When prospects ask him for existing clients’ contact information to get opinions about his service, Brian Werdesheim, managing director of the Summa Group at Oppenheimer & Co. in Los Angeles, initially attempts to slam the brakes on the conversation.
“If and when you get to the point that you are fairly certain you are going to engage us,” Werdesheim, whose team has $1.6 billion in assets under management for 130 families, tells prospects, he will give out names. But “if you’re not serious, don’t waste our time and don’t waste our clients’ time,” he says — adding that he generally uses politer, more professional language.
The situation doesn’t come up terribly often, because most of his prospects are referred by accountants or lawyers, and they rarely feel compelled to conduct additional due diligence. But when they do ask, Werdesheim has developed a system for giving out names and numbers. He keeps a shortlist of clients who have given permission for him or his colleagues to use them as references. Based on age and other demographics, Werdesheim matches the prospect with an existing client from the list.
Periodically, Werdesheim says, he updates that shortlist, occasionally removing a name so that no single client will feel overused. “You cannot take advantage of someone; you have to use discretion,” he says. Others may get crossed off the list even if they think highly of Werdesheim, if it turns out they’re not terribly good at articulating what they like about him. “We’ve had situations where the prospective client comes back and tells us, ‘That person was not very helpful,’ and we say, ‘Well, here a couple more names.’ It’s not a perfect process.”
Prospects sometimes take their research even further, asking to see existing clients’ portfolios (with names and other identification redacted, of course). Werdesheim does all he can to discourage them. For starters, he tells the prospect, sample portfolios won’t necessarily yield a fair evaluation of his firm. “Financial advisors are notorious for showing data that looks great — but only if you drop off a quarter,” he points out. Second, since his financial planning is “client-centric,” one client’s portfolio won’t give much of a clue about what he would recommend for another. Still, on a very few occasions, Werdesheim has agreed to show prospects “very specific information” and “very specific data points” about an existing client’s portfolio, he says.
Stacy Francis of Francis Financial in New York, whose firm manages about $100 million for 100 households, also takes what she calls a very selective approach to giving out client names. She complies with such requests from prospects only if they express a serious intention to hire her firm, noting that the whole recommendation process takes “a lot of work.” She checks with existing clients each time before giving anyone their names, and if they agree, she asks them to specify a preferred method of contact. She also tries to match prospects and clients in terms of their “personalities and situations,” she says.
With some prospects, Francis hasn’t been willing to go through those hoops. “We just say, ‘We don’t give out names out of respect for our clients’ privacy, and if you become our client, we will respect your privacy, too,’” Francis says. And she maintains one hard-and-fast rule: She will never, ever give out celebrity clients’ information. With her practice based in Lower Manhattan, Francis says she has a buzzworthy name or two on her client roster, but she declines to reveal them to prospects — or to FA-IQ.
Some advisors are happy to put prospects in touch with current clients. Natalie Briaud-Pine, a partner at Briaud Financial Advisors in College Station, Texas, which has $465 million in assets under management and about 240 clients, does so willingly — in fact, she’ll suggest it even before someone asks. “We sometimes offer because we can tell that the person has some questions,” she says. “It’s easy for us to say how we think or feel, but it’s sometimes much better for them to hear from a client.”
Briaud-Pine offers only the names of clients who have volunteered to talk about her practice, she says. But she calls ahead to ask permission each time before giving out a name. And she matches prospects with clients in terms of not just demographics but also of investment challenges. “We do try to find a client who either has worked through or is working through the same issues,” Briaud-Pine says.