To Buddy Up or Not?

Mixing busi­ness and friend­ship can lead to stronger re­la­tion­ships — but only if you pro­ceed with care.

Financial Planning - - Contents - BY IN­GRID CASE

Mixing busi­ness and friend­ship can lead to stronger re­la­tion­ships, but only if you pro­ceed with care.

Karen Van Voorhis doesn’t usu­ally mix her pro­fes­sional and so­cial lives. But when the Sapers & Wal­lack vice pres­i­dent found her­self with a pair of Red Sox tick­ets, she de­cided to try some­thing new: in­vite a client to join her.

It wasn’t easy to pick a guest, says Van Voorhis, who’s based in New­ton, Mas­sachusetts. Should it be a long-stand­ing client? A new client? A prospect?

“I ul­ti­mately chose an es­tab­lished client, a woman I know is in­ter­ested in base­ball and I thought would ap­pre­ci­ate be­ing asked,” Van Voorhis says.

Van Voorhis likes the client per­son­ally — an im­por­tant con­sid­er­a­tion given that a base­ball game could last sev­eral hours — and she knew that there might be an op­por­tu­nity for her firm to ex­pand their busi­ness with the client’s fam­ily.

Choos­ing whether or not to so­cial­ize isn’t a sim­ple de­ci­sion. Some plan­ners find it easy to turn friends into clients and clients into friends, whereas oth­ers pre­fer to keep the two groups sep­a­rate.

Scott Bishop, a part­ner at STA Wealth Man­age­ment in Hous­ton, is in the first camp, and he’s vo­cal about the ad­van­tages.

“So­cial­iz­ing with clients is a great way to so­lid­ify your re­la­tion­ship, to get them to feel com­fort­able shar­ing more with you, and to meet other mem­bers of their fam­i­lies, to help where needed in multi­gen­er­a­tional plan­ning,” he says.

If some of those fam­ily mem­bers or other friends need a fi­nan­cial ad­vi­sor, so much the bet­ter, as long as the plan­ner is not vis­i­bly work­ing the crowd for prospects.

Dur­ing tough times in a client’s per­sonal life, a so­cial re­la­tion­ship is a good way to keep a client, notes Scott Bishop of STA Wealth.

“You’re not go­ing to go to some­one’s 50th birth­day party and hand out busi­ness cards,” Bishop says.

Dur­ing mar­ket down­turns or tough times in a client’s per­sonal life, he adds, a so­cial re­la­tion­ship is a good way to keep them. The friend­ship makes the con­nec­tion stick­ier. “It’s harder to fire some­one you’re friends with,” he says.

The re­la­tion­ship is even more solid if it in­volves two cou­ples, rather than two in­di­vid­u­als.

“If I just have a re­la­tion­ship with the hus­band and none with the wife, what are the odds of keep­ing that re­la­tion­ship if the hus­band dies?” Bishop asks. “But if my

wife and his wife are good friends, I’m the first per­son she’s go­ing to call.”

As with most client in­ter­ac­tions, so­cial­iz­ing with clients is best done with gen­uine friendly feel­ing, as well as with bound­aries in mind. Bishop says he tells clients with whom he spends time out­side the of­fice that he will be keep­ing the busi­ness and friend­ship as­pects of their re­la­tion­ship sep­a­rate, and he ex­pects them to do like­wise.

“When we meet so­cially, we can’t talk about busi­ness,” he says. “I also tell them that, if the busi­ness re­la­tion­ship isn’t work­ing out for what­ever rea­son, we ei­ther fix it or move on, with no hard feel­ings. My friends are more im­por­tant to me than any busi­ness in­come.”

Fir­ing Friends

Ryan Cole, an ad­vi­sor at Citrine Cap­i­tal in San Fran­cisco, has had to tell client friends that the busi­ness re­la­tion­ship isn’t work­ing out.

“Clients whom I so­cial­ize with tend not to take the busi­ness re­la­tion­ship very se­ri­ously,” Cole says. “They don’t seem to be quite as re­spon­sive to emails or as mo­ti­vated to get things done.”

When he has fired friends from his pro­fes­sional life, Cole has crafted a mes­sage say­ing that he is no longer able to of­fer full fi­nan­cial plan­ning ser­vices, though as­set man­age­ment is still an op­tion. Rather than have that con­ver­sa­tion, he says, “I now have a pol­icy of not work­ing with friends. I try to keep my pro­fes­sional life and my per­sonal life sep­a­rate,” he says.

That puts friends off lim­its as po­ten­tial clients, but Cole says that’s fine with him. By find­ing clients on­line and through word of mouth, he frees him­self to hang out with his friends with­out feel­ing as though he’s con­stantly on the job.

Though he en­joys spending time in so­cial set­tings with his clients, Bishop agrees that it does in­volve lim­its that might not ex­ist with other friends. “You have to be care­ful about al­co­hol,” he says. “Know your lim­its and stay mod­er­ate. No one likes to see the per­son who man­ages his or her money out of con­trol. You could say some­thing in­ap­pro­pri­ate or lose a client.”

Daniel An­drews, the plan­ner be­hind Well-rounded Suc­cess in Fort Collins, Colorado, has helped a client fill out pa­per­work be­tween rounds of ta­ble ten­nis. Per­sonal re­la­tion­ships with clients are fun and add a pleas­ant di­men­sion to their in­ter­ac­tions, he says.

In his con­ver­sa­tions with his di­verse clien­tele, An­drews talks about sub­jects that other plan­ners might con­sider off lim­its.

“A lot of po­lit­i­cal ques­tions came up dur­ing the elec­tion,” he says. “I talked about the Fer­gu­son ri­ots with an African-amer­i­can client.” Those talks were pro­duc­tive and in­ter­est­ing, in part be­cause An­drews can dis­agree with­out be­ing dis­agree­able. A plan­ner who lacks that knack should prob­a­bly skip more con­tro­ver­sial top­ics.

Be­fore he in­vites clients to spend time with him so­cially, Bishop con­sid­ers how much time and money he wants to spend. “I al­ways treat, and I might do some­thing a lit­tle nicer than I do with friends who aren’t clients,” he says. “I think about how much time we should spend to­gether. A base­ball game is a big­ger com­mit­ment than lunch. You might like some­one, but not have enough in com­mon to sus­tain three hours of con­ver­sa­tion.”

Van Voorhis found suc­cess: She and her client chat­ted hap­pily for the du­ra­tion of the game. “Ini­tially it was a lit­tle hard to get com­fort­able, but it got bet­ter. I knew that we liked each other per­son­ally and had things in com­mon: po­lit­i­cal lean­ings, kids, travel,” she says. “It was fine and I would do it again.”

Bet­ter yet, Van Voorhis thinks the out­ing strength­ened her con­nec­tion with her client. “Now we’re talk­ing about man­ag­ing more of the fam­ily’s as­sets. I don’t know that this is the re­sult of one base­ball game, but it cer­tainly didn’t hurt.”

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