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Should you put a price on relationships?

Should you put a price on relationships?

| March 19, 2024

I first read Professor Dan Ariely's "Predictably Irrational" book back in 2012. Even now when I re-read this particular section, I burst out laughing.

"You are at your mother-in-law’s house for Thanksgiving dinner, and what a sumptuous spread she has put on the table for you! The turkey is roasted to a golden brown; the stuffing is homemade and exactly the way you like it. Your kids are delighted: the sweet potatoes are crowned with marshmallows. And your wife is flattered: her favorite recipe for pumpkin pie has been chosen for dessert.

The festivities continue into the late afternoon. You loosen your belt and sip a glass of wine. Gazing fondly across the table at your mother-in-law, you rise to your feet and pull out your wallet. “Mom, for all the love you’ve put into this, how much do I owe you?” you say sincerely. As silence descends on the gathering, you wave a handful of bills. “Do you think three hundred dollars will do it? No, wait, I should give you four hundred!”

This is not a picture that Norman Rockwell would have painted. A glass of wine falls over; your mother-in-law stands up red-faced; your sister-in-law shoots you an angry look; and your niece bursts into tears. Next year’s Thanksgiving celebration, it seems, may be a frozen dinner in front of the television set."

While we laugh at the idea of paying for what is a family gathering, we do something similar in our financial practices. In his excellent article, "Love is inefficient", author Philip Palaver points out some of the ways we try to commodify a relationship. Impersonal birthday cards? Automated emails? And don't even get me started on voice menu systems that are impossible to navigate. None of this makes a client feel welcome.

On my side of the fence, I still send out handwritten (and sometimes hard to read) birthday cards. I call my clients on their birthday and sing badly. And yes, I will check in out of the blue just to see how they are doing. Philip's point is well-taken. You need to be profitable but not at the expense of a relationship. "The trick is to standardize and make more efficient the things that don't matter to the client and customize the things that do. Knowing what to standardize and what to customize though requires a relationship".

Highly recommend everyone read this article in the March 2024 Financial Advisor Magazine.