From the October 2008 issue of Investment Advisor • Subscribe!

Stand and Deliver

On your path to becoming a wealth manager, you've taken the first step by trimming your client roster. Here's how to deliver a customized package of superior service by following a clear roadmap

It's late morning, and the summer sun is shining on Mt. Kearsarge in central New Hampshire. Ross Gott, president of Kearsarge Capital Advisors in nearby New London, stands on the front porch of his 100-year-old office building in sandals, shorts, and a white shirt as he and his associate Robin wave goodbye to a departing client couple. Jeff and Michelle had dropped by to say hello and pick up a CD copy of Ross's presentation to them the previous week.

The story began a month earlier, when Ross sat down with the couple (both in their mid 50s) to review their portfolio. He told them, "You are at a point where we really don't need anything vague or unknown out there" (the "out there" meaning retirement). "How do you envision your retirement?" he asked. "What are you happy with right now? What's in your way? Where do you see yourself during retirement?"

For the next several hours, Ross listened--intently--as his clients talked about their future. What began as a scheduled 45-minute portfolio review extended to three hours, the foundation of what I call the "re-fact process." Wealth managers use this process to delve into "fact facts" and "feeling facts." Fact facts are quantitative data, such as savings, savings rates, investments, insurance, annuities, and insurance--the information a wealth manager needs to complete a financial plan. Feeling facts are the softer, qualitative issues that give meaning and life to the fact facts. What are the clients' goals, wishes, and aspirations? Do they want to travel? Save for a grandchild's education? Leave a legacy for a charity? Build their dream home?

Wealth Management: Goals and a System

Spending this much time with a client or client couple wasn't always Ross's plan. Twenty years ago, he moved his tax accountancy practice to New London and the idyllic Dartmouth-Lake Sunapee Region, where the town's population swells from 4,000 in the winter to more than 15,000 in the summer. Recreational visitors who like the laid-back lifestyle began returning to New London and its environs to retire, among them self-made professionals and what Ross likes to call "sudden-wealth victims."

Seeing new opportunity, Ross began an RIA consultancy to complement his tax practice. There was only one problem. He had far too many tax clients to concentrate his attention on wealthier clients and effectively deliver a higher service level. Like many who have faced this situation, Ross took the plunge and referred away two-thirds of his tax practice, keeping about 60 high-net-worth clients (for more on how to do this, see the September 2008 Investment Advisor, "Less Is More"). Today, Ross focuses on clients with $750,000 or more in investable assets, those capable of generating at least $5,000 in recurring annual income.

Ross realized that effective wealth management means efficient coordination of his time and resources. Becoming a wealth manager entails an intense focus on goals that require planning, money and time, and the ongoing coordination of a "financial ecosystem" to accomplish them.

As Jeff and Michelle prepared to leave that first meeting, Ross set up the next appointment and told them what the subsequent steps would be. He said he would take what he had heard and develop a "Discovery Agreement" that would become the foundation for a "Client Engagement Road Map."

In Their Own Words

Though these tools may sound daunting, Ross and other financial advisors I've coached find that most people don't want a three-inch binder with a heavy, technical financial plan. They prefer the condensed version, and they want evidence that you understand their most important needs.

That is why the Discovery Agreement is so valuable. The purpose of the Discovery Agreement is more than a deliverable to your client. It's an articulation of your clients' vision for the future--a document you and your clients will return to again and again. It's generally brief, consisting of three to five richly written paragraphs. In them, you outline in your clients' own words their goals and aspirations for the future.

This combination of re-facting to develop a Discovery Agreement, and using quantitative and qualitative data to update the financial plan, is the basis for creating the "Client Engagement Road Map." The Road Map is to the Discovery Agreement what a travel map is to the destination. It describes how you and your clients will get to the destination--by what means, at what cost, and over how long a period of time.

Several weeks prior to meeting with your clients a second time, I recommend sending a follow-up letter thanking them for the opportunity to serve them and enclosing a draft Discovery Agreement. Ask your clients whether the draft captures their vision of the future. Follow up by phone to see if they have any changes or additions. Two weeks before the meeting, follow up with another letter containing an agenda and updated Discovery Agreement. Invite them to review and add to the agenda if they wish.

By taking these steps, your clients will see you first as a good listener, and secondly as the coordinator of their financial needs--instead of merely a planner, insurance expert, or investment specialist. Try it one time, and you will be surprised how easy it is to reconfigure your deliverables so they meet client needs.

After thinking deeply about his recommendations, Ross used the Discovery Agreement with his firm's financial planning software to develop the Client Engagement Road Map, then converted everything into a PowerPoint presentation prioritized and personalized to Jeff and Michelle's needs.

Delivering the Customized Goods

It's the day of their second appointment. Jeff and Michelle enter the office of Kearsarge Capital Advisors and are greeted by Robin, who confidently escorts them down the hall, past an attorney's office, and upstairs to a large presentation room. Music from the 1970s softly fills the room. Large windows offer views of nearby Mt. Sunapee. Robin invites the couple to enjoy the elegantly set out water, coffee, tea, and pastries.

On one wall hangs a 50-inch plasma television with the words, "Good Morning, Michelle and Jeff. Welcome to Kearsarge Capital Advisors" and a photo of the couple.

Ross enters the room and welcomes his clients. He then dims the lights and touches a remote control. The title slide disappears to reveal photos of Jeff and Michelle's favorite travel spots, as the words come up, "The journey continues..." and the music fades.

During the course of the customized presentation, Ross reviews the couple's current situation. Slides include their names, children's names, and family place names--all information Ross gathered during the previous interview. He presents slides of their life timeline, net worth, risk profile, retirement savings plan, current asset allocation, and debt. Though he used Monte Carlo simulations to determine a retirement plan, he didn't share that data. Instead, he enlightened them in a simple way by focusing on what's really important. Where are they in their retirement journey? Where do they need to go?

"Here's what you need to do," Ross concludes the presentation. "Does this seem reasonable?" he asks.

On the way out, Robin presents Jeff and Michelle each with a small tin of K&Ms, candy-coated pieces of chocolate with the firm's logo. "I want them to walk out with a treat, not pages of documents," says Ross. In some cases, a follow-up meeting is needed to refine points of the Roadmap. In others, if the Roadmap is on target, Ross invites them to come by and pick up a CD copy. "It's a small town," he says. "I like all our clients. We're friends."

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You Need a Map

Advisors who use this process find it necessary to continually evaluate the Client Engagement Road Map, meeting quarterly with the client to update the road map as needed to reflect clients' dynamic lives. Also, it's important to offer continuing financial education to help clients understand current thinking about such complex and confusing topics as long-term care insurance, annuities, and capital markets.

I find it helpful to create a two-year agenda and outline the service you plan to deliver. This helps set clients' expectations and define the terms of engagement.

It's important to work with clients using an iterative approach--when you walk clients through the Client Engagement Road Map, be sure to position the road map as a draft and provide them the freedom to make modifications. Your goal is for the road map to become "ours" (the advisor's and the client's) as opposed to simply yours or theirs. After reviewing the road map, conclude with questions like "If we were able to stick to this road map, how would it benefit you?" And after giving them time to reflect on that question, ask "And how would that make you feel?" Again, allow some time for silence and reflection. Then, conclude with a statement, "Here is what we need to do to get started."

At this point, you would walk them through the specific recommendations and implementations that reside in the first quarter of the road map. This would include the completion of any paperwork or forms necessary for implementation.

A successful transition into wealth management will create clients who value your service and who feel empowered to become your primary marketing force. This will enable you to create sales opportunities and plant the seeds for word-of-mouth advertising.

Through the process of re-facting your target clients and developing a Discovery Agreement, you will be able to go deeper than you have in the past and position yourself as the coordinator of your clients' financial needs. The use of the Client Engagement Road Map can transform a tactical relationship into a strategic one, helping you differentiate yourself by knowing your clients better and delivering the highest level of service.


Steve Moore is president of Moore Solutions and has 10 years' affiliation with Russell Investments, advising the Tacoma, Washington-based firm in the area of advisor and registered representative practice management. A former NFL coach, he can be reached at steve@mooresolutions.net.

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