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How would you respond to this client?

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Oct 16, 2008 2:15 am

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. 

Oct 16, 2008 2:17 pm

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.

  But only if you feel like screwing him.
Oct 16, 2008 2:48 pm

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

  "A" share annuities with Enhanced DCA rates really help take the bite out of the upfront commission and are 100% liquid from day one.
Oct 16, 2008 7:42 pm

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.

Oct 16, 2008 8:51 pm

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)

Oct 17, 2008 6:18 pm

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

"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

Oct 17, 2008 6:27 pm

Now is the time to buy:

Thank you Buffett

Oct 17, 2008 7:38 pm

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

  Why do you hate quoting Buffett? 
Nov 2, 2008 4:41 pm

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.

Nov 2, 2008 4:48 pm

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.

Nov 2, 2008 5:10 pm

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.

  When you are near earnings for the stock or there is news or guidance coming up short the same stock against the box. Not enough thingts going up on earnings to worry about loosing $ on the upside but if it tanks you are 100% hedged on the cheap.   I use these and quite a few more. The portfolios have been pretty much flat through the last six months when you add up the options money coming in.