Clients commit to a financial advisor relationship because they trust the advisor's judgment. The measure of that judgment though, if you're Rodger Alan Friedman, is weighed in thousands of practice hours.
Author of Forging Bonds of Steel, from subsidy publisher Advantage, Friedman is a financial advisor of 34 years who has decided to share wisdom drawn from his estimated 90,000 hours of experience with new advisors and clients alike.
Friedman has strung together vignettes, loosely based on his own (un-named) clients or composites of them, to dramatize his point that knowledge is no substitute for judgment. “I have met many knowledgeable simpletons,” he writes in summarizing a chapter he titled, “Facing the Music.”
It's the repetition of human interactions, Friedman says, that built up over a lifetime, form the knowledge base necessary to be a good advisor; one who acts as a “steward of the client's portfolio and guardian of the assets.”
Raised on the lower east side of Manhattan, Friedman these days is the managing director, founding partner and wealth manager at employee-owned Steward Partners Global Advisory, an affiliate of Raymond James Financial Services, headquartered in Washington, D.C. But he started his work life operating a dry cleaning machine in 105-degree summers near Times Square. The family-owned business proved the perfect motivator to propel Friedman into compliance auditing of E.F. Hutton branch offices, which led to operations management and the position of Wall Street stockbroker for Hutton, ultimately Morgan Stanley.
To his credit, the case histories Friedman presents in his book don't all turn out well. The grandparent's children refuse her offer of a college fund even after he intervenes. A directionless son squanders his college fund. And, Friedman acknowledges the role chemistry can play. “Continuing in an advisory relationship with a poor fit is like continuing to date someone in whom you have no interest.” But there are successes, too. He discovers a family is underinsured and spares the surviving parent and daughter a life of debts when the father suddenly dies in an accident. Each tale supports his theme of knowing your clients very personally.
Friedman's team at Steward serves about 150 clients, and he counts among them 34 of the original 36 families with whom he started out in business. A 98 percent retention rate is remarkable in this business, he says. “Most assets walk out the door once the client dies,” he notes.
The first question to ask a new client is “Tell me about your family,” says Friedman. “When you have a family, you're investing to provide for the beneficiaries, you and a spouse or to help other family members who might rely on you.”
In taking on a new client, advisors need to understand the family dynamics. A client may seem to have a lot of money based on his salary. But, he points out, they may have a son in drug rehab at $7,500 a month, and an older parent in assisted living at $1,800 a month. “It's not helpful if you say put x dollars away and they can't.”