This next series of posts will be coming courtesy of a special reader request. A reader recently wrote to us with the following query: 

I have recently read an article written by Jonathan Davis on Monday April 19 2010 in the Financial Times, which referenced Sir John Templeton and a memo he wrote in December 1953 on the subject of ‘How To Keep A Client Happy’. I have researched this memo for a while now and have no success in finding the original copy where I could read the entire memo. Do you have access to any of these types of documents or know who I should contact to access them?

I was happy to report that we do, indeed, have a copy of that memo on file, and today we’ll start posting excerpts from it. It is sure to be enlightening to any other investment managers or financial planners out there looking for keen insight into customer psychology.

You’ll find Part I after the jump.

Alan has suggested that it might be helpful to all of us if I would try to put down on paper the thoughts which I have developed in the last 12 years on the subject of how to keep a client happy. Actually, my knowledge on this subject is inadequate; and I think that many of you have more aptitude than I. It is a difficult subject because it seems to me that the influences on the psychological attitudes, decisions, and beliefs of human beings are 90% subconscious and only 10% logical. However, any personal service firm must devote much effort and thought toward continual indoctrination and selling of the clients and therefore, I will set down below a sort of check list which may be especially helpful in the work of indoctrinating new clients and others.

Most important of all, the investor wants to feel that his list of stocks is the best which could possibly be selected. If he is thoroughly convinced on this score, price fluctuations will appear to be opportunities rather than causes for concern. The best means is to have a long personal talk with a client about each of his stocks at least twice a year. If you explain in great detail why each stock is good and what methods we use in selecting stocks a client will be happy with his list and will probably be impressed with your knowledge. Clients like to know that each of their stocks is subject to continuous restudy and follow-up.

The investor will be comfortable if he knows that he is following a sensible program. In each interview and often by letter it is often wise to describe the program he is following. He wants to feel that his program has been carefully prepared with regard to his own particular needs, and that improvements are made frequently. He should understand the reasons why his program is likely to prove not only safer but also more profitable in the long run than any other possible program. Clients usually like to know how many institutions use the non-forecasting method. Some counselors make a special point of the various ways in which they have diversified the client’s holdings.

The investor wants to feel that his affairs are managed by a group of wise and prudent men. No one of us would want to say this about ourselves. However, each of us should seek opportunities to describe to the client the background and wisdom and success of each other man in the organization. Some counselors make a specially strong point of the fact that other sources of advice may be biased, whereas investment counsel works in the client’s interest only.