There’s a number of techniques advisers can use to make ‘courageous’ conversations easier, writes Fiona Smith.
When new clients come to see Tatiana Coulter for the first time, there are generally some awkward moments.
As a financial planner specialising in insurance, Coulter is going to ask them to consider death, disaster and the financial implications of loss.
For many couples, this is the first time they will have talked about what happens if someone dies or is disabled.
Coulter, director of the Monarch Advisory Group, says couples with children are usually the ones who have the hardest time – more so than investors whose returns have been disappointing.
“The issue of lifestyle is the most confronting one. What we are saying is ‘who is going to look after the kids, how are we going to fund this lifestyle, what is going to happen to the debt, where are you guys going to live?’” she says.
“A lot of people haven’t even thought about it.”
That is one of several scenarios in which a financial adviser could face a difficult conversation. Whether it’s talking through the impact of death or disablement, challenging a financially undisciplined client or relating poor investment performance: such conversations can be frequent for advisers.
Executive coach Melanie Gowlland says she prefers to exchange the word "difficult" with "courageous" when she is describing a tough exchange.
"They are like death and taxes, you will have these conversations," says Gowlland, who consults through the Stephenson Mansell Group, outlining points for handling such conversations.
Eight steps to handling a difficult conversation
1. Prepare: Do all your homework, so you have the best information and recommendation for your client.
2. Active listening: Give the other person all of your attention, rather than planning what you are going to say while they are talking. "Don't think about what you will say until the other person has stopped thinking. Don't interrupt or talk over them," advises Gowlland.
3. Open questions: To make sure you fully understand the issues, use the "when", "what", "where" and "how" questions. Try to avoid the "why" questions – such as "why did you…"
– because they tend to make people defensive, she says.
4. Learn: If you shift to a learning frame of mind, trying to discover what is really going on with the other person, what may be behind the conflict and what you have done to contribute to it – you can avoid being drawn into unproductive emotion.
5. Reframe: Take what you are hearing from the other person and repeat it back to them in your own words, focusing on the problem, not the person.
6. Find areas of agreement: "It will reduce the magnification of disputed areas if you can find some common ground," says Gowlland.
7. Move forward: Try to get an agreement from the other person about how you can move forward from there, even if you have not been able to come up with a solution. ‘Enroll’ them in the outcome by asking if you can go away to do more research and come back to them the next day.
8. Support yourself: Sometimes, challenging conversations are unexpected, but you can keep a piece of paper nearby to remind you to ask open questions and adopt a learning frame of mind.
It is vital that you build a great relationship with people so that when you have to have a challenging conversation, they will accept it, Gowlland says.
"If you have trust, that is a foundation of the relationship,” she adds.
You can also use breathing techniques to help prepare for something difficult or to move from one situation into another.
In line with some of Gowlland’s points about taking time to help people adjust and think, Coulter says she gives people time to consider their needs by scheduling three appointments for new clients, rather than the industry standard of two.
But in many cases the sheer challenge of a conversation remains.
Coulter says telling a client that they have been refused a policy because of health concerns is a dreadful conversation. The solution is to acknowledge the situation and do whatever can be done. In that situation the best she can do is try to find them an alternative policy with better terms, but there is no guarantee of success.
With disappointed investors, Coulter says her approach is to educate her client about the market and alternative investments, so they can see how their portfolio has performed in comparison.
“It is about getting back to basics,” she says.
Fiona Smith is a freelance journalist who writes on leadership, specialising in careers, management and company culture.