Fallout (and marketing) advice for advisors

The RSP season has ended and much of the rush has subsided. Looking at March and beyond, it is time to start deciding what’s next.

There is no doubt the past six months have been difficult. Gyrating markets and client worry take an emotional toll. With a client base leaning on you for direction and leadership, I think right now is the time for the leader to take a break. Regardless of your circumstance, you have to unplug and replenish your energy and enthusiasm for what you do. I find most financial advisors put themselves at the bottom of their own list. We are constantly giving; it is time to take a little something for ourselves. None of us has the capacity to drive forward when we are run ragged.

Here are some suggestions to consider for your immediate future:

1. Take a break. Whether you take a vacation in the sunny south or spend some time with family and friends, you need to completely unplug from your business. Enjoying a week or 10 days with no financial media, no analyst forecasts, is a necessary first step. I suggest you find something to sink your mind into. I ran into an advisor the other day who was doing some “light reading” on contrarian investing. My suggestion? Save that reading for the office and read something for enjoyment.

2. Say “no.” Most advisors get involved in extracurricular events like coaching hockey or sitting on a community board. I think these activities are important for several reasons, but it is also important that you don’t over-commit. I don’t suggest that you bail on existing commitments, but I do think you should strongly consider your priorities and avoid stretching yourself too thin. The best use of your time right now is meeting face to face with existing clients and prospects.

3. Create a client communication plan. Communication is your craft. Regardless of your “advisor orientation,” effective communication is the essence of our business. I suggest advisors have a structured communication plan at all times. If you don’t have one, there has been no better time to implement one. Such plans should include client reviews, client events, a carefully written white paper (a historical view of recessions and recoveries) and a video or written blog that can be distributed efficiently to all clients with your current thoughts. This is not the time to hold general-interest or client-appreciation events in my opinion.

4. Recognize your staff. It is a very good time to recognize the challenges members of your staff have endured during this period. They too feel client wrath and concerns, sometimes even more so than you. Many assistants are worn from this experience, and many are concerned about their own security. I encourage advisors to treat their staff like their best clients. Give them a long weekend, a gift certificate to the spa or even just a thank-you card. If you recognize their contribution, they will be less reluctant to go the extra mile when required.

5. Reinforce your value. Far too many clients measure your value based on their bottom line numbers. They do this because you don’t give them another means of measuring you. I met an advisor recently who explained to me that, despite the losses his clients have endured in the short term, he has been able to successfully recover capital gains taxes paid by tax-loss selling. He wanted to know if clients understood the value he brought to the relationship when they received their rebate checks. I don’t know, but I suggest you find some way to carefully remind your clients about the work you do for them. Despite the evident value we bring, we have to constantly reinforce that there are other areas in which we have created value. This can include work to set up a family trust, ensuring that proper insurance is in place or even taking some clients to freshen up their wills. If you don’t beat your own drum, nobody will.

6. Status quo isn’t good enough. The most common question clients are asking today is “What should I do to better position myself for a recovery?” What clients don’t want to hear is the passive “Let’s maintain the status quo” answer. Whether you are manually managing your client’s portfolio or have delegated that task to external money managers, it is vital to explain to clients how their portfolios have been repositioned. If you can’t effectively rebalance client portfolios, it may be time to rethink your strategy.

If a client portfolio was designed in 2007, for example, with an asset mix of 20% cash, 30% bonds and 50% equities, it could be that an existing mix of 30% cash, 35% bonds and 35% equities might be more appropriate. Do portfolios have the capacity to recover at the same rate that they went down? The answer, if you maintain the status quo, is “no.”

7. Get back to basics. I find most advisors have built critical mass in terms of client assets, but they place a diminished emphasis on marketing for new clients. In my opinion, there has been no better time in my 20 years in this industry to gather new clients. You definitely don’t want to pursue new clients at the expense of your existing ones, but if you have solidified your key client relationships, I give you a green light. I suggest you identify the hot buttons shared by your natural market prospects and develop a way to educate them about how you can remedy this stress. At the moment, portfolio repositioning, the new reality of retirement and rehydrating their diminished retirement income streams are in the forefront of their minds.

I don’t know why, but it seems that those who make a living giving advice have difficulty self-prescribing. For your own sake and that of your clients, take some time for yourself; your clients (and family) need you to remain at the top of your game.

Shawn O’Brien is head of Shift Consulting. For more information, contact Shawn@SlowDownGoFaster.com.

(03/26/09)