Risk vs. safety: What are you and your clients wired for?

By Vanessa De La Rosa


How are successful advisors reaching their clients? Some advisors put on a presentation; some talk in length about the benefits of the product. Others — like Tony Walker, CLU of Walker Financial in Bowling Green, Ky. — don’t follow the herd, believe that the majority of the target market is comprised of savers, not investors, and acquire clients through a process rather than “selling.”

Walker, who does over $30 million in production a year and was a Senior Market Advisor 2013 Advisor of the Year Finalist, believes advisors can reach higher levels of success without feeling like The Wolf on Wall Street.

Are your clients wired for risk or safety?

Walker started his career in P&C insurance before getting into securities and money management. He has sold almost every financial product out there, but the events of 9/11 inspired him to reevaluate his role as a money manager and how it held up to his personal convictions. Walker realized that the markets were closed and that, when they opened back up, his clients’ accounts would take a serious tumble. And that they did.

The true volatility of the market, coupled with the profound responsibility of protecting his clients’ money, hadn’t dawned on Walker until that tragic morning in 2001. And to add insult to injury, Walker was “still making money on their money — even as we watched it take a nose dive.” He couldn’t stomach the idea. “That’s when I decided to find products that could guarantee a lifetime income,” he says, “so I decided to get out of that business. I closed my money management practice and decided that I was going to work on commissions."

Walker came to the conclusion that he was wired for safety, not risk — and that most clients are, too. He started honing in on life insurance and indexed annuities, which he felt were a beneficial product to this group of people.

“Back in the 1930s and 1940s, the majority of people felt that the stock market was a gamble. Have people really changed? My thoughts are no, they haven’t. They want protection; they want guarantees. So why in the world are we putting them in products — mainly mutual funds — that don’t provide that? It’s not that I’m against mutual funds, but I’m against putting all of my clients' money in stocks, when they have no business being there.”

Walker’s grandfather, whose saver mentality was a principal influence on Walker’s financial perspective, was worry-free and never owned a stock or mutual fund — not even a bond — in his entire life. He relied on his employer pension, which was, in effect, an annuity. He never had to worry about the market. He felt safe and was provided with a low-cost way to receive guaranteed lifetime income. That’s why Walker decided to shift his focus to fixed annuities — it’s a product his grandfather would have loved.

The problem, though, according to Walker, is that Wall Street is marketing to hard-working Americans to “hang in there” with the market.
Are you following the herd?

If the industry is encouraging savers to buy into the market, then it seems many financial advisors are simply following the herd.

“Many advisors genuinely think that the only way a person can be worry-free is by saying, ‘You have to put your money with me; you’ve got to hang in there, pay these fees, and hope the market does well," Walker says. "That, to me, doesn't fit the personality of a lot of hardworking Americans.”

See also: The dangers of herd mentality

What is your client’s financial personality?

One of the questions Walker asks his clients and prospects is, “If we could accomplish all of your goals and objectives by investing your money into products that guarantee your principal without taking unnecessary risk, how much of your money would you want to place in such accounts?” He finds that the answer reveals a lot about that person’s financial personality.

By working with saver personalities, Walker is able to help clients get what they want at the least amount of cost and the least amount of risk. But no matter the client’s tendencies, communicating on their level and truly understanding their particular financial personality is key.

“After learning more about the person’s financial personality and vision for the future, one’s true wants, desires and attitudes toward money can be better positioned with products and strategies most suited to their unique makeup.” If this is all done correctly, he says, the clients tend to sell themselves.