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portfolio strategy

The recent stock market uproar presents an ideal opportunity to fix a client-adviser relationship gone sour.

Call your investment adviser to discuss why you’re unhappy. Tell your adviser what’s on your mind as a client and give them a chance to respond.

Lawyer Ellen Bessner figures that bad communication is the root cause of 90 per cent of the adviser-client disputes she’s been involved in over her career. That’s why she wrote a new book for advisers called Communication Risk: How to Bridge the Client-Adviser Gap to Protect and Grow Your Business. At the back of the book is a guide to help investors get the most from their advisers.

Advisers have a duty to communicate with clients – let’s be clear about that. “Advisers are the professionals, they’re the ones steering the relationship,” said Ms. Bessner, who works at the firm Babin Bessner Spry LLP and has defended hundreds of advisers in actions involving clients and regulators.

But clients have responsibilities, too. One of them is to ask questions and not acquiesce to everything the adviser says. “Clients should absolutely never be self-conscious about inundating advisers with questions,” Ms. Bessner said. “Their questions give advisers insight into what the client is thinking, and that promotes dialogue.”

For example, Ms. Bessner said that explaining your fears about declining stocks might prompt a re-examination of your portfolio mix of stocks and bonds and appetite for risk. Advisers are required to cover this ground thoroughly with new clients, but real life experience can change your thinking about risk. If actual losses in the market are harder to tolerate than you imagined, say so.

One of the things the traditional financial advice business does best is to intimidate its customers into subservience. It’s done through fancy offices, the use of faux-sophisticated terms such as “private investment,” and a jargon-infested culture where stocks are always equities, bonds are always fixed income and risk of losing money is nothing more than volatility.

If you feel intimidated asking questions, it’s understandable. Now, get over it. Ms. Bessner insists that the advisers she’s dealt with don’t complain about pesky clients asking too many questions.

“It’s the opposite,” she said. “They say, ‘clients don’t ask enough questions, they’re not engaged in the process, they’re not reading the materials I’m sending them and, when I talk to them, I’m not sure they’re really that interested in hearing what I’m saying.’ ”

It has to be acknowledged that advisers will be most accommodating with their high-net-worth clients – those with portfolios well into six figures or more. If you’re a small account with no real hope of moving into the high-net-worth category, it’s worth asking your adviser whether you’re a good fit for them and their firm. It’s better to get a No answer and move on than to feel ignored.

Ms. Bessner has some thoughts on how clients can improve communication with their adviser that go beyond being a persistent questioner. One is not to keep any secrets from your adviser about other investments and assets you own, financial obligations you have or even the fact that you have another adviser.

What would happen if people were as secretive with a doctor, she wonders. “The doctor asks you all kinds of questions and you basically don’t tell them. You fudge the answers, you’re vague about them, you might say ‘none of your business, that’s private.’ A doctor might send you to the door and say ‘I can’t treat you because I don’t know what’s going on here.’ ”

Being cagey about your finances can actually hurt you, by the way. It’s difficult to put together an effectively diversified portfolio for a client who has significant assets held in accounts at other firms or dealers.

Ms. Bessner finds that investors need to open up about developments in their lives as well. It might be embarrassing to report the loss of a job, but it’s essential information for your adviser because it might dictate a change in approach. For example, your portfolio could be tweaked so that your cash holdings are increased.

Opening your monthly or quarterly account statements and reading through them carefully can also contribute to better relations with an adviser, Ms. Bessner said. Ignoring your accounts leaves you vulnerable to a jolting reality check in the future when you realize you overlooked a problem you could have addressed long ago.

“Open your statements, review them carefully and say to your adviser, I want to go through this line by line,” Ms. Bessner said. “Clients need to understand their statements.”

A discussion about your statement is a good opportunity to ask questions about fees. Ms. Bessner said advisers would much prefer to discuss fees as a matter of course than have you come back at them at a later date in a state of high anxiety about what you’re paying.

It’s important to contact your adviser promptly if you’re disappointed in any aspect of your relationship, including fees, returns or a lack of personal contact. “A big challenge for clients is when they’re not really sure what the problem is, but they’re aggravated,” Ms. Bessner said. “At that point, they need to communicate. Like in any relationship, it’s better to bring things to the forefront rather than letting them fester.”

Major stock indexes may well end the year with losses, which means some investors will be dissatisfied with their results when they open their statements in early 2019. When advisers and clients aren’t communicating well, losses in a portfolio can be blown out of proportion.

It all comes back to expectations, Ms. Bessner said. Advisers need to help clients understand what to expect from recurring cycles of bull and bear markets, and it’s up to clients to tell their advisers what they expect in terms of performance.

The client’s guide to communicating with advisers

Communicating effectively with your investment adviser will help you get more value out of the relationship. Here are some client-focused Do’s and Don’ts from Ellen Bessner, a securities lawyer and author of Communication Risk: How to Bridge the Client-Adviser Gap to Protect and Grow Your Business.


  1. DO consider what you want from an adviser – a financial plan, semi-annual meetings plus a diversified portfolio? 
  2. DO choose an adviser with whom you feel you can share your personal information, history and concerns.
  3. DO express your expectations. Be transparent about your wants and needs. Be flexible and open to suggestions.
  4. DO choose an adviser with whom you feel comfortable asking questions and who answers your questions clearly and directly.
  5. DO learn to read your statements so that you can understand what you’re investing in and how your investments are performing. Open and review all mail you receive.
  6. DO develop financial milestones for one, three, five years or more, and assess regularly whether these are being achieved.


  1. DON’T change advisers before you explain why you are dissatisfied and offer a chance to explain; also, consider the cost of changing advisers.
  2. DON’T be passive or silent or accept an adviser who talks too much and doesn’t listen or probe into what you are saying and what you mean.
  3. DON’T be embarrassed to ask questions.
  4. DON’T accept answers that you don’t understand, including acronyms or industry terms. An adviser should never make you feel stupid about any questions you ask.
  5. DON’T pick an adviser who tells you not to bother reading anything.
  6. DON’T be too rigid about short-term returns. Remember, a market cycle can be three to five years long.