Not everybody's had a horrible year.
The financial system might be in disarray, but candy makers, for instance, are reportedly doing very well as people salve the pain of global economic contraction with sugar. And just as sweet are some inverse funds that bet double against the Dow and S&P, going through the roof to eye-popping 60% returns in 2008.
Nor has it necessarily been a bad ride for all financial advisors, especially independents, who have seen a huge number of potential new clients in play. Despite the hit they've taken to their assets under management, several advisors say the last few months have been positively rosy for new business. Their assets may be down, but they've (almost) made up for the market-induced damage by courting new clients, attracting new assets, and harvesting more money from their current clientele.
The end of 2008 was a glum time for a lot of people, financial advisors included. But it was also a time to distinguish yourself as a holistic planner who sees the big picture, rather than just as an investment whiz, and perhaps turn the market downturn to your advantage and make it bear some fruit.
E.W. "Woody" Young of Quest Capital Management, says that since the beginning of the year his firm has snagged about 12 new clients with a total net worth of more than $100 million. One of them is a big fish-a client worth $50 million who has already cannibalized about $6 million of his investable assets and moved them to Quest.
"I've never seen so many people proactively looking for and asking for help ever in my life," Young says. The firm has just under around $550 million in assets it manages directly custodied at Raymond James, while it has much more that it indirectly advises in the form of 401(k)s, annuities, etc.
It's not just that they can't get their advisors on the phone; in many cases, the clients are moving because they feel their previous brokers or advisors didn't understand the big picture items, either the broad economic trends or even something like tax-loss harvesting. Many aren't even looking at tax returns. And that became a huge planning opportunity at the end of the year for those who do holistic planning and can help staunch the losses.
"If your advisor wasn't helping you manage what we call harvesting tax losses last year for your personal portfolio, which is subject to taxes, then they were really missing the beat," says Young. "And a broker-just a pure broker-doesn't have that knowledge or experience."
Young says one of the ways his firm has won client prospects over is by ramping up seminars (one in late March had 200 attendees show up, many of whom the firm didn't have existing relationships with). Another advisor doing seminars, and converting client prospects into gold in the process, is Steven L. Sanders, chairman and CEO of First Genesis Financial Group in Newton Square, Pa. Sanders says his firm collected some $200 million in new assets under management in 2008, bringing the firm's AUM to just over $400 million by the end of the year. That figure was starting to tip toward the $545 million mark by the end of the first quarter of 2009, he says.
This new influx of assets is hitting financial advisors from multiple directions. Many obviously are coming over from dissatisfied clients of the brokerage houses and wirehouse channels. These clients are more willing to move, say advisors, because they simply can't get their old financial counsel on the phone.