Review season is a time when client and advisor take a fresh look at things and either confirm the status quo or make changes to the existing strategy. Not that you should wait until a quarterly review to do so, but the account review is a good time for a "deep dive" into the portfolio. I am now just over half way through the process and everything is going extremely well, except for the one client who holds some rather unrealistic expectations. There is, however, a lesson in there somewhere. Here's the story.
I established this client’s account in late April of this year. While the aforementioned account—which is fairly conservative—is ahead of the stock market (since account inception) you would normally consider it a victory. In other words, since the inception of the account, the market is down and the account is flat. Wouldn't you expect the client to be grateful that he has outperformed the market? Ah, no such luck. This client opened an account with another advisor a few weeks after opening the account with me and though the other advisor happened to buy at a low point, and the market is up 10% since that point, then my account should be up as much…don't you think?
Maybe in the movies, but not in real life. So the client is comparing my account with the other one—an apples to oranges comparison since they span different time periods. Nonetheless, his angst is clear. His is also not a very large account which provides some explanation since, in my experience, smaller clients tend to be more problematic.
Now I have been in this business for several decades and have spent countless hours educating clients on some rather complex investment topics by making them simple. In 99% of the cases, the client clearly understands what I am saying. Once in a while though, a client, intelligent as he may be, just doesn't grasp what I am saying. Perhaps he has a preconceived bias and doesn't want to listen or perhaps there's some autonomic brain function at work. Whatever the case, this type of client occasionally surfaces.
What to do? What to do? I could fire him which would make my life much easier or I could try one more time to explain things to him.
As we have been working together for less than six months, perhaps I should take a cue from Donald Trump and say……."You're fired!"
What would you do?