It was the calm Friday afternoon of what had been a pretty serene week.
Maybe that should have warned me.
Jennifer, my office administrator, pinged me to say that a long-time client was on line one. I was happy to take the call. After all, he was one of my favorite clients. I had been managing his assets for more than 15 years, and we had been able to grow his portfolio at a nice rate, even during some tense financial times. This client had stuck with me during the 2007-‘08 market meltdown. More than once he had said to me, “Kimberly, just do what you think is best; I have absolute confidence in your judgment.” Only three days ago, he had referred a multimillion-dollar client to me.
Yes, I was more than happy to take this call. Imagine, then, the 8.2-on-the-Richter Scale emotional earthquake I felt like when I heard his first words: “Kimberly, I just want you to know that I’m moving my money from your firm.”
Through waves of aftershocks, I listened as he explained his decision to me: “I’m getting close to retirement, and I just think I need to be a little more conservative.”
This was a tough statement to process since this account was already overwhelmingly invested in fixed-income assets. He went on to tell me that he planned to put his money in annuity products. He assured me that this had nothing to do with any dissatisfaction on his part, either with our services or the performance of his account. “I just think I need to make some changes,” he said.
And that was that.
I’m sure you’ve found yourself on the receiving end of a similar call. If not, you’re either very lucky or you haven’t been in your practice very long. I can guarantee you that it’s not a pleasant experience. Your first instinct is to ask yourself, “What did I do wrong?” As you can imagine, I began replaying in my mind every interaction I’d had with my client for the previous six months. I retraced every portfolio review, every recommendation, but I just couldn’t find anything that seemed like a likely reason for him to pull his account. We had followed the playbook: systematic portfolio reviews, updated goals and target dates, agreement on long-term strategies, personalized recommendations. As far as I could see, we had done everything right. I just couldn’t figure out what was going on.
Luckily, this client’s son was authorized to discuss his dad’s account with me, and I had a great working relationship with him. I decided to call him and try to find out what was happening. Through our conversation, I learned that the decision came after my client had been influenced by a longtime business associate who, it turns out, was also marketing annuity products.
“You know how Dad is, Kimberly,” he told me in an almost apologetic tone. “He makes snap decisions, and it’s hard to talk him out of it. Honestly, I wouldn’t be surprised if he doesn’t come back to you someday. I just hope this doesn’t cost him too much money.”
As it eventually turned out, the son was right. Unfortunately for my client, though, he decided to come back only after he had absorbed some serious losses, and the steep surrender fees included in some of the annuity contracts only made it worse. His retirement plans were now at risk, and one of the first things we did was to use the Monte Carlo simulation component of our eMoney planning tool to help him and his wife figure out how to rebuild their retirement lifestyle after taking this major hit.
We were able to work out a plan to reallocate some real estate assets, freeing up badly needed cash and significantly reducing the household’s monthly overhead. When the dust settled, the family was grateful, and I had recovered a client who, all things considered, really should never have left in the first place.
In our financial planning practices, most of us have had a similar experience. Sometimes we’re able to convince the client not to jump ship, and sometimes we aren’t. Sometimes the client eventually comes back, and sometimes they don’t. But regardless of the specifics, there are some important takeaways that can help us forge relationships with our clients that are harder to break.
Color them unique. First, we have to recognize that each client is a unique individual with a unique style of communicating and making decisions. The son was right on target when he said that his dad was prone to shooting from the hip. I knew, from the time I heard ”goodbye” that trying to talk him out of moving his account would probably be a waste of time. One of the reasons I knew this is because I utilize the
Game the problem. Second, we need to use the available technology to provide our clients with the best and most accurate data on which to base their decisions. In my conversations with the client couple, the eMoney platform and its simulation capabilities were absolutely crucial. We were able to input their sources of income, their liquid and illiquid assets, their monthly expenses, and everything else that factored into their current situation. We played with different variables, scenarios and outcomes, finally arriving at a solution that they felt confident about.
We’ve got your back. Third, and perhaps most important, we need to be constantly building our professional networks so we can provide above-and-beyond service for our clients. In my case, that meant reaching out to a trusted real estate professional who could create maximum value for my client and his wife as we restructured their holdings. The next time, I might need a CPA with a sharp eye for tax savings or an estate planning professional who can spot a creative solution to a thorny legal problem. One of the most valuable things we can do for our clients has little to do with AUM: We can become their doorway to the best and most professional experts; people who can help them overcome the barriers they face.
My firm’s scenario ended happily — not least because it highlighted and reinforced fundamental lessons on how to run a client-centered practice. The more problems we can help our clients solve, the more we can move the conversation beyond fees and market performance. When we focus on that kind of value-added service, put people before profits and focus on service above self, the fewer breakups, we may be subject to. Best of all, we can feel confident about the ultimate outcome — putting our clients’ needs first — even when the phone rings on Friday afternoon.
