Welcome again to my blog. Here’s where I get to let my hair down and just say it the way it comes to my fingers at the keyboard.
What should I write about first? Well, if this is going to be a stream-of-consciousness opportunity then I might as well begin with an email that I got this morning from my long-time friend Larry. Larry, who is one of the best marketers I’ve ever known, wrote to me with some advice on my new web site. It’s probably really good advice. (Larry’s advice usually is.) Yet it is also problematic advice, and that’s what I want to write about.
Larry’s first nugget of wisdom was: “You do too much negative positioning”. (In other words, don’t say that you’re not a commissioned broker or salesperson.) Larry’s right, of course, to remind me that, generally speaking, nobody cares about what you don’t do in a business. In my defense, however, I would like to say that I struggled with how to handle this particular issue. The fact is that many, many people think that all “financial advisors” operate under the same set of rules. They don’t, of course. And so the question becomes one of how to best communicate the core of the matter. Do you say you are 7-Up, or do you say that you are the Un-cola? Both are true, of course. The difference is a matter of perspective. Will people immediately understand if fiduciary advisors like me try to explain what it is we do do? Or it is a helpful stepping-stone to first say that we are Un-brokers? I simply don’t know, which is why I tried to do both in my initial attempt to explain what Griffin Black is all about. I’m going to keep an open mind on this issue, however. I may well come around to Larry’s way of thinking and not even try to explain that we are truly an alternative to something else that’s out there. If people are looking for an alternative maybe I don’t have to tell them…
Larry’s second suggestion was: “You need to prove it [your claims]. Statistics of your portfolio… Case studies maybe.” Oh Larry, I wish. Here’s the deal. Before the site went live it had to go through my compliance attorney, whose job it basically was to make that there weren’t any numbers in it. Yup, the law essentially forbids Registered Investment Advisors from giving out performance statistics. Heaven forbid that someone out there would take a number from the site and assume that he could also achieve the same result. (“Past performance is not indicative of future results.” Write this on the board 100 times…) So the numbers thing is out.
The question of case studies is more promising – I agree they could be quite helpful – but they are also littered with legal issues. So I didn’t go there right away, though I’m looking at whether and how I might do so eventually. It is absolutely the case that people struggle to truly figure out what it is they get and how it is they benefit from working with a fiduciary advisor. While it’s easy to understand (though perhaps not true) if someone promises to produce safe and high returns on your investment portfolio, it’s really difficult for most of us to imagine how our lives could be made better by sane and reasonable financial decision-making over time. But what if one hadn’t committed to that two-income jumbo mortgage in 2007? What if one had purchased long-term care insurance in one’s 50s, before rates zoomed up? What if one had cut up one’s credit cards 5 (or 10!) years ago and had, instead, built up a $50,000 cash reserve to tide one over through the tough times that looked in 1999 as though they would never arrive? What if, what if, what if… None of these things is about investment returns. And all of them probably would have mattered more than differences in investment returns to one’s feeling of security in the current financial crisis. So yes, some kind of “case studies” would be helpful and I’m going to work on the idea.
That said, there are two big issues with case studies. The first is that one case is never exactly like another. I can’t tell in advance if what has benefited current clients will benefit a new one. All I can do is to give prospective clients a sense of the kinds of issues that current clients and I have tackled together and what the outcome of those efforts were. I cannot tell in advance exactly where I will be able to add value to a new client nor quantify the potential value of that advice. Not comforting, perhaps, but true.
The second big problem with case studies is that they require that clients be willing participants. Some of my biggest “successes” from an advisory perspective involve advice that I never got my clients to act upon. (So I guess that I can’t call them “successes” after all…) Opportunities that could have been substantial never materialized because – for all kinds of reasons – clients decided not to take advantage of them. Pay some taxes now to avoid paying a far higher tax bill later? Possible, yes, but it is difficult to part with the money now. Restructure one’s business and personal assets to shift risk to the business (where it rightly resides) and away from one’s personal assets? Well, that involves change and paperwork. Re-do the company 401(k) to avoid $10,000 – $15,000 in wasted annual fees? Uh, we like the guy we’re working with and nobody notices the fees anyway. Can I still use these as case studies? May be I’ll have to describe them as the ‘biggest cases that never were’.
Back to Larry, however. His final piece of advice to me was: “How about some testimonials”? Once again, old friend, the lawyers have cut you off at the pass. Written testimonials are absolutely verboten in this business. I certainly hope that my clients are saying good things about me to others in private, but I am absolutely forbidden from compiling what they say and passing it on. Moreover, I’m hardly even allowed to exist on LinkedIn, not to mention letting anybody recommend me there, even in general terms. Take that, say the lawyers. Since there’s the possibility that you could dupe the unsuspecting and unsophisticated into believing that you will actually do for them what current clients say you’ve already done, you can’t let your current clients tell their stories to prospective ones (at least not in a formal way). This is yet another triumph of the power of government regulation to protect the innocent, don’t you think?
Well, that’s probably longer than a first post is supposed to be. But I think I’m getting the hang of this talking back thing. It isn’t going to be bad at all. And thanks, Larry, for your email, your advice, and your friendship.
