On staying close

It's easy to look like a good adviser in a calm market. Almost anything works. The portfolio drifts along, the fees go through, and nobody's ringing at nine at night.

The hard markets are different. They put the question nobody bothered asking while the going was good right out on the table, where the whole family can see it. What was actually being done in here?

The last letter made the case for staying long, for being one of the families who'll still be planting two and three generations from now. This one is about what staying long asks of the adviser once the season turns hard.

The calm

A bull market is no test of an adviser. It hides almost everything, and the calm tends to breed a particular kind of adviser — steady, polite, never quite alarming the family, and never quite earning the trust they'll need from him later either.

Trust is a strange currency in this work. You can only deposit it in advance, and the withdrawal comes when the markets break. That's when a family finds out, fairly quickly, how much of it they think they've got with you.

The advisers who haven't been making the deposits are easy to pick when the season turns. The phone calls slow first, then the personal notes thin out, and pretty soon the meetings are starting with markets instead of with the family.

The families notice. They mostly don't say anything, but they remember.

A thousand cuts

The old hands in this industry have a phrase for the bad markets: death by a thousand cuts. That's roughly the size of it.

What breaks a family's faith in their adviser is rarely the single dramatic day. The 2008 morning a bank went under was not really the thing. It was the slow run of weeks afterwards, when the news kept getting worse, the portfolio looked smaller every Friday, and the phone just didn't ring.

A family doesn't need analysis in those weeks. They're not short of a slide deck on credit spreads. What they need is a person on the end of the phone whose voice is steady because he's spent the week thinking about it, and who can say plainly what's going on and whether anything needs doing.

The hardest call to make is the one that has nothing in particular to say, except that you've been thinking about them, and that what they're seeing on the news hasn't changed the considered position. That call shows up in no compliance register. A family remembers it for years.

In nearly two decades of this work, the calls that have meant the most to the families we work with were all made in the hard years, when they weren't expected and didn't strictly have to be made. I made one of them from a servo carpark on my way home from Dimboola. It couldn't wait. I've been lucky enough to make a few like it. Not one was comfortable, and I'm a good deal better at the advice than at the small talk that gets you to it (anyone who's waited on me to return a voicemail will vouch for that).

That's the deposit.

What actually lasts

There's a line that has stuck with me, borrowed from someone who put it better than I will. Advice is a humanities job, not a maths job. It's roughly right, though it sells the maths a little short.

Because the maths isn't optional. The portfolio has to be built properly, with the Foundation sized for the long climb and the Conviction sleeve earning its keep, and the structures around it have to stand up to scrutiny in a way almost nothing else in the family's affairs is ever asked to.

All of that is the cost of entry, no more. It buys you the right to the relationship. Keeping it is a different matter.

What keeps it is the visit, or the call, or the conversation at the kitchen table that didn't have to happen and happened anyway. The family is trusting one person, in one season, to do a piece of work nobody else is going to do for them. They can tell whether you see that, or whether you just see a number.

The next hard market will come. It always does. The families we work with won't remember the markdown they saw on a Tuesday in 2027. They'll remember whether anybody rang.

That's the part of the work that never shows up in the portfolio. It's the part that earns the right to look after the next generation too, because we were there for this one.

This is what we are here for.