We have heard a great deal about an adviser’s duty to his or her clients and how standards of duty may vary between types of advisers. There are articles about choosing an adviser and about how to know if that adviser is a fiduciary and more. But something we don’t hear much about at all is the notion of a client’s duty to the adviser.
A client wants many things from an adviser – maybe only performance if you believe the majority of industry stories – but also someone who can be trusted to be available, listen and give useful advice. Taking it even further, clients want a fiduciary (if they know what that means) and, like most anyone, want to be special. These are all laudable goals for a client but it seems clear that it will take something more than simply giving your money to an adviser to ensure you reach those service goals.
The duties I am referring to are not legal precepts and are not usually found in a client contract with an adviser, though a few may be. The duties are more in line with common sense and reasonable expectations and so I do not expect many to read on.
A client should be open and truthful with an adviser if the client expects to get good advice. Misleading, incomplete or just missing information can make it almost impossible for an adviser to suggest the right allocation, the right investments and the right package of goals to fit your life. The client should be open to what an adviser suggests and in case of disagreement should explain the reason and perhaps ask for an alternative solution from the adviser.
A client should not badger the adviser about every little market move or every new product or stock they hear about. Bring up those points of interest in the context of a meeting where all aspects of the relationship can be discussed, after notice, and without being piecemeal. A client should set expectations for the adviser just as the adviser should for the client. This will make for better communication and of course better results. Speaking of communication, the client should respond to inquiries from the adviser in a meaningful and timely way. Failure to provide information about changes in the client’s life, goals, and finances will not be helpful.
All this being said, duty runs both ways and an adviser must also fulfill his or her duties to the client. Even if everything is open and clear and the adviser client relationship is excellent, it does not guarantee that the outcome will be what is desired but will go a long way toward making that happen.