The Advisory Career

A Hall of Fame Client

I’d rather lose half of my clients than lose half my clients’ money

by Francois Sicart

Mr. Sicart is founder and chairman of Tocqueville Management Corporation, the general partner of Tocqueville Asset Management L.P., an ‘entrepreneurial, employee-owned partnership that focuses exclusively on growing and preserving our clients’ long-term capital.’ Reprinted with permission. Visit

On August 24, 2015, in the midst of a global turmoil in financial markets, I called one of my earliest clients.

This is a lady whom I do not call frequently, but I was keen to demonstrate, for my younger associates, one of the most important tenets of our profession: When things are going smoothly, clients do not need to hear from you. But when the environment becomes uncertain, you should call before they feel that need.

Not surprisingly, as with most of the clients we called on that day, her reception was warm and appreciative. But hers had an extra twist: “You thought I was worried by the news? Absolutely not! We have gone through many stock-market cycles together. I know that you will do what is needed and that we’ll be alright in the end.” And we then talked about other things.

Mrs. X, as I’ll call her, is a lady “of a certain age,” but extremely fit, both physically and mentally, with a sharp wit and a strong will. Ever since I have known her, she has been managing her family’s finances, even before her businessman husband passed away almost 20 years ago. And she has done so, not only with a keen eye on the details, but also with an iron hand on her large family.

Lessons in fiduciary responsibility

As I reveled in her compliment and confidence, I thought back to my history with this family. It began in the early 1970s, when I got my first lesson in the meaning of true fiduciary responsibility.

I was then working for the senior partner of a major regional brokerage firm; one of the largest accounts we were managing together was the pension fund of a medium-sized but well-known company. When a larger firm proposed to purchase our client’s business, one of my boss’ former partners pointed out that the pension fund was grossly over-funded, which would make it easy for the acquirer to raid, to the detriment of our client’s employees.

To his credit, the CEO and largest shareholder of our client company, Mrs. X’s husband, elected to do what was best for his employees rather than to strike the best possible deal for himself. On our suggestion, the pension-fund portfolio was liquidated and the proceeds used to purchase annuities for each employee. We lost a large account but gained a family’s loyalty that has lasted to this day. And I believe that kind of loyalty has contributed to the fact that we now manage money for 25 members of this family covering three generations.

just as one bad deed can destroy your reputation for a long time, a selfless one will stick in the memories of those affected

It takes time to earn clients’ confidence and loyalty but, just as one bad deed can destroy your reputation for a long time, a selfless one will stick in the memories of those affected and pay dividends over time. My friend Jean-Marie Eveillard and I have known each other for most of our careers. After a long and very successful run as manager of a major mutual fund, he still serves as senior investment adviser to First Eagle Funds. In 2003, Morningstar, Inc. group gave him a “Fund Manager Lifetime Achievement” award, so his long-term investment performance is beyond question. Yet, I suspect that his exceptional success is due to something more than just performance.

Duty to clients

In the late 1990s, his popular fund failed to participate in the Internet/high-tech bubble; as a result of its underperformance, it reportedly suffered significant shareholder outflows. Interviewed at the time, Jean-Marie famously stated, “I’d rather lose half of my clients than lose half my clients’ money” – a phrase I wish I had invented.

I believe that those loyal shareholders who stuck with him did so because they recognized how rare and valuable is a financial advisor who can place his duty to clients ahead his business interests. And they were rewarded for doing so, first by avoiding the worst losses when the bubble burst, and then by participating fully in the subsequent recovery.

And what happened to the trend-following and market-timing shareholders who jumped ship? They most likely succumbed to the curse described by the performance-auditing firm Dalbar in their annual Quantitative Analysis of Investor Behavior (QAIB).

Most equity-fund investors earn less than inflation as they try fruitlessly to buy low and sell high. Motivated more by fear and greed than intellect, these investors chase market returns to the detriment of their pocketbooks.

Over two or three decades, money-management has changed in the same way that medicine and law, for example, have changed. What used to be professions have become businesses, for the sake of cost-cutting, pooling of resources, growth, and operational leverage. In the process, whereas the main goal of professionals used to be to excel at the services they provided, with growth being ancillary, that goal has now been relegated to a spot behind the pressure to “meet the figures.”

In this context, it is not surprising that the CFA Institute & Edelman Investor Trust Study shows that only about half (53 percent) of investors trust their investment-management firms to do what is right.

Fortunately, good clients can make the difference between organizations, teams, or individuals that have a culture of service and all the others. For that reason, Mrs. X, I would like to induct you today into our “Best Clients Hall of Fame.”



This article reflects the views of the author as of the date or dates cited and may change at any time. The information should not be construed as investment advice. No representation is made concerning the accuracy of cited data, nor is there any guarantee that any projection, forecast or opinion will be realized.