Should there be anything else in the mind of clients aside from sound financial and investment advice?

Last week two articles in the Financial Times reminded me of the power of creativity. The first (here) describes aggressive tactics for acquiring customers in high-end retail banking, a novel twist on the sophisticated wining and dining for the super-wealthy. The second (here) highlights how private banking units have been beefing up their art “investment” advice activities. If only we still had Andy Warhol around to translate both pieces in amusing – and for him highly profitable – canvasses.

Leaving aside a discussion on the merits of investing in art, there is no doubt that the commercialization of advice has augmented in intensity and pervasiveness, mostly at the expense of sound judgement and tangible client results. This, as usual, is not all the banking industry’s fault. Some years ago, a large client left the bank I was working with because we were not being proactive enough with sport-event tickets and offering “help” to one of his children in his budding career. Not a word on how well and why his portfolio was performing. But the industry should push back and refocus clients’ attention to the real job at hand, instead of inventing new concoctions to produce a win.

A classic example surfaced when I looked into the possibility of collaborating with a very well-known and successful group of independent financial advisors. After several calls, email exchanges and a trip to visit with them at their headquarters, they determined that I would not be in a position to provide the same “client experience” they wanted to associate with.

“Client experience.” What exactly does that mean? Think about it for a moment. It conjures images of hallucinogenic perceptions holographically enhanced in a dim room with mist, where the client can “experience” the invigorating effects of sophisticate financial advice. Or it can bring up images of a massage parlor.  Either way what the two words show in this context is the complete delinking financial advisory firms regularly produce between the substance of their message and the verbiage they use to deliver it. Even when they are dealing with one of their own: if they did not want to work with me, that is perfectly fine; just say so and, if you wish, give concrete reasons for the decision.

Not all advisors provide the right “client experience” for some. Fair enough; in my case I could never satisfy all profiles and investment needs in the world. In fact, I’m not sure I would be interested in doing that if it were possible. What I am interested in is providing the right framework and the elements an investor needs to think about before running a portfolio, and the discipline to work a plan. No pyrotechnics or fancy phrase work required; just pure and simple advice.

Instead of looking for “experiences” in finance think about the purpose of your money (if you don’t know its purpose, you have too much of it; give it to charity), your time horizon, and the likelihood and size of any withdrawals during the life of the portfolio.

Once you nail these three things and establish a plan going forward, go ahead and “experience” anything you fancy.

Roberto Plaja, September 13, 2018

-Photo Sources-
Cover: Andy Warhol, One Dollar Bill (Silver Certificate), (1962). Courtesy Sotheby’s.