Buffett Bullish on America

As you Buffettologists already know, Warren Buffett released his annual shareholder letter over the weekend. By word and deed, he seems quite optimistic on the future course of the US from an investment vantage point.

Since Mr. Buffett is his own best communicator, I’ll let him speak for himself:

"Money will always flow toward opportunity, and there is an abundance of that in America. Commentators today often talk of “great uncertainty.” But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001. No matter how serene today may be, tomorrow is always uncertain.

Don’t let that reality spook you. Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America. Yet our citizens now live an astonishing six times better than when I was born. The prophets of doom have overlooked the all-important factor that is certain: Human potential is far from exhausted, and the American system for unleashing that potential – a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War – remains alive and effective.

We are not natively smarter than we were when our country was founded nor do we work harder. But look around you and see a world beyond the dreams of any colonial citizen. Now, as in 1776, 1861, 1932 and 1941, America’s best days lie ahead."

Buffett as a Leader
Although Buffett's reputation was built on his sage investing prowess, his leadership has always been equally perceptive. Indeed, his investing success is a function of his ability to pick great managers, and trusting their judgment.

His holding company, Berkshire Hathaway, has 76 different operating units…from Burlington Northern Santa Fe, to GEICO, to See’s Candies. As a leader of his businesses, Buffett is notoriously hands-off. Every two years he sends out a letter to his 70+ managers that says a variation of the following:

• Run this business like it’s the only business that you and your family can own over the next 100 years,

• Don’t measure your success by quarterly earnings,

• Measure your success by whether or not the moat around your business, that which gives you the competitive advantage, has widened or narrowed.

Berkshire's annual shareholder meeting, "Buffetpalooza", will be held on April 3oth, at the Qwest Center in Omaha.

by Chris Holman

How to Find Awesome Interns

When it comes to summer internships, an internship at Google is pretty much at the top of the totem pole. Google interns get nearly everything that full-time employees get, e.g. free cafes, a gym, a basketball court, recreational classes in yoga and salsa dancing, etc.

Being an intern at Microsoft isn’t bad either: free pizza and clothing, a Cirque du Soleil show, an engraved Zume digital media player, and a complimentary Windows 7 phone.

How do smaller businesses and entrepreneurs such as financial advisory practices compete with these glittering heavyweights?

Pretty good article from Nathan Parcells of Internmatch.com provides some insight. His #1 tip is to be proactive. Go directly to local colleges and universities. Get to know department heads and the career guidance office. Make your pitch at entrepreneurship classes and networking events. Above all else, find your “campus evangelists” who can refer peers and classmates.

There’s some more good information on the Financial Planning Association website. Author and mover-and-shaker Deena Katz advises that if you plan to use an intern as a go-fer doing grunt work, you risk creating a disillusioned young employee who may be forever turned-off with the financial services industry. Know exactly what you are interviewing for. If it’s a career path, or a summer internship only, let the intern know exactly the kind of experience that they’ll receive.

Also, you get what you pay for. If you expect professional ethics, professional dress, and expect the intern to take the job seriously, you'll need to compensate them accordingly. Depending upon their skill-set and where you are located geographically, a range of $12-20 per hour should be anticipated.

Finally, appreciate the subtle difference of working the Millennial generation. Millennials (born between 1980-2000) generally expect structure, guidance, and leadership…as well as continual challenges. Nice article here that offers 11 Tips for Managing Millennials.

Hope these tips help in finding a great summer intern.

Who needs some lame Microsoft t-shirt anyway?

by Chris Holman

Building Your Value Proposition: It's Not About You

In the book, Creating & Delivering Your Value Proposition, authors Cindy Barnes and Helen Blake define a Value Proposition as:

“ …a statement of the way a business proposes to deliver superior value to its customers by harnessing all of its resources in a profitable way.”

Using this definition, it is clear as to what a Value Proposition is...and is not. It is not:

• An Elevator Pitch,
• A Messaging Piece,
• A Benefits Statement, or
• A Unique Selling Proposition (USP)
  

A Value Proposition is, far and away, a stake-in-the-ground strategy whereby a company definitively outlines how they will deliver “superior value” to their clients.

After a company arrives at this strategy, they can build the Elevator Pitches and the other ancillary declarations that are described above. But the Value Proposition comes first.

Unique...or Not Unique?
One of the interesting questions for financial advisors is…how do I make my Value Proposition unique? After all, FINRA reports that as of January 2011 there are 630,847 licensed and registered representatives. Not all of these folks are on the front lines, of course. An estimate of financial advisors who actively serve clients is more likely to be half this amount…300,000+ or so would be an educated guess.

Moreover, many of the 300,000+ financial advisors have very similar offerings in their product/service mix, which further complicates the matter of arriving at a Unique Value Proposition.

It's Not All About You
To make it more likely that one builds a Value Proposition that is unique and differentiating, here’s a hint. Consider your clients first…assume that value can only come from the client’s perspective.

Before you do anything else, consider the buyer landscape and ask these questions:

1. Who are my ideal clients?
2. From their perspective, what is their value experience from a quantitative perspective?
3. From the client’s perspective, what is their value experience from a qualitative perspective?
   

By asking these questions that focus on the client at the outset, financial advisors can go a long way to building a Value Proposition that is differentiating, if not unique. This is especially true if the ideal client niche is well defined. The more narrow the client niche, the easier it is to build a Value Proposition that differentiates.

One last point. When building a Value Proposition, although uniqueness is nice, clarity is best. Many financial advisors have built great businesses that stem from crystal-clear Value Propositions that are specific and easily understood….but aren’t terribly unique.

Conversely, the side-of-the-road is littered with “Unique” Value Propositions that are indistinct, vague and ill-defined.

by Chris Holman

Clients As Partners

There's a compelling article in the Wealth section of today's NY Times entitled, The Hands-On Investor: Increasingly, Advisors Want Clients to Share the Responsibility of Managing Their Assets.

I have a quibble with the headline...which I'll get to in a minute.

But, I completely agree with the headline's implication. Our research corroborates as much. Top-performing financial advisors report to us that there is an ongoing shift in how some clients (not all) would like to work with them. This new dynamic emphasizes the partnership that is created, where the advisor and client build a collaborative space of working together to achieve the client's goals (which have been arrived at through an honest, thoughtful, and comprehensive dialogue between advisor and client). The key words here are "partnership" and "collaboration".

Interestingly, I don't find the words "partnership" or "collaboration" at all in the Times article...which seems unusual.

My quibble with the headline is the wording..."Advisors want clients to share the responsibility..." What the headline misses is that, in many cases, it's the clients who are driving this. They want to share the responsibility and accountability.

Of course, this makes complete sense when you consider how Baby Boomers make decisions. As the private individual wealth in this country has passed to the hands of the Boomer, financial advisors are seeing that Baby Boomers have different expectations of their advisor relationship than their parents did, the Silent Generation. With the old dynamic, the financial advisor could get away with portraying themselves as the all-knowing, all-seeing expert who dispensed advice from the mountain-top.

That approach doesn't work today. Many clients expect a much flatter relationship with their financial advisor, where their opinions, concerns and desires are valued and respected.

Ultimately, I think this new accountability is a good development for both advisor and client.

I'd be curious about your views on this...either as a financial advisor, or as a client.

All the best!

by Chris Holman

Linking Passions with Business Success

When I coach five ClientWise clients in one week who are all improving their business success using the same strategy, it merits a mention. These clients are all in different markets and have different strategies, but each one has an avocational passion. Advisors work very hard and spare time is at a premium, so why not combine business and non-business passions? In our discussions we strategized how to combine their outside-of-work love with their business development goals.

• One client was recently elected to a national organization of wine connoisseurs. He is now undertaking a strategy to reach out to members of the organization in other regions so he can expand the reach of his relationships. His approach is not one of soliciting business just because someone belongs to the same club, but rather getting to know people with a similar interest in other markets, for the joy of it as well as for the business benefit.

• Another client is a baseball fanatic and memorabilia collector. He's redecorating his office to bring in aspects of his personal life -- when prospective clients visit he wants them to experience not just what he does, but who he is. His assistant gave him a gift of a baseball signed by Tony Conigliaro, the Boston Red Sox legend, which now sits on his desk. The gift brought up a creative spurt as he thought about sharing the story of Conigliaro and how it relates to his clients' need to prepare for unforeseen circumstances.

• The third client I spoke with is a Crossfit enthusiast. Rather than targeting new client prospects by income demographics, he's getting more involved in his Crossfit gym and is reaching out to members who he believes will be as interested in protecting their financial health as their physical well-being.

• The fourth client loves classical music and enjoys taking clients to the symphony. Turns out he knows a board member at a music conservatory in his market. His goal is to get involved, get to know the other powers that be, and ultimately become a board member himself.

• The fifth client is a tennis enthusiast. He hasn't put his business together goals with his passion yet -- but he’s going to. We came up with a couple of ideas to get started. Among the things he could do:

1. Organize a tennis match for charity
2. Organize a group coaching session(s) for small groups or individuals
3. Conduct wealth seminars at tennis clubs and draw analogies between tennis and investing
   

As a coach, I would ask the following....are you using your passion to develop business?

Leave a comment. I'd love to hear how you are doing it.

by Mitch York

Michael Lewis Gets Dupped!

I just caught an interview between author Michael Lewis, (Liar’s Poker and The Big Short) and Yahoo! Finance’s Daniel Gross and Henry Blodget.

Under the headline, “My Merrill Lynch Broker Screwed Me So I Fired Him and Switched to Schwab”, Lewis tells a personal story that involves owning some Lehman preferreds and Auction Rate Securities in his retirement account, having these exotics blow up, getting really irritated with his advisor, and closing his account at Merrill and transferring to Schwab.

As one listens to the interview, a number of different graphics pop up underneath their talking heads:

Beware of Wall Street Advice!

Dealing with Wall Street’s Conflict of Interest!

Don’t Listen to Brokerage Advice!

Ouch! Between the headline and the graphics, it’s not too hard to figure where this interview is going.

I certainly don’t want to be an apologist for Merrill Lynch or any other firm that got caught with their hand in the exotic derivative cookie jar. Yet, a number of points about this interview caused me to arch my eyebrows:

1. In the first place, it’s the height of irony that Henry Blodgett participated in this. For those of you who don’t know Henry Blodget, read this Wikepedia entry. Given his own tortured history with conflict of interest, you’d think he would have had the common sense and good grace to recuse himself from this session.
2. During the interview, Lewis says that he doesn't like being "sold". I don’t know what transpired between Mr. Lewis and his advisor. But in Liar’s Poker, Lewis recounts his antics as a bond salesman with Salomon Brothers in the 1980’s. Regarding the inherent risk of these particular securities, don’t you think he would have known? And don't you think that he'd know when he was being "sold"?
   
3. The headline of the piece, “My Merrill Lynch Broker Screwed Me…” has a pretty dastardly implication in my mind. “Screwed” is a loaded term. Yet, when I listen to the interview, I don’t get the sense that Lewis was “screwed.” Although there may have been some willful ignorance involved, on the part of the advisor and Mr. Lewis…“screwed” seems to be a word that was inserted for the purpose of attracting eyeballs to the headline. I guess it worked.
   
4. Finally, Mr. Lewis has an interesting take on what has happened to the advisory industry over the years. In his own words “The big firms have evolved since the 1980s, away from servicing the customer and maintaining nice, happy relations with the customer to managing friction with the customer on behalf of the firms’ traders.” In this case, he’s wrong…plain and simple. There is definitely an evolution that is happening within the brokerage firms, but it’s not this at all. It shows me that’s he’s pretty out of touch.
   

One last thing. My favorite graphic during this whole interview was, “How Big Short Author Michael Lewis Got Dupped by Wall Street.”

“Dupped”? What’s “dupped”? Do they mean “duped”?

Where’s the spell check? Where’s the editor?

That’s all for now. I’m done.

Have a nice day!

by Chris Holman