The Fundamentals Never Change

Four timeless tips that can help deliver long-term client relationships.

Recently stock market rallies have pushed the major indexes above key psychological levels. For the Nasdaq, that level is 2,000 and for the S&P 500, it's 1,000. We've come a long way from the dark days of last year.

Economic indicators suggest the global economy is stabilizing. The financial dark cloud of the Great Recession may indeed be lifting. It's given investors some renewed optimism. I'm reminded by this improving economic climate that no matter how dynamic markets are, the core principles of providing quality client-centered financial advice never really change.

I spoke with Roger R. Bell, president of Roger R. Bell & Company, Inc. in Dublin, Va., to get his thoughts on the immutability of financial planning. Here are four timeless tips that can help deliver long-term client relationships:

1. Peace of Mind

Your client's need for peace of mind does not change regardless of market performance. Bell Bell uses a structured method of active listening to determine a client's goals and desires. Planning relieves anxiety.

It takes a trained ear to hear what is really important. Bell's touchstone is to focus on why he does financial planning in the first place. It's about helping clients get what they want out of their lives.

2. Holistic Planning

Money is an equalizer. Wealth is a means to an end, not an end in itself. Clients' true goals and desires can be a mystery to them. They may think they are self-aware, but they may not actually have a clear, concise understanding of their tolerance for risk and their real life goals.

It takes time, focus and alertness to empathically listen to clients' ambitions and hear the subtext of what they are saying around money issues. Bell's analogy is oatmeal cookies. If you take the shortcut and melt the butter in the microwave, the cookies turn out thin. Folding the butter into the batter by hand allows the cookies to rise. If a planner tries to speed through the "soft" bits of planning, their client relationships will be likewise thin.

3. Plans are Magical

Bell expresses it this way: there is an inherit power in planning. Planning makes dreams come true. Financial plans create energy that is otherwise missing. Lack of planning causes disorientation, entropy and anxiety.

Regardless of market conditions, financial planning, like magic, makes things better than they would otherwise be. Plans become self-fulfilling prophecies. How cool is that?

4. Capacity to Invest

Regardless of the fluctuation of the market, consistency in saving and investing over time is a winning strategy. It's axiomatic. Sounds simple but, Bell advises, pay keen attention to the client's capacity to invest in their portfolio.

Pushing too hard or not hard enough can be disastrous to the client, family and their heirs. It can affect generations. And it can adversely affect your client/planner relationship.

Bell gave me two client examples which illustrate these core principles.

Composure

Bell's client example is a couple, who has been with him10+ years. They have moderate net worth, upper-middle class income, grown children, are aged 60+, largely debt free, and are looking at the "home stretch" of their lives.

By spending time carefully considering the where, what, how and timing of their financial plan, this couple developed peace of mind. They prepared, reasonably and rationally, for the well-being of their financial lives.

The train wreck of 2008 didn't shake their composure. They did their best to control what they could control and let the rest go. They ignored the media's drumbeat of doom. They found serenity in accepting that market conditions were beyond their control. The result is equanimity and patience.

Terminal agitation.

Bell's second example was also a couple, mid 50s, well-educated and facing a disability in their family. Bell has worked with them for 15-plus years. They have been a constant challenge because they short-change the planning bit, in favor of chasing the highest return on their investments. Their goal is accumulating the most wealth they can, period.

No thought is given as to the ultimate use of their wealth. They sabotage their own best interests by seeking the fund-manager with the hot hand. They are quick to chase individual stock spikes only to be the last one in before the fall. They continue to seek inappropriate investments in real estate and commodities lured by the siren song of easy money. The result has been an under achievement in portfolio performance towards uncertain and ill-defined goals. It's a difficult relationship plagued by agitation.

In these frustrating times for financial and investment advisors, I found my conversation with Bell refreshing. His core principles of financial planning evade the capriciousness of the market and give meaning to the service he provides to his clients.

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Marie Swift is the president of Impact Communications, a marketing and communications firm for independent advisors; see www.impactcommunications.org. Read her blog at www.marie-swift.blogspot.com
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