How to Manage Clients During a Crisis

Quarantine Begins

11 days ago, our California county ordered us to "shelter in place,” thus my wife and I began our work-from-home journey.  While most of my friends debated Netflix shows to binge in a quasi-quarantine, my work got more serious as clients' account values began to nosedive and the outreach from clients poured in.

To say the least, wealth disappeared like I've never seen in my lifetime.  My firm started the month managing close to $150mm (i.e. our clients' life savings).  I'll never be able to describe the pain of watching $150mm turn to $120mm seemingly overnight.  Millions of hard-earned dollars, vanished.

These account values are deeply personal to us.  We've helped each of our clients design what their money could help them do some day.  An experienced investor might see a short-term "correction" among the madness, but a worried family might see their retirement dreams ripped from underneath them.

Whether the fears are rational or not, acknowledging this pain is step one of sympathizing with clients and understanding how they feel in these sensitive times.

Managing Clients in Panic

On top of managing the accounts themselves, I've spent the past weeks talking directly to clients, hearing their concerns, and discussing what this might mean for them. 

After dozens of impromptu conversations, hours of reflection, and a couple sleepless nights, this has easily been the most significant and emotionally difficult month of my career.

On the flip side, I've learned incredible lessons on how to manage clients through times like this, which I've never found in textbooks and will influence how I help clients forever.

Below are some of the most impactful lessons I've practiced recently.

People First, Opportunities Later

When markets turn for the worst, the most common question you'll get asked is, "what should we do?"  You'll subsequently need to fight all urges to unleash your favorite strategies in response.  This is about understanding them in this moment, not showing how smart you are.

The next thing to decode is figuring out which version of your client you're talking to.  When someone is under stress, any well-poised person can shift into a frazzled version of themselves.

At a high level though, clients can mostly be segmented into a few categories.  A subset of clients view market dips as opportunities and will want to scheme on the upside.  Another subset will simply wait to hear from you and trust your executive orders.

The last subset of clients will shift to sheer panic-mode and need you the most.  These clients will test your poise and highlight your true strengths (and weaknesses).  Most importantly, these people are primarily looking for shelter, not an attack plan (yet). 

Any basic investing course will teach you several, time-tested strategies you should use right now - don't panic sell, rebalance, tax loss harvest, do Roth conversions, and so forth.  But when someone is calling because they've lost 6-figures of wealth in an afternoon, most of the aforementioned strategies listed mean nothing in this moment. Did the strategy make the money reappear?  If not, then it's not important to the client right now.

Investment firms or other logical advisors won't make it any easier for you.  You'll be inundated with charts and graphs instructing you to "stay the course."  But if you rub charts and logic in the face of a fearful client, you will fail to connect with them during their time of need.

Sure, strategy and implementation to capitalize on the upside are hugely important for long-term success.  Just remember that they can sound meaningless to a distraught person.

Life Allocation > Asset Allocation

Speaking of "staying the course," never forget that those plans can change, fast.  This week, America claimed 3.5 million unemployed workers.  For the newly unemployed or anyone who will be affected, odds are decent that their "course" has shifted.  Meaning your previous strategies might have just flown out the window.

We all know that selling stocks low is the ultimate advisor sin, but when your clients are suddenly uncertain of their ability to make ends meet, this might call for a course correction.

Said differently, reflexively shouting "stick to the plan" might backfire when you eventually learn there might be a new, better plan.  It's the advisor's job to zoom out and learn what's changed in their life, and their asset allocation might need to be adjusted to match, even if it means selling at the bottom.

Control

When your client's world seems to be crumbling around them, there is comfort knowing you can stop the bleeding of their financial livelihood with a few clicks.  When they call, they want to know if you'll help them gain some control in their lives.

Back when you discussed their financial plan and showcased beautiful charts of a rosy future, "the plan" made so much sense.  But in crisis mode, attitudes can shift to self-preservation and the lack of doing something might feel crazy to them.  

Admittedly, last week I helped two clients commit the sin of selling stock at deeply low points.  That decision haunted me for days, like I'd broken a sacred advisor's code. I finally found peace after listening to a wonderful podcast where the guest explained how selling during turbulent times actually makes sense for certain people, even though it's academically unsound. 

Ultimately, humans crave control during uncertain times, and sometimes the suboptimal choices are the best choices if it keeps your client generally headed in the right direction.

Articulation > Action

Cries for help will take many shapes, and clients will rarely articulate their concerns correctly the first time.  When markets dip into recession territory, you will invariably hear questions like:

• Can we sell stocks until this passes?

• Is there a smoother way we can manage this?

Immediately responding to these direct, impulsive questions is a mistake.  Why? Because it is probably the wrong question.

Instead of answering the initial question, it's always better to begin by asking questions in return about their well-being.  "It's been crazy lately. How are you and your family doing?"  

Time and time again, I found that the clients' initial questions didn't explain their feelings, their concerns, or desires for action.  They just wanted to open the door for a conversation. Sometimes, the conversation alone (with no action) was the antidote they needed.

Don't Be Silent

There is nothing more exhausting than reacting to someone reacting over something else.  By sitting back and waiting for the emails to pour in, I opened myself up to added hours of difficult conversations and unnecessary stress.

If I had simply reached out to those who needed me most before they contacted me, I could have controlled the tone much better.  Sure, it would have required excellent foresight into who would be fearful, but it's my job as their advisor to anticipate their emotions.

As a firm, we mostly avoid mass email blasts to clients and instead prefer individual attention.  That said, this recent market selloff was our time to be loud and the authority on the subject.  

There were a few days where we were silent, diligently working on our action plans for clients, but that silence felt like avoidance to them.  We quickly adapted and regularly shared broad messages to share our thoughts and open the door for conversations. Being front and center during uncertain times is the strongest move you can make as a leader for your clients.

Lessons for My Career

I've never been responsible for more clients (and wealth) in my life, and there's nothing quite as humbling as being on the receiving end of several "what should we do?" calls during a crisis. 

I'll never have all the answers at the right time, and I've learned that's okay.  The most important thing we can do for our clients and the people we care about is show that we're here for them, no matter what life brings.

Why Your Financial Planning Employees Quit

The Management Conundrum

I met some of my closest friends in the financial planning program at Texas Tech. Wide-eyed and eager to learn, we eventually graduated and set out to begin our careers as financial planners.

Our graduating class accepted positions far and wide, and after a few months I trusted they were all loving their new jobs as much as I was. It turns out that not all jobs are created equally and some of my friends were having bad experiences. Some wanted to quit their positions, while others considered leaving the profession altogether.

Imagine reading headlines around the ever-growing shortage of financial planners, while simultaneously your well-trained financial planner friends are looking for an exit plan. This is a common conundrum in our profession, and I believe the key difference between unhappy employees versus those who have great experiences is management.

The Hard Truth

Let's call out the necessary truth: most of us entered this profession to become financial planners, not to manage teams and organizations. But when your business suddenly grows and you need to hire more people, you will invariably be deemed a "manager" in no time.

And since we are trained to study spreadsheets and not career development, ignoring this reality often results in bad bosses. People rarely leave jobs; they typically leave their bosses.

If you're like many of us who have suddenly found yourself in a management position, it's important to know what themes create bad experiences and what we can do to avoid them.

Stories are Data

Each time a friend told me why they quit their job (or wanted to), I recorded a data point. And over the past half-decade, I've collected dozens of cases highlighting what went wrong.

Reviewing those cases, there are common management mistakes that financial planning firms are making which cause their young talent to leave. Even more ironic, these issues span far beyond the walls of financial planning and echo in almost every other industry too.

The following three cases outline real cases of mismanagement that both new and experienced managers should review to help avoid common mistakes and retain talent for their firms.

Getting started, each story has its own complexities and nuances, but here's what the following cases have in common:

• Associates - each subject was an entry-level Associate, hired on as a staff member to eventually grow into a financial planner at an existing financial planning practice.

• Quit their Jobs - none of these employees were fired for bad behavior or poor culture fit. They genuinely wanted the opportunity to work.

• Preventable - perhaps this is an opinion, but I believe these poor situations were preventable if proper adjustments were made in management.

Why Financial Planning Employees Quit: 3 Case Studies

Meet Jess

Jess was a former classmate and has always been talented, hardworking, and self-sufficient. It was no surprise she had multiple job offers upon graduation. 

She took a job with a well-known RIA, which has a solid track record for developing Associates. Her specific opportunity was slightly different than the regular program, as the company recently acquired another firm and she was hired to help that branch. She moved to the small city's location and learned they hadn't incorporated financial planning yet.

Plans to become a full-service financial planning practice didn't go as planned and most of her work was administrative. The icing on the cake was accidentally being called a "secretary" on numerous occasions. Obviously, Jess did not feel valued.

Lesson 1: Expectations Management.

Quite simply, the job Jess signed up for is not the job she received. A perk of the original opportunity was the predictable path to a Lead Advisor role, which many other new hires experienced. The opportunity Jess received was uniquely different than what she expected, which led to disappointment.

Many firms opt to hire the best talent no matter what, but the downfall comes when there is no reasonable plan for the talent after the hire. As managers, our job is to make sure we give someone a fair opportunity to succeed. Jess left the firm because she didn't get that chance.

Meet Billy

Billy is exactly what the profession needs—a young career-changer who wants to be a financial planner. He took CFP courses on his own time and was hired to work at a well-known financial planning firm.

Working at a big firm can be tough and Billy soon found himself struggling to keep up with the workload. Self-admittedly, Billy lacks confidence at times and wants his work to be perfect before submitting for approval. This perfectionist attitude combined with a high-volume firm led to backlogs and unsatisfied managers.

For 12 months, Billy gradually improved, but the work poured in heavier and he began to drown. Naturally he reached out for help, but in an environment where everyone is busy, he felt like no one had time for him. After months of the same response and no one to turn to, he quit.

Lesson 2: Direct Managers are Advocates.

First, everyone needs a direct manager to lean on when things get tough. No matter how busy the team is, you should never feel alone. 

• "I felt like I wasn't allowed to make mistakes anymore, which made me feel more like a burden than help. Those who could help me were either uninterruptible or not available, further leading me into self-doubt.”

Lesson 3 - Managers Shape Experiences. 

The hardest part of working on a team is remembering that competency is relative. Your teammates might not be skilled in your strongest areas, and vice versa. Sometimes others need their training wheels on longer than you needed yours.

A skilled manager knows their employee's unique skill sets and will adapt their workload to match. You can take this further by customizing their career path, which the next case study outlines further.

Meet Alice

Alice studied financial planning in college and accepted an entry-level role building plans and inputting data. The role was mainly behind the scenes, but her goal was to eventually move up and become a client-facing advisor.

After a few years of hitting her performance goals, Alice asked for more opportunity.

She asked for a way to become client-facing—the firm said no.

She asked to at least sit in client meetings—the firm said no.

She asked for salary incentives to give her something to work towards—the firm said no.

She clearly hit many ceilings and thankfully she knew she could lean on her direct manager for help. When she approached her manager though, she unfortunately received bad advice:

• "I was told by a female manager that I shouldn't ask for a raise because I need to cater to the partner's male ego to get what I want long term. I realized that my manager wasn’t there to support me or advocate for my growth."

Lesson 4 - Create Goals Together (Career Path Alternative)

There's much talk around presenting Career Paths to young planners and it's important to understand the basics. Most 25-year-olds aren't interested in a "path to equity." All they need is a couple of large goals that they can work towards over the next 1-2 years, which can be customized for each person. Customizing experiences is where boutique firms can thrive since all Associates are different, they should have slightly different paths, course-correcting at least annually. I don't believe Alice needed decades planned out for her, she just needed to visualize a future that had her in it.

Lesson 5 - Give Middle Managers Power. 

Alice’s problems are related to problems faced by her direct manager. A middle manager is often the connection between an associate and the firm’s ownership, and thus should be an advocate for the associate. However, they are unable to follow and promote the lessons outlined above without being empowered by the owners. If the middle manager is not empowered, the associate may ask for help, only to realize that your hands are tied.

Takeaways for NexGen Managers

If you’re like me and want to learn how to grow quickly as a new manager, we can study the main lessons from the stories above.

1. Expectations Management - provide the experience that your new hires expected.

2. Direct Managers are Advocates - be a consistent resource to your team members and never let them feel alone.

3. Managers Shape Experiences - learn the unique skill sets of your team members and customize their experience accordingly. Their present experience will be different than your past.

4. Create Goals Together (Career Path Alternative) - instead of projecting too far in the future, customize the next 1-2 years, and course-correct along the way.

5. Give Middle Managers Power - if you are a senior manager, give your middle managers power and authority to shape and adjust experiences to associates.

Give Opportunity. Create Rockstars.

I've been given more opportunities than I ever imagined, and as a result my career has grown quickly. But the opportunities alone are not the only ingredient necessary for success. Once opportunity is granted, the difference between mediocre and exceptional talent is a direct function of the guidance a young person receives along the way.

It took me years to realize my success has been a team effort. In a way it's like realizing on your 25th birthday you've had great parents who guided you through every life challenge. I thought I was in control, but it was really the care and investment from the generation before us who paved the way.

Now that we're able to give opportunity to the next generation, it's our job to make sure they become exceptional in their own way to help guide the profession's future.

Resisting Entrepreneurship: Chronicles of a 4th Grade Hustler

4th Grade Enterprise

I was 9 years old the first time I bit into the sweet fruit of capitalism.  In 4th grade I had everything going for me: I was one of my teacher's favorites, regularly picked in the top 3 for soccer games at recess, and my mom was a lunch lady so I always got extra cafeteria food.

My best friend from that year was Aric Dang and he hasn't changed in 20 years.  He has given me the shirt off his back more times than I can count and is the best friend everyone needs. But nice guys often get taken advantage of.

One day Aric showed up to school with a handful of these strange-looking jelly snacks:

Aric's parents are originally from Vietnam and a lot of their food, including these treats, came from this Vietnamese market on the other side of town.  Aric asked if I wanted to try some, but I was a classic chicken nugget kind of guy, so I declined. Some of the other kids in class got a taste though, and the foreign snacks became an instant local success.  

Each day Aric would bring more snacks to school and each day he'd give most of them away.  He's so nice that sometimes he'd give them away before getting any for himself!  He couldn't say No to anyone.

This was my cue to step in.

I told him he needed to charge money for his treats, but his 9 year old innocence had no idea what I meant.  Purely out of frustration, I took the reigns and told him, "give me the snacks and I'll show you."  

Ironically, he couldn't say No to me either, so I took the inventory and sold them all in a few hours for a quarter apiece.  We split the profits 50-50 and started feeling like real business tycoons.

Busted

Sales were off the charts in that first week and it was time to think more strategically about our business.  By experimentation, we learned we could get an extra 50 cents if people thought we were running out of supply.  We also started charging more for the popular flavors.

The buzz around our product was high and we were on fire.  But then, things took a turn.

I don't remember exactly what happened but our teacher somehow caught us dealing jellies to classmates and banned our business on the spot.  Apparently running a mini-enterprise on school grounds wasn’t allowed.  

Shut down as we were picking up steam.

Peer Pressures of Entrepreneurship 

Most people would hear that story and think that I was destined to be an entrepreneur.  I saw an opportunity in my 4th grade class and literally turned it into profit.

But I disagree.

When I look back at my story two decades later, all I see is a kid looking out for his best friend.

This is an important distinction, as I'm constantly feeling pressure to become an entrepreneur and I’m not entirely sure why. 

To be fair, much of this pressure comes from my own desire to keep up with the best in the business.  Any time someone I know starts a business or gets praise from the media (i.e. InvestmentNews’ 40 under 40), a little birdie tells me, "you could do that."  

It doesn't help that there's a new wave of celebrity entrepreneurs and instagram influencers like Gary Vee, Grant Cardone, and others peacocking on their platform telling me to quit my day job.  

It creeps its way into my marriage too.  My wife and I are both financial planners and we always get asked "when" we are going to start our own business (don't even get me started on the 'baby' conversations).

I get it though.  Starting your own business is one of those quintessential American ideals that has led so many people to wealth and success.  I should be flattered my peers are effectively nominating me for such a path.

Know Thyself: The Accidental Entrepreneur

One of my financial planning clients is a major banking executive who is basically in charge of making their global website friendlier.  To excel at this, he needs to understand what makes people tick. One of his favorite tools for understanding people is the Enneagram Test, a program that helps reveal your personality type.

He had me take the test and guessed that I would be the "Investigator," mainly because I'm an all-encompassing problem solver for him. 

But he was wrong.  My results scored me as the "Helper."

For him, I do investigate.  But for others, I empower or challenge.  It all depends what I believe they need. And I have to remember that how I help my peers today might look different than how I help them tomorrow.

In 4th grade, I helped Aric stand up for himself and made a little money as a byproduct.  I was an accidental entrepreneur, but more importantly a full-time friend. 

And as I cross over into my 30's, knowing myself will be more important as I deal with new challenges and pressures.  If that leads to becoming an entrepreneur one day, great. But I’m totally comfortable on my current path and love hitting huge milestones with my team.

Quid Pro Quo

To this day, I have no memory of what those little jelly snacks tasted like, nor do I know how much money we actually made together.  

None of that matters.  

All I’ve ever cared about is helping those who matter, just as the people in my life have been there for me.

4th grade entrepreneurs at Bryan’s Wedding, April 2019