How to Fire Your Financial Advisor, A Long Time Friend

Amigos!

I have a Yossarian payload of a blog post for you today, and if you get the literary reference then you know I'm talking about Catch-22 type of scenarios.  But before I take flight, let me first start out thanking The Penny Hoarder.com for having shared one of my blog posts on their FB page, leading to the recent spike of visitors coming to this blog.  And thank you, new visitor, for being here.  I’m honored to have you today and any time.

I clicked on an email on my iPhone this morning, while still chillaxin’ in bed, and read a request for some help on a very dicey situation.  The email came from Money Magazine (I’m on what’s known as the Money Matters panel like thousands of other Money magazine subscribers) and it asked for the following specific help:

Dear Carlos ,

READERS TO THE RESCUE

For an upcoming story, MONEY Magazine is interested in hearing from people with advice for a reader who would like to fire her financial advisor—who is also a long-time friend. 

If you have suggestions for how to handle this situation, please send them to…

Hmmm….blowing up a bridge has never been harder.  We’re talking huge ramifications here.  If this lady doesn’t terminate her client-advisor relationship, her financial plane may take a nose dive, if not already on a deadly descent.  And if she ends this flight (business relationship) unlike Captain Chesley B. “Sully” Sullenberger, of Hudson River lore, she risks losing her long-time pal.  How would you do it?

Now don’t give me lame ideas:

I’d tell her to tell her Advisor-friend the truth, Carlos.  Honesty is the best policy.

I’d tell her to tell her Advisor-friend there’s been a family emergency and she needs her money.

I’d tell her to tell her Advisor-friend she’s found a firm/company with fewer fees.

Why won’t these work?

The very first suggestion puts the lady in what I consider Maximum Chess.  Everything she will say is like a pawn, rook, bishop, etc., moving somewhere on a board begging an immediate defensive or offensive response from the person on the other side.  But unlike the game of chess, each response from both participants is loaded with emotional potential energy.  That’s why I call it Maximum Chess.  One wrong move and you’ve said something that will never, ever, ever, ever, be forgotten, forever altering the “relationship” landscape.  I should know.  Jessica, my wife, likes to strategically remind me of every foot in my mouth comment I’ve made over the years that have ended some of our friendships with other couples or ex friends of hers.  This is back when I was un-medicated, but I digress…Okay, so this is a very uncomfortable, tense strategy to take, requiring caution at every word.  From both professional and personal experience, I wouldn’t recommend this approach without first using a conversation analysis scale like the type I’ve devised to help me and my big mouth.  See below.

The second approach is a lie.  The advisor isn’t stupid, and this is like when a kid in my office would tell me he/she found illegal contraband “on the way to school.”  Yeah right, I’ve heard it a thousand times.  10 years!  That number is about right.  Plus, I suspect this lady has sound morals and lying to a friend to spare their feelings isn’t in her nature.

The third approach is also a lie…a better one…but still a lie.  This is a plausible strategy that will require some homework on the part of the lady.  Like, she’ll actually have to have another company in mind to offer as an answer when undoubtedly questioned: May I ask which company you’ve compared us too, that not only provides the same service, but does so with fewer fees?

In, “provides the same service,” the Advisor-friend would be insinuating the same service as him or herself!  I suspect the Advisor-friend would tell this lady she’s known her for so long and knows her financial situation/goals best, being friends and all for soooo many years.

I’ve “handled” all sorts of people over a ten year career as an Assistant Principal.  Unstable situations in my office are my forte mostly because I’m able to quickly “size up” the person on the other side of my desk.  I have a mental adjuster that lets me modify my approach as people talk to me for the first time, and repetitive interactions with them allow me to use Jedi mind tricks to get a desired outcome. For some reason, I'm at my best at work. Go figure.

Let me show you what I do in my head. Behold, my conversation analysis scale:

Emotional: Low (1) to High (10)

1

2

3

4

5

6

7

8

9

10

  

Rational/Logical: Same as above

1

2

3

4

5

6

7

8

9

10

Tough Skin: “”

1

2

3

4

5

6

7

8

9

10

   

Intelligence:

1

2

3

4

5

6

7

8

9

10

Every person has every one of these components, to a degree.  This is just my way of making sense of things obviously.  In every conversation, a person will exhibit some or all of these components.  We “gather” the evidence on people, so to speak, as we interact with them, and our brain tends to do a decent job of where “not to go” with a person, right?  Invariably, we “f-up,” saying something we quickly regret, especially during heated conversations.  Our emotions get the best of us.  We can’t help this.

We all also plan what we are going to say, when we know in advance we will be stepping into a difficult conversation.  “Sizing-up” the person you will be speaking with, as I do, prior to the conversation, will make for a comfortable flight and landing.  The lady asking for help from Money readers needs to write down a number for each component above, that to her experiential knowledge, best represents her financial advisor-friend.  For example, is the advisor-friend super emotional, like Dick Vermeil, ex-Philadelphia Eagles coach?  He cried for everything!  A defensive player making a tough play at the line would make him cry!  



Or is the advisor-friend more like Ben Stein in a Clear Eyes commercial?  You get the picture.

If the advisor-friend is anywhere from 7-10 on the emotional scale, she can’t and shouldn’t tell her friend the truth if she values the friendship.  The truth being: you suck as an advisor!  How can you side-step this with an emotional person?  You can’t!  What can you say to a highly emotional person given this challenge then?  How about:

You know (insert name of person), I really have appreciated our friendship over the years.  You’ve been there for me on so many occasions.  Thank you for that.  It’s because of how much you mean to me as a friend, that I must insist on ending our business relationship.  

(Initial reaction from advisor here…something like, “is it something I did?”)

No…not at all!

I just fear someday business can get in the way of our friendship and I don’t want that.  Do you understand where I’m coming from here? I want nothing to potentially jeopardize our friendship.

If the person is like my enrolled agent, super methodical, logical, and rational, the truth may not sting as much.  Yes, everyone has feelings, but these left-brain dominant people, as I’ve experienced, are more capable of seeing the logic behind a logical argument, which money can be when you’re not married.

You know (insert name of person), it doesn’t make any sense for you and I to have a business relationship.

(What? Huh?)

Think about it.  What if one day you should make a mistake with my account?  Or what if I didn’t like an investment decision you made with my money?  That could really impact our friendship, don’t you think?  Besides, you’re like family, and you know just as well as I do, family and business don’t mix.

Tough skin’s turn:  Total Truth.

I’m gonna give it to you straight (insert name of person), the past few investment decisions have not been up to my standards…We’re friends, and I know you can handle this…I’ve decided to take my business elsewhere.  At X, I pay fewer fees, and they allow me three office visits per month to speak with my money manager.  Nothing personal, you’re one of my best friends and will always be, but I must move on for my personal and financial well-being.

"Intelligence" is like the instruments on a plane’s panel.  They help the pilot (You) make sure the trajectory is on target.  Knowing the intelligence, and I don’t mean actual I.Q., but rather relative smarts of the person you’re speaking to, helps you expect and foresee some of the “comebacks.”  Smart people will pose follow-up questions that may trip you up!  So anticipate what can be said given a certain level of intelligence.

I think the best advice I can give this lady is to not tell her advisor and long-time friend the actual truth.  If the advisor is emotional or rational/logical, use my words above.  They work and are not lies!  Thanks for reading!