The S&P 500 Index closed at 1553 on Friday, April 5, the level the current rally first reached a month ago.  The stock market’s stalling momentum and increasing volatility, combined with other signs evident in the market’s recent behavior, suggest investors might be looking for new inspiration.

• Daily push-and-pull action: The S&P 500 has now reversed direction on a daily basis 12 times in a row- that has never happened before in the 85-year history of the S&P 500 Index.  It may be noteworthy that the only time the index had reversed direction daily for 11 days in a row was July 26, 1981, ahead of a 15% loss, and the last time it reversed direction 10 days in a row was April 17, 2002, ahead of a 30% stock market decline.
• Stronger selling conviction: Over the past month, trading volume for the S&P 500 stocks has been 20% higher on down days than on up days.
• Risk vs. safety battle: Last week, traditional opposites – the S&P 500 Index and gold prices – both traded at the same level (1554).  Gold rebounded later in the week while stocks slumped.  The last time their paths crossed was May 2010, just before the stock market reversed its trend and began a pullback.
• Defensive leadership: Stocks have recently been led higher by defensive, rather than economically-sensitive, stocks.

These signs suggest that an event in the coming weeks could tip the market trend into a modest pullback or refresh it for another run.

While much of the attention in recent months has been directed toward Europe as a source of potential crisis or breakthrough, global attention has now turned to Asia.  The weak U.S. economy and extended stock market run-up may be vulnerable to a shock or due for a recharge.  A flu pandemic or an act of war by North Korea could be a shock that results in a setback to the economy and stock market, while the aggressive stimulus in Japan could be a boost that finally gets stocks to break out of their month-long range.

Spreading Bird Flu

An influenza pandemic has the potential to exact a great human and financial toll.  The Chinese stock market suffered last week, despite better economic data, from the spreading outbreak of the bird flu, referred to as the H7N9 virus.  None of the 21 confirmed cases in China have yet confirmed that the virus has spread from human to human.  In the past, it was at that point that it began to impact the markets.

• The sudden spread of human-to-human transmission of Severe Acute Respiratory Syndrome (SARS) briefly added to the pressures on global stock markets in March 2003.
• In May 2006, the strain of avian flu referred to as H5N1, was spread directly between members of an Indonesian family.  This first case of human-to-human transmission of the lethal virus garnered much attention and pressured the markets.
• Adding to the stresses of the financial crisis in early 2009 was the fast-spreading swine flu as the World Health Organization (WHO) confirmed human-to-human transmission.

While in each of these cases the U.S. stock market experienced at least a 5-10% decline around the time of initial human-to-human transmission, other contributing factors helped to result in a weak environment for stocks.

The market may react negatively to headlines about infections spreading and potential for limited human-to-human transmission.  We will continue to watch these developments closely.

North Korean Aggression

South Korea’s stock market was down each day last week as geopolitical risk escalated.  North Korea, angered over recent U.N. sanctions prompted by the North Korean nuclear test in February and routine U.S.-South Korean naval exercises, has threatened to launch a nuclear strike against U.S. territories and a missile strike on South Korea.

While likely inflated, such rhetoric has been followed by action in the recent past with attacks that included the sinking of ships and short-lived artillery barrages.  The sinking of the South Korean naval vessel Cheonan, and the resulting deaths of 46 crewmen, took place on March 26, 2010.  An investigation concluded a month and a half later that the source of the attack was a North Korean submarine and contributed to global stock market weakness.  On November 23, 2010, North Korea launched artillery shells and rockets at South Korean military and civilian targets on Yeonpyeong Island – contributing to a pause in the rally among global stock markets.

Last week, stocks fell on Wednesday, April 3, when the news broke that the Pentagon will deploy a missile defense system to Guam in the coming weeks in response to North Korea’s threat.  This may mark a break from much of the past 20 years, when threats and aggressive actions by North Korea typically resulted in high-level meetings, a shot-lived agreement, and economic aid.  Stocks may react negatively to any escalation.  Action could occur ahead of the anniversary of North Korea’s founding President Kim II-Sung’s birthday on April 15.

Japan’s Shock-and-Awe QE

In contrast to the weakness seen in other major world stock markets, Japan’s Nikkei Index was up 3.5% last week, adding to a year-to-date rally of over 20% on an aggressive policy move to revive growth by the Japanese central bank.

The Bank of Japan (BoJ) announced it will buy 7.5 trillion yen ($76 billion) of bonds a month.  Japan was the first nation to use the now common bond purchases known as quantitative easing (QE) 12 years ago and has had little success to show in combating deflation and a stagnant economy.  The new, bolder approach is intended to achieve a two-year inflation target of 2%, a level achieved only briefly over the past 20 years (in 1997 and 2008 as oil prices rose sharply).  The BOJ shifted its focus to expanding the amount of cash in circulation and on deposit at the BOJ, intending to grow it in excess of the pace of economic output.  The surprisingly bold move weakened the yen, which has fallen over 20% in the past six months.

A weaker currency may help promote exports and raise domestic inflation, while higher inflation expectations may encourage consumers to spend now rather than wait.  Pushing down bond yields may also encourage banks to stop holding so many government bonds and instead be more eager to make loans.  Of course, the ability to pull forward spending among aging consumers and the willingness by businesses to borrow is not assured.  Also, there is a risk posed by the longer-term consequences of driving up inflation, resulting in a serious increase in interest costs for a country already using 25% of its budget to service debt.  In fact, the interest rate on Japan’s 10-year government bonds is now less than 0.5% – the lowest in the world, despite a very high level of government debt and annual budget deficits.  Japan’s debt is roughly 230% of gross domestic product (GDP) and rising, higher than that of Greece (175% of GDP) and nearly twice that of Italy (125%).  Japan believes the only way to turn this trend around is to drive GDP higher and is pulling out all the stops.

Perhaps this bold move may inspire investors to believe more stimulus may be forthcoming from the European Central Bank of the U.S. Federal Reserve, given the weak manufacturing and jobs reports last week, capable of renewing the stock market’s rally.

Plenty of events – including those listed here – may serve as inspiration for investors to sell and take profits or put more money to work in the coming weeks.  Given the market’s recent behavior, we expect a modest pullback is most likely.

IMPORTANT DISCLOSURES
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values and yields will decline as interest rates rise and bonds are subject to availability and change in price.
Quantitative easing is a government monetary policy occasionally used to increase the money supply by buying government securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.

INDEX DESCRIPTIONS
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The Nikkei Index is short for Japan’s Nikkei 225 Stock Average, the leading and most-respected index of Japanese stocks. It is a price-weighted index comprised of Japan’s top 225 blue-chip companies on the Tokyo Stock Exchange. The Nikkei is equivalent to the Dow Jones Industrial Average Index in the U.S. In fact, it was called the Nikkei Dow Jones Stock Average from 1975 to 1985.
The Chinese stock market is represented by the Hang Seng Index, which is a freefloat-adjusted market capitalization-weighted stock market index in Hong Kong. It is used to record and monitor daily changes of the largest companies of the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong.
The South Korean stock market is represented by the Korea Composite Stock Price Index or KOSPI is the index of all common stocks traded on the Stock Market Division of the Korea Exchange. It’s the representative stock market index of South Korea, like the Dow Jones Industrial Average or S&P 500 in the U.S.
This research material has been prepared by LPL Financial.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity.

Jeffrey Kleintop talks about the Dow crossing over 14,000 and where it may be heading.

Here is yet another analogy to explain the process of investing:  planting a daffodil.  After all, spring is upon us, and daffodils represent one of the most underrated flowers of spring.

Disclaimer – I haven’t a clue about how to grow a single thing, so I had to read extensively about this process.  So, if you are Queen of the Garden, and decide to write me to correct my details, please know that I will completely ignore you.  I do not plant flowers for a living, I manage money.  End of disclaimer.

Successfully growing a daffodil is no easy task, as it requires preparation, planting, patience, and pruning.  Investing is no different.  Here’s how:

PREPARATION. After selecting a site with plenty of sun shine, one must thoroughly prepare the soil.  Daffodils grow best in fertile, well-drained soil that is moist, although they tolerate other types of soil as well.

For an investor to “prepare the soil,” they must gather all of the data they have…investment statements, 401(k) allocations and options, bank account data, budgeting records, etc.  Failing to do this will result in an unsatisfactory result – your flower will never grow.  Get the data if you want your advisor to have the tools she needs to help you.

PLANTING. Daffodils are planted in the fall, weeks before the ground freezes, and must be planted deep enough below the soil so they do not freeze.  Additionally, they need room to grow, so they are planted 3-6 inches apart.

The financial equivalent to this is to start early (“weeks before the ground freezes”), find a financial advisor you trust, and let them construct a comprehensive financial plan designed specifically to achieve your goals.  Remember, we need “room to grow,” so enter the meeting with goals in mind, not specific actions you think we will recommend.  Often, the path you must take to achieve your goals is not the path you WISH to take, but instead the path that gives you the highest probability of success.  Also, be very specific when communicating your goals.  The more detail you provide, the more we can customize your plan, which stacks the odds in our favor.

PATIENCE. As mentioned above, daffodils are planted in the fall, but bloom in the spring.  In other words, it takes a while for these to become visible.  Nobody in their right mind would plant the flowers, and proceed to check the flowers 3-4 times per day until they see a bulb.  Doing that will only frustrate you, and will cause you to micromanage the watering process, which will likely kill the flower before it blooms.

I believe this is the single most important aspect for people to maintain if they are serious about growing their investment portfolio.  Investing money according to a long term financial plan and then checking your progress every single day is an exercise in futility.  Just as looking at the daffodil hundreds of times doesn’t make it grow faster, allowing yourself to over inspect your portfolio won’t make your money grow.  In fact, it usually makes the investor micro manage the plan.  “Why haven’t I made any money?” “When will this plan work?”  Too much water will kill the flower, and impatience will kill your portfolio.

PRUNING. It is recommended to not cut the foliage on a daffodil until the flower begins to turn yellow.  Once that happens, it is time to dig the flower up, wash the bulbs off, and allow them to dry completely.  Next, they should be stored in a bag that allows air circulation (panty hose), until they are ready to plant again.

This last step represents the ongoing management and review process that your ADVISOR, not you, should be doing.  There is no need to meet with your advisor more than one time per year.  If there are changes that need to be made to your portfolio, your advisor should act proactively and recommend those changes before they become a necessity.  However, it is important to realize that many times the best decision an
investor can make is do nothing.  If your long term goals have not changed, do not change your portfolio just because the stock market gyrates or the media reports scare you.  Doing so would be like digging up the daffodil just after it blooms.  Nobody can enjoy the beautiful flower if you dig it up early, just as the investor’s heirs cannot enjoy a legacy net worth that never materialized because it was “dug up” too early.

Most advisors have a process that they follow when making investment recommendations and that often develops into a proclivity to use one investment vehicle over another.  Meaning, we all think our way is the best way to achieve your goals….or, at the very least, one of the best ways to achieve those goals.

Read this next line carefully……and remember it.

YOU SHOULDN’T CARE.

Who cares if one advisor prefers to use ETFs, while another uses individual stocks and bonds?  Your job, as the investor, is to verbalize VERY specific goals to the advisor, and then leave the heavy lifting up to us.

Consider this analogy.  We are playing a round of golf in Fort Mill, SC.  Captain’s choice tournament.  We are 150 yards from the hole, and our team needs a good shot to setup a birdie putt.  It is my turn to swing.

What is your goal as my teammate?  It is to do everything you can to help me hit a good golf shot, right?

Scenario #1:  I pull a 3 iron (my 3 iron distance is 240 yards) out of my bag, and proceed to skull a worm-burning ground ball that creeps up the fringe, rolls to the hole, and drops in.  EAGLE.

Scenario #2:  I choose a more applicable club, like a 9 iron, and stroke a gorgeous, high arcing shot that fades into the cross wind.  It hits the green about 4 feet past the hole, and the backspin rolls the ball back into themhole.  EAGLE.

One way is sexier, no doubt, but they both got the job done.  Our goal was to hit a golf shot that was close to the pin, and we accomplished that goal.  In fact, we MORE than accomplished the goal….we holed out.  In both scenarios, I addressed the ball, swung a club and made a golf shot.  I did not paralyze my team by arguing with them for 20 minutes about which club to use.  I was decisive, and either way worked.

Investing is the exact same way. YOU, as the investor, should be very prudent to clearly communicate your goal to your advisor.  The more specific, the better.  Then, once they understand your goals, they will craft a plan of action that is custom designed to hit those marks.

Once that occurs, the investor has very little work left to do.  Just stick to the plan.  No need to crunch numbers every day, or to ask about the “HOT MANAGER OF THE YEAR” investment.  That is just noise.  Eliminate the noise, and trust that the advisor’s choices are well thought out, and are being used for a reason.

Also, ignore other advisors that try to snipe your investment plan.  I have seen other advisors offer a “second opinion” on a portfolio only to pick up a client’s statement and crucify each holding individually in an effort to drive a wedge between the client and his current advisor.  Don’t let that happen.  This is the equivalent of saying “why did you use a 3 iron to hit that golf shot?  You hit a 3 iron much too far to use that for a 150 yard shot.  That club is not a suitable choice.  I would use a 9 iron and hit a beautiful shot.  Your club is bad, and your approach is wrong.”

The 3 iron still worked.

In most cases, that other advisor has a vested economic interest in disparaging whatever investments you currently own.  He wants you to question the plan, question your current advisor, question the fees, etc.  Then, he will offer you his version of the Holy Grail in an attempt to get you to fire your advisor and hire them.

This is noise.  PO-TATE-OH, PO-TOT-OH

We all have our own preferences, inclinations, proclivities, and processes when it comes to investment choices….but as long as you clearly communicate your goal, you shouldn’t care whether we use the 3 iron or the 9 iron.

You’re welcome.

Ava missed the mark in December, and was very upset about it.  However, she again failed in January, coming up just 3 books short.

Ava, being a very smart little lady, figured a few ways to work around the system.  First, she wanted to read 5 books in one night before bedtime.  There was not enough time, so of course, we said no.  Then, she picked up 5 very easy books (think Goodnight Moon, etc.), that she knew she could breeze through, figuring that the number was all that mattered.  Again, I denied her request.

“The point is not JUST to read the 22 books, but to read books on your grade level so that you develop your skill and confidence.”

Then, she launched into “excuse making mode.”

“But Daddy, I didn’t have time.”
“Ava, you had all month…the same amount of time every other kid in your
class had.”

“But Daddy, I just forgot.”
“Well, Blondie, you forgot in December too, and still didn’t make the changes needed to hit the number in January.”

“I just didn’t WANT to read.”
“It is okay if you don’t want to read, but you won’t be able to win the pizza if you don’t.”

Then, she morphed into the blame game.

“Daddy, if YOU had read with me more, I….”

I cut her off. 

“Ava, in this life you have to accept responsibility.  If you fail at something, there is no shame in that.  I would rather you try, and fail, then to not try at all.  BUT, if you fail, admit that you failed, and that it was your fault you failed.”

Then, I remembered a famous phrase I had been taught by a wise man.  It contains 10 two-letter words, but speaks volumes when it comes to self reliance.

“If it is to be, it is up to me.”

I asked her to repeat it.  IF.  IT.  IS.  TO.  BE.  IT.  IS.  UP.  TO.  ME.

Simple, yet profound.

“Ava, people in life do not want to hear excuses.  Your boss doesn’t care WHY you didn’t complete a job on time.  Other people do not deserve to be blamed for your failures.  If you fail at something, look yourself in the mirror, admit it, and move on.  If something is meant to be, it is up to you.  So please say the phrase with me.”

ME:  “If it is to be….”
HER:  “It is up to me.”

What if everyone on our planet lived that way?  The world would be a FAR better place.

Chief Investment Officer of LPL Financial Burt White talks about the twin ceiling conundrum and the possible strategies needed to navigate this market.

Buh bye normal Tuesday.

“Matt, we need your help.  We just received a letter from the IRS saying that we owe $141,000 in taxes because our data did not match the data that your firm sent them.” Her voice did not indicate anger, but mostly fear.

“Mrs. Rice.  The first thing I need you to do is to sit down and take a deep breath.  I know getting a letter from the IRS is a scary thing, but it is very likely that the IRS letter is incorrect, so please do not jump to any conclusions.  I do not prepare taxes for a living and do not give tax advice, but I have an accounting degree, and I would say that my knowledge of the tax code is above average…especially when it comes to taxation of investments.  THE FIRST THING I NEED IS A COPY OF THE LETTER.”

Reviewed the letter.  The IRS, citing 1099 statements sent by my firm and the Rice’s previous firm, claimed that investments totaling $141,000 had been sold throughout the year.  True.

This is very different than saying that the Rice family OWED $141k.  See how easy it is to misunderstand when you apply some IRS pressure to a situation?

They sold $141k worth of investments.  Check.

However, because no cost basis had been supplied to them, the IRS assumed a zero cost basis.  This meant that they had assumed that the Rice family had paid ZERO for all of those investments.  *imagine Mike Tyson’s whiny voice uttering this next phrase* This is ludicrous!

How would someone have a zero cost basis?  Even if a gifted investment has appreciated, the receiver of the gift gets the same cost basis of the donor.  Like this:

Investor A:  buys 100 shares of XYZ stock for $5,000
XYZ appreciates, and is now worth $10,000
Investor A gives the shares to Investor B.
Investor B has a cost basis of $5,000.

So, even if the shares are given to you, your cost basis is still not ZERO.  I am unaware of any situation where a cost basis would be zero, so it makes perfect sense that the IRS, in their infinite wisdom, chose to make the DEFAULT scenario a zero cost basis.

The problem was relatively easy to solve.  The client had failed to file a Schedule D (capital gains/losses).  After crunching the numbers, not only did they not owe the IRS a penny, but are instead due a refund of around $750.

“What did you claim on your Schedule D?”

Puzzled look.  Uh oh.  “We didn’t file a Schedule D because our computer software didn’t have that form listed anywhere.”

Shaking my head.

“How did you forget to file a Schedule D?  That should be filed every year if you have any capital gains or losses.  Trust me, the IRS doesn’t care what forms are offered in your software package.”

“Well, we always used <insert prominent Rock Hill CPA> to do our taxes, but this year we decided to save the $500 and do it ourselves.”

Ahh, there we have it. I bet the Rock Hill CPA, or the Fort Mill CPA, or the B.F.E. CPA would not have forgotten to file a Schedule D.  Even this Rock Hill Financial Advisor would never forget to tell a client that they need to file a Schedule D.  But, I don’t do taxes, remember?

If you have a simple tax return, and wish to save a few bucks, then by all means prepare your own tax return.  However, if you have several hundred thousand dollars, or have a complicated tax situation, please hire a CPA.

Consider this:  if you got a speeding ticket, and elected to go to court, would you defend yourself or hire an expensive attorney?  What if the FBI showed up at your office, arrested you, and said you were being charged with a double homicide…defend yourself/call an attorney?

Most would defend themselves for a minor infraction, but would ask for help for anything major. To me, taxes are the same way.  If your situation is simple, do it yourself.  If not, let the professional advisor do it.

Furthermore, the more money you have, think of the more serious crime analogy.  If you have a little, any errors will likely be small.  If you have a boatload, your alleged error could be $141,000 like the Rice family.  Please don’t be cheap….hire a CPA.

That encompasses my overall business philosophy very well. Our department just celebrated our three year anniversary, and in a short amount of time, we have accomplished extraordinary things.  We doubled our business in 2012 for the second consecutive year, despite a tough economic backdrop.

These accomplishments have made Family Trust Investment Services a model to our entire industry, and have even resulted in personal accolades for myself.  However, the last thing I will ever do is become complacent, because there is always room for improvement.

Like Mr. Lombardi said, I plan to “relentlessly chase perfection,” and that means our department will always strive to improve in every individual area until we reach perfection, which we know will never occur.

In December, we mailed out a client satisfaction survey to a select group of clients.  Having 20 years of experience in this business has taught me that one cannot be all things to all people, which is a nice way to say that at any given point in time, it is impossible to please every client.  Some clients equate account performance and level of service, meaning that if their account grows, they think I did a good job of servicing them.  Others desire an unreasonable high level of service, and no amount of account growth will change that expectation.  Suffice to say that I know enough to realize that all clients will not think every aspect of Family Trust Investment Services is elite, so I had reasonable expectations when considering our survey results.

Our scores came in very high (think 8.5 on a 1 to 10 scale), although I focused on the select few that highlighted areas that need improvement.  That is the perfectionist in me, for I know that I will never be satisfied, because if I ever become satisfied, I will get lazy, and our department will suffer.

If I were brutally honest, I personally would not have graded our department as highly as our clients did, because of my obsession with perfection.  Despite that, the gist of the survey was that we are doing a good job, and that fact was underlined by a 100% “yes” answer to the question of “would you recommend your friends and family to us.”  One hundred percent.

Still, we will stay hungry, and chase perfection in the hopes that one day we will catch excellence.

Don’t get me wrong, I am not complaining.  After all, if my goal is to build the elite investment program in all of York County, that is going to require hard work.  I do not mind putting in the hours seeing clients, managing and monitoring portfolios, researching new investment ideas, etc.

In fact, I love it.  It is what I was born to do.  However, with my time being so scarce, I find that it sometimes creates ill-will with prospective clients.  Like this:

“Hi Matt, my name is Henry, and I would really like to meet with you to get your advice about my financial situation.”

“Wonderful Henry, I am honored that you called.  My assistant, Catherine, keeps my calendar, and she is infinitely better at managing that than I.  If you will hold for a sec, I will have her pickup and schedule a time for us to meet.”

Cue annoying “hold” music.

“Hi Henry, this is Catherine, I understand that you would like to book an appointment?”
“Yes.”

“Ok, great.  Matt has availability the week of January 14^th.  Does Tuesday or Thursday work better for you that week?”

“He doesn’t have anything available until January?  Today is December 16^th.”
“No sir.  That is his first available appointment.”

People just do not want to wait.  I do my best to get people in as quickly as I can, but I can only conduct so many appointments in a day. 

My point is NOT that I am busy, and that you just need to wait.  My point is that prospective clients should WANT me to be busy, and should be willing to wait as long as it takes to get in.  If I do a great job with people’s money, and tell them the honest truth in language they can understand, that is attractive to prospects.

Think about this….what is your favorite restaurant in the world?  Can you just waltz into that restaurant on a Friday night at 7pm and command a table for 6?  If not, how long would you need to wait to get that table?  An hour?  A week?

Many popular restaurants refuse to take reservations for this reason – they do not want to be booking reservations a year in advance.  People love good food, and if they have the means to purchase said good food, they will.  Lots of them.  That is why great restaurants are tough to get in.  That many people would not wait if the food was terrible. 

What about popular sporting events?  “Hello Mr. Augusta National, I would like to purchase 2 badges for the MASTERS golf tournament next year.”  The clerk in the pro shop is paralyzed by laughter….

Professionals are no different.  How many elite attorneys or doctors can take appointments on demand?  Can you imagine if you called up the top plastic surgeon in Charlotte, and the doctor herself answered the phone?

“This is Dr. Wyatt.”
“Yes, I would like to make an appointment.”

“OK, just stop by whenever you are in the neighborhood.  I won’t be busy.  I will be here all week, and as soon as you come in, I will see you.”

I would never call this person again.  If they were any good, I would have a tough time getting in.  If they are available upon request, I would assume that they are either incompetent or desperate for business, or both.  I don’t want that person operating on me.  Do you?

So, if you are my next client but just don’t know it yet, please do not get irritated when my next available appointment is 2-3 weeks away.

You should WANT it to be that way….and it should confirm to you that a large number of people would not be willing to wait to meet with me if I were horrible at managing money.

This is an oldie but goodie. It happened about 2 years ago, but I was reminded of it recently and thought I should share it with all of you.

I have a large client who lives in another state, and has money with me, as well as a local advisor.  She had about $800k with me, and about $1.4M with the other advisor.

After working with me for about 3-4 months, I think she was convinced to move the entire relationship to me due to a single act of service.  There were many reasons to move, don’t get me wrong….a more complete financial plan, quicker responses to her phone calls, better explanations of my recommendations, etc.  However, she was hesitant to pull the trigger, until this:

“Matt, I got a notice in the mail about a class action lawsuit against WIDGET company.  I owned that stock a long time ago, and I do not remember any details about it, so I was hoping you could help me with the form.”

“Sure.  I will try.  BUT, please keep in mind that if you bought the stock at your other firm, they are unlikely to talk to me, so you will have to actually call them to get some of the required data.”

She needed date of purchase, number of shares purchased, dollar amount invested, date of sale, number of shares sold, dollar amount received at sale.

She had sold the stock in the accounts she had moved to me, but still held some shares in the account with the other advisor.  I gave her the data that I had, which wasn’t much, and then she called the other advisor.

“Hi Mary, this is Jane, I was hoping you would help me fill out this class action lawsuit form so I can participate.”

“Jane, you had all of your money here, and you moved a chunk of it.  That really irritated me.  I am not sure why you did that.  I would try to help you get this data, but I have no way to access the information.  It happened a long time ago, and I have no way to get the data.  Sorry.”

When the client told me this, I was livid.  She dismissed the client’s request, chastised her for transferring some of her money to me, and then never even tried to help her retrieve the data she was hoping for.

What is worse is that the client was paying approximately $14,000 annually in fees to this person, and they made her feel as if she was wasting her time by asking for help.

“Ma’am.  First of all, do not feel bad about calling.  You pay this person 14-thousand dollars per year in fees.  Your question should not be overlooked just because the advisor’s pride is bruised after you moved some of your accounts to me.  Let me see what I can do.”

I opened the client files on my PC and found a statement from about a year earlier showing the data that she needed.  This statement was the one she got while working with this other advisor.  ON THE STATEMENT, I found the data the client needed.

“Jane, you will never believe this!  I found the data you need.  It was on the statement from last year…”  She interrupted with “how was it on your statement if I purchased the stock at the other firm?”  “No ma’am….not my statement.  The one you provided when you moved your accounts here.  You have 3 accounts and only moved 2 to me, but you gave me all 3 statements last year.  It was on the account you left there.  I looked right on there, and found the data you need.”

“So the answer was right in front of her on the statement that her firm printed?  All she had to do was look, like you did.  Right?”

“Yes ma’am.  Also, I am so sorry you were made to feel that way by the other advisor.  I tell you what….since I have all of the data, I will complete the form for you and overnight it for you to sign.  Then, you can drop it in the prepaid envelope we will send you and it will get to the attorney in plenty of time.  We will track it to make sure it is received.  You won’t have to do anything but sign your name.”

“Matt, I tell you what, you remember that conversation we had about possibly moving my other account to you?  The $1.4 million one?  I wasn’t ready to do it back then, but this whole thing has convinced me.  Please go ahead and send me the papers.”

The rest is history.  The 800k client became a $2.2 million client because I helped her fill out a class action lawsuit form.  I filled out a form.  She has yet to get a penny from the suit, but she never forgot that I helped her.

Helping with the form is the surface reason she moved her other account…but the real reason is that I cared enough about the client not to dismiss her question, and after some thought, I found the answer she needed by reading the competing firm’s statement.

I cared.  That’s all.

Wonder if that same advisor has any other million dollar clients she wishes to neglect into moving their accounts to an advisor that will help them?  I could sure use a few more large clients and there are still seats on my bus.