Best Practice?

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

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”:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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

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:

1. Business owners are more conservative when it comes to saving and spending.
2. Business owners allocate more time to shopping for financial products.
3. Households that own businesses invest more heavily in relatively safe assets.
4. Retirement saving is significantly more important for business owners than non-business owners. (45% vs. 32 %.)
5. 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