"The rich are very different from you and I."

Paul Sullivan writes the Wealth Matters column for the New York Times. His “beat” is the wealthy class…from the run-of-the-mill millionaire…to the uber-wealthy, i.e. $30 million and up (POP: 40,000 ELEV: Rarefied) Mr. Sullivan’s articles also appear in The International Herald Tribune, the Financial Times, and Barron’s. In September, his first book is due, “Clutch: Why Some People Excel Under Pressure and Others Don’t”…which sounds pretty interesting too.

This past week, Sullivan wrote an article in the NY Times entitled, “Picking the Brains of the Super-Rich, and Picking Up Tips.”

The article itself is a compilation of five different wealth studies that have recently been published:

• World Wealth Report, by Capgemini and Merrill Lynch
• Risk and Rules: The Role of Control in Financial Decision-Making, by Barclays Wealth Insight
• Global Wealth Report, by Boston Consulting Group
• Global Private Banking and Wealth Management Survey, by PricewaterhouseCoopers
• Deloitte Center for Financial Services

Mr. Sullivan’s article does a good job at summarizing the highlights of these studies. For those interested in more granularity, you should read his piece.

My three takeaways from the studies are these:

• The high-net-worth market is getting more diverse…less white, less male, and less old.
• Financial advisors who want to appeal to this group should be very flexible, responsive, willing to use all of their firm’s resources…as well as highly emotionally intelligent.
• Ernest Hemingway was right! *

The last bullet refers to the stunning concentration of wealth among the world’s global elite. 103,000 people of the nearly seven billion people on the planet control 36.1 percent of the world’s wealth. Said another way, 00.001% of the world’s population control 36% the world's money. Double Wow!!

* In a most-likely apocryphal exchange between Ernest Hemingway and F. Scott Fitzgerald, Fitzgerald purportedly said: “The rich are very different from you and I.” Hemingway responded: “Yes. They have more money.”

by Chris Holman

Call Reluctance

Ran across this article the other day in the Toronto Globe and Mail, “Entrepreneurs must fight fear of selling.” I found a sentence that was so shocking to me that I had to re-read it two or three times just for believability’s sake.

“…many people say that as much as 50%-70% of entrepreneurial failure relates to the call reluctance issue.”

Wow! Really! In the first place, I’m a bit leery of a statement of purported fact where the source is “many people.” Doesn’t really pass the smell test for me. Beyond that it’s hard to believe that call reluctance among entrepreneurs would over-shadow other catastrophes and blunders in judgment that can lead to business failure, e.g. lack of planning, insufficient capital, poor management, overexpansion, etc.

There’s no denying that call reluctance can be an important obstruction to the success of entrepreneurs and salespersons of all stripes. Think of all the sales motivators, over the years, who have built lifelong careers by dispensing sales advice, tips, aphorisms, and directives, e.g. Dale Carnegie, Napoleon Hill, Zig Ziglar, Tony Robbins, Harvey Mackay…the list is endless.

As a business coach, my observation is that call reluctance (or “sales shame”, or “fear of selling”, or “inhibited social contact initiative syndrome”, or whatever you want to call it) is a complicated grab-bag of an issue that is resistant to easy analysis and solution. If it were a simple issue to disentangle, Amazon wouldn’t have 739 books in the ‘sales motivational’ category.

My other observation is most of us, i.e. 99.999%, have issues that derail the best of our motivations and get us stuck. For entrepreneurs and salespeople, these issues may revolve around call reluctance, or something still deeper. Getting unstuck takes effort and intention…and a self-awareness to ask questions, e.g. what do I really want? As an entrepreneur, whom do I really want to serve? Am I listening to my clients and potential clients? Do I know their primary concerns and problems, and can I help them to provide sustainable solutions?

Without sounding too self-serving, this is where good business coaching comes into play…helping getting us unstuck from the issues that are holding us back.

Oftentimes the best solutions are not on the bookshelf or at a motivational seminar, or on a DVD…but in the mirror. In the words of the great philosopher pictured above (Pogo)… “We have met the enemy, and he is us.”

Hope this helps.

by Chris Holman

Life's Lessons for LeBron and the Heat

There’s a risk in inferring the Lessons of Life from the Lessons of Sports… yet the victory of the Dallas Mavericks over the Miami Heat offers too many opportunities to ignore.

Motivated by Failure
In 2006, Dirk Nowitzki and Dallas lost the NBA finals to Dwyane Wade and the Heat. Indeed, the Mavericks were up two games in that series…yet, ended up losing four straight, with Nowitzki missing a game-tying free throw with 3 seconds to play in one game and drop-kicking the ball into the stands. At the time, Wade called out Nowitzki as a poor leader and finisher…and a whiner. Five years later, Nowitzki has completely recast his image, playing in the clutch with a grotesquely-bent finger in one game, as well as a 101 degree fever in another. The European “softie” has been transformed into a “Champion.” Nowitzki is not the only example of this phoenix-like metamorphosis. Jason Kidd, a gifted veteran player who never has won a title either, quit on the New Jersey Nets in order to get himself traded to the Mavericks. Today, at 38 years old, he is the senior success story of the NBA.

Counting Your Chickens…
Last July, in a dazzling show of bravura and over-the-top showmanship, James, Wade and Bosh predicted a bushel-full of NBA titles. In Game 2 of this series, James and Wade celebrated in front of the Dallas bench with a 15-point lead in the 4th quarter. What’s a good word to describe these predictions and displays? “Premature” comes to mind. "Hubris" is another good one...

Self-Awareness
I’m not really a LeBron “hater.” However, he seems stunningly (not) self-aware at times. Before Game 5, in a coughing skit, he mugged for the camera along with Wade…in an apparent mockery of Nowitzki’s sinus infection. (Nowitzki denied this motivated him, yet he referred to the incident as “childish” and “ignorant”.) In the post-game press conference on Sunday, James didn’t help his image much with comments that dripped with disdain and defiance, “All the people that was rooting on me to fail, at the end of the day, they have to wake up tomorrow and have the same life they had before they woke up today. They have the same personal problems they had today.” You wonder if James really means this? Privately, does he care what his critics say, or is he using his “haters” as a motivator?

There is no “I” in “Team”
Sorry for the trite sports cliche, but this is the big story line of the series. The Mavericks have just one elite player (Nowitzki), but a far deeper roster. James and Wade are both brilliant with the ball in their hands, but rarely showed an ability to be their best at the same time. History can be instructive to the Heat. Michael Jordan, with six championships to his credit, never won a ring before he was joined by Scottie Pippen, and a vastly underrated unit, behind him.

Learning
James has not been a strong finisher the last two seasons. (Understatement Alert!) In 2010, he disappeared in Game 5 against Boston. This year, he was an absolute non-factor during crunch time. Overall, the Heat was outscored by 36 points when James was on the floor, and they outscored the Mavs by 22 points when James was “riding the pine.” Interestingly, James is 1½ years younger than Nowitzki was in 2006, when he was given his NBA schooling. Of course, James has the size, strength and skills to turn it around and win the ring. The question seems to be if he can confront whatever issues seem to be standing in the way of his quest…and grow from this experience.

Congratulations to Dirk Nowitzki and the Dallas Mavericks...a testament to great champions getting better with age!

by Chris Holman

Rules Rule!

There’s a fascinating new report, published by Barclays Wealth that clearly indicates that a high percentage wealthy investors want investment rules. Indeed, 41% of high net worth individuals wish they had more self-control over their financial behavior

The report, Risk and Rules: The Role of Control in Financial Decision Making is based on a global survey of more than 2,000 high net worth individuals, and provides an in-depth examination of wealthy investors from a behavioral finance perspective. It considers the different financial personality traits that exist amongst wealthy investors, and the different self-imposed rules and strategies that they put in place to deal with these traits.

The Benefits of Rules: More Wealth and Happiness
Most interestingly, the report clearly indicates that those who employ a high degree of investment discipline have on average 12% more wealth than those who do not use rules. Better yet, they also experience a 13% increase in financial satisfaction.

According to the principal author of the report, Dr. Greg B. Davies, head of Behavioral and Quantitative Finance for Barclays Wealth, all investors have a unique “financial composure.” There are two aspects to this: 1) Risk tolerance for the long term, and 2) the degree of anxiety that investors experience for the short term. As he points out, classical finance does a good job on identifying and controlling #1…but virtually ignores #2.

However, it is the latter factor that is most destructive to investment returns over the longer term. Many investors, even though they are very aware of their behaviors, can’t help themselves, i.e. they have a natural inclination to respond emotionally to the markets. The cost of lack of investment discipline is significant. Emotional trading can cost investors up to 20% in returns over a ten-year time period.

Gender Differences
The report also illuminates noticeable differences between female and male investors:

• Women are more likely to use financial self-control strategies, and more likely to perceive them to be effective,
• Women have a higher degree of self-awareness to their susceptibility to financial stressors,
• Men are more likely to be financially over-confident…leading to bad behaviors like timing the market, high-frequency trading, etc.
  

Opportunities for Financial Advisors
The implications of this study are far-reaching, and readily pertinent to how financial advisors engage their clients. Financial advisors might craft the “perfect portfolio” for their clients, but this assumes that all investors are completely rational and able to ignore short-term market events…as well as the 24x7 fear-mongering that seems to emanate from the financial media. Astute financial advisors might offer significant value by helping understand their own emotional make-up, as well as helping design the self-control strategies that are fundamentally important to achieving good market returns.

“First we make our habits, then our habits make us.”…Charles C. Noble

by Chris Holman