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Practice Management

In these challenging times, take advantage of the benefits to be found in professional organizations.

This Practice Management article is intended for financial advisors only (registered representatives of broker dealers or associated persons of Registered Investment Advisors).

In February, I visited the FPA chapter in Austin, Texas. While I was there, one of the members commented that he seriously considered not coming to the meeting because of the day’s market turmoil. “I’m really glad I did, though,” he said, “because in talking with other members, I picked up a few tips on what I should be saying to my clients. And more important, it really hit home that I am not alone in all this.”

I was thinking about this advisor’s comments when I attended the Technology and Tools for Today conference in Dallas just a couple of weeks later. I asked several people what they were seeking from this conference. “I need to find more cost-effective ways of handling my practice,” one advisor told me, “because I know I have to cut some staff and the work still needs to get done.”

Nice-to-Haves versus Need-to-Haves
I am sure that you are now poring over your expense ledger, trying to figure out where you can cut costs. Greg Friedman, of Friedman and Associates in Novato, Calif., told me that during good times he used to bring in a massage therapist to help his staff de-stress. Today, he says, if someone thinks they need a mental health day, he asks if they might consider taking a “mental health hour.”

Granted, luxuries like these had to go. But when you begin to pare expenses, you must be careful that you don’t also cut those costs that are essential to your well-being, as well as to that of your staff and clients. I am talking about your memberships in professional organizations. Going to a local meeting and talking with other professionals can be your “mental health hour,” and you could walk away with new ideas of how to become more efficient, cut costs or deal more effectively with clients.

Look Around
Take a look at what some of your associations are doing to meet your needs during this crisis. For instance, The FPA (www.fpanet.org) has been holding virtual seminars with topics, such as Uncertain Times Series, with various speakers talking about issues and problems you’re facing now. Or, you can download the archive of Stephanie Bogan’s presentation, "Bear Market Survival Guide," from their website. FPA also has a Financial Crisis Resource Center, where you have access to real client letters, articles and presentations on what is happening around the global markets. You can connect with colleagues using the FPA Community Building forums, and the FPA site even links to a special area in Facebook just for advisors.

NAPFA (www.napfa.org) has a wide variety of networking and educational experiences for you to explore, including a list of study groups that enables you to get connected with individuals who can then serve as your support system. NAPFA’s Cutting Edge conference calls have also discussed such subjects as "Marketing in Turbulent Times."

Along similar lines, the AICPA’s Personal Financial Planning division (pfp.aicpa.org) has an Economic Crisis Resource Center that includes many resources and webinars like "Advising Clients During Current Market Conditions."

The Society of Financial Service Professionals (www.financialpro.org), on the other hand, has been offering various podcasts focused on how financial services professionals are dealing with the current economic crisis. Local chapter meetings have also addressed how advisors can support one another in these turbulent times.

If you aren’t using your affiliations to their full value, you’re ignoring your best support system. And, if you have dropped your membership, think again. Now is not the time to isolate yourself and your practice from creative ideas, specific action items and, well, contact with other professionals who are living through the same experiences as you are.

Reach Out
This brings me to another thought: Every advisor I’ve talked to recently has told me how difficult it has been to keep talking to clients, reviewing their concerns and hand-holding them through this interminable crisis.

Until recently, most advisors have had abnormally low client turnover, thanks in part to upward trends in the market. Now, for the first time, clients have less money than when they began going to their current advisors. And while client flight has not occurred just yet, we know it may only be a matter of time if the current downward economic spiral continues. What we say to clients right now could make all the difference between their staying and their going.

While we know that hand-holding is valuable for clients right now, what we don’t know is if we are holding the right hands at the right times. Julie Littlechild, president of Advisor Impact (www.advisorimpact.com), has new software available to complete clients’ audits online, on your desktop. Okay, I can hear your objections right now, “Deena, with times so bad, why would I even want to ask my clients anything?”

Personally, my belief is that this is a great time to gauge where your clients are. With their feedback, you can determine how best to meet their needs, deal with their concerns and help them continue to maintain perspective on what’s happening. Here are some questions you may want to ask:

• Are there things that you would like us to communicate to you that we have missed?
• Are we communicating enough in a manner that is appropriate—too many details, not enough?
• What value have you found in our emails, newsletters, meetings, webinars and calls?
• Are there other ways you would like to hear from us?

Add to the Wagon
Finally, since you have been spending so much time with your clients recently, I wanted to remind you that you still need to continue marketing your services as well. During crises, we planners tend to circle the wagons, not realizing that we might also be able to add to the wagon train if we just look over the next ridgeline.

Right now, many people are in transition, unhappy with their current support and uncertain about how best to find trusted relationships, particularly in light of the Bernie Madoff and R. Allen Stanford headlines. Be confident in your philosophy, offerings and customer service, and try to balance your time between current clients and potential new business.

At the Technology and Tools for Today conference, I discovered some vendors who are trying to help us manage our external/internal balance. Boulevard R (www.boulevardr.com), for example, provides a system for prequalifying potential clients. The program takes people though an interactive goals process and provides a road map. The advisor can then determine if they are ready for an advisor or if they need to accomplish some things on their own first. The system keeps track of potential clients’ progress, so the advisor can reconnect when the time is right.

MoneyGuidePro G2 (www.moneyguidepro.com) is adding a feature to automatically “stress-test” your client’s financial plan, saving you a lot of analysis and calculation time—which you can devote to one-on-one meetings. The feature helps clients refocus away from short-term portfolio values and toward longer-term goals. This new feature can answer the question, “How much money could you lose tomorrow and still be in your confidence zone?”

In G2, the confidence zone is the acceptable range in which your client feels comfortable about reaching his or her goals. The acceptable range includes the use of a home, or a partial reverse mortgage on a home, as a financial buffer. This is what Bob Curtis, president of MoneyGuidePro, calls the “security cushion.”

So, that’s my brain dump for this column. Use your resources liberally, value your relationships, and keep your balance. And amidst all the turmoil, just remember to "take care o' you."

Deena Katz is an associate professor in the division of personal financial planning at Texas Tech University. She is also chair of Evensky & Katz in Coral Gables, Florida.



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