Talking to Clients on Japan and Mideast Now: Harold Evensky

“The key is, let’s get to them before they call us,” says Evensky & Katz’s leader on communicating with clients in the midst of crisis


While there hasn’t been a spike in client calls in to his firm due to the crisis in Japan, reports Harold Evensky, founder of the registered investment advisor Evensky & Katz Wealth Management, his firm is reaching out to let them know that they “are monitoring” the unfolding situation in Japan and “talking to money managers to see what they are thinking.” 

“Things are up in the air; until there’s a solution, or containment, there’s nothing to do. I don’t recommend changes in the portfolio,” he says. The firm abides by Evensky’s “five-year mantra” in which “everyone has plenty of liquidity built up,” for five years of expenses—because anything “less than a market cycle is not enough,” he maintains. But for those clients who are feeling uneasy, they can lighten up short-term fixed-income positions, adding a bit more cash for “psychological liquidity.”

While clients are not calling for the most part, Evensky says, “The key is, that’s great—let’s get to them before they call us. I remind my next-gens [younger advisors and students that] the whole point" is to let clients know that “we don’t know what the results will be but we don’t think they’re permanent.”

For “clients we think are on the cusp, we bring them in and show them” projected scenarios. “We use MoneyGuidePro software; Bob Curtis [its designer], built in a [way to] test how bad could it be—and still be ‘acceptable.’ There’s ‘ideal,’ and ‘acceptable.’ In most cases running the plan at ‘acceptable’ shows the portfolio can incur losses well in excess of those during the Grand Recession and still be ‘acceptable.’”

Evensky will “schedule a client call-in next week” and “follow up with a letter.” Looking “back at letters over the years, when it looked like the world might end, it turns out that things do get better,” he concludes.

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