Ask Nick Sample 2019
From the October 2018 issue
YOUR PRICE IS ONLY AN ISSUE WHEN YOUR VALUE IS BEING IMPEACHED
Client says something to the effect of:
“I like our relationship a lot, and I think you help me and my wife in many ways. But, I've come to the conclusion that $20,000 per year is simply too much, and I know I could find asset management for quite a bit less, and I hope I could find value such as yours. So, while I recognize and appreciate your value, I don't think the value is worth the cost. There is certainly a number where I believe the value would be very much worth the cost. Are you open to having that conversation?”
May I ask how you would respond?
I would answer:
(a) You can certainly get the function of asset management for less. It's a commodity function, and I don't charge for it.
(b) I very much doubt you can get my real value—which is planning-driven, strategic and behavioral—for a lower cost. But if you find that you can, maybe you should grab it. And therefore,
(c) I don't negotiate my fee.
Then, while you're waiting for the transfer papers, you'll have the leisure to ask yourself why you didn't know this was coming (or why you let yourself believe it wasn't).
From the June 2018 issue
DEALING WITH OUR CLIENTS' MORTALITY
Four dear clients have passed away in the last year or so, and another client has three to six months to live. I'm finding this aspect of the job hard to deal with, having been invested in their lives for so long. How do superior advisors cope with this sort of continual loss? I feel an impulse to try to distance myself—and yet I'm having lunch every two weeks with a man I know is going to be gone soon. Am I getting overly close to clients, or do I just need to deal with it, since it so clearly comes with the territory?
I may tell you that the last communication I received on this subject was from an advisor who had, over the previous months, been invited to be in the house with two of his clients' families as the client passed. (If memory serves, in one instance he was actually invited to be in the room.) On the whole, I think the way he processes this situation is the preferable one.
In our own way—since the deaths of our clients are an inevitable experience unless we die first—we are or ought to be as instrumental in providing a client with a peaceful death as is his/her physician or clergyperson. If we facilitate someone's being able to pass without worrying what will happen to his/her family financially, then I think we've acquitted ourselves nobly, and can take (even while providing) comfort. Were I you, I'd start thinking about approaching clients' passing as a validation, and an opportunity to sympathize and console.
From the November 2018 issue
THE DISCIPLINED JOY OF REBALANCING
This may be a little outside the scope of the questions you answer in this format, but (1) how often do you rebalance? (2) I understand that you don't let taxes drive investing decisions, but is your policy any different for rebalancing taxable vs. IRA accounts?
Not just within my scope, but right up in my wheelhouse, because I love rebalancing, which is as close as we ever get to a free lunch in investing. (Though not, as you intuit, in taxation.) To your questions: (1) Annually on the same date, to eliminate even the slightest vestige of the market timing impulse. (2) No, for exactly the reason you cite. Rebalancing by its very nature involves reaping gains, and so be it: the only way not to realize gains is not to rebalance, which would be letting the tail wag the dog.