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 probability 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.