Financial adviser William Rutherford is reeling from the market's volatility — but it has nothing to do with poor portfolio performance.
The Portland, Ore., adviser, vacationing outside Toronto, is being hounded by a client.
“He has truly ruined this week,” Mr. Rutherford said. “The market volatility of the past few weeks stirred him up and he's going berserk, sending me hot, angry notes.”
Mr. Rutherford isn't alone. While it's always difficult for a financial professional to leave the office behind, the dramatic market swings during the vacation-heavy month of August are fouling up the plans of many advisers.
Regardless of how well they prepare clients for market volatility, advisers always will have some investors who call their office, alarmed at steep price movements, said David Tittsworth, executive director of the Investment Adviser Association Inc.
“There will be a few clients who always call if the market has a significant drop,” he said. “It's like clockwork. They'll be on the phone, asking, "What should we do?'”
During the week of Aug. 7, when the Dow Jones Industrial Average made a number of 400-point swings, many vacationing advisers said their trips “didn't turn out to be just sitting around drinking margaritas,” Mr. Tittsworth said.
In most cases, advisers went on the offensive, using laptop computers and mobile phones to stay on top of the news and to communicate with clients and personnel at their offices.
“It's 100 times easier to stay connected than it used to be,” Mr. Tittsworth said.
Robert Kargenian was one of those advisers taking time off to spend time with his wife in sunny Santa Barbara, Calif., when the Dow tanked 600 points Aug. 8.
“My wife will tell you that I ruined the day because of the way I responded,” said Mr. Kargenian, the founder of TABR Capital Management LLC. He said he was disappointed that the firm wasn't as defensively positioned as he would have liked.
For much of that day, Mr. Kargenian was on the phone with his partner, Steven Medland, working on a note to clients about the market turmoil and figuring out what adjustments to make in portfolios.
“My wife wouldn't want to hear it, but sometimes you just have to drop everything and deal with it,” Mr. Kargenian said.
The 600-point drop in the Dow “really put a damper on things for him,” Mr. Medland said. “But we felt it was necessary to show clients that we were on top of it and to let them know where their portfolios were.”
Edward Kohlhepp Sr., president of Kohlhepp Investment Advisors Ltd., said that he canceled a golf date with friends that week “because I thought I should be in the office.”
He also was sticking close to the office last week because the only other adviser at his firm, his son, Edward Kohlhepp Jr., was away.
“We are making sure that one of us is here at all times to handle client calls,” he said.
The firm also has stepped up communications with clients, and they are attending a record number of webinars and conference calls with economists and mutual fund companies offering their insight into the market turmoil.
TAKING OFF
Of course, some advisers aren't letting the market jitters keep them behind their desks or tied to a phone.
Benjamin Tobias, president of Tobias Financial Advisors, planned to be out of the office a couple days this week. In October 2008, when the markets were crashing, he canceled a planned trip to the Grand Canyon with his wife to make sure he was available to clients.
“Then I felt I had to be here for clients if they had concerns,” Mr. Tobias said. “This is absolutely not the same as that time period,” he said. “This is a regular bear market.”
If he thought he was going to be bombarded with client calls or that the market would perform dramatically, he would stay home rather than try to work remotely.
Meanwhile, Mr. Rutherford's out-of-control client, who is enraged about a $2 million account owned by his 80-year-old mother, has been invested with Rutherford Investment Management LLC for about six months.
His complaints began after the adviser liquidated some investments to raise cash. The client questioned the strategy and directed him to “only sell on up days and buy on down days,” which Mr. Rutherford pointed out is hard to do unless you can foretell the future.
The client fired his last manager and Mr. Rutherford — who has spent much of his precious family time this week talking to his client and making changes to appease him — appears ready to jettison the account.
In the most recent communication with the client, Mr. Rutherford said, “You've changed your investment goals from long-term to day-to-day. I recommend you hire a trader or manage the account yourself.”
lskinner@investmentnews.com
