9 ways to be a great client

Note: This article is a repost from the corporate blog at nVest Advisors, LLC. nVest CEO Jeremy Torgerson is the founder and publisher of “Think Like a Rich Guy”.

I talk often on here about how we’re working to be a better financial advisor, and I applaud efforts by the Department of Labor, the SEC, and the state regulators to force higher standards of care on our industry. I’ve even given you reasons to fire your current advisorthings to be leery of when looking for one, and how to avoid Ponzi schemes.

I’ve been serving clients for nearly a decade, and have forged deep and lasting relationships with our clients. Many have become close friends. I believe that’s the way it should be, because the relationship of a financial advisor and client involves a great deal of trust and at times, vulnerability. We work very hard to do what’s best for our clients and provide the best service we can. That includes being prompt in our responses, running compliant and ethical practices, having a servant-leader’s spirit and caring for your investments like they were our own.

We often ask you what can we do to become a better advisor, but we seldom take the time to tell you what you can do to become a better client. Here are 10 ways you can help us help you:

Give us the truth, the whole truth, and nothing but the truth.

Not often, but often enough to warrant mention, we begin our work with a client only to find out later that they either didn’t tell us everything about their financial situation, or didn’t keep us informed after something significant changed. Sometimes it’s a lie of omission (one early client failed to mention he hadn’t filed income tax returns for 8 years and the IRS was chasing him). Other times, you might hide something you think is too embarrassing (we had a client once tell us “God wants me to cash out my IRA”, when the truth later came out that he had a daughter going through a messy divorce but was too embarrassed to tell us).

Sometimes, it’s just that you forgot to let us know when something changed in your life. But those milestones or challenges are part of the reality of us helping you get where you want to go. We know there will need to be course corrections along the way. Let us know what those need to happen.

We’re planners, guides, and coaches, not judges or gossips. Our job is to help you move from where you are – where you REALLY are – to where you want to be. We do that through a process of planning that involves having an accurate and complete view of the financial landscape. If we don’t have a complete or accurate picture of your needs, our advice won’t be accurate, either. Garbage in, garbage out.

This is one of the reasons we advise you meeting with a few advisors before settling on one to work with. It may or may not be the one who reached out to you first. Find one you can trust enough to be completely and totally honest about your financial life.

Whitelist (and READ) our emails.

Here at nVest, a lot of the communicating we do with our clients between appointments is done via email. We do this for a lot of reasons, from reducing the carbon footprint and expense of letters and mailed literature, to being respectful of how busy and hectic your life is.

As time goes on and we become more and more high-tech, you can probably expect more of this communication to come in the form of email. Even account statements, tax forms, trade confirmations, etc. are now coming electronically. That’s why it’s critically important that you read what we send you: not because we think everything we send you will be important to you, but because the important ones are sent to you the same way.

If it’s important AND urgent, we’ll call, but just because it’s an email doesn’t mean it’s not important.

Do your advisor a favor. Whitelist his or her emails, and please, open and read them.

Commit to knowing about what you’re invested in.

We know, we know: there’s nothing as dry and incomprehensible as a mutual fund prospectus. Except maybe an annuity contract. But so many advisors end up in hot water with regulators or arbitration proceedings years later, because you thought they sold yon one thing and it turns out to be another.

That’s not in any way an excuse for a dishonest or under-prepared advisor. We’ve seen a LOT of investment and insurance products deliberately misrepresented over the years, with the salesperson glossing over or omitting fees and costs, misrepresenting the possible risks or returns, or making wild promises about his or her abilities or special insights or trading secrets.

We’ve warned you about those tactics, and the regulators do, too. Often.

What we’re talking about is a basic understanding of what you’re invested in. Do you understand what a mutual fund is and how it works? What about an exchange-traded fund? Do you know what share class they’re trying to sell you and what that means? Do you understand how much you’re paying for this strategy? This leads right into our next request:

Ask us to explain what you don’t understand. (And keep asking, until it’s clear to you.)

There is no shame in not easily understanding financial concepts. We don’t get even a semester of basic personal finance in most college degree programs, let alone in high school, where it could really make a difference. Imagine knowing how bad high-interest credit cards were before they gave you one, or how long it would take to pay off unnecessary student loans?

We’ve had people with advanced degrees – medical doctors, PhDs and the like, who have no clue about the differences between a stock and a bond. And if we let our egos get in the way of learning, we’re headed for a bad result down the road.

I’m personally pretty good at explaining financial concepts, because I practice on my own kids a lot. If I can get a 15 year old to understand asset allocation, then I feel confident we can get it through to our clients! But I also watch closely when I’m explaining something, whether it be our client service agreement or a performance report or just a financial concept, to make sure I’m not seeing your eyes glaze over or getting the “deer in the headlights” look back.

Not every advisor is trained to be as observant to your reactions (I’m a trained actor, so I read audiences pretty well), and it’s easy for us to forget that financial jargon does not translate well into simple English.

Einstein once said, “If you can’t explain something simply, you don’t understand it well enough.” So if we’re talking in long, complicated, overly-technical ways, don’t just sit there and bear it. Make us better by making us explain it again.

So if we explain something, and it doesn’t make sense, stop us and ask us to explain it again.

Nag us until you understand. We’ll appreciate your honesty and sincerity to learn. And it’ll make us sharper, because (trust me) we’ll remember the way we said something that gave you that “eureka” moment.

Be at least as committed to achieving your financial goals as we are.

Over the last few years, as investments have done pretty well overall, it’s been easy to be lulled to sleep about your financial plan. In fact, we’ve noticed (and I’m sure other advisors will verify this), that it’s been getting harder and harder to get you engaged about your financial plan and your investment account over the last few years.

Every year, we ask our clients to participate in a formal annual review appointment, where we review not only your investments but also your goals, beneficiaries, risk tolerance, etc. (We obviously interact with you more often than once per year, but this yearly review appointment is really important to make sure we’re still doing the job correctly for you.) In 2011, as the world was slowly recovering from the Great Recession, we had over 90% participation from our clients in getting together for these reviews. In 2014, it was 65%. This past year, only 26% of our clients scheduled one, despite us adding video and phone conferences as possibilities.

We simply cannot care more about your financial success than you do. We can do a lot, but we need you to be engaged and willing to work on your plan with us. Don’t wait for the markets to correct before you return your advisor’s phone call or email.

Turn off CNBC.

And no, that guy asking about what’s in your safe, or the shiny-domed dude offering you an “investment that participates in the market but you don’t lose money”, isn’t being totally honest with you.

With hours of live broadcast time to fill each day, these channels turn every market movement into a daily “horse race” of winners and losers. The drama keeps us tuned in, so they spend countless hours asking – urgently – when the next crash is coming, and trotting out their usual guests to give their (very biased and almost always wrong) guesses on where the markets are heading next.

Give that nonsense up. Unless you’re a day trader, there’s no benefit to spending hours of your life each day obsessing about today’s stock prices or listening to self-proclaimed gurus tell you which investment to “buy-buy-buy”. And be assured, the guy pitching you about gold and silver or expensive equity-indexed annuities, isn’t informing you out of the goodness of his heart.

Stay focused on your goals, turn the noise off, and go enjoy your day. Watching the markets all day is what you pay us for.

Accept and embrace that your investments are going to be down at times.

Unless your advisor is an idiot, they should have tried, repeatedly, to prepare you emotionally for the normal ups and down of the investment and economic cycles. Things go up, and things go down. Sometimes things go down just because other things went up. No one can predict with certainty when those events will happen (though many make a living pretending that they can), but one thing is certain: markets will be volatile.

As an investor, you need to both emotionally accept and intellectually embrace the concept of market volatility.

Let me explain.

If you are actively saving for a long-term goal, say, contributing to your company’s 401k, and you have several years to go before you retire, you not only can survive a market correction, but you actually want lots of them to occur. Why? Because you are going to the market to buy. And when’s the best time to buy something – when prices are sky-high? Absolutely not. You want to buy when things are on sale. So in your case, lots of time for the market to be down can be a very good thing, because you are acquiring your investments at a low cost-per-share, and shares are like balloons, inflating and deflating in value all the time. Buying when they are deflated means you can get more of them. You sell them later, when they re-inflate. The financial concept for this is called Dollar Cost Averaging.

Obviously, steep or lingering market downturns is lousy for people who are retired or just about to. That’s why we have changed your investment allocation (the mix of stuff you own), to help smooth out the volatility and provide you with more consistent income streams from your money.

Remember, too, that your account’s value on any given day tells you only one thing: if you had sold everything you had, and exchanged it for cash – on that day – that’s what it would have been worth. But in the next moment, we’re off to the races again.

If changes in your account value makes you nervous, one of the ways you can help us help you is to not look at it too often. Checking on your investments every day is a lot like stepping on the bathroom scale every few hours. The number will be all over the place, and it ultimately tells you nothing. Seeing how your weight changed from January to June is a lot more telling that how it changed from breakfast to lunch.

But if it gets too scary for you, let us know.

We’re the trained experts who are tasked with helping you avoid making emotional mistakes with your money. Reach out to your advisor and ask for a steadying hand or just a quick pep talk. (And if your advisor is the one stressing you out, schedule a little time with me – for free.)

Give us permission to tell you what you need to hear, not just what you want to hear.

You might gauge from this blog that I’m a pretty direct and informal. That’s the way I talk to clients, too. I believe that you deserve, and are paying me, to give it to you straight. But I also care enough to tell you the truth.

Some advisors are afraid to call you with the news that your account is down or that some bond has defaulted, because we sincerely and honestly want to do what’s right for you. And sometimes, even the best-laid and most well-intentioned plans don’t pan out. If your advisor has your permission to be direct and honest with you, giving you the occasional bad news is much easier.

We also want to make sure we’re always honest about your financial plan or the things we see you doing that could jeopardize it. We’ve had clients, for example, withdrawing far too much money out of their IRAs, making it a real possibility that they will outlive their savings. Other times, we need to punch through your self-delusions, like your notion that saving only $100 a month will be enough when you’re 70. We need to be able to tell you those things – in no uncertain terms (and here, we do).

Let us be brutally honest with you. For your sake.

That’s not just one-sided, however. We need you to be as direct and forthright as you want us to be. If you’re concerned about something, ask us. If you’re not happy with some element of our service, let us know. If you disagree about a strategy, challenge us. We can’t fix a problem we didn’t know was there, and everyone benefits from what I like to call “loving opposition”.

At nVest, we try to do this several ways. First, we always have the “let’s always be honest with each other” talk at the beginning of your relationship as a client, but we also give you opportunities to give us feedback, both in person and anonymously in our annual client survey.

Bottom line: your advisor not only wants to give and receive honest feedback, we needit. It’ll sharpen us and make us better, for you and all of our clients.

Let your friends and family know about us.

Finally, the hardest part of any business is getting a customer. In our business, that’s especially difficult, not only because of general competition, but because many of us are practitioners and small business owners, and not just salespeople. Our time to prospect for new business is always limited by the time it takes us to serve current clients. That’s why our clients can be some of our most potent marketing allies – you screened us, chose us, and hired us. You trust us. (You might even like us!) For others in your sphere of influence, your personal experience with us is far more important, and impactful, than anything we could create as a marketing tool.

Let me give you an example. When Hollywood goes to publicize a new movie, they’ll spend tens of millions of dollars for TV spots, product cross-promotions, newspaper and magazine ads, viral videos, and more. They’ll wine and dine critics, trot the cast out for promotional interviews on late-night talk shows, and slap their movie on products all over the supermarket. Selling the movie can be as expensive as making the movie.

So let’s say you see a dozen television ads about a new movie and it looks pretty good. You decide to head out to the cinema to watch it, and you invite your friends to go along.

If just one of your friends says, “Oh, I saw it last weekend. It’s awful. Don’t waste your money,” that one comment from just one of your friends, just destroyed literally millions of dollars of advertising money spent to convince you the movie was good.

A personal referral from someone you know and trust has that much power.

That’s why we ask for referrals.

Not only that, but did you know that our industry does not allow us to use client testimonials and public recommendations in advertising? Confidentiality rules means we cannot disclose to anyone else who our clients even are.

So while we can’t tell your friends and family that you are a happy client, you sure can.

Now, ideally, your advisor should be such a super-star that you eagerly give out his or her business card when the subject comes up. But many advisors are really shy about asking you to do it.

So let me ask on behalf of your advisor:

If we are doing a good job for you, and if you are not only satisfied but a happy client, would you please let 3 of your friends know, every year?

Better yet – let your friends needing an advisor know you’ll have your advisor reach out to them, and then get your advisor their info. We’ll treat your friends and family with the same level of care and concern we’ve shown you – we promise!


  Reprinted from the blog at nVest Advisors, LLC.

Jeremy Torgerson is an investment adviser representative with nVest Advisors, LLC, a registered investment adviser that does not provide tax or legal advice. Material presented herein is for informational use only by agents of existing and prospective customers of nVest Advisors, LLC, and is not a specific investment recommendation. nVest Advisors, LLC does not recommend specific investment advice without a signed service agreement with each client. This information is presented for education purposes only, and publication of this material does not represent or imply the recipient or reader has any fiduciary client relationship with the firm. Though information was prepared from sources believed reliable, nVest Advisors, LLC, does not guarantee its accuracy or completeness. nVest Advisors, LLC is an investment adviser firm registered in the states of Texas and Colorado.

Jeremy Torgerson

Jeremy is a semi-professional actor, full-time financial advisor (nvestadvisors.com), and the owner of "Think Like A Rich Guy". Jeremy writes frequently for Investopedia and other outlets, and is quoted in national media on a variety of financial subjects. Jeremy lives in his home city of Denver, Colorado.

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