The Reality of Responsibility: Understanding an adviser’s boundaries in a volatile market


During a recent group coaching session, a successful financial adviser with 28 years of experience in the industry expressed her concern about having to be “right” now more than ever considering the volatile market. She said, “My biggest challenge right now is … being right! I feel like I need to time this market perfectly.”

The rest of the group concurred with her concerns, and soon I unconsciously blurted out my thoughts by saying, “No! What you need to do is understand the reality of responsibility.” I went on to explain that the reality of responsibility is really just understanding what is and is not your responsibility and what your boundaries are as an adviser in a fluctuating market.

The following is a series of realities better defining what financial advisers can use as guidelines during this volatile market.

Reality # 1: You are not responsible for carrying a crystal ball

Timing the market perfectly is not your responsibility. Do not assume that you know exactly what will happen in the markets and when; it is stating the obvious that there are unforeseen events that could occur which could ruin your credibility.

Reality #2: You are responsible for explaining to a client their situation and possible risks

You must take full responsibility for keeping in contact with your clients during volatile times whether via letters, emails, voice mails, phone conversations and/or in person. In addition, clients need to know if you believe that there are possible risks and why.

Reality #3: You are responsible TO your clients … not responsible FOR them

In other words, your boundaries of responsibility lie in giving your clients recommendations—you are not responsible for them taking your recommendations. Your clients are adults who can choose to make their own decisions as long as they have been educated; the final decision becomes their responsibility. Now, that doesn’t mean you shouldn’t object if you feel they are taking a big risk.

Reality #4: You are responsible for knowing the facts

Part of your responsibility as a financial adviser is to keep up with current market events. Whether the market swings 900 points in a day, there is trouble/unrest in Greece or an oil spill off the gulf coast, you must know what is currently happening and how this affects the markets. Does this mean you should know everything about everything? No, but it does mean you are familiar with what may affect clients’ investments.

Reality #5: You are responsible for having an opinion

Clients need to know that you have a professional opinion. They entrust their money to you and part of that trust entitles them to have an adviser who has done some due diligence to determine their opinions. Not having an opinion implies that you have not taken the steps to research what you believe and are sharing with your clients, and that is just irresponsible.

Reality #6: You are responsible for how you convey your message

Often, advisers who convey their message (recommendation) in an absolute way run the risk of taking on too much responsibility. Here is an example of clear conveyance: “Based on the information I have today (explain the information), our analysts are recommending that WE sell out of xyz stock … what would YOU like to do?”

Let’s take a look at the bold italicized words above:

  1. “I” signifies ownership of the information you are conveying.
  2. “WE” signifies you (the adviser) also have a vested interested in the decision.
  3. “YOU” signifies it is ultimately the client’s decision.

Reality #7: You are responsible for reiterating how you conveyed your message

Some clients have a tendency not to take responsibility for their own actions if those actions result in a loss. When this happens it is your responsibility to stick to your boundaries about what you are and are not responsible for. The way to do this is to reiterate how you initially conveyed your recommendations. If you follow the “I, we, you” format, you can remind the client that they ultimately made the final decision.

Daniel C. Finley
Advisor Solutions Inc.
St. Paul, Minn.

2 thoughts on “The Reality of Responsibility: Understanding an adviser’s boundaries in a volatile market

  1. I agree with your comments and would add, when people are in the uncertain times we have today, they fall back on whatever brings them a sense of stability.

    As their advisor, you may be called upon to have a deeper conversation than the ones you have been accustomed to having.

    How is the mood of “I have to know” affecting your ability to reach out to clients?

    How would “not knowing” help your credibility with clients?

    What questions do you think they want to ask about their financial security, but haven’t?

    Just food for thought….

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