Watching Others, Watching You, Watching Out

© Can Stock Photo / Bepsimage

You know the classic Catch-22 pun: “Just because you’re paranoid doesn’t mean they aren’t after you.” Here are a few items I’ve been keeping a watchful eye on lately. As an evidence-based investment advisor, you may want to take a look at them too.

Say Hello To the SEC’s SALI

Given the usual deluge of headline-grabbing alerts, you may not have noticed this May 2nd SEC press release, introducing its SEC Action Lookup for Individuals (SALI). SALI is super easy to use, and reports on “individuals” (typically, advisors) who have SEC actions against them “against whom a court has entered a judgment or the Commission has issued an order.” For now, the database covers October 2014 through March 2018, but it’s expected to expand in both directions over time.

SALI could come in handy for your own general research or due diligence on, say, a prospective hire or anyone whose credentials seem suspect. Depending on how you feel about SALI, you may also want to share the link with your investor network. Plus, try entering your own surname and make sure nothing too surprising comes up – especially if you’ve got a common name like Smith or Jones.

Boondoggle Brigade Busted

Admittedly, I’m pretty naïve. Having worked for reputable advisors and fund managers for as long as I have, I sometimes forget that outlandish fees, conflicts of interest and unprincipled practices persist among the wider financial community.

Thankfully, there are columnists like The Wall Street Journal’s Jason Zweig to remind me. Did you catch his recent “Intelligent Investor” exposé, “The Free Trips Your Financial Advisor Takes Could Cost You”? As Zweig observes of advisors who accept free trips from others, “Wining and dining with money managers for free under tropical skies could cloud his or her judgment.”

To say the least! Personally, I can’t even imagine a universe in which any reputable financial advisor would let someone else foot the bill for an all-expense-paid “due diligence conference” held at the Ritz Carlton at Marina Del Ray or the Four Seasons in Mexico City. I love that Zweig includes direct links to these and a couple of other actual, upcoming events, to show that he’s not just making this stuff up.

GDPR … It’s Growing on Me

GD-what? It’s not your fault if you’ve not even heard of the European Union’s General Data Protection Regulation (GDPR). Set to go live May 25th, it’s a big deal in Europe, but I might not have heard of it either if I didn’t have a number of colleagues and clients based there. Even then, it only dawned on me a few weeks ago that I may need to comply with portions of it too, as described in this Forbes article.

If you are not collecting, processing or storing any personal information on anyone in the EU, you can probably remain blissfully ignorant about the details. But, I wanted to bring it to your attention anyway because I’m intrigued by its parallels to our would-be fiduciary standards. Think of the GDPR as having a similar mission, but it’s meant to protect people’s personal data instead of their financial well-being.

Both seem well worth protecting, and the GDPR seems to be authentically leading the charge on this important front. If it works as hoped for, we may have the opportunity to learn from and emulate its successes as we seek to advance universal fiduciary standards of care and improve on financial best practices around the globe.

I think I’ll hit pause for now, to keep this post short and sweet. But I hope to revisit the subject soon … so keep a watchful eye on my blog. Or subscribe below to receive these straight to your inbox.

Are You Ever Asking for It: Ideas on Client Referrals

© Can Stock Photo / Pixelbliss

Note: If you’ve been reading my blog for years, this post may sound familiar. I originally posted a version in 2012. The subject came up again recently, so I decided a redux was in order …

“I know I probably should but …”

What’s your favorite excuse if you don’t routinely ask clients for referrals?

It feels pushy. It’s not my style. This isn’t the right time/place. I forgot. What if it isn’t a good fit? I’m not currently seeking new clients. I’m just no good at it. … Do I have to?

If any or all of these sound familiar, I challenge you to shift your mindset: Asking for referrals doesn’t have to be a chore or an embarrassment, and trust me, the more you do it, the easier and more natural it will become. Once you become comfortable with it, it can become a three-way win for you, your clients and those being referred to you. Here’s how:

It feels good.

Advisors who routinely make referral requests know a big secret: Happy clients actually appreciate being asked something like, “If you’re aware of others we can help, please know we’re always happy to meet with them,” or “Is there anyone else who might benefit from a conversation with us? We’d love to see if we can help.”

I know happy clients appreciate being asked, because I am a happy client myself. Remember, we love you. We are grateful for your help and flattered when you ask for our advice for a change. We love having the opportunity to give back, and to show off how smart we were to have identified such a great advisor. Everything about referring others to you makes us feel good.

It makes things stick.

In contrast to any fear you may have of annoying your clients, I believe asking for referrals actually further cements your relationship. After pointing some of my friends to my advisor and hearing that they, too, are happy and grateful, it makes me feel even more certain that I’ve made the right choice. It also creates another bond between me and my advisor, making it less likely I’d walk away on a technicality. I now feel vested in my advisor’s success.

It highlights the sticking points.

I recognize that some clients may take it the wrong way anyway. But think about it. Might this not be a blessing in disguise? If someone is regularly suspicious of your motives or routinely misinterprets your intents, you may ultimately be grateful if they choose to move on.

It works when it works … and even when it doesn’t.

What about referrals that aren’t a good fit, from your perspective or theirs? They can still be worthwhile:

  • If you are forthright about your services and respectful of others’ needs, even if someone is not a perfect match, they’re likely to respect your integrity and bear you no ill will – especially if you have additional resources to recommend when you are not the best solution.
  • An imperfect possibility may become a better fit later on. They also may be able to refer you to others who could turn out to be your best clients ever.
  • If you’re introducing someone to evidence-based investing for the first time, think about how important that is. Even if they’re not ready to embrace the message today, you’ve planted the seed. One way or another, the good deed will likely come back to you further down the road.

Low-hanging fruit is still the sweetest.

Time and again I hear that, for most advisors, the vast majority of new business comes via word of mouth, especially the mouths of your clients. So, why fester over fancy strategies, spin increasingly complex tactics, or build ever-more-elaborate business development schemes? This easy-as-pie solution costs almost nothing but a smile. That, and one simple question, routinely slipped into your writing and casual conversations: “Who else might we help?”

Go ahead, ask for it!