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Mistakes. Bigger or smaller, sooner or later, we all make them. With meteoric speed, one goof-up can leave a gaping crater in a firm’s otherwise stellar reputation.
A missed deadline, a misfiled certification, or worse – in our business, there are countless ways an advisor can run afoul of the regulatory rules. Advisor, educator, attorney and “one-man think tank” spokesperson Ron Rhoades, CFP®, JD, provided a case in point when he recently withdrew from becoming the next NAPFA chairperson after becoming entangled in a minor regulatory problem.
The best way to manage the fallout for your firm’s good name is to prevent even the puniest such pebble from ever dinging its shine. Fortunately, since so many advisors are vigilant about their corporate compliance and ethics, most of you will never have to say you’re sorry to an inquiring press.
But what if your judgment lapsed and the damage is done. Now what?
Nietzsche marketing: What doesn’t kill you
If reports of serious fiduciary misdeeds are indeed accurate, it doesn’t matter to me what your response is. For everyone’s sake, I hope your ship is sunk long before the media shows up.
But let’s say you find your firm under fire more because of misfortune than deliberate misbehavior. Now is not the time to panic. Think of it this way: A company’s true mettle is never fully tested until it has made an honest mistake and the public is awaiting its response.
What you choose to say and do at this time reveals your corporate culture, amplified tenfold, for better or worse.
To quote financial author Nassim Nicholas Taleb, “Most of us know pretty much how we should behave. It is the execution that is the problem, not the absence of knowledge.” If you rely on that innate professionalism and sense of fiduciary duty that you’ve been nurturing all along as your firm-wide culture, it should steer you and your response team toward the best response.
Disappointing damage control
You may not be able to list the hallmarks of bad damage control, but you intuitively know them when you see them in the press. They’ll resemble one or all of the following:
- Stonewalling — “No comment. And, by the way, my lawyer isn’t saying anything either.”
- Spin, spin spin — “We’ve consulted with our professional PR agency; they’ll take it from here.”
- Pointing fingers — “It was a rogue employee … a disgruntled client … a market turned sour. Not me.”
- Diversions — “This is nothing more than a witch hunt … It’s a dumb rule to begin with … I’m the fall guy.”
- Squatting in place — “Heck no, I’m not resigning as CEO; my people need me.”
- Blustering — “We are outraged by these baseless accusations … saddened by the disregard for our privacy … enjoyed a stellar reputation for years … care deeply … blah blah blah.”
- Back-peddling — “Upon reflection, we’ve decided compensation may not be warranted after all.”
- Lying — “I'm shocked, shocked to find that gambling is going on in here!”
