Customer Profiles: Financial Advisor Asset Revesting

Financial Advisor Asset Revesting

Forty-eight-year-old Collin has spent the last twenty-three years as a financial advisor. His wife, Julia, is a retired human resources analyst. Having worked as an advisor through the 2008 recession,the 2020 COVID crash, and 2022 bear market, Collin has several long-term clients whose portfolios have grown significantly since he started working with them. He has also watched his clients go through the pain of seeing paper losses as high as 35 percent as the market bounced around. Some of his clients in 2008 had to delay their retirement by as much as five years, thanks to the substantial market drops.

Financial advisors are plentiful in Collin’s area. He strives to be the best in his field and to have the most well-tended clients. His days are spent servicing existing clients, reaching out to interested prospects, reviewing upcoming ad campaigns, and approving social media posts. He works carefully to ensure he acts within the rigid confines of his broker/dealer’s compliance department. He also must manage feedback from clients and prospects on social media, an increasingly time-consuming and challenging task. He is carefully planning his retirement. In three years, he would like to retire and begin building a new house designed so he and his wife can safely age-in-place.

When portfolios lower in value, however insignificantly, many clients quickly jump ship and hire a different advisor. Worse, they often blame Collin and post criticisms all over social media. As a result, Collin has experienced how quickly word can spread and cause a domino effect on his reputation. After the initial pandemic-driven market volatility, Collin received a stream of complaints about losses in client accounts. He explained that in the wake of the pandemic, the market was still rebalancing itself and that stocks needed to be held until a positive trend returned. Alas, this was not the answer people wanted to hear.

Several of Collin’s clients withdrew their accounts with him and moved on. His earnings were the lowest they’d been in years, and he was concerned he’d have to sell some of his own assets to keep up with the bills. He looked to his broker/dealer for help, but they only suggested patience and the same standard buy-and-hold approach they always did…and that he often did as well. Realizing this, Collin began losing confidence in his ability to perform as an advisor and considered taking an extended vacation from work.

At a crossroads, Collin reached out to an old mentor of his from a different firm to vent and ask for advice. His mentor recommended asset revesting, a category of investing that Collin had not heard of before. He sent Collin several online resources and invited him out to lunch to discuss it further. Asset revesting, his mentor explained, would shield his clients’ portfolios against significant losses because capital is moved out of assets showing signs of trending down and moved into assets beginning to appreciate. If nothing signals an emerging uptrend, capital is moved to cash or cash equivalents to ensure preservation. The mentor ended the meeting by introducing Collin to a newsletter provider that had published client-facing white papers and a book regarding the topic. They also had a proven track record and sent out signals for different asset revesting strategies.

With this fresh perspective in mind, Collin returned to the swing of things at work. First, he used asset revesting for his own portfolio and was very impressed with the results. His next step was to bring it to his existing clients. One by one, he walked them through the asset revesting strategy, and most decided to give it a try with a portion of their account. It did not take long for them to be pleasantly surprised and to instruct Collin to funnel more funds into the strategy.

Loving the energy he felt about his career once more, Collin’s next target audience was new clients. He created an effective marketing campaign that resulted in him taking on several new ones. He started their portfolios off small, following the asset hierarchy, the asset revesting signals, and risk and position management rules. By doing so, he navigated his client’s portfolios through several downward trends. Their assets all grew despite market volatility.

Collin also took the unusual step of contacting his previous clients to let them know to ask their current financial advisor to look into asset revesting. Even though they had jumped ship with him, Collin still wanted every single one of them to be able to watch their accounts grow.

Within a year, word spread, and clients referred friends and family to Collin. They were interested in building their wealth in ways that didn’t involve the diversified buy-and-hold tactic recommended by advisors in large firms. After two years of working extra hours scheduling seminars, attending meetings, writing client reports, marketing, and researching, Collin’s career had hit new highs. His client complaints lessened, and much of his new business was directly from referrals.

Looking back to the days when he had been ready to walk away from his career, Collin was grateful for the sequence of events that led him toward asset revesting. During this tumultuous period, he had learned to question established strategies, to listen and actually hear what his clients were saying, and to find strategies that would serve their end goal in the best possible way. Collin had become the advisor he would direct his loved ones to use.