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The Death of Equities...or Not

2011-10-06T11:36:00.006-04:00

Some of you grizzled veterans may remember this cover of BusinessWeek from August 13, 1979, that pronounced "The Death of Equities". I do. I was just entering the securities business...and openly questioning my career timing, or lack thereof. Little did I know that it was one of the best contrary indicators that I could hope for.

Therefore, I had a real sense of deja vu, when I saw this article from last week's Wall Street Journal, "Investors Lose Faith in Equities".

Jeremy Siegel, author and Wharton professor, has a good historical perspective on all of this in this recent interview. His quick take: no "new normal" of permanent low-growth, no double-dip recession, and no European Armageddon.

I wanted to share this with all of you. I trust it helps.

All the best!

by Chris Holman

“Secure your own mask first before helping others.”

2011-10-05T11:18:00.011-04:00

How many times have you heard the following?

“If cabin pressure should change, panels above your seat will open revealing oxygen masks; reach up and pull a mask towards you. Place it over your nose and mouth, and secure with the elastic band, that can be adjusted to ensure a snug fit. The plastic bag will not fully inflate, although oxygen is flowing. Secure your own mask first before helping others.”

This pre-flight safety demonstration, as dictated by the International Civil Aviation Organization (ICAO), is a speech that many of us have heard frequently. However, to me the most intriguing sentence of this demo is the last one, “Secure your own mask first before helping others.”

What are they saying? “Be selfish”? “Every person for themselves”? “Don’t help others”? In fact, this phrase offers practical advice quite to the contrary. They are saying:

"In the chance of an unforeseen adverse event, it is most important that we are in the best possible shape ourselves…in order that we may help others."

Confronting the Bear Inside of Us
Here we go again! With the markets flirting with a 20% decline, the third “bear market” within the past decade or so, anxious investors are likely to become even more unhinged. For financial advisors, the immediate question may appear to be, “How do I respond to, soothe, and calm the fears of my clients?”

However, before jumping in to help your clients, take a reality check. Ask yourself this question. “How do I address my own fears…first?” (i.e. “Secure your own mask first before helping others.”)

Sir John Whitmore, professional racing car driver, winner of British and European car championships, and performance coach, has a unique perspective on the nature of fear:

“Fear can be attributed to external or to internal factors or both; however whatever the external circumstances are, we are responsible for our reactions to them. We can succumb to them and wimp out, we can deny them and continue as if they don’t exist, or we can take them as a challenge and rise to the occasion.”

What are your fears, market-related or otherwise? What have you succumbed to? What have you avoided? What fears would you like to confront?

"You can observe a lot by just watching.”...Yogi Berra

Since all change begins with self-observation, the first step in addressing your fear(s) is observing yourself. Sometimes, this is easier said than done. Self-observation is definitely NOT the same as self-criticism. You should avoid the little voice in your head that observes, and makes side comments like, “Why did you do that?” or “Smart one, Einstein!”, so on and so forth. Nor should you feel compelled to devise actions before you’ve completed the self-observation. In fact, by not acting, you allow the self-observation to occur unobstructed and without your critical filter.

A practice is a behavior that we do again-and-again with the intention of improving a quality or competence. Practices follow self-observation, i.e. self-observation becomes part of every practice we do. As a sample practice on your relationship to fear, you might consider making a periodic self-observation, using the following questions as an example:

What fears have I succumbed to today?
What fears did I deny, or avoid, today?
What patterns do I see emerging from my fears?
What triggered these fears, and what was I thinking when these fears occurred?
How could I take on my fears as a challenge, and address them directly?

With this observation and learning, you have taken the first step in “securing your own oxygen mask”. Now that you’ve done this, you should be much more able to help others.

All the best!

by Chris Holman

Smallish Obstacle-Biggish Impact

2011-09-27T14:40:00.006-04:00

Ever have one of those days where the smallest little setback seems to set a negative tone for the rest of the day?

You’re not alone. It can happen to all of us. Regarding the battle of Setbacks vs. Wins, it’s Setbacks…in a cakewalk!

I’m reading a terrific new book, The Progress Principle, by Teresa Amabile and Steven Kramer.

Amabile and Kramer cite extensive research that indicates that the emotional effect of setbacks to diminish happiness is twice as strong as the power of progress to boost happiness.

Additionally:

The power of setbacks to increase frustration is more than 3X as strong as the power of progress to increase frustration.

The connection between mood and negative work events is about 5X stronger than the connection between mood and positive events.

Negative team leader behaviors have a much broader and critical influence, than do positive team leader behaviors.

In general, people expend much more cognitive and emotional energy on bad events than good ones. (When looking at diary narratives, researchers found that the recounting of negative events, was much longer and more detailed than recounting of neutral or positive events.)

So, what's the answer?

Be aware that this bad event vs. good event asymmetry is pretty typical for most people. Don’t think that it’s just happening to you.
Try to ensure that good events outnumber bad events. (Obvious!) Put yourself in situations where good things are more likely to happen to you.
Remove any obstacles that might impede the progress of yourself and/or your team.
Make sure that YOU aren’t the obstacle!

Hope this helps. Have a nice day!

Be the Quarterback!

2011-09-20T15:52:00.010-04:00

I stole this title from a good article written the other day by Thomas Coyle, provided by Dow Jones Adviser. (Link not available.)

The gist of the article is how financial advisors might position themselves towards investors who work with multiple financial advisors.

In the article, Coyle cites a number of financial advisors who place themselves in the conversation with their clients who have significant assets “held away” with other financial institutions. They have done so by positioning themselves as the “quarterback advisor”, i.e. the advisor who takes a broad, holistic view of the entire field of play; or all of the client’s assets, regardless if they are held/managed directly by that advisor.

As one of the financial advisors in the article says, he meets “very little resistance” when he asks his clients to discuss investments that he doesn’t manage directly.

However, another advisor cited in the article takes a cautionary note. He says that most financial advisors do not do enough to earn the trust of investors, in order for them to reveal their held-away assets.

This whole concept of “earning trust” is an interesting one. To continue the quarterback metaphor, let’s consider the importance as to why the quarterback must earn the team’s trust. No surprise, but it is imperative for a football squad to trust their quarterback implicitly. (Google “quarterback+trust+team" and see how many articles come up!)

For financial advisors who are working to build trust with their clients, one approach might be to first engage the client in an expansive discussion about the client's goals and dreams. As the advisor guides the discussion with thoughtful questions, e.g. What are you really trying to accomplish financially? Can you paint a picture of the way you want your future to look? When you visualize your future, what is the one thing that concerns you most?, it will become obvious that more information will be needed for the discussion to be completely honest and helpful.

Indeed, in order for the client to finish painting the picture of their desired future… the advisor will need a complete picture of the client's entire financial life as it exists currently, in order to help them in a professional and comprehensive manner.

The three main benefits for investors to consolidate holdings with one advisor are:

Better asset allocation,
Streamlined reporting,
Reduced portfolio risk.

The last point is especially meaningful for those investors who have the misguided sense that having multiple advisors is a good means to achieve portfolio diversification. (Quite the opposite is true. I've addressed this before. See this link.)

However, cagey and wary investors will not appreciate these very real benefits of portfolio consolidation...if the financial advisor hasn't earned their trust.

Making the effort to see the entire field of play, and engaging in a thoughtful, curiosity-filled discussion that compels the client to think about what they really want to achieve...is a good first step.

by Chris Holman

Like...does this make sense?

2011-09-15T10:09:00.009-04:00

“Fillers” are the empty words and phrases that slip into our speech…that minimize the impact and import of all the other good things that we say.

In English, “um”, “er”, and “ah” are the starter fillers …that many of us use without any thought. Amongst the ‘kids’ today, “you know”, "whatever" and “like” still seem to be the go-to fillers for the Millenial generation. (Who remembers “Valley Girl”? Frank Zappa and his daughter, Moon Unit, were mocking “like” and other valley girl-isms way back in 1982.)

For those of us in business and professional circles, we have our own Filler Favorites. “To be honest…”, “At the end of the day…”, and “If you will…” are three meaningless phrases that seem to pop up like weeds, even among those of us who are reasonably articulate.

This all hit close home to me when I read this essay by Jerry Weissman on the HBR blog yesterday, “Never ask ‘Does this make sense?” I happen to know that “Does this make sense?” happens to be in my own personal bag of fillers. As Weissman accurately points out, this phrase sends out two negative messages. It creates uncertainty on the part of the speaker about the credibility of the speaker’s content, and it casts doubt about the ability of the listener to comprehend what the speaker said. Neither of which is good.

A much better question (which I will try to incorporate) is the nonjudgmental query, "Do you have any questions?"

So what?
Why not use fillers? As linguists point out, fillers can ease the flow of conversation. So, why not use them?

In the first place, fillers are meaningless. Presumably, for those of us who are communicators, we want to delete meaningless words and phrases from our speech…leaving that which is meaningful.

Here’s another reason to delete fillers from our lexicon. They’re selfish. Here’s what I’m talking about.

During a two-way conversation, we often speak by taking turns. When someone thinks that it is their turn to talk, they do. Otherwise, they listen (or pretend to.) Inevitably, there are short periods of silence as the speaker pauses to let the other person take over. But, sometimes the speaker doesn’t want to give up the podium…and inserts a filler to signal that they want more time to speak. When the listener hears the “filler”…they continue to listen rather than start talking.

As a coach, I often listen to replays of my coaching conversations, as a means to continually improve how I communicate, coach and listen. I have noticed that, when a speaker is comfortable with silence, they don’t seem to have the need to insert the “filler” words. (There is no better way to improve your conversational speech and “kick the habit” of lazy, interruptive, or bad speech patterns…than by listening to yourself!)

Like I said...does this make sense?

by Chris Holman

Financial Advisory Paradox: Where Are All the Women?

2011-09-08T09:41:00.006-04:00

You may know the ancient Wall Street anecdote about the wide-eyed visitor to a brokerage firm, who was looking down admiringly at all of the brokers' and bankers' yachts that were docked on the Hudson River. His naive question, "Where are all the customer's yachts?"...was an inadvertent illumination of one of Wall Street's inherent contradictions.

With the dismissal of Sallie Krawcheck this week, we might paraphrase this old saw with... Where are all the women (in financial services)?

Consider the following:

According to a study by Catalyst, within the financial services industry women account for just 19.1% of executive officers, 17.4% of board directors, and 2.7% of CEO's. (With Krawcheck gone, the 2.7% number is even smaller now!)
Looking at the 2010 data from the Bureau of Labor Statistics, the percentage of women who are financial advisors is 30.8%.

Contrast the above, with this:

Women control about 60% of the wealth in the U.S., according to a study by Allianz Life.
This percentage is likely to increase as there is a growing education gap too, as defined by gender. In 2009, 57% of bachelor's degrees were earned by women...as were 60% of the master's candidates...and 52% of PhD recipients. (Source: U.S. Dept. of Education)
Due to significant differences in life expectancies, women are likely to be in charge of much of the $41 trillion that is expected to pass between generations over the next 50 years.
In a 2010 study of female investors by the Boston Consulting Group, 55% of those surveyed said that wealth managers could do a much better job of meeting the advisory needs of women.

We don't presume to have any answers to this obvious disconnect in the marketplace. Yet the question remains:

Women control 60% of the wealth in this country, yet only 30% of financial advisors are women?

What's wrong with this picture?

by Chris Holman

Handing Over the Keys to Your Business

2011-08-31T08:24:00.009-04:00

None of us will retire leaving a legacy quite like Steve Jobs.

However, with the hubbub and hoopla surrounding his retirement announcement last week, I have been thinking about the succession issues that surround many financial advisors and entrepreneurs.

What do you want to leave after you've gone?

Coincidentally, there’s a list of 6 Succession Planning Tips in a recent edition of Financial Planning, which provides financial advisors with a good start in framing this issue:

Plan ahead and leave enough time for your departure. A 5-year window is a good time frame to shoot for.
Have a strategic vision for how you want to exit the business, as well as the legacy you’d like to leave.
Use a trusted, outside advisor to provide objective input on what’s best for you, your family, your firm, and your clients.
Identify internal candidates to lead the business when you’re gone.
In order to secure your best employees, find ways to link their success to the future success of the firm, e.g. equity ownership.
Practice what you preach and spend some time thinking about your own retirement goals. Don’t leave a void in your life where your career once was.

For those of you who are members of Horsesmouth, there is also this thoughtful discussion authored by Helen Modly and Sandra Atkins, “How long can I work as an advisor?” (Subscription required.) As they point out, many financial advisors assume that they will/can work well past the age of 62. However, given that studies indicate that once we pass 60 years old, the likelihood of dementia doubles every five years, what’s the health risk for those of us who desire longer careers? (The recent sobering news on Pat Summitt reminds us that it can happen to the best of us.)

For those financial advisors who intend to sell their practice as a means to fund their retirement, there are a host of additional important issues.

Many of these are related to the fact that there is a very-real demographic bulge of financial advisors in the U.S., who are in their mid- to late-fifties, who hope to wind down their careers and sell their practice in the next 5-10 years...all at the same time. With the large number of financial advisors with this same intention the question needs to be asked…What are you selling, and to whom?

It seems probable that, in the coming years, buyers of financial practices can be very choosy because they will have many businesses to choose from. Therefore, as the owner of your financial business, what have you done with your business that creates sustainable value, post-departure, such that you can command a premium sale price today?

One of Steve Jobs most remarkable legacies is the 313 patents that are linked to his name , including the ornamental design on the staircase of many Apple stores. While it is unlikely that any of us will leave a footprint as deep and as long-lasting as Jobs, it is also likely that many of us want to leave some small trace of our good work.

What have you planned for?

by Chris Holman

Modern-Day Recession Babies

2011-08-17T08:45:00.005-04:00

My mom was a Depression Baby. Depression Babies were born in, and around, the 1930’s…and grew up during a decade of sacrifice and want. Like many depression babies, my mom was frugal, and saved everything. One look in her refrigerator gives a good clue. (She still calls it the “icebox.”) The refrigerator shelves are chock-full of leftovers…of indeterminate provenance.

My mom was sneaky too. Once, during a holiday visit, I spied a small bowl of ambiguous brown bits in the fridge. It looked like it might have been ground beef…accept for the whitish-grayish film that obscured the top. I mentioned this to my mom. She thanked me for the “heads-up” on the past-due leftover. That night for dinner, she made spaghetti, and the bowl of unknown substance was mysteriously gone…as was my appetite!

New Study on Investment Behavior
There’s an interesting study coming out of Stanford on how our economic experiences affect investment behavior. Stefan Nagel, a professor of finance at the Graduate School of Business, has demonstrated that personally experiencing an event like the Great Depression has a significant impact upon how we invest our money.

If you are a financial advisor, as you read this you may be saying something to yourself like, “I sure don’t need a Ph.D. in Finance to tell me that!” (Which Stefan Nagel has, by the way.)

Yet, surprisingly, until now there has not been hard research that economic events can actually change investment behavior. What Professor Nagel did was to compare 47 years of household asset allocation data and stock-market participation figures from the Federal Reserve’s Survey of Consumer Finance…and cross-correlated this against the investor’s economic experience.

Among his findings:

Individuals who had experienced high stock-market returns throughout their lives were less risk adverse, and more likely to participate in the stock market. (For example, older investors, who had memories of the better market returns of the ‘50’s and ‘60’s were more likely to invest in stocks as compared to those investors who experienced the low returns of the ‘70’s and early ‘80’s.)
Alternatively, those who had experienced high inflation were less likely to invest in bonds, preferring inflation-proof cash-equivalent investments.

Recession Babies?
What makes Professor Nagel’s research especially timely is the remarkable market volatility of the past few weeks, and recent articles like this from this past weekend’s NY Times, Small Investors Recalibrate After Market Gyrations…which leads to investor beliefs like the following, “I don’t think there’s a reason to buy on the dip because the dip isn’t done.”

Indeed, one wonders if the 4% daily swings in the market aren’t helping to create a new generation of risk-adverse, Modern-Day Recession Babies.

Beliefs and Risk Preferences
For financial advisors, Nagel’s research might also be instructive in learning more about your client’s investment beliefs and risk preferences. Advisors might consider incorporating some of the following questions as they strive to achieve a deeper understanding of the investment concerns and expectations of their clients:

How have your own market experiences affected your investment beliefs?

How well, or poorly, do you think that the stock and bond markets will do over the next 10 years? (This is their belief.)

I’m curious, based upon your market belief, how might this affect what you are willing to do from an investment standpoint? (This is their risk preference.)

If nothing else, I would think that these questions would stimulate a thoughtful discussion on return expectations and risk tolerance.

by Chris Holman

When “Active Listening” Beats “Action Bias”

2011-08-10T10:18:00.008-04:00

Recently, the US women’s soccer team lost the World Cup final to Japan…on penalty kicks.

The penalty kick is an interesting microcosm of split-second decision-making. Standing 36 feet away, the kicker strikes the ball and sends it rocketing to the goalkeeper at about 80 m.p.h. The goalkeeper has just 0.2 to 0.3 seconds to respond. Stopping a penalty kick is considered one of the most challenging feats in sport. Not surprisingly, 80% of all penalty kicks score.

A few years ago, Professor Ofer H. Azar, of the Ben-Gurion University in Israel, conducted a study. Professor Azar is not a footballer. He’s a lecturer in the school of management, and he thought that penalty kicks would be a perfect way to test his theories of split-second decision-making.

After collecting the data on 311 penalty kicks, what Professor Azar found was instructive. Goalkeepers who moved to their right had the worst chance of stopping the ball…just 12.6%. Those who moved to the left were marginally more successful…14.2%. Those who did nothing, i.e. stayed in the center of the goal, had the best chance…a 33.3% success rate.

As might be expected, the desire to do SOMETHING…as opposed to NOTHING (known as “action bias”) can extend to many fields beyond the soccer pitch. Financial advisors, and investors, know this urge all too well.

For investors, the impulse to act may have deep psychological underpinnings. In one of his brilliant studies, Nobel Prize winner Daniel Kahneman probed the quirks of investment decision-making. He discovered that investors had more pangs of remorse when they lost $1,200 because they chose to act, than those investors who lost $1,200 because they left their investments untouched.

For those readers of this column who are financial advisors, I presume that you have handled 1-2 calls from fearful investors over the past few weeks, who have had a bias toward “action bias.” In their eyes, doing something is better than doing nothing.

As a financial advisor, how do you react to this?

Active Listening
Rather than acquiescing to the clients’ frantic instincts, you may want to make sure that you have practiced “active listening” as you attend to your client and their agenda.

“Active listening” is one of the International Coach Federation’s core precepts that all ICF-certified coaches practice in order to gain complete learning and understanding about their client(s). It is the ability to focus completely on what the client is saying and is not saying, to understand the meaning of what is said in the context of the client’s desires. Active listening summarizes, paraphrases, and mirrors back what the client has said to ensure clarity and understanding… and that both the coach and client are absolutely on the same page. Active listening allows the client to vent the situation (without judgment from the coach) in order for the client to move on to the next appropriate steps.

Active listening is a dynamic commitment to understanding how your clients feel and how they see the world. It means putting aside your own prejudices and beliefs, anxieties and self-interest, so that you can step behind your client’s eyes and envision their perspective.

Of course, “active listening” may not be a financial advisor’s sole response to concerned clients. Additionally, financial advisors might dial up their proactive client communications; ensure that their clients are aware of all of their efforts (including active portfolio monitoring), as well as making tactical changes that are consistent with the client's overall investment plan.

From the client's perspective, the key is their understanding is that "active listening" is not synonymous with inactivity...but rather an intentional response to a client's desire to be heard.

by Chris Holman

How to Change Relationships Forever...in 10 Seconds or Less

2011-08-04T11:28:00.010-04:00

I recently finished reading a fabulous book…Fierce Conversations: Achieving Success in Work & Life, One Conversation at a Time, by Susan Scott. The central premise of this book can be summarized with this sentence: “Our work, our relationships, and in fact our very lives succeed or fail gradually, then suddenly, one conversation at a time.”

I’ve mentioned this book before, as well as an experience that resonated with me. Another experience has happened that demonstrated the power of just one conversation. One even more powerful. I wanted to share this story with you.

I have a morning ritual where I stop in a local coffee shop about 6:00 AM or so and order the same thing…a medium macchiato. The regular barista knows this…and usually has my order going before I’m halfway through the door.

However, once a week, there’s a fill-in barista. He doesn’t know the drill yet. In fact, he has a behavior that has really annoyed me. It so much irritates me that I’ve been socially blocked from chit-chatting with him with the routine small talk.

Each time that I have ordered my usual from the fill-in barista, he has given me this same rap… “Now, you know that our macchiato is not like the kind that you get at Starbucks. We don’t give you the vanilla syrup and caramel sauce. That’s a caramel macchiato. You know that, right?” Five times! He’s told this same rap to me five times!

I listen patiently, but I’m annoyed inside. Silently I say, “Look pal, I know this. I’m here every morning. You’ve told me this before. I think I know what I’m doing, and I would NEVER order a coffee with syrup in it!” I leave the shop muttering.

Last week, I was telling this story to a friend of mine.

My friend: “You know what, that kinda sounds like Nick (not his real name). I believe he works in that café. In fact, that IS Nick…and you know who he is too.”

Me: “I don’t think so.”

My friend: “Yeah, you do. Remember Ben’s play that we saw a few years ago? Remember that awkward-looking young man who played the soldier wearing sunglasses? That was Nick.”

Me: “Ummmm…vaguely familiar.”

My friend: “Yeah, Nick has Asperger’s Syndrome. That repeating thing that he does with you…that sounds like it might be some Asperger’s quirk.”

Me (Stunned and chastened by this revelation): “Ugh…you’re kidding!”

Yesterday, Nick was filling in at the café again. Thankfully, he doesn’t give me the macchiato spiel this time. I dive into the conversation:

Me: “Is your name Nick?”

Him: “Yes it is!”

Me: “Were you in one of Ben’s plays a few years ago?”

Him (Beaming!!!): “Why yes! That was four years ago. How can you even remember? I was wearing sunglasses.”

Me: “Yes, I remember you.”

Him (With his hands crossed over his heart): “I can’t believe you remember that. That’s so great! You don’t know how happy that makes me feel!”

Me: "See you later, Nick."

Him: "This is incredible! I really can’t believe it."

Truthfully, I don’t think that this exchange will alter the course of my life…or Nick’s. But it’s certainly changed our relationship forever. Without question. And it took ten seconds.

Just one conversation.

Wow!

by Chris Holman

Coaching Clients Through Dark and Gloom

2011-07-28T10:12:00.005-04:00

Been reading the headlines lately? Bleak stuff, isn’t it?

Regardless of one’s political stripe or economic belief, the news has been difficult to stomach of late. Each new day seems to bring a different outrage or unspeakable horror.

Sadly, with the dysfunction in Washington, D.C., it’s possible that it gets worse before it gets better.

For financial advisors who’ve been in the business for any length of time, it might seem like déjà vu all over again. It was just three years ago that the financial debacle seriously corroded the trust that investors had in: the financial markets, the regulators, investment firms, and their advisors. Only just recently has this trust and confidence been regained, if at all. Indeed, the World Wealth Report 2011 indicates that only 44% of high-net-worth investors have any faith in the oversight regulators today, and 33% actively distrust these institutions.

If you are a financial advisor, I’m assuming that many of your clients are freaked out by the headlines too. Personally, I don’t think it would take much to scare the living daylights out of many investors…to the point where they crawl back into the cave that they just emerged from…and push the rock back over the entrance.

Here’s the thing though. We have observed that times of “investor stress” are really interesting periods for financial advisors to engage their clients in highly-personal and honest discussions about what concerns them most, e.g. their fears and concerns about money, their legacy and future, family, their values, etc.

If you’d like to engage your clients differently this time, here’s a thought. Act like a coach. Although the best coaches out there undergo years of coaching, learning, and thinking before they reach top proficiency, I would refer you to the 11 Core Competencies as outlined by the International Coach Federation (ICF). These core competencies are the foundational elements that buttress the special relationship that coaches create with their clients. Although not all of these competencies are equally germane to the financial advisor-client relationship, many have a high degree of relevance.

For example:

An essential core competency of the ICF-credentialed coach is the ability to co-create a trusting (and intimate) relationship with the client by building a safe supportive environment that produces ongoing mutual respect and trust.

Another core competency is active listening… which is the ability to focus completely on what the client is saying (and is not saying), in order to understand the meaning of what is said in the context of the client’s desires, and to support client self-expression.

Still another is powerful questioning…which is the skill of asking open-ended questions that evoke discovery, insight, commitment, or action (including those questions that challenge the client’s assumptions.)

Finally, if you are really interested in becoming more coach-like in how you interact and partner with your clients…get a coach. There is no better way to model coaching behavior than to observe close-at-hand the practiced mastery of a highly-skilled coach.

For those financial advisors who’ve seen this movie before…what’s your learning from the last time? What would you do differently?

Remembering the oft-misquoted words of the philosopher George Santayana (1863-1952): "Those who cannot remember the past are condemned to repeat it."

If that quote doesn’t grab you, try this one: “I’ve lived through some terrible things in my life…some of which actually happened.” …Mark Twain (or maybe not)

by Chris Holman

Survey Says!

2011-07-20T09:33:00.007-04:00

Marketers have long known that Client Surveys are a good thing. They are an effective tool that positively influences customers and clients.

In a seminal study by Paul Dholakia and Dr. Vicki Morwitz, published in Harvard Business Review, 1000 customers of a large financial services company were tracked for one year…following a simple 10-minute customer survey that was conducted over the telephone.

Here’s what Dholakia and Morwitz found:

Survey participants were 3x as likely to open new accounts with the firm,
Survey participants were less than half as likely to defect,
Survey participants had a significantly higher profitability profile as compared to the control group, and
Moreover, Professors Horwitz and Dholakia believe that the positive spillover of the client survey last anywhere from 3-8 years.

Unfortunately, there is some evidence that not all financial advisors have not yet embraced client surveys and the positive impact they have on client profitability and loyalty. Recently, our firm, ClientWise, polled a large group of top-performing financial advisors…and discovered that only 20% were surveying their clients on a consistent basis.

This is a missed opportunity. In fact, we think that individual financial advisors can implement a very personalized client survey that is even more effective than the previously discussed results of Horwitz and Dholakia. We call this the “ClientWise Conversation” …a series of 5 straightforward and thoughtful questions that get to the heart of the client-advisor relationship.

Recently, one of our coaches reported on the learning that one of his clients gained through a ClientWise Conversation with his top clients.

Among other findings, the financial advisor discovered:

That several of his clients were concerned that he wasn’t on a team, and (without knowing his succession plan) wondered what might happen if he left the business unexpectedly,
A surprisingly large number of the advisor’s clients asked why they hadn’t been approached for referrals. (Because they hadn’t been asked, they had assumed that the advisor wasn’t looking to build his business.)
Some retiree clients were concerned about the account fees, while noting that the accounts did not have much trading activity. In their minds, they had been asking themselves, “Where is the value?”
Yet, most all of the clients felt great about the overall relationship, and were delighted that their financial advisors cared enough to ask them how things were going.

Without engaging his clients in the deeper discussion that we call the "ClientWise Conversation", this advisor would have been oblivious to these important issues; some of which were putting his clients "at-risk", and others being obvious opportunities to grow.

by Chris Holman

Mark Zuckerberg Turns It On

2011-07-12T09:13:00.005-04:00

For having the reputation of a “27-year-old multi-billionaire geeky tech guy”, Mark Zuckerberg also seems to have a high degree of emotional intelligence and self-awareness, and can turn on the charm when he needs to.

Pretty fascinating article in yesterday’s NY Times entitled, “Taking a Walk with Mark Zuckerberg”. It describes the process, experienced by a select few “rockstar” recruits to Facebook.

Sometime during the recruitment courtship, Zuckerberg surprises the candidate with an invitation to join him on a walk. (How does one say “No” to this?) At this point, Zuckerberg escorts his somewhat startled guest across the parking lot at Facebook headquarters (see picture) on 1601 S. California Ave. in Palo Alto CA, where they amble along a wooded trail until they reach a Silicon Valley lookout that has a pretty spectacular view of the environs below.

With a sweep of the arm, Zuckerberg discusses the technological history of the area, points out Apple’s headquarters…Hewlett-Packard’s…and the other biggies…and remarks that Facebook will eventually be bigger than all of them…and “If you joined us, you could be part of it all.”

One recipient of this dramatic gesture said, “The entire experience was totally surreal. I really felt like I was on a date.”

Speaking of rockstar recruitment conquests by Mark Zuckerberg, there’s an equally fascinating profile of Sheryl Sandberg, by Ken Auletta in the latest edition of The New Yorker.

Mark met Sheryl at the Christmas party of a mutual friend in 2007. He approached her and introduced himself. They chatted for about an hour by the door. At the time, Sandberg was Google’s 38-year-old VP for global online sales and operations and managed 4000 employees. Facebook was a company without any revenue.

For Zuckerberg, the meeting with Sandberg was wonderfully serendipitous. He knew that he was ill prepared to run Facebook on a day-to-day basis. By fortunate coincidence, Sandberg was ready for a change too. Over a six-week period, Sheryl and Mark met for dinner 1-2 times a week at Sheryl’s 6-bedroom home. Sandberg, who is not a night owl, often had to usher Zuckerberg (who is a night owl) out the door at close to midnight. “It was like dating,” says Sandberg’s husband Dave Goldberg (CEO-Survey Monkey). They spent long hours asking each other questions like, “What do you believe?” “What do you care about?” “What’s the mission?”

To Zuckerberg’s complete credit, he recognized that Sandberg was a perfect fit for Facebook. Says Zuckerberg, “There are people who are really good managers, people who can manage a big organization. And then there are people who are very analytic or focused on strategy. Those types don’t usually tend to be in the same person. I would put myself much more in the latter camp.”

Mark offered Sheryl the COO spot in February 2008. Within days she was asking questions, and listening, to her new Facebook colleagues…walking up to hundreds of people’s desks and introducing herself by saying, “Hi, I’m Sheryl Sandberg.”

Today, Sandberg meets with Zuckerberg twice weekly, Monday morning and Friday afternoon. Her workstation is a few feet away from Zuckerberg’s in a cavernous room, and also connected to three other senior executives, the VP of product, the chief engineer, and the C.T.O. Says Zuckerberg of Sandberg, “She handles things I don’t want to. All that stuff that in other companies I might have to do. And she’s much better at it.”

Given that the I.P.O. buzz on Facebook is now in the $100 billion range, which would most likely make Sandberg an instant billionaire, and Zuckerberg’s 24% stake continues to grow like topsy, this has been a fortuitous pairing.

by Chris Holman

Real Conversations

2011-07-05T12:43:00.008-04:00

There’s a coffee shop that I have frequented early in the AM for my morning machiato, 4-5 days a week for the past six months. My conversations with the barista have always been very pleasant, very brief…and very superficial. It was never my intention to be aloof or indifferent to the barista, but I’ve never really stepped outside the exchange of banal pleasantries.

Until just the other day. I don’t remember how the conversation began. But, in a short period of time I learned that the barista is an aspiring elementary school teacher, who has been under-employed during this terrible job market. She was thrilled to tell me that she was recently able to find a summer gig teaching fifth grade in a tough inner-city school. Despite the inherent challenges with her summer assignment, it was obvious that school-teaching is her passion. We spoke for five minutes about her class in a conversation that was engaged, animated, and interesting.

I thought of this experience as I read Fierce Conversations: Achieving Success at Work & in Life, One Conversation at a Time, by Susan Scott.

What an engaging read! The essential premise of the book is the absolute primacy of the conversation. In the words of Ms. Scott, “While no single conversation is guaranteed to change the trajectory of a business, a career, a marriage, or a life…any single conversation can.”

Furthermore…

“The conversation is the relationship. If the conversation stops, all of the possibilities for the relationship become smaller, until one day we hear ourselves in mid-sentence, making ourselves smaller in every encounter, behaving as if we are just the space around our shoes, engaged in yet another 3-minute conversation so empty of meaning it crackles.”

This is not your typical light summer reading fare. However, it is chock-full of valuable insights and observations. Consider her, “7 Principles of Fierce Conversations”:

Master the courage to interrogate reality.
Come out from behind yourself into the conversation and make it real.
Be here…prepared to be nowhere else.
Tackle your toughest challenge today.
Obey your instincts.
Take responsibility for your emotional wake.
Let silence do the heavy lifting.

Does your life suffer from an over-abundance of trivial pseudo-conversations? Read this book!

You may not be able to ask, “How are you?” without really meaning it to a random stranger…ever again.

by Chris Holman

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

2011-06-28T09:24:00.007-04:00

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

2011-06-22T11:22:00.002-04:00

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

2011-06-14T10:21:00.011-04:00

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!

2011-06-07T09:31:00.004-04:00

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

Swimming After a 33-Year Dream

2011-05-31T11:09:00.005-04:00

Almost 33 years ago, Diana Nyad was pulled from the waters of the Caribbean. After 42 hours in the water, and desperately off-course, she had failed in her attempt to complete the 103-mile swim from Cuba to Key West. Shivering and delirious from fatigue, with a tongue so badly swollen from seawater that made her words almost unintelligible, she weakly protested, “Can’t I keep going?”

After 1979, Diana Nyad stopped swimming altogether. Succumbing to “swimmer’s burnout” she didn’t swim a stroke for 31 years. She went into broadcasting… pursuing a career as a TV and radio journalist, e.g. Fox Sports News, “The Savvy Traveler”, etc.

Yet, two summers ago as she approached her 60th birthday, something happened. Life, she felt, “was screaming by like a hurricane. I blink and it’s April. I blink and I’m 61.” One day while driving in Los Angeles, she looked in the rearview mirror and asked herself what she regretted most. Her answer…the Cuba swim.

With renewed vigor, she jumped back into extreme training. Last summer, she completed a 24-hour marathon swim (She sang the theme from “Beverly Hillbillies" 2000 straight times to combat boredom.) She has assembled a support crew of 25 experts, many of whom are working gratis in support of her dream. Although she has found a partial sponsor in Secret deodorant, she is $350,000 short of her desired expense goal…and is self-funding the gap.

(Here's a nice article in the Washington Post, by Sally Jenkins, that describes this adventure in greater detail.)

If all goes well, some time in June or July (weather-permitting) Nyad will slip into the water on the northern Cuban coast, and head 103 miles through the shark-infested Florida Straits towards Key West. In addition to sharks, other hazards await… e.g. hypothermia, dehydration, man o’ war jellyfish, cardio-arrhythmia; not to mention the mind-numbing fatigue of 60 hours of continuous swimming.

However, in Nyad’s view, this is a risk that must be taken again…before it’s too late.

Her own words, say it best:

“I was experiencing what millions my age are feeling these days. Disenfranchised, no longer valued, terribly worried that my best days were behind me. Yet the business of life is to live large and you can dream at any age. To me the phrase “60 is the new 40” is not a joke. We baby boomers can put truth into those words. We are far from irrelevant at 60. We’re now emotionally mature, brimming with wisdom and calm, still physically strong. This should be the prime of our lives. Training for this swim has filled me with the heartening, empowering conviction that it’s never too late to chase your dream.”

Good luck, Diana Nyad.

And…Thank you!

by Chris Holman

Baby Boomers, Investing, and Retirement Angst

2011-05-24T10:27:00.007-04:00

For financial advisors who are targeting the 79 million individuals born between the years of 1946-1964 (How can you “target” 79 million people, by the way?), otherwise known as Baby Boomers, I wanted to recommend a really interesting new study, “Understanding the Accidental Investor: Baby Boomers on Retirement.” Published by Financial Engines, the organization co-founded by Bill Sharpe, “Understanding the Accidental Investor” explores the emotions, behaviors and needs of Baby Boomers entering retirement.

The observations in this report are based upon a three-year long study of Baby Boomers on the verge of retirement, and reveal a population that is rife with distress, fear, mistrust, and overall investment angst.

Reaching Accidental Investors
In addition to highlighting the emotions and corresponding behaviors of near-retirees and retirees, this white paper identified five common needs that, if met, could potentially help Baby Boomers overcome the strong emotional barriers that hinder their investment thinking.

Those needs include:

Flexibility. Given the uncertainty of retirement, participants in the study expressed a need to have flexibility and control over their retirement investments. Participants had a high reluctance to be locked into an investment vehicle--especially early in retirement when uncertainties are at their highest.
Safety. Due to fear of significant losses right before or in retirement, many participants wanted investments that lowered investment risk or that could provide a steady and reliable source of income over time, and potentially for life. Many participants desired both. In addition, many of the participants also wanted flexibility.
Help from an Advisor. Many participants said that they wanted to work with a financial professional they could trust to help them create a plan and decide on the appropriate course of action. At the same time many said that they found it difficult to know who to trust with their life savings.
Sponsor Evaluation. According to the Financial Engines' white paper, participants said that having their employer select and monitor independent retirement income providers made them more likely to accept professional retirement help.
Fee Transparency. Finally, many participants demanded clear and easily understood fees. They said that they would not act unless they fully understood the fees associated with a given product or service.

As a card-carrying member of the Baby Boomer contingent myself (i.e. my driver's license), I can readily identify with many of the observations of this study. However, I think it's also kinda tricky to paint an entire generation of 79 million people with sweeping broad-brush generalizations.

As Mark Twain said, "All generalizations are false...including this one."

Even still, this study provides many valuable insights...and is worth a close look by investment professionals who desire to connect with Baby Boomers.

by Chris Holman

Tall Clover in Rollovers

2011-05-19T11:31:00.006-04:00

Did you see this article in Investment News, "Rollover funds go a-begging"?

If you didn't, and you are a financial advisor who is interested in the rollover market, you should. Today in fact. Unless I am completely mistaken, this seems like it's an incredible educational and marketing opportunity.

In a recent Fidelity Investments Survey of individuals who have left a company retirement plan:

66% of individuals did NOT move assets from their former employer's plan within 4 months of leaving the company,
59% of those that left assets in the company plan did so because of: plan features, services, or access to a specific investment,
27% of those that stayed in the company plan said the money was still there because they "haven't got around to it yet."

By any measure, the 66% figure is a number that must make the financial advisory community gasp! (Is this even correct? Really hard to believe!)

However, if it's close to true, I would think that forward-thinking financial advisors would be inspired to educate and explain as to why leaving assets in a former employer's plan is a grotesque mistake that unnecessarily complicates one's financial life.

Just wanted to pass this on...

by Chris Holman

No Ostriches. No Elephants.

2011-05-17T11:11:00.008-04:00

On June 1st 2011, Barry Salzberg ascends to the CEO spot of Deloitte Global, the largest of the “Big Four” consulting and accounting firms, with 170,000 employees worldwide in 150 countries.

Although Deloitte’s global headquarters on 1633 Broadway in midtown Manhattan is just a borough away from where Salzberg was born-and-raised in Brooklyn, it is worlds away from where he began in life. His father was a postal clerk who died when he was in high school, requiring young Barry to work to help support his family. Salzberg was only the second person in his family to attend college. In fact, his high school guidance counselor told him not to bother to go to college because "he couldn't handle the work." Salzberg applied to every publicly funded college in the city. He wasn't able to leave home because his mother was alone at the time, and he needed to work 25-40 hours a week to support them both.

Ultimately, Salzberg earned a Bachelor’s degree in accounting from Brooklyn College, a Juris Doctorate from Brooklyn Law School, and a Master of Laws degree in taxation from the New York University School of Law. It's not clear what the guidance counselor is doing today.

Joining Haskin & Sells in 1977, Salzberg got his first lesson in leadership…his 3rd day on the job. His first boss (who Salzberg subsequently named “Bosszilla”) asked him to xerox a tax ruling. Salzberg did so…and also took the initiative of including his own 2-page interpretation.

His boss’s blunt response? “Mr. Salzberg, I asked for a copy of the ruling, not your interpretation. One copy, stapled.”

Mr. Salzberg’s 34-year career at Deloitte, along with his bedrock learning on the streets of Brooklyn, has given him a fresh and unique perspective on how he defines leadership. He calls this principle, “No Ostriches. No Elephants.” This philosophy is predicated on four underlying tenets: Honesty, Respect, Appreciation, and Transparency.

Honesty: In Salzberg’s words, “No burying your head in the sand if there’s a problem, and no ignoring the elephant in the room. Much better to name and tame an issue, no matter how difficult it is. Making the truth told and discussed is the foundation of leadership. Without that, you can’t build trust.”

Respect: Salzberg’s attitude towards his colleagues is light-years away from the attitude of “Bosszilla.” In his view, today’s worker expects to be treated with complete respect, as an individual who can offer valued contributions to an organization. Moreover, workers tend to stay longer in jobs that are built around their own unique needs…not vice versa.

Appreciation: The Golden Rule applies…and don’t forget to say “Thanks!” Let your best people know how much they are valued…especially in tough times.

Transparency: No hidden agendas. According to Salzberg: the idea of a "ruling elite in the clouds of some bureaucratic Mount Olympus." In the past, it would have been unthinkable for the average employee to have direct contact with the CEO, he pointed out. Today, CEOs regularly host employee town halls, in which people are encouraged to ask and say anything. "Our people have to see if that if they disagree [with their boss], nothing will happen -- that there are no [negative] consequences to promotion or compensation."

For more on Barry Salzberg, check out this illuminating article at Knowledge@Wharton.

Ostrich Facts: The Ostrich is the largest living species of bird and lays the largest egg as well. Ostriches never actually bury their hands in the sand. Complete myth. Ostriches also have the ability to run at maximum speeds of about 97.5 kilometers per hour (60.6 mph), the top land speed of any bird. (See here.)

by Chris Holman

No Gripe on Skype

2011-05-12T09:04:00.000-04:00

Dr. Eric K. Clemons is a professor of operations and information management at Wharton, and a pioneer in the study of the transformational impacts of information on the strategy and practice of business.

Recently, Dr. Clemons weighed in on Microsoft's $8.5 billion takeout of Skype. Although ClientWise is an executive coaching firm, and not in the business of providing investment advice, we found Dr. Clemons' comments to be insightful and illuminating...and wanted to share this interview with our subscribers.

Besides...most guys who sport bow-ties these days are worth a listen.

by Chris Holman

The State of the Financial Services Industry

2011-05-10T09:41:00.006-04:00

There’s a pretty interesting interview with Chip Roame of Tiburon Strategic Advisors, who recently hosted the Tiburon CEO Summit, a semi-annual gathering of the renowned leaders and other muckety-mucks within the financial advisory industry.

Roame opines about some of the top industry trends:

Are the Wirehouses Alive, Dead, or Dying? (Alive and well, but how many advisors will they ultimately employ?)

Which Wirehouses are growing? (Of the four Wirehouses, only Wells Fargo has seen growth in advisor numbers. UBS America’s days seem numbered.)

Is the “Breakaway Broker” a real phenomenon? (Real…but not in mass numbers. Moreover, 80% of the advisors who leave the Wirehouses do so involuntarily.)

What’s the future of the independent broker-dealer? (LPL has lapped the field with 12,000+ advisors. For the smaller and mid-sized b/d’s, the future looks far less certain.)

What are the trends in consumer wealth? (Stocks have come back 50%+, housing prices haven’t.)

Is the advisory business generally healthy? (Extremely so. The trend is its friend.)

Speaking of the state of the industry, there was a somewhat engaging article in the April issue of Registered Representative, “The Myth of the Vanishing Advisor.” The article explores the health of the financial advisory industry from the standpoint of advisor population, i.e. given the demographic and retirement trends of the affluent, as well as the advisors themselves, will there be a shortage of financial advisors in the future?

One comment stood out for me. Stephen C. Winks, a Richmond, Va.-based management consultant for financial advisors, estimates that there are 17 million households with more than $100,000 in liquid investable assets. He goes on to say that if each advisor had about 200 clients, it would take about 85,000 advisors to serve the market, a fraction of the current population. (There are about 350,000 active financial advisors today.) “You can do the arithmetic very easily,” Winks says. “We've got way too many brokers.”

Not to quibble with Mr. Winks, but his calculations assume that all advisors, and advisory firms, have a homogeneity of skill sets and have been equally adept at staying current with some of the rapidly changing demands and expectations of the complicated financial lives of affluent investors.

From our vantage point, this is hardly the case.

by Chris Holman

Advice

2011-05-04T10:56:00.005-04:00

Most advice is terrible. So says Dr. Heidi Grant Halvorson, author and motivational psychologist, in a recent blog post of hers, “The Difference Between Good Advice and Bad Advice.” Dr. Halvorson goes on to say, “Whether you get it (i.e. advice) from a best-selling author, your boss, or your neighbor, nine times out of ten it’s about as useful as a screen door on a submarine.”

Dr. Halvorson is also the author of Succeed: How We Can Reach Our Goals; which is also kinda funny when you think about it. (Ironic? Paradoxical? Nervy?) Presumably, she doesn’t include herself in the 90% of advice-givers who are “terrible.”

Advice-giving is really big business, and completely recession-proof too. It is estimated that when one tallies all of the self-improvement training and paraphernalia, e.g. books, authors, seminars, holistic institutes, infomercials, etc., the total self-help market is more than a $12 billion industry, and growing at 6%+ annually. Indeed, when one enters “self-help” in the search box on the Amazon website, you’ll find 129,706 different books that fall into this ever-increasing category. (By Dr. Halvorson’s calculus, 116,735 of these books are valueless!)

What separates good advice from bad advice? One of the challenges with getting advice from others is that the advice often comes with strings attached. When you think about it, it is really difficult for many advice-givers, even well-intentioned ones, to dissociate themselves from their own personal agenda when they dispense their advice. In this way, their advice is more about them, and less about you.

As Oscar Wilde has said, “The only thing to do with good advice is pass it on; it is never of any use to oneself.”

The other interesting thing is that when one gathers advice from others, solicited or not, there is a tendency to discount our own intuition and experiences. Not that we shouldn’t value the insights of others, but sometimes the best solution to a specific problem can be found in our own backyard…by virtue of using our own built-in tools and instincts. Although I am no psychologist, it seems that sometimes when we seek advice from others, what we really want is their approval.

I’m curious. When was the last good advice that you received? On the other hand, when was the last time that you came to a resolution…intuitive leap of understanding…or clarity of thought, by your own thinking efforts? My guess is that, for many of you, the last circumstance was much more recent than the first.

On the matter of giving advice, I have always appreciated this quote from Harry S. Truman, when he offers this guidance on how to advise one’s children:

“I have found the best way to give advice to your children is to find out what they want and then advise them to do it.”

Interestingly enough, “advising them how to do it” is still giving advice, and an indicator of how tricky it is to break the advice-giving habit.

by Chris Holman

"Traditional planning is just table stakes."

2011-04-28T09:49:00.006-04:00

There was an interesting development yesterday, April 27th, in the competitive quest to serve affluent clients. U.S. Bank announced the launching of Ascent Private Capital Management, a new wealth-management group for high-net-worth clients with more than $25 million in assets.

In the words of Michael Cole, president of the unit, “These ultra-high-net-worth clients are unique and different. Traditional planning is just table stakes. We are already good at these things. We need to help them do more than just manage their wealth. We need to help them manage the impact of their wealth.”

The bank hopes that, by engaging affluent families in broader discussions about their values and goals, the new unit will help prevent the loss of wealth that often occurs as assets are transferred from one generation to the next. About 70 percent of all estates fail to transfer successfully to the next generation, according to a study by the Williams Group of Stockton, Calif. The primary reasons are poor communication and lack of trust, rather than bad advice or financial mismanagement, according to the study, which included interviews with 3,250 families over four decades.

The competition among banks that are targeting the high-net-worth market is intense. U.S. Trust is the purported leader among the group, all of who are chasing the 36,000 or so persons in North America with investable assets of $25+ million. With this latest move, U.S. Bank is trying to distinguish itself with what it refers to as “wealth impact” services, i.e. sophisticated advice on how the affluent can make a positive impact upon the world (as opposed to ho-hum services like traditional planning and wealth management)

by Chris Holman

Get the Upper Hand on Voicemail

2011-04-27T11:45:00.005-04:00

Voicemail is a necessary evil for most of us today.

I wanted to pass along the comments of a Mr. Tibor Shanto, a self-proclaimed voicemail expert. (btw...this image is definitely not of Mr. Shanto.)

Although I would dismiss some of Mr. Shanto's assertions as sheer puffery, e.g. “50% of my voicemails are returned in 72 hours”, I actually like the way he frames up the entire communication environment that has led to the prevalence of the use of voicemail today.

His tips on how to leave a voicemail are on point too. He says his voicemails are just ten seconds long. They include:

• His name and company,
• His phone number (pronounced slowly),
• And a short, somewhat cryptic comment that piques curiosity and compels the recipient to call you back.

In this link (here) is a 10-minute YouTube video where Mr. Shanto talks at length on how to leave a voicemail. It’s definitely worth a listen if you'd like to brush up on your voicemail skills.

All the best!

by Chris Holman

Time, Money, & Happiness

2011-04-26T09:59:00.011-04:00

Jennifer Aaker is a social psychologist, author, and professor of marketing at Stanford University's Graduate School of Business. Over the years, her research has focused on three topics of interest to most of us: Money, Time, and Happiness (not necessarily in that order).

Her big interest is in uncovering what actually makes people happy...as opposed to what they think makes them happy.

In this regard, she has recently co-authored an article in the Journal of Consumer Psychology, "If Money Doesn't Make You Happy, Consider Time".

As I read it, her conclusions can be summed up thusly:

Happiness is a consequence of the choices we make.
Time is a finite resource. We can increase our happiness by spending our time wisely.
The more time that we spend with our partners, best friends, and close friends...the happier we are.

Sounds straightforward enough. How does one make this happen?

Spend time with the right people. Socially connecting activities are responsible for the happiest parts of the day. Work is an essential part of this element in the time-happiness relationship. Two of the biggest predictors of a person's general happiness are whether they have a 'best friend' at work...and whether they like their boss.
Spend time on the right activities. How much time during the day do we spend on mindless activities, where we never actually make the intentional choice to participate? It is better to ask the question, "Will what I am doing right now become more valuable over time?"
Enjoy experiences without actually doing them. The part of the brain responsible for feeling pleasure (the mesolimbic dopamine system) can be activated by merely thinking about something pleasurable. A great example: reading a guidebook before a much-anticipated vacation. [I think they call this "daydreaming"]
Focus on the present. Research has shown that focusing on the present (vs. the future) can slow down the passage of time. [One can do this by simply breathing more deeply.]
Happiness changes over time. Younger people (i.e. Millennials) experience happiness as excitement. Older folks (i.e. Baby Boomers) experience happiness as peacefulness. The implication is, as we age, that we should shift how we spend our time, as our understanding of happiness changes.

For financial advisors, we can draw interesting inferences from all of this. For example, "Spending time with the right people" should definitely include our clients. If we don't enjoy our clients as individuals, the days can become very, very long. Similarly, I also like the mindfulness of "Spending time on the right activities". Sometimes I feel that when I'm really tired, or a bit blue, I can go from activity-to-activity without even thinking about its value. The net result is that my mindlessness seems to exacerbate my ennui.

Cheers!

by Chris Holman

Your (Flawed) Telepathic Powers

2011-04-19T10:07:00.005-04:00

Chris Brogan is an author, entrepreneur and thinker. His blog, chrisbrogan.com, is in the Top 5 of the Advertising Age Power150.

In a recent post, “Mind Reading”, he discusses the human tendency to project our thoughts (and fears) of what we perceive someone else is thinking…and make mental presumptions that constrict our behaviors.

Example: You have a good friend who you believe would be a terrific client and one who would greatly benefit from your services...even though you have never actually broached the idea of working together. The voice in your head says, “I’d love to work with them, but I’m sure that they wouldn’t want to discuss this because they are most likely working with someone else.”

The interesting thing about mind-reading is that we all do it...including your good friend!

To follow the above example, it is entirely possible that your friend has a professional issue that they’d like to discuss with you because they really, really trust you. However, they don’t because they have their own voice that is playing in their head saying, “You know, I’d really like to talk to him/her, but I don’t think that I’m the sort of client they’re looking for.”

(This is actually not a far-fetched example. From our research, this happens fairly often where potential clients do not reach out to professionals who they know and trust, because they think that they, i.e. the potential client, does not meet the minimum standards that the professional might require.)

Brogan goes on to say that it's important to stay vigilantly self-aware against "mind-reading". If not, we run the risk of manufacturing these conversations in our head that are more perception than reality. Most likely, these perceptions are incorrect or not wholly true...especially if they are negative.

It would be a shame to live a life of relationships that never happened because of imaginary conversations that convey perceptions that never actually existed.

On another completely unrelated note.

Yesterday, Joan Benoit Samuelson ran in her first Boston Marathon in 18 years. Previously, she had won the race in 1979 and 1983. At 53 years old, Ms. Samuelson had hoped to qualify for the U.S. Olympic trials by finishing in 2:46:00 or better.

She didn't make it. Not this time. However, she finished in 2:51:29...the 45th fastest time among all women who ran the race.

For those of you who have ever run a marathon, you know that 2:51 is a super-quick time. To do this at 53 years old is a stunning and inspirational feat...especially for those of us on the north side of the half-century mark.

Thank you Joan!

by Chris Holman

Decamillionaires Need Your Help!

2011-04-12T08:35:00.014-04:00

There’s a famous, and most likely apocryphal, exchange between Ernest Hemingway and F. Scott Fitzgerald:

Fitzgerald: “The rich are very different from you and I.”

Hemingway: “Yes. They have more money.”

They may be different in another way. They have more advisors.

According to recent research from Cerulli Associates, 57% of U.S. households with at least $10 million in investable assets are now working with five, or more, financial advisors.

This is a shocking number! Almost impossible to believe. It's also a quantum leap from previous years. For example, in 2008 only 18% of wealthier households were working with more than one advisor.

What accounts for this increase? For financial advisors here's the bigger question...how might they respond to this trend?

In the first place, the 57% figure is such a mind-blowing number, you wonder if this is a mistake...some egregious polling error. However, I recently saw another report by Cisco Internet Business Solutions Group that indicated 80% of wealthy investors had their assets spread amongst 2 or more firms.

So, let’s assume that the 57% number has some statistical validity.

I’ve blogged about this before, here…and here. However, since the problem seems to be getting worse, not better, continued discussion seems timely.

Let's look at the first question. What accounts for the increase in affluent investors who have moved to working with multiple advisors?

The most obvious answer is that there has been an erosion of trust and confidence. The volatility in the credit, stock markets, US economy has made it more difficult for the wealthy to manage their wealth, maintain their lifestyle, and achieve their goals. Presumably, the move to hire multiple financial advisors is the result of a desire to minimize risk.

The great irony is that, by working with multiple advisors, investors greatly increase portfolio risk...as well as the overall complexity of portfolio oversight.

Take a look at this study for a lengthy discussion of why this is true.

For financial advisors, the bigger question is how to respond, i.e. when you meet an investor who is involved in bad investment behavior that is injurious to their financial health...what do you say or do to get them to listen?

Alternatively, I would think that a non-judgmental, question-based approach that engages the investor in dialogue, and gets them to think about what they're doing...is a good shortcut to building a relationship.

Simple questions like:

Who is responsible for your asset-allocation strategy?
How do your advisors coordinate and collaborate with each other?
What's the communication plan amongst all of your advisors...and you?
How do you prevent portfolio overlap?

...might go a long way to building a relationship of confidence and trust; and leading to more substantive conversations.

by Chris Holman

"Talkin' 'bout my generation..."

2011-04-05T09:26:00.009-04:00

People try to put us d-down (Talkin' 'bout my generation)

Just because we g-g-get around (Talkin' 'bout my generation)

Things they do look awful c-c-cold (Talkin' 'bout my generation)

I hope I die before I get old (Talkin' 'bout my generation)

"My Generation", written by Pete Townshend and performed by The Who, was named the 11th greatest song of all time by Rolling Stone. The song, composed by Townshend at the age of twenty because he was infuriated at the Queen Mother for allegedly having his car towed, was written for rebellious British youths and expressed their feeling that older people "just don't get it".

In a recent study by Cisco Internet Business Solutions Group, "Winning the Battle for the Wealthy Investor", some key findings reveal the same response. However, in this case it's the financial advisors who "just don't get it".

Among the interesting observations of the study was the attention paid to Wealthy Investors Under the Age of 50, a client segment that many financial advisors tend to ignore. Key characteristics of the Wealthy Under-50's demographic include:

Hold 28% of the wealth in the US,
Have higher incomes than older investors, and more likely to own their own business,
67% expect a substantial windfall/inheritance within the next ten years.

However, the study also reveals a "Generation Gap" when comparing how the Wealthy Under-50's expect to be served by their financial advisor:

Wealthy Under-50's are looking for a "custom fit", including financial services tailored to their specific investment needs, and a range of options for interacting with their financial advisor,
Wealthy Under-50's spend more time managing their investments and want to interact more frequently with their advisors,
Wealthy Under 50's appear to be "restless" with their financial services firms that cannot deliver they type of client interactions that they want, e.g. they desire faster and more convenient options for interacting with their advisors and firms...beyond in-person meetings, phone conversations, and email.

It is this last point, the % of wealth US investors interested in using different technologies, where the Generation Gap is most apparent:

54% of Wealthy Under-50's are interested in webcam conferencing vs. 21% of Wealthy Baby Boomers,
59% of Wealthy Under-50's are interested in screen sharing vs. 32% of Wealthy Baby Boomers,
56% of Wealthy Under-50's are interested in HD video from home/office vs. 24% of Wealthy Baby Boomers.

Switch Advisors?
Indeed, one of the somewhat shocking revelations of the study was that a full 63% of Wealthy Under-50's would seriously consider moving their assets to another firm in order to gain access to these new communication technologies.

We are always a little suspicious of study results that indicate an investor's hypothetical intention to move their assets. (We recall a post-meltdown study in 2008 or so, where 70%+ of investors said they were so hacked-off at their advisor that they planned to switch firms. Never happened!)

Nonetheless, many of the findings of this study ring true concerning the generational difference that exists among the Wealthy Under-50's Investor, especially with regard to technology, and how they expect their financial advisor to connect with them with newer, high-touch, faster, interactive, and more collaborative mediums.

The industry is forewarned.

PS: The study also highlighted another opportunity for financial advisors, i.e. wealthy investors of all ages who have their assets with multiple advisors. In the next day or so, we'll address this too. Stay tuned...

by Chris Holman

"You have everything you need to build something far bigger than yourself."

2011-03-29T10:02:00.005-04:00

Seth Godin knows how to craft a good quote.

“Leadership is about finding the right people, agreeing where you want to go, and getting out of the way.”

"Faith in yourself, in your friends, in your colleagues and most of all, faith in your ability to impact our future is the best strategy I know.”

"Leadership is saying what you believe, and seeing who follows.”

Seth Godin is an entrepreneur, blogger, author (16 books at last count), and marketer-extraordinaire. His blog, Seth’s Blog, has been ranked in the AdAge Power 150 as the #1 marketing blog. (It is currently ranked #22.)

With a double major in computer science and philosophy, and a Stanford MBA, Seth Godin brings a rich and balanced perspective to leadership and business issues.

Godin coined the phrase “permission marketing.” As opposed to “interruptive marketing”, “permission marketing” is where the prospective client grants explicit permission for the marketer to send their promotional message. Permission marketers feel that this is a more efficient use of their resources because offers are only sent to those people who are actually interested in their product or service.

Godin is an insightful thinker and thought-leader. In a recent blog entry, he discusses the concept of accepting false limits. He says, “I don't accept for a minute that there's some sort of natural limit on your ability to do just about anything that involves creating and selling ideas.”

In this recent video, Godin expands on some of his leadership philosophies. There are some very good observations here…applicable to all entrepreneurs and leaders…and well worth the 7-minute listen. (Please ignore the annoying background music.)

“Hope without a strategy doesn’t generate leadership. Leadership comes when your hope and your optimism are matched with a concrete vision of the future and a way to get there. People won’t follow you if they don’t believe you can get to where you say you’re going.”...Seth Godin

by Chris Holman

"You define yourself by what you can do, not what you can't!"

2011-03-22T08:59:00.005-04:00

You may have noticed the mythic tale of Anthony Robles, born without a right leg, who won the NCAA 125-pound wrestling championship over the weekend.

More complete stories of his heroically epic story can be seen here and here. What caught my eye was something this young man said:

“You define yourself by what you can do, not what you can’t.”

This reminds me of an excellent essay that I once read by Marshall Goldsmith, the author and executive educator, “Change the Way You Define Yourself.”

Goldsmith says that we all have characteristics and behaviors that we use to define who we are. On the success side, we might describe ourselves as, “intelligent”, “results-oriented”, or “persistent”. On the not-so-success side, we all have some self-definitions that frame us in a negative light, e.g. “stubborn”, “opinionated”, or “inflexible”.

Goldsmith points out that one of the greatest challenges that we face, when seeking to improve ourselves, is the challenge of changing the way that we define ourselves. We do this by pigeonholing ourselves with absolute characteristics and say, “That’s just who I am”, or “It is what it is”.

The problem becomes that we use “That’s just who I am”, as a rationale NOT to change…even when change is desirable and possible.

As Goldsmith goes on to say, unless a behavior is shaped by genetic preconditions (born that way) or environmental factors (external factors that prohibit us from changing), very few behaviors are immutable to change…should we have the motivation and desire to do so.

And as Anthony Robles has demonstrated, sometimes “genetic preconditions” can’t stand in our way either!

by Chris Holman

Crisis in Japan

2011-03-17T08:38:00.006-04:00

Although the horrific crisis in Japan seems to be unfolding by the hour, we wanted to pass along this collection of interviews (dated 3/16/2011) from four experts, all who happen to be professors at the Wharton School.

"Crisis in Japan: What will the costs be?" addresses this event from three perspectives: the economic costs, crisis planning, and the global impact.

This is content-rich, with more than 60 minutes of informative discussion, and provides a good context for understanding the future global implications. You might also want to download a pdf of the entire interview to review at a future time.

by Chris Holman

Big Hairy Audacious Goals

2011-03-15T11:06:00.002-04:00

On this date, 15 March 44 BC, Julius Caesar was assassinated. Caesar was the Roman general who was too successful in achieving his “Big Hairy Audacious Goal” of centralizing his dictatorial power within the Roman Empire.

2040 years later, James Collins and Jerry Porras first proposed the term Big Hairy Audacious Goal (BHAG) or Bee-Hag in their 1996 article entitled Building Your Company's Vision. In the article, the authors define a BHAG as a form of vision statement, "...an audacious 10-to-30-year goal to progress towards an envisioned future."

“A true BHAG is clear and compelling, serves as unifying focal point of effort, and acts as a clear catalyst for team spirit. It has a clear finish line, so the organization can know when it has achieved the goal; people like to shoot for finish lines.”

In the authors’ view, BHAG’s are a powerful mechanism for highly visionary companies to stimulate progress, and stay on top. One of their corporate examples was that of Boeing in the 1950’s. At the time, Boeing had no presence in the corporate market; 80% of their business had been with one client…the US Air Force. All previous commercial attempts had been failures.

In Boeing’s case, they bet the company (one-quarter of their corporate net worth) on building the prototype for a jet. In 1957, on a rainy day in Renton, Washington, the first 707 flew off into the clouds and revolutionized commercial travel by introducing the “jet age”. Competitors, like Douglas Aircraft, never caught up.

When organizations set goals, BHAG’s are seen as an important element in setting a high-performance culture. By setting extremely ambitious targets, it can cause one to think creatively about achieving these goals, and be energized and motivated to move the organization forward.

There is an art to setting stretch targets. On the one hand, research has shown that having some anxiety about the achievement of a goal is a good thing. However, goals that are set arbitrarily, without the participation of all who are expected to work toward this end, can be problematic. Moreover, goals must be realistic. If one doesn’t believe that a goal is attainable, the entire exercise can be counter-productive, and possibly demotivating.

To Tame Your BHAG, Try This

Exhibit courage, and a willingness to take on risk. Even small increases in productivity can have profound, knock-on effects.
For teams, build the confidence of the team-members to embrace the new reality...breaking through self-imposed limits and expectations.
Increase team involvement to raise the bar. Leaders should be clear about expected outcomes, but allow employees the freedom to decide how the tasks are implemented.
Follow through and stay the course. Don’t shift priorities each week, or each month.
Identify, and emulate, peak performers.When high performers are not recognized or rewarded for exceptional effort, overall performance often declines.
Utilize the support that emanates from team dynamics. Indeed, among some teams goals become overly ambitious and must be scaled back.
Improve processes. Great teams, and great leaders, lower the process barriers.
When a lofty goal is met, celebrate and reward.

On a cautionary note, not all attempts to best the BHAG are successful. In 1999, Durk Jager, a manager with a reputation for ruthlessness, ascended to the CEO throne at Procter & Gamble. Jager was known for his motto, "If it ain't broke, break it!" Jager announced job cuts that amounted to 15,000 in job losses, tore up the company's multi-layered bureaucracy, and pushed "stretch goals" on all employees. Eighteen months later, P&G had missed profit forecasts on three separate occasions...and had lost $75 billion in market value. In hindsight, Jager had pushed P&G, a company with a corporate culture that was somewhat risk-averse and inbred, too far and too fast.

"The greater danger for most of us lies not in setting our aim too high and falling short, but in setting our aim too low, and achieving our mark."...Michelangelo

by Chris Holman

Closing the Loop Builds Trust

2011-03-10T08:54:00.004-05:00

There’s a good reminder from a recent blog by Jodi Glickman on the importance of “closing the loop”. Ms. Glickman is a speaker, author, and blogger for Harvard Business Review. In a recent post, “The Biggest Mistake People Make After Receiving a Favor”, she describes the importance of the last step in the asking-for-a-favor process…closing the loop.

“The right way to close the loop is simple: no matter the outcome, no matter if the news is good or bad, be sure to follow up and share what happened. Don't leave someone hanging after they help you out, wondering about the outcome. It's rude, it looks bad, and it actually has the potential to create negative consequences.”

Sound advice!

We see this, on occasion, with financial professionals who ask for referrals from their clients, friends and acquaintances. (Actually, we have observed that “asking for referrals” is not the best way to get referrals…but that’s a topic for another time.)

For financial professionals who receive referrals, it is fundamental that one “closes the loop” and share what happened with the referring source. As Ms. Glickman points out, it’s discourteous and incredibly bad form if one doesn’t follow this protocol, but there is another vitally important reason to do this.

Closing the loop demonstrates that you have follow-through skills. Most importantly, following up builds trust.

In the referral dynamic, the referral source has taken some personal risk by opening a small piece of their network to a financial professional when they provide a referral. Regardless of the eventual outcome of the referral, financial professionals build trust with referring sources by simply letting them know that the contact has been made. Indeed, studies have shown that one of the main reasons that referral sources stop providing referrals is for this very reason; they get left in the dark as to what actually happened, and whatever trust they had in the financial professional in the first place…quickly dissipates.

Speaking of the referral process, our proprietary research indicates that financial professionals have some gaps of their own. In a recent survey of top-performing financial advisors, 90% admitted that they do not have a clearly-defined referral strategy, and 87% indicated that they do not track where their referrals come from.

Summing this up, for most successful financial advisors, referrals are the #1 growth driver for new business. The likelihood of receiving referrals is greatly enhanced by having a process, which includes seemingly innocuous steps like...closing the loop.

On another completely different note, Happy March 10th! It was on this day in 2000…that the NASDAQ hit an intra-day high of 5132.52.

Seems like just yesterday…not!

by Chris Holman

Buffett Bullish on America

2011-02-28T12:38:00.006-05:00

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

2011-02-22T10:15:00.004-05:00

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

2011-02-16T16:00:00.005-05:00

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:

Who are my ideal clients?
From their perspective, what is their value experience from a quantitative perspective?
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

2011-02-10T09:53:00.005-05:00

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

2011-02-08T09:17:00.003-05:00

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:

Organize a tennis match for charity
Organize a group coaching session(s) for small groups or individuals
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!

2011-02-03T15:10:00.008-05:00

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:

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.
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"?
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.
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

Norman Mailer and the Discipline of Writing

2011-01-31T06:31:00.006-05:00

Today, January 31st, is the birth anniversary of Norman Mailer… a “towering writer of matching ego” as his NY Times obituary read.

Mailer was prolific as a writer, and other things. Since the 1948 publication of The Naked and the Dead, he published 30 books, wrote untold numbers of short stories, essays, and plays, was married 6 times, had 9 children, received 2 Pulitzers and 1 National Book Award.

His first novel, The Naked and the Dead, was published as a 25-year-old literary novice. The NY Times book critic called it “the most impressive novel about the Second World War that I have ever read.” Mr. Mailer saw little combat in the war and finished his military career as a cook in occupied Japan. But his wartime experience, and in particular a single patrol he made on the island of Leyte, became the raw material for “The Naked and the Dead,” the book that put him on the map. The book sold 200,000 copies in just 3 months…an astonishing amount in those days. It was on the NY Times bestseller list for 11 consecutive weeks.

The Writing Discipline
Mailer said, “Being a real writer means being able to work on a bad day.” Mailer stuck to a strict writing regimen. He said: "Over the years, I've found one rule. It is the only one I give on those occasions when I talk about writing. A simple rule. If you tell yourself you are going to be at your desk tomorrow, you are by that declaration asking your unconscious to prepare the material. You are, in effect, contracting to pick up such valuables at a given time. Count on me, you are saying to a few forces below: I will be there to write."

He wrote daily from 9 to 5, up until his death at the age of 84. For the last 27 years of his life, he shared a studio with his sixth and last wife, Norris Church Mailer, an artist and writer. They each had their own space. Mailer sat on a wooden chair looking out at the Provincetown Bay — he liked to be near water when he wrote — but he closed the curtains when he really needed to concentrate. Mailer and his wife ate breakfast and lunch on their own schedule, but they would meet up at 6 p.m. to drink wine and eat dinner.

In an interview in 2007, months before his death, Mailer said…“I think the novel is on the way out. I also believe, because it’s natural to take one’s own occupation more seriously than others, that the world may be the less for that.”

by Chris Holman

Ask Not!

2011-01-20T10:40:00.004-05:00

Fifty years ago today, January 20, 1961, President John F. Kennedy delivered his only inaugural address. The address was among the shortest inaugurals ever presented…just 1364 words…and took 14 minutes from start-to-end. However, American Rhetoric magazine recognized this address as one of the best speeches of the 20th Century…second only to Martin Luther King Jr’s “I Have a Dream” speech.

Kennedy’s words still resonate today. The memorable injunction: "Ask not what your country can do for you--ask what you can do for your country,” was a clarion call for a renewed commitment to government service. As President, Kennedy wished America to resume its old mission as the first nation dedicated to the revolution of human rights. With the Alliance for Progress and the Peace Corps (Sargent Shriver, the program’s first director, passed away recently), he brought American idealism to the aid of developing nations.

(Interestingly, in a recent survey undertaken by AARP, 70% of Americans believe that the country has not yet lived up to Kennedy’s inaugural challenge.)

Who wrote the speech’s magnificent phrase… "Ask not…"? Ted Sorensen (who also passed away recently) was Kennedy’s advisor, speechwriter, and “intellectual blood bank,” and widely regarded as having a strong hand with this unforgettable expression. Throughout the years, Sorensen has loyally maintained a speechwriter’s code of silence with regard to the authorship of these words.

Following a talk that Ted Sorensen gave regarding his life and times, during the Q & A he was asked if the words were his...or JFK's. His brilliant response to the questioner was…“Ask not!”

by Chris Holman

Crossing Your Own Rubicon

2011-01-10T13:27:00.004-05:00

It was on this day in 49 B.C. that Julius Caesar crossed the Rubicon River…and launched a civil war.

At the time, Caesar was the governor of Gaul…what is now France and Belgium. Caesar had conquered most of Western Europe, all the way to Britain. However, in Rome, Caesar’s political alliances were falling apart. Pompey, who had been a comrade, had turned against Caesar and was turning the Roman Senate against Caesar as well.

In 50 B.C., the Senate demanded that Caesar disband his army and return to Rome. According to Roman law, if a general was accompanied by a standing army when he entered the official Roman Republic from one of the Roman provinces, he would be considered a traitor. Caesar was convinced that, if he obeyed the Senate’s orders and disbanded his army, he would lose his base of power with no one to defend him.

When Caesar reached the Rubicon River, according to legend, he had still not made up his mind regarding his choice. With the famous phrase, “Alea iacta est,” or “The die is cast,” he decided to cross…and the Roman Republic was thrown into civil war. Eventually, Caesar defeated Pompey and became the emperor of Rome. As Emperor, he centralized power in Rome, eliminated much of the government’s debt, disbanded powerful guilds, launched a massive rebuilding effort, established a police force, modified the calendar…and demanded that he be revered as a part-deity. Five years later, he was assassinated.

Commitment and the Coaching Process
Coaching works because it can be difficult maintaining momentum by oneself. We have all had the experience of wanting to make a change in our life where we charge off with the best of intentions…only to look around a few months later to see that nothing has really happened.

However, with the simple act of telling your plan to another person, e.g. a coach, one raises the stakes and draws public awareness to your commitment… reinforcing its importance.

Moreover, with coaching, there is a process of regular commitment, accountability, and ongoing action. As many athletes are aware, the regular commitment instilled by the coaching process creates focus and discipline. Coaching uses the power of public commitment to keep the client on track, remain in action, and focus on the learning.

Crossing Your Own Rubicon
Today, the phrase "crossing the Rubicon" has entered popular culture, meaning "past the point of no return." And it is used in all sorts of contexts big and small. Ok, ok, ok…I know that it’s a bit of a stretch to compare Caesar’s dramatic Rubicon moment to the mini-Rubicons that all of us face today. However, it is not a stretch to underscore how all of us can choose to commit ourselves to actions that, inexorably, lead us forward. The power of coaching is that we create co-active partners who are witness to our commitments to cross into new territories, stretching our boundaries.

“As a rule, men worry more about what they can't see than about what they can.”…Julius Caesar

New Year’s Resolutions: Your Can’t-Miss Failure Guide

2010-12-29T14:16:00.004-05:00

A few years ago, Professor Richard Wiseman, a psychologist at the University of Hertfordshire, followed over 3000 people who had made New Year’s Resolutions…and tracked their ultimate success or failure. Since 88% of the participants were successful in failing to achieve their goal (i.e. only 12% actually achieved their goal) he had many examples of what NOT to do in making a New Year’s Resolution.

Make Many Resolutions: The chances of failure are greater when you channel your energy into changing multiple aspects of your behavior. To guarantee failure, try to achieve too much by making way too many resolutions.

Be Impulsive: Wait until New Year’s Eve to consider your resolution(s). By waiting until the waning hours/minutes of the year, you can assure that your decisions will be based upon whatever is on your mind at the time…or in your glass.

Make the same ol’ resolution again, and again…and again: Wallow in frustration and disappointment by re-visiting a past resolution that you failed to achieve. Choose the same old problem, and the same old approach that you botched last year.

Be vague and fuzzy: Do not think through exactly what you are going to do, where you are going to do it, and at what time. Be as vague as possible which will allow you to disregard your failure because you didn’t really commit to anything anyway.

ok...ok…ok…enough of the sarcasm. Let’s get serious.

Willpower is a muscle
As we learn more about the brain, we also learn that willpower is a muscle, like our biceps or quadriceps or latissmus dorsi, and can fail from fatigue by being overtaxed, or “weak”.

In an experiment led by Baba Shiv of Stanford University, undergraduates were divided into two groups: one group was given a two-digit number to remember, while the other was given a seven-digit number. Both groups were asked to walk down the hall…where they were offered two different snack options: a slice of chocolate cake or a bowl of fruit salad. Notably, the seven-digit group was 100% more likely to choose the chocolate cake. The reason, according to Professor Shiv, is that the seven-digit number was taking up valuable space in the prefrontal cortex portion of the brain, (i.e. cognitive overload) making it more difficult to resist a self-indulgent dessert.

The pre-frontal cortex, located right behind the forehead, is also in charge of keeping us focused, handling short-term memory, and solving abstract problems. Asking it to do too many functions at once can create a “tired” brain which is less resistant to outside stimuli.

In another experiment, by Professor Roy Baumeister of Florida State University, students who fasted for three hours were asked to perform a variety of self-control tasks, e.g. focusing on a boring video. The results were that students with lower glucose levels also had lower self-control. In other words, willpower requires real energy.

"A new oath holds pretty well; but... when it is become old, and frayed out, and damaged by a dozen annual retryings of its remains, it ceases to be serviceable; any little strain will snap it."…Mark Twain

Observations for Success
Let’s return to the research of Professor Wiseman that we pointed to earlier…without the sardonic, tongue-in-cheek tone.

What else might his study inform us about achieving success with New Year’s Resolutions?

One very interesting observation was that there were large differences in the goal-setting approaches that best suited men and women:

Men were significantly more likely to succeed when asked to set S.M.A.R.T. goals (i.e. Specific, Measurable, Achievable, Relevant, Time-Bound)…as well as focusing on rewards and benefits.
Women were more successful when they made their goals public to friends and family…as well as simply having someone encourage them to be persistent in taking time to learn new habits.

To recap the research findings on New Year's Resolutions, sans cynicism and sarcasm...consider these eight bits of learning:

Make only one resolution,
Plan ahead,
Avoid previous resolutions,
Be specific,
Set S.M.A.R.T goals,
Carrot good, stick bad,
Go public,
Be persistent.

Above all else, trust yourself. The first step to goal achievement is self-awareness. The best way to fix willpower flaws is to be aware of them.

In the New Year, may your right hand always be stretched out in friendship, but never in want.

Happy New Year to you...from all of us at ClientWise!

by Chris Holman

“It is sad to grow old but nice to ripen”

2010-12-23T10:47:00.006-05:00

"It is sad to grow old, but nice to ripen."...Brigitte Bardot

According to a series of articles in the NY Times column “The New Old Age”, adults over the age of 80 are the fastest growing segment of the population. So, what are all these elderly people doing with their lives?

Well, as you might imagine, some are living the life they dreamed of, but a growing number are still working…some out of necessity and some just because they want to keep busy.

Those with financial security and good health are living the retirement lifestyle they planned. Those who aren’t in good health need someone to take care of them; oftentimes this burden rests with their children, another relative, or a home health aide. The elderly who aren’t financially secure need help, too; again this burden typically falls on their children’s shoulders.

However, more and more seniors are taking matters into their own hands and continuing to work to support themselves…or just for the fun of it. In fact, for many seniors, the jobs they are getting are the most fulfilling they’ve ever had.

Recently, I had some work done in my house and needed to get a room painted. The carpenter I used recommended a painter he has referred to other clients, so I had him come over to give me an estimate. When I opened the door, I was surprised to see an elderly gentleman standing before me dressed in his painting whites and holding a clipboard.

While he was measuring the area to be painted, we chatted. Clearly, he was well past retirement age, but he was still working…painting. He told me that he doesn’t need the money, but wants to keep working because some of his friends retired, then got sick and/or passed away. He doesn’t want to spend his days on the couch in front of the television. His theory is that if he keeps working, keeps active, and keeps his mind engaged, he’ll live longer. A lot of today’s seniors feel the same way.

However, finding a job when you’re well past retirement age is not an easy task. There are several obstacles that get in the way, including age discrimination, available jobs (currently there is a 5.7% unemployment rate for people over 75), and competition from younger workers.

These statistics are worth noting:

According to the AARP, in the past 20 years the oldest group of workers (the 75-plus work force) has increased enormously to approximately 1.3 million as of 2009. This number was just under half a million in 1989.
Since oftentimes it’s the woman who outlives her husband, a growing proportion of this work force, almost 44%, are women.
A large percentage of working seniors are putting in long hours. More than 42% of the people in this age group who are working are holding full-time jobs, according to the Census Bureau.
A quarter of older workers switch occupations after age 50, according to Richard Johnson, a senior fellow at the Urban Institute in Washington, D.C. The federal Department of Labor estimates that between 2006 and 2016, the number of workers over age 55 will rise 36.5%. That increase will create the grayest labor force since the government began tracking this data, according to Richard Johnson, a senior fellow at the Urban Institute in Washington, D.C.
Of workers over age 65, more than 90% say they enjoy their jobs — a higher proportion than among young people, Mr. Johnson noted.

As a financial advisor, you should be doing everything you can to help your clients formulate an appropriate retirement strategy. But, what else can you be doing to support your clients who are approaching retirement age?

Start the new year with a new plan for your clients who are seniors now...or “soon to be” seniors.
Create a "Retirement Checklist" which would include a comprehensive review of all retirement-related issues, e.g. assets, documents, accounts, etc.
Engage your clients in a retirement conversation...that doesn't necessarily involve money.
Become familiar with some of the excellent informational resources available. For example, this book..."Get Inspired to Retire, Over 150 ideas to help find your retirement" is a great first step.
Team up with a local university or host a volunteer night to connect seniors with local organizations who can use their valuable time and talents.
Remind seniors to take care of themselves, physically, spiritually and mentally; consider hosting a “Get Fit” night with local doctors or experts in the fields of Alzheimer's, dementia, heart problems, cancer or arthritis.
Organize a “Getting Old and Taking Control” day for seniors and their children with executives from various local senior organizations, such as nursing homes, home health aides, assisted living housing, long term care choices, etc. Having information such as this available long before it’s needed, so it can be reviewed in advance is much more beneficial than having to rush around and find such a service in an emergency.

When we talk to financial advisors, many of them will say that "retirees" are one of their target markets. What is becoming more apparent each day is that the "retiree" population is remarkably heterogeneous. For advisors who want to specialize in "retirees", it might make more sense to further isolate sub-sets of this growing demographic and become an expert in the needs and concerns of more homogeneous groups.

by Theresa Ficazzola

The Power of Reciprocity: The Weight of Obligation

2010-12-14T10:58:00.007-05:00

The Principle of Reciprocation states that one should repay favors in return for favors that we receive is a psychological phenomenon in which we feel somewhat compelled to repay what another has provided for us first.

This explains why restaurants often include candies or mints when presenting the bill. (In a study completed by the Center for Hospitality Research, it was found that giving customers fancy chocolates increased tips by 15-23%. In fact, the highest tips were received when the server gave dining parties one piece of candy per person and then “spontaneously” offered a second piece per person.)

In a good blog post in the Harvard Business Review, Steve Martin (not THIS Steve Martin!) points out that positive reciprocation is definitely not the “If you help me, then I’ll help you” variety. Constructive reciprocation requires one to give first without the blatant expectation of receiving something in return.

Indeed, numerous studies have shown that when one extends a service in this manner, those who we “invest” in very often return the favor by exceeding the expectations of scale in their reciprocation:

When hotel guests were informed that the hotel had already made a donation to an environmental organization, those guests were 45% more likely to reuse their towels and linens.
In a study of wineries offering complimentary wine tastings, vs. those that charged a small fee, visitors who had complimentary wine tasting spent significantly more money at the wineries than visitors who paid a fee for tasting. Furthermore, visitors who tasted wine for free felt significantly more appreciative of the personnel than did visitors who paid a tasting fee.

As Mr. Martin points out, there is also a delicate balance between the aggressive posture of… “Yes, I did help you out and now you owe me” and the much more compliant response of “Hey, it’s no problem. I’m happy to help.” The deficiency of the second response, from a business standpoint, is that it doesn’t really lead anywhere. “Happy to help…I know that if the situation were reversed, you’d help me” is more suggestive; as is…“You are most welcome. That’s what we do for important clients such as you.”

The one big exception to the Principle of Reciprocation rests in overt requests for trade. If someone feels something will be expected if he/she accepts, the power of reciprocation is greatly diminished.

Financial advisors who understand the persuasive effects and nuances of the Rule of Reciprocity can enhance their ability to build stronger networks, create more trusting relationships, and become more influential over others. Some specific examples might include:

When sending out client surveys, include a $5.00 gift card from Starbucks, or your local coffee purveyor. Organizations that have included "preemptive gift cards" have doubled their response rate to client surveys.
Never, ever, never say to your clients something like… “There are two ways that I get paid, and one of them is from your providing referrals to me.” Cheeeeesy!
For your clients who are business-owners and entrepreneurs, reach out to them and help them grow by advocating and promoting their services and businesses to your own clients and networks.
The Golden Rule, i.e. treat others as you’d like to be treated yourself.

"The Golden Rule is not a sacrifice. It is an investment."...Paul Bunyan Walker

by Chris Holman

Delusional Diversification Redux

2010-12-09T05:18:00.006-05:00

In our most recent blog post, "Delusional Diversification: The Flawed Logic of Using Multiple Advisors" we discuss the inherent risk and complexity that results from investors who use more than one advisor. We also point out the unfortunate paradox. One of the reasons that investors use multiple advisors, unconsciously or not, is to reduce portfolio risk by increasing diversification. The paradox lies in that, by creating layers of communication and efficiency boundaries, the investor increases portfolio risk.

As we reflect on this situation, a number of questions spring to mind. These are questions that an advisor might ask an investor who has created this circumstance...or questions that investors might ultimately ask themselves:

Why do you have multiple advisors?
What is your asset allocation strategy?
Who is accountable for your asset allocation strategy?
How do your advisors coordinate and collaborate with each other?
What's the communication plan amongst all of your advisors...and you?
How do you prevent portfolio overlap?
If all of your advisors have partial information about your entire portfolio, how do you estimate the outcome of choices on the final portfolio?
Which of your advisors has the responsibility of considering your unique investment variables, i.e. your age, current taxable income, future income needs, investment strategy, asset allocation strategy, etc.?
Have you considered the hidden risks of having multiple advisors?
Most all of the affluent investors who I work with have a fundamental need for a trustworthy relationship with one financial advisor. Would it help you to work with one advisor who has a deep understanding of your personal goals and monetary philosophy?

From our observation, the benefits of working with one advisor are three-fold: simplicity, more effective and efficient portfolio management, and having one relationship seems to increase the level of trust and understanding that the advisor has of the investor's needs.

On another completely different note, today is the birthday of author, humorist, and professional "epigrammatist", Ashleigh Brilliant. Brilliant makes his living authoring witty pronouncements, such as:

I feel much better now that I've given up hope.
I try to take one day at a time, but sometimes several days attack me at once.
I have abandoned the search for truth, and am now looking for a good fantasy.

Brilliant once sued television journalist David Brinkley who wrote an autobiography entitled, "Everyone is Entitled to My Opinion." Brilliant proclaimed that the words were originally his, and Brinkley's publisher paid Brilliant $1000.00.

by Chris Holman

Delusional Diversification: The Flawed Logic of Using Multiple Advisors

2010-11-30T12:50:00.008-05:00

“Put all your eggs in one basket…and watch that basket.”…Mark Twain

There’s a population of affluent investors who, in a vain effort to achieve portfolio diversification, hire multiple financial advisors to mitigate their portfolio risk. Not only is this effort wrong-headed and risky, but it may contribute to the exact condition these investors wish to avoid.

The research we’ve seen indicates that 70% of individuals with portfolios in excess of $1 million use an advisor, and 34% of this population employ multiple advisors. Anecdotal evidence is telling us that this number may also be increasing, as affluent investors attempt to counter the increasing volatility of market conditions.

The psychology of having multiple advisors would seem to be an extension of basic asset allocation principles. Investors reason that if allocating investments across a diverse portfolio is sound advice, why not extend this thinking in order to get a diversified array of “expert” investment opinions?

Unfortunately, there’s a fatal flaw in this logic.

This flaw can be illustrated by considering a hypothetical case study. Let’s consider an individual who is due to retire in one year. They are interested in developing an efficient income plan and tax strategy that takes all of their variables into account. Their assets consist of multiple IRA’s from past employers, a substantial 401(k) with their current employer, as well as a taxable account. Of course the location of each account is important in this calculation. IRA’s are tax-deferred and offer unlimited investment options. 401(k)s are also tax deferred but have more limited investment choice. Personal accounts are fully taxable and have virtually unlimited investment options. When one apportions an investment portfolio among the different asset classes, e.g. stocks, bonds, cash, real estate, alternatives, etc…there is a risk/reward trade-off between these various asset classes. Moreover, when one is retiring, another level of complexity is added because withdrawals may be taken into account. At this point, the investor must decide where and how much to hold in certain types of investments, as well as deciding what accounts should be sold and in what amounts such that the marginal tax bracket is minimized each year.

Given this scenario, it is nearly impossible to expect that a disparate group of advisors working at different firms could develop an efficient communication plan that avoid pitfalls like: portfolio overlap, security concentration, or a less-than-optimal asset allocation, or other equally serious risk factors. The fact is that most affluent investors lead complicated lives anyway. Investors who work with with multiple advisors add a layer of complexity that is, at best, troublesome and, at worst, needlessly perilous.

On top of all of this, post-financial crisis, affluent investors are quite clear on their new investment priorities. In the 2010 World Wealth Report:

79% of high-net-worth investors indicated that “greater transparency and simplicity around products, risks, fee structures, portfolio reporting, and performance” was important to extremely important.
81% of HNW investors were highly desirous of “scenario analysis on the proposed allocations/products aligning to individuals’ goals/expectations.”

So...affluent investors are telling us that they want simplicity, greater transparency, and a scenario analyis that aligns to their goals and expectations. However, if they have hired multiple advisors...this is unlikely to happen! Multiple advisors cannot assess risk properly because they hold only partial information and cannot estimate the outcome of their choices upon the entire portfolio. Financial decisions made without a broad-view perspective, are risky and can lead to asset overlap, higher tax brackets, and poor portfolio performance.

For financial advisors who have clients with multiple advisors, the good news is this. By virtue of having many advisors, the client is most likely saying that they want to reduce their portfolio risk. In which case, it is incumbent upon the advisor to show them a better way to accomplish this.

By the way, today, November 30th, is Mark Twain’s birthday. It is the irony of ironies that he has said, “Put all your eggs in one basket…and watch that basket.” Although Twain was a very successful author and speaker in his lifetime, he was a hapless, hopeless investor. He bankrupted himself by funding the Paige Compositor, a beautifully engineered typesetting machine that never came to market due to the perfectionist nature of its inventor. Over a 14-year period, from 1880-1894, Mark Twain invested $300,000 in this device (equal to $7.5 million in inflation-adjusted dollars), which was the bulk of his book profits plus a good portion of his wife’s inheritance. You can laugh and grin at Mark Twain’s most quotable quotes, but never follow his investment advice.

by Chris Holman

Your Thanksgiving Checklist

2010-11-25T09:40:00.003-05:00

Celestine Chua is a native of Singapore and the founder of The School of Personal Excellence. She graduated from the National University of Singapore in 2006and secured a position with Procter & Gamble as an assistant brand manager. Two years later, she walked away from the financial security and prestige of P&G...towards her "real purpose", which is "helping people grow and living their best lives." She founded The School of Personal Excellence, which serves as a training ground for individuals who seek to live according to their passions in their personal or
professional lives.

She has compiled a list of 60 things to be grateful for in our lives. In the spirit of Thanksgiving, and as as aid to those of you who need some hints on this day, we offer you the following:

1. Your parents - For giving birth to you. Because if there is no them, there will not be you.
2. Your family – For being your closest kin in the world
3. Your friends – For being your companions in life
4. Sense of sight – For letting you see the colors of life
5. Sense of hearing - For letting you hear trickle of rain, the voices of your loved ones, and the harmonious chords of music
6. Sense of touch - For letting you feel the texture of your clothes, the breeze of the wind, the hands of your loved ones
7. Sense of smell – For letting you smell scented candles, perfumes, and beautiful flowers in your garden
8. Sense of taste – For letting you savor the sweetness of fruits, the saltiness of seawater, the sourness of pickles, the bitterness of bitter gourd, and the spiciness of chili
9. Your speech – For giving you the outlet to express yourself
10. Your heart – For pumping blood to all the parts of your body every second since you were born; for giving you the ability to feel
11. Your lungs – For letting you breathe so you can live
12. Your immune system – For fighting viruses that enter your body. For keeping you in the pink of your health so you can do the things you love.
13. Your hands – So you can type on your computer, flip the pages of books, and hold the hands of your loved ones
14. Your legs - For letting you walk, run, swim, play the sports you love, and curl up in the comfort of your seat
15. Your mind - For the ability to think, to store memories, and to create new solutions
16. Your good health – For enabling you to do what you want to do and for what you’re about to do in the future
17. Your school - For providing an environment conducive to learning and growing
18. Your teachers – For their dedication and for passing down knowledge to you
19. Tears – For helping you express your deepest emotions
20.Disappointment - So you know the things that matter to you most
21. Fears – So you know your opportunities for growth
22. Pain – For you to become a stronger person
23. Sadness – For you to appreciate the spectrum of human emotions
24. Happiness – For you to soak in the beauty of life
25. The Sun - For bringing in light and beauty to this world
26. Sunset – For a beautiful sight to end the day
27. Moon and Stars - For brightening up our night sky
28. Sunrise - For a beautiful sight to start the morning
29. Rain – For cooling you when it gets too warm and for making it comfy to sleep in on weekends
30. Snow – For making winter even more beautiful

31. Rainbows – For a beautiful sight to look forward to after rain
32. Oxygen - For making life possible
33. The earth – For creating the environment for life to begin
34. Mother Nature - For covering our world in beauty
35. Animals – For adding to the diversity of life
36. Internet - For connecting you and me despite the physical space between us
37. Transport - For making it easier to commute from one place to another
38. Mobile phones – For making it easy to stay in touch with others
39. Computers – For making our lives more effective and efficient
40. Technology – For making impossible things possible
41. Movies – For providing a source of entertainment
42. Books – For adding wisdom into your life
43. Blogs – For connecting you with other like-minded people
44. Shoes – For protecting your feet when you are out
45. Time – For a system to organize yourself and keep track of activities
46. Your job – For giving you a source of living and for being a medium where you can add value to the world
47. Music - For lifting your spirits when you’re down and for filling your life with more love
48. Your bed - For you to sleep comfortably in every night
49. Your home - For a place you can call home
50. Your soul mate – For being the one who understands everything you’re going through
51. Your best friends – For being there for you whenever you need them
52. Your enemies – For helping you uncover your blind spots so you can become a better person
53. Kind strangers – For brightening up your days when you least expect it
54. Your mistakes - For helping you to improve and become better
55. Heartbreaks - For helping you mature and become a better person
56. Laughter - For serenading your life with joy
57. Love - For letting you feel what it means to truly be alive
58. Life’s challenges - For helping you grow and become who you are
59. Life - For giving you the chance to experience all that you’re experiencing, and will be experiencing in time to come

60. You. For being who you are and touching the world with your presence.

Thank you to Celestine Chua for this list! Thank you to all of you for your support! Happy Thanksgiving to one and all!

by Ray Sclafani

Thanksgiving's Indomitable Founder: Sarah J. Hale

2010-11-23T07:58:00.006-05:00

As we all give thanks this Thanksgiving, we might want to pause and thank Sarah J. Hale. Without her unrelenting 35-year long campaign, Thanksgiving would not be our national day of thanks.

By any measure and in any era, Sarah Hale was a remarkable woman. Sarah Josepha Buell married David Hale in 1813, and had five children with him. When he died suddenly in 1822, she was compelled to turn to writing to support herself and her family (One of her children’s verses was “Mary had a Little Lamb”). After the successful publication of a book of poetry as well as a novel, she was solicited to become the editor of a new magazine aimed at women, Ladies Magazine and Literary Gazette. In 1836, Louis Godey convinced Hale to become the editor of his magazine. Godey’s Lady’s Book. Godey’s Lady’s Book was one of the most influential magazines of the 19th century, reached a wide audience and covered topics ranging from health, beauty, cooking, gardening, and architecture. Hale published articles about proper writing techniques and prescribed reading lists, similar to ones given at college courses, to further educate her readers. Hale also published lists of schools that accepted women and advocated for women’s education. Over the years, Hale became more vocal in suggesting that, not only should women be educated, but they should receive a similar education to men.

35-Year Campaign
Beginning in 1828, Sarah Hale began writing editorials calling for the entire nation to observe a national holiday on Thanksgiving, similar to the holiday that she had experienced as a native New Englander. In between the editorials, Hale wrote hundreds of letters to politicians, including five presidents, lobbying for a day of thanks.

35 years later, in September 1863, less than three months following the Battle of Gettysburg, one of her letters reached Abraham Lincoln. It begins:

Sir:

Permit me, as Editress of the “Lady’s Book”, to request a few minutes of your precious time, while laying before you a subject of deep interest to myself and …as I trust…even to the President of our Republic, of some importance. This subject is to have the day of our annual Thanksgiving made a National and fixed Union Festival.”

Timing, and Persistence, is Everything
Finally, after years of pleas to deaf ears, Sarah Hale benefited from propitious timing. The fall of 1863 was a depressingly dark period in a nation splintered by an appalling civil war. The Battle of Gettysburg, with more than 50,000 Union and Confederate dead, lingered painfully in memory. The Battle of Chickamauga, fought in September, was one of the worst Union defeats of the War. President Lincoln was attuned to the mood of the nation, and was sensitive to the hundreds of thousands of soldiers away from home…as well as being keen to find ways to rally the nation’s spirit. Hale’s letter also benefited from some clever marketing on her part. She included two letters of support from governors who endorsed her effort, as well as a mention of her “good friend, Hon. Wm. H. Seward”…who happened to be Lincoln’s Secretary of State at the time.

On October 3, 1863, Abraham Lincoln issued the proclamation that declared the last Thursday in November to be Thanksgiving, a national holiday.

Hale followed up Lincoln’s proclamation with a final editorial poem to celebrate this day of national unity and thanks:

All the blessings of the fields,
All the stores the garden yields,
All the plenty summer pours,
Autumn’s rich, o’erflowing stores,
Peace, prosperity and health,
Private bliss and public wealth,
Knowledge with its gladdening streams,
Pure religions holier beams…Lord, for these our souls shall raise.
Grateful vows and solemn praise.

by Chris Holman

"That which does not kill us makes us stronger."

2010-11-19T07:20:00.009-05:00

"That which does not kill us makes us stronger."...Fredrich Nietzsche

In 1993, J.K. Rowling and her six-month old daughter were living in Edinburgh, Scotland. Penniless, depressive and contemplating suicide, Rowling had separated from her husband and was living in a cramped apartment with her daughter, Jessica. While surviving on state welfare, Rowling would escape her flat in an effort to walk her daughter to sleep. She would often end up in cafes where she would complete her first novel. Today, her Harry Potter books have sold more than 400 million copies, and Rowling’s estimated net worth exceeds $1 billion.

Steve Jobs was adopted by a working-class family, and grew up in the apricot orchards that would later become Silicon Valley. In 1972, Jobs attended Reed College in Portland, OR… dropping out after one semester because the tuition was too much for him. He continued to audit classes at Reed, including a course in calligraphy. Says Jobs, “If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts.” In 1976, Jobs founded Apple computer with his buddy, Steve Wozniak. 8 years later, following an internal power struggle, Jobs was forced out of Apple by John Sculley. In 1986, Jobs bought Pixar from Lucasfilms for $10 million. 20 years later, he sold Pixar to Disney for $7.4 billion. Around the time that Jobs was booted from Apple, he founded NeXT Computer. In 1996, Apple purchased NeXT for $429 million, bringing Jobs back to the company he co-founded. In 1996, Apple was trading at around $12 per share. Since then, there have been two 2:1 splits, and AAPL now trades above $300 per share. Jobs’ stake in Apple and Disney exceed $6 billion.

Back to Fredrich Nietzsche’s quote, which has now become an adage used by annoying people who want to mollify us during stressful times. Turns out Nietzsche was right!

In a new study, “Whatever Does Not Kill Us: Cumulative Lifetime Adversity, Vulnerability and Resilience” the effect of adverse situations on people’s mental health and well-being is examined. In a longitudinal study occurring over many years, authors Mark Seery, Alison Holman, and Roxane Cohen Silver reveal that persons exposed in moderation to adversity over the course of their lives are higher-functioning and had generally a higher life satisfaction over time. Furthermore, people who had encountered adversity in their life were less negatively affected when they encountered adverse circumstances later.

In this study, authors Seery, Holman, and Silver report,

Resilience involves having psychological and social resources that help people tolerate adversity, but coping with adversity may itself promote development of subsequent resilience.
Experiencing moderate amounts of adversity creates effective coping skills, helps engage social support networks, creates a sense of mastery over past adversity, fosters belief in the ability to cope successfully in the future, and generates psycho-physiological toughness.
All of these qualities contribute to resilience in the face of subsequent major adversity. Such qualities should also make subsequent minor hassles seem more manageable rather than overwhelming, leading to benefits for overall mental health and well-being.”

This study is interesting and important on several levels. The knowledge and confidence gained by being able to survive life’s challenges helps us to better navigate our way through future adversity through the development of subtle and supportive self-interventions.

Says Steve Jobs, “Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of other's opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

by Chris Holman

Veterans Day

2010-11-11T07:09:00.009-05:00

“Without heroes we are all plain people, and we do not know how far we can go.”…Bernard Malamud

Today is Veterans Day. Veterans Day began as Armistice Day, and commemorates the armistice signed between the Allies of World War I and Germany for the cessation of hostilities on the Western Front…which took effect on “the eleventh hour of the eleventh day of the eleventh month” of 1918. The First World War was known as “the War to End All Wars” because it was the bloodiest war in history up to that point. After 4 years of horrific trench fighting, 9 million soldiers had died, and 21 million had been wounded.

In many parts of the world, a two-minute moment of silence is observed at 11:00 AM as a sign of respect and remembrance for the 20 million people who died in World War I.

Following World War II and the Korean War, at the urging of the American veterans' service organizations, the 83rd Congress struck out the word “Armistice” and inserted “Veterans.” President Dwight D. Eisenhower issued the first Veterans Day Proclamation on October 8th, 1954.

The Department of Veterans Affairs estimates that there are 22,795,000 veterans living today. Vietnam Vets account for the largest proportion at 7,569,000. About 2 million World War II veterans remain, although their numbers are dwindling…with approximately 1000 dying each day.

Frank Buckles, at 109, is the last surviving American veteran of World War I. Born on a farm in Missouri in February 1901, he saw his first automobile in 1905, and his first airplane at the Illinois State Fair in 1907. Buckles enlisted in the Army in 1917 at the age of 16, lying about his age. He was sent to England and spent much of the war as a driver, delivering dispatches and driving the occasional ambulance. After the armistice, Buckles escorted 650 German P.O.W.’s back to Germany. Seeing his young age, the prisoners “adopted” him, taught him German and gave him food from their Red Cross packages. When Buckles visited Germany in the 1930's, while working for a steamship company, it was difficult for him to reconcile his fond memories of the German P.O.W.'s with what he saw of life under the Third Reich.

In 1941, Buckles was running the Manila office of the American President Lines. Taken prisoner when the Japanese invaded the Philippines, he spent 39 months in prison camps. Although he developed beriberi caused by malnutrition, and his weight slipped dangerously below 100 lbs., Buckles led his fellow prisoners in a daily calisthenics class.

Today, Frank Buckles lives near Charles Town, West Virginia where he purchased a 330-acre farm in 1953. When Buckles passes away, he will be buried in Arlington National Cemetery, having received special approval from the White House in 2008 (with prompting and special intervention from H. Ross Perot). When asked about the secret to his long life, Buckles said, “When you start to die…don’t.”

In Memory of USMC Lance Cpl. John J. Mann Jr. (1985-2010)

by Chris Holman

(I Can't Get No) Creativity

2010-10-31T10:05:00.005-04:00

In a recent interview with Terry Gross, Keith Richards described how he composed the riff to “(I Can’t Get No) Satisfaction”.

It was May 7, 1965 and the Stones were on their third U.S. tour. Awakening in the middle of the night in a motel room in Clearwater, Florida, a fuzzy-headed Keith Richards grabbed his tape recorder and guitar (which he always slept with) and recorded the opening hook to “Satisfaction”. The next morning when he replayed the tape and he heard a drowsy 30-second rendition of “Satisfaction”…followed by a ‘CLANG’…and 45 minutes of snoring. Three days later, the Stones took the song to the legendary Chess studios in Chicago and recorded the first version of their iconic song. Issued in the U.S. in June of 1965, “Satisfaction” stayed at the top of the charts for 4 weeks, and established the Rolling Stones as a worldwide premier act. Rolling Stone (the magazine) has selected “(I Can’t Get No) Satisfaction” as the #2 greatest rock-and-roll song of all time.

In a way, this story is the more modern-day version of the Mozart Myth. The Mozart Myth goes something like this. Some people are born with creativity and talent so prodigious that it spills from their minds, as if by magic. Mozart is reputed to have composed his symphonies in one sitting, without revision, through a single burst of inspiration.

In a contra-example to the Mozart Myth, Beethoven exhibited a creative process that required extraordinary amounts of preparation and persistence. He would fill notebook-after-notebook with scribbling, musical dead-ends, and futile variations. For Beethoven, his stumbling trial-and-error method was his creative genius.

In the end, was his process any less creative than Mozart’s?

Either way, there is growing evidence in this country that our creativity as a nation is declining. Newsweek documented this in an article in their July 10, 2010 issue, “The Creativity Crisis.”

Corroborating this disturbing trend is Kyung Hee Kim, a professor of educational psychology at the College of William & Mary. Over the past number of years, she has tested 300,000 adults and children with the Torrance Test of Creative Thinking, one of the better creativity tests. Since 1990, there has been alarming erosion in a number of creative characteristics, including:

the ability to produce a number of ideas,
reflective thinking,
motivation to be creative,
intellectual curiosity and open-mindedness.

According to Professor Kim, the possible explanations are numerous. One may point a finger at the excessive time our children tend to spend in front of televisions and computers, watching programs, and playing videogames, rather than engaging in creative activities such as playing outside or exploring the outside world. Another ready explanation for decreasing creativity among upper-grade elementary school children is the lack of creativity development and the stifling of children’s creative opportunities in classrooms.

For parents, Professor Kim proposes a number of ideas that, in her view, would boost and preserve creativity, including:

Focus on ideas,
Raise non –conformists,
Be playful,
Be less protective,
Foster independence,
Give time alone,
Travel.

In the words of Albert Einstein, “Imagination is more important than knowledge.”

by Chris Holman

"All the News That's Fit to Print"

2010-10-21T15:17:00.004-04:00

Our normal publishing schedule is once per week. However, every now and then something comes up that causes us to depart from this schedule.

In today’s New York Times, October 21st, there is a special section on Wealth. For those of you who are financial advisors, and who don’t read the Times on a regular basis…you may want to pick up a copy of today’s paper.

In the Wealth section, there are a number of articles of interest to “affluent” readers. The lead article is especially interesting, “The Post-Crash Sell.” In this piece, the author opines that wealth managers are recasting their services in an effort to confront the wariness that exists amongst circumspect investors these days.

Whether or not you agree with the author’s view, you may want to use this article to connect with your clients about the level and quality of client engagement that you are providing…and that they are expecting. Additionally, there are a number of other articles, “A Philanthropy Coach Talks About Wise Giving,” “The Watchword on Taxes This Year is Flexibility,” and “Treading Carefully in the Currency Bazaar” that might be interesting to clip-and-send to your interested clients.

Just an idea for you…hope this helps.

PS…The Times’ motto “All the news that’s fit to print” has existed since 1896, when it was adopted by then-publisher, Adolph Ochs. Recently, Ochs’ great-grandson, Arthur Sulzberger Jr. announced that, given current newsroom costs, the Times is likely to be forced to stop publishing a printed paper sometime in the next five years or so. Sobering news from the “Grey Lady.”

They’re gonna need a new motto, too!

by Chris Holman

Evaluate Your Life Day

2010-10-19T11:56:00.005-04:00

October 19th has special resonance for financial advisors. It was on this day, 23 years ago, that the Dow plummeted 23% in one day. For those of us in the business then, it was a vivid reminder of the vagaries of human rationality and efficient markets. We were all glued to our Quotrons. (That’s an old-timey, flashback word!) There was little else to do.

October 19th is also “Evaluate Your Life Day”…which might be startling news to a number of you. It’s one thing to wake up and discover that the day is “National Cupcake Day” or “Hug Your Cat Day.” These would be relatively easy to deal with… (unless you are a celiac or cat-allergic.)

But “Evaluate Your Life Day?” As the kids say…”Whoa!”

The good news for financial advisors on “Evaluate Your Life Day” is that advisors are in the extraordinary position of being able to help others evaluate their lives…financially-speaking. In the spirit of “Evaluate Your (Financial) Life Day”, advisors might ask their clients and prospective clients the following series of questions:

Are you happy with your financial status?
What are your lifetime goals?
Are you on a path to achieve these goals?
What might you change in order to allow you to achieve these lifetime goals?

For financial advisors, asking the right questions is critical to helping others achieve personal happiness and success. Many of us get so caught up in the day-to-day clamor and hubbub that we rarely take the time to examine whether we are on the right path to reaching our potential… financially and otherwise. Financial advisors are in the unique and enviable position of guiding their clients to initiate positive change that will better the lives of their immediate family, as well as future generations.

Speaking of evaluating your life, there is a NY Times #1 bestselling book entitled, “Well-Being: The Five Essential Elements” that might be just the tonic for what ails you. Authors Tom Rath and Jim Harter were moved by the abundance of research by the Gallup organization to create an assessment called the Well-Being Finder. They postulate that there are universal elements of well-being…5 interconnected elements that differentiate a thriving life, from one of toil and suffering:

Career Well-Being: People who are happy to go to work each day, appreciated and respected by their peers and associates, able to speak with pride about their company to others.
Social Well-Being: Those with several strong relationships, and able to activate a support system when encountering problems. They feel loved.
Financial Well-Being: People who manage their finances prudently, are aware of costs and are in control of expenditures. They are frugal but not cheap.
Physical Well-Being: Those who get sufficient rest, as well as rigorous regular exercise, have plenty of energy in reserve, and eat sensibly.
Community Well-Being: People who are actively and productively engaged in the neighborhood and in the community, as well as in various groups within the area, such as a church, P.T.A., Crime Watch, Meals on Wheels, homeowners' association, etc.

Interestingly, of the thousands of individuals surveyed for their well-being in each of these categories, just 7% were thriving in all five…66% were doing well in only one of the five areas. How do you compare? What about your clients?

That’s enough well-being for now. Hope you are well and that you enjoyed it. Now back to work for you.

by Chris Holman

Stuck on the Tracks?

2010-10-14T16:06:00.004-04:00

“Even if you are on the right track, you’ll get run over if you just sit there”…Will Rogers

Procrastination is not a new problem. Writing in 800 B.C., the Greek poet Hesiod declared that “a man who puts off work is always at handgrips with ruin.” In the mid-1800’s, French author Victor Hugo (Les Miserables and The Hunchback of Notre Dame) would tell his valet to hide his clothes so that he’d be unable to go outside when he should stay inside to continue his writing.

However, it appears that procrastination is on the rise. According to Piers Steel, a business professor at the University of Calgary who has made a career out of the study of procrastination, the percentage of people who admit to difficulties with procrastination has quadrupled over the past 20 years. Research by Harvard behavioral economist David Laibson, revealed that American workers have foregone huge amounts of free money in matching 401(k) contributions…simply because they never got around to signing up! (Are your clients maxing out on theirs?)

Many of these insights, and much more, are contained in a very entertaining essay entitled “Later” by James Surowiecki in the 10/11/2010 issue of The New Yorker. In his essay, Mr. Surowiecki reviews recent procrastination research and explores what procrastination tells us about ourselves.

Speaking of procrastination research, one of the most prolific academics in the subject of procrastination is the previously mentioned Piers Steel. Dr. Steel also states, rather dogmatically, that… “People who procrastinate tend to under-perform in almost every other area of their life.” In fact, for those of you who want to get your own procrastination assessment, Dr. Steel invites you to participate on his website, Procrastination Central.

So…after all of this talk about procrastination…what does one actually do about it? According to Timothy Pychyl, professor of psychology at the University of Ottawa (Why are all the experts on procrastination from Canada?), there are a number of deliberate strategies that one can undertake to stay one step ahead of procrastination:

Time Travel. Procrastinators discount future rewards as less important than the task at hand…especially if the current reward or activity is a more pleasant one. With “time travel” we use concrete mental images of the future…to represent the future as if it were happening right now. For example, for a person who is procrastinating on saving for retirement, it might help if they imagine, as vividly as possible, living on his/her potential retirement savings now. In other words, think about the task in the real context of the day, and think carefully about how these tasks would make you feel. Hopefully, the realization that the future image is not as rosy as one had imagined, would help a person to change his or her actions toward that activity or task today.
Don’t give in to feeling good. Learn to recognize that we can have negative emotions without acting upon them. Stay put for a minute…don’t walk away. Don’t give in to “I’ll feel more like it tomorrow.” Begin a task today; even if it’s not completed…at least it’s a start.
Reduce Uncertainty and Distractions. For important tasks, reduce all uncertainty about how to proceed. Shut off your email, close the blinds, wear ear-plugs…isolate yourself and make sure that the environment around you is strengthening your willpower to succeed.
The Willpower Muscle. Research indicates that willpower is like a muscle, i.e. you can exhaust your willpower, and when you do, you lose your ability to regulate your behavior. One immediate method to strengthen your resolve is to remind yourself of your values; thereby fortifying your willpower.

Many of the solutions to procrastination amount to the re-framing of the task in front of you. In some ways, procrastination is influenced by the gap between effort (what is required now) and reward (what you harvest in the future, if ever). Narrowing this gap, by whatever means necessary, is the key to limiting procrastination. This is why it helps to focus on short-term projects with definite sections and deadlines, as opposed to open-ended tasks with distant time limits.

By the streets of “by and by” one arrives at the house of “Never.”…Cervantes

by Chris Holman

Your Brain Doesn't Care How Old You Are!

2010-10-07T08:06:00.005-04:00

The July issue of Consumer Reports On Health contains a very interesting article about the brain as it ages. Recent studies show that the choices people make throughout their lifetime have a significant impact on their ability to remain sharp in old age.

“Your brain doesn’t know how old you are…and doesn’t care,” says Paul D. Nussbaum, Ph.D., an adjunct professor of neurological surgery at the University of Pittsburgh School of Medicine. “It just wants to be in a stimulating environment, and that’s something you can do at any age.”

There are several things you can do to keep your brain stimulated as you age:

Build a mental reserve—research has shown that the more participants engaged in mentally stimulating activities like reading, writing, crossword puzzles, playing board or card games, playing music, participating in group discussions, the longer they delayed rapid memory decline. Not surprisingly, passive activities, such as watching television, don’t count as “mentally stimulating”.
Keep working—putting off retirement and continuing to work can also help. However, don’t put in such long hours that you are neglecting your rest. A 2009 British survey found that people who worked more than 55 hours weekly scored similarly on vocabulary and reasoning tests as those who worked more reasonable hours.
Stay healthy—exercise and diet are extremely influential in helping to keep your brain energized. Countless studies show that people who exercise a few times per week and maintain a healthy diet have stronger hearts and overall better health than people who don’t exercise or eat well. When you consider that “with every beat of your heart, 25% of the blood flow goes right to your brain,” according to Nussbaum, it’s easy to see why taking care of your heart has a direct impact on your brain function.
Sleep on it—getting enough sleep is also critical. If you reduce an average night’s sleep of 7-8 hours by 1-2 hours, your response time will be slower, you will have more difficulty with complex tasks, and you will have more trouble remembering information. Just like your body, your brain also needs a rest. Sleeping gives your brain time to make connections to new information and shuttle it to long term memory.
Stay connected—studies have shown that the more frequently people interacted with others, the higher their scores on simple tests of cognitive functions, so stay connected with colleagues, family and friends on a regular basis.

Keeping your brain energized is a no-brainer. If you’d like to take a little break from your daily grind right now and try a little mental exercise to help boost your brain power, check out these optical illusions.

On this day, October 7th, Dr. Harvey Cushing passed away in 1939. Dr. Cushing was a pioneer of brain surgery, and is often called "the father of neurosurgery." Almost singlehandedly, he perfected the techniques of brain and nerve operations. Pre-Cushing, mortality rates for neurosurgery were very high...50-60%. Over the course of his career, Dr. Cushing experienced mortality rates of 10%.

by Theresa Ficazzola

Best Practice?

2010-09-21T16:16:00.005-04:00

According to Wikipedia, a “best practice” is… “a technique, method, process, activity, incentive, or reward which conventional wisdom regards as more effective at delivering a particular outcome than any other technique, method, process, etc. when applied to a particular condition or circumstance.” (If it’s in Wikipedia, it must be true, right?)

In the world of the financial advisor, “best practices” abound. Or do they?

In the definition above, the key phrase is “conventional wisdom regards…” The problem with conventional wisdom is that it often isn’t. The problem with “best practices” is that just because something worked for somebody else, somewhere else, sometime else…doesn’t mean that it will work for you.

However, by sticking the “best practice” tag on a technique/process/method ….it seems to immunize that particular technique/process/method against critical and discerning thought as applied to one’s own world.

For more discussion on the risk of blindly following “best practices,” I encourage you to read this essay by Tim Berry, “The Sad Truth About Best Practices.” It’s quite good.

At the same time, we can all learn from the best. There’s no point getting older, if we don’t get smarter.

I guess the key point here is to use some balance. “Best practices” can offer some good learning if we take the time to employ some critical thinking as to how these techniques/processes/methods might apply to our own circumstance. Here's a question for you: Are you utilizing any types of “best practices” in your business model today? If not, you may want to examine some and determine if they could yield some benefits for you.

Speaking of a technique/process/method that may or may not be a “best practice”, I’d like to share a brief story with you.

I was in Nordstrom’s the other day…purchasing the right tie for an upcoming occasion. At the counter, as I was completing the transaction, I noticed a list that was labeled, “Best Customer List”. Names… Addresses….Phone numbers….the whole works…in full view for anyone to see. Very indiscreet…a real faux pas by some injudicious Nordstrom employee.

However, this incident got me to thinking. I can imagine how most merchants of luxury items e.g. high-end retailers, luxury car dealers, jewelers, wine merchants, etc. must segment their clients into “Best Client Lists.” I would also think that when financial advisors build strategic alliances, that they should include the other professionals who make their living by purveying luxury goods and services to the affluent. Moreover, I suspect that a savvy financial advisor might organize creative client events that would involve other purveyors of luxury items, and engage the “Best Client List” of all those involved. Could be quite fun!

Not a “best practice.” Just a thought that may, or may not, work for you.

PS…We, at ClientWise, have recently done some research around best practices and developed a benchmarking tool that gives financial advisors the opportunity to benchmark their practice versus top advisors from across the country. By measuring yourself against your peers, you can learn what areas of your practice fall into the “best practices” model, and which areas may need some improvement.

We will be hosting a complimentary webinar on October 13 to discuss some of our research findings and explain how our Benchmark Assessment Report (BAR™) can help you reshape how you manage your practice. For more information, call Liz Walsh at (914) 244-1545, ext. 301.

by Chris Holman

Cultivating Creativity

2010-09-08T13:11:00.004-04:00

Last week, I was listening to Terry Gross’ rebroadcast of a 1996 interview with Willie Nelson. Terry Gross is the host of Fresh Air and is, I believe, among the best interviewers in the media today. Her combination of empathy, curiosity, and listening skills enable her to extract the most remarkable stories from her guests, night after night.

During the interview, Nelson revealed that he had written three of his top hits, ‘Crazy’, ‘Night Life’, and ‘Funny How Time Slips Away’…during one eventful week in 1960. At the time, Willie Nelson was still a struggling song-writer. After he wrote these three songs, he figured he might have the requisite song-writing chops, and this was all the impetus he needed to pack up his ’46 Buick and head off to the rhinestone-lined streets of Nashville to see if he could make a go of it.

What a week for Willie! Regardless of whether you are a big fan of Willie Nelson or not, it is extraordinary that the inspiration for these songs struck within the span of seven days. Patsy Cline picked up ‘Crazy’ and the first time she performed it at the Grand Ole Opry, she received three standing ovations. ‘Funny How Time Slips Away’ has been covered by a whole array of artists…including The Supremes, Elvis, and Dave Mathews. “Night Life” was one of Willie’s first big hits via Ray Price, and has become the most-covered country music song of all time.

This got me thinking about inspiration. How does it strike? In Willie Nelson’s case, what was going on in his world to enable him to create three classic songs in such a short time period? I guess we’ll never know. In fact, I wish Terry Gross would have asked THIS question…

For the rest of us, however, is there anything that we can do to cultivate inspiration and creativity…or does originality “just happen” out of the blue?

Fostering Inspiration
Andy Stefanovich, who is writing a book on innovation, and is the senior partner at Prophet, a strategic brand and marketing consultancy….believes that intentional, focused inspiration is a discipline that requires deliberate practice and becomes easier to achieve when five modes of inspiration are practiced. He writes about this in "The Inspiration Discipline." Review the following five modes in sequence, each of which will lead you to greater degrees of “difficulty”:

Serendipity. An unexpected moment of inspiration is serendipity. We don’t seek it, but serendipitous inspirations hit us like a bolt-from-the-blue. Although this form of inspiration cannot be engineered, it can help you develop your inspirational capabilities.
Recreation. Recreational inspiration is common, yet unrecognized. The sole function is to release the conscious mind from its standard routine or direct concerns. This form of inspiration bubbles up when we do activities for fun, e.g. sports, music, hobbies, exercise, etc. Recreational inspiration is essential to thinking differently and maintaining good mental health.
Intentional distraction. This happens to us all the time. Example: Someone asks you who won the Academy Award for Best Picture last year. You know this because you were at an Oscar party last year. The name is on the tip of your tongue, yet you can’t quite remember. Then, you stop thinking about it and five minutes (or five days) later, it comes to you. Here’s what’s happening…once you move onto something else, your unconscious mind eventually provides the answer.
Forced connection. Once you feel confident with intentional distraction, you can progress to forced connection. This is the first step in applying inspiration to a specific real-time objective, and is a skill that requires practice and development. Example: You are walking down the street, and stop next to a streetlight. A voice in your head asks the question, “What does this streetlight tell you about leadership?” Slowly, some ideas come to you. The light shines from above. It provides illumination during times of need. The historical nature fits in with the old warehouses around it. Forced connection perspectives can give you a new entry point for considering surprising new perceptions of old problems.
Targeted discovery. This mode pushes you to seek sources of inspiration that strategically stretch your thinking, challenge your assumptions, and create new connections…all with a specific real-time objective in mind. Example: What business am I really in? Forget about your specific product or business. Ask yourself what is the value that you provide to your clients. What other organizations or persons make the same promise. What can I learn from them? This mode of inspiration is the engine of innovation, since it is the quintessential new input that’s needed to get new outputs, and create a sustainable pipeline for new ideas.

Stay tuned. I’ve rambled on enough for one day. Next week, we’ll be talking more about inspiration and innovation, and specifically what you can do to cultivate more of both…including exercises. Fun!

Talk to you then.

by Chris Holman

Business Owners and Investment Risk

2010-09-02T17:27:00.004-04:00

The Ewing Marion Kauffman Foundation is the world’s largest foundation devoted to entrepreneurship. Their mission is to help individuals attain economic independence by advancing educational achievement and entrepreneurial success, consistent with the aspirations of the founder, Ewing Marion Kauffman.

(In 1950, Ewing Kauffman founded Marion Laboratories in the basement of his home in Kansas City with a $4,000 investment. His first product was calcium supplements, which he made by pulverizing oyster shells. In 1989, Marion Labs was purchased by Dow Chemical for $2.2 billion. How’s that for entrepreneurship!)

Over the years, the Kauffman Foundation has been a source for fascinating research on business owners and entrepreneurship. Recently, they published an intriguing study on the amount of risk that business owners assume (outside of their direct business interests) entitled, “Business Owners, Financial Risk, and Wealth.”

Among the report’s conclusions:

Business owners are more conservative when it comes to saving and spending.
Business owners allocate more time to shopping for financial products.
Households that own businesses invest more heavily in relatively safe assets.
Retirement saving is significantly more important for business owners than non-business owners. (45% vs. 32 %.)
Business owners are wealthier. The medium net worth for business owners in this study was $497,000…for non-business owners it was $94,000.

If you are a financial advisor, how might you use this study?

In the first place, if you work with business owners now, this might corroborate what you have intuitively known all along. As such, the report might bolster you to guide your business owner clients to more conservative portfolios. (Don’t make assumptions though! All clients are different.)
You might share this report with your business owner clients in order to stimulate a discussion regarding their financial risk.
If you currently do not work with business owners, you might want to use the study to begin a targeted campaign to attract business owners as clients.

Today, September 2nd, is the birthday of Andy Grove, one of the first employees of Intel, who oversaw a 4,500% increase in Intel’s market capitalization while serving as CEO. Grove was born to a middle-class family in Budapest, Hungary. During the Hungarian Revolution of 1956, he left his home and family at the age of 19, under cover of darkness and emigrated to the United States.

Andy Grove once said, “Your career is your business, and you are its CEO.”

by Chris Holman

Back to School

2010-08-24T08:01:00.009-04:00

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:

Have you seen the latest U.S. News & World Report college rankings?
Has your son/daughter started talking about where he/she wants to go to college?
What subjects are he/she interested in?
Has he/she taken the SATs? Have you considered a prep course to boost scores?
Do you know the approximate four year cost of that school’s tuition?
Do you currently have a college account for your children/grandchildren?
Will you have enough to pay for school when the time comes?

Questions for those with younger children:

Have you seen the latest U.S. News & World Report college rankings?
Before you know it, your children/grandchildren will be talking about college. Do you know the approximate cost of a four year college education?
Do you currently have a college account for your children/grandchildren?
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

Building Your Wealth Management Network with Business Brokers

2010-08-20T14:36:00.005-04:00

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

The Science of Attention

2010-08-17T10:04:00.008-04:00

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!

What Motivates You?

2010-08-06T09:52:00.009-04:00

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

Independence, or the feeling of being in charge of one's own destiny
Money
Challenge and Achievement
See an Opportunity
Lifestyle

Push Factors for Entrepreneurs

Job Dissatisfaction
Changes within the workplace
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:

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.
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

You've Got the Power!

2010-07-19T18:49:00.009-04:00

In 1968, James David Power III struck out on his own to form J.D. Power & Associates. It was an unusual career move for the time. At 36 years old, with a mortgage and three kids, Dave Power had a secure job as director of corporate planning at McCullough Corp., makers of chainsaws and Weed-Eater.

Nonetheless, Power had an ongoing passion for market research, and decided to form his own market research firm. (In the early years, Power and his wife Julie tabulated the results of their customer surveys around their kitchen table.)

J.D. Power & Associates began as a publisher of independent customer surveys that focused on the automobile industry. Power’s big break happened in 1971, when his customer research uncovered a flaw in Mazda’s rotary engine. Writing his first-ever press release on a yellow pad of paper, Power detailed unreported problems by Mazda car-buyers. 24 hours later, the press release hit the front page of the Wall Street Journal…and (as they say) the rest is history.

By 2005, J.D. Power & Associates had grown to 700+ employees with annual sales of $150 million. Dave Power had earned the reputation as the auto industry’s “Mr. Quality.” During that year, Power decided that the time was right to step aside, and sold his company to McGraw Hill. Terms were undisclosed.

For the past 8 years, J.D. Power & Associates have branched out to the financial services industry and have provided ratings for full-service investment firms. In the latest survey, “2010 U.S. Full Service Investor Satisfaction Study” released on July 19, 2010, three firms distinguished themselves with superior ratings: Edward Jones, RBC Wealth Management, and LPL Financial. Edward Jones had the highest investor satisfaction, averaging 769 on a 1,000 point scale.

The study also finds that advisors who perform certain practices see a positive impact upon client satisfaction and the overall investment experience. These activities include:

Fostering engaged client/advisor relationships that involve the development of an investment strategy,
Periodic review of investment objectives,
Regular communication around, and reasons that explain, investment performance,
A clear explanation of fees and commissions.

The study also finds that investor satisfaction has a substantial impact upon several other important criteria: share of wallet, more new client introductions, and higher levels of loyalty and retention.

Also notable is that investors’ positive sentiment regarding their own investment firms have decreased. Overall, an increasing number of investors believe that their firm is more focused on profits…as opposed to them.

The 2010 study is based upon responses from 4,460 investors who make some or all of their investment decisions with an investment advisor. The study was fielded in May 2010.

There are no real surprises in the Investor Satisfaction Survey. Financial advisors know they need to engage their clients and keep them happy. What is relevant is yet another reminder that many clients remain dissatisfied with their current firm. What about yours? Here are some coaching questions that come to mind:

What are you doing to effectively engage your clients on multiple levels, so they remain satisfied with your level of service?
Why not communicate the survey’s findings to begin an open dialogue with them about you and your practice?
What is your plan for acquiring new clients in today’s marketplace?
How else might you use the survey’s findings?

You have the “power” to ensure all your clients are satisfied; don’t relinquish that power to someone else.

by Chris Holman

Think for Yourself

2010-07-15T14:08:00.003-04:00

Groupthink is a style of thinking that people can engage in when they are deeply involved in a cohesive group. When groupthink occurs, the desire for group unanimity overrides the motivation to realistically discuss and appraise different alternatives.

For financial advisors, groupthink occurs all around. Wall Street is an exceedingly subjective and psychological environment where there is a marked tendency towards groupthink.

For those financial advisors who work with investment committees of foundations or employers, group decisions can lead to significant behavior and psychological biases.

There are several noteworthy pieces that explore this interesting topic.

For those of you who have read Michael Lewis’ The Big Short, you know the story of how a quirky band of unknowns made hundreds of millions of dollars by thinking differently than the “Wall Street Machine”.
There is also a wonderful research piece from Vanguard on groupthink called “Group Decision-Making: Implications for Investment Committees.” This is a must-read article for any financial advisor who works with investment committees on an ongoing basis.
There is also a thoughtful piece on Art Petty’s Management Excellence blog entitled, “Six Steps for Avoiding Groupthink on Your Team.”

Many financial advisors are getting sucked into the groupthink philosophy because they are hesitant to break out from the pack. There could be several reasons for this, including compliance rules and regulations, fear of a lawsuit from a client, or worries about hitting their numbers and potentially losing their job if they say or do the “wrong” thing.

It’s interesting to note; however, that some of the most successful investors in the past decades, e.g. Benjamin Graham and Warren Buffett, have achieved their success by avoiding the trap of consensus, groupthink investing. Coaching questions: What about you? Do you participate in groupthink, or do you stand up for what you believe and speak out on your own?

Perhaps Doris Lessing, the 2007 Nobel Prize winner for Literature, summed it up best when she said, “Think wrongly, if you please, but in all cases, think for yourself.”

by Chris Holman

Post-Crisis: Has Investor Psyche Changed?

2010-07-08T09:13:00.010-04:00

Capgemini is a global consulting firm headquartered in France that has released the World Wealth Report (in conjunction with Merrill Lynch) for the past 14 years.

In the most recent report, World Wealth Report 2010, they offer some interesting observations with regard to the post-crisis environment. In their view, investor psyche has changed significantly in the past three years. Since their insights run parallel to what we, at ClientWise, are seeing in the industry, I thought that I might share them verbatim:

1. Post-crisis, most high net worth clients have yet to regain their trust in the regulatory bodies and institutions that are meant to oversee markets and protect investor interests. Coupled with ongoing concerns around financial markets, this lack of confidence has long-term implications for investing behavior.

2. Shifts in asset allocation mirror investor caution. High net worth investors are favoring predictable forms of cash flow like those in fixed-income products, and are seeking protection against downside risk, and their search for returns takes place within the broader context of portfolio risks and goals.

3. High net worth investors have seized a more hands-on role in their finances. Above all, they want specialized and independent advice, transparency and simplicity, and effective portfolio and risk management, and are looking for wealth management provider relationships that can clearly demonstrate a more integrated approach to meeting their needs.

4. Emotional factors are a prominent feature of the high net worth psyche today, and wealth management firms and advisors must incorporate those emotional factors into stronger portfolio management and risk capabilities so as to properly support client goals and needs.

5. With billions of assets still in motion post-crisis, wealth management firms are embracing change, leveraging key tenets of behavioral finance to rebuild investor trust and confidence and drive further innovation into their offerings and service models.

Admittedly, many of these changes in investor psyche were happening before the financial crisis. However, post-meltdown they seem to have been exacerbated.

However, the learning for financial advisors is profound. Assuming that you agree with Capgemini's observations, the coaching question is: what are you doing differently now to meet your clients’ needs, communicate more effectively and restore their trust?

Join our Complimentary Webinar
At ClientWise, we’re always looking for ways to help financial professionals improve their productivity and meet their goals. Our latest public webinar, to be held on Thursday, July 15 at 4:30 pm, EST, will discuss the benefits of our new service, the Benchmark Assessment Report (BAR™), which benchmarks your practice against other top advisors.

For more details about how the BAR™ can leverage your strengths to accelerate growth or to register for the webinar, please visit our website at www.clientwise.com and click on the “Knowledge is Power” photo.

by Chris Holman

Generation Gap

2010-07-01T13:09:00.006-04:00

There’s a thought-provoking piece in the Harvard Business Review that discusses generational diversity in the workforce and how to manage it.

In many organizations today, there is a diverse group of workers with disparate differences in attitude with regard to: motivating, managing, maintaining, dealing with change, and increasing productivity. Many of today’s organizational leaders are members of the Silent Generation or Baby Boomers. Fast on their heels are Generation X and the Millenials. Although stereotypes are tricky, it seems to be true that each generation demonstrates similar characteristics.

For those financial advisors who work on multigenerational teams, it might be helpful to raise awareness of the differences between generations, as well as to recognize the benefits of cross-generational dialogue. The photo at the beginning of this article is a prime example of the difference between two generations—the older businessman is reading a book, while the younger person seems to be reading a text message from his phone.

The oldest generational group, born between 1925 and 1945, is the Silent Generation. This group values hard work, conformity, dedication, sacrifice and patience. Members of this generation are comfortable with delayed recognition and reward.

The largest group in the work force today is the Baby Boomers. Born between 1946 and 1964, Boomers are characteristically optimistic and team-oriented. They place a high value on work ethic, while also seeking personal gratification and growth.

The smallest sized group is Generation X, also known as the Sandwich Generation because of their position between the two largest groups. Generation X, born between 1965 and 1980, were the first “latchkey kids”. They are self-reliant, global thinkers who value balance, fun, and informality.

Millenials were born between 1981 and 2000, and ultimately will become the largest group. Members of this generation exhibit confidence, optimism, civic duty, sociability, street smarts, inclusivity, collaboration, and open-mindedness. They tend to be goal-oriented.

Multigenerational Dialogue
For many teams, cross-generational understanding begins with dialogue. Indeed, some teams have formalized the conversation by organizing discussion groups that explore the generational differences between them.

Here are some coaching questions that may facilitate a useful exchange of ideas:

What were some of your generation’s key national and international events?
What trends, people, and popular culture do you recall from your first 12-15 years?
Which defining historical event(s) shaped your generation?
What do you value most about your generation?
What challenges do you face as a result of being in your generation?
What perceptions do others have of your generation?
What are the pluses and minuses of working with each of the other generations?
How can the members of multigenerational teams work better together?
What should the mode of communication between them be?

Within any team, it is important to openly discuss differences in expectations. Recognizing that the same generation can look very different through the “generational lens” is helpful in understanding that it is normal for different people to react to the same situation in different ways.

Join our Complimentary Webinar
Webinars are a relatively new method of communicating and are commonly used by people from most generations. The benefits are obvious: they can reach a large audience; participants can be located across the country; they’re convenient, they save time and money and increase productivity.

At ClientWise, we’re always looking for ways to help financial professionals improve their productivity and meet their goals. Our latest public webinar, to be held on Thursday, July 15 at 4:30 pm, EST, will discuss the benefits of our new service, the Benchmark Assessment Report (BAR™), which benchmarks your practice against other top advisors.

For more details about how the BAR™ can leverage your strengths to accelerate growth or to register for the webinar, please visit our website at www.clientwise.com and click on the “Knowledge is Power” photo. Members of all generations are welcome.

by Chris Holman

Kids?...or a Bentley Flying Spur?

2010-06-22T08:03:00.005-04:00

For moms and dads, or those of you considering becoming a mom or dad, have you ever wondered just how much it costs to raise a child today?

A study released recently by the USDA, showed that raising a child is 22% more costly than it was in 1960. Adjusted for 2009 dollars, middle-income parents in 1960 spent a total of $182,857 to raise one child through the age of 17. Today, parents spend $222,360. The bulk of those costs are, not surprisingly, for health care and education.

(The suggested MSRP for a 2010 Bentley Continental Flying Spur Speed Sedan is $202,500.)

As a financial advisor, these figures shouldn’t sound too off the mark. Everyone knows the costs of raising a child are increasing each year, particularly for education. However, most parents spend so much money on the day to day expenses of raising their children, they fall short of being able to afford to pay for college, let alone fund their retirement sufficiently.

What are you doing to help your clients prepare for the financial reality of paying for their children’s expenses until they’re on their own? Effectively managing finances over the course of a child’s early lifetime can significantly impact how much money your clients will end up with in their retirement fund.

How can you help?

Consider creating a marketing campaign surrounding the USDA’s new study to make your clients aware of the expenses of raising a child. Create a mini campaign for clients who are expecting their first child (or those becoming grandparents) and distribute it a few months before the child arrives to prepare them for what lies ahead. Once they have the baby, they will be too preoccupied with everything that comes with being a new parent to focus on their finances.

Create a list of popular websites that you can share with your clients that offer good information and advice about health care costs (www.insurekidsnow.gov) and education expenses (www.collegeboard.com ).

Devise a strategy to help your clients decide where they should put their money and when – is it better to pay off the mortgage, save for college, or fund a retirement account. If there are limited finances, which should be done first? Develop different scenarios with real life examples to share with clients.

Host a seminar in your office to help clients understand their options. Consider holding it in conjunction with a local university financial aid officer or an estate attorney from your professional advocate network for maximum impact.

The better prepared your clients are for paying for their child rearing expenses, the better prepared they will be to enjoy the lifestyle they dream of having in their retirement. As their trusted financial advisor, you can help them prepare more effectively.

by Theresa Ficazzola