A story from two customers

What Makes a Good Comprehensive Wealth Management Advisor? In this position I have worked in various functions since January 1987. Of course I’ve seen a lot over the years. Put simply, my opinion is that the best consultants care about their clients’ interests. In this mode, the most important factor develops over time – trust!

All advisors should have expertise in investment, insurance, estate planning, taxation, and financial planning. The term Certified Financial Planning ™ indicates proven knowledge in these areas – and this must be supplemented by a very structured further training. In all honesty, I have known really good consultants who are called CFP® – and conversely, I know some who I thought were missing. I must add, I knew some competent professionals who did not have such references. However, it’s a good starting point.

I decided to become a Certified Financial Planner ™ Professional in 1993 and feel that it has served my clients and me very well. But there has to be some rain in every life. The following is a story that suggests that if you feel you did everything right, there is one more variable that can affect the success or failure of the client-advisor relationship: when the relationship began .

In 1998 a wealthy client was recommended to me. He asked my advice on where to put a larger amount of money, and also a smaller one that might really grow – a little more speculative. I selected three proven large-cap mutual funds that had a long, positive track record and were managed by a world-class, gold-plated company. There we use the larger amount. You’re probably ahead of me now, but I suggested an internet retail fund for the smaller amount – as it had grown extremely well. Meanwhile, in 2000 (as you may recall) the markets fell into a three-year downturn. Starting with the Bush / Gore referendum debacle in Florida in 2000, followed by September 11, 2001, followed by the collapse of WorldCom, Enron and a group of high profile companies. Of course, the “dot.com” bubble has got technology stocks into a tailspin. It was a very long, drawn-out bloodbath! The internet fund lost about 80% and the blue chip fund lost about 30% – there was nowhere to hide during that time! Disappointingly, this customer relationship ended.

Fast forward to 2003. A CPA friend of mine asked me to recommend an investment that was feeling down. One that I thought had the potential to really grow. This was for his personal account. I suggested my old “friend”, the Internet Fund. It seemed grossly oversold! On his retirement account, I proposed three blue-chip large-cap funds with a larger sum of money – and monthly contributions. In other words, the exact same investment (s) that had performed poorly for my previous client. After a short time he was enthusiastic about the performance. This strategy worked well for years!

Ironically, my CPA friend took a trip with another CPA. It turned out that his travel companion was doing business for my former client who had invested back in 1998. Needless to say, his report on my performance on behalf of his clients wasn’t very positive.

When I got back from their trip, my friend called me and asked me what the customer who had had such a bad experience had invested. Timing can be anything – in life, in romance, in customer relationships and certainly also in investment performance.

The real moral of this story is: The best consultants are also masters at handling customer expectations. This know-how usually takes a few years to mature and develop – and surviving a bad market cycle or two can certainly help you improve the skills necessary to become an effective “customer handler”. The result is typically a more favorable result for both customer and consultant!

The opinions expressed in this material are for general information only and are not intended as specific advice or recommendations to any individual. To determine which investment (s) might be right for you, consult your financial advisor before investing. The economic forecasts presented in the presentation may not develop as forecast and there can be no guarantee that the strategies advertised will be successful. The performance indicated is historical and is no guarantee of future results. All indices are unmanaged and may not be invested directly. Investing involves risks, including losing capital.

RFG Advisory and its investment advisor representatives do not offer any tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended and should not be relied upon as tax, legal, or accounting advice. Please consult your own tax, legal, and accounting professional for information on such matters.

Visit us at www.williamsfa.com. Tommy Williams is a CERTIFIED FINANCIAL PLANNER ™ Professional at Williams Financial Advisors, LLC. Securities offered by registered agents through Private Client Services, member FINRA / SIPC. Advisory products and services offered by investment advisory agents through RFG Advisory, a registered investment advisor. RFG Advisory, Williams Financial Advisors, LLC, and Private Client Services are not affiliates. The branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.

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