A Money and Spirit Tale

Periodically, I will provide a new example of how my approach is helping people overcome their financial anxieties and resolve their money issues. As the stories accumulate, I will offer an archive of past stories, so that you may review them as they become relevant to your situation.

Stockbroker’s Dilemma
“It’s sad. I want to be able to advise my clients on their whole picture. But I just can’t get them to give me the information”. These words were spoken to me by a stockbroker, named Justin, who was in dismay because he felt he never could form a close financial relationship with his clients.

“I understand,” I replied, “Your clients won’t give you that information because you’re selling them stocks, and they know you have a vested interest. They’re afraid you might try to take advantage of them if you know how much money they have.”

“It’s too bad,” Justin said, “I can do so much better for them if I know their total situation. He paused and then said “Being a salesman definitely has its draw backs.”

Our conversation was stimulated by the problems that Justin was having in keeping some customers. “I’ve had some major losses on stocks I’ve purchased for these clients,” Justin said, “and I don’t have the mutual trust I need to hold the clients.”

“It’s not easy to create trust with your clients when the stocks you’ve chosen have gone down. The best suggestion I can think of for holding on to clients is to keep in touch with them about the stocks that are not performing well. If clients feel that you really care for them, and are watching out for their investments, they will be much less inclined to go to another broker.”

“That’s true,” Justin said nodding his head.

“Moreover, it always helps if you let the client decide whether or not to sell stocks if they have anxieties about them,” I went on.

“Most clients want me to make that decision.” Justin said, “They think that I’m more qualified to make the decision.”

“But if they are concerned about losing money on the stock, you’re safer letting them make the decision.”

“What if I feel that the stock should be kept, and the client wants to sell it?” Justin asked.

“The client is always right. Maybe the stock will go up after the client sells it. That doesn’t mean the client was wrong. The client had to sell the stock because the client couldn’t live with the anxiety it created. That’s a valid reason for selling regardless of the future performance of the stock.”

“But the client might not understand that,” Justin responded. “The client might blame me for letting him (or her) sell the stock.”

“They may blame you, but they can’t hold you responsible for the decision. When I was a stockbroker I don’t remember ever losing clients because I let them make bad decisions in selling stocks. If I lost clients, it was because I didn’t listen to what they wanted to do, or I made some bad judgments on the stocks I picked.”

“I see,” said Justin

I caught myself. “Actually even if I made bad judgments, clients usually didn’t leave me because they know I made it to protect them.”

“It’s all about caring for the client,” Justin said.

“Yes, that’s it precisely,” I replied. “The Stock Market is such an inaccurate science that a stockbroker has to expect to make errors. The important thing is to try and protect the client.”

“Does this mean always cut your losses?” Justin asked.

“In this Market, it might be so. However, I don’t want to simplify the decision-making with that statement. A lot depends on the stock, the client’s anxiety level, and other factors. But keeping down losses is the best antidote for not losing clients.”

Our conversation came to an end. But later on I began thinking about the validity of what I had told Justin as it related to a case I recently had of a woman named Peggy who came to me because she needed to have permission to sell her stocks.

After going over Peggy’s financial situation, and finding out that Peggy had run her own business successfully for 15 years and had about $70,000 in investments in her account and her childrens’ accounts, I asked her how she felt about the Stock Market.

“I don’t trust it,” she said, “I haven’t for several years. I’ve been to my stockbroker and a financial planner and asked them what I should do about my stocks and they tell me there is nothing to be done, but to hold them.”

“I assume the stocks have performed badly,” I said.

“Last year they were worth $90,000, and today they’re worth about $70,000,” Peggy said, “I’m tired of putting money into my stock accounts and watching them go down. I wanted to get out of the Market two years ago, but I listened to my stockbroker who said I should hold on to them.”

“Now you still want to get out of the market,” I said.

“I think so. But I’m afraid that if I do the Market will go up and I will feel badly that I sold. I listen to all the experts, and they say the economy is going to come back this summer. But I don’t think it will be that quick.”

“Why do you doubt your own views? I asked.

“What do I know about the Market?” Peggy countered, “I just know my business.”

“You’ve had 15 years of business experience,” I said, “You know how businesses work. Your judgment on the economy is as good as anyone else’s.” I paused and then added, “And no one knows what the Stock Market is going to do.”

“I don’t know who to believe.” Peggy said in exasperation. “The stockbroker and planner say I owned good mutual funds. Yet the stocks still go down.”

“Why don’t you listen to yourself?” I questioned. “I don’t think you can make a mistake in selling your stocks now. You’re so negative on holding on to your stocks that I don’t think they could perform well for you even if the market turned up. You’d be better off selling them and not investing in the Stock Market until you believe in it. Your first impulse to get out of the Stock Market was right so why wouldn’t your feelings now not be right.”

I watched Peggy visibly relax as I said these words.

“You mean you’re giving me permission to sell my stocks?” Peggy asked.

“I am,” I replied. “With the caveat that you don’t judge yourself if your decision looks in hindsight like a bad one. Your decision will give you peace of mind so it can’t be a mistake.”

As I remembered saying these final words to Peggy, I felt reassured that there was validity in advising Justin to let the client make the decision to sell.

Archive story #1

Archive story #2

Archive story #3

Tags: financial fear instruction | money psychology | emotion-based financial advice | negative energy money