Sure, you might have a basic understanding of the investing world: Stocks go up, good! Stocks go down, bad! But that’s about the extent of it. The result is that you feel uncomfortable asking your financial advisor certain questions, and, sometimes, you don’t even know what to ask. The result is a one-sided relationship in which your financial advisor tells you what’s happening without much-needed input from you. When you learn to communicate better with your financial advisor, says Steven G. Blum, you can forge a more profitable relationship for you both.
“Communicating successfully is important in any investment situation,” notes Blum, author of Negotiating Your Investments: Use Proven Negotiation Methods to Enrich Your Financial Life (Wiley, 2014, ISBN: 978-1-118-58307-4, $40.00, www.negotiatingtruth.com). “And it is critical as you negotiate your working relationship with your financial advisor. As it is likely to be unfamiliar territory, you will want to communicate clearly and carefully with the other side and make sure you receive understandable, valid, and complete information in return. You never want to negotiate about your investments in a state of confusion or misunderstanding.”
In Negotiating Your Investments, Blum teaches that the care and management of one’s financial life is a series of negotiations—and explains to investors how to structure win-win deals that lead to better relationships with their advisors. With expert insight into the before, during, and after of a successful negotiation, you’ll learn how to prepare for and conduct important financial discussions with an eye toward getting the best possible outcome.
Read on for Blum’s tips on how to talk to your financial advisor in order to get optimal results.
Choose your words (and how you dole them out) wisely. How can you let your advisor know of your requirements, interests, and inviolate standards in the clearest way possible? You need to tell them explicitly that any agreement must be better than your best alternative, meet your interests well, and be demonstrably fair. It will also have to be stated clearly in writing with all its terms verifiable. It cannot in any way “lock you in” but, rather, must give you the right to step away whenever you wish. How can you best communicate all this and more to your partners in a manner that keeps the door open for fair and honest dealing?
“Be warm and friendly in person yet firm and unyielding in writing,” advises Blum. “You will want to follow up all conversations with letters that summarize and confirm what was discussed. Those letters should make clear the firmness with which you are insisting on your needs. Be explicit in your written communications about your expectations, requirements, deal breakers, and understandings. Choose language carefully, leaving no room for interpretation or discretion by those whose interests may differ from your own.”
Create the tone and atmosphere you want. Of course, being firm and unyielding is not a style that comes easily to everyone. Although some people are comfortable taking that tone, others find it nearly impossible. It’s important to identify the quality of interaction that is right for you, and then work hard to create that atmosphere for the negotiation process.
“A truth about negotiating is that success tends to flow from being yourself,” says Blum. “It is almost never a prudent strategy to pretend to be someone you are not. Be sure to create an atmosphere in which you are comfortable and centered. Prepare this carefully with an eye toward non-verbal cues, body language, setting, speech patterns, and physical comfort. Regardless of mood and tone, though, you will need to make clear those things on which you intend to hold firm. Being friendly, warm, and considerate is not incompatible with determined, strong, and resolute.”
Demand a jargon-free zone. You need to insist on clear explanations in understandable English. Ask for clarification whenever you need it and persist until you have a full understanding. “Get statements in writing so that you can read them over to get a better understanding,” advises Blum. “And then follow up with your advisor regarding any questions that have popped up.”
Ask lots of questions. An important study found that skilled negotiators spend almost 40 percent of their time acquiring information (asking questions) and clarifying information (restating and reframing what they’ve heard to verify that they’ve understood correctly). Average negotiators spend about 18 percent of their time on the same behaviors. In other words, average negotiators ask half as many questions as skilled negotiators.
“The key is to ask previously prepared questions and, just as important, listen well enough to pose precise follow-up questions,” notes Blum. “Probing and clarifying the other party’s position requires that you listen carefully and formulate good questions on the spot. Strong listening skills, along with good preparation habits and the ability to express thoughts clearly, are among the top traits of the most effective negotiators.”
Be an active listener. Your communication, and therefore your results, will be better if you continuously strive for improvement. You should be constantly monitoring your communication efforts for purpose and effectiveness. Is your financial advisor hearing all you want them to hear? Do they understand? As fully as might be possible? What might you do to improve the interaction?
“The very best negotiators use the techniques of active listening more than do average bargainers,” says Blum. “In particular, they ask far more questions and test for understanding by summing up and getting confirmation. You will frequently hear such an expert say something like, ‘What I understand you to be saying is…’ and then asking, ‘Do I have that right?’ Such active listening techniques can go a long way toward minimizing misunderstandings and reinforcing effective communication, and you should absolutely incorporate them into the way you communicate with your financial advisor.”