Schannep Investment Advisors runs radio ads and also distributes a monthly newsletter. But these are not quite personal enough, and so using the telephone helped during those tough days, he says.
His certified wealth strategist certification has become an important relationship-builder. "It's amazing when you start talking to people," he says. "Some say, 'Yeah, I don't have a will. I don't have anything.'"
In one case, a client had a trust. But then Schannep discovered that the brokerage account the client had opened with him three years before was omitted from that trust. It needed to be retitled. Schannep's next question: "Who's the successor trustee?" "My son," was the response. "Does he know that?" Schannep asked. "No."
So Schannep suggested bringing in the son to start working with his parents' business. Not only would it be a way to familiarize the son with his future responsibilities, but it could also be a carrot to get the son's assets under Schannep's management. Plus, it would help Schannep set the
stage for a new relationship when the transfer of wealth finally occurred.
An attractive next step is to probe client charitable giving, he says, which means: "Then, you start getting close to the heart. It marries the customer more heavily to you."
Greg Phelps, president of Red Rock Private Wealth Consulting LLC of Las Vegas, was preparing to feel a pinch earlier this year with his upper-middle class-retirement-oriented client base, since he had some clients in those infamous illiquid auction-rate securities.
Nevertheless, "my assets are up from October-probably about $8 million," he says, because of a change in focus to wealthier clients. "I brought in a few large clients. The activity I've seen for new clients is down, but I believe it's because I raised the minimum portfolio size." He now takes clients with portfolios of $1 million and up. It makes for fewer accounts and better profit margins.
One large client brought some auction-rate securities to him that were still illiquid, he says. "They were definitely pitched and presented as a money market alternative." Another client had been getting more than 5% tax-free on a Florida auction-rate security.
He says most of his clients' auction-rate securities have already become liquid or were paid off. Though illiquidity definitely poses a short-term challenge, over the next six to 12 months he expects those securities to "wash out." Phelps says that his saving grace was that he never looked at those securities as a money market alternative, but rather, as a longer-term holding with a one-and-a-half-year time horizon.
Still, he adds these weren't the types of situations in which, say a $1 million client was purchasing $200,000 in auction-rate securities. Those that had them have a net worth of $5 million to $10 million.