Plain Conversation and Due Diligence Create Security
Drop the financial jargon. Don’t explain market activities with terminology sophisticated enough to require a specialized financial dictionary to decipher. But, at the same time, also do not talk “down” to clients. These are the communication guidelines that smart financial advisors employ today.
This is what Gene Sulzberger recommends doing. He is the president of Sulzberger Capital Advisors based in Miami, Florida. Sulzberger’s take on keeping conversations simple is unique, especially considering his background as an attorney, where language and documents tend to be anything but uncomplicated.
Coming from a family with a long history of working in the legal field, he successfully pursued a legal career for several years. Yet, when he successfully pursued a legal career for several years focusing on trust and estate issues. Yet, with Sulzberger’s Wharton School of Business background (he was a finance major) and with his legal work with trust companies on behalf of clients, he found himself drawn to the financial aspects of the work.” As he began to pursue a career as a financial advisor, one aspect remained constant for Sulzberger: Talk to clients on their own level.
“I think it is the biggest mistake that advisors make,” Sulzberger said. “They either talk over their client’s head or use too sophisticated a language or talk too technically – or they talk down to their clients.”
Sulzberger said that advisors need to gauge what level of financial understanding each client has reached, and then guide the conversation to meet that level of capability.
A recent experience with one of his clients is a case in point. The client worked just down the block from Sulzberger’s office and came by for some quick clarification about her Social Security statement. She received her annual statement and stopped by his office with some questions, admitting that she had never understood the document and was hopeful he could help her. “She said to me, ‘can you explain this,’” Sulzberger recalled. “Not a problem … I walked her through it, and she felt so relieved to finally understand what that document meant. It was simple, but it really helped her out.”
Putting the interest of the client first is a mainstay for Sulzberger. It is why he is an RIA. He wishes the entire financial services industry was required to work in a fiduciary capacity.
“I think that every investment advisor/broker should be working under a fiduciary standard,” he said.
Noting his background as an attorney – a field in which safeguarding the client’s best interest is a given – Sulzberger said that the fiduciary standard is just the best way to do business.
“I find there is too much question of where your loyalties lie when you are doing business on a commission basis,” Sulzberger said. “Are you promoting this product to the client just because it pays a higher commission?”
He is irritated by the extremely high salaries and bonuses Wall Street brokers often receive, and said that he believes the financial services industry does itself an injustice when these are handed out, he said.
“These insane salaries on Wall Street hurt regular people,” he said. “They sit on the backs of people’s 401K plans, their bank accounts and investment accounts.”
The bulk of Sulzberger’s clients fit into the latter category – the people who are trying to accumulate a retirement savings through employer-sponsored 401K programs and other investment accounts. Most of his current clients are mid-career professionals for whom retirement may not be right around the corner – but it is definitely on the map. Or at least in theory, it could be.
As pensions disappear and more of the retirement planning and saving is moved from the shoulders of employers to employees, Sulzberger believes more people will continue to work well past the traditional retirement ages of 65 or 70. He has an 82-year-old client now who works from 10 a.m. to 2 p.m.
“He hated retirement; he still wants to work,” Sulzberger said. “Now he has something to do and it is providing a meaning and sense of value to him. People get bored with retirement very easily – especially when they remain so capable.”
He thinks the baby boomer generation – those in their 40s and 50s currently heading to retirement years – have come to realize they may not have it as well off as their parents did. “Their retirements may not be as comfortable,” Sulzberger said, “and thus, they are scared.”
He recommends they find a financial advisor who can conduct thorough due diligence on any suggested investments – especially the highly attractive alternative class that now buffers against volatility in the traditional bond and stock markets by providing the opportunity of a higher return.
It’s what he does to ensure his clients are not duped into an investment that they and he, as their advisor, might regret.
“I have a lot of offshore clients and one of the things constantly on my mind as I open up to the different types of products out there is paying close attention to the due diligence that needs to be done on these products before getting involved,” Sulzberger said. “Nothing replaces performing appropriate and thorough due diligence.”