Joint venture: when dealing with couples, advisers need to ensure that the less talkative partners get included in all discussions
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The financial advice industry’s obsession with the age of its professionals is misplaced. True, at over 50, the average US adviser is older than his or her counterparts in most other businesses. But it is also a sector that holds grey hair in esteem.

“It shows you’ve been through a few market cycles,” says Laura Pierson, general manager of Peak Advisor Alliance, an adviser-coaching firm in Omaha, Nebraska. “If anything, younger advisers tell us prospecting is a challenge because they don’t have the age, the experience of some of the others they’re up against.”

The FT listing of the top 400 US financial advisers is a monument to experience. The median adviser in its ranks has been in the job for 26 years. And these long-tenured advisers have learnt a trick or two for keeping sometimes skittish clients on track and focused on long-term outcomes.

“That’s why clients value them,” says Ms Pierson. “If you’re looking for another kind of service – such as advertising – you really might want younger professionals, and people in that business know it.” But “advisers are usually eager to play up” their time and experience in the business.

FT 400-listed Joseph Montgomery of Wells Fargo Advisors in Williamsburg, Virginia, agrees there are benefits to having gone a few rounds – both in terms of client perception and reality. The first thing he tries to tell prospective clients is something he feels he learnt the hard way. “There’s no free lunch,” says Mr Montgomery, who draws on 38 years of experience.

In other words, if a scheme promises a lot of gain for little risk, it is probably not for real, or at least not sustainable. What’s left, he says, is careful groundwork in the form of rigorous investment diversification. This, accompanied by a firm grasp of the fact that markets are volatile by nature, can help investors make the most of their money without going crazy in the process, says Mr Montgomery, whose team managed about $880m last year.

William Sarran, an FT 400 adviser with Morgan Stanley in Cincinnati, says 37 years in the business has taught him the value of a long-term perspective. Clients respond positively to advisers who can translate this into “being the voice of reason” by “helping them stay focused on their goals”, he says.

Long-term perspective: William Sarran

Mr Sarran and his team, who managed about $385m last year, mix long tenures in the business with a hands-on approach to asset management and an appreciation of stock valuation not just stock price. This combination, and a prudent portion of alternative-investment products in his clients’ portfolios, “helps us to be not so uptight about the market”, he says.

The alternative products come courtesy of what Mr Sarran calls an “evolution of the investment process” that lets advisers bring traditionally institutional strategies – embodied in things such as real estate investment trusts and managed futures – to retail-client portfolios. A prudent allocation of such investments, which typically have low correlations to broad markets, will not necessarily “make you well” in downturns like the one we saw five years ago, “but it can give you some brakes”, he says.

“Early in my career, being diversified was using 12 companies,” adds Mr Sarran. “Now we use 12-25 managers with hundreds of positions in each of our clients’ portfolios.”

Three or four decades in the business can make an adviser more attuned to clients – and a better communicator for it, says FT 400 adviser Judith McGee of McGee Wealth Management in Portland, Oregon, which managed $370m in 2013.

“You learn how to listen. And you know that when a client asks a question, even when it seems very straightforward, there’s always another question behind it, and maybe it’s the more important one.”

Ms McGee has gleaned other client-relation tips in her 35 years she has been an adviser. For instance, she has learnt how to help clients who seem to be hesitating on the verge of an important disclosure. “I’ll tell them a similar story” – drawn from real life but with no identifying details shared – “to get them to continue” with their own confessions, she says.

And when dealing with couples, Ms McGee makes sure less talkative partners get included in all discussions. “You’re not just working with the person who signs the cheques,” she says. “You have to engage the other person.”

Experience can also help an adviser spot clients they want to work with. “That really helped us in 2008,” says Ms McGee. “We didn’t have clients who weren’t a good fit for us.”

Mr Montgomery has little time for bad fits either. He will give prospects all the time they need to understand how he and his colleagues handle planning and investments, but will politely show them the door if it seems they are looking for quick fixes or false assurance. “I’d rather not work with people who are looking for something we can’t give them,” he says. “I’m too old for that.”

Copyright The Financial Times Limited 2017. All rights reserved.
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