In this exclusive series, we ask top RIAs from around the country to share their biggest challenges and successes from the past few years. You’ll learn how they’re overcoming the unique issues facing our industry today and glean insights that may be helpful in your own practice.
This article features Jaime Quiros of FBB Capital Partners, who shares his perspective on handling difficult client conversations as well as technology’s role in optimizing operations.
The growing complexity of financial markets may require more financial planning and guidance. In other words, talking through investments and helping clients understand the risk associated with their portfolio, including educating them about new types of investments or investment vehicles.
Ever-changing regulations and strategies contribute to the complexity, too. For example, the required minimum distribution for retirement plans was just pushed back to 73 years old — that can impact a client’s retirement.1 Moreover, the self-employed 401K contribution limits rose $5,000 from a maximum of $61,000 in 2022 to a maximum of $66,000 in 2023.2 That could alter a business owner’s financial plan. In the end, navigating this increasing level of complexity and keeping up with the regulatory changes requires more hands-on planning and guidance.
FBB Capital Partners has an investment team that’s in charge of determining what’s worthwhile and what’s not. From there, we explain to clients our thought process, views on risk tolerance, and ideas of what’s best for their portfolios. We try to quell the emotional pull to jump on trending “FOMO” investments and help them understand the more prudent path to their goals so that they feel confident with their plan.
Through candid conversations, we’re able to help clients see the big picture and realize: “Maybe I don't need to jump on that kind of thing. I'm not missing out.”
We’ve upgraded and integrated our relationship management and portfolio management systems over the last several years. These efforts came in handy when the pandemic struck. Within our CRM, we’ve implemented workflows that help track information and improve processes in a compliant manner. That covers everything from onboarding and document gathering to transfers and distributions.
We’ve also added client-facing components that make the client experience better. Our appointment scheduling software streamlines the process — clients have real-time access to our calendars, so they can pick a time that works for them. It sounds so simple but avoiding back-and-forth phone calls and emails just to schedule a meeting is a major timesaver. And then modern video conferencing makes the actual conversation much more personal and dynamic.
Additionally, we hold regular live webinars to discuss markets and release monthly newsletters and then track engagement on the backend to gauge client interests.
In terms of portfolio management, our systems allow clients to access their portfolios from a top-down perspective, so they can find answers to many questions as they arise. Naturally, the system’s convenience is appreciated by the client, but it also frees up the portfolio manager to do their job more efficiently.
In my view, our firm is unique when it comes to succession planning because of its structure. From the moment they’re onboarded, people aren’t just clients of the portfolio manager, they’re clients of the firm. I may be their initial contact person, but they have full access to every other team member and resource. We can connect clients with the best person for any particular question, concern, or issue. For instance, one portfolio manager may specialize in charitable giving while another is adept at long-term care.
This structure lends itself nicely to succession. Clients inherently connect with other advisors, cultivating relationships across our firm and taking friction out of an eventual transition. If I'm not available for any reason, other portfolio managers can easily step in. And thanks to our upgraded systems, we each have a clean, clear, comprehensive lens into the client’s situation, which facilitates seamless conversations and team cohesion. The client is comfortable knowing there’s no drop off, because there’s a backup. On the other side, our team is up to date because they can readily review digital notes and records.
It’s critical to keep clients in the loop. As a firm, we actively strive to be out in front of big market changes and set realistic expectations. Whether it’s Brexit or COVID-19, the firm assembles early, discusses the situation, and then reaches out to clients to address what’s happening, our take on the matter, what could unfold, and our go-forward plan.
The psychological aspects of investing are highly valued by our firm. Our Director of Research wrote a book on behavioral finance, a discipline we emphasize and develop internally. In our team meetings, we share out-of-the-ordinary situations as they arise so that everyone is as prepared as possible to field client questions, empathize with challenges, and address their concerns.
Managing emotions starts with having down-to-earth conversations with clients — listening to their fears, concerns, and whatever else is running through their minds to understand why they’re apprehensive. The client needs to express and articulate their emotions. Then it’s up to us to empathize and convey our understanding, before we can transition to a rational discussion about what’s happening and our plan. Whether it’s just noise or something that is truly rattling the markets, we explain how we’ve positioned their portfolio to handle the situation. In essence, we use logic to douse the emotional flames and reestablish peace of mind.
Recently, a client was worried about the debt ceiling and general market turmoil. We’ve had a plan in place for this client for the last decade, but their nerves were getting the better of them. They wanted to withdraw a meaningful amount from their IRA and park it in a standard bank account. Needless to say, they weren’t fully appreciating the tax consequences associated with such a major move, so we needed to have a conversation.
We talked through the portfolio’s positioning, outlining its diversification and limited exposure to risky assets. We simplified the situation with an intuitive analogy: the portfolio is like a multi-level house. On the first floor, you have less risky assets like cash, treasury notes, and so on — in the event of a fire, you likely can grab these assets quickly and escape without being burned. On the second floor, you have riskier assets like equities — you might get bumped and bruised a little on your way out. The client’s portfolio was quite conservative, so the visual resonated and the client felt more at ease. In other words, fire extinguished.
Jaime Quiros, a Certified Financial Planner and NAPFA-registered financial advisor, serves as a Portfolio Manager to FBB Capital Partners’ clients. Prior to his current role, Jaime worked on Wall Street as an equity trader and in multiple other market capacities, including market making, portfolio management, and private client lending. Jaime is also a board member of Life Assets. His thoughts on financial planning best practices have been featured in USA Today, Forbes, and CNN Money.
1 IRS, Retirement Plan and IRA Required Minimum Distributions FAQs
2 IRS, Retirement Plans for Self-Employed People
FBB Capital Partners is an independent organization and is not affiliated with State Street Global Advisors or State Street Corporation.
The views expressed in this material are the views of Jaime Quiros and FBB Capital Partners through the period ended July 31, 2023, and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Investing involves risk including the risk of loss of principal.
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