Coronacrash Update: Laidlaw Wealth Management’s Richard Calhoun & Tony Sirianni
AdvisorHub’s Publisher & CEO — Tony Sirianni — asked executives from top firms their opinions on the dual management of the Coronavirus and market meltdown crises. Read how leadership is managing one of the most unique challenges we have faced as a financial community.
Here is how Richard Calhoun — CEO of Laidlaw Wealth Management responded.
The last few weeks have been unprecedented and unexpected, a perfect storm if you will, of management challenges both on the employee and client level. You have had to deal with employee safety issues that no CEO has training for, and a directly correlated market crash. What have you implemented at your firm to address this dual threat?
Our first focus was our people, I was taught a long time ago that the difference between a bank and financial services firm is the banks believe the most important thing is deposits but financial service firms know the most important thing are the people who get on the elevators and go home each night.
To that end, as soon as things began to escalate we offered every employee in our domestic offices and London the ability to work from home or remotely. We have an in-house technology firm that worked with our team members to make sure they were operating as efficiently as possible. Next, I implemented two Daily Update emails — one I called “Random AM Thoughts” that was designed to give updates on the markets, our offices status, employee updates (we still have one stranded overseas and another who had to travel to Russia after her father got sick), information coming out from the states where our offices are located, and federally on COVID-19 and a little bit of humor and motivational thoughts. The second one, “PM Update” was less about the markets and more informational with updates for the next business day, things that had occurred during the day and again employee updates.
The goal of these communications was to make sure we filled the “connectivity gap” that can occur when you have a decentralized workforce. We are proud of our culture and the “family feeling” we have in our offices so the more we can maintain the dialogue and stay in touch with each other, the easier it will be for us to get thru this crisis together. We also did our best to maintain some level of normality. We have a weekly meeting @ 8:00 AM on Tuesdays and 9:00 AM on Wednesdays that were focused on sales ideas and professional development. We kept those meetings intact but moved them to the phone and Zoom.
How about the continuing market volatility? What are you telling your advisors to do and what are you hearing from clients?
There is only so much you can do about volatility or the markets. What I have been telling our FA’s is they need to “control the controllables” which is their attitude, their work ethic, taking care of their health and being consistent in speaking to every single client.
I am also stressing to our FA’s that they need to be careful in these markets.
Below is an excerpt from one of my recent AM Notes after the massive 3-day move up:
For those of you who have been thru a hurricane, one of the things that you learn about is the “dirty side” of the storm. The dirty side is generally known as the right side of the storm when looking at it from above, but it’s more accurate to say it’s on the right side of whatever direction the storm is moving, according to the National Oceanic and Atmospheric Administration. The right side of the storm is worse due to the direction of hurricane winds. Hurricane winds rotate counterclockwise, so the strength of the storm on the dirty side is the hurricane’s wind speed plus its forward velocity. The absolute worst spot in a hurricane is on the dirty side closest to the eye of the storm, according to NOAA.
So why am I bringing up hurricanes and the dirty side? As much as this market move up has felt great and it’s nice to see green on the screens, I fear that the general public may mistake this as an “all clear” to jump back in and right now we could be in the eye of the storm and on the dirty side, meaning we may (and I stress may) retest the lows. There is a lot of talk about how a new bull market started yesterday, but let’s not forget that the ‘73/‘74 bear market saw a 20% bounce and the ‘01/‘02 bear market had rallies of 22%, 25%, and 24% before ultimately falling 51%. Finally in ‘08/’09, we saw a 27% rally before falling 56%. I don’t think we are out of the woods quite yet and if you have lived thru a hurricane, when the eye moves over, it gets very quiet and people generally go outside and clean up any loose debris and things that have come down. When the warning horns go off, you know you need to get back in your house because the back side and maybe the dirty side of the storm will be upon you soon. The market doesn’t have warning horns — that’s our job — we need to be the warning horns. We need to proactively tell clients to reduce risk, clean up margin, lessen concentration, shorten duration and most importantly, stick to the plan.
What about the economy longer term? Where do you think we will be in 6 months, and how can advisors and their clients take advantage of that long term direction?
I always try to be an optimist and I want to believe that as a country we will bounce back from this crisis, but I also need to be a realist and recognize that the recovery from this is going to take longer than any of us would like. I do think if we can start getting people back to work in June that would go a long way towards righting the ship. Unfortunately, I think there are a lot of businesses (mostly small) that won’t make it back.
A lot of restaurants and bars, mom and pop places that truly operate week to week that won’t come back. As far as advisors, I think this could be one of those opportunities of a lifetime to invest in some great companies that were sold off indiscriminately as the markets had seen a massive “de-risking.”
What about our business? What do you think the long term impact of this dual crisis will be on the advisor business model?
Our business has weathered a lot over the years and each time there have been people saying it’s the end. I think if anything, this crisis will support the need for a “human financial advisor” who can hear the fear in a client’s voice, listen to their concerns and then help them process — is this a reason for them to sell, or is this one of those “Black Swan” events that we discussed when we introduced them to the financial planning process. “Financial professionals do meaningful work” is a quote from the Ray Sclafani book — You’ve Been Framed, and I truly believe that.
Ray said that financial advising is a noble profession because the work we do helps clients design the lives they want to lead and then helps them live them to the fullest. I consider myself lucky to call Ray a friend and I could not agree with him more. An 800 # or website is not going to guide clients through a crisis — it will take a financial professional with training, experience, knowledge and compassion who can be empathetic, but maybe most importantly — rational, to keep people “on track” to their goals.
So these things tend to bring out the good and the bad in people. What has most encouraged you, what have you seen that’s reaffirmed your faith in our community and how its handling these difficult times?
In the same book I reference above, Ray calls what we do “impact work” and I think that is what we are seeing right now. Impact work is a reference to when advisors do their jobs well, not only does their work impact this generation but it carries forward to multiple generations. I have seen our advisors talking their clients through this crisis every day. Reminding them that they had a well allocated portfolio before this began and where appropriate, adding to great names that have been beaten up. I have also seen advisors spend time on the phone just talking to people about things that have nothing to do with financial advice – fears about their kids who can’t get home, fears about going outside and being exposed to the virus, fears because they or their spouse were just laid off. We have had several of our advisors and team members offer to go grocery shopping for an elderly neighbor, or assist by donating their time or money to those who are in need right now. I am so inspired by what not only our advisors are doing but others around the industry as well. Winston Churchill is credited for saying “a pessimist sees the difficulty in every opportunity, while an optimist sees the opportunity in every difficulty.” We have our work cut out for us, but if we get this right, we could take difficulty and pivot it into an opportunity to impact multiple generations.