Communicating with clients is crucial in crisis

Financial advisors have a tougher job than most these days.

In the turbulent wake of an unstable economy and plunging markets, several of the nation's broker/dealers are offering more resources and support to their advisor affiliates - in hopes of helping them keep their clients rational, satisfied and on board.

"You need to be able to talk about something other than investment execution," said Sam Aspinwall, CFP, a senior case manager with Wealth Solutions of Raymond James & Associates Inc. in St. Petersburg, Fla. "To be quite honest, investment execution is fairly commoditized. We need some way to arm our advisors with more information, more value, that they can bring to the relationship."

As a result, Raymond James created the Master's Program in response to the financial crisis, which provides more in-depth training on strategies including asset protection, alternative investments, tax efficiency, and disability and long-term-care planning opportunities.

Aspinwall said that the education was created to offer a more hands-on, detailed preparation on explaining challenging issues and how to engage with clients. "Typically, broker/dealers train at a fairly high level," he revealed. "The advisors, in my opinion, are ultimately left to themselves to dig up the real nuts and bolts of the issues. We started this process when the economy was starting to weaken and we thought, what can we get in our advisors' hands to let them go out and talk about something aside from markets?"

A more aggressive communications campaign was also rolled out at H.D. Vest Financial Services in Irving, Texas. Two to three "client-approved" communications have been sent out to advisors each week, which can then be forwarded to clients, according to president Roger Ochs, who also hosted a series of monthly podcasts for advisors, addressing client needs and offering tips on appropriate client protocol in the context of the financial crisis. Clients, too, were able to sit in on a separate series of podcasts featuring the firm's economist and senior portfolio manager giving updates on the state of the market.

"Being good listeners and understanding what the clients' concerns are is really the most important thing we can do," Ochs said. "Once we understand what their needs are and what their overall goals are, we really re-assess where their portfolio is relative to that goal. We want to determine what the gap is."

Ochs said that the biggest challenge to Vest's approximately 5,400 advisors - half of whom are CPAs - are the Baby Boomers who are trying to enter into retirement. Not surprisingly, they are going to their planners looking for advice on how to proceed. Those conversations have been difficult, as are the ones that advisors have with clients who are already in retirement and lacking the income many pre-retirees have.

"One advisor shared with me that sometimes he feels like a cheerleader, sometimes he feels like a psychiatrist and sometimes he feels like a minister," Ochs said. "It's less about the financial advice and more about the emotional issues around retirement and how it's going to change people's lives."

Advisors also support each other. Ochs pointed to dozens of meetings around the country earlier this year that included videos from Vest's home office covering issues such as talking with clients during tax season.

"Advisors have learned a lot from listening to other advisors and how they position themselves in this market," agreed Aspinwall. "We have created a number of trainings that are specifically from some of our better advisors saying, 'Here is how I'm addressing the market, here's what I'm saying to my clients,' and that has had a lot of interest."


For the first time in a long time, asset allocation and diversification hasn't provided the protection that it has in the past, noted Al Prentice, vice president of business management services at 1st Global in Dallas.

As a result, his firm deploys such tactics as defensive strategies and alternative investments such as non-market-correlated assets, non-mark-to-market assets, equipment leasing and real estate limited partnerships, non-traded real estate investment trusts, and principal-protected notes in its fee-based asset management or advisory platforms.

"What these do, since they are non-mark-to-market, they have been able to dramatically reduce the volatility in clients' portfolios, and that has multiple benefits," Prentice explained. "It prevents the clients from panicking when markets are down, and it reduces temporary losses in clients' portfolios, which is extremely valuable because it increases the overall returns."

Though Prentice said that 1st Global started using some of these strategies approximately eight years ago, the CPAs who are a part of his network are continuously kept up to date on how best to use them. Still, the downturn has left advisors needing additional support.

"We realized that our CPAs wanted and needed more communications, so we held weekly conference calls with our advisors," Prentice said. "We just talked about the markets, what was going on and tried to share as much information as we had, and brought in experts from our strategic partners to give fresh insight. A lot of it is just being able to reach out to people and hold their hands to relieve some of this psychological stress in the marketplace."

Communication has also been kicked up a notch at Genworth Financial Investment Services. Advisors are sitting down face to face with their clients in "rediscovery meetings" to evaluate what has changed in their objectives and goals.

"Let's face it - it's an emotional time," said Michael Abramowicz, director of practice management at Genworth in Chicago. "When the value of something you own goes down, there's emotions involved and sometimes you want to be out. We're really talking to the advisors and saying communication is by far the No. 1 thing you should be doing."

An internal practice management Web site was constructed with tools and techniques to help advisors with planning, managing and building their practice - as well as how to navigate client relationships. One of the modules included on the site is aimed at defining market volatility and how to handle it.

"It's Cliff's Notes or a cheat sheet to help the advisor construct a story to walk through and help their client through this time period," Abramowicz said, adding that the site also offers a guide on how to conduct an annual client review. "It could be different for everyone, but you really need to take a look at the client's objectives, the strategy they are in, see if anything has changed, take a look at current news and events and also have an opinion. This module really helps."

Aside from regular teleconference calls, Genworth advisors can tap into a practice management team available in each of their eight regions. Within those regions, an internal planning specialist and a regional planning specialist can be used as an advisor resource.

"Whereas the team might have been helping individuals with business plans, now they need help in talking about current events, they need help in talking with clients and what has happened to their portfolios," Abramowicz said. "We are constantly communicating with our advisors and letting them know what's going on."

(c) 2009 Accounting Today and SourceMedia, Inc. All Rights Reserved.

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