Has Someone Said 'You Can't Fire Friends?'

Let's talk about report cards. These are the periodic reviews you deliver, ideally face to face. You are being accountable. You made recommendations and reporting back on the results. You have lots of tools at your disposal. You compare performance to a blend of indexes weighted to match their asset allocation. Comparing a portfolio that's 50% stock and 50% bonds to the S&P 500 isn't fair, because the index is 100% stock. You will be accountable for every security in their portfolio.

Here's why it works. Clients love accountability. (It's not responsibility. They don't get their money back if an idea didn't work out!) They can be pretty tolerant (at least for a while) if they feel you are on your toes and have their best interests at heart.

How does it address the "can't fire friends" problem? If things don't work out, you have given them a roadmap for unwinding the relationship. "If I'm not doing a good job …" They shouldn't feel any guilt, because the way to unwind was your idea!

Strategy #2 – The Risk Is the Reason 

Suppose you brought up their objection before they did? This would be a three-statement strategy.

Statement #1: "You know where I work and what I do. I've never talked to you about business because your friendship is very important to me. I never want to put that at risk." You took the words right out of their mouth. They might just let you continue. They might say: "I feel the same way too."

Statement #2: "I've always assumed you work with someone else already. They probably take great care of you and provide excellent service. Most successful people have that kind of relationship with their advisor." You've set a bar, a standard. They might say yes. They might say nothing. They might say: "No, I don't have that kind of relationship. What can you do for me?" Assuming it's the first or second, onto Statement #3.

Statement #3: "It's been a difficult time for the stock market. You may know someone who hasn't been as lucky as you. I thought we might spend a few minutes talking about 'What I do.' In case you ever come across one of those people, you will know how I may be able to help them." You've moved the conversation to "third party" status. You are talking about helping someone else.

This is a good strategy because you assume they know people in similar situations to themselves. Your explanation lets them know how you could help someone like them, or even themselves, if they choose to approach you.

Both situations are designed to set your friend at ease. They can choose to not become a client and still retain the friendship. On the other hand, you've brought up business and approached them, in a very tactful way.