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Mar 2, 2007 8:31 pm

From the "You are never as good as you think you are" files:


One of my first clients, a 74 year old woman, gave me 150k in an IRA to manage two years ago.   She had a portfolio which was mostly treasury bonds but does have approx 40% equities.    Her account has grown to about 170k in the last 25 months since she came aboard.


When I called her at the end of '06 to remind her to take her RMD she mentioned she had already taken it from her other IRA.    I explained that she might benefit from consolidating these IRA's.


Well, I got my wish, she's ACAT'ng the account out.


What really slow burns me the most is that she didn't even have the courtesy to call me.


I'll learn something positive from this.


scrim

Mar 2, 2007 9:53 pm
scrim67:

I explained that she might benefit from consolidating these IRA's.


Well, I got my wish, she's ACAT'ng the account out.





Ypu forgot the part about "consolidating these IRA's with me", what should have been a 100% slamdunk, became a 50% coin flip.




Mar 2, 2007 10:47 pm

Doesn't she have to take a distribution from both IRAs?  For example, if you have $150K at firm X, and $150K at firm Y, can you only draw from the IRA at Y based on a $300K total.  I'm not sure that's kosher.  Not positive, however....

Mar 2, 2007 11:15 pm

The RMD amount is based on the total and can be taken from 1 IRA. 

Definitely a good lesson learned.

Chris

Mar 3, 2007 12:22 am
Soothsayer:

Doesn't she have to take a distribution from both IRAs?  For example, if you have $150K at firm X, and $150K at firm Y, can you only draw from the IRA at Y based on a $300K total.  I'm not sure that's kosher.  Not positive, however....


C'mon Sooth, you know better than that...

Mar 3, 2007 2:21 pm

Sounds like Sooth doesn't work with too many retirees...

Mar 3, 2007 2:28 pm

Her account has grown to about 170k in the last 25 months since she came aboard.

When I called her at the end of '06 to remind her to take her RMD she mentioned she had already taken it from her other IRA.    I explained that she might benefit from consolidating these IRA's.


Well, I got my wish, she's ACAT'ng the account out.


Hey Scrim, maybe this illustrates a couple of things:


Relationship, not performance, is king. How often did you get to meet face to face, vs. in person?


I have found, we work so hard to form the initial relationship, and then I feel locked into that marketing mentality, when of course it takes a ton of contact to maintain what you already have.


Out of fantastic service and contact, comes referrals, so the service is actually my marketing.


Of course, you can always keep every client, and don't feel bad if you did give a lot of contact and service.


 

Mar 3, 2007 2:29 pm

can't keep every client

Mar 3, 2007 2:52 pm

"Relationship, not performance, is king. How often did you get to meet face to face, vs. in person?"


Dead on, planr.  I'm going through the Moss Adams survey again this year and in pulling out my last year benchmark report, I'm reminded that the average firm responding to the survey has twice the AUM and half the relationships.  I've really got to work hard on that as it gets harder and harder to maintain relationships when you get too many small clients.  I'm starting to think that my soft minimum needs to be a hard minimum, but I'm having a hard time saying no to revenue walking in the door...

Mar 3, 2007 2:53 pm

Scrim, if she has IRA's with you and also at other places, she is a customer and not a client.

Mar 3, 2007 3:26 pm

 I've really got to work hard on that as it gets harder and harder to maintain relationships when you get too many small clients.  I'm starting to think that my soft minimum needs to be a hard minimum, but I'm having a hard time saying no to revenue walking in the door...


This is when the business gets really cool. You get to work on the marketing mix, the old 80 -20 rule. I have to do my own thing, what is best for my practice 80% of my revenue comes from the top of my book, but those small referral accounts somehow round out the mix and make a better practice - me a better person.


I've had managers come in and tell me, tweak this or that, and you will be a super producer. But how much money do I need, and I feel like a true professional since I really help and never chase people.


You probably know, that for all the hard time people give Ed Jones reps, they have some of the highest client contact #s in the industry, whether by phone or in person. And it looks like they as a whole are happy.


That is so hard to internalize, the supreme importance of the client relationship, in some way it trumps account size in my book. Every now and then, a really nice size chunk of money drops in, too.

Mar 3, 2007 3:27 pm
anonymous:

Scrim, if she has IRA's with you and also at other places, she is a customer and not a client.


Uh, she's neither.


She's leaving.


I would say half my clients have another advisor.    I'm only in my 3rd year of this....I am planning on having them view me as their trusted advisor as the years roll on.


scrim

Mar 3, 2007 6:29 pm
Gone Indy:

Sounds like Sooth doesn't work with too many retirees...


No, Sooth doesn't have too many retirees with assets at other firms.  Well more than half my assets are qualified.  That being said, I should have known that, but didn't.  Never had that situation before.  Honest.

Mar 4, 2007 12:22 am
Indyone:

I'm starting to think that my soft minimum needs to
be a hard minimum, but I'm having a hard time saying no to revenue
walking in the door...





This is where a target date funds (+TIPS), plus a junior broker work gold.



Someone else to farm the relationship, together with investments that don't blow up.

Mar 4, 2007 6:47 am

I would say half my clients have another advisor. 


Uh oh.  Scrim, it appears that one of two things is happening with this half of your book.  I hope that I'm wrong.  Either way, at least for now, these people are customers and not clients.


1) The investments are primarily assets that they already had at the bank and they decided to do something different with them.  You have the business because you happen to be the person in the chair at the bank.


2) The people are not happy with their current broker so they are investing some money with someone else (you).   It's not so much that they want to invest with you, but rather, they want to invest with someone other than their current broker.


Please don't take any of this the wrong way because you are probably doing something very right with the rest of your book.  I just can't help but wonder if there is something wrong with your sales process.


There is no advantage to the investor to have multiple brokers and there are definitely disadvantages.  It simply means that the investor doesn't have complete trust in you which is why they are a customer and not a client.


Have you considered not letting your clients invest with you unless they invest all of their money with you?  You would have less people, but more assets and less worry about people leaving you.  The way that you have things now, it is very reasonable that half of your 50% will either leave you or, at the very least, make any future investments with their other broker.

Mar 4, 2007 7:31 am

Scrim- Sounds like you business is growing well and I hope you continue to keep us posted on your progress.  With regard to your situation, my two cents:


Generally speaking, there is no such thing as loyalty in this business when it comes to clients.  Granted, people are reluctant to change and if you are doing your job properly (service, returns, etc) the vast majority of customers will stick with you.  Still, there are so many things out of your control- a client relocates; dies; friend/relative gets in the business; someone else promised them the world for half the cost; they watch enough CNBC and read "financial" periodicals and they convince themself they don't need any help; "Suze" makes a personal visit (sorry- couldn't resist). etc etc etc


That is why it's all about bringing it in.  I spend the vast majority of my time trying to open new accounts and gather additional assets from current clients. The rest is spent maintaining contact and getting some immediate business (i.e. trades) done.  From what I gather, you are without a doubt going about it the correct way: continue placing the vast majority in fee-based accounts and just continue to bring it in. 

Mar 4, 2007 9:05 am
anonymous:

I would say half my clients have another advisor. 


Uh oh.  Scrim, it appears that one of two things is happening with this half of your book.  I hope that I'm wrong.  Either way, at least for now, these people are customers and not clients.


1) The investments are primarily assets that they already had at the bank and they decided to do something different with them.  You have the business because you happen to be the person in the chair at the bank.


2) The people are not happy with their current broker so they are investing some money with someone else (you).   It's not so much that they want to invest with you, but rather, they want to invest with someone other than their current broker.


Please don't take any of this the wrong way because you are probably doing something very right with the rest of your book.  I just can't help but wonder if there is something wrong with your sales process.


There is no advantage to the investor to have multiple brokers and there are definitely disadvantages.  It simply means that the investor doesn't have complete trust in you which is why they are a customer and not a client.


Have you considered not letting your clients invest with you unless they invest all of their money with you?  You would have less people, but more assets and less worry about people leaving you.  The way that you have things now, it is very reasonable that half of your 50% will either leave you or, at the very least, make any future investments with their other broker.



Since I started from nothing it's natural that many of my clients would have another advisor already.


I figured after a few years many would consolidate with me and a few would consoldiate with their other advisor and many would have multiple advisors.


scrim

Mar 5, 2007 11:28 am

Common courtesy is soemthing that you will find to be lacking in this business. From clients to FA's, from FA's to FA's, etc. It still amazes me how little courtesy people have these days...

Mar 5, 2007 12:14 pm

I agree blarm. I also think if you practice it regularly it pays good dividends down the road in terms of goodwill, positive karma, etc.

Mar 5, 2007 12:45 pm

Wisdom from the true vets here. There ought to be some way to open the gates of good karma, good advisors getting more business from there clients, because they have done what's right.


There is, it is more informal contact with their clients. A lot of things make that hard, being busy with the mechanics, need more business right now by means other than referral.


But the more you can just call who you have, or have an informal bring a friend lunch, or golf lesson and lunch, or whatever, the more chance good clients have to find a courteous, client centered advisor.


We all need to encourage each other to grow in this manner - we could hold each other accountable here, in some fashion.