Being small is fine with me and my clients

This article was originally published in August 2017

Counterpoint Private Wealth is a small business looking after a small number of clients. And that is just fine with my clients and I.

While there are many service providers behind the scenes (e.g. investment researchers, asset consultants, software providers, compliance experts), the business itself is just myself and one support person. I often joke that if all goes to plan, I will retire from the same office. And given the size of the office, at best I could employ one more person. This physical restriction is an important consideration.

                                      Our “humble” little office — built c. 1885

All clients are equal

In my industry, there is always discussion about what an “ideal” client is. I can define this pretty easily:

1. They must be prepared to take advice. While the client clearly has the final say, they must be open to accepting that the advice I give usually comes from a position of greater knowledge on the advice topic.
2. They can benefit from the relationship. While most people will benefit from having someone to help them, there are cases when people either don’t need any advice or they are more than capable of making the correct decisions for themselves.
3. They are profitable to the business. There is no point having a client if the relationship is unprofitable, but this doesn’t mean every client is profitable every year. Some years there will be lots of activity, and other years very little will need to happen. So in terms of hours invested, and thus profitability, this can vary year to year.

If you meet the above, then you can be a client. I do not have different classes of clients, for example where A clients get “better” service or investments than B or C clients.

All clients have the same level of access to me and all portfolios will generally hold the same investments. There will be some differences between portfolios, but this is based on risk profiles and objectives, not portfolio sizes.

But each client is unique

But each client’s situation is unique and therefore the relationships will vary greatly. Some clients need monthly contact during times of change, whereas other clients can go 12 months without much contact at all.

Thankfully, the spread of clients means there is always a manageable balance of those needing attention and those in a fairly static state.

Who thinks about who more?

The major benefit of having a small business is that I intimately know all my clients and think about them regularly.

I am pretty sure that I think about clients’ strategies, look at their portfolios, and consider their overall positions more than they do. And so I should. It is my job to do the thinking for them. But it is sometimes hard to show clients this.

I recently met with a client who I have known since 2001. He has been with me through four business names and three office locations. We know each other really well, but at this meeting I discovered some areas of concern — for him, not me.

He was a little unsure if he was still an “ideal” client, as his portfolio size had declined (like most retirees who are drawing down their capital to live). In my mind, he has always been, and will always be, an ideal client. But he was unsure, because we had never had the conversation as outlined above.

Another area of concern was whether his overall superannuation structure (a self managed fund) was still appropriate given the capital value. It was a fair question, but again it has never been asked and I had never made the comment to him it was all OK.

As I worked through my reasoning for why he was still structured correctly, it struck me that I knew the answer and could articulate it well because I regularly asked myself that same question on his behalf.

That is, I think about my clients’ position regularly and ask myself “is what I am doing for them still correct and appropriate?” I just don’t necessarily tell a client everything is fine, but from now on I am going to have these conversations more.

Urgent versus important

I cannot talk about the benefits of being small without acknowledging the challenges. The main challenge is managing workflow, and the classic urgent versus important concept is used every single day.

                         The Eisenhower Matrix, also referred to as Urgent/Important Matrix.

We very rarely have problems with too many urgent/important tasks, because with a small number of clients these events seem to spread themselves out.

But we have lots of non-urgent/important tasks and I always have to stop and question my inherent need to deal with everything right now. I think this is a function of being small,

and again knowing all clients really well and thus wanting to help them as quick as possible.

I feel very lucky to work with the right types of clients and to have found the right approach and business size that allows me to service them properly. But writing this piece has reminded me that there is no harm in revisiting the basics of why they are a client, why they are structured the way they are, and what services that should expect.

This article is the opinion of the writer and does not consider the circumstances of any individual. This document has been prepared by Peter Keogh (Authorised Representative No. 253538 of Paragem Pty Ltd AFSL 297276) and is intended to be a general overview of the subject matter. The document is not intended to be comprehensive and should not be relied upon as such. We have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained in this document. No responsibility is accepted by Peter Keogh, Paragem or its officers.