Distraction-Proof® Advisor Ideas

Be careful about doing business with friends. When I started in this industry as an advisor, we were encouraged to bring on friends as clients. So I did – I started with a couple who went to the same church as I did, and very early on in the relationship, we started running into problems, at least in my opinion.

Each Sunday morning, they wanted to talk shop: they wanted to talk about what had happened in the market that week, interest rates, and different stocks they had in their portfolio. But Sunday mornings at church, I didn’t want to be talking business.

Then what would happen when we had our portfolio reviews, for the first ten or fifteen minutes they would be talking about church stuff and friends that we shared, mutual acquaintances we had.

It became problematic.

So, beware of doing business with your friends.

• If you do, realize the dynamics of the relationship are going to change. I know it can be easy to think, “Well, it’ll just be an extension of the friendship,” but it will be more than that. So, be honest with yourself: the dynamics of the relationship will change.
• Establish paramaters; clarify together exactly how this relationship is going to work, what the expectations are. Clarify you don’t want to be talking shop at church or in social situations where you do mix.
• Be very clear about how you’re both going to communicate should expectations not be being met. So, if they’re not happy with the communication or something from you as a professional regarding their portfolio or their financial situation, they need to clarify that immediately to you. And likewise you to them, should you feel that the friendship relationship is being impinged upon.

Be very clear with each other about how things are going to happen, and chances are you may have a great relationship, both in business and socially. But just be aware and awake to exactly what might happen with bringing on friends as clients.

I look forward to bringing you another Distraction-Proof Advisor Idea next week.