“Clearly there are dislocations in the market place,” said Tom Boling, vice president of the Retirement Planning Group. What he tries to do is focus on some of the positives that can help deflect the fear and negativity that clients absorb from the media.
Steve Soden, president and CEO of Great Plains Trust Co., thinks that times like these are good ones to remind his clients why they hired a wealth manager in the first place. Anyone can look good in a bull market, but volatility puts a premium on people who not only know what they are doing, but who also care about the long-term interests of the client.
Honesty is an essential part of that relationship, argued Mike Brown. This means letting clients know what an adviser can control—and what he can’t. “If there is someone out there that is telling you they have all the answers,” said Brown, “they’re not being truthful about how they see the market or truthful to themselves.”
Aaron Clark, vice president of the Bank of Kansas City, argued that “volatility is here to stay.” This puts pressure on the wealth manager both to understand the psychology of client relationships and to manage assets in creative ways.
Scott Boswell, president and CEO of the west region of the Commerce Trust Co., agreed that it is critical to set expectations based on the long-term need of the client, whether an individual or an institution. He also confirmed the need for diversity in asset allocation, including the finding of “alternative spaces” to park assets.
Good and Bad Clients
Randy Hallier raised the question of what a “good” client looks like and what a “bad” one does.
“A good client,” said Molly Kerr, cutting to the chase, “is one that takes your advice.” She elaborated: “These are deep relationships that we’ve had for years with the families, with their kids, and that’s really what I hang my hat on.” As to the “bad,” Kerr observed that they are not implicitly so, but rather that they refuse to take advice and end up consuming more time than the adviser can justify.
For Pete Martinez, the bad client is the “armchair quarterback” who takes for granted the excellent recommendations the adviser makes and carps about the one that doesn’t go as planned. Then too, there’s “the client who doesn’t take your advice and blames you” for not having taken it.
In Brian Perott’s experience, some clients expect to be “all-out before the market goes down and all-in before it goes up.” That, he noted, is a hard expectation to meet over time. “Some of them just can’t get it, and that’s when you just have to kind of punt.”
“Unfortunately,” added Steve Soden, “people like that over a period of time can be dangerous legally.”
Chris Costello recommended a test. He asks would-be clients, “If you were lost, would you stop and ask for directions?” Those that say ‘no’ generally don’t turn out well. “If I think about my best relationships,” he said, “it’s with people who’ll stop and ask for help.”
For Mike Brown, relationships hinge on the understanding of risk. “One of the largest challenges in our business,” he said, “is to educate institutional or in-dividual [clients] on risks vs. reward.” All strategies entail risk, Brown explained. In a good relationship, all parties know what those risks are.
A good client, in Scott Boswell’s estimate, will “ultimately understand the value you add for that fee or charge.” For Boswell, this is a more important variable than the client’s etiquette on the telephone.
As Randy Hallier observed, one factor that affects adviser-client relationships is what he calls “media fatigue.” He asked his colleagues how they deal with clients who are overexposed to the plentiful economic inputs that the media offer.