Years ago, long before I started consulting in financial services, I completed a rotation as a clinical chaplain as part of my theological training. I worked at a large trauma center in suburban New Jersey, and my main assignments were the intensive care unit, the cardiac care unit and the emergency room. As you might imagine, it was a very impactful learning experience.
One of the things I observed from the outset was how doctors handled conversations with patients. Every physician I met was bright, well trained, and totally committed to a patient’s well-being and family. Our healthcare system attracts some of the highest-quality people (full disclosure: my younger daughter is a physician). A big part of my job was to support the families of patients who were in a significant health crisis, so I heard many conversations in which difficult treatment decisions had to be made.
I observed some doctors—I call them the good doctors—carefully explaining the patient’s situation and describing the available options. They would lay out the pros and cons of various treatments and procedures and cite the statistics for each option. They would answer the family’s questions and wait respectfully for a decision to be made. Sometimes the decision needed to be made urgently, and I saw many families grapple with the burden of figuring out the right thing to do.
I also observed other doctors dealing with the same situation but with a slightly different approach. These doctors—whom I consider great—would also lay out the treatment options with the pros, cons and statistics. They would also carefully answer the family’s questions. But before asking for the decision, these doctors would add a final piece of information: “If this were my [family member], I would do [procedure] because [reason].” These doctors weren’t just providing information; they had the courage to advise.
For families facing a decision in conditions of uncertainty with significant consequences, this makes all the difference in the world.
The Difference Between Information and Prescription
As a retail financial advisor, your clients face exactly the same situation as patients’ families do, just in a different area of life. Your clients must make decisions in conditions of uncertainty that have significant consequences. “Should we increase or decrease the risk in the portfolio? Should we invest in a long-term-care insurance policy that we may never use? Do we have enough life insurance? Can we afford this house, this car, this vacation? Do we really need to get those documents drawn up or updated? Are our kids mature enough to start managing real money?” This list goes on, and each question has a potential consequence that could meaningfully affect the lives of a client’s family, sometimes across generations.
All advisors provide information, offer recommendations, and explain the risks and benefits of investment decisions to their clients. Good advisors expand their scope of engagement beyond just investment advice and provide details about a variety of wealth-management decisions. These advisors understand that most of their clients don’t know all the issues they’re facing in their financial lives, so clients cannot ask about those issues. Good advisors offer a robust and expanded Standard of Care to clients so that informed decisions can be made.
Great advisors go beyond providing information: they have the courage to advise. Great advisors know more than their clients and use that knowledge to improve the likelihood of positive financial outcomes across a wide range of decisions. Like great doctors, their advice comes from a well-informed and professional point of view. When they advise, great advisors provide prescriptions for the client to follow, not just options for the client to consider: “At this stage of your life, I believe it’s important for you to do [action] because [reason].”
The difference between a good advisor and a great advisor comes down to three things:
Knowing more than your clients do
Using that knowledge better to benefit your clients
Having the clarity of firm convictions about what’s in your clients’ best interests in all areas of their financial lives
In a world that’s awash in information, with many voices offering advice, it’s the courage of conviction that stands out. For more information about designing an expanded Standard of Care or to explore any of the AllianceBernstein Advisor Institute’s wealth-management checklists, call (800) 227 4618.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.