Sky-high gas prices driving advisers to take new roads

They rethink client face time, even consider moving the office

Jun 9, 2008 @ 12:01 am

By Jeff Benjamin

With the price of gas spiking more than 30% since January, some financial advisers are starting to recalculate the value of client face time, turning instead to web-based meetings or even bicycles to avoid having to start the car.

Smaller independent advisers and insurance agents responsible for their own travel expenses have been hit particularly hard by the sudden reality of gas at $4 per gallon.

They are scrambling for a competitive edge.

"I try to meet clients in my office whenever possible," said Lori Embrey, owner of Fairfield Investments & Wealth Management LLC in Pickerington, Ohio.

Ms. Embrey, who started her own advisory firm in December in Arlington, Ohio, opened a second office in February in Pickerington, closer to her home, just to save on commuting costs.

"The savings in gas almost completely paid for the second office," said Ms. Embrey, a 12-year industry veteran who now has $5 million under advisement in her new firm.

Dylan Ross:
+ Zoom
Dylan Ross: "A month ago, I got rid of a gas guzzler and started riding my bike to the office." (Michael Falco)

With the price of oil hitting another record level last week at more than $139 a barrel, the idea of more expensive fuel is becoming a permanent bottom-line issue for some advisers.

"A month ago, I got rid of a gas guzzler I was driving and started riding my bike to the office," said Dylan Ross, owner of Swan Financial Planning LLC of East Windsor, N.J.

Mr. Ross, who usually charges an hourly advisory fee, said he plans to make the three-and-a-half mile bike ride to work even during the winter months.

"My wife doesn't believe I'll do it, but I'm getting a bike that's conducive to winter riding," he said. "I think my bike riding is also prompting some of my clients to think about fuel alternatives."

Mr. Ross said he rarely travels to visit clients anymore, with the ex-ception of a few longtime clients.

"I'm trying to wean them of the idea of me coming to visit them," he added.

Meanwhile, some advisers be-lieve cutting down on client visits to save gasoline is penny-wise and pound-foolish.

"When you are dealing with $500,000-minimum-asset accounts, a tank of gas becomes noise," said Helen Modly, co-owner of Focus Wealth Management Ltd. of Middleburg, Va.

Ms. Modly, whose firm oversees $110 million in client assets, cited the example of a two-and-a-half-hour trip to visit a $3 million client as part of the cost of doing business.

"We buy her a very expensive lunch and tell her everything is okay; do you think I should ask her to meet me halfway?" she quipped. "I suppose if I was cruising all over town trying to get a $2,000 IRA, it might be different."

Ms. Modly added that her true threshold for altering her driving habits will be if gas prices reach the levels consumers pay in parts of Europe.

"If we end up paying $8 a gallon, I'll start using our virtual private network more and have everyone work from home one day a week," she said.

In some segments of the insurance business where expenses are tied to specific products, the higher gas prices have meant a direct and immediate cut into profits, according to Jeff Taggart, president of the National Association of Insurance and Financial Advisors, based in Falls Church, Va.

"It's not unusual for me to have to travel 110 miles to get a signature," said Mr. Taggart, an independent agent operating as Taggart Co. in Cody, Wyo. "Gas has gone up and commissions are relatively the same, so in some markets people are questioning whether it makes sense to even drive over and visit a prospective client."

This is exactly the case for Terry Headley, president of Headley/Scott & Associates in Omaha, Neb.

"The higher gas prices force one to be more conscientious about conducting business, because you can't just go out and meet with everyone face to face anymore," he said.

In addition to leveraging technology and using electronic signatures when possible, Mr. Headley moved his office in April in order to cut his commute time down to 15 minutes from 40 minutes.

"The cost of gas is a pressure point that raises the cost of doing business, because we have no ability to make adjustments through product pricing," he added.

Technology such as that enables advisers to work with clients over the Internet has helped Jeremy Portnoff keep his travel to a minimum.

"I was already using this kind of technology before gas started going up, but I've definitely been leaning on it more now and I'm making it clear to clients that I'm using this kind of technology to cut down on travel," said Mr. Portnoff, owner of Portnoff Financial LLC in Piscataway, N.J.

Mr. Portnoff oversees less than $25 million of client assets.

A case can also be made for positioning client portfolios to take advantage of the situation, according to John Davidson, president and chief executive of Davidson Insurance & Financial Services Inc. in Thousand Oaks, Calif.

"I have learned to use world events as an excuse to talk to clients about their investments," he said.

Primarily an insurance salesman, Mr. Davidson said about 10% of his business involves giving investment advice.

"I wouldn't not go see a client because it might cost me an extra $5 in gas, but I would use that opportunity to talk about investment advice," he said. "The price of gas is the cost of doing business and it causes you to pay attention to where your resources go, but it also gives me a reason to ask clients if they're prepared for retirement if gas gets up to $10 a gallon."

E-mail Jeff Benjamin at


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