How would you respond to this client?

Adios.

setup a systematic plan of getting back in the market - over the next 12-15 months. if its a taxable account you can do some tax harvisting. opportunity to evaluate asset allocation.

Right, DCA back in over 12 months, after dumping all in panic. How about a fixed annuity, if you can stand the smell? In this case, not because you want the business, but to "punish" the client. No, that would be greedy. Sayonara, oyasuminasai.

Thank you for your business. If I can assist you in the future. The client is working on emotion you have to be detached ( not always easy ). Keep in touch.

Variable Annuity, if he’s primarily concerned about the income he can generate.  Put him back in the market with a safety net. 

Yeah, I know that he’s scared.  Went to a trip to Europe and he texted me a couple of times about selling, remaining in the market, selling again.  I found out that he had a talk with some investment banker there who was giving him economic advice about how banks around the world now are in unstable condition.  And he pays me for advice.

He’s down 10% now, and to me that’s not bad considering how the market did.  Maybe it’s time to say goodbye.  Or, a fixed or even a variable annuity may be something.  He’s basically going to use the money for income when he retires FIFTEEN years from now.

Good suggestion Ferris. Can you just imagine the groaning as he/she collects that super interest rate of what 3 to 3.5 % and if in Canada the higher taxation rate on Interest versus Dividend Income. I can just see that Train Wreck coming but as to your point just right for the putz.

So Gregoron…he met " some banker " in Europe and had a couple of drinks and they discussed economic theory and he decided his new best friend had all the answers. Geezus H. ask him how much they were drinking.

Exactly.  Fear and paranoia is a bad combination.

Add B.S. to the formula and this is the result. Hell the " Banker " could have been a Clerk in the Counting Room … " I used to see lots of currency , now I see less". You get my point.

Yeah.  The thing is that this client is one of those impossible ones too.  Should have seen it earlier when he’s fine with your recommendation one day, then he throws you a curve ball another.  Worst kind.  He only wants huge gains and no losses.  Should have just stuck him in Treasuries or long-term notes.  Maybe a VA wouldn’t be so bad actually if he wants “guarantees”.

AAHHH!! Only wants the Gains? I’ll almost bet he tells you what is the latest stock pick ( from Crazy Cramer ) and thinks he is pretty sharp when it comes to investing? You can also " fire " a client.

… the " Banker " could have been a Clerk in the Counting Room … " I used to see lots of currency , now I see less". You get my point.

Yeah.  The thing is that this client is one of those impossible ones too.  Should have seen it earlier when he’s fine with your recommendation one day, then he throws you a curve ball another.  Worst kind.  He only wants huge gains and no losses.  Should have just stuck him in Treasuries or long-term notes.  Maybe a VA wouldn’t be so bad actually if he wants “guarantees”.

Sell him out. You are in a lose lose situation. In a market like this, if someone says i cant take it anymore, AND you know he is a pain in the ass client, just follow his instructions, send him a check, and spend the time you wouldhave spent convincing him that you are right, looking for new clients. Believe me, there will be plenty of qualified prospects looking for new brokers over the next year.
You put a guy like this in a VA with a surrender, he’ll end up suing you, saying that you never told him its locked up, even tho you told him 10 times.
In an environment like this, asshole clients dont deserve any of our valuable time, or energy

There are plenty of 4-5 year products out there. This sounded like a young guy, so really, the VA is not a bad choice at all.  Like anon said, he might want a GMAB, or heck, for income just use a GMWB.  Just be sure to have him sign a disclosure of all the fees and penalties and you’re fine.

I have had quite a few of these “difficult” clients in the last week.  My pending VA stack is getting pretty big after today. 

Edit: if he’s more than 10 yrs away from retirement, you might have to improvise.  The VAs i’m using only give 10 years of guaranteed growth on the withdrawal benefit.  Your mileage may vary.  

[quote=Sportsfreakbob]Sell him out. You are in a lose lose situation. In a market like this, if someone says i cant take it anymore, AND you know he is a pain in the ass client, just follow his instructions, send him a check, and spend the time you wouldhave spent convincing him that you are right, looking for new clients. Believe me, there will be plenty of qualified prospects looking for new brokers over the next year.
You put a guy like this in a VA with a surrender, he’ll end up suing you, saying that you never told him its locked up, even tho you told him 10 times.
In an environment like this, asshole clients dont deserve any of our valuable time, or energy

[/quote]

I do think you’re being a little harsh.  in the last 8 trading sessions, we’re down what, 18-20%?  Stocks AND bonds are losing.  McCain and Obama are still bickering, global markets didn’t help, and there are still many negative nancy’s on the news.  Everyone is still experiencing the shock & awe of the media.  That said, I’m telling clients that we don’t want to take unneccessary risks to meet their objectives, and if some sort of gaurantee can help them meet that objective, give them the option! 

If you don’t, someone else will, and they’ll make the comission and trail. 

[quote=gvf]

I do think you’re being a little harsh.  in the last 8 trading sessions, we’re down what, 18-20%?  Stocks AND bonds are losing.  McCain and Obama are still bickering, global markets didn’t help, and there are still many negative nancy’s on the news.  Everyone is still experiencing the shock & awe of the media.  That said, I’m telling clients that we don’t want to take unneccessary risks to meet their objectives, and if some sort of gaurantee can help them meet that objective, give them the option! 

If you don’t, someone else will, and they’ll make the comission and trail. 
[/quote]

Your point is well taken. But this quote from the original poster is what prompted my response…Yeah.  The thing is that this client is one of those impossible
ones too.  Should have seen it earlier when he’s fine with your
recommendation one day, then he throws you a curve ball another.  Worst
kind.  He only wants huge gains and no losses. 

Sportsfreak, he's not going to sue.  It's not that we verbally told him 10 times about the surrender charges.  It's that he has signed documentation talking about the surrender charges, fees, etc.

I've been doing this for a long time and have plenty of pain in the butt clients.  Nobody has ever sued me.  Nobody has ever complained about me.    For the $5,000, $10,000, $15,000 or whatever I'd make, I'll gladly have a VA conversation with him before firing him.

Duh.  I re-read the post.  I see now. 

So yeah, it’s a mixed bag.  Still, I’d rather get an upfront + trail on an impossible asshole who I have locked up for 4-5 years. 

Sounds like you need to put him in an equity index annuity, give him a 10% bonus,tell him he can recover 10% (from the bonus) and he’ll be locked in for 10 years with market gains without market losses. Huge commish for U.

Sell him out. You are in a lose lose situation. In a market like this, if someone says i cant take it anymore, AND you know he is a pain in the ass client, just follow his instructions, send him a check, and spend the time you wouldhave spent convincing him that you are right, looking for new clients. Believe me, there will be plenty of qualified prospects looking for new brokers over the next year.
You put a guy like this in a VA with a surrender, he’ll end up suing you, saying that you never told him its locked up, even tho you told him 10 times.
In an environment like this, asshole clients dont deserve any of our valuable time, or energy

Well, I talked to him again and told him that he could either cash out and find someone else, or go with a four-year VA with a 6% GMIB.  He’s interested mainly in getting the income when he retires.  He was pretty gracious and left a huge chunk of his money for the VA.  He took the rest to someone else.  Thanks for the inputs everyone.

Unless he asks for it, don’t send him his check.  Leave it in cash and when he feels more comfortable about the market start buying stocks.  If it’s a sizeable account you’ll do some nice gross off of him. (if your transactional)

I hate quoting Buffett but his op-ed in the NYTimes is worthy a read and worthy of forwarding to clients

http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=1&oref=slogin

"A simple rule dictates my buying: Be fearful when others are greedy,
and be greedy when others are fearful. And most certainly, fear is now
widespread, gripping even seasoned investors. To be sure, investors are
right to be wary of highly leveraged entities or businesses in weak
competitive positions. But fears regarding the long-term prosperity of
the nation’s many sound companies make no sense. These businesses will
indeed suffer earnings hiccups, as they always have. But most major
companies will be setting new profit records 5, 10 and 20 years from
now."

Now is the time to buy: http://www.bloomberg.com/apps/news?pid=20601213&sid=apDKZD4TIAKQ&refer=home

Thank you Buffett

I hate quoting Buffett but his op-ed in the NYTimes is worthy a read and worthy of forwarding to clients

Get out your firm’s focus list. Find the highest quality dividend paying stocks you can. Look for some that are in the $30’s or less that your client wouuld like to own if he could get them at a nice discount. Sell some cash secured puts at the level that the delta is around -20 ish for a november expiration (this gives you a 5 to 1 probability of an out of the money expiration). Quick cash in his account, you look like a hero and if you are lucky you’ll get to buy them at th strike price minus the credit you recieved, applied to his basis = great deal + good job done.

Oh yeah, when you start getting soome of the stocks write covered calls a month and a half to expiration (time value will have an expodential decline in the last 30 days). Keep the delta 10 or less (this will give you 90%+ probability of expiration out of the money) and at a price you would be OK selling for a swing trade gain. Win win. You sell the stock for a very good short tewrm gain or get paid for being wrong.

A little more info.  Find your firm’s weightings for their ETF program that is the same level of risk the client profile has. Dont use and one stock more than 5% of all his $$ and start molding them to the same weight as the etf. With AGE I use DSIP stocks and CAAP for the weightings. I have the Thompson stock rating software and only use 9 & 10’s of 1 to 10. When / if the stock gets cut from the list sell it off with an in the money call at the next expiration to squeeze every cent out of it you can.