Harold Evensky – Nine Key Communication Points

February 10, 2015

by Robert Huebscher

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Advisors should put their mouths where their money is, according to Harold Evensky. Educating and preparing clients for what advisors will ultimately deliver must be a core principle of every practice. In a recent presentation, Evensky described nine key ways that advisors should interact with clients, the media and their peers.

Evensky is a Certified Financial Planner and chairman and co-founder of Florida-based Evensky & Katz, one of the most prestigious fee-only financial planning firms in the country. He is also a professor in the personal financial planning department at Texas Tech University.

Evensky spoke on January 19 at the AICPA advanced personal financial planning conference in Las Vegas. A copy of the slides from his presentation is available here.

Though Evensky focused on how he employs these principles in his practice, his presentation can be adapted and used as a template. Let’s look at the nine ways better communication skills can improve your practice.

1.    The “what” of your practice

A practice consists of three “Ps” – philosophy, process and people – and Evensky explained how he articulates these elements for his own firm.

Evensky identified nine core aspects of his philosophy:

  • A total-return approach that is indifferent as to whether cash flow comes from capital appreciation, dividends, income or other sources;
  • Realistic (not conservative) assumptions in planning exercises and an acknowledgement that future returns from capital markets will be modest by historical standards;
  • Goals-based planning – helping clients achieve a desired financial outcome instead of attempting to achieve certain investment results;
  • Tax-efficient investment vehicles and optimizing asset location whenever appropriate;
  • A belief in the weak form of the efficient-market hypothesis – specifically, that there is no benefit to market timing;
  • A belief in factor-based investing based on the research of Fama and French, including overweighting portfolios toward value securities;
  • An agnostic position in the active-passive debate and a willingness to use either approach for asset classes or sub-classes;
  • A belief that asset allocation is the single most important determinant of investment performance and overall volatility;
  • A written investment policy statement.

Similarly, Evensky said his process consists of three elements:

  • A fee-only structure;
  • A team-based approach to client management;
  • A distinction between risk tolerance (the level of risk a client can withstand before wanting to go to cash), risk capacity (how much risk clients can afford to take) and risk need (how much risk clients must take to achieve their goals);

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