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By Jonathan Chevreau
National Post
“Advisor Post” Section
Monday, September 12, 2005 |
A few weeks back this column looked at the six essential traits of great financial advisors. That sparked debate about the flip side: What are the most desirable qualities an advisor should look for in a client?
Adrian Mastracci, investment counsel at Vancouver’s
‘fee-only’ KCM Wealth Management, says, "I like to work with clients who take a keen personal interest in their wealth management needs.”
When this question was posed at an Internet discussion forum I frequent, it began with predictable tongue-in-cheek advisor-bashing. "Naive ... no financial knowledge ... poor in math," quipped one wag, portraying the supposed ideal client for an "advisor-from-hell" looking only to pad his own retirement account. In a similar vein, another suggested the ideal client is willing to pay for hand holding, but doesn't require much of it.
Hah hah hah. Now those are out of the way, let's move on to the more serious feedback.
Money has little to do with it, one advisor told the forum. He made the fine distinction between the terms "client" and "customer." Advisors may encourage mere customers to go elsewhere. "Clients we want to keep forever, regardless of net worth."
Customers tend to commoditize the services or products advisors bring to the table. Clients value what the advisor suggests. Customers have no sense of loyalty. Clients are loyal.
"Ultimately, any advisor who has too many customers and not enough clients will be out of luck."
Adrian Mastracci, president of KCM Wealth Management, says he likes to work with clients who take a keen personal interest in their wealth management needs, take the time to reveal what's important to them, appreciate the value of designing investment policy statements before investments are chosen, and listen to the advice preferred.
Another advisor posting anonymously on the Net seeks clients who can articulate realistic objectives and need some direction to achieve them. They don't shift goal posts midstream and are as accessible, open and honest as they expect their advisors to be. There should be "mutual respect and appreciation of what each party brings to the table."
Valued clients are intelligent enough to comprehend the wide-ranging scope of the financial planning process. Economic potential is important too: that doesn't mean they're already wealthy but they should have the potential to "grow into one of those semi-affluent clients everyone is so anxious to acquire."
Such clients tend to be responsible. They won't "jump into the first loony-tune scheme that comes along from some long-lost cousin."
Mike Hadford says the brighter the client "the better we get along." His best clients are retired engineers, chief executives, lawyers or crown prosecutors.
"I enjoy being challenged in a reasonable, informed, articulate manner." Less ideal are clients with minimal knowledge or interest, who just want the advisor to do what he thinks best. "This relationship is less likely to be satisfactory, since we have no meeting of the minds on goals, methods, costs, and risks."
The worst "customers" are those who unilaterally tell advisors what they want their money invested in and aren't interested in other ideas or debate. They just want the advisor to execute trades but blame the advisor if the investment tanks.
I also asked for input from consultant Dan Richards, who furnished the initial list of six desirable advisory traits. Richards -- whose firm is Strategic Imperatives -- says knowledge levels vary dramatically among clients. Some are sophisticated; others are not and feel that's why they have an advisor in the first place.
At the onset of a relationship, advisors need to know the full story of a client's circumstances. This requires an upfront investment of time which good clients willingly invest because they perceive the ultimate benefits.
Good clients ask questions before making snap judgements. The poor ones "don't even know what they don't know."
Once a plan is agreed on, good clients have the discipline to stick to it at least over the mid-term. "Few things are more frustrating for professionals than clients who keep changing direction based on what's happened in the last quarter or something overheard at a cocktail party," Richards says. "The best clients can keep their emotions in reasonable control if things don't go just right."
They have reasonable expectations and don't constantly second guess advisors or point fingers when ideas don't pan out.
Just as top professionals respect their clients' time, top clients respect the time of their advisors. They don't expect them to drop everything the instant they call. Similarly, they have reasonable expectations on how often they will see their advisors -- one in-depth meeting a year should suffice, supplemented by periodic phone calls.
Outstanding clients trust their advisors and generally take their advice. That doesn't mean they don't ask questions or take advice blindly but if a client is so cynical that they constantly suspect ulterior, negative motives lie behind the recommendations, the relationship can never flourish.
Finally, superior clients have a positive attitude. They want their relationship to be profitable for their advisor too, within reason. "Some clients constantly haggle on commissions," Richards says. "The end result is the advisor is unable to sensibly provide a high standard of timely advice and service."
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