Helping clients take control of their financial future

Jodie Borlaug • Rochester, NY
Financial Freedom Group • SagePoint Financial, Inc.
Read full biography below

Proactive Advisor Magazine: Jodie, what are the important qualitative aspects of your work with clients?

I am a people person, and I think that has been a tremendous asset in my career. I am sincerely interested in understanding the opportunities and challenges people face in their lives. I work extraordinarily hard to help them make the changes that will help better secure their financial futures.

My mother was an educator, and I think that has had a profound influence on how I approach working with clients. Education is a major part of what I do in both prospecting for new clients and the process I use for current clients. I am also an optimistic and spiritual person, and the concept of reaching out and helping people is second nature to me.

Working through and implementing a comprehensive financial plan can be a challenging process, but my focus on building relationships and ability to relate well to people from all walks of life has been a positive for my practice. I am energetic, persistent, and client-driven, and people appreciate that in working with me.

Talk about the types of clients you work with and how they are introduced to your practice.

I primarily work with clients who are 50 to 70 years old. That is the age range when people are starting to think seriously about their retirement years or are already in retirement. They have many questions about their financial future, from how to develop an income stream for retirement to Social Security claiming. They are also concerned about making sure they have the appropriate health, life, disability and long-term-care coverages. Some people are more focused on legacy planning or assisting their children or grandchildren with educational funding. I can offer a holistic planning process that can address all of these needs, as well as investment planning.

“I emphasize to clients that their investment plan and broad portfolio strategy are constructed for the long term.”

I am in a somewhat unique situation working at a firm where the other advisors will ultimately transition their clients over to me. The process of being introduced to those clients and learning about their needs is a priority that will occupy me for some time. I also encourage my own clients to recommend friends or associates who they think will benefit from my services. That provides another source for organic growth of my practice.

In addition, I continue to pursue a networking opportunity that has been successful over several years. Our area has popular health fairs, home-improvement shows, and other major consumer events. Some of these shows can draw thousands of attendees and are held in the convention center. I set up a booth at these events and offer some sort of incentive for people to stop by and chat. I usually have an attractive giveaway, like wine or chocolate, and I run a raffle for a higher-value gift. I am able to develop a number of new contacts in this way and usually can schedule a number of introductory consultations.

As you start working with new clients, what is your process?

I use a consultative approach. This starts with getting to know people on a personal level. What are the financial issues that they consider most important at this time? What is their employment and family situation? Are there any current health issues or unusual family circumstances? What are their hopes and dreams for their future?

As we move beyond getting to know each other, we get into a comprehensive discovery phase and analysis of their household budgeting, their assets and liabilities, and the various financial and insurance products they currently hold. I will very often present an analysis or illustration of their current investment portfolio, analyzing its strengths and weaknesses. Are there any red flags? Are there different and advantageous ways to potentially approach their investment strategy?

It is unfortunate but true that many people have very little understanding of what investments they are currently holding, the true nature of their insurance coverages and what may be adequate, and how they are going to fund a comfortable retirement. That is exactly why I feel a holistic planning approach serves clients and their families well.

After completing the full discovery phase, we work together on establishing realistic and achievable financial-planning objectives and then build out recommendations for three key areas: retirement planning, insurance protection, and growth and preservation of assets. Beyond those core elements, every client is different and our discussions may lead to other planning objectives that we need to pursue. Central to my process is the fact that I want clients to become educated about their options in each area and to walk through the decision-making process with me. I do not think it is appropriate to make discretionary decisions on behalf of clients. They should be fully informed as to the pros and cons of various alternatives, and I will help them take control of their financial decisions.

See Related Article: Weathering an investment perfect storm: How active strategies manage risk

Talk about the growth and preservation of assets. Where does active investment management fit into your approach?

Overall, I think too many clients that I meet for the first time are putting their hard-earned savings and assets at too much risk through unmanaged investment products. It all depends on the client and their specific objectives and risk profile, but I do think a managed and more active investment approach can serve most clients well. Many different types of risk profiles can be suitably accommodated through managed accounts.

I try to put this in the proper context for clients, and we explore many different investment alternatives together. The investment plan is a direct outgrowth of the financial plan, meeting their specific financial objectives and using a risk-return profile that is consistent with their time frames and appropriate risk exposure.

There is, though, a more human side to investments. Money itself is not the important thing; it is what it can do for you and your family in terms of helping you achieve real things in your life. Would you like to retire early, buy a new home, pay for college education, or become a more generous contributor to your church or a charity? I firmly believe that investments are just one element of the grander plan for your life.

But to get to the place where you can achieve those goals, a sound investment plan is very important. Client portfolios need to focus on wealth preservation, risk management, diversification, and controlled growth. Clients do not, in my opinion, need to expose their assets to huge market-driven downturns and drawdowns.

My focus is on the planning process and relationship management, so I use third-party money management for most of my clients. They are the experts in this area and have staff specifically devoted to managing client investments. These managers almost universally emphasize actively managed investment strategies that focus first and foremost on risk. Their strategies may not see all of the upside in the market, but they are constructed to avoid catastrophic downside. They use quantitative, rules-based strategies. Their returns, by and large, can be very competitive throughout market cycles, while providing that key element of downside protection. As I explain this to clients, they come to see the merits of such an approach.

What are the most important attributes you look for in a third-party investment manager?

There are several. Our broker-dealer first conducts a thorough vetting process so we know we are selecting from a list of reputable and solid firms. I then interview managers myself or with other advisors in our office. I am looking for a consistent and time-proven track record for a money manager’s strategies. I want representatives who are fully knowledgeable about their firm’s strategies and who are service-oriented.

In terms of strategies, I prefer a firm that has actively managed strategies that offer diversification, rebalancing, and rules-based portfolio decisions. These strategies can move among asset classes and sectors, and can adopt a defensive posture if market or sector indicators are providing warning signs. Personally, I am very interested in exploring alternative strategies if they make sense for a specific client. But, in general, I am looking for investment approaches that deliver solid returns over time with risk management built into the strategies. For some of our retirement clients, managed bond strategies might make more sense than equity or blended strategies. So, it all depends on what might be most suitable for a specific client’s objectives.

The overriding thought I try to communicate to clients is that we are living in an investment world of some uncertainty. We have seen huge market losses twice already in this century. An investment approach that is designed to manage volatility and can play defense makes sense in this environment.

This year has been challenging on returns for many active strategies, given the up-and-down nature of the market and some periods of volatility. I emphasize to clients, however, that their investment plan and broad portfolio strategy are constructed for the long term. We can make adjustments to specific strategies along the way. But the big themes of risk management and diversification should always be consistent elements of their investment plans. This makes perfect sense to virtually all of my clients.