"Caring is a powerful business advantage." - Scott Johnson
In the middle of all of this market turmoil, I received a pleasant call from one of my clients. He just wanted me to know that I was doing a good job, and he thought I needed to hear that. Although very few clients called with the specific purpose of "cheering me up," in meetings and calls we have had since the market meltdown, other clients expressed similar sentiments. Many of them were genuinely concerned about how we were coping with the situation. For a moment, they put aside their own fears and concerns for ours.
Furthermore, incidents like this were not unusual. One of our partners received flowers from a client at holiday time to express her gratitude that we helped her through a difficult divorce. Elizabeth Jetton and Michael Smith in our Atlanta office tell of "new clients who brought fun toys to share with clients to help lighten things up. At one of the planning meetings, they brought champagne and wonderful bread that we all shared together-wanting us to know that the experience for them was transformative. They wanted to show their appreciation."
In spite of the difficulty of these times, we feel that we are blessed with loyal clients, and we believe it is not accidental or lucky. It is the result of the financial life planning approach, which helps us to understand our clients' dreams and desires (the "interior"). And it demonstrates that we care about them as human beings-not people who have portfolios that are large enough to warrant our attention. As someone once said, "I don't care how much you know until I know how much you care." And while investment management is a part of the process, it is just that-a part and not all of what we do or care about. We do what we do because we care.
A benefit of caring is client loyalty and retention. In our process, we do not discuss quantitative data (the "exterior") until the third client meeting or later, unless there is a pressing issue that needs to be addressed. Of course, we provide advice for estate planning, taxes, cash flow, risk management, investments, funding for future expenses, retirement, etc. But these things are done in the context of who our clients are and their uniqueness, which we discover by asking questions about their histories, values, goals and the way they want to live their lives. It requires a great investment of our time and theirs, but it demonstrates that we care about who they are, and that we listen. After each of our discovery meetings we send meeting notes that may take two to four hours to write, but it forces us to listen and shows that we understand.
While we are learning about our clients, another phenomenon is occurring. We are building relationships in months that used to take years when we used the typical exterior approach, when we asked them questions such as, "How much do you earn? How much do you have? How much life insurance do you own? How are your investments allocated?" Discovering who the clients were and what really mattered in their lives was discovered accidentally, if at all.
For example, the initial interview form we send to prospective clients before our get-acquainted meeting asks questions about their feelings, attitudes and concerns-not their assets. Some of the questions we ask are: "What are your most important financial concerns? What are your most important non-financial concerns and objectives? Why do you think you need help? Are there any special needs situations you are responsible for? Is there anything else we need to talk about?" We also ask each of them to rate their satisfaction in areas like spending, charitable giving and financial education. At our first client meeting, rather than collect quantitative data, we explore their histories and attitudes. We say: "Tell me about your family when you were growing up. What messages about money did you receive from your father, your mother, your grandparents? What financial values of your parents continue to affect you today? What does money mean to you?"
We believe that this approach not only builds meaningful relationships with our clients, but it also helps us to help them cope during volatile times, such as those we are experiencing. They know we care, and while we have yet to discover a sure-fire method to relieve their pain, they know that we feel it with them. Many of the clients who call simply say, "I want you to hold my hand." They understand what we can and cannot control and they don't expect unreasonable results when markets turn, because we have been honest with them in the past. We do not make outrageous claims that we know how to time the market or that our asset allocation will assure them superior risk-adjusted returns. Our fees are retainers based loosely on net worth. We feel that charging a percent of assets sends the message that investment management is what we primarily do and the other parts of the planning process are secondary. On the contrary, the planning process and everything it involves defines our firm. Investment management, while important, is a part of that process.
While we did not purposefully adopt this process of financial life planning in order to build a "reservoir" of good will for the future, it certainly has resulted in that. However, it is not something you can do at the moment things turn bad. If it is built into the DNA of your firm, you have probably had similar experiences with your clients. I have had conversations with some advisors, however, who are losing clients during this downturn. I silently wonder how the relationship started and progressed over the years. If portfolio performance was the primary subject discussed at client meetings and calls, it would be extremely difficult to change the conversation to what really matters in their lives. If they did not invest the time and energy required to understand their clients' relationships with money, their values, and what is most important to them, it may seem unauthentic to attempt to do so when performance is suffering.
While our recent conversations with our clients may be centered on what is happening in the market, we try to put it in perspective and discuss how it may affect the lives they told us they wanted to live. Ben Stein recently wrote, "We are more than our investments.