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Value Creation Blog

Your Advisor Might Have A Dirty Secret – Wealth Management

Posted by Josh Patrick

Client ControlAdvisors talk about how they can help clients when they’re with you, their clients.  The dirty little secret is that when advisors get together and clients (you) are not there, the conversation often turns to “client control.”

I’m not a fan of trying to figure out who’s going to be in control of the client.  I find the whole concept distasteful.  Why is it that clients can’t be control of themselves?

I think client control conversation involves three things:

The advisor doesn’t trust the client and wants to make sure they do what the advisor would do in their situation.  I’ve seen this happen a lot.  It also fits in with the disconnect many advisors have with their clients.

Instead of helping a client gain clarity around what and why something is important, the advisor will often jump to conclusions about what the client should do.  The client will use their worldview of what’s important and not the clients.  This is one of the main reasons I see advisors advice not taken by their clients.

The advisor wants to make sure they aren’t cut out.  If clients start to think for themselves about what’s important they might decide their advisor’s advice is not what they’re looking for. 

I find that many advisors have a scarcity mentality, meaning they are afraid there isn’t enough business to support them.  Many advisors are worried about their revenue stream and want to make sure their revenues are protected.  These advisors believe that if they continue “controlling” their clients they will be able to direct them to activities that provide revenue.

Their idea is so complicated the client can’t understand it.  Complicated strategies are expensive.  This creates lots of revenue for your advisor, but it might not create lots of value for you.

I’ve had advisors tell me that their clients need to “trust them” even if they don’t understand what they’re about to do.  This is where you, the client, can get yourself into big trouble.  Rule number 1, 2, and 3 is never do something you don’t totally understand.

The issue here is who’s going to be in control.  I believe that you need to stay in control of all your engagements no matter how complicated.  If you want to move forward with something you don’t understand, make your advisor teach you what it is you are about to do.  If you don’t, you could be disappointed with the results and have some very expensive and unfortunate results.

Remember, you are responsible for what you want to do and why it’s important.  If you’re lucky, your advisor will not only remember this, but insist that you stay in charge of the work you do together.

Josh Patrick

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Topics: client control, for business owners, wealth management, business relationship management, trust

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