High-Profile – and Antagonistic – Divorce Underscores Why Financial Advisors Must Probe Clients on Personal Lives
Do you know if your clients who have spouses are happily married? Does this very question prompt a sensation of awkwardness on your part?
Well, if you think proactively discovering facts like this isn’t necessary – or if you believe bringing up anything that is deemed too personal in any client engagement isn’t appropriate – you might want to think again.
Financial advisors – especially professionals serving clients with significant assets – can look to the acrimonious divorce between Bill and Melinda Gates as highly instructive in this regard.
Be Careful About Assumptions
To many outsiders, Bill and Melinda Gates seemed to have, if not an idyllic marriage, an admirable one. On and off, the wealthiest person on the planet going back roughly 30 years, Bill had established a reputation as a wonky do-gooder. He not only pledged to give away a significant percentage of his fortune but also convinced other wealthy individuals to do the same.
Melinda, for her part, was seen as an equal partner in this mission. She has played a massive role in running the couple’s foundation, which has steered billions toward projects focused on improving health conditions and educational opportunities in some of the most impoverished countries in the world.
While the recent divorce doesn’t erase any of their good deeds, it does highlight the dangers of making assumptions about other people’s relationships – and for advisors, raises the question of how much personal information you should know about your clients.
Relationships Turning Toxic – Part of Life
At the same time, relationships turning toxic is a part of life. Therefore, providing clients comprehensive service – notably estate planning support – sometimes means asking probing questions about their personal lives.
But there are ways to find out what you need to without being undiplomatic. Here are some examples.
- Ask open-ended questions. Many clients are willing to reveal almost anything about their lives, but it comes down to knowing what questions to ask and how to ask them. Therefore, think of each conversation as if it’s a news interview, where the key to getting the most revealing responses out of a subject is avoiding questions that invite one-word answers. For instance, “How do you feel about your heirs?” is likely to get a much different reaction than “What concerns do you have about your heirs and other loved ones when it comes to money?” While the former is too general to arouse much thought (“Good”), the latter will yield more reflection (“Well, now that you mention it…”) and, thus, more helpful information.
- Keep it impersonal. Often, in response to an estate planning question regarding an heir, a client will ask what prompted it. In those instances, resist the temptation to directly refer to their spouse, child or other relative. By saying something like, “Let’s say you and Karen got a divorce,” it could make them defensive, shutting down the conversation. Instead, be as general as possible, telling them that doing a beneficiary review is an important part of the estate planning process, one that must recognize that family dynamics sometimes change.
- Use impactful examples. Naturally, most clients quickly understand how one of their own broken relationships could cause them to revisit their estate plan. Sometimes, however, it’s less evident why a similar experience involving a family member could force them to do the same. For instance, they could keep a child’s divorce close to the vest, assuming that it would not require them to revisit their plan. To prevent this from happening, don’t be shy about using examples that highlight the stakes, whether it’s a former in-law getting using a chunk of a client’s estate support a new spouse or an heir squandering an inheritance to bankroll a substance addiction.
- Listen, pay attention. Advisors sometimes tend to talk more than listen. These types of conversations, however, not only require being an active listener but paying close attention to non-verbal cues. If it seems like a client is uncomfortable with the conversation, shut it down immediately. At the same time, try to leave open the possibility to revisit it later, making it clear that protecting their interests without passing judgment on them or their heirs is a key part of every advisor’s job.
Many advisors excel at the science of estate planning – knowing how to team with outside experts to craft a plan that will both protect a client and satisfy their wishes.
What’s less common is an advisor mastering the art of that process. It starts with winning a client’s trust (these aren’t first-day conversations) and then requires knowing what to ask, how to ask it and when.
Josh Strange is the Founder & President of Good Life Financial Advisors of NOVA, an independent wealth management firm headquartered in Northern Virginia