Key Takeaways
- Bad news delivered well builds trust
- Prepare clients before dropping bombs
- Give them time to process before problem-solving
Saying What They Don't Want to Hear
"The way you deliver bad news is often remembered longer than the news itself."
Sometimes your job requires telling clients things they don't want to hear:
- They can't afford to retire when they planned
- Their spending is unsustainable
- Their portfolio has lost significant value
- Their expectations are unrealistic
- They need to make painful changes
The SPIKES Framework (from medicine)
| Step | What to Do |
|---|---|
| Setting | Find a private, comfortable space |
| Perception | Ask what they already know/suspect |
| Invitation | Get permission to share difficult information |
| Knowledge | Deliver information clearly and honestly |
| Emotions | Acknowledge and address their response |
| Summary | Recap and discuss next steps |
Framing Bad News
Don't: "Unfortunately, your portfolio has lost 25%." Do: "I need to share some difficult information with you. Before I do, I want you to know we're going to work through this together."
Don't: "You're going to have to work until you're 70." Do: "I've looked at the numbers, and I want to be honest with you about what they show. Are you ready to discuss that?"
After Delivering Hard News
| Do | Don't |
|---|---|
| Pause and let them react | Keep talking to fill silence |
| Acknowledge emotions | Minimize their feelings |
| Stay calm and present | Get defensive |
| Answer questions honestly | Sugarcoat further |
| Offer to discuss solutions when ready | Push immediate problem-solving |
When They React Badly
Some clients will:
- Get angry (sometimes at you)
- Cry
- Deny the reality
- Blame you or others
- Go silent
All of these are normal. Your job is to be a steady presence while they process.
"I understand this is upsetting. I'm here when you're ready to talk about what we can do from here."
The Retirement Reality Check
A client who can't retire when they planned
Setup
A client has been planning to retire at 62 for years. You've just completed their comprehensive plan, and the math doesn't work—they need to work until at least 67, or make significant lifestyle changes.
Client says:
“*Excited* So, am I on track? My wife and I have been counting down—I've got a countdown app on my phone! Three more years and we're out of here. Florida, here we come. How are we looking?”
Practice Objectives
- 1Prepare them that the news isn't what they hoped
- 2Deliver the reality clearly but compassionately
- 3Give them time to process before problem-solving
- 4Acknowledge their disappointment
- 5Eventually explore options, but not too quickly
- 6End with some sense of path forward
Portfolio Down Significantly
A client during a market downturn
Setup
The market has dropped 30% over the past year. You're having your annual review with a retired client who depends on their portfolio for income. They're going to see a much smaller number than last year.
Client says:
“So let's see how we did this year. I know the market's been rocky, but we're in good shape, right? You said we were diversified. How bad could it be?”
Practice Objectives
- 1Be honest about the decline—don't minimize
- 2Put it in context (everyone is affected)
- 3Acknowledge their fear without dismissing it
- 4Reassure about the long-term plan (if appropriate)
- 5Discuss any adjustments needed
- 6Don't blame them or the market—take responsibility
Spending Is Unsustainable
A client who needs to cut their lifestyle
Setup
A widowed retiree has been drawing down their portfolio at an unsustainable rate. If they continue, they'll run out of money in 8-10 years. They're going to need to make painful cuts.
Client says:
“I know you wanted to review my accounts. I'm doing okay, right? I know I spent a bit more last year on the grandkids and that trip with my sister, but I'm careful. I only take what I need.”
Practice Objectives
- 1Show the math clearly without being condescending
- 2Acknowledge this is hard to hear
- 3Understand what's driving the spending
- 4Explore what cuts would be least painful
- 5Discuss options (downsizing, income, etc.)
- 6Don't shame them for wanting to enjoy their life
Before delivering disappointing news to a client, you should: