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100 Point Letters To Clients

About two days ago, a friend of mine who works in one of the major wirehouses told me about the latest “big idea” initiative coming out of the firm to sooth the frayed nerves for clients & advisors alike. Are you ready for this?

100 point letters.

No, that’s not a letter with large font telling everyone to Stay Calm & Carry On. It’s a letter that is sent to Advisors each day the market moves down (or up) more than 100 points in the Dow Jones Industrial Average. It’s to be forwarded to clients. In the last 58 days, you’d receive 24 emails from your Advisor. And in principle, while more communication is probably a good thing in tumultuous times, I’m not sure whether to laugh or cry about this effort.

What the letter basically does is narrate what the market did that day. And, that’s about it. It offers as much insight as a newswire summation, and is probably less interesting. Want to see some?

Dear Client,

Like the famed Watty Piper children’s book The Little Engine that Could, the market tried to rebound from yesterday’s sell-off. With a collective “I think I can, I think I can”, the market tried to rally through the morning. Alas, unlike the book’s happy ending where the tiny engine makes it over the mountain, the equity market simply didn’t have the requisite firepower. A late day swoon resulted in a 173 point (1.6%) loss for the Dow Jones Industrial Average. Somewhat remarkably in light of the recent volatility, this was the first back-to-back 100+ point decline since March 16.

….Whereas the aforementioned Watty Piper never actually existed (it was the penname for a New York publishing firm), the market’s current challenges are all too real. Equities will likely take their near-term cue from upcoming economic data, along with any sense that the European debt crisis is being addressed with meaningfully more aggressive measures (including the possible creation of bona fide Eurobonds, something that Germany has yet to embrace)….

This 600 word craftily wordsmithed masterpiece goes on for almost a full page, followed by disclaimers for a page and a half (of course). There are no charts, no suggestions or action plans. Nothing practical at all. Just a 600 word summation (and lots of disclaimers).

This big idea is right up there with such timely inbox additions as, “Helping you Navigate Market Volatility” (after the 5th week of it) and “What the Downgrading of US Treasuries Means To Your Clients” (a week after the fact). But at least management’s response is predictable. Removed from reality, never timely, and almost always useless.

Needless to say (but I am anyway), my friend is not sending these to clients. He told me he’s actually waiting to find some soft, flowery paper so he can print it out– and then promptly wipe his ass. I suggest you consider doing the same.

______________

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3 thoughts on “100 Point Letters To Clients

  1. Billy Flynn

    I too have seen a similar collection of 4ply: “Things to tell you’re clients to make sure they leave their money in the market: Keep a long term perspective, these are really cheap valuations, this the holy bottom, make-no-drastic-moves-lest-you-lose-your-money, we’ve had great corporate earnings, Asian growth forever, et aL. Funny how the sell side guys never say sell…

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