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Showing posts from 2018

Rejected

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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 that they fo…

Sentiment

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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 Francisco based fa…

Organic Growth

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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 trained to offer the…

Painkillers vs. Vitamins

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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 when markets become …

Midterms

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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 Street and helped the…

Same Side

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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, estate planning  and …

Experiences

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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 surprise us.  She pause…

Fintech

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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/compliance and Fee …

Let's Investigate

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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 requires that all …

Comebacks

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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 investors have unique talent.Athletic coaches appreciate talent…

Leaks

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The litany of departing White House officials and their tell - all books made me ask why do people leak secrets?This week we will examine that question and see that it is not just politicians who leak.The term is different in the private and business domain but it still packs an emotional punch.

Friends and Family
I vividly remember the first lie I told my parents.I was terrified that they would find out, but as time passed my anxiety declined.Eventually my parents caught me and lectured me on telling the truth and I would nod and say I’m sorry. Lesson learned – lie/leak and just apologize.Life goes on.

Secrets
Secrets are a euphemism for little white lies.We kid ourselves that broken secrets are not as bad as lies.I would ask the people that trusted us with their secrets if they agree.Listen to how people rationalize telling secrets.They usually start their statement with don’t tell anyone but XYZ person told me they did X.Gossip/white lies feel good for the gossiper but they hurt the…

Memories

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We love to read chronologies about traumatic events.This last week was overloaded with two such events – 9/11 and the closure of Lehman Brothers, both traumatic events that we continue to revisit.This blog will examine the power of traumatic events and how they can be like a light to moths.Don’t misunderstand me, we need to continue to remember like  Cats and Barbara so we won’t forget and repeat past mistakes.

Tragedy
Tragedy has a stronger lasting impact than success.We need to be aware of this reality and do our best to remember our successes and try to learn from our failures.Unfortunately businesses promote success and fire failures.This reality causes us to promote the top salesperson into a management position so they can teach strategies that are out dated and ineffective in today’s environment.Clients and shareholders should demand proof of recent success rather than listening to the tireless story about how the professional navigated the Financial Crisis.Ms. Garzarelli and y…

Woke

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There is a risk when a 56 year old writer attempts to use Digital Native terms.My Millennial children laugh at me when I overuse LOL and FOMO.Laugh if you must but my feeling after listening to a recent call by Morgan Creek Capital Management on Crypto Capitalism was I’m Woke.This blog will summarize other groups that should be Woke.

Banks
Banks hold most of our Fiat currency.  We pay them a significant amount of fees for this mundane service.Why do we continue to pay these exorbitant rents? Is it inertia or are we just not aware of better alternatives?My opinion is that we aren’t aware of a better alternative.Banks are acquiring brokerage firms for their deposits that continue to grow after the advent of the CMA.Deposits are king, but how much rent should we pay for this service? Banks need to wake up.
Wealth Management
Independent wealth management firms have thrived over the last five years by eliminating the banks’ rent on client accounts.Crypo currency’s inclusion in a portfolio c…