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New Year’s Resolutions

Follow these tried-and-true steps to achieve success in the coming year.

By Janet C. Arrowood

OK, another year has sneaked by you. Rather than thinking about what could have been, let’s look at some resolutions you could make to become more involved with your clients, increase your book of business and help your clients better manage life’s financial ups and downs.

Schedule and hold annual reviews. Clients need to hear from you that they are doing the right thing by staying invested, that there are additional actions they can take and plans they can make, and that you care about them. Annual (or more frequent) face-to-face reviews give you and your clients the chance to update their risk tolerance and goals documents, change plans, reassess asset allocations and make sure all their needs are being identified and met. This is a good way to avoid (legal) trouble, too. And it is the time to ask them what is going on in their lives and the lives of their friends—who’s getting laid off, who inherited money, who is getting divorced and so forth.

Your clients, prospects and referrals need you now more than ever.

Divide your clients into A, B and C lists. You’ve heard the adage that 80 percent of your business comes from 20 percent of your clients. Well, it’s true. Once a year you should “fire” the lowest (in terms of assets) 20 percent of your clients. Give them to a new person in your office or let them become orphans or house accounts. They aren’t likely to do more business with you. They are “suspects,” not prospects. The top 20 percent of your clients are your A list. These clients need more than annual reviews; they need the occasional client-appreciation event, notes and cards at least four times a year and phone calls several times a year. The next 20 to 30 percent of your clients are your B list. They should be called several times a year and you should try to meet with them at least twice a year. A few cards would also be a good idea. Finally, the remainder of the clients you have kept are your C list.

They should have a face-to-face annual review and get cards or notes several times a year. You also should call them occasionally, especially in light of the national do-not-call list.

Practice what you preach. How many times have you told your clients they need a three- to six-month financial “cushion” against layoffs, unexpected expenses and so forth? How many clients have actually been building this account? Have you built your account? If you lead by example, you can show your clients that escrowing for a job loss, major expense or deductible makes a lot of sense. You’ll have personal experience and actions to back up your recommendations. The same applies to systematic investment programs, dollar-cost averaging, regular pension plan contributions and other long-term investment plans.

Make sure you’re up to speed. Investments go in and out of favor with frightening speed. Don’t get caught up in the “flavor of the month.” Don’t become enamored of a few funds and make all your clients fit those funds. Get to know, love and use asset-allocation models in conjunction with your clients’ risk-assessment documentation. Regular client meetings will help you and them stick to the asset-allocation models. Advisors who encouraged their clients to stick with previously agreed asset allocations generally saw a far smaller decrease in portfolio values from 2000 through 2003 than other individuals. Why? Because when the percent of a client’s holdings in a given asset class exceeded the agreed amount, the funds were reallocated to classes that were below their agreed percentages. This effectively locked in gains in the high-flying asset classes and transferred “real” money to the lower-performing classes. When the markets fell, your clients had fewer dollars in the asset classes that fell the hardest. As markets rise, their assets should be reallocated to those classes that were hit the hardest and were allocated at favorable per-share prices.

It pays to pay attention. Your clients, prospects and referrals need you now more than ever. There is so much money sitting on the sidelines, waiting for directions to be placed into the market. Clients and prospects are gun-shy, and they want and need your advice and assistance. At the same time, it is easy for you to spend too much time with suspects. Suspects rarely turn into prospects, and you waste a lot of valuable time learning this lesson.

Listen to your clients. You can only listen if your ears are involved. This means picking up the telephone, holding meetings and asking questions that result in useful responses. Some “listening” involves your eyes, too. You need to watch body language and gestures, and that means having face-to-face meetings.

Janet Arrowood is the managing director of The Write Source Inc. She can be reached at


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