Client Reviews

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Sep 19, 2006 1:17 am

Please help me with ideas/formats for running "A client reviews". It seems to me I only end up talking returns and I would like to not focus on that exclusively.   I'm fairly new to the business and I would like ideas on how to keep my best clients? Please advise.

Sep 19, 2006 7:31 am

What firm are you with?

Sep 19, 2006 9:04 am
rippey26:

Please help me with ideas/formats for running "A client reviews". It seems to me I only end up talking returns and I would like to not focus on that exclusively.   I'm fairly new to the business and I would like ideas on how to keep my best clients? Please advise.


Client reviews should follow a fairly basic structure, and should effectively "drill" down and across a clients' financial needs.


It is best to develop an Investment Policy Statement for the client.


A basic agenda format:


1. Introduction


2. New information (has anything happened since our last meeting, is our data on your outside accounts [401k, etc.].


3. Review of the capital markets since last meeting


4. Review of the client's asset allocation


5. Review of client's individual investments


6. Performance of client's investments (If client underperformed; why? Is the problem something that is likely to reverse itself.)


7. Firms' view of the capital markets going forward, recommendations for client's portfolio.


8. Credit and Lending (how is client borrowing, do better alternatives exist?)


9. Estate planning: Is client's estate plan up to date? Is gifting and college planning on track?


10. Insurance: How is client's insurance coverage?


11. Are there any next steps


12. Schedule follow up meeting.

Sep 19, 2006 10:17 am

Good informatio San Fran, Thanks

Sep 19, 2006 10:25 am

I agree, that's a good outline of what needs to be covered--I suggest that you're on thin ice talking about estate planning unless you know your stuff.


Question.


Is it the same idea regardless of how many dollars the client has invested as part of your AUM?


If it's not it should be.


So, why does a guy with $2,000,000 invested with you pay so much more for essentially the same service than a guy with $200,000 invested with you?


It seems to verify, "You can fool some of the people all of the time, and all of the people some of the time, but you can't fool all the people all the time" doesn't it?


Sep 19, 2006 10:35 am

I always start by reviewing the client's goals and objectives.  Meetings have to be about the client and not the client's investments.  The investments are just a means to an end.


All decisions are based upon what the client is trying to accomplish.  Have the goals and objectives changed since the last meeting?

Sep 19, 2006 10:35 am

Yes very good SF Broker.  


The review shouldn't be you lecturing the client on the performance of their accounts.  By beginning with what's new, what has changed in the client's life and letting them talk you will uncover all sorts of new needs and directions that you may want to go.


For example in a what's new since our last meeting with a client I discovered that he and another family member have inherited a rather large piece of commercial property that they plan to manage together.   This led to the discussion of how to structure a legal partnership/llc or other entity to protect his interests in the property and other estate planning issues, a referral to an attorney that I network with and a proposal for a buy/sell agreement that will be funded with two insurance policies, that I am writing on the two principles.  While discussing this we also found a need for other insurance for estate planning as it appears they will be inheriting many more properties in other States.


If I had only gone over the performance of his portfolio and left it at that....I would not have gleaned all this other information.  Sometimes the clients think that all we do is investments.  If we want to keep them, we have to show that we are counselors in many other areas of their financial lives.  My client was pleasantly surprised and grateful that I was able to help him solve this issue and that I even offered life insurance.

Sep 19, 2006 10:40 am

Do you spent ten times as long on a client who has ten times as much money as another client?

Sep 19, 2006 10:46 am

I "spent" as much time as it takes to get the job done.  I treat all my clients with respect.


You never know who is hiding big assets from you or will eventually inherit or marry into money. You also don't know who they are talking to about you after they have met with you.  Sure some client's don't generate much income and take up some time, but the positive PR is invaluable, especially in a smaller town where I live.  It all balances out.

Sep 19, 2006 10:53 am
babbling looney:

You never know who is hiding big assets from you or will eventually inherit or marry into money. You also don't know who they are talking to about you after they have met with you.  Sure some client's don't generate much income and take up some time, but the positive PR is invaluable, especially in a smaller town where I live.  It all balances out.



I understand, but you're being evasive.


Do you believe that a client who represents $10,000,000 of your AUM is being fairly charged if he pays you significantly more than a client who repesents $100,000 of your AUM?

Sep 19, 2006 11:00 am

NASD,


Shut up.  Your an idiot.  Does a real estate agent put a million dollar house on a different MLS than the $100,000 houses?  No, and yet the real estate agent's fee is still 6% (or whatever they happen to charge).  You could always do FSBO, right?  Why doesn't everyone do that?


Is it any more difficult (expertise required) to build a $500,000 house versus a $200,000 house?  No, and yet the builder's markup could very well be identical. Why not sub out all the work yourself, and save the builder's markup?


If someone is so inclined, absolutely they could open a Scottrade account and handle all their own financial matters with out paying annual fee (I know I would).


And yet, I just had a meeting two weeks ago with a gentleman very well versed in both the financial markets and real estate, with over 10 million LIQUID net worth (over 15mm total), and he found value in working with not one but three financial advisors/institutions (he shared that it was nice to get frames of reference when offered something).  By the way, I am proposing on 2.5mm of that this week...


The fact is not everyone is so inclined to sit in front of their computer and trage GOOG options all day.  It is a SERVICE (not a neccessity), like many others each and very day, for which they pay a fee.


Sep 19, 2006 11:08 am

In a perfect communistic world, everyone would be paid the same for everything, everyone would work equally as hard for everyone else's benefit, and all would be peachy.


That world doesn't exist.


This is a capitalistic, free economy.  That $10,000,000 client has every right in the world to pay whatever fee is offered to him, whether it is a broker at ML asking 1.5%, or a discounter asking $7 a trade.  It is their choice, and if they find value in it and choose to pay it, then by all means they are being treated fair.

Sep 19, 2006 11:18 am
BankFC:

Shut up.  Your an idiot. 



The word is you're not your.  What's with the rage?  Come on now, surely you can deal with hearing somebody say something--right?


The question is not answered by pointing to a real estate agent's commission--that is a one time cost.


Would you like it if every year the real estate agent who sold you your house reaches into your checking account and pulls out 1% of the home's value simply because they sold it to  you.

Sep 19, 2006 11:29 am
Knows Wall St.:
BankFC:

Shut up.  Your an idiot. 



The word is you're not your.  What's with the rage?  Come on now, surely you can deal with hearing somebody say something--right?


The question is not answered by pointing to a real estate agent's commission--that is a one time cost.


Would you like it if every year the real estate agent who sold you your house reaches into your checking account and pulls out 1% of the home's value simply because they sold it to  you.



Wow.  That sounds just like our property tax system.  Plus the taxes/fees can be increased by votes on bond issues from people who don't even own property at all.

Sep 19, 2006 11:35 am
Knows Wall St.:

Do you spent ten times as long on a client who has ten times as much money as another client?



More often than not a client with a large asset base presents more issues and has more needs than those with smaller accounts. I've yet to need to spend time on a complicated investment plan or estate plan with someone who has a small account.


Then again, since you've never done this job, it doesn't surprise me that it escapes you. You really should drift back to sleep and dream about the "good old days" when "real brokers", unlike the kids here, had a list of five stocks that every single client owned. When everything about the job was the next commission, what can I get this guy to buy or sell and where to I insert the sizzle. “Say, Mrs. Smith, wanna earn a quick 25%?”.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


Yeah, the "good old days" when, if a client were to ask, "But what about the tax implications of what you're suggesting" the broker would reply "Taxes? I don't know anything about your taxes, Bob. Hell, I don't even know your cost basis. That's not my job". By golly, the good old days when the industry wrote together a commission schedule that everyone was forced to live by. Price fixing at it’s best. Yes, indeedy, THAT’S when the client came first…


Sep 19, 2006 12:02 pm

Would you like it if every year the real estate agent who sold you your house reaches into your checking account and pulls out 1% of the home's value simply because they sold it to  you.


Ok. Let's go with this analogy.  If I signed a contract with the realtor who sold me my house that entailed them coming in two to three times a year to rearrange the furniture, upgrade appliances, put new paint on the walls and generally increase my property values, then I would have agreed to pay the fee and they can certainly take it from my account.   If I haven't signed a contract and the realtor is billing me or taking money from my account, they get to see me in court.


Do I care that my 3400 square foot house gets a different treatment than my neighbor's  1500 square foot house?.  Maybe I'm getting more visits and different carpeting in other colors.  Maybe I'm getting less frequent appliance upgrades because the quality of the original appliance is still good.  Do I care?  Not as long as I am seeing appreciation in my property value.


If I feel that my negotiated fee with the realtor is too high or that my property is not appreciating as it should, then I will cancel the contract and do my own interior decorating, or hire another person for that service.


This is not hard for anyone to understand.  This is how business and how the real world works.


Sep 19, 2006 12:05 pm
Knows Wall St.:

I agree, that's a good outline of what needs to be covered--I suggest that you're on thin ice talking about estate planning unless you know your stuff.


Question.


Is it the same idea regardless of how many dollars the client has invested as part of your AUM?


If it's not it should be.


So, why does a guy with $2,000,000 invested with you pay so much more for essentially the same service than a guy with $200,000 invested with you?


It seems to verify, "You can fool some of the people all of the time, and all of the people some of the time, but you can't fool all the people all the time" doesn't it?




If the average investor could, working part time, educate themselves to level where they outperform the the world's top money managers, how many hours per week would that take? And assuming that they could, working part time online, outperform the smartest money management minds in the world, by how much could they outperform them, half a percent, one percent, how much? And if they could do this, outperform the professionals by a percent, would it be worth it? Aren't there better things to do with life?


There will always be a group of people who devalue our service. Just as there are for every service a group of people who will devalue it. For instance, my brother thinks I'm crazy to have a mechanic work on my car. You will never find my brother at a Jiffy Lube getting the oil in his truck changed. And you will never find a Do-It-Yourselfer financial genius in my office. There is simply no way for me to convey the value proposition that professional money management offers that would be any way acceptable to this person.  The world is full of 30 cents on the dollar types who actually believe their KIA is every bit as good as a Honda, their Azera is every bit as good as a 5 series. These people are not our prospects. We will never reach them.


Maybe, when an investor with 2 million can invest that money anywhere at the same cost as an investor with 1/10th the amount fees will adjust. Generally speaking, within my own book clients with larger portfolios pay at lower fee rate than do the smaller accounts. However, for time intensive accounts the fee is calculated to fit the situation. So, account size isn't the sole determinate of fee. Just part of the equation.


I had to sue an RV manufacturer a few years ago. My lawyer worked the same way. More work equaled higher fee. I recognised the that value and paid him.


Lastly, there is this; Our good buddy, the father of devaluing investment advise and creating mediocre mutual funds, John Bogle, needed of all things, a heart transplant. This guy is the king of the cheap suit philosophy applied to money management. So what do you think he did regarding his heart transplant? Do you think he went the discount route? Do you think he applied his life's view of devaluing professional advise and dialed an 800 number to find a surgeon? And then after summarizing his entire medical history in ten minutes to a clerk, do you think he asked and then took the clerk's advise on which surgeon to use?  Of course he didn't. In fact that sounds ludicrous. Yet, with one life's other important matters, money, it's OK to dial an 800 number, recite the abridged version of your financial situation to a clerk, and then invest your life's saving based on the clerk's advise. Yeah, that's a smart way to go. And to put icing on it, that investor doesn't realize that they are a victim of a very slick marketing campaign that assures them they are doing the right thing. Investing via 800 numbers-equally ludicrous.


That people buy houses along super highways and next to landfills proves that there is a buyer for everything. Without these people Bogle would have faded from the radar screen a long long time ago. PT Barnum said it right.


Cynics on both sides of the aisle.



Sep 19, 2006 1:39 pm

How can a guy be a good advisor when he doesn't know the difference between advice and advise?

Sep 19, 2006 1:43 pm

I ask again.  Why should an investor pay a middleman 100 or more basis points to do nothing other than combine the figures on year end mutual fund statements into a summary?


Why would somebody with a million dollars not turn $10,000 of it over to an "advisor" to see where they put the money and then simply mirror that allocation with the other $990,000 by buying directly, or through a discount broker?

Sep 19, 2006 2:15 pm
Knows Wall St.:

How can a guy be a good advisor when he doesn't know the difference between advice and advise?


Now I need my sales assistant to start proof reading my posts.


How about a real answer instead of a cheap shot?