Say It Like It Is – How To Be A Good Client

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There is a lot more to a having successful client/advisor relationship than just finding a financial advisor who sounds smart and promises “superior risk-adjusted returns”.

Good Client Decisions Can Lead to Better Outcomes

Dalbar studies have established that the average investor earns only 40%-50% of the market returns.[i] No doubt some unscrupulous marketers are guilty of promoting strategies only after great returns have been experienced. However, the investor himself frequently contributes to his own eventual disappointment by chasing high returns, seeking rock-bottom fees, or engaging in similarly non-productive behavior.

Such clients need to know what to do and how to do it to avoid this unfortunate cycle. These clients need to know, “How to Be a Good Client.”

For long-term, tax paying clients

If you are a tax paying investor, planning for the long-term, and your goals are the successful accumulation, protection and transference of assets, below are factors you should know. Being a good client enables you to get the most out of your advisors and at the same time have an enjoyable and rewarding client experience.

1.  Select the right advisor in the first place.

Write down your needs and preferences, and the reasons for both, instead of asking other people whom they use. List what you have liked about your past relationships and what you did not. Know what you want from your advisor and the service experience you expect.

 2. Set high standards. Seek out the very best in each profession. It costs virtually the same to hire a highly qualified advisor, but the difference in advice and results can be extraordinary.

 3. Value not price. I have met countless people who, because they either didn’t understand or trust their advisors, were more interested in paying the lowest fees than they were in understanding the breadth and depth of the services rendered and the value received.

4. Emancipate your advisor from fear. In my opinion many investment advisors feel they may be dumped if recommendations seem too straightforward, entail too much common sense, or the turnover is too low. Don’t encourage complexity. If the right strategy is to hold quality assets for decades, let them know you won’t fire them and try to do-it-yourself to save a few bucks.

5.  Get to know your advisor and make sure they know you. Know what makes them tick, why they do what they do. Then reciprocate. In your family, there are reasons why things are the way they are. Make sure they know why, so they can address issues with sensitivity.

6. Avoid second-guessing. When markets go down it is easy to point out the strategy that would have worked better. If you maintain multiple advisory relationships, avoid setting up a performance “horserace”. Eventually you will be the loser when risk silently seeps into your accounts.

7. Don’t haggle about fees for inactivity. It takes more restraint and discipline to do nothing when markets are up or down. The great investors all agree that after good decisions have been made, most of the time, you should do nothing.[I]

8. Allow time to do things well. Research and coordinating with other advisors to arrive at the right decision should ultimately save or make you money.

9. Test everything and require data. I love the old adage; “He uses data like a drunk uses a light post, for support rather than illumination.” Ask for data that argues against or contradicts a recommendation. If your advisor knows both sides, you probably will make better decisions and both of you will be happier.

10. Make sure your advisors are compensated fairly. There is a cost to doing high quality, ethical business. Remember that at time you are paying for 30 years-worth of experience a judgment, not just 30 minutes of someone time.

11. Be candid and encourage candor. Few enjoy confrontation, but if something falls short of your expectations talk about it, even if it is small. Once a year ask your advisors how you could be a better client.

12. Avoid multiple decision makers. Large distended families present unique challenges. If possible, identify one person to be the final decision maker for each entity.

13. Have patience; think in terms of decades. Client/advisor relationships are intimate. Only enter a relationship if you expect it to last at least ten years. It is hard for most people to ignore the news flashes of the day. Great things take time to unfold.

14. Don’t under-spend. If the better strategy (or advisor) costs a little more – pay it.

15. Only RFP if you mean it. Going through a Request For Proposal (RFP) process for the sake of process is ill advised. RFPs rarely ask the right questions or allow the respondent to demonstrate exceptional insight or service capabilities. They always are time consuming and cause unnecessary disruption.

16. Learn continually. The most rewarding relationships are with knowledgeable and experienced clients. Require your advisor to educate you and your family. It will make you a better client and enhance your ability to discern quality advisors from charlatans.










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The above materials and calculations were compiled from company reports, public filings, and other sources. While believed to be reliable, no representations of their accuracy can be made. The opinions expressed herein are solely those of the author and do not constitute an investment recommendation.

Morgan Stanley’s Investment Advisory programs are described in the applicable Morgan Stanley ADV Part 2, available at or from your Financial Advisor

Morgan Stanley Smith Barney LLC. Member SIPC. Morgan Stanley Private Wealth Management, a division of Morgan Stanley Smith Barney.

[i] Charles T. Munger, Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger, 2005, Donning Company Publishers [i] “Why Average Investors Earn Below Average Market Returns: Investor overreactions cause poor historical returns”, Retirement Decisions, By Dana Anspach  August 28, 2016.

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