What makes a good comprehensive wealth management advisor? I’ve worked in that role, in varying capacities, since January of 1987. Needless to say, I’ve seen a lot throughout all those years. Simply put, my opinion is that the best advisors look after their clients’ best interests. Operating in that mode, over time the most important factor evolves – Trust!
All advisors should have expertise in investments, insurance, estate planning, taxes and the financial planning process. Having the Certified Financial Planning™ designation indicates that an individual has proven knowledge in those areas – and must augment that with very structured continuing education. Frankly, I’ve known really good advisors who have the CFP® designation – and conversely, I’ve known some whom I thought were lacking. I must add, I’ve known some competent professionals who had no such credentials. It is, however, a good starting point.
I chose to become a Certified Financial Planner™ Professional in 1993 and feel that it served my clients, and me, very well. But into each life some rain must fall. The following is a story that suggests that when you feel you’ve done everything correctly, there is another variable that can impact success or failure in the client-advisor relationship: Timing of when the relationship started.
Back in 1998 an affluent client was referred to me. He asked me for advice on where to place a larger sum of money, and also a smaller amount that perhaps had the ability to really grow – a bit more speculative. I selected three tried and proven large cap mutual funds that had a long, favorable track records and were managed by a blue-chip, gold-plated firm. That’s where we put the larger amount. You are probably ahead of me now, but I suggested an internet mutual fund for the smaller amount – as it had been growing extremely well. Meanwhile, in 2000 (you may recall) the markets went into a three-year downturn. Beginning with the Bush/Gore Florida vote recount debacle in 2000, followed by 9-11-2001, then followed up by the collapse of WorldCom, Enron and a group of high-profile companies. Of course, the “dot.com” bubble sent technology stocks into a tailspin. It was a very long, drawn out, blood bath! The internet fund dropped about 80% and the blue-chip funds dropped about 30% – there was no place to hide during that time! In a disappointing way, that client relationship ended.
Fast forward to 2003. A CPA friend of mine asked me to recommend an investment that was beat down. One that I thought had potential to really grow. This was for his personal account. I suggested my old “friend”, the internet fund. It seemed grossly oversold! In his retirement account, with a larger sum of money – and contributions added monthly – I suggested three blue-chip large cap funds. In other words, the exact same investment(s) that had performed poorly for my previous client. After a short period, he was thrilled with the performance. This strategy worked well for years!
Ironically, my CPA friend took a trip with another CPA. Turns out his travelling companion handled business affairs for my former client who had invested back in 1998. Needless to say, his report about my performance on his clients’ behalf was not very favorable.
Upon returning from their trip, my friend called and asked me what the client who had such a bad experience was invested in. I exclaimed, “The exact same thing you are in!” Timing can be everything – in life, romance, client relationships, and certainly investment performance.
The true moral to this story is this: the best advisors are also masterful at managing client expectations. That expertise typically takes a few years to mature and develop – and riding out a bad market cycle or two can certainly help one to hone the necessary skills to become an effective “client hand-holder.” The result is typically a more favorable outcome for both client and advisor!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk including loss of principal.
RFG Advisory and its Investment Advisor Representatives do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Please consult your own tax, legal, and accounting professional for guidance on such matters.
Visit us at www.williamsfa.com. Tommy Williams is a CERTIFIED FINANCIAL PLANNER™ Professional with Williams Financial Advisors, LLC. Securities offered by Registered Representatives through Private Client Services, member FINRA/SIPC. Advisory products and services offered by Investment Advisory Representatives through RFG Advisory, a Registered Investment Advisor. RFG Advisory, Williams Financial Advisors, LLC and Private Client Services are unaffiliated entities. Branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.
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