Most clients are families of average means who want better results from their investments. They want to make their money grow, or they want reliable income during retirement. They want to adhere to an overall organized investment strategy that works while leaving room to safely experiment for high-potential returns. And they have a clear sense of wanting to take control rather than trusting their financial future to large institutions.
Over time I have learned what characterizes clients who are most comfortable with me and most appreciative of the returns I provide, which is what makes my job satisfying.
1. Clients realize that most wealth comes from wealth and they want to put their money to work for them. While we may not think it fair how the rich get richer and the poor get poorer, until the rules of wealth distribution are changed, we need to take advantage of how the system works. By contrast, most financial planners are engaged to preserve wealth more than to create wealth. They like clients who already have enough money and can pay bigger fees, who rarely leave even if performance is poor. My clients are usually more anxious about missing opportunities than about temporary dips in valuation.
2. Clients manage their own asset allocation. Some have used me or financial planners as advisors, but almost all of them remain very much in charge of the balance between their investments. For some clients I manage most of their investment assets. Others have placed a small portion with Wenzel Analytics and I don't know their net worth.
3. Clients are comfortable delegating. They may be or have been in management or own their own business or consulting practice. Some are comfortable delegating just because they have no interest in dealing with financial and investment decisions. Whether they know a lot about investing or very little, a lot about me or very little, they decide to delegate this responsibility to Wenzel Analytics and then are comfortable with the decision. They are not anxious. If they need information, they usually read my reports, read their brokerage statements or visit the brokerage web site. Some welcome a quarterly meeting while most do not.
4. Clients trust a single-person practice to work on their behalf more than they trust a large financial institution and its employees. One client was with Piper Jaffrey for years before realizing that returns did not match the market. Upon leaving the broker said that an independent could never match returns because of Piper's access to inside information. It clearly hasn't worked out that way. Another didnít know that a Thrivent agent had sold him an annuity until six months later when I asked about it on his statement. Another was surprised to find an annual fee of $500 from Metropolitan Life for a guaranteed return provision. By asking, he also found an $8,000 penalty if he moved his assets too soon. Clients believe that the illegalities identified in the mutual fund industry pale beside the scandals of hidden fees and business as usual. Clients are suspect of relationships where there are multiple levels exacting a fee, such as for wrap accounts and subordinate money managers of mutual funds or private accounts.
Clients and prospects are often concerned about what they would do if something happened to me. Since their funds are held by their broker, nothing happens to their funds if something happens to me. As for the management of accounts, I have a succession agreement with another money management firm that I respect. If I were to suddenly die or be incompetent, they would immediately contact each client and offer their services. Clients would be free to accept that offer or find alternatives, similarly to when they first became clients of Wenzel Analytics.
I struggle to not become overly protective of my clients. It angers me when I see clients come under the persuasive influence of someone that I donít think works in their best interest. As markets go up and down, it bothered me when a couple clients chose to get off at the bottom Ė hurting both their financial future and my performance record. The history in this country is that equities return about 10% while the average investor gets about 3% because of fees and because of buying high, then selling scared when things are low.