19 January 2021
Chris Tidmore
CFA, Senior Investment Strategist, Vanguard Investment Strategy Group
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The Benefits of Saying No
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As an advisor, you likely manage your clients’ investment portfolios according to your own set of investment principles.In doing so, you’re bound to run into clients or prospective clients whose ideas conflict with your beliefs about investing and what’s in their best interests. For instance, you may disagree when a client says something alongthe lines of:

  • “Old valuation rules don’t apply.”
  • “Higher returns are achievable with minimal additional risk.”
  • “This time is different.”
  • “I want to sell everything.”

As an advisor, you have an obligation to take a stand for your clients, even when that means telling them your views differ. Saying no can be difficult, but it also can create openings for productive discussions. When differing opinions arise, here are some potential ways to move the conversation—and your relationship—forward:

  • Acknowledge what your clients are saying and the positive merits of their suggestions.
  • Talk over the agreed-upon goals they are trying to achieve, and explain how this course of action could affect their progress toward those goals.
  • Discuss the suitability of any product or strategy suggested by clients.
  • Address any needs to evaluate and adjust policy statements.
  • Seek to uncover and address any unspoken client interests or concerns.

If the impetus for the conversations are issues you and your clients have discussed—perhaps market volatility—you may have a great opportunity to revisit and reaffirm your plan.Explain that impulses to deviate from plans inevitably arise at the worst possible times and that you will stand firm for their benefit.

Vanguard resources

To invest successfully, it helps to maintain realistic expectations; they insulate investors against claims of outsized return possibilities and impulses to chase fads. The good news, if a difference of opinion with clients reflects a lack of realistic expectations,is that Vanguard has research and resources to help. A good place to start is Putting a value on your value: Quantifying Vanguard Advisor’s Alpha, which specifically addresses performance-chasing and encourages discipline in“staying the course.” In addition, below are some common “push backs” that we frequently hear, along with supporting research to help address them.

In extreme cases–it may be best to part ways

Understandably, no one likes to lose business. However, if you cannot reconcile your views with those of the occasional client or prospect, the proper conclusion may be that he or she is simply unsuitable for your practice. In such a case, I would suggest having an honest conversation about why you believe the relationship may not be a good fit. Be respectful and diplomatic, and hopefully the client or prospect will respect you for sticking to your principles. From time to time, such a conversation might preserve a relationship.

Ultimately, building your practice around clients who best align with your philosophy will save you a tremendous amount of time trying to persuade the “dissenters”—time that may be better spent deepening your relationships with existing clients or developing relationships with prospective clients.

Note: All investing is subject to risk, including possible loss of principal.


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