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If Clients Don't Get It, It's You, Not Them

March 2, 2018

This time we hear from Larry Solomon, director of financial planning and investments at OptiFour Integrated Wealth Management in McLean, Va. He recounts an interaction that caused him to rethink his approach to communicating financial concepts.

A few years ago I had an eye-opening experience with our firm's client advisory board about my ability to communicate financial concepts to clients. At our firm we have a structured investment process we've been using since 2012. To help explain the strategy, I created a bunch of charts and slides that are included in client pitch books and presentations. But after a few years of using the slides, we started feeling that people were neither understanding nor embracing what we think of as our very unique way of managing money. We weren't closing as much new business as we thought we should and even existing clients didn't seem to appreciate, or could wrap their heads around, our strategy. Their questions made it clear we weren't doing a good job of explaining the benefits of our strategy.

We clearly weren't framing the basic concepts in a way that was digestible and made sense. I decided it was time to go back to the drawing board. I came up with some new ideas and created one of the best slides I thought we'd ever had on the topic of correlations. The main concept I wanted to get across with the chart was that correlation was not a good thing for portfolios.

I thought it was a beautiful chart and my colleagues agreed, so we presented it to our client advisory board. After the presentation, we were completely shocked by the response. While all our board members said they understood the concept I was trying to explain, they also said the presentation left them wanting more correlation, not less -- the exact opposite of the message I was trying to communicate.

It was embarrassing that I had totally confused this really bright audience. The way I was explaining the concept to them clearly didn't work. My colleagues, who had also thought my presentation was great, were similarly shocked that we had missed the mark by such a wide margin and communicated the exact opposite of what we wanted to.

It could've been tempting to stick with this slide I'd worked so hard on and explain away the board's reaction. Maybe they just weren't paying attention or they weren't smart enough. But I knew that wasn't true. Our board is made up of very, very smart people. We have a three-star general and industry leaders who are highly intelligent and educated people. The mistake was mine.

I thought about it a lot, trying to figure out where I went wrong and how I could make it right. Ultimately I decided not to try to communicate the idea of correlations at all because it's so counterintuitive. I just threw out the word "correlate." A lot of the jargon we use in our business makes sense to me and my colleagues, but people who aren't in our field don't get it. Jargon is a shortcut, ultimately -- but not an effective one if your audience doesn't get it.

It took me quite a few evolutions -- and almost a whole year -- before we finally nailed down an explanation that everybody was happy with. It was a lot of work, but ultimately we came up with something that our client board understood.

The bottom line is, if you explain something that the client doesn't understand, that's not the client's fault -- that's your fault. No advisor should ever say, "The client's not smart enough to figure it out."