YOUR PRACTICE-How investment advisers can win DIY clients

Fri Aug 22, 2014 8:00am EDT

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(The opinions expressed here are those of the author, a columnist for Reuters.)

By Hilary Johnson

Aug 22 (Reuters) - Aaron Rubin counts many formerly self-directed investors among his clients at Werba Rubin Wealth Management in San Jose.

Usually, Rubin notes, these investors come in when they've made a disastrous investment, or when they have a health scare, and they realize there's no co-pilot aboard.

"They show up after they realize they did damage, or when there's a crisis," Rubin said. "Then they say, 'I just need help.'"

A recent survey from Market Strategies International showed that self-directed investors often need more help than they realize. They tend to trade less frequently, have less money overall. They may often have an inappropriate portfolio mix, the research - admittedly, done by a firm that frequently consults for the advisory industry - showed.

In short, inside every self-directed investor is a client who needs an adviser.

It is not easy to bring on new self-directed clients while they're feeling confident. To win them, advisers say they need to demonstrate value by helping clients focus on the bigger financial picture.

"Self-directed investors have usually been dealing with bits and pieces," Rubin said. "We ask them how they've dealt with other issues, like wills and trusts, and life insurance. We try to bring everything in their financial lives into one cohesive unit."

Once self-directed investors have been won over, they can be some of the best and most loyal clients, said James Gambaccini, managing partner of Acorn Financial Services in Fairfax, Virginia.

"I like the clients who understand what we do, because they've tried it themselves, and they have a greater appreciation," he said. "They can be very sticky."

Gambaccini said he is careful to encourage clients who enjoy trading to continue to be involved in the market, often by setting aside a portion of the portfolio for them to manage solo.

Terry Siman, an adviser with United Capital in Philadelphia, says all his clients are self-directed, since his firm's model encourages each client to be involved in the process. Indeed, clients wanting to hand off all responsibility are often encouraged to look elsewhere.

Siman, like Rubin and Gambaccini, says he finds clients by asking them questions about the bigger financial picture. And, he said, he takes every opportunity to do so.

For example, at a neighborhood barbecue, Siman may ask an acquaintance about college savings for kids who are rapidly getting taller, or about plans to help an aging mother who's using a walker for the first time, he said.

"You have to be bold and ask personal questions, and find out how they connect resources and life events," he said. "Because it's more than individual securities. We're trying to connect the dots. That's where we can make a difference." (Reporting by Linda Stern; Editing by Nick Zieminski)

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