The Four Clients, Which Are You?

In the book, Why I Left Goldman Sachs, the author Greg Smith describes himself as a “not very religious Jew” but that he appreciates the traditions around the Jewish holidays especially the Passover Seder.  He particularly likes the part of the story discussing the reaction of the Four Sons to Passover: one who is wise, one who is wicked, one who is simple, and one who doesn’t know what questions to ask.  He then goes on to say that just as in ancient Egypt it was told about the Four Sons, so too on Wall Street there are the Four Clients.

And I believe just as there are Four Clients on Wall Street, there are also Four Clients in commercial real estate.  These Four Clients represent universal truth.  By that I mean it’s as true today as it was 3,000 years ago and as true as it will be 3,000 years from now.  And these Four Clients transcend all cultures that have ever existed or will ever exist. 

About half my blog readers are clients and the other half are commercial real estate professionals.  So after each client description I give my suggested response of how the commercial real estate professional can best serve this particular type of client. 

THE WISE CLIENT

These are the ones we hope to always have as clients and fortunately many of my clients fall into this category.  They have excellent commercial real estate experience.  They know the ropes but they also respect what you bring to the table.  They realize you are an important cog in the wheel and they don’t grumble about the fee you earn. 

OUR RESPONSE: Treat them with the respect that they deserve.  Listen to them because you have the opportunity to learn from them.  Bend over backwards to get the deal done as promised.

THE WICKED CLIENT

The Wicked Client knowingly withholds adverse information from you about the property or about himself in order to get the best possible outcome for himself.  He has no problem  cutting ethical corners if that is what it takes.  He hopes that whatever he is hiding will stay hidden just long enough to get the deal done. 

OUR RESPONSE: When we find out that important information has been withheld, we disclose it to the light of day.  To not disclose it makes us a party to his deception.  So if it means we lose the transaction and/or the client we do what is necessary so we can go to bed at night with a clear conscience. 

THE SIMPLE CLIENT

The Simple Client thinks he knows more about commercial real estate than he actually does.  He generally has an over inflated ego and as a rule does not trust anyone’s judgment but his own.  If left to his own ways, the outcome of the transaction will get done but it will likely be a more painful process and have a less favorable outcome than if he would have taken your experienced counsel. 

OUR RESPONSE: It is our duty to protect the Simple Client from himself.  We should vigorously give them our best counsel (even when they don't trust us or our advice) but ultimately we leave the decision making to them.  As easty as it would be to be a "yes-man," give them your best counsel and even if they don't take it, they will deep down grudgingly admire that you weren't their sycophant.

THE CLIENT WHO DOESN’T KNOW WHAT QUESTIONS TO ASK

These clients are the most vulnerable, the easiest to take advantage of.  These are the clients that really shouldn’t own commercial real estate.  They don’t even know what questions to ask.  This reminds me of one of my clients, a recent widow whose husband before he died was the one who liked owning and managing commercial real estate.  She was a passive investor but now she had to make all the decisions on her own.

OUR RESPONSE:  Guide them through the process.  Give them wise counsel and charge them a fair fee for services rendered.   One definition of integrity is doing the right thing when no one is looking.  With the vulnerable client we show integrity when we treat them right, especially when they wouldn't realize it if we were taking advantage of them.  

So in ending this article I ask, “Which client are you?”  In reality, most of my clients are a combination of two or more of these traits.  Do an honest self-assessment and once you can honestly admit to yourself who you are then find the commercial real estate advisor who will work best with your personality bent.  If you have a tendency under stress to cut ethical corners find someone who will keep you on the straight and narrow.  If you have a tendency to be a bit blustery don’t hire a “yes-man.”  And if you believe you’re in over your head find the advisor who you believe will always be looking out for your best interest and not his own.