Prospering from adversity

By Ed Morrow

Intl. Assoc. of Registered Financial Consultants

We are still in a financial tsunami and it will not be over soon. In fact, there are more waves coming -- and your only solution is client retention and attraction.

More regulations

In addition to all the recent proposals from FINRA and the SEC, the IRS now wants to get involved by broadening the scope of its control over practitioners. On June 5, IRS Commissioner Doug Shulman announced he intends to propose a comprehensive set of recommendations to ensure "uniform and high ethical standards of conduct for tax preparers" in order to increase taxpayer compliance.

Some of the potential recommendations include a new model for regulation of tax preparers, as well as increased service, outreach, education and training of tax preparers, along with stepped-up enforcement to deter tax preparer misconduct.

Shulman will submit the recommendations to Treasury Secretary Timothy Geithner and President Obama by the end of the year. He claims that, "Tax return preparers help Americans with one of their biggest financial transactions each year. We must ensure that all preparers are ethical, provide good service and are qualified. At the end the day, tax preparers and the associated industry must be part of our overall game plan to strengthen the integrity of the tax system."

Not to be outdone, the new head of the SEC, Mary Schapiro, has proposed changes to the custody rule for federally registered investment advisors that would subject them to a yearly "surprise exam" by an independent accountant if the advisor has asset management fees deducted by a third-party custodian.

Client redistribution

Redistribution means clients leave one financial advisor or vendor and take their business elsewhere. But why is it that an estimated 40 percent of American consumers are likely to make this switch? Lack of attention. Everyone understands the market meltdown -- and no one is happy about it -- but the reason consumers will switch is lack of communication.

Have you touched base with them lately?

Most studies indicate a need for advisors to drastically step up the rate of contact with clients or risk the loss of their business and their future referrals. Van Morrison and Rod Steward made the song "Have I told You Lately?" popular in its second reprise, after Elvis performed it in the early 70s. There's a reason this song was so popular.

Plan to touch base with clients briefly while you arrange for more comprehensive and personal contact. For example, send a mid-year planning memo, or plan to send a financial independence card or letter to all clients on the fourth of July. And, by all means, plan to design and send a Labor Day card in September.

Economic stimulus in China

Last month, at the invitation of the Chinese Institute of Certified Financial Planners, I visited Beijing, Shanghai and the city of Nanning. I saw the Bird's Nest Athletic Stadium in Beijing and went on to the playing field to see an illustration of the flag wavers. In Shanghai, everything was being rebuilt and refurbished for the forthcoming World Expo in 2010. Since I was invited to address an audience of financial advisors, I did my research on the small, rural town of Nanning in the southern province of Guangxi.

The official population in 2006 was 1,200,000 in the city and 3,200,000 in the province -- ranking Nanning 51st in size. But Nanning has been growing. The population is now 6,480,000 in the greater city area, although I suspect that the city proper is only about 4,000,000. Nanning is a regional distribution center on the north bank of the Yong River. And, a new high speed rail, which is almost complete, will soon shorten the connection time between Nanning and Guangzhou (the old city of Canton) from 13 to three hours.

From my hotel room, I could count more than 200 tall building cranes along the landscape -- testimony to the future growth of the city. The streets were wide, bordered by shrubbery and trees, and there are many parks, which justified Nanning's claim to be the "Green city of China."

Concerned about the possibility of an economic slowdown, the Chinese government has decided to take a capitalistic approach -- one somewhat reminiscent of one made by Franklin Roosevelt. The project to build 22 dams north of the giant Three Gorges Dam on the upper Yangtze River (the world's largest dam -- originally proposed by an American) has been accelerated. Rather than start one per year, they are starting eight this year. All other money is being poured into the construction of bridges, dams, canals, highways, schools and public buildings. So when the money is spent, the infrastructure improvements will remain. While this is seemingly "trickle down capitalism," the government, of course, would never use that term.

I'm sorry to relate that the Chinese Army is still in hiding. None could be seen anywhere. No truck convoys, no military jets overhead. Because there are more cars, there are more traffic police -- who appear to be unarmed. Passage in the airports is swift and convenient. Their version of ATA is competent and polite, including temperature checks of all immigrants who might or might not be carrying viruses.

The flight into Beijing was delayed because it left the U.S. late. The 24-member Japanese virus inspection team in Tokyo Narita airport was most meticulous in their haz-mat suits, gloves, goggles, temperature measurement devices and cameras. Medical inquiries and screening onboard the plane took nearly two extra hours.

Upon having arrived four hours late (can you imagine processing through the Beijing Visa office at 3:30 AM -- one that had closed at midnight, no less?), the Chinese kindly reopened the office, took photos, issued the visa, and then got a currency exchange booth to reopen, since payment was required in RMB (People's Money). I was not required to remove my belt, shoes, cell phone or metal cufflinks. The immigration officer smiled, welcomed me to China, and joked, "Please spend lots of money here!"


You cannot change the actions that may be taken by the IRS, SEC, Congress or the President. You cannot change what is being done in other countries. However, the financial tsunami will not wipe you out if you focus on client retention and new client attraction. This means frequent, attractive, informative communications. This evidence of your caring will increase your revenue and referrals. If you have not sent out some type of broad scale massage in the past two weeks, do so now. Not next week -- now!

If you have not sent a mid-year planning and tax memo, then that would be an excellent start. Write it yourself or get it elsewhere. Maybe start at Google by entering "mid-year planning memo." Be sure to use the quotation marks or you will get more than 300,000 responses for all sorts of topics.

Somewhere in your clientele, there is a person just waiting to do more business and one or two who have friends who are disgruntled with their financial planner or advisor. Remember: Your memo will prompt a response.

*For further information, or to contact this author, please leave a comment and your e-mail address in the forum below.