A common and significant problem facing financial advisers is the failure of many clients to be open and forthcoming with them in providing information to be used in the planning and advice process. It should be self-evident that complete and accurate information would be a big help in creating a relevant and useful plan and advice for a client. However, the desire for pertinent advice often seems to be overshadowed by the desire for secrecy, whether attributable to embarrassment, a misplaced certainty that one knows better than the adviser, laziness or simply a lack of trust.
As with many things in life, the failure to share information permeates the activities of a majority of people. Remember that an omission may be a lie just as an overt misrepresentation of fact. Just ask any lawyer, doctor, accountant about problem clients…the list is endless. Sometimes the harm or loss is minimal and the reluctance to share or misstatements made do not affect the outcome for the client. Other times, for example in medicine, the failure to share can be fatal. In the financial arena, failing to trust or trusting the wrong person (including oneself) can be very costly.
So what should we do to protect ourselves? Discomfort in sharing personal information, financial in the context we are discussing, is not unreasonable or abnormal. However, what you do about it is going to be important. If you have taken the time to select an adviser you believe you can trust – and you have talked with clients who have worked with that adviser and otherwise done your homework – then your preferred course should be to disclose anything relevant.
What is the right test? If you made a big investment mistake such as putting half of your life savings into energy MLPs a year or two ago, explain to your adviser why you did so and solicit alternatives to improve and save your position. If the adviser laughs and calls you foolish, well that is no help and perhaps it is the wrong adviser. One who takes a more practical approach and offers solutions and not commiseration will be the adviser you need.