Why Advisors Need to Appreciate Their Clients’ Situation Outside Analytical Assessments

A number of years ago I received a mobile call at work from a number I couldn’t recognize. This is how I remember it:

“Am I speaking to Maya Tussing?”


“This is Fire Battalion Chief Joe Schmoe and I want to tell you first the good news. No one was hurt.”

So if that’s the good news, what’s the bad news?

I thought about that conversation as I watched markets close to record highs Thursday with the S&P 500 delivering its best week in over 40 years.  And then the bad news: 6.6 million Americans applied for unemployment benefits, a potential federal government budget deficit of $3.6 trillion according to Goldman Sachs, U.S. daily output has fallen roughly 29% according to Moody’s Analytics and most importantly, a global death toll of over 100,000 so far from the coronavirus. This good news/bad news can be a challenge for advisors who have been communicating positive performance for the better part of eleven years since the S&P hit bottom in 2009.

Ever since the market drubbing, the most cliché conversation among investment professionals has been what, when and how to communicate unpleasant market news to clients or anyone else who asks. This time has laid bare how well advisors have understood their clients’ needs and risk profile.

As we’ve discussed in past posts here and as discussed in Jeff Sommer’s most excellent NYT article, risk is a very personal thing that often can’t be concluded through a risk intake questionnaire. The theoretical question “what would you do if the unthinkable happens?” is insufficient in a real-life situation. [An aside: I recommend Amanda Riley’s book “The Unthinkable” on human responses to epic disasters.] Yet there are things advisors can do to better appreciate their clients’ situation outside analytical assessments.

Let Them Be Heard

It’s trite to tell people to listen. Often we take that to mean to pause longer before providing our two cents. By hearing more of what our clients want, we can better understand their point of view and engage them in the solution.

Let’s look at an example. A client who up until a few weeks ago, was completely satisfied with the investment strategy his financial advisor had implemented, but now upon seeing markets nosedive, he wants totally out. He wants to cash out.

Chris Voss of the Black Swan Group recommends “Tactical Empathy” in situations like these. As he puts it, “It’s recognition of their perspective and articulating what you see in a strategic, even proactive manner.” Specifically, the client wants to be heard and have his feelings and opinions validated. Instead of saying, “But this is what we had in the plan and you agreed to this,” Voss might advise you to label his feelings. “You believe we implemented the wrong strategy for you.” This statement alone takes immense amount of courage to say to a client even if you disagree with it. Even if you think the client should stick to the strategy and stay in the market. Still, labeling their feelings in a straightforward way could result in 1) more information about what the client is truly thinking and/or 2) his trusting you more that you have his back.

The long bull market is over and Coronavirus has forced us into an uncertain future. As a result, financial advisors should become better prepared to have conversations focused less on market performance and more on understanding client perspective.

The Fire Battalion Chief told me my apartment was gutted by a fire started by a lamp with damaged wiring. Luckily no one was in the building at the time, but three dogs died.

“It’s all a bit of a shock for you,” he said. “It will be OK. It will all be OK.”

Related: Free Range Artisinal Financial Gibberish