Tried and True

Now that we appear to have survived the worst of the crisis, Krasney notes that “yields have narrowed again, people are looking for returns and willing to take on an element of risk, and the markets are more or less behaving as we would have expected them to behave.” That means, he argues, that “now more than ever, it’s become incumbent on me, to preach the virtues of goals-based results rather than financial-pain-centered metrics: not how much pain can you stand, but what do you need to do to get the job done?

If you approach people from the point of view of what kind of risk are they willing to accept to get the job done, their job, they become more focused on getting the job done and less on how much money their account gained or lost in a specific year.”

Len says he sees the last year as a great opportunity. Hewing to his original theme, his firm focuses on things they can control: “We can’t control market performance, but we can control the planning side, how the assets are arranged for our clients, and we can differentiate ourselves now much more than in an up market.”

Frisch says that one thing that happened over the past 12 months is that “everybody wanted to put their head in the sand, including the advisor! All of us are guilty of waking up at two, three, or four o’clock in the morning and watching the futures to see what would happen the next day.” What’s been confirmed for him, more than a change is the importance of clients education. When clients get on board, “they’re on board for the long haul, and when they understand things better, it makes for a more dynamic relationship. As the years go on [with clients], we take a less active advisor role and become more of a coach, and we enjoy that relationship better, and so do the clients.”

For Finke, the crisis “clarified some things we didn’t want to believe…that from the client’s standpoint, yes, they do want to reach their goals, but they really want that relationship to be there. So we’ve been forced to focus on that relationship. We moved from a monthly report to a couple of e-mails each week, saying “this is what happened this week, this is what we’re doing about it. So people don’t call us now and ask us about some change in the market and how we’re going to react. They know what our thinking is on these matters.”

Stewardship Capital viewed the last year as a “big opportunity,” too, says Finke. Beforehand, he says, “we may have grown in spite of ourselves, so this has helped us focus on the process of building the relationship, that the clients are having the experience we wanted them to have from the onboarding process through the client lifestyle. We know a lot of people are looking to switch advisors, and while we could cry over spilled milk since we haven’t grown, adding a lot of new clients, but we’ve formed a strong foundation from a staff standpoint, from a process standpoint. We’ve got the people in the right places, and we can make sure that clients get the experience they expect.”

Using the CRM software Junxure, Len agreed with the other advisors that his firm sent out e-mails to clients more frequently. “We use Junxure, which has an alerting function that allows us to send out e-mails on demand,” but he sounds a note of caution as well. “One of the things I find interesting is that I would bet that all of us preach long-term investing to clients, but yet you’re sending out weekly e-mails, others are sending monthly notes, we send out quarterly performance reports. I know I have clients who track their balance every day–we’re sending the wrong message to our clients.” Many of his firm’s e-mails “focused on ‘Here’s what’s going on!’ I’m sure at Yahoo! Finance there’s some poor guy in a back room that has to come up with sensational headlines every day. This goes back to my comment about control; clients feel that there’s all information out there, and if I can capture the information, then I have control.

I’m sure everybody has had client calls where the client says, ‘I was reading on the Internet that this stock is going to go up, it’s a sure thing.’ I had a client call me in August and said there’s going to be a correction because everybody agrees there’s going to be one. And I said, ‘Are they all going to wait until it corrects to start selling down? If everybody believes it, then they would have started selling already! You just want to believe it.’ So a big part of our job is to educate clients about the process, and to keep clients out of their own way, emotionally. While I may be emotional about my money, I’m not emotional about theirs. It’s a big difference, and it’s a lot of what we provide clients.”

Frisch jokes that, “pre-August 2008, we went from being 90% advisor and 10% therapist to 90% therapist and 10% advisor. And we’re back now to about 70% advisor–I don’t know how much below 70% we will be when we get back to quote, unquote ‘normal.’ He points out that “CNBC doesn’t help, to broadcast headlines like ‘single biggest Dow drop since last Tuesday.’ Clients always migrate from fear to greed. Up until about a year and a quarter ago, they went from greed to fear, and greed is starting to come back because they’re trying to make back everything they lost as quickly as they can. People want handholding; clients didn’t realize they had more risk when they had more money. People didn’t leave because of poor performance last year, they left because they felt they were out in the cold, that no one was holding their hands. It was a wake-up call to many firms.”

Bernhardt puts it succinctly: “We’ve earned our fees for the next 10 years over the past year, with all the handholding we’ve done.” When it comes to clients, he says, “It’s about setting expectations, educating them, keeping them disciplined. I feel good about what we’ve done for our clients. We did a lot of e-mails, and phone calls, and Webinars to keep them informed last year.” While he admits that it’s “hard to keep them disciplined, because we did, we did a good job. You have to stay true to your asset allocation: you need to rebalance; you need the forced discipline to buy low and sell high.” Finally, he argues, whatever communication you have with clients, no matter the medium, it “has to be personal–caring and educational.”