Since my last column, we have had some successes with the COVID-19 vaccines in the United States, and some additional difficulties with new variants such as the delta variant. The available vaccines do appear to be effective against the delta variant, but inoculated persons can still become infected. Usually, they do not require hospitalization. In this light, advisors should continue to be careful and use virtual means of communication with clients (Zoom, MS Teams, etc.) as needed.

Recommendations and Client Rejection

One of the important obligations each of us accepts when becoming a member of NAIFA is our agreement to abide by the NAIFA Code of Ethics. The Preamble states the principles of our ethical behavior, and the nine obligations direct our behavior toward clients. One of the situations we may encounter when serving clients is the situation in which a recommendation to a client, made in the client’s best interest, is not agreeable to the client, at least not at first. Sometimes the client just requires more time to consider the recommendation and is agreeable to reviewing the recommendation again after some time has passed. This affords the client an opportunity to consider the existing proposal carefully and may allow the advisor to prepare an alternative recommendation for the client to consider.

But what should we do if the client is adamant about their decision? How do we ethically deal with this situation? Trying to understand the client’s reasoning is always a good idea and may encourage the client to further explain the reasons for his or her concern. The client may have a financial or practical concern that has not been mentioned to this point. A good way to discover the client’s thinking is simply to ask. When done with an interested and inquiring attitude, the client may well explain the situation or concern that may not have been disclosed. The advisor is then able to consider how the recommendations would function in light of the client’s additional information.

Alternative Recommendations

Perhaps the new information will indicate the need for changes in the recommendation that may be more agreeable to the client. In other situations, the recommendations may have to be slightly delayed. In any event, asking the client’s reasoning always provides three important benefits to the client:

1. It conveys the advisor’s interest in fully understanding the client’s concerns.
2. It affords the advisor the opportunity to develop additional recommendations.
3. It underscores the advisor’s active interest in accommodating the client’s best interest.

Annual Review

An initial rejection of a recommendation should not end the conversation. The first point to remember is the important role that client annual reviews play in helping clients stay current in all of their financial goals and with their financial assets. In our example, the resolution of the initial client rejection response should be entered in the agenda for the next scheduled annual review.

The financial advisor should record complete notes referencing the client’s concerns and decisions, as well as the present status of any recommendation. New recommendations the advisor has since reviewed, in the order of priority, should be included for discussion in the annual review. These arrangements will allow the client to stay current with financial assets and intended uses, and to discuss new personal and financial circumstances that have arisen since the last meeting. Maintaining an up-to-date set of financial concerns with recommendations will serve the client well, clearly providing the advisor’s service in the client’s best interest.