Publication: The Trusted Financial Advisor
Date: April 2008
The Truth Shall Set You Free
By: Bill Bachrach, CSP, CPAE

Why do so many Financial Advisors justify, slightly exaggerate, sugar-coat, or tell prospective Clients whatever they want to hear? Too many believe that’s what they have to do to succeed or even survive in this market. I suppose this is similar to why some athletes think it’s okay to take performance-enhancing drugs: “I have to dope to remain competitive because everyone else is taking them.”

A highly productive Advisor I know was in a quandary recently. He was so frustrated with having to behave like this that he was seriously considering leaving the business. I asked what seemed like the obvious question: “Why don’t you just tell the absolute, bottom- line truth every single time instead of sugarcoating or being overly optimistic with your projections?” His response was the absolute, bottom-line truth: “Because I don’t know if I can succeed by telling the truth.”

Not only can you succeed by telling the truth, you can thrive by telling the truth. The reason is that you will attract Clients with lots of money who can handle the truth, and who prefer the truth.

Here are some examples of truths you ought to be telling if you want that kind of Client in your business:

“There are no guarantees. The best we can do is to give you the highest probability of achieving your goals regardless of the circumstances. If things get bad enough, there’s no telling how it might affect your finances.”

“The bottom line is that no matter what might happen that’s out of your control, the things that are within your control have to be executed in the most intelligent and prudent manner.”

“Bad things happening both inside and outside our borders do not give you license to procrastinate or make poor decisions.”

“The most we can project is 8 percent on your plan, provided you have at least 10 years before you have to touch the money.”

“No, I have no strategy to get you from where you are to where you want to be in the time frame you have given me. To get there, you are going to have to save/invest more money. You can cut back on your lifestyle spending. You can get a second job. You can get yourself in gear to become a better business person so your business generates more revenue and/or becomes more profitable. Your spouse can go to work. You can change your time frame. You can lower your goals. There are only so many options. We will focus on those within your control.”

“I have no idea what the market is going to do.”

“I have no idea what is going to happen with interest rates.”

“I have no idea how unrest in the Middle East is going to affect your investments.”

“All we can do is to take the action that will give you the highest probability of achieving your goals, regardless of what happens in the market, the economy, or world events.”

“I don’t think you are going to become disabled either, but the statistical probability is the same whether you believe you will or you believe you won’t. So, yes, you do have to buy the disability insurance.”

“No, I don’t believe in investment gurus who can consistently beat the market. I believe that successfully achieving your goals is the result of the actions you take. It’s not about what some money manager does. If you believe that your success is outside of your control, then I really can’t help you.”

The question on the table is whether you really can succeed if you tell the truth. Can you tell people the exact return they need to meet their goals, and also tell them if they have unreasonable expectations? And then discuss a reasonable goal and a plan to really get there? Can you succeed by telling the truth about your own business? Can you admit that you can’t predict the future but that there are certain things every one of us can do to greatly enhance the chances of our success?

The answer is yes, absolutely you can. It can actually give you a competitive advantage in a market glutted by Advisors full of hot air. Most Advisors fear that nobody wants to hear the truth, but of course they do! In fact, the ones who want to hear the truth will be your best and most lucrative Clients. Most successful people respond to bare-bald-buck-naked facts, because most successful people got that way by remaining grounded in reality.

Jack Welch, arguably one of the successful CEOs of our times, held the philosophy: “Tell me the truth … and tell me early.” If something you knew happened and you and didn’t tell him about it, you were fired. But if you went to him early and said, “You know what? This whole project is screwed up, and I don’t know what to do about it,” you would have gone a long way with Jack Welch.

Truthfulness and credibility always have appeal. If your claims aren’t inflated -- if you trust your Clients and sincerely believe they deserve the truth and can handle reality -- they will trust you in return. As Ralph Waldo Emerson said, “Trust men, and they will be true to you; treat them greatl,y and they will show themselves great.” The truth has power. If you tell the truth, you begin to play in a new league; you walk away from the games of salesmanship and into the realm of reality as a Trusted Advisor.

People can go to any salesperson to hear hype and buy whatever’s “in” this week. But a business built on this kind of Clientele is exhausting and expensive -- you’re always on that prospecting and marketing treadmill. The best Clients seek out a Trusted Advisor to keep them from doing what they would do if they didn’t have an Advisor (which, for the most part, is nothing … or the wrong thing). Your Clients deserve the truth.

Go Back