I attended an industry conference last week. At lunch I found myself seated with a fellow attendee who is a broker with one of the large regional banks. We exchanged thoughts on some of the presentations from that morning and then I asked the gentleman how many clients he had. “400,” he responded. “Do you have another advisor or planner you work with,” I asked. “No, just me and an administrative assistant.” Now I was really curious.
Here's how our conversation unfolded:
Me: “So how do you do planning?”
Bank broker: “What sort of planning do you mean?”
Me: “Well, tax planning for one. How do you evaluate a client’s tax situation to minimize taxes?”
Bank broker: “I don’t really do that.”
Me: “What about recommendations on disability insurance?”
Bank broker: “I don’t sell that.”
Me: “So what planning do you do?”
Bank broker: “We rebalance the portfolio annually.”
I didn’t have it in me to tell him, but I will tell you – That Is Not Financial Planning.
The principal problem is the numerator. 400 clients, 250 workdays; the math doesn’t add up. If an advisor wants to deliver proactive, comprehensive planning, those numbers won’t allow it. Our client review meetings typically take 2 hours of prep, an hour to 90 minutes of meeting time, and 1-2 hours of post-meeting work. And that’s just the start.
That doesn’t count inquiries and questions that arise in the normal course of business, the one-off emails asking about long-term care insurance premium increases, confirming beneficiary designations on a client 401k, or helping the adult child of a client navigate a first-time home purchase. These are all actual examples of things I’ve fielded just this month.
There’s always something coming over the transom – and it requires time and attention.
It’s why we put a limit on the number of clients we work with (see video here).
I remember early in my advisory career reading David Halberstam’s book Summer of ’49. A quote from that book stuck with me and influenced how I serve clients. Joe DiMaggio was 35 years old, in his 13th season in the majors (he would retire two years later) and battling injuries. DiMaggio was asked why he continued to play with maximum effort. He replied, “I play my best every day. You never know when someone may be seeing you play for the first time.”
I never want to provide less than my best effort on behalf of our clients. One thing is certain, trying to serve 400 or even 200 clients is one way that virtually assures mediocre wealth management.