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The Message You Send

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“Anybody over the age of 60 is scared to death” over the coming Presidential election, said Keith Pinsoneault, whose firm, Optimum Investment Advisors, directly manages some $800 million for individuals in addition to the more than $3 billion it oversees in mutual funds like the Aston/Optimum Mid Cap mutual fund. Egged on by the media, Pinsoneault says those clients “ask me every day” what will happen to them and their wealth, assuming Barack Obama is elected in November and that he is able to follow through on his pledges to raise taxes. But James Moffett, manager of the $4 billion UMB Scout International Fund, points out that when Bill Clinton was elected, “he raised taxes and the economy chugged along; we had eight years of a bull market.” In his soft drawl, Moffett suggests there might be a “racial reason” for the anxiety felt by some people like Pinsoneault’s clients over Obama and his platform. Interviewed in the last week of June, when the Dow plummeted as oil prices soared, Moffett suggests that the sharp market downturn might have something to do with it being “the end of the quarter, when they cut the statements,” on which some managers might not want their clients to wonder, “Do we own Citigroup?”

The lesson here is to remind you of the key communications role you play for your clients. Like Pinsoneault patiently fielding calls from panicky clients, and suggesting that if they’re really worried about taxes being raised, it might be a good time to take advantage of the currently low capital gains rates, part of your role is to place any economic, market, or political development into context. The message you send clients must be consistent, clear, prudent, and measured. You can’t promise them the moon, and you also shouldn’t be a Cassandra.

In fact, the message you send current clients in a time of market turmoil and economic bad news is the same message that should appeal to prospective clients. As our cover story points out on page 38, in a sea of sameness, where the words if not the essence of the independent advice model have been coopted by the biggest firms in the business, you need to differentiate yourself with a clear, consistent message that’s delivered by you, your partners, and your employees on an ongoing basis. If you’ve always defined “marketing” as waiting for passive referrals, you may soon find yourself waiting for Godot instead.

As Mark Tibergien told me recently, he believes there will soon come a time–within the next 10 years–when the passive referral approach will falter. There will be some consolidation of advisory firms in that timeframe, due to the “slow eroding trend of rising costs and declining margins,” which he says will lead to “the breakeven point for advisory firms getting higher,” which in turn means firms will need to “generate more volume to support their infrastructure and generate more profits.” Tibergien admits that right now “most advisors do not have any problem attracting clients,” but that “eventually you will have dominant practices in a marketplace that will have the ability to attract the cr??me de la cr??me of opportunities.” By then, “people will be competing more aggressively for the right kind of clients.”

Part of an advisor’s job is to increase clients’ chances of succeeding in an uncertain future. You should improve the likelihood of your own future success by honing your marketing to start attracting now those “right kind of clients.”


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