Communicating with clients has never been easier with mobile phones, e-mail and Skype, but advisors agree that nothing beats in-person visits when they want to really get to know clients and their needs.

Michelle Rand, president of Cascade Investment Advisors Inc. in Portland, Ore., has logged thousands of miles trying to meet face to face at least once a year with 140 clients scattered throughout 15 states and overseas. Sitting in her clients’ living rooms often helps her understand a lot more about them than what she gleans even through office visits, she says. Rand founded her firm in 1997 and manages approximately $150 million of assets.

Ann (not her real name), a self-made, high-net-worth client who lives abroad, stops by Rand’s office when she travels to the U.S. Rand didn’t understand how comfortable and frugal the 60-something-year-old was until she visited her home—and used her guest bathroom.

“You could hold the towel up to the light and see through it,” says Rand. “She probably hasn’t bought a new towel in 30 years.” Rand didn’t say anything about the towel to the client. But she did speak up when she saw the room Ann had booked for herself at a youth hostel in a city where they’d met for sightseeing, shopping and dinner. “I told her, ‘Seriously, you need to get yourself a nicer room.’”

Over the years, Rand saw “bursts of spending” in Ann’s account. Not until her trip did she learn that it’s mostly for gifts, travel, family and philanthropy. Rand reminded Ann that she could also afford to treat herself better. When she saw Ann’s nice residence and learned more about her family dynamics, “I realized she could take more risk than I originally perceived,” Rand says.

Rand has shifted some of Ann’s bond portfolio to investments that offer higher yield. “It doesn’t mean we’re buying distressed securities,” she says, but she has replaced some government issues with corporate issues. Rand also learned how important socially responsible investing is to her client, and became more sensitive about individual issues she placed in the portfolio.

“I knew she was sensible with money,” says Rand. “The trip gave me a vision of what she cares about that I couldn’t get from her brief visits or our e-mails that tend to focus on investments.”

A visit with another client triggered a profound change in Rand’s investment strategy. The client (who we will call George) had lost his job, sold his house and moved. What he didn’t tell her was that he and his wife had purchased another house—at the top of the real estate market, using an interest-only loan to boot. When Rand joined the couple for dinner, George confessed he was worried about an upcoming rate adjustment on this mortgage. Fortunately, the adjustment date was still 18 to 24 months away.

Rand sold down a small portion of George’s portfolio to purchase shorter-term corporate bonds that would offer greater yield and mature on the mortgage rate adjustment dates. This would enable him to pay down principal or handle potentially higher payments. She felt it was the best option considering George was unemployed and under water on his property. Luckily, interest rates remained low and he didn’t have to liquidate his IRA. “If they had been hit by an adjustment, they’d be really hurting right now,” she says.

Rand and her colleagues, who each spent 20 to 30 years valuing companies, build custom programs. They use individual securities for the majority of clients and don’t use mutual funds. “Every client looks a little different,” she says. “We don’t even do a [standard] black box allocation.” So getting to know clients is especially important.
Cascade encourages close contact from the get-go. The firm initially meets several times with new clients to see if the relationship is a good fit and to discuss assets and investment policy work. “We call it ‘taking the temperature,’” she says. Little details she learns during meetings, such as whether clients are reading their confirmations and statements and whether they are obsessed by news about the stock market and other events, also give her a clearer sense of what type of investment strategies and level of hand-holding will benefit each client the most.

Family Affair
Getting in front of clients is also important for Trinity Financial Advisors LLC, a Chicago firm that manages approximately $173 million in assets for 60 families. It likes to meet with clients three or four times during the initial year and then semiannually once a relationship is up and running. Principal John Wimbiscus, who launched the firm in 2000, visits clients in more than a dozen states. Trinity’s other two advisors each speak frequently with half of the firm’s clients.

Clients often invite Wimbiscus and even his family to stay in their homes. For instance, he recently visited one client’s ocean-view property. The client bought the home to renovate and sell—but ended up in a sour real estate market. The visit helped Wimbiscus better understand his client’s situation and expenses.

He has also met several of his clients’ adult children during these visits, some of whom are now also his clients. “If clients like us, they tend to introduce their children,” he says.

Trinity’s goal is to be the “Family CFO” for its clients, many of whom are current or former corporate executives. In addition to financial planning and investment management, the firm offers CPA services for clients without them. Those who do have a CPA firm are encouraged by Trinity to stay with it. “I don’t brag about that,” says Wimbiscus. “It’s not a money maker. [But] one-stop shopping makes it easier for clients and it makes the relationship stickier.”

Trinity manages most of each client’s investment assets. But the firm also asks to be copied on statements from other investment providers, believing the whole investment picture better serves clients, and Wimbiscus says 99% of the clients are OK with this. Recently, he informed a client that another advisor had boosted his market allocation. The client asked Trinity to talk to that firm and get the number back in line with a level he was more comfortable with.

Active Listening
Cornerstone Financial Planning LLC, which manages approximately $80 million for 90 clients and has offices in Portland, Maine, and Newington, N.H., also holds frequent meetings with its clients in the beginning of the relationships. Advisors Susan Veligor and Jill Boynton then like to meet with them at least annually. Some clients even request quarterly meetings.

Veligor and Boynton founded Cornerstone in 2004 after leaving another firm. “The firm didn’t attract clients who wanted deeper, more meaningful discussions about life and love,” says Boynton. In contrast, many of Cornerstone’s clients are divorced, single and widowed women looking for their advisors to be objective sounding boards since they don’t have partners to play that role, says Veligor.

She and Boynton engage in active listening to help facilitate dialogue with and between clients. For example, the advisors might ask a client to elaborate on a comment, to weigh in on what someone else has said, or to explain how a situation makes him or her feel.

Once, Veligor had to facilitate a conversation with a couple she worked with, two longtime clients who were considering a retirement community. Neither could fully broach the subject with the other before coming to her.
“We created a safe place rather than just the two of them sitting at their kitchen table,” says Veligor. When she got the ball rolling, they finally started talking about it for two hours at her office. Since then, they moved and have lived in the retirement community for about a year and are very happy, she says.

Boynton and Veligor also try to read clients’ body language during meetings and listen for silent cues. During a phone call, Veligor learned a client’s daughter was pushing the client to buy a house around the corner from her and the grandkids. Veligor told her client she could afford it, but sensed some hesitation. She asked the client if she would buy the house if money were not part of the equation. The huge pause that followed made her realize that her client was not ready to say yes.

Boynton asks clients to provide their family trees and listens intently when they bring up how they were raised, how their parents treated money, and what lessons they learned about working and saving. “Those money stories can be really revealing,” she says. Learning that one client had helped raise her five younger siblings after their mother died helped Boynton better understand the client’s present relationships with her family and money.

She and Veligor acknowledge that it can be difficult to get clients to discuss their spending habits and financial issues. “It’s intimate whether we’re healthy with money or not,” says Veligor. Establishing a rapport and reassuring clients that they are not being judged helps them become less guarded, they say. Sometimes a good step is to simply reach out to them first.

“Pick up the phone and call people,” says Rand. “Make excuses to see them.”

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