When the client asks, be ready with your answer: comprehensive planning.
Wonderful guy, this client; a well-respected research scientist with a great sense of humor and a 55-foot fishing boat. We're early in the client/advisor relationship and the turf is being staked out.
It began with our introductory meeting when I learned about his passions, concerns and attitudes. A self-declared competitor, we agreed
that racquetball is a wonderful way to stay in shape. "We should play sometime." Uh, oh; as we talked it became clear why good business people (not just good financial planners) have to know who fits the profile of a good client, and who doesn't. We used this meeting to exchange not just information, but philosophies. It's here that the advisor needs to use the ears and mouth in the exact proportion that God gave them out: "Listen twice as much as you talk."
As I listened and learned, this combination of emotion and intellect told me what was important to him in defining a successful relationship: performance. Talk about your blinding red flag!
So, on we went. Combining years of experience and a certain amount of Irish charm, I was able to flush out that, while this issue of investment performance carried a lot of weight, it was not the only measuring stick. This is where I spent my allotted time talking. Because I am convinced of the value of comprehensive financial planning, I began my crusade, ever mindful that recruiting this man to my way of thinking was not nearly as important as the fact that I cannot be recruited to any other philosophy. It's where the rubber meets the road; time to walk your talk; fish or cut bait; lead, follow or get out of the way (or any other tired old cliché)-this is the time to set expectations.
If you are a true believer in comprehensive planning, this is a great time to be alive. Savor the time you have to educate your prospects and clients about the value you provide. Continually remind them that investment management is but a subset of the planning process, and never let them forget that. But this puts you in a tough spot if you lead with superior investment performance, or your ability to beat a benchmark. The old saying is that you only have one chance to make a good first impression; if you lead them with market talk, then you've made your impression. "What have you done for me lately?"
Sometimes working with clients is like raising kids. You just never know if you're doing it right. Around my house we have talked about establishing a family fund called the "Yeah But." Every time we hear, "Yeah, but...," the offender contributes a quarter to the fund. Who needs a 401(K) if you've got a "Yeah But" fund? The point is that we all hear "Yeah, but..." from our clients, and our initial reaction is to counter with something that will squash it forever. Forget it. "Your plan is right on track and you are making good progress," I say, and then I hear, "Yeah, but what about a terrorist attack?"
What do I say? The wonderful thing about having conviction is that you don't have to make up something new every time. Go back to the reason you and the client got together in the first place; revisit the power of comprehensive planning and remind them that the subset of investment planning has been implemented, and through proper diversification there will be good days and bad days irrespective of terrorism.
It can be said about every period in American history, "These are tough times." That's why people hire comprehensive planners: to help them through the tough times. Be sure to take whatever time is necessary at the beginning of every new engagement to listen and learn. As Stephen Covey says, "Seek first to understand, and then to be understood." If you follow his advice you'll have wonderful relationships for a lifetime. It'll also give you more time to play racquetball and go fishing.
Dave Moran, CFP, is a senior vice president with Evensky, Brown & Katz in Coral Gables, Fla.