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Showing posts from 2019

The Conch

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Last week’s financial services industry news of Schwab and other brokerage firms cutting commission rates to zero reminded me of one of the two books I read in High School (no Cliff Notes).  The book, Lord of the Flies, described how a group of marooned kids organized themselves.  They utilized a shell, The Conch, to signify who could talk at their large gatherings.  The meetings were organized by Ralph who would limit the time each kid took.  This week I will discuss who has The Conch and what they are telling us to do.  I will play the role of Ralph and decide when its time to pass The Conch.
Wall Street
Wall Street has had the conch for years.  They created high margin products and “sold” them to their clients.  This structure was exposed during the Financial Crisis and opened the door for competitors to educate their clients about these conflicts of interest.  The other area Wall Street made money was supporting Hedge Funds through their Prime Brokerage unit.  This group provided …

Perfect Podcasts

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Perfect conversations and Podcasts are in the eye of the beholder.  My podcasts and my children are perfect in my humble opinion.  I continue to simplify this monthly summary to organize the list and hopefully you will agree with me.  Apple has a head start with their star based rating system. Twitter followers and downloads matter too.  This month has some new items I hope you like too.


Business Podcasts
My new favorite is Naval - How to get Rich.  I've found that this podcast delivers ideas that will cause you to think and falls into my perfect podcast group.  My advice is to listen to each podcast numerous times.  Our first impression might be wrong.


Dramas 

We all need a break from our daily life and from academic content.  I love movies and live theater as an escape from daily life.  Drama podcasts with a good script and good actors are perfect.  My favorite is 1619.  This podcast is a double whammy.  It is moving and it educates us on the history of slavery. 

There are no perf…

Boone

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Mr. Pickens, Boone to his friends, passed away on September 11, 2019.  This blog will summarize the numerous lessons that Boone lived and shared with us during his amazing life.  We hope you will reference and adopt them in your personal and professional lives.  Boone shared most of these beliefs with his co-workers, friends, investors and the traditional media.  Many of his beliefs are common to successful people, however, his generous heart is unique.
Great at Making Money
Boone was great at and enjoyed making money.  It was a challenge that he mastered first as a Wildcatter in the oil business. He understood that every deal wouldn’t work out as planed and he was able to evaluate where he could improve his results on subsequent deals.  He was self-aware.  Boone took his experience to his next ordeal in the public markets with Mesa and as a corporate raider.  Same risk reward profile but the results and prices were public. The mindset and discipline were the same.  Boone’s next ventu…

Pick on Someone Your Own Size

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The financial press has been filled with articles about RIA transactions.  I’m happy for the industry but I think we need evaluate how we got here.  My blog this week will examine why RIAs are growing and selling at an unprecedented pace,  One of my RIA friends observed that we got here by positioning ourselves versus the ills of Wall Street.  I’m not as PC as my friend so I will take a hard look at how RIAs need to pick on somebody there own size.  RIAs have a stellar reputation of always doing the right thing for there clients.  We don’t need to be a bully to grow and ultimately sell our practice.  Here are some ways we are picking on our competition.

Wall Street
Clients and their advisors know that Wall Street has many conflicts of interest.  Selling against that fact seems to have run its course.  The breakaway advisors I follow after they realize that a fiduciary standard does NOT pay well start to adopt Wall Street conflicts to narrow the pay gap.  My April 2016 article is worth  …

No Free Lunch

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As we have discussed in the past monthly summaries the number of Podcasts is exploding.  That is the good news but the bad news as discussed in the Wall Street Journal is that the free model with limited advertising is not working.  Specifically podcast listeners are not buying enough products from the sponsors of the shows to pay the bills.  Several popular podcast are signing up name brand (read wealthy) companies to sponsor the podcast and pay the bills.  This reality coupled with the fact that most podcasts hit the wall at 12 episodes has caused us to tweek our monthly categories to include monetary support and frequency.  This “pivot" should improve our summery. Please share your opinions through the comment field.  

Funded
HBS has the dough and they are releasing numerous podcasts that I have found very helpful.  My current favorite is Cold Call.  I know we hate that term but the podcast covers case studies from HBS and the presenters are actual HBS professors.  I might have …

Elasticity

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Last week’s tumultuous market moves caused me to revisit an old economics concept of elasticity of demand. Don’t worry there won’t be a test at the end of our post, but we want to examine several real world concepts that impact the wealth advisory world.  Unfortunately the academic concepts and other rules of thumb aren’t helpful in the real world.

Fees
Most business relationships start and continue with a fee analysis.  The only guaranteed fee reduction is to cut out the middleman.  Once the client identifies the Middleman we can start focussing on the fees that matter.  ETFs and The Internet have been effective disrupters of the Middleman.  The challenge for clients and advisors is that indiscriminately cutting fees can leave us with a poor solution.  We need to understand what is provided for each fee so we don’t end up driving a car that runs but is embarrassing.

Tariffs 
The trade war with China was one of the many reasons for the market selloff.  Whether the President is correct or …

Hacked

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Technlogy is a double edged sword.  Technology has made our lives easier but as we bought more smart phones we also became more vulnerable to being hacked.  The Russians and other hackers have attacked our elections and recently have attacked our businesses.  These hacks are news worthy but until we are personally hacked it is someone else’s problem.  I have been hacked but the credit card monitoring software caught the hacker before they could buy a car using my identity.  While it scared me it confirmed Jamie Dimond’s statement that hacking is our country's greatest risk.  Banks will contunue to invest in solutions to combat hackers and we will need to trust but monitor our accounts.  Our monthly  review of our favorite podcats will continue.  Hackers be damned!

First Person
We are moved by the real world podcasts that summarize the experiences of real people from the first peson perspective.  Real trumps fiction and actual stories move us.  Our favorite is Room 20.  First pers…

Mars

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We recently celebrated the Fiftieth anniversary of our “Giant Leap” trip to the moon.  Watching the CBS coverage of the event was informative but the commentators, while they were impressed by the accomplishment, they were also asking what is next?  Mars was the logical answer.  Fifty years later we have not been back to The Moon and Mars is only referenced in movies and John Gray books. Our country also pays lip service to other important items like gender equality.   This week we will examine why these struggles continue and hopefully break the glass ceiling once and for all.  The solution seems obvious but we must be missing something.  The items we have identified will be discussed and hopefully they can solve this issue and we can move on!  It should be easier than going to Mars.
Teachers
I recently spent time with a family friend who has recently retired from teaching.  I asked her how we could improve our education system and she did not hesitate to answer.  She believes we need …

Person in the Mirror

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Michael Jackson's song Man in the Mirror still plays in my head eventhough it was released in 2007.  This week we will examine what we can learn from The King of Pop as we create our social media profile.  We won't be writing about how to write a hit song, but we will examine some tools that we have at our disposal.  There are a few warnings, but we also list some best practices.  We will start with the warnings and end with best practices.

Echo Chamber
WARNING!  Social Media can become an echo chamber that sends our ideas back to us creating a false sense of agreement.  Followers and Likes feel good but they can create an echo chamber of feedback and a false sence of importance.  Statistics show that most people who like your posts don't even read them!  Software that tracks time spent on your post is money well spent.  We use Hub Spot.  Don't use these facts as a reason to NOT use social media.  Use it and complement it with tools to evaluate its impact.  We ALL beli…

The New Podcasts are Coming

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When compiling my monthly list of podcasts I was surprised to read that there are 540,000 podcasts!  At last count there are only 114,131 mutual funds.  The large number of podcasts has caused us to adjust our ranking to look at Established Authors and First Person Accounts.  We and our clients have adopted podcasts for our commutes and our walks. Advisors  need to be aware of what they are listening to and not rely on Apple.

Authors
It's not surpriing that jornalists and authors have found their way to the podcast neighborhood.  Both professionals are expert at research and writing.  Two skills that many bloggers and podcasters lack.  Our favorite, this month is Bethany McLean best selling author and Forbes columnist.  Her podcast Making a Killing is worth a listen.
First Person
Nobody can tell an emotional story better than an interview with the person who experienced the event.  Podcasts are perfect for this reality.  Our favorite is Man in the Window.  Warning this podast will …

New Leader

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Most of the topics covered on this blog reference breakaway advisors.  That story is getting tired so this week we will examine breakaway leaders.  The two that stand out because of their success are the leaders at Dynasty and Rockefeller. We have written about the old guard leaders before.  This week we will examine that there is more than the person in charge it is what they provide clients and advisors.  We have more questions that we all need to consider before changing jobs.  
Legacy Business
Many leaders in the independent wealth advisory business made their mark on Wall Street in a dated business model.  I resemble that remark and welcome the questions on how I can transition my Wall Street “success” to an independent and un-conflicted business.  Advisors and clients should ask the question of how you will change.  We need to be careful to not take the political approach of changing everything the past administration accomplished.  We can’t be that clueless but every replacement …

Inorganic

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Our industry has always looked down on Wall Street’s recruiting checks.  Last week there were numerous announcements that independent firms were offering advisors money to purchase their practice.  The term for these transactions is inorganic growth.  This week we will look at why these transactions are the new rage and examine if they are better than the old Wall Street checks.


Wempy
Popeye and financial advisors fall for the “I’ll gladly pay pay you tomorrow for a Hamburger today” pitch.  Unfortunately Popeye and and most financial advisors provide their hamburger but seldomly get paid what the firms and Wimpy promise.  Why?  The advisors need the cash and Popeye is gullible.  On Wall Street the deals adjusted when the advisors changed firms looking for a new deal every five to eight years.  The recent Luminous departure shows that the advisory contracts need to be adjusted.  The new contracts are written by experienced firms and lawyers to prevent serial departures.  Wall Street has …

Information

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The president’s recent interview confirmed how important information can be for a successful political campaign, running a country and in our case running an independent wealth advisory firm.  Our monthly podcast recommendations help.  The important item that I add is a consideration of what is the podcast host's agenda? We won’t need a Mueller report to decide.  Here are our new favorites and their agendas.

Grant’s Current Yield
Jim Grant has remained an informative voice on the fixed income markets for years.  His thoughts are unique and helpful.  His agenda is for us to subscribe to his newsletter.  

The Meb Faber Show

Meb is a thought leader and a top portfolio manager.  We always learn something new when listening to his podcast.  His clear agenda is to attract more investors to his funds.

CBS Sunday Morning
If you are like me this program airs too early on Sunday TV.  If you miss it because you stayed out late Saturday night you can catch the summary on this podcast.  


My podcast l…

History

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The 75th anniversary of D-Day was moving and made me appreciate the power of history. This week we will examine the history of the wealth advisory business.  As is the case with any history, there are some good items we need to remember and several we don’t want to repeat. This is easier said than done but History can be our helpful guide.

D-Day
The statistics and photographs of D Day evoke many feelings.  The soldiers were BRAVE but the mission was satistically doomed.  What can we learn from their experience.  I vacillate between anger and awe.  My hope is that we leverage our young to help our country move forward.  Youth has energy and is full of new ideas.  We need to provide them experienced information and engage in honest conversations that allows each generation to avoid the statement of “they don’t get it”.  History can only help us if we share accurate information about our past.
Legacy Systems
Change is difficult.  A recent article in The Wall Street Journal summarizes the pro…

Self Reported

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The Luminous breakaway news has grabbed the headlines again.  Didn’t they already breakaway?  There are several items we need to consider regarding this break.  Our blog this week will discuss the items and the ramifications for clients and other advisors. The breakaway doesn’t concern me but the self reported figures do.  Here are the main items after I take a deep breath.


Dating Sites
The Gig economy loves DIY and is self confident and self aware.  These beliefs have manifested in numerous new companies that empower people to implement functions that larger firms and their parents controlled.  Two examples are dating sites and self reported financial data.  Dating sites are thriving and self reported financial advisors continue listing inflated asset levels on their websites and pitch books.  We can solve this problem, asking the online dates to meet in person and asking financial advisors for multiple references after meeting with their team in person.
Custodian and Financial Press Su…