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Retirement Planning > Saving for Retirement

Advisor alert: Do right by your client

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For our upcoming annual senior issue, which you’ll see in July, I interviewed a 63-year-old Texan to get his take on wealth, health and retirement.

In interviewing the client, who I’ll call Jim, an interesting tidbit emerged: He’d been “done wrong” by an advisor. Yeah, I know, it’s beginning to sound like a country-western song already, but, hey, we were in Texas.

So here’s the skinny. Jim was cruising along for 40 years with his money in CDs. Not getting great returns on them, but not losing his shirt, either. Then, along came an advisor who put Jim in some pretty risky equities. This was 2007. The money started flowing. Jim felt pretty good about things. Jim retired for the second time. He’d earned it.

We turn the page to 2008. Jim’s a modest guy, who lives in a nice neighborhood but nothing flashy. He could afford more, but he’s kept a tight lid on the money all these years. He was in CDs after all. But, man, that money’s really flowing. I mean, it’s going gangbusters. Jim’s out shopping for fancy cars; his preference is Mercedes. He’s looking at custom made bikes; he’s a Harley man. Then the market crashed. Jim lost about half of his savings.

The advisor who put him in the risky investments? Not a peep. Cut and run. Dine and dash. Not even a good old, “Hasta la vista, baby!”

So Jim has to jump back into the workforce for the third time, trying to figure out how to turn that 201k back into the 401k he’d labored over for 40 years. A friend put him in touch with a second advisor, a safe product guy who took a look at the damage done and told Jim some bitter truth: “You gotta cut your losses, buddy.”

Jim swallowed hard at that prospect but appreciated the straight shooting after the rollercoaster he’d endured the past couple years. The second advisor got Jim in products that promised guaranteed income. They promised something else, too: If the market got fickle and took another nosedive, Jim wouldn’t lose a dime. Shoot, man, he wouldn’t lose a penny.

Now Jim’s got a nice check coming in every month. He’s even eyeing that Harley again. And one other thing: He referred the second advisor to his mother-in-law, who has money tied up in bonds that won’t fully mature until 2041: Another opportunity for a straight-shooting advisor.

What’s the moral of this tale? There are plenty, but here are two:

  • Find the product that best fits the client’s needs. Jim didn’t go around looking for risky investments; he got sweet talked into it. Do right by the client, and the money will come. And referrals, too.
  • Communicate, communicate, communicate. It doesn’t matter how. Pick up the phone. Send an email. Send a card. But keep your clients warm. Just because that big commission check has already rolled in doesn’t mean your work is done. Things change. The client’s priorities can, too. It’s better to find out from them what they need, instead of losing their business to another advisor.


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