Boomer Market Advisor

Picking up the pieces

The question should ideally have been addressed when the client was still a prospect. At that time, if the client had a problem with the advice given by the former advisor, the very fact that he is now your client should be proof that he thought enough of your expertise and credentials to reasonably reassure himself that the mistakes from the past would not be repeated. Hopefully, you did a good job of convincing the client that you would try to ensure that experience would not be repeated.

Also, at that time, if you had done a thorough interview you would have found out exactly what the former advisor had done for or to the client. On some occasion, it is quite possible that the former advisor had done nothing wrong and that it was simply a case of some misunderstanding on the part of both the client and the advisor. Perhaps the client's expectations were a bit unrealistic, too. (For example, "get me out of the market when you see it going down, and get me back in when you see it going up. I don't want to lose money!") At that time, it is up to the advisor to impress upon the client the validity of his approach and what he can or cannot do for the client. For every prospect that comes into our office, I tell them that, after 26 years in the business, I still do not have all the answers, that I am not a market timer or a trader, and that I do not have a crystal ball - I still have to work for a living and if I had the magic formula, I certainly would not be sharing it with anyone.

When they mention past mistakes, clients usually are talking about losing money. Perhaps the former advisor had taken chances with the client's assets that he should really not have taken, and as a result the client lost an extensive amount of money. As long as you have taken into account their risk tolerance, their objectives and done a good job of diversifying the client's assets, you should be able to convince them of the validity of your approach, and how the past mistakes would not be repeated with such an approach.

There may also be times when the former advisor had really tried to do a good job, but the client became impatient and frustrated and decided to part ways with the advisor. Perhaps the only thing the former advisor was guilty of was inadequate communication with the client. If so, you have to let the client know that the previous advisor had indeed used the right approach and that perhaps the markets really were not conducive to better returns. You have to do this because one day you yourself could become a former advisor. Also, under these circumstances, it is imperative that you increase the frequency of client communications and make them aware that you are there to answer any and all questions. Hand-holding and showing you care are extremely necessary at times like these and can help overcome a lot of client dissatisfaction.

Reassuring nervous Boomers

It’s extremely important to take a pro-active approach to addressing client concerns. You can send out periodic communiqués – your own newsletters or copies of articles addressing similar situations from the past. While these are good, and may even reassure clients for a while, the best way to calm their nerves is by periodically calling them to discuss the validity and content of the assets in their portfolios. You can tell them that their investments were made with their risk tolerance and objectives in mind and that, in the long run, a fully diversified portfolio will produce the rewards in keeping with their asset allocation.

Of course, this means that you have done your job by investing their assets responsibly and not speculated with the funds. Also, it’s understood that the percentage of growth and income were based on defined time frames; obviously, the shorter the time frame, the less the percentage in growth.

In the 26 years in this business, my experience has been that clients do in fact understand what’s going on and just need some hand-holding and reassurance. Media reports are enough to  scare anybody. To use a cliché, clients don’t care how much you know, until they know how much you care. It’s up to you to make sure that they know you’re looking out for them. It’s during times like these that you earn your fee.