Carving Out an Indie Niche; Boosting Client Communication: June Research—Slideshow

The subjects of such conversations include: the client’s total financial picture; what type of relationship the client wants; how much money the client expects to spend in retirement; investment strategy and the importance of diversification; how to prepare for a sharp market decline; and whether an investment strategy is actually meeting client needs.

According to Jay Nagdeman, founder and president of Suasion Resources, a financial services marketing firm in Roseland, N.J., “The most important thing to remember is that this is a mutual relationship and that both parties need to be satisfied. Many times advisors are in sales mode and forget this. But the advisor isn’t selling products or services; the advisor is selling trust.” Nagdeman suggests advisors pose questions to clients, such as: “What was the best experience you’ve had with an advisor?” And, “What was the worst experience?”

The Shale Gas Rush

Contributor Gerald Burstyn reports on the boom in hydraulic fracturing, or “fracking,” of natural gas from shale rock. The growing use of that technique carries substantial investment risks as well as opportunities, he finds.

Although worries about possible contamination of drinking water have gotten much publicity, Burstyn writes that “environmental concerns aren’t even the greatest threat to this investing area.” Rather, he suggests that investors keep a sharp eye on “historically low prices of natural gas and questions about how the industry presents its current assets and future prospects.”

Significiant uncertainties arise in attempting to assess how much natural gas exists in shale rock and how much can be extracted for a profit. However, some experts argue that such doubts are overblown. “One can certainly not argue that the resources do not exist in large quantities,” says Simon Rosenberg of Snow Capital Management. “Whether that is more or less than original estimates is beside the point.” 

What Is Your Financial Legacy — Today?

In the final installment from his new book The 7 Most Important Equations for Your Retirement, Annuity Analytics columnist Moshe A. Milevsky discusses how Solomon S. Huebner changed the perception of life insurance from a dubious “game of chance” to a rigorous field that makes serious use of the tools of economics and human capital valuation.

Writes Milevsky: “Professor Huebner’s main idea, and the one for which he is recognized today, is that people should insure their human life value, which is the present value of all the wages, salary and income that a breadwinner will earn over the course of his working life. He argued every head of household had a moral responsibility to have life insurance to protect that capital.”

Milevsky also recounts how Huebner applied diversification to a strategy of buying stocks in the depths of the Great Depression, stating “One share in 50 companies is better than 50 shares in one company, because it gives the spread of averages.” Huebner profited handsomely from that insight, decades before diversification became a staple of Modern Portfolio Theory.

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