"You're Welcome." Little Words Can Make a Big Difference to Your Clients

"You're Welcome." Little Words Can Make a Big Difference to Your Clients

“You’re welcome.”  It’s a phrase that every one of us learned to say when we were young.


Not just to be polite, but to express our willingness to give something—our time, money, or thought— to someone else. But in today’s increasingly casual world, the words “you’re welcome” seem to be falling by the wayside. I’m on a personal mission to bring them back.

Say thank you to a restaurant server, and many times, the reply you’ll get is a careless, “No problem.” No problem? I hope it’s not a problem for me to pay to for my burger and beer.  And by the way, as the customer, isn’t is it my call as to whether there is a problem or not? Sheesh. Say thank you to anyone—from a cashier to a banker to a close friend—and an off-handed “sure” is the likely response. The unrequited thank you is just as prevalent on radio and television: the host thanks the guest for coming on to the show, and the response is not “you’re welcome,” but “Thank YOU!” There are now billions of thank you’s out there waiting for a you’re welcome.  They are figuratively starting to pile up on our streets and in our communities.  Like sentences without periods, boomerangs waiting to return the unfulfilled thank you is more than an unfinished social nicety, it can be a missed opportunity. Now is the time to make a change.

As an advisor, your client relationships drive your business. If you’re guilty as charged of taking your clients’ thank yous for granted, here’s why you need to change your ways and your words:

Talking about money makes your clients vulnerable.


Amy Florian, the author of No Longer Awkward: Communicating with Clients Through the Toughest Times of Life, gets it. Whether your clients are coming to you in times of crisis like a divorce, death of a spouse, or financial dilemma (which Florian covers in detail), or times of opportunity like a marriage, career promotion, or inheritance, many conversations about money are charged with emotion. To help advisors avoid the trap of using language that unintentionally alienates distressed clients, she offers specific suggestions for how to respond appropriately to clients. “You’re welcome” is just the beginning when your client is in crisis, but it’s an awfully good place to start. 

Your words have the power to strengthen your client relationships. 


I’m no psychologist, but I know the impact that words have on my own relationships with people. If I can tell someone is taking in what I’ve said and responding with a thoughtful reply, it tells me not only that they value what I have to say, but also that they know I value what they think. By choosing your response and your words carefully, you are telling your clients that you’re really listening. Assuring them that you care about what they think and what they feel is the strongest relationship builder there is.

Careless language can be misinterpreted as careless business.


I’m not suggesting that every word you say should carry the weight of the world, or that you only use highly proper language when speaking with clients. Every client is different, and it’s important to adapt to your audience. But there’s a big difference between being welcoming and friendly, and being so casual that you appear careless. An offhand comment or careless response to a question can be translated into “You don’t take me seriously.” In many cases, your clients are entrusting you with their life savings. That’s business that should never be treated lightly. 

It may sound petty, and I might sound like an old guy ranting on the demise of the English language, but details matter. Words matter. And as an advisor, paying attention to the words you speak to your clients is a critical part of your communication. Saying “You’re welcome” is another way to say, “I hear that you appreciate what I did to help.” That’s something that can be important to say, even if the words sound automatic. Even better, it opens the door for you to continue to help—and that’s what being a trusted advisor is all about.

Let’s face it: it’s hard for people to talk about money. As an advisor, it’s your job to try to make the conversation as easy as possible and to be sure your clients feel that their fears, joys, and expectations are being heard. When you’re able to help, whether that’s with a kind word or the financial guidance they need to take the next step, their “thank you” means a lot. Treat it with the respect it deserves, and fill your “You’re welcome” with the same amount of care. All those forgotten thank you’s that are piling up around us will someday thank you in the end.

Bill Acheson
Investing in Life
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Bill Acheson is Chief Financial Officer of GWG Holdings, Inc. Bill is ideally suited to inform financial professionals and investors about specialty finance, alternative inves ... Click for full bio

Building a Better Index With Strategic Beta

Building a Better Index With Strategic Beta

Written by: Yazann Romahi, Chief Investment Officer of Quantitative Beta Strategies and Lead Portfolio Manager of JPMorgan Diversified Return International Equity ETF at J.P. Morgan Asset Management

With the global economy warming up, but political uncertainty remaining a constant, it’s more important than ever for investors to position their global portfolios to navigate long-term market volatility. That’s where the power of diversification comes in, says Yazann Romahi, Chief Investment Officer of Quantitative Beta Strategies at J.P. Morgan Asset Management and Lead Portfolio Manager of JPMorgan Diversified Return International Equity ETF (JPIN).

Not all diversified portfolios are alike  


In their search for diversification, many investors turn to passive index ETFs, which track a market cap-weighted index. But these funds aren’t always the most effective way to steer a steady course through volatile markets—and there are two key reasons why.

First, traditional market cap-weighted indices are actually less diversified than investors may think. For example, in the S&P 500, the top 10% of stocks account for half the volatility of the index. Within sectors, while you might assume that sector risk is distributed across the ten major sectors fairly evenly, it is a surprise to many that at any point in time, one sector can be as high as 50% of the risk.

Second, cap-weighted indices come with some inherent weaknesses, including exposure to unrewarded risk concentrations and overvalued securities. So, while these indices provide investors with exposure to the equity risk premium and long-term capital growth, as is the case with any other investment, investors can also experience painful downturns, which increase volatility and reduce long-term performance. For investors seeking equity exposure with broader diversification—and potentially lower volatility—strategic beta indices may be better positioned to deliver the goods.

How do we define strategic beta?


Strategic beta refers to a growing group of indices and the investment products that track them. Most of these indices ultimately aim to enhance returns or reduce risk relative to a traditional market cap-weighted benchmark.

Building on decades of proven research and insights, J.P. Morgan’s strategic beta ETFs track diversified factor indices designed to capture most of the market upside, while providing less volatility in down markets compared to a market cap-weighted index. Rather than constructing an index based on market capitalization—with the largest regions, sectors and companies representing the largest portion of the index—our strategic beta indices aim to allocate based on maximizing diversification along every dimension—sectors, regions and factors. The index therefore seeks to improve risk-adjusted returns by tackling the overexposure to risk concentrations and overvalued securities that come as part of the package with traditional passive index investing.

So, how do you build a better index?


As one of just a few ETF providers that combine alternatively-weighted and factor-oriented indices, our disciplined index methodology is designed to target better risk-adjusted returns through a two-step process.

First, we seek to maximize diversification across the risk dimension. This essentially means that we look to ensure risk is more evenly spread across regions and sectors, which balances the index’s inherent concentrations. As uncontrolled risk concentrations are unlikely to be rewarded over the longer term, we believe investors should strive for maximum diversification when constructing a core equity exposure.

Second, we seek to maximize diversification across the return dimension. Research shows that there are a number of sources of equity returns beyond growth itself. These include risk exposures such as value, size, momentum and quality (or low volatility). When creating a diversified factor index in partnership with FTSE Russell, we seek to build up the constituents with exposure to these factors. We therefore select securities through a bottom-up stock filter, scoring each company based on a combination of these return factors to determine whether it is included in the index. These factors provide access to a broader, more diversifying source of equity returns as they inherently deliver low correlation to one another, providing diversification in the return dimension.

So, whereas traditional passive indices allow market cap to dictate allocations, the diversified factor index seeks to ensure that we minimize concentration to any source of risk—whether it be region, sector or source of return.

How are you currently weighted versus the market cap-weighted index, and how have your under-   and over-weights enhanced risk-return profiles?


Crucially, our weightings don’t reflect specific views on sectors or regions and are instead, by design, the point of maximal diversification. It is important to remember that market cap-weighted indices typically carry a lot of concentration risk—for example, at various points in time, a single sector can explain half the risk of the index when left unmanaged. At the moment, three sectors explain two-thirds of the risk of the FTSE Developed ex-NA Index—these being financials, consumer goods and industrials. In contrast, the FTSE Developed ex-NA Diversified Factor Index—or strategic beta index, which JPMorgan Diversified Return International Equity ETF (JPIN) tracks—is explicitly designed to maintain balance and therefore these sector allocations range from 8% to 12%. In the short term, any concentrated portfolio can of course outperform a more diversified one, if the concentrated bet paid off.

Investing wholly in a single stock may outperform over short-term periods. At other times, it may significantly underperform an index. However, it is well understood that an investor is better off diversifying across lots of stocks for better risk-adjusted long-term gains. The same applies here. From a pure return perspective, if financials, for example, account for half of a cap-weighted index in terms of market cap and have a strong run over the short term, of course, this index would outperform over this period. Over the long run, however, it is fairly uncontroversial to suggest that the more broadly diversified index could achieve better risk-adjusted returns.

Seeking a smoother ride in international equity markets?


For investors targeting enhanced diversification through a core international equity portfolio, JPMorgan Diversified Return International Equity ETF (JPIN) targets lower volatility by tracking an index that more evenly distributes risk, enabling them to get invested—and stay invested.

Learn more about JPIN and J.P. Morgan’s suite of strategic beta ETFs here.

Call 1-844-4JPM-ETF or visit www.jpmorganetfs.com to obtain a prospectus. Carefully consider the investment objectives and risks as well as charges and expenses of the ETF before investing. The summary and full prospectuses contain this and other information about the ETF. Read them carefully before investing.

 

J.P. Morgan Asset Management
Empowering Better Decisions
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See how ETFs differ from other investment vehicles, learn how to evaluate them, and discover how ETFs can be used effectively to achieve a diversity of investment strategies. ... Click for full bio