One of the earliest, and most important, lessons I learned when I became a financial advisor was that it’s okay to tell a client you don’t know something. Of course, you need to make it clear that you will find out, and it’s all-important to actually get the right answer, but too often in our industry, the impulse is to confidently rattle off what amounts to your best guess and hope you got it right. It sounds like a simple thing, but it is actually quite counter-intuitive, particularly for an advisor who is relatively new to the business.
For years I had a tax preparer whom I loved. She was actually the mother of a childhood friend, and had gotten into the tax planning business very late in her professional life. Because of this, she had never become bored or jaded with the business, and had this enthusiasm about tax issues that was delightful and infectious, if not a bit odd. Not only in preparing my taxes, which were fairly simple, but when I would call to ask a tax question for a client, she would often tell me she didn’t know the answer off the top of her head, but would do some research and find out. It never bothered me that she didn’t know something immediately, what mattered was she was honest about it and got me the right answer. Give me someone smart and curious who’s willing to do the investigating work any day.
Financial Advisors Are Asked Questions on Many Topics
Financial advisors are expected to be proficient in a wide variety of subjects, and the good ones pride themselves on being the go-to person for their clients when any financial matter comes up. In that role, one is faced with a seemingly inexhaustible number of questions on such a vast range of topics that it can be daunting. We get tax and estate planning questions, investing and budgeting questions, insurance, benefits, lending and debt questions, and the list goes on. Each of these areas is worthy of singular expertise, yet we may be expected to address them all in a single day. It’s virtually impossible to know everything there is to know about all of those subjects, yet so often, advisors will hazard their best guess rather than admit to not knowing the answer. It takes a lot of confidence to admit one’s own ignorance of something, and to me that confidence tends to come with experience.
It’s one of the things that makes it so hard starting out as a financial advisor. You’re being asked all of these difficult questions across multiple disciplines, and without the experience of repetition, and years of addressing the same issues under your belt, you already feel as though you’re short on answers. It’s so hard to repel the instinct to try to respond confidently, even if we aren’t 100% sure of our answer. The problem is, that’s when serious damage can be done to clients.
Advisors Who Seem to Know Everything
So, if you’ve been with an advisor for a while now, and have never been told he or she doesn’t know something, he or she is either a genius, or isn’t being completely forthcoming. My money’s on the latter. The truth is that everyone makes mistakes, and we’ve all been guilty of giving an answer we were sure was right, only to find out later was wrong. It’s so important though, if there’s even an inkling of doubt, to step back and have the courage to admit it, in order to get to the right solution.
We have a saying we use quite a bit: “We know what we don’t know.” We don’t know what the market will do tomorrow, and we don’t know what tax rates will be in 20 years, but we do know that if we’re honest with our clients when we are unsure, and work to get the right answers on their behalf, they will be much better off in the long run, and respect us all the more for knowing what we don’t know.
(For more from this author, see: 3 Steps to Avoid Investing Mistakes.)