What makes the perfect Redfish Capital client? Tuesday January 12, 2025 Around the first of the year every year, I tend to do a deep dive on the business and investigate the kind of details where we can improve as a team. This year was a little different. I wanted to come up with an idea of what makes the most successful client for Redfish Capital. Decades ago, when working for a big Wall Street firm this was a simple answer given to us by management. Whoever had the most money wins. By and large this was a true statement as the business was quite different back then. It was commission based so you can see why whatever client had the most was the most important. But then the game changed for many of us. When I left that racket and became an investment advisor, I took on a fiduciary responsibility to always place the client first. No matter how many dollars the client may have, their individual needs always come first. All clients are charged an annual fee, and no commissions would ever be charged. It became an equal playing field for the client. So now how do I rank the client base if it is not based on simply the size of the client’s account? Being that I am now a fiduciary as mentioned above, suddenly, I have a deeper and legal responsibility for making sure that the client is being taken care of. I realized that my list now consists of how I feel about the safety and security of the client’s overall financial objectives, goals, and progress. So how do I quantify this? I took a week and did a deep dive into every client we have with Redfish Capital. It started with me looking at the financial plans set up by our CFP Robert Simpton. The plan lists out what every client has set for goals and where they want to go from a financial perspective. So, if the plan states that they need to save $X amount in their 401K, savings, or college savings accounts we need to verify that they indeed are doing this. From there, I can also check the plan to see what rate of return, with the deposits they are making, they need to achieve to make goal. Honestly, quantifying this is not too terribly difficult as Robert’s software simply tells me if the client is on goal or not. Thank goodness, this is something we check quarterly, so this is easy. Now I needed to step back and create problems. I have been reminded by my dad that I have been creating problems since I was born so I guess this comes naturally. What kind of problems can I create now to run scenarios for each client? The biggest issue that I have witnessed that client’s run across, from a financial perspective, really do not have much to do with investments or return on investments. It seems to simply come from life events like death, illness, accidents, loss of employment, divorce, you get the picture. So how I do factor this in my equation? I decided to create a weighted spreadsheet based on the following criteria: Assets: Are they properly allocated between stocks, bonds, real estate, private equity, speculative investments, and other fixed income investments. Accounting: Does the client work with a CPA and have a plan to handle taxes in the most efficient manner? Do the investments they have properly reflect this as well? Should they stop contributing to tax deferred accounts and contribute more to individual or joint accounts? Legal: Does the client have the proper wills and or trusts set up in place for themselves as well as future generations? Do I have a copy of the potential power of attorney should something happen to the client rendering them incapable of handling their financial affairs even for a brief period? Do I know who to contact? Will the family argue? Is there going to be one person in charge? Do they know they will be in charge? If they own a business do they have succession plan documents and are they in place? Insurance: Is the client properly covered from a property and casualty perspective (home, auto, general liability)? What about the amount of life insurance? Is it the right kind of life policy? Is it the right amount? What if they develop dementia? Do they have Long Term Care? Disability? If they own a business, do they have a Key Man? I took all the above and created a weighted score card for every client we have. Now I can look at the entire client list from a new perspective that has nothing to do with simply the amount of funds they have with us. The new weighted score tells me which clients I can feel safely about from a more comprehensive viewpoint. Once I completed the spreadsheet and ranked them based on my new feel chart, some of the clients I expected to see at the top were there but I was genuinely surprised by others. Regardless of the amount of money, the clients who are properly planned for, with scores in each of the categories, ranked much higher on the feel scale. It also pointed out where we need to do some work for others this year. Again, surprises showed up here as well. So now going into 2025 at full steam, we at Redfish Capital have a new agenda. Increase the feel scale. Simply put, make sure all Redfish clients are covered should any life events, mostly unplanned for, take place. My dad and I used to use a phrase quite often that we called the 5 P’s. Proper Preparation Prevents Poor Performance. Maybe I need to change the name of the Feel Scale to that...the P Scale.
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