I sadly couldn't find the clip you're talking about, I'll have to do some more digging. Personally, I read that quote as something that applies to people who mask cruelty as honesty. I've personally heard it time after time, where some guy says something horrid and rude, and when they're called on it, they put up their hands and go "Hey, I'm just being honest!" I think the Dr. Phil quote means that there's a way to be an honest person without being rude and needlessly hurting people.

I'd have to see the full clip to get the context, that's just what I gathered from the quote haha.