I Think My Firm is Cooking Its Books

I’m not sure how to raise questions about what I am finding. It isn’t my style to be accusatory or threatening. But I worry about an audit and whether our outside accounting firm, which confirms our financials, understands the nature of the numbers we are reporting.

I can’t go into more detail because I am concerned about confidentiality and this information getting out into the public before I am able to address it. Do I speak with the president first? Do I confront the COO? Do I assume I am missing something?

I.W.

Dear I.W.,

Before we talk about your next steps, I would ask you to reframe the way you are thinking about discussing what you have found. Words like “accusatory,” “threatening” or “confront” connote a negative impression in your mind before you have taken a step to do anything! We are often unaware of how we talk to ourselves about our perceptions and how the talk we engage in will influence our approach and our frame on the situation.

You are curious about what you have found. You are interested in learning more. You want to understand from your COO’s position what she was doing and why. This is a discussion and a learning exploration. You don’t know what you will learn or find out so you don’t want to approach this assuming something is negative.

Inquire with the COO before you raise a potential concern to the president. Give her the chance to explain what she did and why. Approach her openly, “I might be misunderstanding something I am seeing,” or “I have learned when it comes to financial documentation sometimes people have different ways to get to the same outcome, please help me understand your process and approach.”

Give her the chance to explain and listen with an open mind. Unless you have uncovered something truly egregious, which it sounds like from your note you are not certain you have, I would strive to learn.

If you uncover something that is legally or financially detrimental to the company, or you don’t get good answers from the COO when you speak with her, then of course you need to have a conversation with your president. Again, be calm and objective and choose your words carefully so as not to ignite a firestorm. But let the president know there could be reason to dig deeper into some of the past financials and perhaps even bring in an outside forensics person to help you align what you are seeing.

It’s very possible you have found something significant and troublesome. You don’t want to minimize your experience. Approach this with caution and be as objective as you possibly can until have you more data and details and then decide where to go from there.

Dear Bev,

I am a coach in the advisory profession. I’m interested in your view on a situation I am dealing with with a very talented advisor who is an emotional wreck. I am a man, and I don’t deal well with female tears or overly upset clients when I am trying to calm them down.

This advisor holds a senior role in a well-regarded firm. She is responsible for a significant amount of AUM and highly sophisticated clients. From what I can tell, she serves her clients extremely well, but internally she is a mess.

She has cried at the last three team meetings because someone interrupted her once, another person “disregarded” her viewpoint and in another case the meeting ended before she had a chance to respond to an issue she disagreed with in the meeting. I know this because I work with a number of people at this firm, and I attend many of their internal meetings. This is not hearsay, I witnessed it myself.

I have explained to her she minimizes her impact by being so emotional and she needs to be calmer and more thoughtful in her approach. Her rejoinder is that if her colleagues respected her and gave her the credit she deserves she would be much calmer. Have you any insights about how I can get through to her?

E.A.

Dear E.A.,

You are in the business, so I don’t need to tell you, our biggest challenge is people who think they are right, are unable to see their role in anything. These people don’t want to step back to see where they may be creating their own problems by their behaviors. I used to make the analogy that in any good 12- step program for behavior change, the person first has to say, “I have a problem.” If the person you are coaching won’t admit to any of it, you are going to have a hard time helping her see a reason to change.

Of course, there are always two sides to every situation. It is entirely possible there is some truth to her view. Perhaps she is not respected or rewarded for her contributions. You and I both know this could be because colleagues see this emotional reaction and it colors their view of what she does professionally. When anyone behaves in an overly emotional way – tears, anger, obvious frustration and so on – it leads the listener to focus on only the delivery and the emotion, not the person’s skills or effort.

That said, there are a few things you could try if you have not already:

1. Ask her whether she would consent to have you interview some of her peers to understand how they interpret and react to her behavior. If you were to balance out their positive view (“they really do respect you”) with their reaction to her outbursts (“but you are limiting their ability to work effectively with you”) it might help her to see it isn’t all one or the other.
2. If you haven’t recommended an outside resource for her to speak with (i.e. a therapist), it might be appropriate to do this. Be very careful, but tell her you observe how stressed and upset she seems to be. Say that it will be helpful to have a sounding board that doesn’t know everyone in the office. I recommend this with a bit of trepidation because sometimes a therapist can hear only the view of the patient. It could make things worse, but your client might need an outlet to be emotional to understand how to manage herself differently.
3. Start to work with her on emotional intelligence (EQ). This includes not only self-awareness but also self-regulation. Bring this up as a marker of success – even the CFA Institute referenced the importance of EQ for advisors in one of their white papers. Ask her open-ended questions – “How could you regulate your reactions in the next meeting?” “What happens when you get upset, and how can you prevent yourself from getting overly upset next time?” Explore this with her in some detail. As coaches our job is to help people be the best they can be in their role. That includes helping them increase their EQ and be an effective professional overall.

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry, in 1995. The firm also founded and manages the Advisors Sales Academy. She is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).

She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.

Read more articles by Beverly Flaxington