By understanding their fears, advisors can truly understand their wealthiest clients. Derek Chesley of Integrated Partners explains the power of the disturb track and how it can help score your next big client.
Russ Alan Prince: What are disturb tracks?
Derek Chesley: Disturb tracks, in their simplest form, are a mechanism used to motivate the client. A way to make them feel that they are not OK and to get them to react so that you can interact with them.
Prince: Why are advisors using these more than ever?
Chesley: Well, the truth is, clients, especially wealthier clients, are numb to economic data and information. The 24-hour news and business channels have made it more difficult to grab clients’ attention. So sometimes, we need to rattle their cage.
Prince: How do you use disturb tracks with clients?
Chesley: If you are live fact-finding with the client, is there anything that makes you think, “Hmmm. I wonder if they know that?” Our goal is to recognize the issues, expose them and find out how they could impact your client. From there, we work to make sure that they understand it and then magnify the issue to extrapolate into the future how this problem could impact them later in life if left unattended. Next, we work to explain the next steps and the benefit of working with us. This conversation is not about providing solutions but about building up a conversation.
The next step is what we refer to as the DAMIT track. What are the distribution issues, the administrative issues, the management issues, the income issues and the tax issues? By highlighting the big issues, the client starts to realize how essential you are as an advisor to help connect the dots and make things work.
Prince: Can you give us examples of disturb tracks in action?
Chesley: I always talk about the S&P Disturb or the dangers of drawing from your assets in a down market. We ask, “I understand that your previous advisor suggested that you keep one to two years of cash on hand in your personal financial plan, but we’re talking about your retirement plan now.” Then, we bring up our worries and ask, “What concerns me is that if we’re in an upmarket, you probably don’t have to worry about how much cash you keep in reserves, but let’s talk about what we just lived through.
Someone who retired in the fall of 2021 had a pretty tough start, and once they run out of money, they are forced to sell. Not only that, most of the time, when the markets drop like that, it doesn’t turn around right away. It takes a couple of years for the market to find its bottom and a couple of years to recover. So, just about the time the market is hitting the bottom, you may be out of cash. At this point, you will be forced to sell from a down position. One of the benefits of working with us is that we are going to make sure that you have enough money to live the life you want to live but, more importantly, will always have the cash set aside to make sure that you can survive a three to five-year downturn in the market. So, I think the next step is to look at your portfolio and see where we go from there.”
Prince: If this works so well, why don’t more advisors use disturb tracks?
Chesley: I think there may be several reasons that more advisors don’t use disturb tracks. Perhaps the most common is that they simply haven’t been exposed to them and how powerful they can be. Another could be that these tracks if done properly, can lead to some uncomfortable moments for their clients. Most of us try to avoid conflict or making someone uncomfortable, but there are times when temporary discomfort can lead to tremendous long-term comfort. In this case, that comfort comes in the form of the client’s long-term financial security.
Prince: What’s the big takeaway?
Chesley: Disturb tracks can be a mechanism to motivate your clients to act and be their own advocate to increase the probability of success of their and their family’s financial security. Learn them and make them your own.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.