September 2020 - Dan's Monthly Musings

september musings


With Labor Day upon us and the traditionally busy Fall season just around the corner, we are all scratching our heads on what has been a crazy year to date. Hopefully you’ve been able to still have an enjoyable summer and spend time with your family and friends. Like many of you I take time off over the summer and get to do some reflecting on things, both business-related and personal. The following Random Musing crossed my mind when a You Tube snippet hit my newsfeeds while I was (randomly) reading about sports on my iPhone. It made me think about an issue that probably faces Financial Advisors more often than people think – how often do you actually TURN DOWN clients?

Let’s say you’re a highly regarded Financial Planner and Investment Manager. Along with managing risk and growing assets for your clients, your firm has in-house expertise in Retirement Planning, Tax Strategies, and Insurance. You are known for your ability to help Celebrities, particularly Athletes, maintain and grow their assets. They don’t intimidate you and if they don’t follow your prescriptions, you don’t take them on as clients. You get referrals from Sports Agents and Attorneys and you are willing to work with young athletes who haven’t yet signed the big contracts, including second tier athletes who may never get the big payday, because it makes you feel good to help them keep from going broke. Your typical client has $10M but you have no minimums and love solving problems more than you love making money. As an Advisor you are fee-only, act as a Fiduciary and have discretion on behalf of your clients. You have a spotless regulatory history which you would never knowingly compromise or put at risk.

A Lawyer who has referred business to you in the past calls you with a referral.

“I am in a regular foursome at my club with a former athlete who has good income flow from a Retirement Plan. He is a robust and healthy 70 year old and I believe he has an income stream above and beyond his retirement nest-egg. He needs someone he can trust, someone with both smarts and integrity, to help him continue to enjoy his lifestyle – hopefully for several decades – plan for his ultimate need for care – and be able to pass on a legacy to his children whom he loves dearly. No spouse. I want to give you right of first refusal to take him on before I would refer him to anyone else.”

Upon further interrogatory, you find out the following about this prospect:

•To say the least, he has had some notoriety. He has been to the top of society, both in earnings, celebrity, and adulation and then hit the bottom, about as low as you can go.
•He was on trial for a truly horrific crime; despite the preponderance of blood evidence, he was found Not Guilty by a jury of his peers.
•More than a few people to this day see him as somewhat of an icon, and a symbol of police oppression and prejudice
•He got into another scrape with the law and did nine years of hard time for a sentence that some legal scholars felt was overly harsh, and perhaps a payback for his prior history in that he had gotten off for a crime many felt he committed
•His self-belief, ego-drive, and survival instincts are second to none
•Everyday people – bartenders, caddies, regular Joes on the golf course – find him polite, charming, and
charismatic •He has 650,000 people following him on Twitter

While you have no idea what his real assets are, if he was polite, willing to follow the advice you gave him, very amenable to paying fees, and truly needed sound and objective advice, would you help him?

If he wasn’t like certain prospects who have unrealistic return expectations, are demanding of outsized returns with limited risk, would you jeopardize your referral relationship with the Attorney who referred him and turn down a meeting?

If all of the above bullet points were true, would you take on the account of – OJ Simpson?

As a Fiduciary, you would never take on the account of a shady character who came to you with millions of dollars of unreported cash in a suitcase. You’re definitely no Marty Byrde (this will be understood by my fellow Ozark-philes). You would never over-promise returns or under-estimate risk. But have you ever been in position to take on a client who was less than savory; maybe had some anti-social tendencies, had a history of lawsuits, had some immoral behavior in the past, did prison time, or had simply made some youthful mistakes or indiscretions?

Would you turn OJ down?

Is it actually more unprofessional and against your behavioral standards to turn down such an account than it is to take it on since you can really help OJ? Or is more professional and in keeping with your code to turn down the account since you think OJ got away with murder?

Love to hear your thoughts

Happy Labor Day!

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