Know your IREM code of professional ethics: article 8. managing the assets of the client.(KNOW YOUR CODE)(Institute of Real Esta

A MEMBER shall exercise due diligence in the maintenance and management of the client's assets and shall make all reasonable efforts to protect it against all reasonably foreseeable contingencies and losses.

The current recession has become a sensitive issue for many clients and tenants. When it comes to handling their money or assets, what is reasonable has climbed to new heights. Clients and tenants often expect more than due diligence from property managers; they expect perfection. This perception makes it vital that you match up the client's vision of what we do, to what we actually do. There are three methods of accomplishing this:

SHARE MANAGEMENT PRACTICES

First, hold regular meetings with clients to describe and identify the property management practices in place that protect the client's assets. Offer this information as part of a routine client agenda in small bites so it is a continuous exercise. Topics should include banking and cash management, segregation of funds, loss-prevention management, security controls and the long list of other major systems and procedures in place. Make sure you give plenty of opportunity for the client to ask questions and offer suggestions regarding your management practices. By affording the fullest opportunity for the client to learn what we do, and why we do things a certain way, you can give clients a "street level" view of our business. These meetings will also allow for an exchange of ideas on possible improvements.

STATE OF THE ASSET MEETING

This method of educating the client is often tied to the annual budget, marketing or capital planning meeting for an asset. During this meeting, your systems, procedures and controls should be woven in to the presentation when they are relevant to the topic. The purpose is to elevate transparency, to enhance the discussion by providing the means and methods of execution by the manager, and to produce meaningful exchanges. Often, "state of the asset" meetings are strategic in nature. This does not mean practical policies, procedures and systems should be downplayed. Rather, this is precisely the venue to point out and discuss how your duties are executed.

POLICY AND PROCEDURE UPDATES

Despite their importance, many clients and owners may show little interest in your asset/property management policies, systems and procedures. Most want a copy of the policy book on DVD or to download, but often this is a checklist item that ends up in a file somewhere. It is never read until something goes awry. A way to overcome this disinterest is to engage the client each time there is a policy or procedure update. The client will be educated over an extended period of time, while you highlight the importance of the procedure and its update. This communication will help the client buy in to your efforts to protect foreseeable assets.

Managing clients' assets well in today's economy requires more than just a nuts and bolts approach. Communicating through a clear and open framework that explains policy and systems, and invites discussion, can produce an excellent avenue to jointly understand due diligence and what is reasonable.

CRAIG L. CARDWELL, CPM[R] (CCARDWELL@EDRTRUST.COM), IS EXECUTIVE VICE PRESIDENT OF EDUCATION REALTY TRUST, INC. AND THE PRESIDENT OF ALLEN & O'HARA EDUCATION SERVICES, INC. IN MEMPHIS, TENN.

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