Participants:
Steve Wershing
Peter Atwater
Josh Patrick

[Audio Length: 0:42:47]

Steve Wershing:    
Welcome to Becoming Referable, the podcast that shows you how to become the kind of advisor people can’t stop talking about. I’m Steve Wershing. As this episode is being recorded, we are experiencing a market that is unlike anything that we have experienced for about 10 or 12 years. The market is down 25 to 30% from its peak, and advisors are having to consult with clients who may be in a difficult situation. They may be nervous, they may be scared, and they may want to do things that are not in their long term best interest.

Steve Wershing:             
So on this episode we want to give you some guidance on how to have those kind of conversations. The kind of service we provide in these kind of situations means far more than anything that you can do when times are good. Coaching people through difficult times is the best way to provide them the most service in their long-term financial plan, and of course will do more for client loyalty and referrals than the best kind of service you can provide when times are good.

Steve Wershing:             
On this episode, we talk with Peter Atwater. Peter is a researcher, speaker, writer, adjunct professor at William and Mary and the University of Delaware, and the president of Financial Insights. Atwater is an expert in the subject of confidence. He is the author of Moods and Markets: A New Way to Invest in Good Times and in Bad, and has done extensive research on what confidence is, where it comes from, and more important to our conversation, what happens to people when they find themselves in a state of under-confidence.

Steve Wershing:             
Advisors are currently facing clients who are experiencing severe episodes of what Atwater would call under-confidence. When dealing with clients in this state, it’s really important to remember certain principles of how people in this state are different than they are normally. Their perception of the world is different, their perception of the future is different. Their cognitive levels decline. They just make decisions differently than they would when times are good, and we need to know how we can communicate with folks in this state, because it is different than communicating with people in an objective, dispassionate way when there aren’t these kind of stresses going on.

Steve Wershing:             
We talk about risk assessment tools and how we may need to make adjustments to the portfolios that, despite what their risk profile says. We talk about how to facilitate what may be a non-optimal strategy in terms of adjusting a portfolio, in the hopes of preventing a catastrophic mistake, which would be something like going to cash. Peter gives us specific tips on how to talk with clients who are experiencing nervousness and even fear.

Steve Wershing:             
There’s also a bonus at the end of this episode. We have a short conversation with Josh Patrick, who is a repeat guest on this podcast. You may remember Josh from prior episodes. Josh is the founder of Ask Josh Patrick, and the president of Stage 2 Planning. He is a financial advisor and a coach to financial advisors, and so we wanted to check in with Josh to get some ideas on step by step, how we go through a conversation with nervous clients to help calm them down and help keep them on the straight and narrow as we navigate our way through this difficult market.

Steve Wershing:             
I hope that there’s a lot of value for you in this episode. I got a lot of really interesting guidance and information from this, and with any luck, it will help you have more productive conversations as you guide clients through this difficult time. Without further ado, let’s get to our conversation with Peter Atwater.

Steve Wershing:             
Peter Atwater, welcome to the Becoming Referable podcast. Thanks so much for joining us.

Peter Atwater:                
Happy to be here.

Steve Wershing:             
Our audience is financial advisors, and right now the markets are a real roller coaster. You have an analogy for that, so what have you learned about confidence by studying people on roller coasters?

Peter Atwater:                
What I’ve learned is that as the roller coaster goes up to the top, just before it begins the descent, if you were to ask people what they’re thinking about, the uniform response you’re going to receive, even among roller coaster enthusiasts, is, “It’s all about me here now.” I think that’s a really important aspect of what we’re seeing behaviorally today. We may not be at the top of the roller coaster. I think for some it feels like the coaster is now coming off its wheels, coming off the track.

Peter Atwater:                
But I think that what we’re seeing is very much me, here, now behavior, where self interest, close ethnic and relationship is vital to us. Time horizons have collapsed. The only thing that matters is right now.

Steve Wershing:             
Yeah. Well, if you could put that in perspective for us, what are people like when they get on the roller coaster? What’s more of the base state that people are used to dealing with, so we can contrast that with me, here, now?

Peter Atwater:                
I think we can just go … If we rewound the tape to early February. The investors particularly were in an us, everywhere, forever mindset. If you think about the incredible performance over the last six months, ahead of that, by companies like Virgin Galactic and Tesla. There was this sense of unlimited opportunity, and a really positive collective view. We were eager to attack climate change.

Peter Atwater:                
There was all of this behavior, very recently, that suggested a completely different mindset. This view that the road ahead of us was perfectly clear, not a cloud in the sky, and people as a result, taking extraordinary risk in the midst of it.

Steve Wershing:             
I want to talk a little bit about under-confidence, because you’ve got a lot of really, really helpful stuff about under-confidence. But before we do that, what actually is confidence, and where does it come from?

Peter Atwater:                
Confidence, most often when I ask people what it is, they can’t tell me. It’s sort of like pornography, they know it when they see it. What often happens is that people associate confidence with individuals. LeBron James, Beyonce, celebrity star performers. That’s not what confidence is at all. Confidence is cognitive. Cognitive in that it expresses how we feel, and it impacts the choices we make. It’s all about what’s happening between our ears. Confidence, at its core, is how we see ourselves faring in the future. That’s a mouthful. Let me break it down a little bit.

Steve Wershing:             
Great.

Peter Atwater:                
First of all, it’s perception driven. There are no facts in terms of confidence. It’s all about the stories we’re telling ourselves and the stories that are being told to us by the crowd around us. Those stories are important, because those impact two critical elements to confidence. Our sense of control, and our sense of certainty in the world ahead. To be confidence, we need to feel as if we will be successful in the future. It’s those two elements, it’s “Am I in control, will I be in control, and can I reasonably predict what’s ahead?”

Peter Atwater:                
As you might expect, the coronavirus has just upended both of those perceptions. The sense of vulnerability and powerlessness today is extreme, and nobody quite knows how this is going to play out. There’s just widespread uncertainty.

Steve Wershing:             
Yep. I think that’s really important to understand that confidence comes from … The degree of confidence that you have is related to the degree of control you think you have over things, and the degree of your ability to predict what’s coming ahead. Obviously in this kind of a situation, people probably are feeling like both of those have sort of gone away. When something like this happens and people lose their sense of control and lose their ability to predict what’s coming, and they get into what you’ve referred to as a state of under-confidence, what effects does that have on them? Then we’ll get around after that to how do we deal with them more effectively?

Steve Wershing:             
So how does it affect people when they get into that state of under-confidence?

Peter Atwater:                
People are very familiar, I think, with the term overconfidence. Overconfidence, we identify in hindsight as environments where we were too certain, too confident, and as a result underappreciated the risks of things around us. Under-confidence is the reverse. We are naturally prone to overestimate the risks of things around us. We’re on edge, we’re looking under each stone. Not for treasure, but for more worms and slugs.

Peter Atwater:                
Under-confidence is an environment where we are naturally on edge, and I think this is something that’s really important if you’re an advisor, is to appreciate not only are you, but your clients as well, are all in this heightened sense of, “Things might be worse than they are.” It’s important for all of us to sort of step back and to say, “Is my perception of the world around me an accurate perception? Am I being overly fearful?”

Peter Atwater:                
There are ways to sort of test that, in terms of the way we think and the behaviors. Panic is a natural response to those moments of extreme under-confidence. To the extent which you are panicking, you are expressing very naturally that you are really, really under-confident. I think another aspect is that we are naturally prone to extrapolation, very deep, dark, negative extrapolation when we’re under-confident. There is that sense that the worst is still to come. Things are bad today, but just wait, they’re going to suck forever.

Steve Wershing:             
Right.

Peter Atwater:                
What I think we forget is that that saturating sense, when the crowd all feels it’s going to get worse, and significantly worse, is what marks major lows in confidence. That’s how we felt on 9/11, that’s how we felt Lehman Brothers weekend. That sense of, it’s going to be horrible ahead is to me one of the best indicators that we’re nearing a bottom in terms of confidence.

Steve Wershing:             
Okay. Well, that’s really interesting, and that’s really good. I’d like to get your opinion too, about, in the advisory business it’s popular to use some kind of a risk profiling tool, or some way of measuring people’s risk and then designing a portfolio around it. One of the things I’m concerned about is, there was sort of a joke made, and I wish I could remember who it was because it was brilliant, and I wish I could attribute it. But somebody in the financial press said at that point that these risk assessment tools enabled us to very finely gauge people’s capability for risk, and then position them to experience it.

Steve Wershing:             
That’s kind of the case, obviously not very helpful. How does having something like that relate to how you might deal with clients now? If they’ve gone through it and they said, “Oh, well you’re this level of risk on a scale of 1 to 100, or you’re this category.” Does that have relevance in conversations now, or do we need to sort of take a different approach?

Peter Atwater:               
Well, I’m reminded of the quote, everybody has a plan until they’re punched in the face.

Steve Wershing:             
That’s Mike Tyson, I love that quote.

Peter Atwater:                
Yeah, and I think that that’s sort of where we are today, is that people are sort of reassessing that in one moment their risk tolerance was A, and today that risk tolerance is now Z. That’s perfectly natural. That’s exactly what we do. When we’re confident, we’re willing to take far more risks than when we’re not confident. One of the challenges for money managers and advisors here is to recognize that that sense of sentiment is going to impact the preferences that their clients have. It’s the challenge of, do you enable a client to sell at the low, which is going to be the natural response.

Peter Atwater:                
One of the things that I encourage advisors to do is to have sort of steps where you’re reducing risk, not all at once, but in some sort of orderly sequence. When you’re setting these up, to say to a client, when you’re 5% down or 10% down, is there an amount that you’d want to take off the table? Is there an amount that you’d want to take off the table at 20% or 25% down? That process of risk reduction, I think avoids the hysterical knee-jerk reaction and the phone calls that will inevitably come at the very low, where people capitulate and say, “Just get me out now.”

Steve Wershing:             
Sure. Now, realistically, is that a conversation that advisors can have with clients now, or is that the kind of conversation you have to set up, being prepared for something like now?

Peter Atwater:                
I think that those are conversations that you need to have now.

Steve Wershing:             
Okay.

Peter Atwater:                
In terms of, okay, things have been bad. You’ve given back a lot of gains. How much more do you want or are you prepared to take, in terms of additional risk? And importantly, I think this is the time to be having the conversation with clients. Not just about how they’re feeling in terms of the market, but in terms of their feelings about their job, about their ability to continue to meet the financial obligations they have. I think this is a time when a holistic sort of enterprise risk assessment is important.

Peter Atwater:                
If someone is feeling like their job or their business that they run is now subject to a whole lot more risk, then it’s absolutely prudent to take risk out of their investment portfolio.

Steve Wershing:             
Oh, okay. Interesting.

Peter Atwater:            
Manage the client holistically.

Steve Wershing:             
Right, right. Well, and I think that’s a really important concept. That when people become under-confident and have responses to their portfolio, it’s not because of the number that’s on the statement. It’s not because of what the portfolio is doing, but it’s because of their fear about what might happen to what the portfolio represents. Which could be their retirement security, or could be the goal that they really wanted to have, or those kinds of things. What it sounds like is, you’re saying that we should take a look at those things as well as the portfolio, or those things instead of the portfolio, and maybe try to refocus their thinking on what’s behind that. They’re saying they’re afraid of their portfolio, but how valuable is it to get at what we think they’re really scared of?

Peter Atwater:                
Yeah. If I’m running a small business today, the sense of dread, the uncertainty that I’m feeling, there’s a lot to be said for taking risk off the table in the financial markets, because for that client who’s running a business, their thinking will become clearer.

Steve Wershing:             
Okay.

Peter Atwater:                
When we are in those moments of panic, it’s very difficult to make strategic thoughts about abstract decisions. We really do need to find ways to get relief, and to look at our lives in their entirety.

Steve Wershing:             
Yeah, so you’ve said that in your talks, about that when you become under-confident, your ability, your cognitive level actually declines, and that you’re able to process a lot less. I want to get to that point you just made in a second, but you talk about when people get under-confident, and their cognitive level goes down and they lose some of that ability to do that abstract thinking. You talk about getting into me, here, now thinking. You mentioned that earlier in this episode. Can you talk a little bit more about what me, here, now thinking is, and how it differs from how people might operate normally?

Peter Atwater:                
Yes. When we’re in me, here, now mode, anything that is not relevant to my situation today, I am either going to be fearful of it, or I’m going to ignore it. I’ve got to take it off the table. When confidence falls, we for example become naturally xenophobic. Things that are psychologically distant from us take on very negative, disconcerting attributes. We have a choice, in those moments, to ignore them, find a way for them to just get out of our sights. That’s also the case with the future. We stop thinking about the future because it’s so uncertain, and so all we do is to focus on our situation right here, right now.

Peter Atwater:                
You see that, in terms of the kind of decisions that we make. We’re only able to make the simplest choices. I’m doing a lot of advising right now to industrial and political leaders, and reminding them that every solution that you put on the table today must in some way tie to the me, here, now simple needs of your audience. This is not the time for strategic conversations. This is a time for tactical solutions.

Steve Wershing:             
Yeah. This is … It sounds like you would advise advisors against pulling out lots of charts and graphs and historical performances and those kinds of things, because it sounds like that would just escape most clients who are in a difficult situation.

Peter Atwater:                
Yeah, I think the metaphor that I would use right now is, America is New Orleans awaiting Katrina.

Steve Wershing:             
Oh. Got it, sure.

Peter Atwater:                
Think about, how would you have knocked on the door to somebody in New Orleans just as the hurricane’s about to strike? What’s going to be important to that client?

Steve Wershing:             
Yeah. Yeah. One of the things that you’ve said in your talks is that people who are under-confident crave affirmation. Can you tell us a little bit more about that, and what it means and how we could do it?

Peter Atwater:                
Sure. Again, in those environments where I’m feeling powerless, I seriously challenge my own judgment. We are really mean to ourselves when anxiety is high. If you were to look, anxiety peaks every night sometime between 1:00 and 2:00 in the morning. In those moments, you can also see that searches for terms like “am I stupid,” “am I fat,” those spike as well. We take a very critical eye to our own abilities when we lack confidence.

Steve Wershing:             
Yeah, I can just picture the scenario where you end up in a situation that turned out badly, something unexpected happened, and you’re saying to yourself, “How could I have been so stupid? Why did I ever do this?” That can easily be extended to, “Why did I ever listen to this person or that person when they gave me advice?”

Peter Atwater:                
Yeah.

Steve Wershing:             
Yeah, and so how do we help people grapple with that? If they’re lacking confidence not only in the future and in the markets, but maybe even in the advice they were given by this same person who’s trying to coach them through the current situation?

Peter Atwater:                
Yeah, I mean, if … It gets even more challenging for advisors, because when things go wrong, we become really angry at the agents, those third parties who we feel put us in this position. Daniel Kahneman, a psychologist-economist researcher, talks a lot about the criticism that arises when things turn down, and we have been what we feel, wrongly advised. Agents of all nature are highly vulnerable here.

Steve Wershing:             
It sounds like … First, before we talk about what advisors can actually do to help deal with that, and also deal with the client’s panic. It sounds like one thing that we also want to be very sensitive to is not getting defensive, especially if a client reacts out of that emotional position and goes to blame us for things that we … What’s a productive way of dealing with that?

Peter Atwater:                
I think that particularly with this crisis, this is one where there’s going to be a lot of both what I would say good and bad ability on the parts of people to suggest that they didn’t see this coming. That this is something that was out of the blue. I’ll be honest, I have very mixed feelings about that, because there are individuals that were unprepared coming into this by circumstance, the service workers, many small businesses were unprepared for something on this magnitude. There were others who, you can debate whether they were unprepared voluntarily.

Steve Wershing:             
That’s a great way to put it, yeah. Sure.

Peter Atwater:                
Were they prudent in the management of their business?

Steve Wershing:             
Right.

Peter Atwater:               
But I think for advisors in this circumstance, no one was looking at this as a risk, even six or eight weeks ago. The challenge is that nobody saw this coming from an investment perspective. I think that there needs to be at least some agreement between you and a client of, if we had both seen this coming, we both would have acted differently. I think there needs to be some conversation with the client to acknowledge that you were as unprepared for this as they were.

Steve Wershing:             
Well, let me … I’m concerned about that, because what it sort of implies is that maybe I should have been able to time the market better, or maybe I should have been more … Most advisors, I think would rather approach it from the direction of, no of course we couldn’t see this coming, and we built your portfolio so that it would be okay for all of these things that we didn’t see coming, because we would expect that. How … Yeah, go ahead.

Peter Atwater:                
I think that part of that conversation then, is around what was done ahead of time in an effort to mitigate the impact of this through portfolio construction.

Steve Wershing:             
Right.

Peter Atwater:                
We didn’t see this coming. But we established these risk tolerances-

Steve Wershing:             
Yeah.

Peter Atwater:                
In anticipation of the unknown, and here’s the outcome.

Steve Wershing:             
Yeah.

Peter Atwater:                
Then I think it’s a question, do you want to re-evaluate your risk tolerances in light of what else is now happening in your world?

Steve Wershing:             
How far should we let people go with that? We have these two conversations. We have the one conversation where this is your risk profile, and therefore we want to set up your portfolio this way, so that we can protect, we can mitigate against unforeseen outcomes. We’re having that conversation, when people are operating at a high cognitive level, because we’re relatively dispassionate. Nothing bad is going on.

Steve Wershing:             
Now we’ve got to revisit that conversation while people are in somewhere between a mildly and severely under-confident kind of situation. How does that conversation change?

Peter Atwater:                
It changes because I think people are feeling far more personally vulnerable. That the vulnerability here is not just financial. It’s professional, and most importantly right now it’s physical. I think particularly with individuals who are advising elderly clients, this is a very real threat. I think to be dismissive of that in these conversations is to not necessarily do your client a great service.

Peter Atwater:                
I think that these are moments where you’re going to have to work with a client in distress and to recognize that your responsibility is not just financial in helping them to get through this. To the extent that that means taking risk off the table, for some period of time, that to me is prudent client management.

Steve Wershing:             
Yeah. Yeah. We’re coming up on time, I know you’ve got a zillion people that want to talk with you today. I really appreciate your joining us. Just to sort of summarize, what would you suggest for financial advisors? What’s the sort of bullet point list of things that you would do, or that you would recommend that advisors do, as they reach out and talk with clients, and maybe in an under-confident situation?

Peter Atwater:                
One of the things that I did this past week was to write about how the approaching pandemic is naturally causing panic to occur. To me, that’s an important element of the conversations, is to be very realistic. Anybody who is panicking now is behaving quite naturally in light of the perceived threat. That being said, as the physical distance, and the psychological distance between us and the pandemic comes to close … As I said before, we’re like New Orleans just ahead of the hurricane. What’s so interesting is that once that distance has closed, the panic will abate. I’ve said to several groups and organizations this week, the good news to me in what we’re experiencing right now is that the panic phase of this crisis is coming to a close. Because we’re gone from the epidemic being in China and contained there to it’s in America to it’s in my community to it’s right here next to me. I can feel it.

Steve Wershing:             
Yeah.

Peter Atwater:                
That will mark, when we all have that sort of sense that it’s imminent and things are going to get worse, that will mark the bottom of the panic phase. I think it’s important that folks recognize that we are moments away from that. I don’t know if it’s today or next week, but I think we’re very close to that. It’s something that is easily visualized and understood by people.

Steve Wershing:             
Okay. Just again, I think that’s really helpful for advisors who are trying to think of what to do with portfolios. Are there things you can recommend that … What really struck me is, and I think this is worth contemplating, that advisors will be dealing with some clients … Not all clients, some clients will take it in stride. But some clients may be panicking, and to recognize that panic is a reasonable response. Are there particular things you would recommend to talk with that client, who is in that panic mode, to figure out how much you want to take off the table, and what we can do so that we don’t give into their fears and sell at the low?

Peter Atwater:                
I think that what I would suggest is to set up a plan that is systematic.

Steve Wershing:             
Okay.

Peter Atwater:                
To say, we will take more risk off at this level, we would take more risk off at this level, so that there’s a clear understanding between the client and the advisor in terms of how their risk tolerance has changed today, versus when they were first established.

Steve Wershing:             
Great. Excellent. Well, like I said, Peter, you’ve got a zillion people who want to talk with you today, and I really appreciate your joining us on the podcast to share your expertise. Is there anything else that you want to mentioned before I let you get off to all of your other things today?

Peter Atwater:                
I would just remind people that … Two aspects of this current situation. We’ve been here before, and so not to lose sight of the fact that these things happen, and we’ve been here before. Related to that is, this is for now. Panic does not last. Physically, it almost can’t. It’s very exhausting, it’s very energy depleting. I think it’s important, as mantras for ourselves, as advisors. This is for now, we’ve been here before. We will adapt, we will figure it out, and we will find a way to get through this.

Steve Wershing:             
Excellent. Peter, where can people find your writings, and your insights and otherwise where can people follow you?

Peter Atwater:                
I have a website, peteratwater.com. They can find things that I’ve written and where I’ve been cited there. I also have a regular blog on LinkedIn, under Peter Atwater as well.

Steve Wershing:             
Excellent. Peter, thank you so much for taking some time in this very busy time for you and talking with us.

Peter Atwater:                
Thank you very much, I appreciate the opportunity.

Steve Wershing:             
Josh Patrick, thank you for joining us on Becoming Referable to help our listeners make some of these calls in these challenging times.

Josh Patrick:                    
You’re welcome, thanks for having me.

Steve Wershing:             
I really value your insights on these. You’ve been an advisor for a long time, and you’ve coached a lot of advisors, and so I know you’ve got some experience at how to have some difficult conversations with clients, when people are particularly stressed. Can you take us through some of the principles that you would follow when you’re reaching out to clients who may be in a difficult state now?

Josh Patrick:                    
Yeah, absolutely. The first thing you want to do is, at least in my opinion, is when you call somebody ask them how they’re doing. You shut up until they stop talking.

Steve Wershing:             
Yeah.

Josh Patrick:                    
I would actually go further and then say, I would keep asking questions until they have nothing more to say about how they’re doing.

Steve Wershing:             
Okay. What kind of question would you ask?

Josh Patrick:                    
Well, you know, how are you doing, and then from there they’re going to say, “I’m terrible.” Well, what specifically is making you terrible, or I’m really concerned, or I’m scared, or … I might ask, I say, “Well, okay. What are we doing to become a little bit less scared?”

Steve Wershing:             
Okay.

Josh Patrick:                    
I just want to validate where they are and what they’re feeling. Just really, really important to do that. When they get around to talking about how they’re really scared about their investments, they want to go 100% to cash. Instead of getting into an argument about why that’s a bad idea, and by the way it is a bad idea.

Steve Wershing:             
Well, sure.

Josh Patrick:                    
Is that you really need to let them get all their feelings out.

Steve Wershing:             
Okay.

Josh Patrick:                    
Because once they get all their feelings out, then all the emotion is going to be their … Now you have the opportunity to potentially, and this is a potential, have a rational conversation. Now, one of the things that we do with our clients, and have done way before this happened, was we use a strategy with our investments called the bucket system. The bucket system is, you segregate cash, fixed income, and stocks. Most people do that within one account. We do that within three accounts. We have a cash account, we have a fixed income account, and we have an equity account. We can point at the cash account and the fixed income account and say, “Okay, we have 10 years’ worth of spending sitting in these accounts right now.”

Steve Wershing:             
Okay.

Josh Patrick:                    
And then-

Steve Wershing:             
But if I can jump in, Josh.

Josh Patrick:                    
Sure.

Steve Wershing:             
For advisors who may not have done that.

Josh Patrick:                    
Right.

Steve Wershing:             
Because right now is not a good time to tell advisors how to do that. But you had mentioned that there was one client, for example, who was not taking your advice and who was freaking out because they were 80% in equities. Walk me through how you have that conversation with that client.

Josh Patrick:                    
Well, she has two advisors.

Steve Wershing:             
Okay.

Josh Patrick:                    
She said her other advisor had gone 100% cash for her. I asked her, I said, “Arlene, how many years spending is that 100% cash for you?” As it turns out, it’s about eight years worth of spending if she gets no return whatsoever. I said, “You know, we’ve never had a 10 year period where the stock market hasn’t recovered.” The history of pandemics is, we recover relatively quickly. This was after she had spent 15 or 20 minutes telling me about how scared, and the fact she wasn’t going to be able to retire, and went on and on and on. It was a really valid concern for her, but she had really sort of wound herself down, so we could have this conversation about, does it make sense for us to move to cash?

Steve Wershing:             
Okay. So-

Josh Patrick:                    
I said to her, I said, “Look, at the end of the day it’s your decision.”

Steve Wershing:             
Yeah.

Josh Patrick:                    
She decided that because she was now a bit more neutral, a bit less charged, that 100% cash with her half her portfolio was enough.

Steve Wershing:             
Yeah. Let’s talk about that conversation, how you got her there. Because some clients will have resisted advice and will have the wrong allocation. But a lot of other clients may have a perfectly good allocation, and just may be freaking out. Let’s talk a little bit about, how did you get her from being freaked out and not being able to talk about it at a high level to the point where she could be a little more neutral and consider things a little more objectively?

Josh Patrick:                    
I just kept asking her questions.

Steve Wershing:             
Okay.

Josh Patrick:                    
I mean, really, it almost doesn’t matter what the question is. The point here is to encourage the person you’re with, and this is true under any emotionally charged issue. Just continually let them speak and speak and speak until they talk themselves out.

Steve Wershing:             
Okay.

Josh Patrick:                    
You may have noticed this with your children. Your child is really upset, and they’re crying like crazy. If you try to be rational with your child at that time, it just doesn’t work. So you have to-

Steve Wershing:             
Well, I think that’s a really important point. I’m going to hold you up there for just a second, because I think that’s a really important point. Is that to the extent that any advisors are calling out to their clients and hope that their rationality will coach the client through it, I think they’re going to end up getting bad outcomes.

Josh Patrick:                    
Really bad outcomes. You’re going to get into a fight, the client’s going to walk away really frustrated. You’re going to walk away saying, “Boy, that client’s an idiot.” They’re not an idiot, they’re just reacting the way any three year old might react.

Steve Wershing:             
Right.

Josh Patrick:                    
We all have a three year old living within us.

Steve Wershing:             
Sure.

Josh Patrick:                    
We have to … If somebody is exhibiting three year old behavior, you have to let them become an adult again.

Steve Wershing:             
Yeah.

Josh Patrick:                    
The way you let them do that is to vent and vent and vent, and encourage the venting, not try to stop it.

Steve Wershing:             
Okay.

Josh Patrick:                    
Now, it’s really uncomfortable. As you know, I used to own a food service and vending company. I would sometimes have difficult conversations with my employees, and they’d start crying. Now, most people would try to make that crying better. What I learned in that period was, you just have to let them cry it out.

Steve Wershing:             
Okay.

Josh Patrick:                    
Sit there and let them cry it out. When they were done, we would start having a real conversation. It’s no different with my clients today. I have to let them cry it out.

Steve Wershing:             
Okay. Interesting, interesting. Well, Josh, I want to respect your time, and I want to be able to move on, but I think this is really valuable for our advisors. Are there any other resources you would point advisors to, or where can they learn more about what you can do for them?

Josh Patrick:                    
We have a couple of websites, so you can go and poke around if you want to. We have tons of videos and a podcast also, which you’ve been on a couple of times.

Steve Wershing:             
Yep.

Josh Patrick:                    
That’s www.sustainablebusiness.co. I’ve been writing a lot of philosophical blog posts on our wealth management site, which is www.stage2planning.com, that’s the number 2. Both places have tons of things you can download, and information that’s mostly about how you create a sustainable business. But this is all part of the deal. It’s how do you effectively work with people? Sort of like when we teach people to delegate. They always have this problem.

Steve Wershing:             
Sure.

Josh Patrick:                    
It’s easy to find folks, it’s easy to find information there. If you want to give me a call, there’s a contact me. Just sign up for a phone call and I’ll be glad to talk with you. And that’s all.

Steve Wershing:  
Josh, thanks for … Yeah, thanks for coming to visit with us again.

Josh Patrick:  
My pleasure. Talk to you soon. Bye-bye.

Julie: 
Hi, it’s Julie again. It was great to have you with us on Becoming Referable. If you like what you’ve been hearing, please do us a favor and rate us on iTunes. It really does help. You can get all the links, show notes, and other tidbits from these episodes at becomingreferable.com. You can also get our free report, Three Referral Myths That Limit Your Growth, and connect with our blogs and other resources. Thanks so much for joining us.