Friendship can be a blessing and a curse. You have a lot going in your favor when you approach friends and ask them to be clients. They feel they will get the level of attention you give your top clients. So far, so good. You can handle that.
However, they might feel the easy going nature of your friendship slides seamlessly into business. You must draw the line, sooner, rather than later.
Think about how friendships develop. Put dating relationships into the mix. Balance in the relationship can be very dynamic. In the initial stages, you may be putting in lots of energy to win over the other person. This is very common in dating. You are the one making all the calls. Doesn't the other person know the phone works both ways? In a business relationship with a friend, you may be giving them the "best client treatment" and delivering lots of personalized service, even if the relationship isn't that big.
Soon, it evens out. You are calling each other about the same number of times. Now you've got them interested in what you can do for them, businesswise. They've gotten into investing as an activity. This is great because they've got lots of money spread all over the place. Think orphaned IRAs, annuities to monitor, paid-up life insurance policies that need review. The spouse has accounts.
Gradually the scales may tilt in your favor. You've given 150% of yourself. It's appreciated. They feel they are getting spectacular service. They tell their friends. Your friend, once a reluctant client, is now a dynamic source of referrals. You've gained a great client and plenty of qualified leads and introductions.
So what happens when friends do business with other friends?
1. Unlimited 24/7 Access
As friends you are used to calling and texting all the time. Often it's relationship type questions. "He said WHAT to you!! I can't believe it…" Now your friend assumes a sudden stock market decline requires an immediate valuation of the funds within their variable annuity. It's 11:00 PM on Saturday night. You are both on your fifth tequila shooter. You don't have your laptop or online account access. You are on the spot.
News flash! This might sound scary, but they are worried about the exact same thing! As their advisor, you will ambush them with sales presentations while they are soaking up the sun on the beach. They think you feel friendships mean 24/7 access.
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