I met a prospective client for lunch a couple of weeks ago. “Barry” (not his real name) is a high-net-worth (HNW) former real estate developer who sold his operating business several years ago. We met to discuss his goals and to see if there was a suitable “fit” between us.
Over the course of my career, I’ve had hundreds of working lunches. Most of them have been pleasant and interesting, although not all of them have led to new business. But this conversation stood out.
Barry was blunt and direct, without being impolite or hostile. He knew what he wanted from this relationship and, perhaps more importantly, what he didn’t want. Most important of all, he was able to communicate those wants clearly and cogently.
Obviously, I didn’t record my conversation with Barry for confidentiality reasons. But I do remember several key points that stood out. It’s my hope that by sharing these points with you, you can use them to develop a more positive, profitable relationship with your financial professional, no matter what your net worth.
•“I don’t want someone who thinks the same way I do.”
Some investors want a financial order taker – someone to validate their decisions. Others want to delegate financial decisions to a trusted surrogate, so they don’t have to think about money. Most, like Barry, want a partner who can provide solid investment ideas and strategies and push back when the client is about to do something potentially “off track.” Any of these approaches can work, but the point is to know what you’re looking for, and to communicate that in every meeting.
•“I’m the kind of guy who tells it like it is.”
I appreciate the straight-up approach – perhaps because I’m the same way. This should be an important goal for every investor. If you can be clear with your expectations (when they are met and when they aren’t), and if you can accept that same level of clarity from your advisers (when they make good decisions, and when they don’t), then you’re likely to have an excellent working relationship.
•“If I don’t like something, we’re not going to do it.”
After the big market drop of 2007-08, it was clear many investors had been sold investments they were neither comfortable with nor fully understood. This is obviously a real “black eye” for the financial-services sector, but there’s a lesson here for investors too. Don’t be afraid to say “no” if you don’t understand an investment, if you’re not comfortable with the approach or if something seems too good to be true.
•“I’m not looking for a stock jock. This is about more than the portfolio.”
Throughout our discussion, Barry made it clear how success would be measured. Investment performance was important, but also how well we were able to handle his holding company assets, set up trusts for kids and grandkids, start a charitable foundation and so on.
Whether or not you share Barry’s goals, you can learn something from his approach. Too many investors start a relationship without telling the professional how he/she will be evaluated.
By being clear about how success will be measured, you do two things:
•provide tangible yardsticks the professional can work to; and
•let the professional know he/she will be constantly evaluated.
By emphasizing the need to evaluate progress toward tangible goals at regular intervals, you establish a “pay for performance” relationship, and give the professional an incentive for living up to your expectations (i.e. more assets directed to them over time). At the end of the day, everyone benefits. •
