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What drives clients to work with you is probably not what you think.

About a year ago I was talking with an advisor about 3D’s IncomeConductor strategy. When I asked him what process he used to generate income for his retired clients he said, “I discourage my clients from taking income from their investments”. When I asked him “Why?” he said, “because I would make less in advisory fees. I don’t get paid on income that my clients take”. I’m sure his clients would have been interested to hear that philosophy, but it reminded me of a couple of my favorite clients, Tom and Katie.

Both Tom and Katie were school teachers and had no children. I met them when they were sixty years old and I actually drove to their home for our first meeting. After we exchanged small talk, they said that they would like to retire and wanted to hear my “pitch”. After I finished they gave me some preliminary figures. Over their teaching careers they had accumulated about $600,000 in their qualified plans and had pensions that would replace 60% of their salaries. As is the case with many teachers’ pensions, there were COLAs built into the benefit. Their lifestyle was modest and after a few simple calculations I told them how much income they could safely withdraw from their investments. The combination of their pensions and the investment income was more than adequate to meet their needs. I went into greater detail on how the segmented strategy would work and the process that I used to select and monitor their investments. I told them that I would need to gather more information and would want to present them a written plan.

At the end of the meeting they proceeded to tell me how wonderful their current advisor was and how he had worked with them to accumulate their retirement nest egg. They said they wanted to think about it and they would get back to me. As I left, I had that feeling we all get when someone says “thank you and we’ll get back to you”. I figured that I would never hear from them again because they would share the information I gave them with their current advisor and he would convince them that he could do the same thing. So, I mentally wrote them off and went home.

About a week later I had a message at my office to call Tom and Katie. When I called they told me that they had decided to work with me. I was shocked. I really needed to know how they arrived at that decision, so I asked them “why”. They said that I encouraged them to retire and start enjoying the income their investments were capable of producing, while their other advisor did not want them to retire or take any income from their investments. In essence they said “you gave us permission to spend our money. Our other advisor would not”.

Tom and Katie retired two months later and turned their entire account over to me to implement the retirement income plan that I took back to them. Six years later Tom developed cancer and passed away. Twenty years later, Katie is still a client and to this day thanks me for giving them “permission” to retire and take income from their investments. She feels strongly that if they had stayed with the other advisor Tom would have died while still working and they would never have had the wonderful trips they enjoyed during their years of retirement.

No matter how sophisticated our procedures and technologies are, many times our clients decide to work with us for reasons that have nothing to do with how we work. I knew on my first meeting with Tom and Katie how much they wanted to begin their retirement dreams and all that was necessary was for me to give them “permission” by assuring them that they had adequate assets.