We all like to get the things we need to live our lives as inexpensively as possible, don’t we? We check around for the best price on a new car when we’re in the market, and we go to several different furniture stores when we need a new couch. Searching for the best prices is in the nature of humans, is it not? But in some cases, what appears to be the best price isn’t always. I know everyone reading this column has their own stories regarding times when they thought they were saving money, when in reality the item or service they bought was much more expensive. I think that comes in to play when it comes to financial services. When a potential client contacts me for the first time, the first question is usually one about our fees. The short (bumper sticker) answer is the easiest to give, but is usually the wrong answer to what turns out to be the wrong question. While I completely understand the question, “How much do you charge?”, the more important question from the client should be, “How much do I pay?”
You see, the charges a client pays for having his money managed is not just what the advisor charges, but what the investment charges in addition. A follow-up question may then be, “What on-going services do you provide for that fee?” These are questions that invoke a conversation, not just a two or three word answer. For example, a typical advisor may say they charge 1% on the investments they put your assets in, but the investment itself may charge another 3%. And then when they invest it that way, many times the advisor will just file it away until the next time you come in, only looking at your portfolio again the day before your next appointment with him.
At ProVest, we manage our own accounts, therefore we can use less expensive investments for client portfolios. We receive daily research and make our trades according to the signals we receive from that research. And since we are managing our clients’ accounts personally, we keep up with our clients’ portfolios in a constant and on-going basis. So while our actual fees may be just a little higher than what another, less experienced advisor may charge, what you pay as a client is usually less overall than what you’d pay through the other advisor. And in many cases, we can and do provide more prompt and better service. This is an example that just came up;
One of our clients turned 70 ½ late last year. And since he didn’t take his 2017 distribution last year because of tax reasons, he must take it, and his 2018 distributions this year. His 2017 distribution must be taken before April 1st. His contract has an automatically increasing payout right up to the time he starts taking an income from it. Since his contract date is February 7th, we had decided to take his full distribution on March 1st. However, in checking with the company his IRA is with, we found out that it would be much more advantageous for him to take it on February 8th instead of March 1st. So we updated the paperwork and sent it back in. Had Cindy, our service manager, not been checking on this we would have never known about the advantage to our client for taking his distribution just a few days early. Great service cannot be over-emphasized when it comes to making sure our clients get all they’re entitled to.
Elite financial services practices are going to have employees dedicated to providing their clients with world-class service. ProVest does.