Typically, advisors tend to on-board all types of clients when they start their practice. Many advisors tend to reach out to the low hanging fruit - family members, since they are easily accessible and keen to support you. While there’s nothing wrong in having family members as clients, things can get tricky if
- investments do not perform as per their expectations or
- when they don’t understand your viewpoint or
- you take them for granted.
Hence, many advisors feel that handling family members as clients is complicated. This is because a bad financial experience can ruin family bonds. To help you deal with family clients better, we spoke to a few advisors to know how they deal with their family clients. Here’s what they have to say:
Manage expectations
Treat all clients at par, including your family members; do not take them for granted. This will help you maintain a professional relationship so that they don’t have unrealistic expectations from you. Spend time in explaining the rationale for your investment recommendations and the risk associated with them. Ramesh Bhat of Aniram advises, “Treating family members similar to other clients is essential so that they don’t have unrealistic expectations from us. By doing this, it becomes easy for advisors to handle their investments and advice accordingly.”
Do not mix business with family
Try not to mix your personal and professional life. Conduct review meetings ideally at your office; not at the family member’s home or social occasions. Lovaii Navlakhi of International Money Matters believes that such situations can be avoided if some ground rules are set for the advisor-client relationship. “Dealing with family members as clients can affect your personal as well as professional life. To avoid this, tell them to restrict their financial issues at professional level and not bring it out at social gatherings,” says Lovaii.
Don’t undercharge
Family members may expect that you would not charge them a fee. However, avoid offering any discount and charge the same fee what you charge to other clients. Nikhil Kothari of Etica Wealth Management says, “Advisors hesitate to ask fees from their relatives. If you don’t charge fee to your family, this may give a wrong impression to other clients because your family members can give you referrals. If you don’t charge, their (family members) referred clients may expect the same from you.”
Don’t assume you know their financial matters well
They may be your kin but you may still not know about their finances in detail. “Advisors are relaxed while dealing with family members. They start believing that they are aware of their goals and aspirations. Instead, they need to ask the right questions to family members,” adds Ramesh. As with other clients, know their concerns and goals well will help you provide the right solution to your kin.
Reject if they are not suitable
It is never easy to say no, especially if it is someone from your family. However, it is best to be careful in both on-boarding them and letting them go. “Do not onboard family members if they are not your ideal clients. If you have family clients whom you are not comfortable dealing with it is best to part ways. If we are behaving with family members just like other clients, rejecting them should not be a trouble,” says Pallav Bagaria of Brand New Day.
To sum up, you need to deal with family clients the same way as would deal with others.
Key Takeaways:
- Treat them like other clients
- Don’t assume you know everything about them
- Set some ground rules for the adviser-client relationship
- Avoid discussing financial issues at family gatherings
- Charge the same fee to family members what you would charge any other client
How have you dealt with your family members? Share your thoughts.
