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Published on: 10/1/2002
Last Visited: 10/1/2002
So how will you react when Richard Heinrich of family-values broker Edward Jones knocks on your door?
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RICHARD HEINRICH OF EDWARD JONES: "If I have someone who rejects me, the next 50 or 60 doors I knock on will give me plenty more people to meet"
(Richard Heinrich)
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It's a sultry August afternoon in an east-end Toronto neighbourhood and rain is threatening, but Heinrich looks blissfully content, as if he'd rather be right here on this porch than anywhere else.Seconds go by and finally, as if some inner timer has gone off, he turns to walk down the steps.Then the door opens and a skeptical middle-aged woman peers out."Hi, my name is Richard and I'm with Edward Jones, a full-service investment company," he says."We have an office just around the corner from you.I'm just introducing myself to people in the neighbourhood."Although the woman's English is halting, Heinrich soon finds out that she's made investments through another financial adviser, and while she's noncommittal, she radiates just enough encouragement that he makes a mental note to call on her again in two weeks.He also takes down her address so that, when he returns to his office, he can write her a thank-you card.
The pattern repeats itself along the street as Heinrich gently "prospects" his way into strangers' consciousness.A trim 6'1" in a white shirt and sober, geometric-pattern tie, dark slacks and sensible black lace-ups, the 38-year-old Heinrich has a clean-cut, almost missionary appearance to go with unfailing good manners.He has been in this, his first office posting with Edward Jones, a mere two weeks, but has plans to systematically knock on every one of the thousands of doors in his immediate area.Brush-offs, like the one he gets from a bleary-eyed middle-aged man who mutters that he's liquidated all his investments and will hold only real estate, simply don't faze him.He merely backs off and moves on.Heinrich is still new to the storefront, value-investing culture espoused by St. Louis, Mo.-based Edward Jones, but he's well versed in the niceties, like stepping back from the door and keeping his hands visible so that homeowners looking through peepholes won't feel threatened.Perhaps most important, he's convinced that the metaphorical glass is not only more than half full, it's bottomless."If I have someone who rejects me," he says, "the next 50 or 60 doors I knock on will give me plenty more people to meet.One of the most difficult things to overcome is that there's a lot of people out there."
What Heinrich and everyone else in the investment industry have to overcome is that a high proportion of those ordinary people are more inclined to hide behind their doors these days.A two-and-a-half-year-old bear-market cycle triggered by the crash of the tech sector, the proliferation of indulgent accounting practices, corporate scandals, corner-office greed, the threat of terrorist attacks and a possibly wider Mideast conflict have left retail investors battered, wary and eager to sell.This summer, a study by the research firm Market Probe Canada for the Toronto Stock Exchange found that in 2001, for the first time in 20 years, share ownership by Canadians actually decreased, even though the number of people investing in stocks, at 46%, remains appreciably higher than it was in 1996, before the technology-driven bull market distorted all reality.
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Heinrich and his colleagues think, no, believe they can succeed during and after the current crisis of confidence by being persistent and applying the company's proven formula: selling time-tested, quality investments to conservative individuals.
What does an Edward Jones customer look like?
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Heinrich is the team's coach.
"I find that a lot of it for me is just putting my head down and going," says Heinrich, who describes his day as an exercise in discipline.Each morning, he prints out a list of 25 of the office's roughly 200 clients and starts phoning, mainly to let them know he's taken over the office and that their investments are "safe and sound."His phone conversations run from token introductions to detailed updates of individual portfolios, copies of which are neatly arrayed across his desk for quick reference.For one woman, he briefly explains what a bond is and how it works, a curious digression considering her portfolio already holds about $100,000 worth of them.
In most cases, he finds a way to let clients know he's part of the local community.He mentions he lives near the office.His six-year-old son goes to a local school, and yes, he tells one client, he'd be interested in knowing more about the local business association.Later, away from customers' ears, he allows that he's a bit disingenuous.He doesn't live all that close to the office, and the main reason his son goes to this particular school is that it has a good daycare program.Still, it's important to cultivate that sense of communal intimacy with the customer, and at Edward Jones, they tend to be enthusiastically compulsive about it.
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At last count, there were 560 Edward Jones recruits like Heinrich in one-broker offices across the country, mostly in urban centres.
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Heinrich is almost a prototypical Edward Jones investment representative.The son of a restaurant owner, he was raised on a farm outside Milton, Ont.He went to Milton High School and then studied marine biology at the University of Guelph for two-and-a-half years.An economics course changed his ambition, however.He dropped out and studied accounting for three years at a Toronto-area community college.After he graduated, he caught on with a small, private money manager, Grange Avenue Research Corp.When that company was wound up in 1996, Heinrich went to work with Bank of Nova Scotia as an analyst in its real estate department.In the late '90s, a friend encouraged him to look at Edward Jones and, by 2001, he was ready for another change."I think it was to get back in front of people," he says."I really like working with people."
This is obvious.After lunch, weather permitting, he goes out and knocks on doors.Apart from the fact that it's a company tradition pioneered in the 1950s by the likes of Edward Jones Jr., son of the firm's founder, door-knocking works.In the 10 months he worked for Edward Jones from his home before coming to this office, Heinrich rapped his way to a modest client list.Later in the afternoon, he schedules meetings with the people he's met in his travels as well as with existing clients, either in the office or in their homes."Usually I'm running from 8:00 a.m. to about 7:00 p.m.," he says."I put in good days.Last night, I had an appointment at about 8:30 and came back here around 10:00."
Long days and sensible shoes are de rigueur in the investment business these days, if only so that brokers can comfort the legions of retail clients who've been hurt by the downturn.Just before Labour Day, the S&P/TSX Composite Index was trading in the vicinity of 6,700, down 42% from the high reached in the late summer of 2000 (see chart, p.63).Former tech darlings have fared far worse than the broad index: in late summer, the S&P/TSX Canadian Information Technology index was down 86% from its 2000 peak.
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In the late afternoon, Heinrich welcomes a new client to his office, a rumpled 42-year-old man in a plaid sport shirt and chinos.The man clasps a bottle of mineral water in one hand as if it were a talisman against the August heat and runs the other through his lank black hair.He says he's a consumer-products market researcher and that his wife is an executive in warehousing and distribution.The story of his past investments sounds all too familiar -- small children, large mortgage and an investment portfolio that has erred badly in favour of growth stocks and underperforming real-estate funds.An attempt to flip a vacation country condominium went sour to the tune of $17,000, and his financial adviser has kept him fully invested in equities with no debt or income cushion."You see what's happened to my RSP account in the last couple of years," he tells Heinrich."I keep putting in more money, but it's still lower."
The hard-luck tale plays perfectly to Heinrich's soft-sell message of financial redemption.After listening sympathetically, Heinrich outlines the Edward Jones approach, reviews the man's portfolio and suggests alternative fund investments from the five fund families that pass muster with the firm's investment review committee."We'll build a good core based on good-quality mutual funds," he says."Then we'll add some blue chips.This is probably a good time to be putting some money into the market."Heinrich also suggests monthly automatic debits so that the client can dollar-cost-average.The man says he will talk to his wife about transferring the family in
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