Recently, I stumbled across some research conducted a few years back summarizing why clients leave their financial advisors. Spoiler, the top reason wasn't performance or fees. It's communication.
It's not that performance or fees don't matter, it's that they're just not at the very top of the list for most folks.
This is a great opportunity for me to set expectations in each of these areas. Plus, I want to make sure you're happy so you don't leave!
I can't speak for the other advisors at Aspen Leaf Wealth Management, but I trust them to make quality communication a key part of their offering.
Using the graphic above as a format, what follows is how I personally break my clients into different levels of service, meeting frequencies, philosophies on communication, and what types of advice clients should expect.
DOESN'T RETURN PHONE CALLS
I can't understand why someone in any business wouldn't return a phone call.
Professionals are busy. We have meetings. We conduct research where we'd prefer to avoid interruptions. We discuss strategy with colleagues. We work on behind the scenes projects to better serve clients.
However, none of those tasks ever last all day. It's so easy to look at your phone a few times a day to see if someone called.
Even if a client contacts you at 4:30 PM in the afternoon, it doesn't mean you have to begin work on their project immediately. All you have to do is call them back to let them know you understand the question and then give them a time frame you expect to finish the work.
Even when I travel in the summertime and we're out on the road, I have all my work calls routed to my cell phone. There are occasions when I'm out of cell service on a weekday due to camping and hiking in the mountains, but these are extremely rare events.
I take proactive steps to let clients know my summer travel plans, availability, and I even change my professional voicemail when I may be out in some National Forest with my family and there's no cell service. I feel this is a valid way to balance having a life with professional obligations.
DOESN'T PROACTIVELY CONTACT CLIENT
This can be broken down into two categories; proactively contacting as a regular component of service, and proactively contacting when the market takes a hit.
First, some context.
I work with two types of clients. Wealth management clients are those that I directly manage portfolios for as well as provide comprehensive financial planning. Investment clients are those that I manage portfolios for.
Typically, wealth management clients have a minimum of $400,000 of investable assets and a strong desire to stay informed of how they're tracking towards their retirement goal.
There is no difference in the portfolio work I do for wealth management clients versus the portfolio work for investment clients. The only difference between the two is the financial planning component.
Investment clients may have hired me to create a financial plan in the past, but unless it's something we're reviewing (and paying for) every year, they are not wealth management clients. Usually, investment clients are shy of the $400,000 threshold which is when I include financial planning as part of the overall fee that comes out of the investment account.
Now that client definitions are out of the way, here is what I personally provide from a service standpoint:
Wealth management clients receive a 60-90 minute annual review at a pre-selected month. If their annual review is in the spring, they receive a check-in communication in the fall and vice versa.
Investment clients are scheduled for every January of each new year. I reach out at least twice via email to schedule reviews. These reviews are optional but encouraged.
All clients have access to a dedicated Client Portal. We provide a clean online summary of the information you care about; account balances, holdings, contributions & distributions, and performance. Numbers are updated daily and access is 24/7.
All clients receive blog posts. I try to crank out 1 per month. I feel that's all the mental bandwidth most folks have for finance-related topics. I structured blog posts this way for two reasons. First, do you really want more than one email per month from me? Kohl's emails my wife and myself 4 times a day and it's insane. Second, I could write little fluffy generic posts a few times a month, but what kind of value does that provide? I prefer to do more extensive research and go deeper with posts.
All clients receive timely blast emails related to operational, market-driven, or tax-related events. I don't distribute quarterly "market commentaries" written by some egghead you'll never read based on some arbitrary delivery date on the calendar. These provide little to no value. You hired an advisor so you don't have to follow this stuff! Let's be honest, are you more likely to open an email based on the subject "Q3 Market Commentary; Are Emerging Markets Due For A Correction?" or "Here's Exactly What You Need To Know About Your TD Ameritrade Tax Summary"?
All clients receive a summary of tax-related documents in February. This is not the generic messaging that comes from TD Ameritrade Institutional. This is me reminding folks where they can go to locate tax-related information for their upcoming returns as well as when they can expect to receive this information.
Pivoting to communicating during major market events, back in March at the beginning of the pandemic, I communicated in a variety of ways. Every client received two blast emails in the span of ~ 3 weeks. I discussed what was happening in the market as well as what we were doing behind the scenes in investment accounts.
In addition, I spoke to or left messages for all of my wealth management clients and I also talked to a handful of my investment clients.
If I'm grading myself without bias, I could've made a greater effort to reach out to more of my investment clients to check-in and make sure everything was ok.
DOESN'T PROVIDE GOOD IDEAS AND ADVICE
As in any professional field, advice can be subjective. However, there are a few truths most clients never hear because their advisor is a salesperson as much as they are an advisor.
If you don't work with a Fee-Only advisor, advice is likely reflected by what's good for the advisor but only mediocre for you. There's a major conflict of interest here. Would it be weird if your doctor sold you the medicine she prescribed? Yeah, it would, for obvious reasons.
In the financial world, most advisors are glorified salespeople that drink the kool-aid of products their employing firms allow them to sell. They justify expensive products that pay big commissions and hidden investment fees in the name of I'm helping.
The best way an investor who hires professional help can ensure they receive advice in their best interest is to ensure the advisor they work with doesn't sell anything, ever.
Once you get beyond compensation structures, it gets harder to evaluate how good the advice you're receiving is. I would suggest another way of stacking the odds in your favor are to work with an advisor with an advanced designation, such as the Certified Financial Planner (CFP®) credential.
According to the CFP Board, only ~ 25% of financial advisors have gone through the headache of this coursework and passing this annoyingly tricky test. Chances are, if you don't already work with Aspen Leaf Wealth Management, you're likely not working with a CFP certificant. That could mean that your advisor isn't paying attention to everything they should. When this happens, you lose.
In addition to the CFP marks, I completed the Chartered Retirement Planning Counselor (CRPC) designation. Simply said, I'm kind of a nerd. I figure that's what you want!
The last thing I'll say about good ideas and advice is that over the last several years, I've tried to get better about quantifying the value of recommendations.
Instead of just telling clients to execute a Roth conversion, select a certain date to begin Social Security payments, or donate to charities via Qualified Charitable Donations straight from their IRA, I like to attach numbers to the advice.
What's more meaningful, hearing me say "don't take your Required Minimum Distribution in 2020 because you don't have to per the CARES Act" or "RMDs are optional in 2020, the combined federal and state tax savings will be $7,560 and this is a greater benefit than leaving the $$$ in there and taking slightly larger RMDs for the rest of your life"?
DOESN'T RETURN EMAILS IN A TIMELY MANNER
When I email someone in a professional context, I don't expect a reply in a few hours. In my mind, an email is not a time-sensitive inquiry that requires an immediate response. For example, when I fire off an email to my tax advisor, I don't do it on April 14th asking what they need from me to file my personal return. If I'm ever in this situation (I won't be but humor me), I'll call. Why? Because it's an immediate need.
In general, emails can certainly be serious in nature, but if someone gets back to me in 24 or 48 hours, that's fine. It's email... If they happen to get back to me within a few hours, I get a warm fuzzy. Bonus! But if it's a day or so later, it's not like I'm bent out of shape, ready to fire them.
My personal philosophy with email is to check it in the mornings. This usually means I'm responding to clients as I sip my morning coffee or potentially before lunch. Usually, I don't check emails in the afternoon. I'm meeting with clients, returning phone calls, picking up my kids from school, doing research, or working on content to push out to all of you.
What I like to tell my clients is to think about the nature of their inquiry before they reach out. In the case that something is truly time-sensitive or feels complicated in nature, just call! If the inquiry doesn't need to be addressed at that moment or feels like it would be understandable in written form, then email is appropriate. This is how I interact with the other professionals in my life and I believe it's served me (and them) well.
If we've decided to work together, it means we both made a decision that we're better off with this person in our life. Beyond the belief that you're better off with me than without me, you need to feel comfortable with my client service schedule as well as my responsiveness. I feel I've built a fair platform that works for both of us.
If you're a client and your expectations of me are greater than what I've laid out or what I've delivered, then please reach out so we can talk through your thoughts. Perhaps a compromise or understanding can be worked out so we can avoid ending a relationship we didn't have to! But, I won't know how you're feeling if you don't voice your opinion. This can be hard to do, but I'm not scary. One of the benefits of working with a small, boutique firm like mine is you're not just one out of thousands of clients. I actually care what you think and am willing to listen to feedback.
For readers who haven't hired us yet, ask yourself if your financial advisor actually ticks all the boxes below.
Are they responsive? Do you feel good about the advice or does something feel off? Do you feel you're being sold products disguised as advice? Do you feel like you're actually accomplishing things during your review meetings? Can they quantify the value of their advice with numbers or back up recommendations with research? Are you experiencing performance in line with the stock and bond markets? Does the advisor use software to model retirement outcomes or do they just focus on the portfolio? Last, are you certain you understand exactly what your advisor is being paid and if yes, do you feel that the advice/products received were 100% worth the compensation the advisor received?
If you answered no or I'm not sure about any of those, you owe it to yourself to start asking questions. Reach out to us for our perspective. Like I always tell folks kicking our tires, we're not salespeople. Initiating a conversation via the Contact link at the top of the page doesn't queue up a timeshare presentation.
Last, we're on your side. We only get paid from your fees, not some brokerage firm, annuity company, or insurance carrier. It's in our best interest to deliver the best advice possible, communicate effectively, and keep you happy. If we fail at any of that, you'll leave, our revenue suffers, and we'll have to hunt harder for a client to replace you. I'd prefer to avoid that!