A guide to virtual handholding.

Living with technological change is old hat now. Everyone knows computers and related equipment get faster and more innovative every year while falling in price as if there were no bottom. There's almost nothing that can't be done to increase office efficiency if we're just willing to make time for technological experimentation.

Probably the most elemental building block of this entire phenomenon is e-mail. And there's virtually no professional who doesn't use it frequently enough to take it for granted as a primary form of communication. But do clients feel the same way? Unless your client works at a desk and uses e-mail frequently in his own work domain, he or she may refer to it only occasionally-and may not regard it as a serious communication tool.

Which is probably OK when times are smooth, when the economy's rolling along, when clients see their personal finances in an optimistic light. But how about when the markets are falling just like technology prices-with no bottom in sight? Can one effectively hold his client's hand by e-mail, or do times like these require face-to-face (or telephone) contact?

This isn't an issue on which we're going to find unanimity, but in the differences of opinion we can examine our own beliefs and decide if they need adjustment. Joel Ticknor of Ticknor Financial Inc. in Reston, Va., represents one extreme when he says, "Clients want human contact, and this has never changed. I have never regarded e-mail as a substitute for face-to-face contact. Clients hire us as counselors, trusted advisers, 'friends.' When they are worried and concerned, they want reassurance that someone is listening and cares. I don't believe an e-mail will ever take the place of eye contact and a calming voice."

Joseph Janiczek of Janiczek & Co. Ltd. in Greenwood Village, Colo., expresses a similar sentiment: "E-mail, or for that matter, a mailed letter, is only a tool to augment a client relationship, not replace it. My belief is that you use them sparingly for the client's convenience, not the advisor's. Clients, like most of us, are overwhelmed by the amount of e-mails and printed documents [they get] to read. As an advisor, I'd rather be a solution to this problem than a contributor to it."

Ticknor's viewpoint sounds indisputable on the surface, but perhaps it only applies to certain clients. And Janiczek assumes e-mails are an inconvenience to clients, but that, too, may be a perception that is not universally applicable. Lissa Farkas, a portfolio manager at Spero-Smith Investment Advisers Inc. in Cleveland, is perhaps a bit more discerning in her decisions to use e-mail or the telephone. "The three-year market decline has caused our firm to be more diligent about communicating frequently with clients. It really hasn't resulted in more face-to-face meetings in particular, but has resulted in a more focused client communication effort via all avenues ... e-mail, regular mail, phone calls and meetings," she says.

Is this the key? That is, using e-mail as a "preventative" rather than a response mechanism? Maybe frequent e-mails to clients to communicate the state of the market and the fact that you're on top of things is what's necessary to limit the amount of time-consuming, face-to-face (or phone-to-phone) contact we assume clients want?

Roger Southward at Southward Financial Services LLC in Pickerington, Ohio, thinks so. His firm provides a quarterly newsletter and monthly market update to all clients, and even sends out daily updates if the markets dictate. "Since the start, we have communicated regularly with clients via e-mail, and we have encouraged our clients to respond to us using e-mail as well. The recent difficulties in the market don't seem to be causing a reversal in this trend for us ... for several reasons. First, our regular communications often answer questions before a client may think to ask them. The regularity of the e-mails is also a reassurance that we are continuing to watch out for their interests. Our encouragement to respond back is also helpful in demonstrating our willingness to talk. We also, as part of our letters and e-mails, offer the opportunity for phone or personal conversation. However, we just don't seem to have a change in [the number of] individuals taking us up on that offer," says Southward.

Spero-Smith does something similar, but Farkas says she typically picks up the phone when clients continue to express fears in spite of the assurances: "I believe a phone call versus an e-mail conveys more urgency, and gives the client the message that you heard their concerns and feel it is important to address them more personally."

Barbara L. Steinmetz of EA Steinmetz Financial Planning in Burlingame, Calif., admits to picking up the phone now and then if she believes a particular client requires a live, interactive response, and she's aware that not all clients are proficient in the use of e-mail. In general, though, she says, "There's been no increase [during the period of market decline] in the need or desire for face-to-face contact. I believe that you can effectively hand-hold or respond in either fashion as long as it is timely and complete."

Perhaps Steinmetz has put her finger on the key-timeliness. What is more important to clients: that they hear our actual voice or that they get a response from us, in one form or another, as quickly as possible? And if the latter is more important, is the phone or e-mail a better method for a quick response?

Maybe the answers to these questions lie in the survey form Jon Ford of Financial Planning Solutions Inc. in Cedar Falls, Iowa, recently sent to all of his clients. With an 88%response rate, Ford learned:

93% of his clients feel they "always" get timely responses to their questions and concerns, while 7% feel they get a timely response "most of the time";

The same percentages of clients feel they have "frequent enough" contact with Ford;

Ford's clients' preferred methods of contact were (respondents could have more than one answer so the totals below exceed 100%):

Telephone 43%

Face-to-face 43%

E-mail 36%

Written 29%

Asked if they would like to receive information via email, 71% answered yes, and 29% answered no;

91% said they check their e-mail every day;

Some of Ford's clients not presently connected to the internet expressed a desire for his help in getting connected, i.e., choosing a computer, setting up an internet connection or email address, and getting trained;

Other questions in Ford's survey indicated clients are just as eager for ongoing financial planning information as they are investment information.

This survey confirms that Ford's clients (and probably yours, too) place a high value on timely responses and are open to e-mail, even though they want more personal forms of contact at times. However, says Ford, "The contact my clients want by phone or meeting is generally to answer urgent questions of a financial planning nature. A client might call to say, 'We just discovered that my father has accounts in four savings and loans that no longer exist.' I rarely get questions from clients about their investments, because they know they are going to see me soon anyway," says Ford, referring to the regular meetings he has with clients.

At the far end of the spectrum from Ticknor is Pat Horan, owner of Horan & Associates Financial Advisors Ltd. in Towson, Md. "We believe e-mail is a timely, personable way to communicate and it is our preference for communications. During volatile markets, as we have seen in the last 36 months, we use e-mail to broadcast messages to all of our clients and for one-on-one communications. For example, on 9/12/01 we sent out an e-mail message to all clients urging them to stay cool after the terrorist attacks. We noted that the events that took place were political and economically driven, and we believed that when the stock markets opened again there would be an initial sell-off in the market and then it would stabilize-which in fact is what happened," says Horan.

Horan also uses e-mail to answer specific client questions, such as, "Why did you buy this or that?" and "What do you think about this stock or that stock?" He says, "If clients need money from their accounts or have specific questions, we like e-mails as we can respond to them directly and in a timely matter. I would estimate that approximately 10% to 12% of our 540 clients have expressed concerns about the overall economy and equities market. Of those who communicate that they are anxious about current conditions, about two thirds communicate via e-mail."

In conclusion, the march toward greater efficiency through the heightened used of e-mail continues. How much you play a role in it depends upon your outlook and how you've trained your clients. For example, your own comfort with e-mail may dictate how essential you think it is. Some advisors perceive it as an advantage in that frequent, brief e-mail reports can leave clients with the right impression-that you are on top of things and intend to keep open the lines of communication. Others think it a disadvantage, a lazy form of communication that leaves the client dissatisfied.

In the end, can client fears only be address by phone or in person? No, says Horan: "I answer the phone calls with a phone call and the e-mails with e-mail responses. Clients seem to dictate their preferred method of communication and I respond based on how they communicate with us." Perhaps Horan's approach makes the most sense.

David J. Drucker, MBA, CFP ([email protected]), a fee-only financial advisor since 1981, is co-author of the book Virtual Office Tools for the High-Margin Practice (Bloomberg Press, 2002) and the Virtual Office News newsletter, both available at www.virtualofficetools.net.