When friends become clients

By Bryce Sanders | June 17, 2013 | Last updated on September 21, 2023
3 min read

When a client becomes a friend, the rules governing the business relationship are in place. When friends become clients you need to position the rules of engagement with minimal disruption the friendship.

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Everyone wants to be an important client. Friends expect they’ll receive the same attention and service as your top clients, and sometimes you’ll be putting in more than you get out. But you can tactfully suggest the desired behavior.

Demands on Your Time

Do friends call during the workday to chat? Of course they do! When friends become clients they may assume the same rules apply in business.

The issue: They feel they can ask you investment questions on weekends or while celebrating on a Friday evening. You prefer they confine business conversations to weekdays.

The double standard: They don’t want you bringing up business during their relaxing downtime.

The strategy: Explain you understand they enjoy their leisure time after a hard week in the office. Although you see each other on weekends you will only bring up business during the workday. But you do not hold them to the same standard. If they have an investment question that’s really important to them, they can ask anytime.

The outcome: Many clients will take the hint and acknowledge you’re entitled to your leisure time, too. They will confine business conversations to the workday.

Discussing Performance and Investments

Market volatility changes behavior. Your friends respect the “weekdays only” rule but feel the occasional exception is permitted.

The issue: They’re anxious about volatility. They have a concentrated position that was affected by a poor earnings report.

The double standard: They don’t have their statements with them, and don’t remember the news story exactly, but assume you have detailed account information memorized.

Read: Give uncommon answers to common questions

The strategy: Always have an upcoming scheduled portfolio review on the calendar. With local friends, face-to-face quarterly reviews aren’t difficult to plan. When they have a question, remind them of the upcoming review: “Can the question wait until then or do you need an answer immediately?”

The outcome: Sometimes they can wait, other times they want an answer earlier. Be flexible: “If this is a major concern we can move next month’s review up to this coming Tuesday. I’ll need a few days to prepare because I don’t have all the information in my head.”

Following the Rules

We’ve all seen TV dramas where the police look the other way to help a detective friend “just this once.”

The issue: Friends may assume the rules can be relaxed because “we’re all friends.” This might involve signing their spouses’ names on documents. This is dangerous because you will be compromising your integrity. Once you make an exception it becomes a standard.

The double standard: If you violated confidentiality or bent a rule to their detriment they would not be understanding. Rules are rules.

The strategy: Insist on sticking to the rules but make it easy by offering solutions to problems. You suggest a stock. She buys some in her own account and wants to buy it in her spouse’s account, too. No power of attorney is on file. Explain you have to hear the spouse’s voice before placing the order – can you call his cellphone? This can be a lot easier in the future if there’s a power of attorney on file. Send her home with the paperwork.

The outcome: They respect your integity. Deep down they realize if a divorce or other family issue arose, they would want you to be an impartial advisor who respects the rules and doesn’t choose sides.

Doing business with friends isn’t difficult if you compartmentalize, remain flexible and stick to the rules. You’ll develop loyal, enthusiastic fans who can be great sources of referrals and introductions.

Read: How to achieve success early

Bryce Sanders

Bryce Sanders is President of Perceptive Business Solutions Inc. in New Hope, PA. His book “Captivating the Wealthy Investor” is available on Amazon.com.