Three keys to deflect questionable financial advice

One of my clients recently lost her husband. He was a good man, and they were very close. She was involved in our planning meetings, but he primarily handled the finances on a day-to-day basis. With money invested, life insurance proceeds, and their home paid off, her finances are thankfully adequate. The challenge for her going forward lies in taking the financial reins. She is perfectly capable of doing it — she just didn’t do it before. Her situation has invited financial advice from family members and I’m sure it has come from sincere intentions. Unfortunately, the advice has been bad — dangerously bad.

She is still overwhelmed and grieving and financial “tips” are bombarding her like a tweet-storm. Her description of what she’s hearing reflects emotional and confusing messages. I would be confused, too! I’ve had to tell her that oil pipelines (likely in a Limited Partnership or Private Placement) are not remotely an appropriate investment for a widow who needs liquidity. And 7% to 12% per year “guaranteed” annuities don’t exist today. These family members along with their advisors do not have an inside track. In fact, it’s hogwash.

In our recent conversation, I was able to educate her on the inappropriateness of these investment products for her situation (or, in the case of the annuity, provide a reality check). Nonetheless, she faces this pressure from the people to whom she’s closest. What do you do when the people you love (and who love you) are sincerely trying to help?

1. Recognize soundbite advice for what it’s worth. It’s easy for any of us to comment on politics, sports or someone else’s financial situation, but context is usually overlooked. A “good” investment may be ideal for a particular person, but does that mean it’s good for you? Would you go to a professional financial advisor who said, “I will give you the same advice I have given to all my other clients”? No, absolutely not! You want someone to look at your unique situation and priorities and develop a plan that fits you. People commonly impose their own experiences on another person’s situation and assume it will work. Remember, also, that your family member’s idea of a financial advisor may be very different from yours. If that “advisor” is pitching oil pipelines to a widow through third-party family members, please understand this is not a financial advisor in the best sense.
2. Be direct or deflect. I think in most of these situations, responding with as few words as possible is wise. “Thanks, but I already have a good plan in place.” Be equally vague and confident at the same time. If you don’t feel confident, talk to your advisor as soon as possible. This is not only okay, but a wise thing to do. There is no need to explain yourself to your helpful relative or friend even if they have facts about your situation wrong. It is unlikely that it will help to inform them. Depending on your relationship, you may be able to politely deflect their advice. If the situation gets uncomfortable and they are pushing too hard, you may need to put on a brave face and say, “I truly appreciate your willingness to help but I’m not interested.”
3. Enlist an “inside” advocate. Pressure from those longing to help can be tough. Consider enlisting a family member whom you trust. You may want to have this person attend at least some of the meetings with your financial advisor to allow them to see why you are doing what you are doing. When it comes to family gatherings, you won’t feel so isolated. It gives you another deflection point if needed. “So and so knows I’ve got a solid plan in place.”

These situations are, unfortunately, more common than most would imagine. If you don’t have a solid financial plan in place, I highly recommend seeking the guidance of a qualified, objective financial planner. He or she can help you gain the confidence and peace of mind to calmly deflect questionable financial advice in any situation.

Talk with us about your portfolio or financial plan here: Talk with an advisor

More Reading: Three Keys to Deflect Questionable Financial Advice Video