Straight Talk for Clients and Investment Advisers

Grove O’Rourke here. I’m taking a break before Top Producer, the novel where I’m a good guy and a stockbroker with a boatload of troubles, ships in September. In the meantime, here’s one question I’d like to discuss:GroveProfile

How do clients and their financial advisers build successful long-term relationships?

I’ve seen so many articles that create templates for evaluating and choosing advisers. The columns pose questions about investment performance, fees, and other financial topics. They speak to wealth management clients and tend to ignore financial advisers.

Odd, because financial advisers read the same articles.

The singular focus is a big problem. One-sided questions encourage stockbrokers, like me, to repeat answers we’ve delivered a thousand times. We can rattle off explanations about poor investment returns in our sleep.

“We beat our index.”

And the question—why did a client leave?—is a piece of cake. I once heard a stockbroker respond with a classic sales pitch, an illustration of his dogged determination to protect capital even if it cost him a relationship.

“The client asked me to chase more risk than I felt prudent.”

Building a long-term relationship requires a two-way dialogue. During August I’ll post a series of discussion topics, which financial advisers or their clients can introduce into conversations.

Let’s face it. Clients can’t develop trust if they select new financial advisers every time there’s a tough year. And financial advisers require the right foundation to build long-term relationships. It’s too hard to find new clients. Here’s the question where I’d lay the groundwork.

Do you have an investment philosophy?

Both parties need to answer. The replies might evoke lyrics from that old Gershwin song.

Tomato, tomahto.

Let’s call the whole thing off.

Financial advisers, we serve clients best when everybody is on the same page. I would resist the temptation “to reinvent yourself” just to make the quick sale and bag a few extra bucks. Have the guts to say, “I don’t understand that asset class, and I avoid it as a consequence.” You’ll save yourself plenty of aggravation over the long-term.

Clients, it’s equally important to talk about your expectations. An investor once told me, “Let’s go to Vegas, take big risks and shoot for the moon.” He was describing his investment philosophy.

So he thought.

As we spoke, I realized he wasn’t being honest with himself. He really meant something else: “If you lose one dime, you’re fired.” I’m a piece of fiction and can deal with the consequences of unclear communication.

What about you?

That’s it for Acrimoney today. Thanks for stopping by.

Grove O’Rourke

Top Producer

August 12, 2009

Categories: Acrimoney

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