The Wealth Consigliere

It’s that time of year again when people start talking about their New Year’s Resolutions.  Unfortunately it is difficult to predict the events that will impact our life a year in advance.  My sage confidant surprised me last week when he asked me about my 2019 resolutions.  Rather than pushing back I have decided to focus this week's blog on my hopes for 2019.  Characterizing them as hopes can be helpful for advisors and investors.  Here are my hopes for us in 2019. Rolodex All RIA firms want to grow.  Most realize that there are two types of growth - inorganic and organic.  Both types of growth depend on a recruiters' and an advisors' contacts.  Evaluating how robust these contacts are separates good from great professionals.  Unfortunately most professionals believe their contacts are gold.  Inorganic growth falls short when the new advisor signs the contract but the mistakes don't show up until later.  Successful organic growth strategies look good

The pull back in the financial markets reminded me of the quote from Warren Buffet t.  He said that when markets pullback we can see who is swimming naked.  After this week we can see many people who chose to swim without a suit.  Our blog this week will look at some surprising naked swimmers and discuss what new bathing suits they should buy. Markets are volatile and the last week of December reminded us of this reality.  How should investors and advisors respond?  The losses are comprable to the losses before the financial crisis.  I panicked in 2009 and sold because I couldn’t take the pain and I made the eroneus projection that the capital markets and the world might be coming to an end.   I was wrong as most emotional decisions turn out to be.  Mr. Buffett has one of the best investment track records because he has not panicked and in fact he has bought from others like me me who panic and are skinny dipping.  Maybe that is why he is one of the richest people in the

The passing of President H.W. Bush taught us all about his humility and his faith.  His morning conversation with James Baker still resonates with me.  When asked what are we going to do today?  The President answered he was going to Heaven to see Barbara and their daughter.  I’m sure it was a loving reunion.  Heaven has played a large role in my earthly life through Led Zeppelin’s song Stairway to Heaven,   This week’s blog will chronicle how that song can help after another CRAZY week in the markets. High School Dance When the guitar solo started we all knew what we needed to do. Find a slow dance partner ASAP.  We had both been thinking about this moment since the dance started. The risk of the ask was replaced by the risk of what will happen when the music speeds up and the couple is forced to break their slow dance clutch.  We both know what is coming.  The same holds true for equity investors.  We know  the equity risk premium is going to end too.  How we handle

Advisors, prospects and recruits eventually reach a fork in the road when a final decision must be made.  This week’s blog will discuss decisions from the perspective of the advisor, client and the hiring firm.  We will share there is a right way and a wrong way to make final decisions.  Decisions that don’t go our way are difficult to hear.  I recently experienced a painful decision that I did not want or expect to hear.  I hope my experience of being rejected will help you. Time Time is our most scarce and valuable asset.  Seth Godin defines that we make up every day with 15 - 20 hours of attention. Respecting how we allocate our attention and how we respect our clients’ attention is one of the most important decisions we make.  When we meet with clients their top consideration is how long will this meeting take?  The advisor and client both know that the goal of the meeting is to make a sale.  One of the most successful advisory firms I have worked with has a structure

Good investors are always trying to evaluate investor sentiment.  Most successful investors use sentiment as a contra indicator.  Thanksgiving dinner conversations and Uber drivers are my contra indicators. I spent my Thanksgiving with my family in Dallas. While most of our guests drove themselves to dinner like most good Texans do.  Uber was used by my California based family. This week I share my Thanksgiving and Uber conversations and my conclusions from each. Thanksgiving I have worked in the financial services industry since 1987.  Initially  my family believed my job provided me a crystal ball into the direction of the stock market.  I was flattered when they asked and I provided them the company line on where the market was going.  It made me feel smart but when my opinions were incorrect my family members remembered.  Eventually my Thanksgiving response became that I didn’t know where the market was headed.  The blind love of family members thought their San Francis

The recent Focus Financial earnings conference call identified numerous questions without credible answers.  The market price agreed and now the RIA industry needs to examine what Focus has gotten right and where the firm needs to improve.  Our blog this week will try and answer these questions and also provide a historic perspective of how we  got here. History History does not repeat itself but it does rhyme.  Wealth Advisory firms need to understand who their recruiting targets are and create a program to transition the professionals from their old business model to their new firm’s culture.  Understanding the advisors’ history is an effective place to start.  I have made the mistake of hiring people that shared my history in the brokerage industry.  This approach has failed and I have examined why.  The first place to start is to compare the professional focus of the advisors’ old firm.  What was their compensation plan and what products and services were they traine

November 15 is a big date for hedge fund investors and their managers.  November 15 is the date investors must inform managers that they would like their money back in January.  The October statements could scare clients into making the decision to redeem.  Successful investors warn against making emotional decisions we might eventually regret.  While we might block out past erroneous decisions, a good investor and their experienced advisors can be a good sounding board.  This week we will look at resources that can help us make good decisions on November 15 and beyond. Dalbar Wealth managers often reference the results of the annual Dalbar study .  The poor results that retail investors continue to experience were at first shocking but have now become ‘Meh” . Our advice is to educate your clients on how they can avoid the Dalbar pit.  We have found that establishing an IPS during calm times and reminding our clients the importance of adhering to the IPS commitments whe

Now that the Midterms have finally come and gone, we will have more brain capacity and TV capacity to focus on other issues in our life.  An October 26, 2018 episode of Hidden Brain entitled "Too Little, Too Much" shared some academic research on our limited brain capacity that can guide us.  Freeing up the Midterm capacity will create mental capacity that will allow bloggers and investors the opportunity to focus on issues that impact our financial and emotional lives. This post will address what the wealth management industry can learn from successful midterm strategies without clouding our judgment by requiring we pick a side. We are shocked and appalled by the billions spent on political campaigns.  Let’s examine where the money was spent and examine where the strategies worked. Brand The financial crisis created brand backlash against Wall Street.  This backlash opened the door for independent advisory firms to position themselves as the anti-Wall S

After a tumultuous week I find it is helpful to ask what did I learn?  The weekend financial press is full of anecdotes to instruct us on what to do next.  I’ve found that either I forget their advice or find that it is not effective.  While listening to Brene Brown on a recent Armchair Expert podcast I gleaned some wisdom that I will share.  Her wisdom was to focus on our own pain before we create pain by criticising others.  This week I will focus on the pain in the wealth advisory business above and beyond the recent market swoon. The fiduciary mantra of putting the client’s interest ahead of our own can be tested during times like last week.  We will look at what got tested and how we can address the three main challenges from the same side of the table as our clients. Bundling We offer clients numerous services that are all bundled into the fee we charge.  The services include financial planning, investment management, retirement planning, family governance, es

The recent swoon in the global financial markets has shifted the focus of business consultants to a soft subject  that they can control. Established thinkers like Mark Tibergian , Seth Godin, Mike Blackman and Sarah Kay have started to talk about experiences. This week’s blog will expand on their ideas and hopefully create a positive experience for our readers. What are my favorite consiglieres talking about?  None of them is talking about the financial markets or ETFs.  They are writing and talking about big issues that impact our lives. Celebrities Most of us believe that the grass of someone else’s life is greaner than ours.  Social media has stoked this belief and the tweets of celebrities create an unrealistic view that their life is perfect.  I will never forget an interview with Debra Winger when she was at the pinicle of her fame after the success of   An Officer and a Gentleman .  The interviewer asked Ms. Winger for information about her life that would su

We are all concerned that robots are scheming to take our jobs.  Inefficiencies in all industries stoke the robot concerns and fuel the Silicon Valley investors' belief that they can optimize every issue.  Our blog this week will look at the main fintech solutions from both sides and hopefully allay any concerns that robots will take all of our jobs. Inefficiencies Potentially successful fintech  solutions can be identified with an honest business model evaluation that will show procedures that are consistently experiencing issues.  Optimizing procedural performance should also increase profit margins that are being squeezed by fee compression.  This reality alone is a good reason to consider fintech solutions for your business.  A recent research report from Aite Group is a good place to start. Their Digital Advisory Matrix of nine solutions identifies several solutions that should be investigated. Our favorites include Client onboarding, Portfolio constraints/comp

The senate confirmation process of a potential Supreme Court justice and the recent FBI investigation was at times painful but necessary.  The extensive two-sided nature seems merited since a court appointment has no term limit.  This week’s blog will examine how we make other decisions that could have a lengthy term.  Are we diligent or partisan?  Let’s investigate. Effectively choosing a wealth advisor should be as comprehensive as our senate confirmation process.  Thankfully we have numerous tools that we can use to make this important decision.  Let’s take a look. Broker Check Many advisors either work at a regulated brokerage firm or they did at one time in their career. The broker check system archives any complaints that have been filed against the registered professional. It will allow you to be the FBI and ask the advisor about alleged customer complaints that happened over the last ten years.  Their answer can be very helpful to your final vote.   FINRA now

Tiger Woods' Tour Championship victory has been deemed the greatest comeback story in golf history.   The record TV ratings prove we agree and our love hate meter with Tiger is now firmly in the love camp .   Tiger had not won a professional golf tournament since 2013.   Investors have a love hate relationship with hedge funds that has remained on the hate side since 2009.   This week’s blog will examine what Tiger can teach hedge fund managers and their investors. Don’t read the press The press and blogs have a large case of schadenfreude.   Most of their stories have a failure bias not just a political bias.   Athletes and money managers make a lot more money than reporters and the average American.    Our jealous dark side would like to see them come down to our zip code.   Athletes and hedge fund managers need to focus on their successes and not be brought down by the naysayers.   Comebacks are 90% mental. Fundamentals Great athletes and great