Jeff DeMaso: Hello, this is Jeff DeMaso, director of research of Adviser Investments with another “Adviser You Can Talk To” podcast. Today I have as my guest Claudine Schrock, who’s a senior account manager. She works closely with clients to ensure their portfolios are appropriate for their goals, and that their financial lives are in order and on track. Today Claudine and I are going to talk a bit about why someone might hire an adviser, and maybe some of the questions that they should ask an adviser when they’re looking around. So Claudine, volatility has returned to the markets, we’re down about 10% from the highs, for a do-it-yourselfer, is it time to hire an adviser, and if so, what questions are you getting from these investors who typically manage the money on their own?
Claudine Schrock: Well, thanks for having me Jeff, but a lot of these folks that we’re hearing from recently are those self-managers, those do-it-yourselfers, that are having a point of selfreflection and analysis in this period of volatility to say, you know, am I doing the right thing with my money? Is my immediate reaction or inaction derailing what I had planned for my long-term goals and how I would measure success? And I’d say that if you’re having these potential internal conflicts, tussles if you will, that it’s probably time to at least consider talking with someone else and seeing what other options are out there for you.
Jeff DeMaso: Well alright, let’s take the other side of that, we know when the markets are going well, as they were for the prior 15 months until we hit this patch of volatility, why would I hire an adviser then when everything’s just going up?
Claudine Schrock: I definitely say, preparation and discipline, almost kind of think of an adviser as a coach, in good times and bad, that they are helping you stick to a plan, understanding your goals, and getting you prepared for times of volatility like we experienced last week, and/or even a potential market correction. You know volatility is a regular occurrence in the history of investing, and something that I think every successful investor should kind of have in the back of their mind. But if you do a good job of partnering with your adviser, telling them exactly what’s important to you, and what your goals are, there should be enough groundwork and preparedness in place that the plan they have for you will anticipate the next volatility, the next correction, and help you kind of get through those periods in time, with the least amount of stress as possible.
Jeff DeMaso: Okay, so I’m hearing you talk about planning, what you haven’t really mentioned is performance, you know should I hire an adviser just for their performance, and if they aren’t outperforming, what am I paying them for?
Claudine Schrock: Performance is absolutely trackable, it’s an easy metric to follow and kind of get hung up on, but I don’t think it should be the end-all-be-all to hiring a manager. You know going back to the human element, having someone that understands the bigger picture, understands your goals, helps you meet your goals and holds you accountable, I think is, an extreme value that you can get from working with an adviser. You’re less likely to remember what happened and what your performance was, in say 2012 or 2013, but you will remember and feel extremely successful if the trusted adviser that you work with helps you meet your retirement goal. You know, where you can live comfortably, you’ve made all of those goals come to fruition, or paid for your kids’ college, or paid for your grandkids’ college, I mean that’s that kind of a goal you have to meet (laughter).
Jeff DeMaso: I talk to clients about that too, you know beating the index doesn’t necessarily equal success.
Claudine Schrock: Correct.
Jeff DeMaso: You know, nor does it say to pay for retirement or your kid’s college that you have to beat the index each and every year, it’s more of an unrealistic goal than what you’re actually trying to achieve.
Claudine Schrock: Mmm-hmm. Certainly to kind of get back to personal finance, what’s right for you may not be right for me, your goals might be extremely different, and working with an adviser, I think they help you with that. They get to know that and they hold you accountable, because it’s a two-way street.
Jeff DeMaso: Yeah, and advisers can do a little bit more too, than just keeping your accountable, they can also act as your financial quarterback maybe.
Claudine Schrock: Yes.
Jeff DeMaso: How do you think about that or talk to clients, or work with clients in that capacity?
Claudine Schrock: I’m glad you brought that up Jeff, that’s one of the things I really enjoy working with.It takes a village, we work with a woman right now who, she had asked us if we wouldn’t mind looking over her estate planning document, she’s in her mid to late 70s, you know, she’s getting older, and she wants to make sure that she’s looking forward to potential potholes that might be in her estate plan, as well as kind of figuring out a game plan to help her speak to her adult children, about wealth and her wishes for handling money if, God forbid, anything happened to her.
Jeff DeMaso: So, what common themes have you heard from investors who are looking for help and professional advice?
Claudine Schrock: There’s a lot of catalysts that are, are pretty similar that we hear quite often, one of the ones we hear a lot is stress. “Claudine, I’m getting very stressed out, I’m not sleeping, I’m constantly thinking about my portfolio and the performance, you know and what’s happening in North Korea, and I just can’t sleep at night.” That’s a horrible thing to hear.
Jeff DeMaso: Yeah.
Claudine Schrock: You know also it could be something as simple as when I first started out in investing in my company 401(k), it was only $50,000 and the world was a lot simpler, and now I’m retired and I have different wants and needs and pulls at my time, and I just don’t feel comfortable, I don’t feel like I have the education nor the time to actually manage this anymore. So again, back to stress. If there’s a life event or a health change. I want to retire. I want to go on a world vacation and not have to worry about this, or there’s some sort of physical or mental change, where you’re not able to keep as actively involved as you did.
And then to dovetail with that one, love and legacy. Preparing your needs, your wants, your desires for your spouse or your next generation if they’re not necessarily as involved in finances, and financial services acumen as you are. We work with a couple in the Boston area, they’re both in their 80s, he’s a little bit older, she’s a little younger, very very cool, very sharp people, extremely active, you know sharp as a tack, but he’s traditionally been more involved in the investment decisions and financial planning, and just kind of helming that part of their relationship and their family, and she hasn’t, and she knows that if something were to happen to her husband, she would not feel comfortable.
It would be a stressful event for her if she was thrust into the position where she had to make all those decisions. So she loves that we all work together, because we’ve gotten to know her situation, you know, her husband’s, hers, the family’s intimately, and she feels that there’s trust, there’s a long-term relationship between all of us, and she just sees it as a no-brainer that we continue to help her and her family if, God forbid, anything happened to her husband.
Jeff DeMaso: Great, okay, you’ve convinced me, I should probably hire help, ask for, at least ask for some help, but if I’ve come to that realization that I should ask for help, what should I look for in an adviser? Because there’s thousands of advisers out there, all with different strategies and styles—what should I be looking for?
Claudine Schrock: Well I applaud you for accepting help, that’s a very hard step, first step to take, but I would bring it back to your comfort level and what you’re looking for. Does it feel like the right fit? After I’ve had this conversation, after I’ve shared these intimate details with the adviser on the other side of the table, do I feel like they’re really listening to me when I speak to them, as a client or as a potential new client? Are they responsive to my questions and concerns in a timely manner? Are they providing any additional education if I’m looking for it? Do I really feel like they’re trying to bring me in and incorporate me? And are they laying out a plan for me or is it just a portfolio that I’m another investor in, there’s no personality or personal touch there. I’d say it’s a marriage analogy, it should be a long-term relationship that has shared philosophies, common goals, open communication, strong bond, you know beauty is fleeting and so is performance.
Jeff DeMaso: (laughter)
Claudine Schrock: So hopefully it’s more than just that.
Jeff DeMaso: So, before I enter into this long-term relationship, and draw out some of those softer sides of the relationship, what are some questions I should be asking?
Claudine Schrock: I would ask specifically about communication, who am I going to speak with if I’m a client, is it the adviser I met with originally, is it a team member after we have the initial relationship, is it a combination of the both, or does it seem to be a revolving door and my adviser changes, you know every couple months I call? Compensation is important, there’s so many ways you can get help in terms of investment and financial planning, you could work with a broker dealer, and they get paid on a commission base, so they’re getting a cut of any transaction they’re making in your portfolio, whether they’re buying or selling.
You could work with a registered investment adviser, such as Adviser Investments, where we’re fee-only, and then you could also work with someone who’s more on a supervisory or a monitoring level, or you might bring a couple of stocks you’re looking at and ask their recommendation, and see if you should actually purchase it, and they might charge you on an hourly basis or something of that nature, but I think that’s probably crucial to kind of figure out, are there potentially any other hands behind the scenes or strings that are being pulled that might influence how this person would recommend investments for me, or help my family? And I’d say last, are there any additional services you could provide, it’s a great big world, it takes a village, and you know, are they able to help me prepare my taxes, help with estate planning documents, even just review those as part of the overall relationship, what other tools they have in this great day and age, there’s wonderful technology out there, do they have something great that would really blow my mind to get me excited about working with them, you know? Something like that.
Jeff DeMaso: No that’s great Claudine, I think you’ve given people even contemplating an adviser some things to think about, and hopefully some questions to start asking if they do take that next step, so thanks for joining us.
Claudine Schrock: Thank you!
Jeff DeMaso: This is Jeff DeMaso, and I want to thank you for listening to another of our “Adviser You Can Talk To” podcasts. I’ve been speaking with Claudine Schrock. If you enjoyed this conversation, please subscribe to our podcast, or check us out at www.adviseryoucantalktopodcast.com. Your feedback is always welcome. And if you have any questions or topics you’d like us to explore, please email us at email@example.com. Thank you for listening!