Tuesday, August 24, 2010

Back to School


Regardless of where and when you went to college, chances are things are a lot different today, especially the cost of a four-year college degree. For most people, college is a four year commitment; however, what’s accomplished in those four years impacts an entire lifetime. Deciding where to go to school and what major to declare is almost as important as figuring out how to pay for it.

What’s clear is that a college degree is much more valuable than a high school diploma. According to the U.S. Census, the total annual family income when the head of the household has earned a bachelor’s degree earned almost twice as much ($110,587) as a head of household with a high school diploma ($59,904). Multiply this over the course of a career and we are starting to talk real money!

U. S. News and World Report just released their rankings report of the best colleges for 2011. This is the 27th year the magazine has been educating parents and children about the best colleges and universities in the U.S. In addition to ranking the overall top universities and colleges, the magazine ranks schools in other categories, as well. There are regional rankings, college rankings by high school counselors, up-and-coming colleges, business programs, engineering programs, and more.

Not surprising, the top 5 universities are:

Harvard, Princeton, Yale, Columbia, and Stanford

The top 5 liberal arts colleges are:

Williams, Amherst, Swarthmore, Middlebury, and Wellesley

Here's a link to a complete listing of U.S. News & World Report University and College Rankings.


It’s widely known that one of the main reasons people save and invest their money is to pay for their children and/or grandchildren’s college education. As a financial advisor, you are probably already helping many of your clients do just that.

However, as a wealth advisor today, you can help your clients do so much more. Become an expert and trusted resource regarding all things college-related.

  • Learn everything there is to know about 529 college savings plans (remember tax implications vary by state).
  • Compile a listing of college prep course instructors in your area. There are chain programs, such as Huntington Learning Center, with centers across the U.S. and Canada. There are also smaller, independently run centers that provide more than just tutoring services for the SATs and ACTs. Ivy Educational Services, for example, provides tutoring, along with counseling on how to write an essay that will get the attention of college admissions officers.
  • Depending on the age of their children or grandchildren, open a dialogue with your clients about the latest college rankings. Some sample questions may include...
Questions for those with high school aged children:
  1. Have you seen the latest U.S. News & World Report college rankings?
  2. Has your son/daughter started talking about where he/she wants to go to college?
  3. What subjects are he/she interested in?
  4. Has he/she taken the SATs? Have you considered a prep course to boost scores?
  5. Do you know the approximate four year cost of that school’s tuition?
  6. Do you currently have a college account for your children/grandchildren?
  7. Will you have enough to pay for school when the time comes?
Questions for those with younger children:
  1. Have you seen the latest U.S. News & World Report college rankings?
  2. Before you know it, your children/grandchildren will be talking about college. Do you know the approximate cost of a four year college education?
  3. Do you currently have a college account for your children/grandchildren?
  4. Will you have enough to pay for school when the time comes?
If some of your clients are thinking about sending their kids to a smaller, less popular school thinking it will be less costly…forget it. These days, college is expensive no matter where you go. I would never have considered going to Harvey Mudd College in Claremont, CA. It was ranked #18 on this year’s U.S. News and World Report list. I have nothing against the school…I’ve just never heard of it. I was shocked; however, to discover that one-year tuition at Harvey Mudd for the 2010-2011 school year is $40,390.

Believe it or not, #1-ranked Harvard University is cheaper at $38,416…just try to get in!


by Theresa Ficazzola

Friday, August 20, 2010

Building Your Wealth Management Network with Business Brokers



One truism of the financial advisory business today is that investors are expecting increasing levels of proficiency and sophistication from their advisor(s). The advisor can respond to this internally, i.e. by adding specialized competencies and functions within the team…or externally, i.e. forming alliances with other trusted professionals. Typically (and predictably), these external alliances are with CPAs and attorneys. Less typically, more creative financial advisors are building networks with other professionals, e.g. property and casualty agents, commercial loan officers, art gallery owners, business appraisers, etc.

Whatever professional network the advisor chooses to build, it should completely be a function of the clients the advisor chooses to serve, and how they serve them. In this way, the advisor creates a virtual (and virtuous) team which works to the benefit of the clients.

Financial advisors who we are coaching who work with entrepreneurs and business owners are finding that business brokers are natural members of their wealth management network. For those advisors who are interested in connecting with business brokers in this regard, we offer the following insights:

  • Comeback is spotty. Many business brokers are only now emerging from a very tough period where listings were down 40%+. When the banking crisis triggered the recession, the brokerage business was devastated by a lack of credit. Even now, the comeback has been spotty around the country. Business brokers in New York are reporting that listings are up from last year…however many brokers in California report that 2nd quarter listings are way down from 2009.
  • An increase of self-funders. One of the trends of the past year or so is that self-funders have come into the market. In some cases, these are down-sized executives who are buying businesses…bypassing loans and putting their own savings into the purchase price.
  • Credentials count. In choosing a business broker, find one who is credentialed by the International Business Brokers Association. To become an IBBA-sanctioned Certified Business Intermediary (CBI) requires some years on the job, as well as additional continuing education.
  • Finding a specialist. The best brokers specialize in a select group of industries. Every industry has its own unique culture, history, and knowledge awareness. Importantly, business broker generalists are akin to the financial advisors generalists, i.e. they are fast becoming dinosaurs.
  • Communication is key. The best business brokers work with their clients in communicating how they manage the process. This process might include: researching the company and industry, “staging” the business for sale, valuing the business, uncovering potential buyers, providing frequent updates on interested prospects and transaction status, etc.
  • Negotiating the fee. Most usually, the broker collects a fee when the business is sold. 10% has been the industry standard, although with the weakened economy, knowledgeable sellers have negotiated better deals.
  • Time-frame for sale. On average, it takes about nine months to sell a business. Brokers will ask their clients for an exclusivity contract, and six months is the likely minimum time-frame, although like the fee, anything is negotiable.
Concluding Thoughts: Right now, buyers like private equity funds are scrounging the market looking for bargains. On the sell-side, there is a pent-up desire to sell, motivated by the fear of a possible increase in the capital gains rate. Either way, it would seem to be an opportune moment for financial advisors to connect with business brokers. Savvy financial advisors could partner with business brokers in joint marketing opportunities, and position themselves as an integral player in this process. Building your professional advisory network could take some time; however, the benefits of a mutually beneficial relationship (e.g., new client introductions for you and the broker) are worth the time and effort.

by Chris Holman

Tuesday, August 17, 2010

The Science of Attention


My apologies for our brief hiatus...I've been away on jury duty.

There's a pretty interesting piece in yesterday's New York Times entitled, "Outdoors and Out of Reach, Studying the Brain."

The premise of the article is intriguing. Organized by Dave Strayer, a professor of psychology at the University of Utah, five neuroscientists take a raft trip down the San Juan River in a remote section of southern Utah.

The trip's intention is to explore what happens when we step away from our devices and rest our brains...in particular, this journey is an exploration into how attention, memory, and learning is affected; as well as how our capacity to focus is altered when we escape from the phone, email, texting, etc.

What makes this excursion doubly interesting is that it is populated by both "believers" and "skeptics". The believers postulate that heavy technology use can inhibit deep thought and cause anxiety...and accept that getting into nature can help. The skeptics use their digital gadgets without reservation, and are not convinced that anything lasting will come of this trip, either personally or professionally.

As time went on during the trip, both the believers and the skeptics became more relaxed, reflective, quieter and more focused on their surroundings. While a few days away from civilization didn’t transform the group, it did get them to change the way they think about their research and themselves. For example, one person used to take out his computer during meetings, but is now saying that perhaps he can learn to listen better and work at becoming more engaged.

More and more, in this era of Information Overload, neuroscientists and psychologists are directing their focus to the Science of Attention. Some interesting new books on this topic include:

I find the entire topic quite absorbing. Behavioral studies have shown that performance suffers when people multitask. These same researchers also wonder whether attention and focus can take a hit when people merely anticipate the arrival of more digital stimulation. If true, this would mean that our attention and focus is always at a deficit! Bummer!

By the way, if you are reading this post while you are on vacation yourself...do yourself a favor:

Step away from the electronic device...now!

All the best!

by Chris Holman

PS...If you have a colleague or friend who might appreciate the information on this blog, please consider forwarding this to them. Thanks very much!

Friday, August 6, 2010

What Motivates You?


Lately, for many of our coaching clients we have been thinking about the subject of motivation. For financial advisors and entrepreneurs especially, this is an interesting and always timely topic.

Coincidentally, there was a short piece this past week in Forbes that addressed this topic from the standpoint of entrepreneurs, "Why Serial Entrepreneurs Can't Stop." In this article the author contends that the motivation for entrepreneurs, especially the "serial entrepreneurs", i.e. those go-getters who can't stop creating and building new companies is...a sense of purpose. For them, changing the world is part of their quest. As such, their work is never done.

For the top-performing financial advisors who we work with, we also see them driven by other desires, such as:
  • Achieving a goal...personal, professional, material,
  • Reaching a lifestyle that is equal to, or better than, that enjoyed by their parents,
  • Building a profitable and sustainable business that will survive them,
  • Validating themselves in their own eyes, as well as the eyes of their peers.
Push/Pull Factors for Entrepreneurs
For entrepreneurs, there have been some interesting studies that investigate the key motivating factors for starting a business. Generally, the factors are split into two underlying reasons...Pull and Push factors.

Pull Factors for Entrepreneurs
  1. Independence, or the feeling of being in charge of one's own destiny
  2. Money
  3. Challenge and Achievement
  4. See an Opportunity
  5. Lifestyle
Push Factors for Entrepreneurs
  1. Job Dissatisfaction
  2. Changes within the workplace
  3. Children, i.e. financial concerns, a desire for flexible schedules, etc.
Interestingly, Pull Factors for entrepreneurs seem to be much more persistent and sustaining than the Push Factors.

As coaches, one of the frequent questions that we encounter is how to boost ambition. Without being completely directive and telling our clients what to do exactly, we have seen success for clients who do two things:

  1. One of the keys to ambition is the understanding of one's own motivations. If you can understand what drives you on a day-to-day basis, your path to increasing your ambition becomes clearer.
  2. The other method to jump-starting ambition is to get you out of your comfort zone and take some risks. Ambitious people don't settle for the status quo. They seem to be continually testing the boundaries of what they can comfortably do, on both a professional and personal basis.
For closing thoughts, let's turn to one of our heroes...Mark Twain...whose memory has recently benefited from the publication of a 500,000 word autobiography:

"Keep away from the people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great."...Mark Twain

by Chris Holman