At its best, a financial planning relationship brings joy to both clients and advisors, but serious conversations are also often required to break bad news. The possibility of running out of money, receiving an insurance denial or financial mishaps are common occurrences. What is the best way to handle these tough exchanges?
Doctors are well versed in breaking bad news. In my previous job as a physician, I faced telling people all varieties of bad news on a daily basis, from sharing a diagnosis of life-changing diabetes or cancer to acknowledging that death would happen soon. Thankfully, the reports financial planners have to share are not life threatening. They can borrow tools from the medical profession to mitigate the pain of these conversations.
The SPIKES Protocol
The SPIKES protocol was developed by
The Setting for a hard conversation creates the appropriate atmosphere. Use a quiet and private area with minimal distractions. Turn off mobile phones and silence office phones. Let office staff know not to interrupt the conversation. Have tissues available and include other family members if the client desires to have them present.
Learn the client’s Perception of the situation. Use open-ended questions to find out how much they understand about the problem at hand. For example, if you know the client is overspending and will run out of money, ask, “What do you understand about your spending and outlook for your finances for the future?” Be prepared to address misinformation and unrealistic expectations.
Invite the client to set the level of detail they desire in the meeting. In the overspending situation, you can state, “We will discuss your spending and how it plays out in your future financial security. Would you prefer to get into the details of your spending or just an overview of the numbers and the outcome?” Letting them set the tone of the detail minimizes the chance you will overwhelm them with information they aren’t prepared to hear.
Provide Knowledge. Summarize the information you’ve gathered prior to the meeting. Use warning statements about the bad news you are about to drop, such as, “The projection of your cash flow over your lifetime is not as good as I expected.” Check in with the client periodically to confirm their understanding of the situation. Periodically state, “We have covered a lot of information. What questions do you have so far?”
Address Emotions as they arise. Showing empathy and validating emotions go a long way toward providing client comfort. Acknowledge pain or loss. If crying occurs, offer a box of tissues but don’t pull the tissue directly. This gives the other person the control of managing their emotions. It is okay for you to cry, too, as this shows your empathy with their situation. Ideally you will only have tears and won’t ball your eyes out: This could take the focus off your client’s emotions.
Summarize the situation and create a follow-up strategy. Review high points of what you covered, the next steps you and the client need to take, and when you will follow up with the client. For example, if the client agrees to reduce their spending, offer to check in periodically in the short term to address their challenges and see how they are doing.
Develop Your Communication Style
Communication skills are learned and take constant practice. There are many resources to improve your style when discussing difficult situations with clients. “Fierce Conversations” by Susan Scott is a perfect reference if a hard conversation is on your horizon. I’ve read her book at least four times and am probably due for a fifth review. To prepare for a particularly hard discussion, I write out how I want it to unfold and use her methods to hopefully create a positive outcome for all involved.
Amy Florian’s book “No Longer Awkward” is a great tool in communicating with clients about death and illness. She shares practical tips about what to say and not to say. For example, I have totally extinguished from my communication the phrase, “I’m sorry about your loss”. This phrase means nothing. It is much better to look for something meaningful that ties the client to their loved one.
A client shared a story on social media about his father who recently died and posted his father’s pictures. I didn’t know his father, but reading his story and seeing the joy in his father’s face in those pictures immediately made me write, “Your dad was an amazing person and I love seeing where you inherited that joyful look he has on his face.” In a time of pain and need, hearing good things about the person you love means so much more than empty words. Looking for the good in every situation isn’t hard but it does take practice.
Honing your communication skills through the use of tools such as the SPIKES protocol will ease the pain of bad situations for you and your clients. This will translate into more meaningful and valuable client interactions and increase the chance they will be loyal clients for years to come.
