‘Reformed Broker’ Speaks Out; Firms Hunt New Advisors: March Research—Slideshow

Advising the Entrepreneur

Entrepreneurs can be a tricky bunch to have as clients. For one thing, they tend to have a distinctive view of risk, one that may be more suitable for their business ventures than for their portfolios. For another, being do-it-yourself types, they may only seek financial counsel after a problem has already become pressing.

Ellen Uzelac taps the experience of advisors focused on entrepreneurial clients, as well as entrepreneurs themselves, to seek out the practices that work best in dealing with this market segment. One tip: give preference to on-site meetings that are short and to the point. Busy business owners have little patience for "death by a thousand PowerPoints," notes former financial advisor Herb Sih, who heads an early business incubator in Kansas City, Mo.

Another tip: create a lasting engagement. "Many entrepreneurs are looking for someone who can be a sounding board — who can ask the right questions, almost like a personal board member," says Ray Padrón, president of Brightworth, an advisory firm in Atlanta. "You become their trusted counselor."

Bullet Proofing

Sales Seminar columnist Bill Good offers suggestions on protecting an advisory practice against litigation by disgruntled clients.

The first line of defense, Good notes, is ethical behavior, so as to avoid giving clients any legitimate reasons to sue. "But sadly, today, that's not enough," he writes. "You can do the right thing and still lose everything."

The second line of defense is being able to prove you did the right thing. Thus, Good spells out the requirements of careful document management, to ensure that communications are recorded carefully and available for ready retrieval.

He also discusses how a lack of communication — such as a client not responding to repeated attempts at contact — must be documented, in case the advisor later receives a letter from the client's lawyer stating that "failure to communicate changed risk factors in that investment has caused our client a substantial loss." Writes Good: "Without documentation that you made every reasonable effort to advise your client of the issue, you are heading down a two-year path to substantial legal bills or, worse, an abrupt change in career path."

Magnetic Personality

Profiled in the March issue is Peter Cocolaras, a consulting group senior vice president in Morgan Stanley Smith Barney's midtown Park Avenue office in New York City. He manages about $65 million in assets and focuses his practice on a compact 100 households, enabling him to keep business personal.

 "I very much bond with my clients. When you've forged a special type of relationship, 80% of the conversation has nothing to do with stocks and bonds," says Cocolaras. "It has everything to do with what's happening in each other's lives."

Gregarious Cocolaras concentrates on two niches: small business owners and retirees at least 65 years of age. He speaks with clients frequently to be sure he's on top of every significant event in their lives. "There are trigger moments — a marriage, arrival of a child, retirement. It's imperative for advisors to recognize these and plan [for clients] accordingly," he says. He also developed some notable expertise at time management during five years in which he owned a Greek restaurant while working as a financial advisor.

 To access the March issue, click here.