Meeting with XC (Part 2)

I continue today with summarized notes from my meeting with financial adviser XC on August 22, 2017.

XC managed assets for an insurance company that grew to over $200M AUM through some fortuitous M/A activity. His first personal clients were co-workers who liked what he did with corporate funds and asked him to manage their money. This was $25M in a single-shot that he credits more to luck than he does to investing skill.

XC introduced me to E/O (errors and omissions) insurance. One example of an E/O situation is where the IA goes to buy 25,000 stock shares of stock for a client and accidentally enters the wrong ticker symbol. The IA would be liable for any losses and E/O insurance would protect the firm. I did not get the chance to ask about cost.

He talked a lot about some of the free tools located on his company’s website, which allow clients to make future growth projections and to see how their overall financial situation is progressing. He suggested I check out these tools and encouraged entry of some personal information to see what it says about me.

After discussing these tools for a few minutes I pointed out that trading, not financial planning, is what I want to do. Even so, he argued, I should not aim to be a trader who has no personal relationship with clients. Talking about their total financial plan and where I fit in is a way to avoid such anonymity that could otherwise leave clients’ future satisfaction solely dependent on my trading performance [“everyone knows” no strategy works well in all markets]. XC said client turnover is very costly in this industry because expenses to the firm are front-loaded.

Getting back to the website, XC said they post a blog every 2-3 weeks of 1,000 words or less. They rarely post market commentary because he doesn’t want content to be time-limited. He said the blog is a really good way to get an idea of how/what someone thinks. The posting date (although it may be changed or the post deleted) adds context about current events surrounding a stated viewpoint.

He attributes a lot of his success to networking. Some of his jobs arose because of people he knew as far back as college.

XC talked about a gynecologist he knew who later went into finance. He was interested in trading but didn’t want to be the one doing the trading. Instead he did extensive research on a broad spectrum of wealth managers and became an encyclopedia of available offerings in the industry. Combining this with his knowledge of physicians’ backgrounds and needs, he was able to talk to clients and make (give) relevant recommendations (advice).

I will conclude next time.