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Portfolio > Alternative Investments > Real Estate

Beyond Investment Advice

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When the phone rang that day, advisor Mary Lacey Gibson was surprised to hear one of her clients say, “My wife is making me call you and you will be the decision maker. I want to purchase a Toulouse-Lautrec lithograph for about $37,000. Can I afford to do that?”

The client is a retired university professor with a passion for art. This was his dream. Gibson, a CFP who owns and operates her own eponymous financial planning and business consulting firm in San Juan Bautista, Calif., was pleased to get the call. After crunching some numbers, Gibson determined that her client would be able to afford it, but only with the proviso — and his wife had him write it out as a promise to her — that if the couple ever fell on financial hardship, he would be willing to sell the lithograph without argument.

Gibson says providing this type of ancillary advice is quite common for her. Some other services she’s provided: visiting housebound clients, setting up budgets for newlyweds or soon-to-be-marrieds, coaching people to negotiate a raise or evaluate workplace benefits, helping clients determine how best to buy or lease a car, providing real estate advice and repairing damage caused by identity theft.

“The most important aspect of working so flexibly,” she explains, “is that it strengthens my clients’ understanding that I am the go-to person whenever any financial question comes up. If they are wondering about something, I tell them they need to be calling me. They recognize that in the long run, by calling on my advice or insight, they will save money and anxiety.”

Jake Engle, a CFP who established Wealth Planning and Management with offices in Kansas City and Seattle, says his clients use him as “a fresh set of eyes” regarding their real estate holdings. “In one family, they literally could not see the trees for the forest,” he says. “Two different family members had a substantial number of trees on properties they’d inherited. Trees grow bigger and better if the forest is thinned, and the trees being thinned can be sold right away — thus improving cash flow,” he explains. “We devised a plan to thin the properties once every decade. All of us are environmentalists, and the trees were cut in an environmentally friendly manner. The forest won and the clients won by getting money now, and even more money in a decade.”

In the case of “the tree clients,” one paid Engle by the hour and another was already working with him under a retainer/AUM agreement. However, fees are not his primary goal. “Mostly, my clients pay me for this type of ancillary work through referrals, and that’s what I want. I tell my clients I serve as a network; my job is to share with them what other people have learned and are doing, whether it is incenting their kids to buckle down and study, or finding ways to save money on household expenses. If I’ve heard it, I share it,” Engle says. “Clients are amazed and grateful. They say things like, ‘I thought this was going to be just a bunch of dreary number-crunching.’”

Engle says his role as an advisor is to share and suggest, with the intention of getting the client’s mind working because “the more minds we have working together, the better our solutions — and the more of the solution that comes from the client, the better.”

Bradley Bofford, CLU, ChFC, and his colleague Michael Flower, both of Financial Principles in Fairfield, N.J., say it is important for them to be a resource to their clients. “We would be foolish not to do this. We want them to think of us whenever they have any question or concern in their life,” Flower says. “If I am being asked my thoughts and opinions not only on their finances but life decisions — for instance, job opportunities — I know that I have formed a strong relationship with the client. I have probably developed an advocate for my practice.”

The biggest example of this happened recently. Flower had a husband and wife as clients since 1999. The wife passed away from complications of a broken leg in 2002. There were questions about what the doctors had done or not done. Over the course of a year, Flower convinced the husband that he should speak with an attorney who deals with cases like this one. “I spoke with an estate planning attorney that I refer a lot of business to and he referred the case to an attorney in his firm,” Flower recalls. “The case did not look all that promising and the client was hoping near the end to just recoup his costs, but he ended up settling for upper six figures.

“Even when things looked dim, the client always told me that he was happy that I introduced him to the attorney and that the attorney had been working very hard for his benefit. Needless to say, when the settlement was reached, the client went out of his way to thank me several times for introducing him to the attorney. The client actually said, ‘If I had not been working with you, this good outcome would have never happened.’”

Flower and Bofford agree that this type of involvement and ancillary advice will not only return to their bottom line, but will ultimately strengthen relationships with both strategic partners and clients. In the example above, Flower was able to refer a center of influence (the estate planning attorney, who benefited from the referral inside his firm) and create a common interest: working for the same client to achieve the best outcome.

“One of the ways we differentiate ourselves from other advisors is we take a ‘macroeconomic’ approach in working with our clients,” Bofford explains. “It is clear we go beyond simply providing investment advice. Our philosophy is that every financial decision made affects another area of the client’s financial life. Thus, it is pivotal to understand the impact of every financial decision implemented in the client’s planning.”

For example, the firm’s “macro” model addresses all insurance coverage (including auto, homeowners and umbrella), group benefits, allocation of 401(k) plans with current employers, estate planning documents, tax-return review and so on. When first meeting with a client, they use a medical analogy. “Before a prescription is made, a good doctor will give a thorough check-up to ensure the proper diagnosis. We do a thorough and professional job for our clients with a similar thought process,” Bofford says. “We remind them that we can be doing a great job on the management of their investments, but hypothetically, if the client is in a car accident tomorrow and is sued for millions of dollars without the proper coverage, their portfolio can be completely lost.”

Bofford and Flower find that people truly appreciate their value-added advice, especially when it is clear there is no form of compensation involved. “We simply care about our clients and want to be sure they have all of their bases covered in their overall planning,” Bofford says. “We have heard countless times how very grateful the client is. An indirect result is it solidifies the wealth management relationship and stimulates referrals.”

Next month, we’ll look at ways other advisors are integrating this value-added approach into their core business.

Marie Swift is president of Impact Communications, a marketing and communications firm for independent advisors; see


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