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When culture is ignored, advisor-client relationships can fail

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SAN DIEGO — Advisors are (finally) getting serious about bringing inclusivity to the wealth management industry. One of the greatest sticking points has been acknowledging how culture affects advisors’ conversations with clients, experts told attendees at a panel on increasing cultural competency at the FPA's annual retreat.

"Culture can be defined in so many different ways," said moderator Rianka Dorsainvil, a CFP and founder of planning firm Your Greatest Contribution. "Values are the deepest manifestation of culture."

Unfortunately, acknowledging clients' cultural cues while also offering sound financial advice can be a challenge. Generally, advisors enter tough conversations with good intent, said Saundra Davis, a professor at Golden Gate University's CFP board-registered financial planning program and founder of Sage Financial Solutions.

However, they sometimes "put financial health above values," Dorsainvil said.

For example, suggesting that a devout religious black client who is overspending should curb donating to their church may not be the most culturally competent suggestion. "I'm not going to call out things based on what my values say they should do," Davis said.

Instead, advisors should show clients all the possibilities, in effect opening up the conversations, Davis said. For example, if an Asian client is insistent on paying for their kids' college, show them what the financial consequences of that would be. Don't just default to what you think the best financial decision should be, Davis said.

"How do I make sure my way-of-being is sensitive to their specific needs? Is the way I talk about [my own] financial needs really right?" she said. "I have to make sure all my conversation is — I won't say neutral — but sensitive."

Advisors might be concerned about the consequences of providing several options. In that case, it's important they do their due diligence and take note of the information they've provided the client, Davis said. "The fact is, you have no control over what a client does when they leave your office," she said. "You all should be documenting anyway."

One way to avoid offending a client is to simply ask them why they're making certain investment decisions — especially ones that go against their advisor's original advice.

"Sometimes understanding the why … can help you wrap your head around something your client wants," said Dr. Terrance Martin, assistant professor of financial planning at Utah Valley University's CFP board-registered program.

While many advisors believe that affinity drives their clients' decision to hire a particular planner, trust is a huge factor — particularly in communities of color, Martin said.

"I realized the people sitting across the table from us … were looking for more than the same skin color or ethnic values," Martin said. "The moderating factor may be trust."

In his research, Martin found many people in the black community avoid seeking financial advice because they don't trust advisors easily. Whereas in Hispanic communities, clients may feel uncomfortable making decisions 1-on-1 with an advisor without looping in other family members because the financial decision-making process is often generational, Martin said.

Because the Latino community is growing at a faster rate than any other group, advisors "need to find a way to communicate, speak their language and involve the family in the process," he said.

It’s crucial advisors note cultural differences in how communities make financial decisions, Dorsainvil said. While she used to think of the United States as a melting pot, Dorsainvil said she now thinks of its makeup as a mosaic.

"It's important that we stop focusing on similarities and start celebrating differences," she said. "How can we be aware and inclusive of this variety of backgrounds and demographics our clients and planners represent?"

For advisors who feel discouraged by their own past interactions with diverse clients or unsure how to improve, it's important that they not feel shame — so long as they're eager to learn, Martin and Davis said. The problem goes both ways: clients, too, can feel ashamed if they're worried they've made the wrong financial decisions.

"That shame factor is a hindrance to communicating and trust," Dr. Martin said. It's important the industry build an environment where there's no judgment, he added.

"Don't be ashamed that you don't know," Davis said. "But once you know better, embrace the opportunity to do better."

Part of creating that environment means being available for minority advisors when they need your help, too. "If you don't know what to do ... arm yourself," Davis added. "Be someone they can call."

While the panel was as educational as it was riveting, it was tough not to ignore the fact that there were only about 20 people in the room. For the panelists, this provided an opportunity to reiterate the importance of the conversation.

"I resisted talking about these topics for a very long time because I didn't want to be the one, the black guy, the race guy. But now we need to have these conversations," Martin said.

The closing message: Don't let these conversations stop in the hotel ballroom. "Bring them home and keep having them in your communities," Martin said.

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