In the book Being Mortal: Medicine and What Matters in the End the author, Atul Gawande, talks about three types of medical professional-patient relationships:
“The oldest, most traditional kind is a paternalistic relationship - we are medical authorities aiming to ensure that patients receive what we believe best for them. We have the knowledge and experience. We make the critical choices. If there were a red pill and a blue pill, we would tell you, ‘Take the red pill. It will be good for you.’ We might tell you about the blue pill; but then again, we might not. We tell you only what we believe you need to know. It is the priestly, doctor-knows-best model, and although often denounced it remains a common mode, especially with vulnerable patients - the frail, the poor, the elderly, and anyone else who tends to do what they’re told.
The second type of relationship the authors termed ‘informative.’ It’s the opposite of the paternalistic relationship. We tell you the facts and figures. The rest is up to you. ‘Here’s what the red pill does, and here’s what the blue pill does,’ we would say. ‘Which one do you want?’ It’s a retail relationship. The doctor is the technical expert. The patient is the consumer. The job of the doctors is to supply up-to-date knowledge and skills. The job of the patients is to supply the decisions. This is the increasingly common way for doctors to be, and it tends to drive us to become ever more specialized. We know less and less about our patients but more and more about our science. Overall, this kind of relationship can work beautifully, especially when the choices are clear, the trade-offs are straightforward, and people have clear preferences. You get only the tests, the pills, the operations, the risks that you want and accept. You have complete autonomy.
In truth, neither type is quite what people desire. We want information and control, but we also want guidance. The Emanuels described a third type of doctor-patient relationship, which they called ‘interpretive.’ Here the doctor’s role is to help patients determine what they want. Interpretive doctors ask, ‘What is most important to you? What are your worries?’ Then, when they know the answers, they tell you about the red pill and the blue pill and which one would most help achieve your priorities. Experts have come to call this shared decision making.”
The parallels for financial advisors are clear. As it pertains to the informative type of relationship, it is tempting to want to impress others, especially when one’s knowledge is that of an expert in a niche area. However, the skill is not in presenting impressive analysis on duration, alpha, technical analysis, etc, but rather explaining complex ideas in simple terms.
As in the medical field, the third type of relationship, shared decision making, is superior to the first two. A financial advisor must understand the client’s goals, concerns, and priorities in order to tailor the advice around such information. The ultimate form of financial planning is specific to the individual. This may include helping a client determine what they want when they haven’t put much thought into it themselves. I’ve had experienced advisors tell me before, half-jokingly and half serious, that a financial planning degree is best paired with a psychology degree. Point being, there is more to a financial advisor-client relationship than the advisor presenting option A, B, and C with the various pros and cons. As Atul Gawande makes evident in Being Mortal, shared decision making results in the most successful type of relationship, whether it be medical professional and patient or financial advisor and client.