Coronacrash Advisor Insights: Wedbush Securities’ Karl Pettijohn & Tony Sirianni
AdvisorHub’s Publisher & CEO — Tony Sirianni — asked top advisors from leading firms their opinions on the dual management of the Coronavirus and market meltdown crises. Read how these advisors are managing one of the most unique challenges we have faced as a financial community.
Here is how Karl Pettijohn, Managing Director at Wedbush Securities responded.
So we’re in a new and dynamic, where not only do our clients need us more than ever, but we have to change the tried and true way that we have always interacted with them. How are you handling the challenge of working remotely and managing clients? Is video conferencing effective? How do you maintain a sense of normalcy personally and professionally?
Working from home has been working out well. Our team does a Facetime call together in the morning to discuss our day plan and the markets. We like to all be on the same page and be consistent with our communications. Juggling the phones alone is challenging, but clients have been very understanding in these unusual times. The shortfall has been the collegial environment that we all miss from the office. However, the time savings of not commuting, and the money saved eating at home, no dry cleaning, and not paying for parking or a dog walker, has been nice. I have more time to speak with my clients. One challenge I think we all face right now, is having boundaries and balancing work hours and a home life. It’s been great getting out the door by 5:00pm for an early evening bike ride, which seldom happened after commuting home from the office. It’s great to be able to clear my head, after a day of stressful conversations.
People who have never done this job don’t really understand how much psychiatry we do every day, how close we have to get to our clients to get them to tell us about their hopes and dreams and plans, nor do they realize how closely the physical fears of coronavirus and the all too real fear of financial ruin are so closely related. How are your clients reacting to the dual threat of covid-19 and the market crash? What are you telling them?
No question, these are intense conversations with clients. Everyone has a different relationship to stresses like the ones we’re dealing with now. I start my calls by articulating that this is a unique time when we now have three issues to deal with: a pandemic that we’re not even at the top of the bell curve of, a bear market that has just begun, and an imminent recession or worse. From there, we talk about them and their family’s health and safety, then their financial shape, job security, cash on hand. No one knows how long these three issues will last and the repercussions, but I am advising clients to prepare themselves for a protracted challenging period. I try to avoid allowing the conversations to devolve into politics, as that is a recipe for added stress and is a distraction from the bigger picture of their personal and financial wellbeing. This is also a good opportunity for a 401k review, so I will discuss that with them as well.
What about your business? Are you just “maintaining” or are you growing? Is there an opportunity to build your book because other brokers are afraid to pick up the phone right now? How do you prospect without traditional client interactions during a market climate like this?
Business is okay at this early point in COVID-19/bear/recession environment. Of course managed asset values are down in the first quarter, but fortunately enough, new assets were in the pipeline that I’m still growing and in fact, managed revenues for April should be an all-time high for the practice. I don’t know what other advisors are doing but I know that I’m in touch with everyone as best time allows. Being April, it’s tax season so I am constantly calling my network of accountants to check in. Many are working on helping their clients with the Payroll Protection Program applications and appreciate any help that I can offer. Just being available and letting them know that I’m happy to help any other clients of theirs who may want to speak with me has historically been a good lead generating time for me.
Things are down, but somebody must be making money. Where do you see opportunity in the market? Are you recommending any investments right now to clients, or suggesting they exit certain investments or sectors? Do you have any sense of where to invest post crisis? Or are you riding out the storm?
I’ve had long conference calls with managers that I currently use. I also use this time to reach out to my network of seasoned pros for their thoughts. Every client handles risk differently and as such, solutions and changes are also different. In past bear markets, I’ve weathered the storm well by having individual short positions for higher risk accounts. I’ve been taking advantage of sell days to pick up oversold equities and bonds. We’ve also been raising cash. Carefully trying to get out of very leveraged companies and weak credits has been challenging but it’s a work in process to “upgrade” holdings.
What’s been the most useful piece of technology or advice that you could suggest to other advisors who are trying to cope in these circumstances, particularly some technology or business practice that you have discovered or rediscovered during this crisis that you will use in your business going forward?
The telephone would be the most useful piece of technology! I have a solid data base of professional contacts that I devote 20% of my days communicating with during times like these. I try to give them something back for their generosity in sharing their thoughts. I use a day planner, and now more than ever, find it useful. I have a phone list and will make a list in the next day’s plan of five or ten different clients that I want to be certain to connect with. So, I have some control of the results of the day and am not just reacting to inbound calls.
I’ve got a feeling that we are getting to know each other a little better these days. Whether we hear kids and dogs in the background of a conference call, or see some interesting choices in clothing and grooming on Zoom, we are “getting real” with each other in an out of the corporate world type of way. I’m seeing the best advisors create truly holistic experiences for their nervous clients, and helping folks in ways above and beyond what a “traditional” financial advisor would normally do. What’s happening in your world during this crazy time that you will take with you into the post corona world that will help you grow your business and deepen your client relationships?
No question, when the markets are crazy as they’ve been, and people are worrying about their health and safety, stress and concern over finances are heightened, and for some more than others. Listening to my clients has been even more important during times of crisis; it helps me better understand those who might need some additional hand holding and guidance, in order for them to make the best decisions. As a regular practice we’ve aligned our client’s investments with their risk tolerance, so we really haven’t had as much panic at this point in time. I also know exactly how clients have performed YTD and what the benchmarks have done. I remind clients that “everyone” has losses during times like these and so their “relative” wealth is still intact. That comparison seems to give people better context when they review their statements. It’s been fun to be reminded where client’s kids are going to college and what they’re doing at home. Relatedness has definitely gone up. When the dust settles, I have offered to run financial plans for clients so that they can revisit their goals after the impact of the market decline.