Allegheny Interchange - Talking with R. Kevin Guernsey
How do you describe your practice to your prospective clients? My practice is based on building strong relationships with people who are looking for someone who can help them create a plan that will increase their chances of realizing their financial goals and objectives. Often times they have a fairly clear set of objectives, but they are unsure what is required to meet those objectives, which can be many years off. In preparing a financial plan we put down on paper a clear account of the clients’ current financial situation, where they are trying to go, and a strategy to get there. We list their assets and liabilities, and talk about the various risks and ways to minimize them.
I typically meet face-to-face with my clients twice a year, more often if necessary, to do a detailed review of their investment portfolios and compare our results to the overall market. We also make any adjustments that may be required as a result of changes in the markets or their personal situations. Our discussions at these meetings are never limited to investments, or even just the “financial stuff”; that’s only part of my relationship with my clients. We often spend just as much time, if not more, talking about what is going on in their lives. While the numbers are important, satisfaction is often about a lot more than just financial results.
I have limited the number of clients that I serve—because I do develop very strong relationships with them, and I spend a great deal of time serving each of them. I often work with entire families, often including multiple generations. I also like to develop relationships with other financial professionals that my clients are working with, such as their attorneys and CPAs. That assures a coordinated effort in the client’s interest.
Who are your clients? How would you describe them? They are a diverse set. I have a small group of “thirty-somethings” who have become clients primarily because of the relationships that I have developed with their parents. A larger group of clients, my peer group, are in their forties and fifties. But the majority of my clients range in age from their sixties to their nineties. I have even had a centurion or two along the way. Most of my clients are Pennsylvania residents, but some are in Florida, South Carolina, Georgia, Virginia, Texas, Utah and California. More generally, though, my clients tend to be people who are looking to establish a long-term relationship with someone who they know genuinely cares about them.
What is most frequently on your clients’ minds now? And what advice do you give them? Given the severe market downturn in 2008, most clients who are either nearing retirement or who are in retirement are concerned that we have not seen the end of the market volatility. Many of these people were jubilant in the period leading up to October of 2007, when the markets reached their peaks. In the months prior to October 2007, I’m now proud to say, I was advising clients to “take some of the winnings off of the table” and put them somewhere where they would be protected. While no one could have foreseen the severity of the downturn, I remind them that over the long term the equity markets have historically returned on average 7% to 9% per year. What we’ve witnessed over the last two years has been extreme on both the downside and the upside.
I now try to assure clients that their portfolios are structured so that they have sufficient assets to provide for their short- to mid-range needs. I also point out that the longer-range portion of their portfolios can benefit from downturns because they are reinvesting the dividends and capital gains. By reinvesting when the market is down, they are buying shares “on sale,” allowing them to purchase more shares than when the markets are up. When markets do eventually recover, they will have more shares appreciating than they would have otherwise had. And as the shorter-term assets are depleted, we will replace them by moving some of the longer-term assets to less volatile positions at opportune times.
One other frequent client concern deserves mention. Older clients who realize they will not need all of their financial assets are concerned with making sure that as many of their assets as possible go to their heirs and as few as possible to Uncle Sam. This is where a relationship with the client’s estate planning attorney comes in to play. I coordinate with the attorney in developing an estate-planning strategy, one that will allow the client to pass on as much as possible to heirs.
What brings new clients to you? Referrals by clients are the primary way. I often tell new clients that I am compensated in two ways when I work with someone. The obvious way is monetary. But the second, equally important way is through introductions to people they care about. The introductions not only benefit me, but potentially help the clients’ friends and family members by introducing them to a financial professional who will have their best interests at heart. The clients know from their own experience that I don’t pressure anyone to work with me. There must be a chemistry between advisor and client. If we are not comfortable with each other, the relationship will not be good no matter how good the advice. I tell people up front that the main purpose of our first meeting is to determine if we are a proper “fit,” that it’s okay for either of us to decide we are not, and that they won’t hurt my feelings by being honest.
Now, in addition to introductions, I occasionally conduct educational seminars for prospective clients, both to provide information that assures attendees don’t go away disappointed, and to demonstrate my capabilities.
Where do you see your practice headed and what are your plans? I am growing the practice slowly— slowly to avoid disrupting the strong relationships with clients I already have. Don’t get me wrong, any business needs to grow in order to thrive, and our business is no exception, but the slow-growth strategy allows assimilation of new clients without compromising service to existing clients.
To allow both growth and improved service, I am incorporating increasingly sophisticated technology into the practice. For instance, shifting to Allegheny’s data system will save a great deal of client-report preparation time and provide information benefits for clients, including more comprehensive client-specific information over time.
I am also planning to develop my own website, gearing it towards my clients in particular. Clients can now find a great deal of information on Allegheny’s website, and I will “piggyback” on that, but my website will be in line with the conversations I am having with clients and address issues they raise.
Securities and investment advisory services offered through Allegheny Investments, Ltd., a registered broker/dealer • Member FINRA/SIPC
