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Seven Strategies to Help You and Your Clients Weather the Storm

Tough times present opportunity to strengthen ties with clients. 

Veena A. Kutler and Annette F. Simon, 10/23/2008

This monthly series of articles describes the many steps and occasional missteps we have taken in building our financial advisory business, Garnet Group LLC. Currently, Garnet has eight staff members, more than 90 clients, more than $300 million in client net worth under advisement, and offices in Bethesda, Md., and Boston. Veena Kutler, CFA, and Annette Simon, CFP, are the managing principals in the Garnet office in Bethesda.

As we write this column, the S&P 500 is down more than 40% for the year; the few up days in the market are quickly followed by big drops. A good day is when it closes flat. Over the past six weeks, all market sectors are down except Treasuries. Banks, hedge funds, and quasi-governmental agencies are blowing up right and left.

What does your instinct tell you to do when the financial system is crashing? If your first thought is to crawl into bed with the covers pulled up over your head, you are not alone. It's a human nature to take cover and lick your wounds during a retreat. But the reality is that your best course during a time like this is to reach out to your clients.

Our Approach
Veena left the institutional money-management world and started her business working with individuals in late 2000, just as the market began its long decline through mid-2003. Annette had been at it a few years longer opening the doors of her solo practice late in 1997. We merged in early 2002 and together went through almost two years of bringing in new clients and investing their assets only to see month after month of negative returns. Recently, we have gone through a similar period of uncertainty and daily crisis in the markets; the basic structures and systems we developed in those difficult first years are carrying us and our clients through the storm.

Here are seven strategies we use to provide a consistent experience for our clients and to help us weather challenging periods:

1. Financial Planning
We have always believed that ongoing financial planning is absolutely critical to the long-term financial security of our clients. Early on, we figured out that preparing a lengthy plan in a binder was neither useful to our clients nor a productive way to spend our own time. A written plan is out of date almost as soon as it is printed. This is particularly clear in times like these when asset values are moving so dramatically every day.

An essential building block of our service to clients is an annual update to their financial plan. Prior to our annual review meeting with each client, we send out an update form showing them the data in our planning model. We ask them to correct any numbers that are out of date and to add any new information that is missing. We also invite them to share with us about qualitative changes in their lives--new jobs, children, grandchildren, and plans for the future. Using this new information, we re-run projections and Monte Carlo analyses and review past achievements as well as recommendations and planning steps that still need to be tackled.

We believe this ongoing attention to planning strengthens our ties to our clients and helps us better understand them and their goals.

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