Retirement scares people, says Roger Smith, a registered rep, CFP and co-owner of Planned Solutions, an RIA firm in Sacramento, Calif.
“I don't want to exaggerate, but these people are as close to petrified as you can get,” says Smith, a 21-year veteran of the financial advice business.
To ease fears, Smith takes a holistic approach, addressing clients' financial needs as well as personal issues. But he can hold only a limited number of hands. He keeps his book lean at 121 clients.
At the beginning of each relationship, Smith starts by mapping out the client's financial future with retirement planning and projection software from Money Tree. Next, he puts together a portfolio.
Then he moves on to talk about the softer issues surrounding retirement — like what the client is going to do for the rest of his life. “I ask them what they really enjoy, because that honey-do list is going to run out really quickly,” he says. “I tell them, ‘You're going to be bored out of your gourd.’”
Smith's clients usually find him through a referral and bring in an average of $750,000 each — typically in a 401(k) account, IRA, profit-sharing plan, pension plan or some other kind of retirement account. Their net worth averages $1.5 million. About 90% come to him for retirement planning.
“They've accumulated this wealth over the years,” says Smith, who uses Securities America as his broker/dealer. “Some are executives and some are senior managers who have just saved their entire lives.”
With a client who still has two or three years of work left before retirement, the first thing Smith does is help make the most of the limited choices in the client's 401(k). Although Smith doesn't generate any income from the management of those funds, it's a quick way to earn the trust and confidence of new clients.
“I've found that it is not workable for me to charge a fee to manage a client who has a 401(k) plan that just doesn't have enough investment choices,” he explains. “As part of our retirement planning fee, we'll help them design a portfolio to allocate their 401(k) plan.”
Keeping it Personal
Smith knows his 121 clients thoroughly. “If you wake me up at 3 o'clock in the morning, I should be able to remember, right off the bat, what we were working on the last time we spoke,” he says. “If I can't do that, then I have too many clients.”
Smith screens all his prospective clients and has set a minimum asset requirement of $500,000 for all new accounts. As a result, he is able to shower his clients with personal attention. The strategy is paying off handsomely, he says. Smith generates gross revenues in the neighborhood of $400,000 a year and has roughly $60 million in assets under management.
More importantly, he has discovered that there is nothing quite as fulfilling professionally as the satisfaction he receives from orchestrating a client's comfortable retirement.
For example, Smith remembers fondly a client making an announcement in the middle of her retirement party, thanking him for his guidance. And Smith recalls another afternoon when a client dropped into the office unannounced, holding a check from the sale of some rental property he owned. (Usually, nobody sees Smith or even talks to him on the telephone without an appointment.)
“He was going to sit and wait for me until I finished with another client, so he could figure out what to do with this escrow check, where the safest place to hold it would be,” Smith says. It's something a client would only do for his most trusted financial adviser — not his stockbroker, he says.
“I tell them to call me for anything,” he says. “We become their life's adviser.”
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