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Jan 6, 2009 6:18 pm

Here's a question a client emailed me today that I've never heard before:

 
"What is the standard deviation of our current portfolio?"
 
I was busy selling a $225k VA to a different client, and this question doesn't intrigue me at all.  Which one of you CFP's wants me to send you his ACAT paperwork?
Jan 6, 2009 6:21 pm

I would just be straight up with him and say, "Standard Deviation isn't a measurement I use as a reference in my client's portfolios.  But here's why your portfolio is right for you..."


Or if he asked you on the phone or to your face you could have just not said anything for about 5 seconds, then burst out laughing and said "Get the F*** outta here, haha, you almost had me.  Okay John I gotta go, you're the best though, that was great, haha, bye bye now."  click.
Jan 6, 2009 6:25 pm
OS:

I would just be straight up with him and say, "Standard Deviation isn't a measurement I use to as a reference in my client's portfolios.  But here's why your portfolio is right for you..."

 
I would say, "Here is OS.  He's a real go-getter, a genuine good sh1t.  I'd trust him with my dead mother's life.  He will answer your questions from this point on".
Jan 6, 2009 6:31 pm
snaggletooth:

Here's a question a client emailed me today that I've never heard before:

 
"What is the standard deviation of our current portfolio?"
 
I was busy selling a $225k VA to a different client, and this question doesn't intrigue me at all.  Which one of you CFP's wants me to send you his ACAT paperwork?



Just let him know that his expected return is set to fall within 3 standard deviations of the mean and to call you if he sees that it is slipping beyond that.

Jan 6, 2009 6:32 pm
Ask him if he would rather invest with the Nobel Prize winners who invested standard deviation and then blew up the financial world, or buy a variable annuity from you and count on predicatable income with a guaranteed legacy benefit.
 
 
 
Jan 6, 2009 6:33 pm
snaggletooth:
I would say, "Here is OS.  He's a real go-getter, a genuine good sh1t.  I'd trust him with my dead mother's life.  He will answer your questions from this point on".
 
Haha, I appreciate that.
Jan 6, 2009 8:36 pm
Hank Moody:
snaggletooth:

Here's a question a client emailed me today that I've never heard before:

 
"What is the standard deviation of our current portfolio?"
 
I was busy selling a $225k VA to a different client, and this question doesn't intrigue me at all.  Which one of you CFP's wants me to send you his ACAT paperwork?



Just let him know that his expected return is set to fall within 3 standard deviations of the mean and to call you if he sees that it is slipping beyond that.

 
Game.  Set.  Match. 
 
Perfect.
Jan 6, 2009 10:24 pm
OS:

Or if he asked you on the phone or to your face you could have just not said anything for about 5 seconds, then burst out laughing and said "Get the F*** outta here, haha, you almost had me.  Okay John I gotta go, you're the best though, that was great, haha, bye bye now."  click.

 
That is funny
Jan 6, 2009 10:36 pm

I think you could go three routes.

 
1. Find out what it is, and then throw is some comments about alpha, r2 and some other modern portfolio bullshit.
 
2. Find out what he does and ask him some idiotic theory that goes on in his job, then say, it is your job to get him to where he wants to go, not to teach a class.
 
3. Explain why Modern Portfolio Theory doesn't work(plenty of info out there) and how the std dev has little to do with his retirement plans.
Jan 6, 2009 10:48 pm

Tell him its somewhere between Madoff and Barnum & Bailey

Jan 6, 2009 11:49 pm
snaggletooth:

Here's a question a client emailed me today that I've never heard before:

 
"What is the standard deviation of our current portfolio?"
 
I was busy selling a $225k VA to a different client, and this question doesn't intrigue me at all.  Which one of you CFP's wants me to send you his ACAT paperwork?
 
Why the hell would a CFP want a time-waster like that?  If this is L/T money, that's a stupid short-sighted question and I'd have him on a very short leash.  If you want some pointers on how to fire a client and have fun with it, call me.  For starters, I'd have your assistant kick out an S&P report (several pages each) on every position, burn them all to PDF files and put them on a CD and tell him that to calculate standard deviation, he needs to set up an Excel spreadsheet, and calculate standard deviation by using a weighted average of market values X standard deviation/aggregate market value.  That ought to keep the asshole busy for awhile.  Then, as soon as he's finished, the number is obsolete anyway.  If he protests that he wants you to do it, tell him he's not that good of a client customer.
Jan 7, 2009 1:41 am

I love this thread.  Bookmarked.

Jan 7, 2009 10:28 am
iceco1d:

Some of those responses are pretty damn funny...especially yours OS.

 
Snags - is there  a serious question in there somewhere, or is this just for a laugh?
 
Ice, the client seriously asked the question.  I posted it because I thought it was funny that anyone would ever ask that. 
Jan 7, 2009 10:36 am

Great thread!  Reinforces my New Year Resolution to fire all the "engineer" types in my book!

Jan 7, 2009 10:57 am

What am I missing? Have you bothered explaining to him or asking him what he knows about standard deviation or why he's even asking? How big of an account does he have with you? If it's substantial enough, I'd get to the bottom of his question rather than sit and laugh about it before you lose him to someone who will give him an answer. I'm still missing the humor in all of this.

Jan 7, 2009 11:58 am
anabuhabkuss:

What am I missing? Have you bothered explaining to him or asking him what he knows about standard deviation or why he's even asking? How big of an account does he have with you? If it's substantial enough, I'd get to the bottom of his question rather than sit and laugh about it before you lose him to someone who will give him an answer. I'm still missing the humor in all of this.

 
A-
 
Have you ever had a client ask a similar question?  If so, you know that more often than not, you end up with either (1) A customer who doesn't trust you and is reading investment theory, but not understanding practical application, (2) A customer who's getting ideas from someone else (Suze Orman or the retired brother-in-law who manages his own portfolio for fun), (3) a numbers geek such as an accountant or engineer (although there are exceptions...I have two excellent engineer clients) or (4) a customer who's talking to a competitor and is looking for a reason to leave.  There could be other reasons, but those are common ones, and most of them don't have a happy ending.  At the very least, you are going to end up spending time on foolishness and you're going to have to make a call about whether or not the client is worth the extra effort, because the questions will probably not stop there, unless you effectively communicate why the information won't really benefit the client.
 
The customer I fired last year was obviously getting a second opinion on a regular basis and didn't understand enough about what she was getting to intelligently pose the right questions.  I spent far too much time trying to guess what the questions were, answer those questions appropriately and take care of all sorts of increasingly unreasonable servicing requests.  My guess is, Snag's client may end up the same even if steps are taken to diplomatically nip this in the bud now.  Two times in my career I relaxed standards of who I would accept as a client.  Once when I was starting out and once when I went independent and both times, I paid the price with a customer I ultimately had to fire.  In the case of the last customer, it had nothing to do with the size of the customer...she was a high-six-figure account.  For me, it was simply a matter of the relationship not being worth my effort at any size.
 
I'm sure Snags will ask a question or two to clarify what the customer wants in case it's a harmless misunderstanding, but most likely the answer won't motivate him to bend over backwards to accomodate future requests from this customer.
 
Snags...I think you have an ACAT candidate.
Jan 7, 2009 12:07 pm

I am with Anabuhabkuss and Iceco1d on this. What is the big deal giving him the SD anyway, that is what software is for.

Jan 7, 2009 12:30 pm

I agree with those who are looking for the humor in this.

 
I love a good laugh also, but since the market has tanked and FAs by the droves have decided that VAs are the current panacea-of-the-month, we now begin making fun of our clients who have questions about basic financial concepts in their non-annuity portfolios?
 
It wasn't too long ago that we had complete faith in the investment portfolios we were putting together for our clients. Have we since abandoned the concepts we were selling up until the beginning of this down market?
 
And as a result of being asked a question that far too many FAs couldn't answer without doing research, this client is now an ACAT candidate?
 
Very interesting...
Jan 7, 2009 1:34 pm

I agree with myself on this. 

Jan 7, 2009 1:48 pm
Hank Moody:

I agree with myself on this. 


Are you absolutely sure about that, Hank?  I'd run it by yourself another time just to be safe.