Judith Shine doesn't let herself get carried away with growing the business during down markets. That's because she's found keeping clients on the right track is harder work when the market sours.
"You're in the middle of a bear market, so you're going to be putting Humpty Dumpty back together again," she says. "This is the time I should be concentrating on my current client base."
Before the market went south, Shine kept growth to a steady five to ten clients a year. Since 1999, she has kept it that way. That inevitably has resulted in her turning clients away.
"We always do," she says. "I don't buy into the thinking that this is the time to grab clients."
Her firm, Shine Investment Advisory Services in Denver, currently has 175 clients and $600 million under management. Despite the tough times, the firm has kept to a revenue growth rate of about 10% per year. Since she started the business 20 years ago, Shine says she has lost a total of five clients.
Fees start at 100 basis points for the first million and fall to 25 basis points for $3 million. The firm's only source of new clients is word-of-mouth referrals from its current clients. Prospects she does talk to are often in a state of fiscal shock-"frozen in the headlights" after bad experiences with other advisors, brokers or do-it-yourself investing.
"A lot of people thought they were getting financial planning and they weren't," Shine says. "Now everyone's flocking to advisors for help."
That means she has to manage expectations from the get-go. "I've talked to a lot of people on the phone and just said, 'I have the same stock market in my office that your advisor has in his office.'"
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It was about two years ago when Mark Little decided he'd had enough of business as usual. Not that his business was doing badly. Wall Street Services Inc. in San Antonio, Texas, was a transaction-based firm plugging along with 1,242 clients.