Five years ago, we experienced the worst market meltdown in our lifetimes. Here we share lessons learned from bank advisors and tips on how theyve changed their practice from better managing the debt portion of clients portfolios to tuning out the hysteria of the media.
One of the things I've learned over my career is that the market's performance is out of my control, yet performance seems to be the way most clients like to determine how well you're doing for them. Since I cannot control that aspect of their financial lives, I would hate to lose a client solely on investment performance so I've taken a holistic approach to their financial lives and become more focused on their overall wealth accumulation. This has been well received. Since most clients and prospects seem a little gun-shy about investing their money again, the focus becomes increasing their overall net worth, and they feel more comfortable once they see how everything works together. Earning my CFP has also helped my credibility with clients and prospects.
2. Craven Green, Extraco Banks/Raymond James -- Waco, Texas
I have been re-confirmed in the conviction investors should buy historically good investments and be patient with them. Just as importantly, I also have removed the television from my office.
3. Patrick Varney, Bank of Colorado/Raymond James -- Windsor, Colo.
Without a doubt, the biggest lesson I learned was to turn off the television version of financial media. It creates mental chaos which can affect the ability of an advisor to think clearly. Choose your media sources wisely. I always choose to read one bear and one bull newsletter weekly as it allows me to see perspective from both sides of the fence.
The second-biggest lesson reinforced my belief all along. Once clients understand we cannot control markets but that we can control our service, they are much happier.
4. Wayne Rogers, Wells Fargo -- Midland, Texas
One of the biggest lessons would have to be the importance of client segmentation. My focus is only on a certain number of clients so I can deliver the service that I feel is needed for higher end clients. It also allows me to stay on top of things better as far as investments are concerned. It's hard to stay in top of 200 households.
My client service model has also changed over the years. The numbers of contacts and face-to- face reviews have been refined over the past couple of years. At the end of the day I want to spend 80% of my time on my current clients and the other 20% on other items. That's been my ideal business model and has been a focus and realization since 2007.
5. Yvonne Silguero, Lone Star National Bank/LPL Financial -- McAllen, Texas
Over the past five years I have refined my communication skills with my clients. It was a difficult period during 2008 and 2009 market crash. Since then, I make sure clients are very aware of the "worst case" scenario. If and when it happens again, we will be able to use rationalism as opposed to emotions to make decisions in bad markets.
6. James Hare, Pinnacle Bank/Raymond James -- Nashville, Tenn.
The biggest lesson that I learned from the crisis was to always keep a level head. Stock market declines are inevitable and our clients depend on us to be the voice of reason when pullbacks occur. The crisis reinforced the decision I made long ago to be a discretionary-only advisor. Making investment decisions during times of despair can be very emotional for clients. It's comforting when they know someone that they trust is making prudent investment decisions on their behalf. As far as changing investment strategies, I have traditionally been a heavy municipal bond investor but the crisis afforded me an opportunity to add more equities to client portfolios.
7. Joel Worsfold, Wells Fargo -- Clive, Iowa
I changed our investment strategy to include technical trading in hopes of missing most of the next crash if and when it happens. It also helps us determine when we want to invest new money as well.
8. Kevin McDermott, Citadel Federal Credit Union/Cuso Financial -- Exton, Pa.
The biggest lesson I have learned is this: The clients that I had more interaction with via face-to-face reviews, quarter newsletters, emails, client events, and various other touch points stayed the course, heeded my advice and remained great clients. Those who I had little contact with were more panicked and more apt to sell out or leave the markets completely.
As a result, I have reduced the number of clients in my book and . redoubled my efforts to have 10-12 touches per client per year via face-to-face meetings, emails, quarterly newsletter, topical email/letters, client events. He adds, I survey my clients and one question in that survey asks every client how often they want to meet and how do they prefer to communicate (phone, email etc.)
9. Rhonda Arnett, Columbia State Bank/Cetera Financial Institutions -- Tacoma, Wash.
One of the biggest changes for me both personally as well as advising clients involves the level of debt on their personal balance sheet. I am much more vocal about directing clients to think about paying down debt than I was five years ago. Even in a low interest rate environment, where in the past, I may have advised clients to go ahead and borrow at a low interest rate, then invest their money to presumably obtain a higher rate of return, my comfort zone is much different now toward debt. Particularly for those getting close to retirement, I really like to see them enter into retirement with as little debt as possible.
The other notable change is that I advise emergency funds be closer to 12 months worth of expenses, when in the past I may have advised six months was adequate.
10. Matt Fryar, Wells Fargo Advisors -- Des Moines, Iowa
I guess what its done is reinforce the model that Ive always had as far as frequent contact with clients. Ive always had a policy of communicating with clients quarterly. That served very well during the financial crisis because clients are used to being communicated with. We didnt put our heads in the sand and we actually communicated more during those periods of time.