Certified financial planner Matt Helfrich is president of Waldron Private Wealth, a Pittsburgh-based money management firm. Helfrich, leads Waldron’s strategic vision, brand and value proposition, and overall culture of the firm. Since 2002, Helfrich has served in a number of roles including chief investment strategist and chief investments officer. Waldron manages assets of $1.2 billion.
Knowing the emotional impact of a practical decision.
What I have found is that as you approach leadership in financial advising is that what’s technically correct isn’t always emotionally acceptable. You can give people technical advice, but at the end of the day humans have emotional needs. They’re not robots.
The textbook example, and this applies to a lot of people, is that for some people it makes better sense not to pay down their mortgage, versus the allocations they have with their portfolio. Emotionally, people just don’t like debt. But given the rate on the mortgage, it might make better sense to stay allocated.
There’s the other side to that as well. Someone may have a financial plan in place, but then they see the market going up, and they want to get more aggressive. They think, “I want to get more. I heard so-and-so was making money in real estate, or with a dot-com or in energy.”
Technically, they don’t need to do it, but emotionally, they want that edge, they want that chance to earn more money.
When you’re younger or in a support role, you’re always worried about being technically correct. The “a-ha” moment for me was when I started running clients’ relationships. When you’re having conversations about estate planning with family members, you need to build trust, and emotion always factors into it. For instance you could tell someone “technically, you could be giving more money to your kids,” but emotionally the person may be concerned about running out of money.
This is part of leading a company, too. Technically, you may need to have a tough conversation with an employee, but when you interact with people on a day-to-day basis, it can be very difficult emotionally, even though you know it will be better for everyone in the long run.
Sometimes it’s better to let the client make the emotional decision.
Because you need to build a relationship of trust, sometimes it’s better to let the client make the emotional decision.
As long as you’ve explained the situation and they know the technically correct thing, as long as it doesn’t move the needle, sometimes it’s better to go with the decision that makes the client comfortable.
Unfortunately sometimes it’s more politically expedient to do it the other way, but as an advisor you need to make a judgment call.
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Pictured: Matt Helfrich: Photo courtesy of Waldron Private Wealth.