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Using Investment Clubs to Win New Clients

By Michael McDaniel, Chief Investment Officer

Many advisors get an invitation to an investment club, and turn them down. “Why would I go share my knowledge with a bunch of guys who think they are fine managing their own money? Forget this.”

Don’t turn down that next invitation. Let’s leverage it to win a bunch of new clients.

One of my clients belonged to such a club, and she asked me to “look into a stock” that her club was thinking about adding to their portfolio. I asked a few questions and discovered that her club included about 40 high net worth households who enjoyed getting together at a local restaurant to discuss wine and stocks. (Who doesn’t like to mix dividends with a dry Riesling?)

I offered to provide a fundamental analysis of the stock in question, a risk review of the club’s existing portfolio, a risk tolerance analysis for each club member, and a demonstration of the risk questionnaire for the entire group at their next meeting.

Taking the podium a few weeks later, I felt fully armed. Running through the risk questionnaire was a hoot. Presenting the results was exciting and generated a lot of discussion. And the discussion got even more animated when we looked at the six month Historical Range™ for the club’s portfolio.

Suffice it to say, club members got the distinct impression that I was more than just a guy hawking mutual funds who kept 100 bps of their money. For the first time, they saw that their advisor could offer tremendous value as a risk manager. My signup sheet was full of members who wanted to give their personal portfolio a risk review.

I went to those meetings with ACAT forms in hand…and I wasn’t disappointed.

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