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Handling Numbers-Obsessed Clients

Clients who check their portfolio like they check the weather can be troublesome—here's how to deal with them.


Most advisors have one or two clients who just can’t leave well enough alone. They are either always looking for the next sure thing or are so afraid of losing their money that they refuse to invest in anything more risky than a CD. While these clients can be trying, there are ways to handle them. Here are some suggestions:

  • Use a personal benchmark. If you and a client decide on a 10 percent average annual return over the long haul, use that as your benchmark. When you send out quarterly reports, include a graph that plots a cumulative growth of the portfolio at 10 percent next to the actual growth of the holdings. If the two graphs are in line, the client should be pleased and will stay with the plan.
  • If a client’s portfolio has rebounded after a shaky couple of months, point out that if he had pulled out six months ago he would have missed out on a great opportunity.
  • Remind clients of this axiom: A diversified portfolio will never do as well as the single best performing asset class within that portfolio in any given year. But a broadly diversified portfolio will also never do as poorly as the worst performing asset class in that portfolio in any given year.
  • If a client insists on doing something against your advice, draw up a disclaimer stating that this is not your recommendation, and that he will assume all responsibility for the results of the transaction. With this type of documentation, clients will often have second thoughts.
  • Give clients a “play account.” Set aside 2 percent to 5 percent of their portfolio that they can use to satisfy their impulsive urges and invest on their own. This will not only prevent clients from risking their entire portfolio, but will also help them understand the intricacies of investing.

These tips were taken from the article “Obsession: Handling and Advising Numbers-Crazy Clients” by Neiciee Durrence, which originally appeared in the July 2000 issue of Advisor Today.

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