Ask Nick Sample 2018

FROM 3/18 ISSUE

THE “RIGHT” BLEND OF EMPATHY AND STOICISM

Q

I welcome the February volatility and hope it persists, as I believe that the uninterrupted advance since the election has masked a lot of incompetent advisors and given too many investors a false sense of security. But I'm finding myself somewhat less empathetic to worried phone calls than I might wish to be. (How many times have I told people that corrections are the annual norm?) Any specific recommendations for newsletter pieces or entries in Around the Year on empathy, or do I just give them straight Spartan stoicism and see who peels off?

A

I think the wisdom is in realizing that you're going for a blend of stoicism and empathy; they're not either/or. I wouldn't presume to dictate to an advisor what that blend “should” be, (a) because it's probably unique to each advisor and (b) because it probably ought to be adjusted for each client, depending to some extent on his/her current degree of alarm. In the end, of course, the outcome will be determined not by today's blend of stoicism/empathy, but on how well you've trained the client, going all the way back to onboarding.

Your mantra: it's OK to feel the fear—Mr./Ms. Client, you mightn't be human if you didn't feel it. It's just not OK to give in to the feeling. (See October 24 in Around the Year.) Experiencing a fear-based impulse and acting on that impulse are two different things; the advisor's highest function is helping the client disconnect the impulse from the act. Stoicism moderated by fellow feeling seems to me a pretty good definition of tough love, which is the Spartan's art form.

FROM 12/17 ISSUE

A PROSPECT WHO DOESN'T TRUST YOU ISN'T ACTUALLY A PROSPECT 

Q

I interviewed a prospect who has about $1 million in company stock, and is therefore terribly underdiversified in that total net worth with 401k is $2 million. How might you respond to the following email?

“It was a pleasure meeting with you last Friday. We are very interested in moving forward. Before we sign up, I have three questions. Please note, we've never had this much money and we've never handed this much money over to anyone…so we're a little, well, afraid. Thinking of starting with $150K and increasing from there linked to a diversification strategy. Questions:

1. Do you have any client references that it would be OK for us to chat with?
2. How much money do you manage across all of your customers?
3. Is there any movement in the management fee percentage?”

A

I would write back:

Thank you very much for considering my firm and me as your financial advisor. I don't believe there's a basis to move forward here, and would recommend you continue to seek other counsel, with an eye toward finding someone you intuitively trust to serve you well. Please know that I wish you every success. Thanks again. Sincerely,

Then I would frame this email with a legend beneath it, saying (as a message to myself):

My first job is to make myself trusted implicitly. I failed here, but elected to make believe I didn't know I had failed. I will not make this mistake again.