Financial Literacy

Clients That are as Financially Literate as the advisor

Make the Best Relationships.

Determining a client’s true risk tolerance is a tricky endeavor requiring a mastery of human psychology, perhaps a high level of clairvoyance and the artful ability to politely, yet firmly tell a client that what he or she says when markets are stable doesn’t match up with the emotional behavior he or she displays when volatility takes over. A client may say he or she can handle a 15 to 20 percent loss, but translate that statistic into real dollars and that projected tolerance level often ends up in the round recycling bin. A prudent financial advisor finds a way not only to broach, but also to clearly define, this topic in terms of retirement planning goals long before the market gets choppy.

“The first step toward retirement planning is to make sure it is defined properly for both the client and the advisor,” Terry Kingsbery says. “Make sure the goals are realistic relative to the standard of living expectations. Second, create an investment management system that does a great job of ‘avoiding the worst days’ in the market, like 2008, so the client’s asset base continues to stay ahead of taxes and inflation.”

This requires providing more than just investment advice; it also includes an advisor’s commitment to client financial literacy, according to Kingsbery.
He knows that other advisors like to create “dependent” clients whose financial literacy lags behind theirs.

Not Kingsbery.

He considers the high level of financial literacy his clients attain to be his greatest accomplishment, and he takes an intentional approach toward educating his clients regarding the workings of his firm’s proprietary investment management system.

“I have found that the more educated my client is, the better our relationship is,” Kingsbery asserts.

One of the features of the proprietary system at his firm, Investment Counseling Services, Inc. based in Norman, Oklahoma, found its beginnings in Kingsbery’s desire to get the clients more involved in the actual investment process. He doesn’t want to “tell” clients how to invest or what might happen during downturns and upswings—he wants to demonstrate it to them firsthand. He believes this type of experience makes the financial lesson more real. That is why the firm’s new software allows clients to run simulations based on their choice of how much of the S&P’s volatility they want to accept for their portfolio.

Kingsbery believes the new software will go a long way toward his firm’s continued compliance with ever-changing fiduciary regulations being enacted via the federal Dept. Of Labor. ICS has been a fiduciary firm since 2012 because as Kingsbery said, “We believe it is the right thing to do.”

“We illustrate to them how assuming 100 percent of the S&P’s volatility may create more volatility than they are willing to accept relative to the timing of their retirement goals,” Kingsbery explains.

Learn more about Terry Kingsbery and Investment Counseling Services, Inc. online at www.icsadvisors.com

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