Celebrating Advice: Downturn has helped advisors

Hello there. How’ve you been since old Beasley was dumped last year for a newer model? (Thanks, I missed you too.) You notice it took a dozen writers to fill Beasley’s shoes for the year?

Actually, I think the back pages have improved a great deal since yours truly hung up his quill, so it’s likely good they’ve only invited me back for a one-off guest appearance.

Kidding aside, though, it has been a rough year, hasn’t it? I was being literal and sincere when I asked, “How’ve you been?”

Many of our colleagues found last fall pretty rough. Few of us have fully recovered financially, but hopefully most of us recovered emotionally. For 35 consecutive mornings last autumn, I woke up feeling guilty. Crazy, isn’t it? Instead of the alarm clock, evil questions would greet me in the wee hours, like, “Why had I not taken all my clients to cash?” “I saw this coming—did I do enough?” “Did I fail to protect them the way I promised?”

Then, the truth began to trickle in, as we looked closely at our clients’ portfolios and at their situations. It turned out our discipline of keeping two years of retired clients’ spending needs in cash and two years in fixed income had paid off, big time. In reality, our clients were in pretty good shape.

As well, my phone calls to clients would result in the client asking, “Never mind me, how are you?” It turned out they cared about us as much as we cared about them, and they also seemed to sense how high their level of dependence had grown in the wake of the unprecedented market chaos. Even clients who had doubted it before could see how essential we were to them now, navigating as we were through uncharted waters.

During the worst of the crisis, our real value was to show leadership and a measure of calm. In some cases, rational thought led us to cash in some equity investments, when it was the best thing for a particular client. However, more often it resulted in maintaining a well-thought-out investment policy, and even rebalancing toward equities. That took some gonads, and certainly not all clients (or advisors) were up to it.

Either way, clients had to know we were at the helm, fighting the storm, keeping the ship on course, and providing that reassurance; that steady voice. The voice did not need to have all the answers, it just needed to provide comfort that someone was paying attention, responding when needed and continually seeking answers to the unknowns.

If you were one of those few advisors who failed to call your clients through that storm last fall and in the months since, shame on you. You let them down and you let yourself down.

More importantly, you missed a great opportunity to deepen your relationships. Relationships forged in that inferno are a well-deserved gift given to advisors who stood in the flames and led their clients through.

Our value is in taking the lead, which can mean changing the course, as well. Use the lessons you learned in this last crash to consider leading your clients partly out of the markets if appropriate for them, the next time things look a little too good. Gonads work both ways.

The ending is unclear/doesn’t sum up his point. And he’s got to stop saying gonads, it’s really sophomoric.

Beasley Hawkes is a pseudonym. He is a practicing financial advisor with a firm he’d rather not name.