I recently took a road trip with my family through the Karoo and spent a night in Prince Albert. We had dinner with friends on the stoep of a restaurant watching Karoo life meander along the road. Very peaceful – apart from a loud patron sitting on his own who clearly had drunk too much and was shouting animatedly into his cellphone. Fortunately, this gentleman left before our irritation levels rose too much.
As we finished our meal, we had some unexpected excitement with a police car racing up the normally quiet road followed closely by another big civilian bakkie. It seems the loudmouthed patron had left without paying his R800 drinks bill and the local police, with the help of the restaurant’s security manager, weren’t letting him get away with it. In a small town, there are not many places to hide and before we had paid our bill, the gentleman was back at the restaurant under police escort to do the same.
I’m yet to meet a financial planner who hasn’t had at least one client who wants too much of a bad thing.
It turns out that he had drunk 31 tots of whisky. No mean feat and no surprise that he forgot to pay his bill. All the onlookers to this bit of comedy drama commented on what an idiot this guy was. I have to say my family and friends had the same view. But on further reflection, I wondered who the idiot really was… the patron, or the premises?
To serve 31 tots of whisky to one person is beyond idiotic. In fact, it’s incredibly dangerous. Thank goodness this guy had a strong constitution, so the worst consequence of his activity was some memory loss. Not only did he forget to pay his bill, but he also left his cellphone on the table when leaving. Not the sign of someone intent on doing a runner from their bill.
Now I’m sure you’re wondering what this story has to do with financial planning. Well, I’m yet to meet a financial planner who hasn’t had at least one client who wants too much of a bad thing.
Another approach a financial planner can take is one that I learned from a parenting coach when my children were small. She pointed out that many parents forget that “No” is a word.
They want to spend too much money; or drawdown too much from their investments or switch their investments too often. The list goes on. When I ask financial planners about what they do with clients who want too much of a bad thing, the answer is invariably: “It’s their money, it’s their life, so as long as they sign a disclaimer pointing out the risks and that this is not my advice, then that’s fine.”
This is a bit like the waiter coming over to the patron after his 10th whisky and instead of saying, “I am sorry you can’t have any more,” rather gets him to sign a disclaimer that if he drinks anymore whisky, it’s his responsibility.
Outrageous and dangerous, I am sure you’ll agree. But is it any more outrageous when a client signs a disclaimer because a financial planner doesn’t think what they are doing is sensible?
Another approach a financial planner can take is one that I learned from a parenting coach when my children were small. She pointed out that many parents forget that “No” is a word. So, when you next have a client who wants too much of a bad thing, don’t be afraid to say, “No.”
If your client doesn’t want to listen to you, then they probably are not a client you want anyway. At least your client will be taking full responsibility for their decisions, without the need of a disclaimer that may or may not be worth the paper it’s written on. The disclaimer is the path of least resistance. But professional financial planners ideally know that “No” is a word, and one that is worth its weight in gold.
Rob Macdonald, Head of Strategic Advisory Services, Fundhouse
Rob Macdonald has held several senior positions in the investment industry. At Fundhouse, he acts as a consultant and coach to financial advisors and develops and facilitates training programmes in behavioural coaching and practice management. Before joining the financial services industry, Macdonald was MBA director at the UCT Graduate School of Business. He is co-author of the book Rethinking Leadership and has consulted, written and spoken widely on a range of topics. Macdonald has a Master’s degree in Management Studies from Oxford University and is a CFP® Professional.