After the market's historic plunge in early October, Debra Stotler added a little something extra to her regular client letter--a healthy dose humor. She told a cautionary tale that warned of the dangers of eating the whole pan of brownies by yourself. Weaving a laugh-out-loud personal experience with a brief history lesson and savvy market perspective, Stotler's client letter was at once calming, instructive and insightful.
"I will write something, usually once a week," she says. "I have all of their emails, so they get my perspective on what's going on in the market. To keep them focused through this crisis, I go back to 1907 and show them there are a lot of similarities to previous bear markets over the years. They get my charts and all of my analysis, so they are with me in the process."
Staying constantly involved with her clients is the core of Stotler's business. A wife and the mother of three school-age children, Stotler also is a senior vice president, investments, at Moors & Cabot in Boston. She's a Certified Financial Planner(R), a Chartered Market Technician, and a registered representative with FINRA, holding licenses in Series 3, 6, 7, 87 and 66.
She maintains discretionary control of her clients' investments, using her own technical market analysis to pick stocks and customize each portfolio based on individual goals, risk tolerance and timeline. And in her spare time she teaches estate planning at the College of Financial Planning.
Her real job, though, is relationship building, and she does that through almost constant communication. Beyond the weekly letters, her Internet site, www.stotler.com, keeps readers up-to-date on her thoughts on the market, and she uses seminars to stay in front of her clients as often as possible.
"With the seminars I can walk my clients through my analyses, and I have a chance to explain to them what is going on with their accounts," she says. Of course, seminars are also a great way to get warm, personal referrals because she always asks clients to bring a guest. If the guests like what they hear, the next step is getting them in for a comprehensive financial plan.
"Financial planning is the best way to get to know your clients," Stotler says. "When you spend that two or three hours with someone, you get to know what they really want to do with their lives, what they are afraid of and what keeps them up at night. And they get to know me as well."
After the plan is in place, Stotler takes control of the investment portfolio, using technical analysis as the base of her decision-making. "My main strategy is to find the market trend, and within that trend to find the strongest sectors. From there, I search out the best companies in those sectors, and invest accordingly," she explains.
Because she builds each portfolio using individual stocks, her target clients have at least $500,000 in investable assets. "I find that's a good number for a portfolio because that's enough to fully diversify it or manage it," Stotler says. "I don't like mutual funds, especially now. With the market going down and all the trading going on, you are going to have to pay taxes on that mutual fund, even while it has gone down in value. I hate that."
Instead, she and her clients spent most of October sitting on the sidelines with a 75% allocation to cash while Stotler kept her eye on the market, looking for the bottom. "I start with the big picture. I follow the news, the political events, and watch for movement in different sectors," she says. "I'm thinking small caps may be the next upward move, but I may be wrong. I'll watch the charts."
In the meantime, she'll keep talking to her clients, letting them know what she's doing and why, and listening to their ongoing concerns. "I always know where their kids are, what schools they are applying to, what vacations they are taking," she says. "It's a real relationship."
That is particularly important during periods of heightened market volatility, when nervousness can easily slide into panic. "As an advisor, you have a responsibility. You have to get to know them and stay in their lives, particularly in terms of understanding their risk tolerance," she says.
Her message during the rough patches? It comes down to reminding her clients of the importance of discipline, whether you are standing next to a pan of brownies or riding out a bear market.