Dedicated to columnist
Dan Taylor our dear friend and colleague
Business Management for Independent Financial Advisors
Jack Schecter
TABLE OF CONTENTS Letter from the Editor ..................... In the News .................................... Wirehouse Rep Movement ............ Calendar of Events ........................
1 3 5 6
Jack Schecter: Wealth Manager With a Higher Calling .................... 7 Are You Leaving? Trusting a Stranger with Your Clients ............ 11 by Ryan N. Shanks Building Relationships that Last ... 13 by Jeremy Condie The Exit Planning Process: Step Two ........................................ 17 by David Leitner, Esq. Creating Your Own 2010 Economy .......................................19 by Teresa Allen
Billion-Dollar Wealth Manager Passionate About His Work and His Causes … Page 7 RAYMOND JAMES'
AdvisorChoiceSM Page 23
Checklist for a Smooth Transition Page 29
Succession Planning: Who Can You Trust Your Clients With?
"High-Five"
Page 11
Subscribe today and receive a FREE eBook: "Valuing and Selling Your Business"
Beyond Reproach ........................ 21 by David Loeper, CIMA® "High Five" Raymond James AdvisorChoiceSM ............................... 23 Book Review: Activating Your Ambition ............................................ 24 authored by Mike Hawkins Dual Registration ......................... 25 by David Loeper, CIMA® What Good Hath Roth? Part II ..... 27 by David Williams, CFP® Transitioning Checklist ................. 29 by H Thomas Fehn, Esq. Moving to the Next Level: Should You Do It All? ................................ 31 by Beth Ruggiero, RFC, CFE For Crying Out Loud! Five Advisor Decisions for 2010 ... 33 by Dan Taylor Why I Want to Grow Old With My Dogs ..............................................35 by Dan Taylor Grin and Bear It! ........................... 37 Resource Directory ...................... 38 Financial Forum Publishing Partnered with
January 2010
M a g a z i n e
Transitions Magazine
From the Editor The Passing of an Industry Warrior: Dan Taylor “Dan has made the ultimate transition in his quintessential journey.”
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---Lewis Walker CFP® Walker Capital Management
t was Christmas Eve, and with it brought the sad news of the passing of our dear friend and popular columnist, Dan Taylor. A well-known and respected industry Thought Leader, Dan was diagnosed 14 months ago with stage IV brain cancer. He survived a delicate surgery and withstood many months of chemotherapy and radiation treatments. As an associate coach with Dan Sullivan’s Strategic Coach program, he continued to coach advisors (which included traveling and intense sessions), write his column, “For Crying Out Loud” for Transitions, maintain his many organizations including American Pet Cross, The ParentCare Solution program, and Personal Privacy program, among others. He was a giant among men — skilled, intelligent and compassionate — inside (and outside) of this industry.
Lewis Walker, a dear friend of Dan’s and ours (and who was mentioned in his last column on page 35) said of him, “Dan Taylor was a creative, dynamic, and thought-provoking fountainhead of future-focused ideas. Dan’s leadership and mentoring skills were treasured by countless advisors. His book, The Parent Care Conversation, and the disciplines that he developed to help advisors frame solutions to the challenges of aging will live on as a fitting legacy. Dan was a forceful personality, his own man, independent and courageous to the end. We are all better off having had him in our lives. He is missed and fondly remembered.” Mark Bass CFP®, a financial planner with Pennington, Bass & Associates and a dear friend and colleague of Dan’s said when he and his wife Betsy were in Charlotte with him in mid-December, Dan remarked to them, “I know I’m already eight months past my ‘sell by’ date.” Said Mark, “He was quick-witted to the end. I am a better person and professional because of him.” His resounding last words of advice in his final column on page 35 were, “In terms of the big firms, be like a good shepherd and get the flock out of there as soon as possible. Even if none of your clients come with you, you will have it all back again in less than three years. The risk of loss at starting over is about 1 millionth of the risk of loss of losing your business because your OSJ won’t stand up for you.” That was classic Dan: always telling it like it is, unapologetically, and with the conviction of a Winston Churchill, “Victory at all costs, victory in spite of all terror, victory however long and hard the road may be; for without victory there is no survival.”
From the Editor s
My co-publisher, Lyn, and I are saddened beyond expression. Who will fill the gaping chasm left by our courageous friend? I remember one of my first conversations with Dan about the many plights of independent advisors. He was adamant about his beliefs on regulation, compliance, and breaking away from the wirehouses and wanted to broadcast them in his inimitable fashion: jarringly candid, loud, and laced with his unrivaled sense of humor. I told him we would be honored to publish his commentaries. He was incredulous and said, “You aren’t afraid of getting sued? All the other publishers were. I’ll tell you what, Syd — FOR CRYING OUT LOUD — if you get sued, I’ll represent you!” And then he quoted Thomas Jefferson, “Question with Boldness. Hold to the truth. Speak without Fear.” He lived those truisms; and that was the day I became a Dan Taylor fan.
Dan was fearless and enthusiastic about life and success. He would say, “Yes, there is fear; but feel the fear -- continued -www.transitions-mag.com
January 2010
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Transitions Magazine
From the Editor
and do it anyway.” Said another dear friend and close colleague, Jon LoDuca, Founder and CEO of Wisdom Link, (also mentioned in Dan’s column), “Dan was more interested in winning than he was afraid of losing. Because of him, I have given up being afraid of failing. Dan told me that this was the way of the Samurai. An individual who is no longer afraid to fail, no longer afraid to die. People loved him because he spoke the truth. Always.” When I received Dan’s column for this month’s issue earlier on, I read and enjoyed it. It was typical Dan. However, the last paragraph that he wrote startled me. It left me curious and uneasy, but somehow confident that Dan would always be here to protect and fight for all of us. Now that I read it again, I realize that his last paragraph was truly prophetic:
From the Editor s
“Never leave anyone behind in the name of bureaucratic adherence, obedience, or compliance. Know that the only easy day was yesterday and that it pays to be a winner… even if you have to die in the process. If they ask you who told you to do these things, tell them I did. Also, tell them to FEAR THE DARKNESS FOR I AM IN IT.” Dan loved dogs, smart people, beautiful art, interesting books and sunsets in Santa Fe, New Mexico. His passions were free speech, pet advocacy, and creating unique processes designed to improve the way we live, work and care for others. He was preceded in death by his mother and father, Gloria and Clyde Taylor, of King, NC; his sister, Jane Taylor, and his twin brother, Donald Taylor. Dan is survived by a brother, David Taylor, of Tobaccoville, NC; his nieces, Rachel Stauffer, of Charlottesville, VA; and Ashley Taylor of Tobaccoville, NC, his fiancée, Christine Sheffield, her daughter Ashley Sheffield, and his three dogs; Roxanne, Zack and Pearl. In lieu of flowers, donations may be made to the American Pet Cross at www.AmericanPetCross.com For a complete obituary click here: www.transitions-mag.com/taylor-obit.pdf. We will miss you, our dear friend, and will think of you often and with love and respect. Your legacy lives on in the hearts and minds of those you have helped and inspired — financial advisors around the globe, your friends, family, and the animals you protected and cherished.
Editor-in-Chief Sydney LeBlanc sydney@transitions-mag.com Managing Editor Cami Miller cami@transitions-mag.com Contributors Teresa Allen Jeremy Condie H Thomas Fehn, Esq. David Leitner, Esq. David B. Loeper, CIMA® Beth Ruggiero Ryan Shanks Dan Taylor David Williams, CFP®
IT Directors John Weeks Shane Hansen
Advertising Sales • Stephanie Kunz stephanie@ffpublish.com 435.750.0062 x3 • Terri Chiodo terri@transitions-mag.com 310.375.9300
Until next time,
• Lyn Fisher lyn@ffpublish.com 435.750.0062 x1
* To read columns written by Dan Taylor, click here: http://www.transitions-mag.com/wp/?cat=566
Published by Financial Forum Inc.
** To view a Dan Taylor video, click here: http://advisorfreedom.com/video.asp 2
Publishers Lyn Fisher & Sydney LeBlanc
January 2010
550 North Main, Ste. 221 Logan, UT 84321 435.750.0062 • info@ffpublish.com www.transitions-mag.com
Transitions Magazine
Industry News
linkedFA, the first and only FINRA compliant social networking site for financial professionals to inform, connect and interact with investors, clients and peers, is weeks away from global launch following an invitation only, pre-launch registration for up to 15,000 early adopters seeking competitive advantage. linkedFA is a social networking site for financial advisors, registered representatives, registered investment advisors, insurance advisors, and CPAs. It offers all the social media and client relationship building benefits of social networking sites, while addressing the regulatory needs of the financial community including, but not limited to, FINRA required compliance, supervision and record keeping features. linkedFA complies with document retention rules under 17a-3 and 17a-4 of the Securities Exchange Act 1934. All communication relating to business will be kept for more than six years and all records will be maintained as per Rules under 17a-3. linkedFA was developed in anticipation of the market need identified by Richard Ketchum, Chairman and CEO of FINRA. www.transitions-mag.com
In a public speech he recently stated: “We continue to witness the advent of technologies that will challenge your ability to ensure compliance with regulatory requirements. The social networking phenomenon is one such innovation. Social networking sites such as Facebook or LinkedIn provide new ways to connect, inform and interact with customers. They also raise new regulatory challenges. For example, as currently designed, they may not allow you to archive and maintain the communications on your own books and records.” With a clear shift in acceptance towards social networking within the financial and insurance industries, including the establishment of a FINRA Social Networking Task Force to explore compliance challenges posed by new Web 2.0 communications channels, linkedFA provides a powerful tool for Financial Professionals and their investors to build relationships. linkedFA incorporates proprietary reputation management software to separate personal and private information with secure access for diverse audiences. It adopts the highest security standards protecting users from information poaching, phishing/spyware/malware/ hacking, illegal and unauthorJanuary 2010
ized disclosure of personal or confidential information. Says linkedFA CEO, Brian Byrne: 'Financial professionals want to use social networking to connect and interact with clients. By using linkedFA, financial professionals can do more business, attract investors and enhance their professionalism.' For more information, contact: Helen Downey or Michelle Milsom at 954 804 1941 or helen@ downeymckay.com Real Estate Investment Securities Association (REISA) Selects New Executive Director The Real Estate Investment Securities Association (REISA), formerly known as the Tenant-in-Common Association (TICA), has selected Brandon Balkman as the new Executive Director. Prior to joining REISA, Balkman served as the Director of National Accounts at Orchard Securities in Utah. During his tenure with Orchard Securities, he has worked with industry sponsors, broker-dealers and registered representatives. He brings 17 years of experience in corporate senior positions within business development, corporate strategy, change management and marketing. He holds a bachelor’s degree and MBA.
In the News
New FINRA-Compliant Social Network for FAs Debuts in January
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Industry News
Brandon Balkman
According to Renee Brown, incoming REISA President. “We believe Brandon will lead the organization with his extensive industry experience to develop new member recruitment strategies and long-term association success.”
In the News
Balkman will be responsible for expanding membership and growing awareness of REISA throughout the United States and real estate securities industry.
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The Real Estate Investment Securities Association (REISA), is a national trade association for professionals who offer and distribute securitized real estate investments. For more information, contact Jill Delaney at jdelaney@reisa.org or 317.663.4175. First Woman Inducted Into The American College Alumni Hall Of Fame Susan D. Waring, CLU®, ChFC®, recently became the first woman to ever be inducted into The American College’s Alumni Hall of Fame. The Executive Vice President and Chief
Administrative Officer – State Farm Life and Vice President – Health was nominated by her peers and selected based on her active participation in volunteer efforts for The College. Waring was inducted in a ceremony at The College’s annual Knowledge Summit in Boston. “I am a passionate supporter of lifelong learning,” said Waring. “My entire career has been about moving forward and embracing new challenges in various positions at State Farm. None of that would be possible without a desire to confront challenges and always learn and grow.” The Alumni Hall of Fame recognizes graduates of The College who have made extraordinary contributions in time, effort and energy to the nation’s premier financial services educator. Individuals must be longterm volunteers of The College and active participants in The College’s community and learning environment. Waring is only the fifth individual to be inducted into The American College Alumni Hall of Fame. The selection of the Alumni Hall of Fame recipient is based on the recommendations of a review committee comprised of past Hall of Fame inductees and the President of The American College Alumni Association. “Susan Waring’s selfless dediJanuary 2010
Susan D. Waring
cation to The College and her service as a champion of women in financial services make her more than deserving of this honor,” said Larry Barton, Ph.D., President and CEO of The American College. “Her work on The American College Foundation Board of Directors, leading committees and helping create the State Farm Chair in Women and Financial Services, demonstrates her commitment to professional education.” Waring has a significant history of support for The American College and strives to strengthen education for women in financial services. In 2004, she was instrumental in the creation of the first State Farm Women’s Symposium on the institution’s campus in Bryn Mawr, PA. In 2007, she led a panel to create and endow the State Farm Chair in Women and Financial Services, a post recognized for its production of top academic research and publication. Waring also serves as Secretary for The College’s Founwww.transitions-mag.com
Transitions Magazine
Industry News dation Board of Directors. For more information, visit www. TheAmericanCollege.edu Forty-Five Percent of CIPM Candidates Pass Expert Exam CFA Institute today announced that 45 percent of the Expert level candidates in the Certificate in Investment Performance Measurement (CIPM) program passed the exam and will be entitled to use the CIPM designation upon satisfying an experience requirement. A total of 196 candidates in 22 countries sat for the three-hour, computer-based Expert exam. The CIPM program is designed to test candidates’ mastery of a specialized curriculum in the
areas of ethics, performance evaluation, and application of the Global Investment Performance Standards. Certification recognizes a practitioner’s proficiency in applying analytical techniques and preparing GIPScompliant presentations, which guide investment firms in fairly representing and fully disclosing performance results. The CIPM self-study program trains performance analysts, client relationship managers, investment consultants, GIPS verifiers, compliance officers, regulators, and software developers, among others, to meet industry needs for technically qualified, ethically grounded investment performance professionals.
In addition, 56 percent of the candidates enrolled in the Principles level of the CIPM program passed the exam. A total of 321 candidates in 33 countries sat for the three-hour, computer-based Principles exam. Candidates who pass the Principles exam are eligible to enroll in the Expert level of the program. Both exams cover professional ethics; investment performance measurement, attribution, and appraisal; and the GIPS standards. The CIPM curriculum is offered online and examinations are administered during two periods each year at test centers worldwide. For more
Discovery Database Rep Movement Update Some rep movement statistics from the month of November include: • The average predicted AUM for a rep that changed BD firms was $45,484,454. • 702 reps have been identified as changing BD firms in the month of November Of the 702 reps identified, 25% have moved from within the institutional channel. The remainders are
In the News
displayed in the chart below (left).
Of the 177 wirehouse reps that have changed firms in the last month, 42% have stayed within the wirehouse channel, but switched firms. The remaining reps were dispersed among the categories listed above (right). NOTE: Information provided by Discovery-RR database. This information is provided for informational purposes and is not to be redistributed without permission. Data provided may be delayed as specified by our data providers. www.transitions-mag.com
January 2010
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Industry News information, contact: cipm@ cfainstitute.org. House Scraps Amendment To Place B-D Advisors Under FINRA
In the News
On Friday, December 11, 2009, the House of Representatives decided against giving FINRA rulemaking authority to RIAs. In a voice vote, the House adopted an amendment to the Wall Street Reform and Consumer Protection Act that eliminated a provision that would have given FINRA rulemaking authority over many investment advisory firms.
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“We are pleased that the House of Representatives recognized that it would be inappropriate for FINRA, the self-regulatory organization for brokerdealers, to exercise inspection and rulemaking authority over investment advisors,” David Tittsworth, executive director of the Investment Advisors Association, said in a prepared statement. Industry experts have voiced their opinions against the proposed regulation. Many felt that FINRA was not the appropriate regulator for investment advisors, and not experienced in regulating that type of investment activity. A major reason that many investment advisors had been skeptical of FINRA supervision was be-
cause broker-dealers adhere to a suitability-based standard of compliance. Investment advisors adhere to a higher fiduciary standard. Congress is exploring other alternatives, and there is no word as to whether yet another regulatory agency will be created, or the current SEC/State system will remain in place for investment advisors. Either way, investment advisors at brokerage firms will continue to have to separate, and duplicative, oversight entities. FINRA will continue its lobbying efforts to extend its jurisdiction over investment advisors. The Senate Banking Committee is still developing its regulatory reform legislation and the regulatory reform debate will continue into 2010. Currently, registered investment advisors are supervised by the Securities and Exchange Commission or by state securities commissioners and FINRA supervises broker-dealers. Unlike the SEC, FINRA is a selfregulatory organization. U.S. Representatives Steve Cohen (D-TN) and Barney Frank (D-MA) sponsored the House amendment. uuu
January 2010
— 2010 —
CALENDAR OF EVENTS JANUARY Jan. 11-12 IMCA 2010 New York Consultant's Conference New York, NY FEBRUARY Feb. 3-6 TD Ameritrade Institutional 2010 National Conference Orlando, FL Feb. 17-20 Technology Tools for Today Annual Conference San Diego, CA
OCTOBER Oct. 9-12 FPA Annual Conference Denver, CO NOVEMBER November 7-10 AFP Annual Conference San Antonio, TX
More Conference Info
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Transitions Magazine
Jack Schecter Billion-Dollar Wealth Manager With a Higher Calling By Sydney LeBlanc
Wealth manager Jack Schecter sets extremely high standards for himself — and he is calling on other advisors to do the same. But, just what
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are his standards?
A 2009 recipient of Registered Rep magazine’s “Outstanding Advisor of the Year” award and a two-time Barron’s “Top 100 Advisors in the U.S.” honoree, Schecter insists that the amount of assets under management does not define him or his group. He says, “Having tremendous AUM is not what makes you the best. Plenty of advisors have $200 million and they do a great job for their clients.”
Dr. Andre Goy, Jack Schecter, Dr. Andrew Pecora
Overall wealth management, though, is key for clients according to Schecter. In addition to the wealth management, they also place a special emphasis on “caring” for clients. This means spending time to not only understand their financial goals, but also to teach them about the psychology of investing. Moreover, Schecter believes that mutual respect for one another plays a significant role in the relationships, too. But that’s not all. Schecter believes in helping and inspiring others. In order to put his philosophy into action, he became a part of something much greater than his practice, something greater than himself: He became a benefactor for those who were struggling with the same health issues he faced in 2006. Jack Schecter faced a life-and-death battle with a rare form of lymphoma (AILD) that attacked his immune system. He was initially diagnosed as having Lyme Disease because the AILD was so difficult to diagnose. After being referred to Dr. Andre Goy, a world-renowned cancer specialist at the Hackensack University Medical Center, he began his treatment and has been in remission for almost four years. www.transitions-mag.com
January 2010
Cover Story s
or starters, Jack Schecter and his team, New Yorkbased The Schecter Group at Morgan Stanley Private Wealth Management, strive daily to protect more than $1 billion of clients’ assets through risk management and through strategic investment processes.
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Cover Story
Determined to beat his illness, and to help others as well, make a little bit of a difference that day to somebody or in 2007 he and his wife, Elyssa, launched Research for something. For others, maybe you’re trying to take your the Cure Foundation (see Research for the Cure Founda- business to a new level; or maybe you helped a client, tion, page 9) in order to help fund innovative and cutting- or a child, or someone in need. Maybe you were able to edge research for the early detection and better treatment make a connection for your favorite foundation that will of cancer. Said Schecter of his experience, “Starting the enable it to take the next step. There’s not a day that I foundation was something that I didn’t have to think wake up without thinking about doing some good that twice about. When you get diagnosed with cancer, you day — I don’t believe in a day off, to me, that’s what literally look out the window and say to yourself, ‘It’s a keeps me going. It keeps my mind off other things so short list out there. Who do I call?’ Regardless of money, there’s no negativity, only positives.” power, or intellect, you just don’t know where to turn for Schecter wants to be an inspiration to other advisors and help, especially in the cases of undiagnosed illnesses. I encourage them to step outside of themselves and think believed a foundation was needed to set people on the more about being a part of something greater than their right road immediately so they didn’t go down all the business. “It’s very important for them to give back to the many roads I went down that led nowhere. I was first community that has been so good to them. Particularly diagnosed with the Lyme disease, then rheumatoid ar- now, in our current environment. People everywhere need thritis, then it turned out to help, and being involved in any kind be such a rare form of can“I believe that we each have to get of charitable or philanthropic activcer that some oncologists up every day and think that we have ity on any level adds more balance to didn’t even know what it the potential to do something great your life and can be greatly rewardwas. The Epstein Barr vithat day. That’s how I approach ev- ing. I highly recommend that anyone rus actually triggered my reading this article think about what ery day. — Jack Schecter lymphoma, so they have they can do to make this world a betto treat the virus, not the ter place for us all.” lymphoma.” One has to wonder, with so many issues at hand and a foundation launch, how Schecter manages an A-list clientele, a team, a family, his health as well as the new foundation. He says, “I am passionate about everything I do and believe in. My business is a joy and the foundation is a way for me to help people. I’m comfortable enough with my business that I’m doing this foundation work for all the right reasons.” He continued, “I believe that we each have to get up every day and think that we have the potential to do something great that day. That’s how I approach every day. I’m not saying I achieve that every day, but I do wake up thinking, ‘I could do something really good today and I am going to try.’ I would like to think that I was able to 8
An Extensive Background and Success Schecter is proud to share his belief that his team “probably has one of the highest client retention rates in the industry.” He said, “We enjoy a sophisticated, high profile clientele and I like my clients very much, and I believe they like me.” With six years at Morgan Stanley Smith Barney and 15 prior years at Merrill, Schecter knows what his clients need, in terms of product, planning and client-centric service. “I’m a director of Morgan Stanley Private Wealth Management and I have access to higher level strategies — and broader access to management and great technology.” He is one of the few financial advisors to meet the exacting standards of the Family Wealth Director designa-
January 2010
www.transitions-mag.com
Transitions Magazine
Cover Story tion at Morgan Stanley Smith Barney. This is a highly exclusive designation granted to less than 1% of the financial advisors at Morgan Stanley Smith Barney. This designation encompasses rigorous academics, extensive technical skills and practical experience to help address the complicated issues facing today’s wealthy families. When asked about the wealth management aspect of his business, Schecter described his extensive network, both internal and external, of professionals at Morgan Stanley Smith Barney. “In my opinion, Morgan Stanley Smith Barney is the best investment advisory firm right now. We have the best of Morgan Stanley and the best of Smith Barney. The inventory is always strong and I just enjoy working there. Plus, we work with our clients’ current advisors, with philanthropic and legacy planners. That is a key part of successful wealth management. Many times, after people accumulate wealth, they don’t know how to give it away. Some would really like to give away more money to charitable causes, but some need to be held by the hand and actually ‘be led to the water.' We take them by the hand.” Schecter also explains that knowing how and when to dialogue with clients is a crucial part of the relationship. “Part of our job is educating clients, asking questions like ‘what are you interested in?’ or ‘what is important to you’ or ‘what would you do if you could really make a difference’ those kinds of things. It’s vital to understand
exactly what is going on in your clients’ lives. Are they taking care of an elderly or sick parent, or are they passionate about rescuing abandoned or abused animals, or really involved in their religious affiliation, for example. If we, as wealth managers, can talk to clients about their LIFE goals, their concerns and interests, it allows us to not only have that personal conversation and build a trust, but it also allows us to customize the right approach, whether it’s planned giving, leaving a legacy, whatever it might be. All of these life priorities is what defines the person; not how much money they have.” Schecter also currently serves on the board of the New York City Police Museum (NYPD) and serves as advisor to the Jeffrey Modell Foundation at Mount Sinai Medical Center and Harvard University Medical Center and the FDNY Foundation. In 2001, Jack was appointed by Mayor Giuliani, Fire Commissioner Thomas Von Essen and Richard A. Grasso, the former Chairman of the New York Stock Exchange, to serve as a senior advisor to help assist the families of the victims of the 9/11 tragedy. He has also worked closely with various New York City officials, including the former mayor of New York, Rudolph Giuliani, and the Police and Fire Commissioners of New York, to raise funds and coordinate assistance for those adversely impacted by the terrorist attacks on 9/11. uuu
Research for the Cure Foundation The Research for the Cure Foundation is a volunteer-based organization whose goal is to raise money for cancer research. Comprised of cancer survivors, clinical oncologists, and scientific researchers, the Research for the Cure Foundation helps to fund innovative research for early detection and better treatments for cancer. While there is an enormous amount of research going on throughout the world, one of the first recipients of the Research for the Cure’s fund raising efforts is the Tumor Bank at Hackensack University Medical Center (HUMC). continued -- page 10 www.transitions-mag.com
January 2010
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Cover Story
Said Jack Schecter, Vice President of the Foundation, “Dr. Andre Goy the head of medical research at Hackensack University Medical Center gives us tremendous support and guidance. The head of the cancer center, Dr. Andrew Pecora, the chairman — they are all involved. They all come to the outings and the fundraisers. The events we hold are very special golf outings and celebrities always attend. At our next fundraiser, we will be honored to have the renowned Sports Psychologist, Bob Rotella as the golf event chairman along with Dr. Andrew Pecora, the head of the John Theurer Cancer Center at Hackensack University as our honoree. He continued, “We honored Dr. Goy at this year’s event and in prior years, Rudy Giuliani. There are usually about 100 golfers and about 180 for dinner and the events continue to grow. Ridgewood Country Club in Paramus, New Jersey, will host The Barclays, the first event of the PGA Tour Playoffs for the FedExCup, in 2010 and it’s more than just a golf outing, it allows people to really get closer to what’s going on. Of course, Dr. Goy will be there all day, as will Dr. Stephen Suh, Ph.D. and Scientific Laboratory Director at the Tumor Bank.” Schecter explained that the goal is for the golf event to raise $150,000 profit to enable funding of more projects at the Tumor Bank, whether it’s new equipment or new research. The biomarker discovery projects are helped by the equipment the foundation helps to purchase. “We are developing strategic alliances with foundations that want to piggyback onto us because they see how effective we are,” he said. “Everyone in the business is telling us that our Foundation is a very effective foundation. Those three words are critical because that means the money is going exactly where it’s supposed to go. Certain studies are successfully being performed because of the money we’re raising for the Tumor Bank. We can show results and that’s critical. To be known as an effective organization is a dream. Currently, we have no administrative costs. It’s a labor of love for us.” He continued, “We have people from all over the country calling. People in need don’t know where to turn, and that’s why we launched the Foundation. I don’t care how much money you have; cancer doesn’t care. Part of my own story was the misdiagnosis and I thought rather than be negative about it, why not channel this into a positive way. I’ve always been very much into the research and I’ve been involved with various foundations that targeted immune deficiency. What’s curious is I never thought I would need it myself. I refuse to have a bad day, regardless of how many nights I have ever spent — or may have to spend -- in the hospital. Every day is a new journey.” Much of the cancer research is overseen by Dr. Andre Goy, M.D., Director of the Tissue Bank at the John Theurer Cancer Center at Hackensack University Medical Center in New Jersey — and as Head of the Medical Advisory Board for the Foundation, Dr Andre Goy, said, “This is one of the most worthwhile organizations that individuals can donate money to. The foundation is poised to help take our research to a new level.” uuu
Advisors who would like to get involved in this cause, or for more information on the Research for the Cure Foundation, pleases visit their website at www.researchforthecure.org or email info@researchforthecure.com Opinions expressed by Jack Schecter are solely his own and do not necessarily reflect those of Morgan Stanley Smith Barney.
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January 2010
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Transitions Magazine
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As in any business, exit planning is crucial. This holds true for financial advisors. The difficulty comes when you try and factor in that the income is generated from investments that are tied to hundreds, if not thousands, of clients. It would be impossible to get 100% of your clients to agree on a plan, so it’s your responsibility — and yours alone — to create an exit strategy. This strategy must ensure that the clients maintain their current investment objectives while the advisor receives a fair market value for the business. At the top of your priority list is finding someone who is almost a mirror of yourself, to continue the longstanding relationships that you have created. This person must have integrity, knowledge and the financial stability to incorporate these clients into their current book of business. Imagine the concept that you were dying and needed to pick someone to replace you in marriage. This is essentially the impact this will have on your clients because your replacement would have to be as good, if not better than you, in all areas. Something I preach regularly is that this idea of creating a succession plan isn’t an option for advisors, but rather a requirement. If something happened to you overnight, think of the bind you have just put each one of your clients in. It is proven that if you do what is right for the client, the money will follow. If you pick the right person to take care of them, this means the retention rate for the new advisor will be much higher. Considering your income from the sell will probably come more on the backend, once the clients have been transferred. Have fun and enjoy every moment you have with your clients. In the end, the legacy you leave behind is dictated on how well you position your exit relationship.
Succession Planning
ow does an advisor retire and make sure their clients are still being taken care of? The idea of handing clients over to someone new is a very difficult task for most financial advisors. Typically, an advisor will work with 60 – 70% of their clients for 20+ years. That’s the length of time that allows friendships to materialize and flourish. When you consider that the majority of your clients are friends, it makes it hard to retire and leave those friends on their own. How you handle this will dictate the continuation of those friendships, but more importantly, the stability and piece of mind for those clients.
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Ryan N. Shanks is Founder and CEO of Longmeadow, Massachusetts-based Finetooth Consulting. Finetooth is a research-based consulting firm, providing Transition Advisory and Practice Advisory services to financial advisors, Registered Investment advisors and Broker Dealers across the country. Visit Finetooth online at: www.finetoothconsulting.com www.transitions-mag.com
January 2010
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Breaking Out
Transitions Magazine
Building Business Relationships That Last Are You Maximizing Your Relationship Capital? By Jeremy Condie
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ow we all know relationships are the lifeblood of our business. Managed well, clients will stay with you through thick and thin. Great relationships result in solid business referrals. But even the deepest of relationships can be derailed through inattention or an insensitive comment – just try forgetting your Mother’s birthday! I would like to offer this article as practical suggestions on how to ensure your relationships remain active and relevant, and ways to improve your relationship management skills.
The Power of Showing That You Care So the markets are volatile and performance is not where it should be – and now you are faced with having to call your clients. You launch off into a deep explanation of the markets, but you can sense that the client is girding themselves for the bad news that you’re about to impart. Not an ideal situation. So perhaps we can we learn from others’ experiences. For example, in a 2002 study of surgeons and family practice physicians found that a surgeon’s interpersonal skills were a strong indicator of whether a patient was likely to sue for malpractice. Family practice physicians who sounded like they cared about a patient were less likely to be sued. Doctors may make errors, but if they have a good relationship with their patients and something goes wrong, the patients are more likely to say the doctors did the best they could. I would hope it’s easy for a doctor to show care and compassion, but how does work for a wealth advisor? Perhaps in more ways than you can at first imagine. For starters, how do you feel when others remember your birthday or anniversary? A phone call or card is always appreciated and can lead to a much longer conversation with that person than if they had called you out of the blue. On the flip side, you might have called a client on their religious holiday. The trouble is, this shows a lack of respect. But you are probably not the first to make this mistake, so why worry? Remembering something so seemingly simple can help to differentiate yourself and it shows each client that you do care and that you have an interest in them.
Client Relationship Management
You probably won’t be surprised to learn that research has shown that over 85% of executives attribute their success to their business relationships. And even though this study wasn’t strictly focused on the wealth management space, the results would appear to fit our industry well. Unfortunately, it also demonstrated that 78% of business professionals also overestimate the quality and strength of their relationships!
We have all seen recent images on TV as hurricanes tore through far off lands like Taiwan and American Samoa, and then there were unprecedented sand storms in Sydney, Australia and floods in the UK. Perhaps a number of your clients have family and friends overseas potentially affected by these events. Reaching www.transitions-mag.com
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out to see if everyone is okay really shows that you are thinking of them. Showing that you care requires a focus on the issues that are important to the human inside each of your clients. Now, despite the fact that there would appear to be an almost limitless number of factors to remember and actively track, experience suggests that there is a practical group of personal facts on which you can focus and that are fairly easy to follow. These include business and personal interests, family, important dates and ethnicity.
Listen Carefully And Remember To Remember How many times has a client mentioned an interesting little personal fact – that you immediately dismissed. The number of children, the names of their children, their favorite team, their home country, anniversaries and birthdays (perhaps of their favorite pet)? So often this information gets forgotten in the daily rush to finish important business. Also, where do you store this information? And once you have stored it, is it lost in the depths of another notebook or CRM? But you are probably not alone. A quick straw poll of your peers and contacts will show you that few people believe they have a solid process to capture, and then act upon, all this useful information. Collecting and acting on this type of information appears to be a Herculean task, especially given all the other work on your plate. So don’t try and capture every single detail on day one. Once you have committed to capturing these crucial nuggets of information, you can slowly and steadily tease out more information during the course of your conversations moving forward. Over time, you will build a deep insight and connection with each client, who will be overwhelmed with your attention to detail and personal interest in them as people.
But Which Tool To Use? Now it is obviously important to capture each fact before you forget it. You may well have a CRM, which 14
may allow you to capture such information if you can add customize fields. If this seems too daunting, you may want to create a spreadsheet. The flexibility and search features in a spreadsheet lend themselves well to this type of data store. The downside however, is that both CRMs and spreadsheets are passive. You have to remember to search each to retrieve the relevant facts on a timely basis. LinkedIn, Facebook and MySpace are popular nowadays and if you listen to the pundits, you would think that they are the answer to your relationship management needs. The trouble is most of these sites don’t allow you to add your own details to a contact’s profile. It may be great to see the photos of their last vacation, but it won’t prompt you to remember their wedding anniversary. Also, most of these services are not confidential. After you agree to “connect,” all your other connections can now be visible to all your other contacts. While there may be ways to turn this feature off, at the end of the day, these sites are designed to be as open and as accessible as possible, which is a concern from a confidentiality standpoint.
The Most Successful Firms Leverage All Of Their Contacts Aside from the importance of tracking, and then acting upon, information relevant to each contact, larger teams or groups have another potentially lost opportunity. Most partners tend to assume that everyone knows the firm’s key contacts, but is your firm capturing and leveraging all of its relationships? Your assistant and other team members will know useful contacts through their clubs, sports, associations, college connections, industry contacts, church or spouse to name but a few. And it could be extremely valuable to capture these relationships and leverage them to find additional referral or introduction opportunities. Now many firms tend to track their paying clients and those people whom they would like as a client. But is this too narrow a focus? We’ve all heard the expression
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Client Relationship Management Who Knows Whom, or six degrees of separation (from Kevin Bacon). Perhaps your team or group is sitting on a hidden asset – their business and social relationships. Capturing these could open new markets and expose opportunities for firsthand introductions to important new clients. So where to start? A regular team meeting involving everyone in the firm to discuss new markets and connections can often help. You could also ask every member of the team to capture their contacts and relationships that they wouldn’t ordinarily consider adding to your CRM. You might want to start with a spreadsheet again, which you can all review every week or so. This process may start slowly, but a regular focus will underscore its importance, which will also cause your team to actively work at thinking about whether they have useful contacts to leverage. In doing so, you are helping to develop and deepen their relationship skills too. Magazine
Measurement Helps Success! In the wealth management space, we measure success as performance against a benchmark. But how many advisors measure their business relationship effectiveness? Remember, we’re not just talking about your clients here, but anyone important in helping you to drive your business forward. So ask yourself this question: How many important business relationships do you possess? Perhaps 200? Too high? Maybe 50 then. Most people have no idea off the top of their head and most will need to think about it. But whatever the number is, is this optimal for your business? And is the list growing or has it reached a plateau? So to measure your relationship effectiveness, you need to measure the number and the depth of each relationship. This will be a subjective ranking so you should try and pick a measurement that you can apply evenly to all your contacts. One way might measure the number of times you communicate with a business contact. Someone you speak to easily and throughout the year could be considered a deep relationship. Another perwww.transitions-mag.com
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son that you call from time to time is perhaps an occasional contact, and anyone called less than once a year is perhaps pretty basic. Now you have the opportunity to measure your relationships and any change – both good and bad. In doing so you are removing the uncertainty and starting to take charge of your relationships. A tool is recommended to help you retain and measure any improvement. Most CRMs require customization to capture these attributes; so again, a spreadsheet can often serve as a quick and flexible alternative. Start by capturing the names of as many key relationships as you can recall and the depth of each relationship. Each month you can scan through these names and note if any have improved or remained as is. The latter is a good indication that a relationship is starting to fade away through lack of relevant and timely conversation – but at least you can now see where to focus. uuu
Jeremy Condie is the Founder and CEO of FirmsContacts www.firmscontacts.com <http://www.firmscontacts. com/> , a breakthrough business relationship management solution using proprietary event-driven technology for clients and business contacts. Formerly president of E*Assist, Jeremy also served as senior vice president and head of hedge fund sales and relationship management for Thomson Financial. In this position he managed and grew a multi-million dollar book of business, counseled more than 350 hedge funds on solutions for improving returns and managing risk, and co-authored two patents. Other roles included executive and senior level management positions with Morgan Stanley, Credit Suisse Asset Management, and J.P. Morgan Investment Management. Mr. Condie received his BS with Honors and his MBA from Kingston University in London and participated in an executive management program at Oxford University’s Said Business School. 15
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The Exit Planning Process Step Two: Valuing Your Business By David Leitner, Esq. 7-Step Process for Exit Planning Step 1 Your Destination
Step 2
Valuing Your Business
Step Step Step Step Step
Enhancing Your Value Sell to Outsiders Sell to Insiders Business Continuity Estate Planning
3 4 5 6 7
Editorâ&#x20AC;&#x2122;s note: The information in this article is also good for helping clients with their business succession and sale/transfer activities.
I
n my previous article, (December, 2009) you learned that Step One of the Seven-Step Exit Planning Process is to determine your destination. That is, when do you want to exit your business and how much will you need to receive upon the transfer of your ownership in order to maintain your current lifestyle. Step two of the process is determining the value of your business. Think of that as the starting point for this exit voyage. Once you have gone through the first two steps and have reliably determined your destination and starting point, you can then proceed to the next step in the process, which is the determination and planning of the route to get from where you are to where you want to go.
Depending on your profession/industry and the size of your business, different rules of thumb are commonly employed. For example, for financial planners, the most common rule of thumb for estimating value of your practice depends on your gross annual revenue. Gross annual revenues below three million dollars, a good rule of thumb is 1.75 to 1.85 times revenue equals value. If your planning business is generating more than three million dollars annually, a commonly used rule of thumb is 2.2 to 2.5 times annual revenue. Other industries have other break points and different rules of thumb to use. Keep in mind that rules of thumb are only that and not actual appraised values.
What Next? Before retaining a business appraiser, you should first retain your exit planner. There are different ways of appraising a business that can have a significant impact on your tax liability upon sale. A qualified exit planner can help you select an appraiser and determine the proper method of appraisal to minimize the tax consequences of the sale of your business. For example, if you are planning to sell to an outside third party, you probably want the highest appraised value possible. If you are planning on transferring ownership to insiders â&#x20AC;&#x201C; key employees, your children, an ESOP- you probably want the lowest defensible value. The difwww.transitions-mag.com
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Exit Planning
How this is done depends, in part, on the selling ownerâ&#x20AC;&#x2122;s objectives that were fleshed out in step one of the process. Critical here is the time line for exit. If you are planning on selling your business or practice immediately then you will need a thorough evaluation by a credentialed business appraiser. You can expect to pay $10,000 to $15,000 for a full opinion of value from this professional. If your time horizon for exit is longer, you can probably go ahead with a ballpark value based on rules of thumb, for planning purposes.
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ference flows from the tax consequences of the sale. A properly designed appraisal not only can save you a great deal of taxes, but it is also a very important step for a sophisticated outside buyer doing due diligence to determine whether or not to make an offer to purchase your business or practice. And it is important to do as thorough a due diligence examination of your business as would a sophisticated outside buyer so that you can negotiate terms, price, etc. from a position of knowledge and strength. It also allows you to determine what areas need to be worked on to enhance the value of your business in the third step of the exit planning process. One significant reason why determining business value is the second step in the process is the importance of determining whether you can sell your business for a sufficient amount to maintain the lifestyle you want for yourself and your family in retirement. It is at this stage that you discover whether you have a salable business or are merely self-employed. Because your business is likely your largest single asset, you must determine whether it has sufficient value to allow you to achieve the goals you established in the first step of the process. If it turns out that the business is worth more than you believed, you can leave sooner rather than later. If the value is lower than anticipated, there is work to do that you may not have otherwise done to increase the value of the business, or to transform it from self-employment to a saleable business. Keep in mind that the value of a business is relative, not fixed. It can vary based upon the reason for transferring ownership and the conditions under which that transfer will be made. For example, an appropriate business valuation for a third party sale may be significantly higher than that established for transfer of the same business to key employees over time or as a gift for the children. Moreover, value fluctuates over time. In companies with multiple owners, unless the value established in the buy18
sell agreement is updated periodically, one owner may receive too much or too little while the other pays too much or too little. Similarly, if the sale is to a third party, business value may fluctuate depending on the then current status of the mergers and acquisition market in your geographic area. This changes often and can have a significant impact on not only the sale price, but also the terms of a third party deal. Another thing that rule of thumb valuations cannot take into account are discounts for minority interests. That is, if you are transferring a partial interest in your business, that is, less than 50%, there may be a significant discount in value for that non-controlling interest. This can be either good or bad depending on the surrounding circumstances. A credentialed valuation expert can take this into account in determining valuation; a rule of thumb can not.
What About the IRS? It is also important to consider that the IRS may challenge your valuation of the company after sale. If it is based solely on a rule of thumb, you will have a very difficult time justifying the valuation to the IRS. If it is based upon a valuation by a credentialed business valuation expert or certified appraiser, the IRS is far more likely to accept the value that has been assigned to the sale of the company. This can result in substantial tax savings should the IRS challenge the valuation. Once the value of your business is determined, you are ready to move to Step Three: Working On â&#x20AC;&#x201D; Not In â&#x20AC;&#x201D; Your Business. This process can be viewed as the map between where you are and where you want to go. We will discuss this step in more detail next month. uuu
David Leitner has helped numerous business owners achieve their goal of exiting from their business in style and with financial security. He is a 1976
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Exit Planning graduate of Stony Brook University and a 1979 graduate of the University of Iowa College of Law. He has been licensed to practice law in Iowa since 1979, before the United States Supreme Court since 1994 and in Nebraska since 2000. In addition to his law practice, concentrating in civil litigation and estate planning, he has published or contributed to 14 books and many law journal articles
on subjects ranging from insurance coverage litigation to employment discrimination and from managed care to software. David has been recognized by the American Bar Association, Who’s Who in Emerging Leaders, Who’s Who in American Law, Who’s Who in the Midwest, Who’s Who in the World and others. He can be contacted at 515 252 0777 or dleitnerlaw@gmail.com
Creating Your Own 2010 Economy: Top 10 Questions To Ask Yourself By Teresa Allen
One of the best ways to bring about success in a new year is to celebrate the successes of the current year while. You need to be painfully honest about the failures or lost opportunities in 2009. This will open the door to identifying positive steps to take in 2010. Involve your staff and conduct an internal audit of your business and your client service progress in 2009 and make plans for 2010. Involvement of staff is critically important to this process. You will receive more buy-in to any necessary changes if they help to determine what went wrong and what went right! Determine the answers to the following 10 questions: 1. What percentage of our assets under management or product sales came from new business and old business? 2. What were top three generators of new business? 3. What percentage of new business came from referrals? 4. Could we have grown our existing business even more? 5. If your answer to number 4 is yes, quantify five ways to target that goal in 2010. 6. How did our customer service impact our 2009 business? What are five specific things we could we do to improve our service image and reality in 2010? 7. What are three technology improvements that would positively impact our business in 2010? 8. What are two ways we use social networking to grow business in 2010? 9. Who are our top five customers? What did we do for these specific relationships in 2009 and how could we innovate and be creative in strengthening the relationship with them in 2010? 10. In what capacity could our company make a positive impact on both our local community and any national organizations supporting our industry in 2010? Now that you have conducted your audit, assign a team to work on each of the identified opportunities in 2010. Ask these teams to set specific tasks, objectives and goals, not just for the year as a whole but for specific quarters of 2010. By doing this NOW, you will have a leg up on your competition as you begin the new year! uuu
Teresa Allen is a nationally recognized business consultant, speaker and author. She is often asked to present her dynamic motivational programs on customer service, sales, and communication which help businesses and organizations that want to build success and profits through enhanced employee performance. She can be reached by email: tallen@AllenSpeaks.com or through her website: www.AllenSpeaks.com. www.transitions-mag.com
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Beyond Reproach Keeping Your Resolution to Build a Practice that is “Beyond Reproach” by David B. Loeper, CIMA®. CIMC®
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n last month’s column (December, 2009) I closed with a New Year’s Resolution for you that outlined the premises of true integrity. That resolution was:
I hereby resolve to build a practice that is beyond reproach and further resolve that in all communications with clients that I will not:
3. Misrepresent biased information, research or analysis as being objective 4. Present the benefits of any approach without fully understanding and clearly disclosing the price, pitfalls, or uncertainties of the benefits hoped to be obtained While it may be easy to say you are making this resolution, acting on it will require a lot of effort and objective self-examination that will, at times, be very uncomfortable for you. Think about these statements in collective context of one another. To fulfill all these together there are communications you will need to make that are rarely, if ever, discussed or highlighted to ensure clear objective understanding by the client. Take, for example, something as simple as a decision to use active management or passive management. Regardless of whether you are an active advocate or a passive pundit, to honor your resolution you will need to highlight — and make sure it is understood — the potential pitfalls of your approach. For example, if you are a passive pundit, you probably often cite the benefits of lower fees, the high percentage of active managers that underperform index benchmarks and, perhaps, also the lower costs of turnover and tax efficiency. You might even use examples of the active managers whose great track records ultimately turned sour. If you are going to honor your resolution though, you will need to also highlight the other side of the story. This would require you to disclose that you have no chance of outperforming appropriate benchmarks, there will be several active managers that will do so, that you are not going to attempt to identify those managers and the only reasonable expectation is for the portfolio to underperform appropriate benchmarks by the total expenses, lower as they may be. www.transitions-mag.com
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sEthics,
2. Overcome valid objections and I will, instead, acknowledge and reinforce their validity
Integrity and Trust s
1. Omit any information that would be needed to make an informed objective decision
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Ethics, Integrity and Trust
Before you active activists get too excited about ethical passive pundits disclosing the downside to their strategy, you need to objectively shine a light on the potential pitfalls of your own approach. In your presentations to clients, you probably highlight superior performance records, your thorough due diligence and research, and your continuous monitoring. But, if you are going to honor your resolution from the same objective and honest context as the disclosures made by our passive pundit, you would need to make sure the client also clearly understood the flip side to your investment approach. This would require that you clearly communicate that the expenses are certain to be higher, that it is uncertain whether the performance will be higher, there is a risk of significantly underperforming that could be avoided, and even if better returns (or risk) are realized, this may not necessarily equate to any additional wealth (see my article “Winning By Not Losing”). Regardless of which side of the fence you are on, omitting any of these disclosures (or relying on documents to do the disclosures for you) would mean you are violating your first resolution because one could not make an informed objective decision without knowing these facts. As uncomfortable as highlighting these disclosures might be, our second resolution—acknowledging and reinforcing valid objections instead of overcoming them—helps to keep us honest even if we are not executing very well on our first resolution. But, this too is often difficult for us to do because our natural sales skills cause us to counter objections in an attempt to overcome them. Regardless of which side you are on, think about how you respond to valid objections and whether your tendency is to counter with a benefit in an attempt to outweigh the objection. Highlighting other benefits isn’t reinforcing the valid objection; instead it is an attempt to overcome it. Think about the outcome and the choice you face in all of your communications and, at the root, what you might be 22
afraid of that is causing you to not highlight the pitfalls of what you are presenting. Are you afraid that the client may not do business with you if you highlight the pitfalls? Instead of that being a reason not to emphasize it, in a practice that is beyond reproach it is the very reason you should. uuu
David B. Loeper is the CEO of Financeware, Inc. which does business as Wealthcare Capital Management. An SEC Registered Investment Adviser with nearly 25 years experience, Loeper has appeared on CNBC and has been a featured contributor on Bloomberg TV and CNN. Loeper joined Wheat First Securities as vice president of investment consulting in 1988, where he served for 10 years. He was promoted to managing director of investment consulting, and then eventually to managing director of strategic planning for the retail brokerage division. He left his position at Wheat First Securities in 1999 to found Financeware. Active in industry associations throughout his career, Loeper has been a member of the Investment Management Consultants Association (IMCA) for over 20 years, serving on the advisory council for more than 5 years, most recently as chairman. Loeper was also appointed by the governor of Virginia to serve on the Investment Advisory Committee of the nearly $30 billion Virginia Retirement System. He received his CIMA® designation in 1990 by completing a program offered through Wharton Business School, in conjunction with IMCA. Drawing on years of experience in financial services including serving as a fiduciary for all types of ERISA plans, Loeper has authored numerous whitepapers and books including the top selling book, Stop the 401k Rip-off! as well as The Four Pillars of Retirement Plans, Stop the Retirement Ripoff and Stop the Investing Rip-off
January 2010
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"HIGH FIVE"
Raymond James AdvisorChoiceSM
T
Individual Solutions for Independent Advisors (www.raymondjames.com/advisorchoice/
hrough AdvisorChoiceSM, a revolutionary approach to broker/dealer affiliation, Raymond James offers financial advisors the ability to match their career goals to one of four business models, each offering a distinct combination of support and independence. Every advisor is free to build relationships and grow his or her practice through the most suitable arrangement. Business Models With a complete range of affiliation and payout options, AdvisorChoice from Raymond James gives you what you want: the flexibility to build your practice your way. You gain full freedom to operate your business with four unique ways to affiliate. And you can change platforms as your goals and needs change. You’ll have control of your practice and you’ll also own your own book of business. Traditional Employee — Build your business in a branch office setting. Enjoy the synergy and support of working with other financial professionals. Independent Employee — Run your own business. Get health insurance for yourself, your family and your staff. We handle all major administrative tasks. Independent Contractor — Be the boss. Manage your business your way. Enjoy the retirement, tax and succession planning benefits of business ownership. Independent RIA — Operate your own fee-only firm as a portfolio manager or consultant. We provide strong clearing and custodial services. If you are undecided or not sure which business model is right for you? Visit their interactive comparison tool to discover the option that’s right for you. http://www.raymondjames.com/advisorchoice/matrix/ Here are a few other things you should know about Raymond James:
The Arts — Along with charity and education, Raymond James is a major supporter of the arts. The company has been the title sponsor of the Raymond James Gasparilla Festival of the Arts since 2003, providing financial support and volunteers for the festival. Accolades for 2009 August: Five Raymond James Financial Services advisors were named to Barron’s “Top 100 Independent Advisors” list. July: Raymond James was named one of the “Best Places to Work in Florida” in the large company category by Florida Trend magazine. June: Two Raymond James advisors were named to Barron’s “Top 100 Women Financial Advisors” list for third time. Canadian affiliate Raymond James Ltd. was named winner of the “Best Entrepreneurial Partnership” award in the Toronto Globe & Mail Business for the Arts Awards program, and it was ranked among the “100 Best Places to Work in IT” by ComputerWorld magazine for the fourth consecutive time, and the best full-service broker for the second consecutive year. May: Its equity research analysts were recognized for their stock-picking abilities in three national surveys: The Wall Street Journal’s “Best on the Street,” Forbes “Blue Chip Analyst” and the Financial Times/Starmine’s S&P 500 and Russell 2000 survey. www.transitions-mag.com
January 2010
High Five! s
Company Culture — Raymond James has been recognized nationally for its community support and corporate philanthropy. The company has been ranked as one of the best in the country in customer service as a great place to work and as a national leader in support of the arts.
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Book Review
NEW YEAR'S RESOLUTIONS YOU CAN KEEP — 8 Essential Steps to a Rewarding Year Ahead — Title: Activating Your Ambition: A Guide to Coaching The Best Out of Yourself and Others Author: Mike Hawkins
Cover Price:$24.95 (autographed hard copy)
To order, click here: http://www.alpinelink.com/Activating_Your_Ambition.aspx Executive Coach and author Mike Hawkins says, 9 out of 10 people make a New Year’s Resolution, but only 1 out of 10 keep them. Why is it so hard for people to change behavior? Whether it’s stopping a bad habit, starting a new diet or exercise program, learning a new skill, improving upon relationships, or communicating better at work, change requires the right mindset in order to reach objectives. A study conducted by John Norcross, University of Scranton psychology professor on New Year's resolutions proved that having the right mindset and a readiness for change to be the best indicator of long term success. Mike Hawkins has found that even the smallest of changes are not to be underestimated. Change doesn’t come easy, and contrary to what some say, improving yourself is not just a matter of wanting something bad enough or trying harder, you must be willing and ready to face the challenges put forth. With his straightforward approach to facilitating proactive change, Mr. Hawkins provides a basic 8 Step Plan for Success. By following it closely,you will accomplish your New Year's Resolution(s) and reap the rewards thereof. So,"Here's to you and a successful year ahead, Happy New Year!" 8 Steps to Ensuring Proactive Change in 2010: 1. Awareness - Get beyond your symptoms and uncover the root of what has prevented you from achieving your objective(s) before. Move past your self-deceptions, biases, and blind-spots by seeking feedback from others and building your self-awareness. Become accurately aware of what it is you need to do in order to reach your goal. 2. Motivation - Build an unyielding internal motivation to change. Convert your broad desires or external incentives into specific benefits that have real and near term meaning to you. 3. Belief - Remove any doubt that you can achieve your goal. Study former failed attempts and visualize yourself succeeding. Plan around your anticipated obstacles and have contingency plans in place that can be easily deployed. 4. Incremental Steps - Analyze the legitimate approaches to reaching your goal and select the best approach available. Devise a plan of action using small steps that circumvent your brain’s built-in resistance to change. Embed elements of fun to make your actions something you look forward to. Create realistic milestones by which you can measure progress. 5. Time & Energy - Determine how much time and energy your plan will require. Determine how you will free up that time and energy to ensure the top excuses to change, “I don’t have the time” and “I’m just too tired” are taken care of. 6. Initiation - Ensure the circumstances are optimal when starting your self-improvement journey. Don’t start a diet just before going on a family vacation. Don’t sign-up for night classes when a large and time sensitive project kicks-off at work. 7. Others - Solicit the help of others. Build your own support group. Find people that will offer you wise counsel, hold you accountable, and celebrate milestone achievements with you. 8. Normalcy - Follow your plan. Stay focused. Take it one day at a time. Apply your new behavior every day. Don’t let a trip or special circumstance prevent you from following your plan. Apply yourself until your new behavior becomes as unconscious as brushing your teeth with your dominate hand. 24
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Dual Registration
L
By David Loeper CIMA®
egislators and regulatory agencies are building momentum to require that brokers be held to the standard of a fiduciary under the auspices of consumer protection. As a consumer advocate, I applaud both the idea and objective but I fear that if brokers are held to this standard it will not materially protect consumers. Discount brokers that permit individuals to day trade their wealth away are staunch adversaries to this regulatory proposal because their business model is to just follow the consumer’s instructions. In theory, they don’t give advice or sell anything. Every trade they make (supposedly) is non-solicited. If the intent of the fiduciary standard is to protect consumers from harming themselves by eliminating the freedom to manage their assets in a manner of their choosing, holding all brokers to the fiduciary standard would conceivably prevent consumers from taking imprudent risks. In reality, despite a fiduciary standard for brokers, there will always be firms willing to risk the fiduciary liability to earn the commissions for the penny stocks consumers want to flip. It will just cost the consumer more to compensate the firm for the liability of accepting such trades and in the end few consumers will collect on the fiduciary breach as their lawyer smiles all the way to the bank. Consumers already have plenty of choices to use a fiduciary for their investment services if that is what they are seeking. There are thousands of SEC Registered Investment Advisers that are already held to the fiduciary standard, so why do we need a government mandate forcing brokers to the same standard? In fact, there are so many SEC investment advisers that there are proposals to raise the minimum assets under management for SEC registration from $25 million to $100 million.
The problem isn’t the fiduciary standard: it is the legalization of conflicts of interest that are permitted under the Investment Advisers Act by fine print disclosure. Brokers paid by product vendors are going to have a conflict no matter what standard to which you hold them, and disclosing conflicts that are uniformly present across most firms will do practically nothing to protect consumers. The problem is dual registration that allows fiduciary investment advisers to be paid both by the end client and the products they sell as brokers, fully disclosed in their ADV form of course. To protect consumers from being misled, we don’t have to eliminate the freedom of letting them manage their own money by having a government sponsored intermediary deter them from their freedom in the form of a broker charging an outrageous commission because of their newly minted fiduciary liability.
Sound Off
Could it be that consumers can’t tell the difference between brokers and fiduciary advisers?
Instead, all that would be needed would be to eliminate the conflicts of dual registration. If a firm wants to earn commissions as a broker, do not let them also be in the business of being a fiduciary investment adviser. That is where www.transitions-mag.com
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Sound Off!
the confusion with consumers rests. A simple bold print disclosure that clearly states “this firm is a broker, is conflicted by product sales and is not a fiduciary advising your best interests” would make things clear to the consumer. On the flip side, the ability of fiduciary investment advisers to also earn commissions as brokers would likewise have to be stopped. If you are going to be a fiduciary, you should only be paid by your clients to serve your clients, and if you want to have a firm that earns commissions for product sales, then become a broker and give up your investment adviser registration. Such firms that choose to be fiduciaries would be free of the conflicts of interest most of them currently have under dual registration and consumers could clearly delineate the difference. Of course, this easy solution will not be supported by legislators for political reasons. Also, both sides of the industry would hate it and lobby intensely against it since most firms are dually registered as both investment advisers and brokers. But, those are the exact reasons why consumers would actually be offered some protection while maintaining their freedom of choice uuu
David B. Loeper is the CEO of Financeware, Inc. which does business as Wealthcare Capital Management. An SEC Registered Investment Adviser with nearly 25 years experience, Loeper has appeared on CNBC and has been a featured contributor on Bloomberg TV and CNN.
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January 2010
www.transitions-mag.com
Transitions Magazine
What Good Hath Roth? Part 2
Look a little closer at the Roth IRA for your client’s sake
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By David Williams CFP®
t can be a challenge to convert your existing clients from commission to fee-based model as part of
a transition from brokerage to Independent Investment Advisor. You may also need to establish a more consultative stance. Advising your clients on Roth Conversions will highlight your advisory value, and potentially give you the opportunity to move qualified funds into a managed account.
Tax Increase Protection and Reconciliation Act of 2005 (TIPRA)
TIPRA also provided for a special tax treatment of Roth Conversions made in 2010. Unless a taxpayer elects otherwise, income from the conversion is taxed over a two-year period, beginning in 2011. So, if a taxpayer converts $100,000 of Traditional IRA money to a Roth IRA in 2010, he will add $50,000 to his tax return for the 2011 tax year, and $50,000 to his tax return for the 2012 tax year. If the taxpayer elects, he may add the entire $100,000 to his tax return for the 2010 tax year.
Cents and Sensibilities The feasibility of a Roth Conversion depends on tax rates at the time of conversion, tax rates at the time of distribution, availability of funds to pay the taxes, expectations of portfolio growth, and likelihood of passing the account to non-spouse beneficiaries. Many of these factors are unknown; a decision needs to be made based on reasonable expectations. By evaluating the following questions, you may help your Traditional IRA client to determine what the practical approach is: • Will tax brackets rise after 2010? • Will tax brackets remain above current rates for an extended period of time? • Do you expect the account balance to increase meaningfully during 2010? • Do you have non-retirement funds that you can use to pay the tax liability upon conversion? • Will the Roth IRA likely survive both you and your spouse?; also, • Will Congress initiate new taxes in 2010 that will be retroactive?
Retirement Planning s
TIPRA has a forward-looking provision regarding Roth conversions. It repealed the MAGI limit of $100,000 for 2010 and beyond on conversions. The contribution limits remain intact.
• Will a conversion trigger Alternative Minimum Tax or other surtaxes, or will it accelerate the phase-out of deductions and exemptions? The more confident your client is that the answers to questions 1-5 are “Yes” and the answers to questions www.transitions-mag.com
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Retirement Planning
6 and 7 are “No,” the more confident you can be that a conversion early in 2010 would be practicable. Your client should also consult his tax advisor before committing to any conversion.
their 2010 returns, it may ease the pressure on Congress to raise taxes in 2011 or 2012 beyond the de facto increases in place.)
To Bifurcate or Not To Bifurcate, That Is the Question
We recommend that our clients diversify across asset classes to reduce purchasing power risk. We recommend they diversify within asset classes to reduce systematic risk. We recommend they diversify among banks and insurance companies to reduce unsystematic risk. We now have an opportunity to diversify our clients among taxable, tax deferred and tax favored ownership to reduce income tax risk.
Assuming we convert to a Roth IRA in 2010, we have a choice of when to pay taxes. For conversions that occur in 2010 only, the taxpayer may pay the tax liability by April 15th, 2011, or they can add one-half of the converted amount to the tax return they file by April 15th, 2012 and the other half on the tax return they file by April 15th, 2013. At first blush, you would think that we want to defer taxes until later. However, we are making the conversion in the first place to take advantage of the known lower tax rates currently in effect. Things are not as they seem—it is, as if, something is rotten in Denmark (or D.C.). First off, converting to a Roth IRA becomes more advantageous if tax rates rise. Whether we pay the tax from the IRA or not, we are in essence betting that taxes will go up. Taxes are at historically low levels. Many political and economic pundits say that ballooning deficits will put pressure on the Government to raise taxes. Secondly, the current tax law expires on December 31, 2010. Unless Congress acts, tax rates will return to 2006 levels on January 1, 2011. Tax brackets shift from the current 10%, 15%, 25%, 28%, 33%, and 35% rates to 15%, 28%, 31%, 36%, and 39.6%. Taxes on capital gains and dividends will rise, and certain credits will cease or be reduced. Barring the unknown of Congressional action, we know the tax structure will be higher in 2011 and 2012 than it is in 2010. Unless we know that our client’s taxable income will be significantly lower in the latter years, it makes sense that he pay taxes on the conversion in 2010. (As a broad supposition, if many taxpayers convert great amounts of IRA dollars and choose to pay the tax with 28
Diversify, Diversify, Diversify
We know that mechanisms are in place to change taxes in the future, as they have changed over the past 100 years. Tax deferred assets such as qualified plans and IRAs are exposed to future tax risk. Taxable assets are exposed to both current tax risk and future tax risk. Roth IRAs (and their similar ownership forms such as 529 plans) are exposed to current tax risk, but avoid future tax risk—barring an outlying event such as a retroactive tax law change. As our client’s assets accumulate in tax deferred ownership, he becomes over-weighted in future tax risk. Roth IRA conversions allow us to help our clients diversify this risk, just as we attempt to diversify to reduce the other risks. At the same time, we create a transaction that can be used to re-position our clients into our new practice model. uuu
David Williams, CFP®, Partner of Business Enhancement Associates, LLC, helps business owners and corporations grow, protect, and transfer wealth. Dave is also a Registered Investment Advisory Associate with Wealth Strategies Advisory Group, Inc. Prior to establishing his business consultancy, he was Director of Financial Planning for Regions Morgan Keegan Trust. As a CFP® since 1985, and with more than 25 years of financial planning experience working with business owners, Dave also has expertise in advanced estate and charitable planning, employer stock option planning, and qualified plans. He is a Past President of the Financial Planning Association of the Mid-South. Dave can be reached at: Dave@WSG-TN.com.
January 2010
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Transitions Magazine
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Transitioning Checklist By H Thomas Fehn, Esq.
t is not the first time it has crossed your mind. In fact, every time you ran into the immovable object known as the wirehouse compliance department, you nurtured thoughts about being somewhere else. Now, for good reason — or no reason at all — you consider flying off the perch and landing in unknown territory. Here are some things you need to think about before you cut loose. Remember the words of legendary country singer Charlie Pride: “When I get done leavin’, I’ll be gone ...” 1. Make the Leaving List Why are you unhappy in your present situation? List the factors which lead to dissatisfaction. This is not the place to include anticipated positives. Concentrate on negatives only. Done right, your list will show why you are unhappy. What do you want? What are you looking to achieve? Make certain this list is comprehensive because it will be the measure of your success both before and after the move. Try to remain realistic. There are some things not even you can have. Rank by importance the things you cannot live without. 3. Shop Around They will promise you anything. You are the subject of the ancient art of seduction. Here again the list is all important. For every firm you interview, keep separate notes. Identify what they claim they can deliver and what they can do for you and your clients. Once your survey is completed, you can tally up the points to assist in your decision. 4. Basic Needs Here are most of the things you are likely to think about. Gross x Payout - Charges = Net. Working conditions - do you control them? Clearing firm - platform, reputation, service; Business reputation and branding; products offered, marketed, or available on demand. 5. Advanced Needs Here are some things that might not occur to you. They can become very important in difficult times. The firm’s financial condition will determine if it survives adverse economic conditions. Risk management policies will determine its exposure level. Overall management talent, depth and organization can shape your future. Obtain and read the firm’s compliance and supervisory materials. You will learn the level of compliance mentality and whether it will nurture your practice or cause you probwww.transitions-mag.com
January 2010
Transitioning Tools s
2. Make the Wish List
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Transitioning Checklist
lems. It is desirable to interview the chief compliance officer and staff to ascertain their attitude, dedication and competence. What is the firm’s commitment to technology and innovation? It will shape the future. Is there errors and omissions insurance, and what are the terms. Are you indemnified completely, or on your own to some extent. If there is a branch or regional management structure? Who and what are the managers and how are they paid? 6. Make the Legal List Most important events have legal consequences. This is especially true for brokers, moving firms, taking clients, and leaving behind unpaid promissory notes. The first step on this list is seeking advice from a lawyer knowledgeable of securities industry practices. Not just any lawyer will do. You need a real specialist, not someone merely claiming expertise. Questions to ask: Do you have a written agreement? What does it say about ownership of clients, moving them, confidential information, non competition and injunctive relief? Is it enforceable in whole or part, under the law of your state? Are there laws which apply to you regardless of the agreement or the lack of one? If you owe money on a promissory note, do you have an excuse for not paying other than you don’t feel like it? Are you able to pay? Are you able to accept the consequences of not paying? These and other questions specific to your situation need to be addressed in the decision process. 7. The Process While still in the seduction stage, you have leverage. Once you move, your ability to change outcomes is impotent. Negotiate your deal as best you can. Then write it down on paper. No handshakes. No e-mails. Good old fashioned paper. If the deal goes bad, you will have a memorial of what was agreed upon. It won’t help much, 30
but it will help everyone to remember the deal when it is time to call a lawyer. 8. The Move Once you get where you are going, you will need help. You must learn the new firm and move your clients. Identify well in advance who will be helping you. Talk with these people to make sure they are available, willing and competent. Accept no substitutes or assurances from others. You are not required to formally resign or announce in advance your intention to do so. Depending on your personal preference, you can just leave one fine day and phone in the notice that you won’t return. This is best done on the day you receive your last paycheck. This method will provide time to move the client accounts without interference. From those who may wish to convert those clients on their own. 9. The Problem If the move does not work out, call a knowledgeable lawyer. Unless you called that lawyer before the move started, in which case you won’t have a problem. uuu
H Thomas Fehn is a founding partner of Fields, Fehn & Sherwin, a boutique Los Angeles law firm that focuses on all aspects of securities law. Since his admission to the California Bar in 1969, he has served in private practice as an attorney. For more than ten years, Mr. Fehn has co-chaired the West Coast Practicing Law Institute annual seminar on securities arbitration, which educates attorneys on developments and intricacies of this specialized practice. He has also served on the faculty of the University of West Los Angeles School of Law, teaching Corporations Law. Mr. Fehn is also a trusted mediator who is hired by lawyers on both sides of a claim to help them resolve their dispute without costly litigation.
January 2010
www.transitions-mag.com
Transitions Magazine
Moving to the Next Level: Should You Do It All?
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How to Hire an Assistant By Beth Ruggiero, RFC, CFE
uring an on-site consultation with a 20-year highly credentialed financial advisor, I noticed he was personally entering his client data into his financial planning software. We talked about it, and he believed that he was gaining a greater understanding of the client, and that it didn’t take him much additional time or effort. Further analysis of his workflow uncovered that the financial planning process relinquished three hours of his time. With a fee of $175 per hour, this process proved to be a loss leader. Wouldn’t an advisor with such experience gain more by talking with the client for an hour? Wouldn’t a techsavvy recent college graduate at a cost of $20 per hour effectively complete the process? This advisor was conducting business the same way for more than 10 years—without an assistant. Thankfully, the on-site visit opened the eyes of the financial advisor and introduced discussions on hiring an assistant. The times have clearly changed! Especially for the newly transitioned advisor. Technology, the economy, the industry and clients’ needs have changed. Changes have prompted a look at the staff and processes. Every five years, at minimum, an assessment should occur. An industry study, conducted by Cerulli & Associates, projected that hiring an assistant generates an increase in revenue upwards of 20 percent. Based on the current employment environment, a multitude of qualified candidates are willing to be flexible in working arrangements. Hiring an assistant even on a part-time basis will allow an advisor to reorganize weekly activities to focus on revenue-generating ones. According to salary.com, the median base salary for a registered sales assistant on the east coast is $38,600; therefore, an advisor with an average hourly rate of $175 would recoup the base cost after only five-and-one-half weeks !
Before You Hire An Assistant Successful hiring begins with identifying key skills and aptitudes. List all the current activities and functions that need to be completed. Highlight revenue-generating and non-revenue-generating activities. Include activities that do not best utilize your skills or express your passion. List skills and qualifications required to complete the tasks, i.e. proficient in MS PowerPoint software to prepare client presentations or enjoy interacting with clients at client appreciation events.
Hiring an Assistant s
How Could You Operate More Efficiently?
Craft a help wanted ad and promote in print and online. Or talk to your local college about hiring an intern. Use social networking sites. Some resources to help you visualize your organization chart and project needs include www.smartdraw.com www.transitions-mag.com
January 2010
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Business Metrics
and www.mindjet.com. Further guidance into selecting members to strengthen your team can come directly from your clients. Client surveys often reflect desire for more communication and meetings. To respond to these requests, consider hiring candidates with the following skills or work experience: • Writing and editing • Graphic Arts
• Public relations • Accounting • Insurance
Look for local talent at your school, place of worship, and networking groups, or by asking your current clients for referrals. The site www.craigslist.com offers job posting opportunities to a larger audience for a minimal fee.
Ensure a Good Fit Proper skills are only half of the equation in hiring successfully. The other half of the successful hiring equation is finding a good fit in your office environment and compatibility with communication and leadership styles. Incorporating behavioral assessments into your hiring process, such as ProScan www.PDPworks.com or Kolbe www.kolbe.com , offered under the guidance of a trained consultant, will increase the odds of hiring a candidate who will succeed. The final step in hiring successfully is onboarding your new hire. Since performing at peak productivity takes a new employee from six months to one year, this final step is crucial. Begin by preparing a training outline with scheduled daily training sessions. Demonstrating key functions and tasks are the first priority on your outline. Key items to review are repetitive tasks such as:
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• Compliance
Employee Development Also Earns $$ For You In addition, assign reading material pertinent to your firm and industry. It won’t be long until he or she gains insight that translates into productivity and performance for you. This knowledge will also aid the assistant in developing confidence, which will be helpful in talking with clients and prospects. Sample reading assignments include: • Your website
• Teaching or training
• Account set-up
• Telephone script
• Your brochure
• Event coordinator
• Client meeting preparation
• Trade processing
• The broker dealer internet site
• Topical brochures or articles on asset management, financial planning, or on products you provide • Your contact management system manual
With skills assessment, behavior assessment and onboarding, you are on your way to a successfully hiring a sales assistant. uuu
Beth Ruggiero is an innovative, tech savvy, performance consultant as well as a 20-year consummate leader specializing in the area of financial services. In the field of training and coaching, Beth has earned the reputation as being a “Straight Shooting Performance Coach.” She is the President of Climb High Consulting, LLC and works with financial institutions to provide group coaching for advisors and offers personalized coaching to wirehouse, independent and bank financial advisors across the country. Prior to forming Climb High Consulting, LLC, Beth served as a Performance Business Consultant for Securities America, a division of Ameriprise Financial where she worked with more than 2000 consultants nationwide. In her first year, Beth created an innovative national web based marketing program whereby graduates increased production by 35%. Beth is a Registered Financial Consultant (RFC) and Certified Financial Educator (CFE). In addition, she holds her Series 7, Series 24 and Series 63 licenses.
January 2010
www.transitions-mag.com
Dedicated to columnist
Transitions Magazine
Dan Taylor our dear friend and colleague
Five Advisor Decisions for 2010 As my friend Dan Sullivan would say: Facts are not trends and trends are not certainties, but there are certain trends that are more certain than others.
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ere are the big trends that I see that will affect the advisor community in the next couple of years. While we are dealing with clichés, bromides, and trite sayings, just remember that “forewarned is forearmed” — no one ever went broke taking a profit, and never interrupt your enemy while they are attempting to destroy themselves. Trend no. 1: Commissions are gone or going. The Financial Services Authority in Great Britain has outlawed all commissions on financial services products by the year 2012. This means that advisors will have to negotiate their compensation with the clients directly. This will be perfect for advisors who have packaged and branded themselves properly. For those who haven’t: start storing up those sleeping pills and vodka. Trend no. 2: Regulation increases and freedom of self-expression decreases in the United States. The SEC becomes the new barrier to innovation and creativity under Mary’s leadership and FINRA becomes the new SS with enforcement powers that make the coming environment look like a developing republic. For the most part, these bumbling morons do not understand how capital works, flows, or helps people get to their goals in life. Look for more meetings, more mandatory attendance at those boring meetings, and more compliance that has nothing to do with anything EXCEPT COMPLIANCE.
For Crying Out Loud!
By Dan Taylor
Trend 3: The Big Financial Services Companies look a lot more like GM and Chrysler and less like Apple. Run — do not walk — from these monstrosities. You will need to be a part of their President’s Council or Top Producer Group going forward like you will need to have Herpes 4 to get a date. They are simply manufacturers of products and that’s it. Any relationship you have at the top or bottom of those organizations you can duplicate on a street corner in West L. A. Trend 4: Consumers want partners to STRATEGIZE their future and not just vendors TO SELL THEM THINGS. In about two years, the apps on the IPHONE will bring investment analytics to every 11th grader’s cell phone that were only available to the financial elite a few years ago. You can be smug and say they don’t know how to think about the future, but trust me here, they will figure it out. www.transitions-mag.com
January 2010
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Transitions Magazine
For Crying Out Loud
Are You Creative? I think all of this is really positive news for creative advisors who see that the packaging of their wisdom and experience into Unique Processes is the key to increased income and freedom and deepening of client relationships. In order to accomplish this new packaging, you will have to be involved in some exceptional programs. For example, like The Strategic Coach (www.strategiccoach.com) or hire someone who understands how to do this like Jon LoDuca at www. thewisdomlink.com). Both these companies are excellent at training the new advisor and getting them focused. My friend Lewis Walker, a veteran financial planner, (www.lifetransitions.com) has come up with a platform that focuses an advisor’s attention on the life transitions that clients go through. His focus is helping them work through and create the experiences they want about changing jobs, spouses, children leaving home, disposing of property, and using money as the means to facilitate all that and not as the sole focal point. He’s got a real hit on his hands as I have watched him develop this over the past few years and if the BD’s can get their Future IQ above a number resembling tepid water, he will build a huge national movement. So, with all that said, what are my recommendations for the top folks? Go independent: There’s nothing the big firms have that you can’t create for yourselves technologically, legally, financially, or organizationally. Just paint a picture of what you want, package it, staff it, structure it, and like the WHIZ, just get on down the road. In terms of the big firms, “be like a good shepherd and get the flock out of there” as soon as possible. If none of your clients come with you, you will have it all back again in less than three years. The risk of loss at starting over is about 1 millionth of the risk of loss of losing your business because your OSJ won’t stand up for you or because Mary and her Morons got a reg through you didn’t know about. Package and brand your wisdom: Use Sullivan’s pro34
gram to get a hold of your attention, time, and money and Jon’s program to take the packaging to a new level. Write and publish about what you believe and what you think people should do with their lives and money. They actually want to hear from you about that: Do not ask for permission to write a book. The first amendment to the Constitution gives you that right when you are born. Just write the book, publish it, and ask for forgiveness. If Mary gets mad, let’s allow the Constitution to sort it out. Above all, do not collaborate on your life’s treatise with some 28- year-old compliance officer team leader who read “Danny and the Steam Shovel” or “Olivia Saves the Circus” as their last book. Create things that make you more useful and matter to the people you serve and who have hired you to protect them. Never leave anyone behind in the name of bureaucratic adherence, obedience, or compliance. Know that the only easy day was yesterday and that it pays to be a winner … even if you have to die in the process. If they ask you who told you to do these things, tell them I did. Also, tell them to FEAR THE DARKNESS FOR I AM IN IT. uuu Publisher’s statement: It is with sadness that we inform our readers that our beloved friend, colleague, and columnist, Dan Taylor, passed away on Christmas Eve with his family and pets at his bedside. He fought a long and courageous battle with brain cancer, having been diagnosed 14 months ago. He was a nationally recognized speaker, author, business coach and lifelong entrepreneur. As a member of The Strategic Coach team, his leadership and mentoring skills were treasured by countless advisors, business associates and friends. Dan was a forceful personality, his own man, independent, brave and humorous to the end. He loved dogs, smart people, beautiful art, interesting books and sunsets in Santa Fe, New Mexico. His passions were free speech, pet advocacy, and creating unique processes designed to improve the way we live, work and care for others. If you wish to remember him, you may make a donation to one of his organizations, American Pet Cross, at www.americanpetcross.com . If you would like to see more of his life work and videos, please visit www.advisorfreedom.com <http:// www.advisorfreedom.com/>. Dan’s legacy will live on in our hearts and minds.
January 2010
www.transitions-mag.com
Dedicated to columnist
Transitions Magazine
Dan Taylor our dear friend and colleague
Why I Want to Grow Old With My Dogs By Dan Taylor
Editor’s note: Our friend and investment coach, Lewis Walker (Walker Capital Management), was also a good friend of Dan Taylor’s. They had been working together to expand the Parent Care conversations and processes in applications for clients and to teach the processes to other financial planners. Says Lewis, “Dan posted the following blog on 8/28/07. His thoughts offer a wonderful insight into life, love, and as the Good Book says, honoring your father and mother, grandparents, or just a wise older friend and neighbor.”
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HAPPINESS - Life changes as you grow older. Or maybe it’s you that changes as life grows longer. Either way, perspective changes. It’s easy to project some gray hair, weak knees, and foul tasting medicine you never had to take before on your view of the world. You get grayer … the world gets grayer. Dogs won’t let you do that. I have lived in my neighborhood for 10 years now and we have walked at least 300 days of each of those years around its cul-de-sacs and streets. When I go out with them tomorrow they will do what they always do … see it for the first time. They will have the joy of Christmas, the energy of a 2 year old, and barks like voices at a rock concert. Caregivers should be that kind of happy. LOYALTY - I work with my dogs most of the time in my home office. My business lets me do that and for that I am most grateful. They are there with me all day long. If I’m writing they are there. If I’m doing a consult they are there. If I’m trying to figure out why the “send” on my e-mail isn’t doing that, they are there. They are there when I come home from traveling: 3 days, 3 weeks … it doesn’t matter. We have a huge bark-leap- about-lick-fest in the foyer whether it’s three in the afternoon or three in the morning. I’ve been gone but not forgotten. What a great lesson for everyone who has to be away from those they love as they age.
A Final Thought
love dogs. If I have a choice between growing old at Merry Acres with strange caregivers and even stranger residents or living in the basement with my dogs … I choose the latter. The three dogs that I have, an Australian/Golden mix named Julia that my vet and I rescued from the long green mile at Charlotte’s Animal Control; a black lab named Roxanne and a big chocolate lab, Zack (aka Zack the Noodle, Zackarooni, the Zackmeister,) are constant sources of happiness, joy, and companionship. I was thinking about what terrific caregivers dogs would make for us as we get older and then it dawned on me that they are caregivers now while we’re on our way. They know it … we don’t. They have all the characteristics of good caregivers and all the great habits as well. Let me explain.
PATIENCE - They wait for me … to find their leashes, to fix their food, to finish a phone call, to fill their water bowl. While they are waiting their ears are straight, their eyes are bright, and they have that ear-to-ear www.transitions-mag.com
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A Final Thought
smile that only a happy dog can have. It’s almost as if they’re saying, We’ve got four legs. You have two. Take it easy. We’ll be right here … just take your time.” It’s easy to lose patience as we grow older. It’s easy to lose patience with those who are growing older. It’s easy to think because we might be slower at something that we don’t know how to do it … or can’t. Patience changes all that. When you’re working with older people just sit, keep your ears alert, and a smile plastered across your face. GRATEFULNESS - All three of the dogs have a way of showing that they appreciate me. Roxanne, my black lab, is a kiss face dog in the morning and during the day. Sometimes she just gets up, walks over to me, and sits there until I lean down and whatever was on my face isn’t. Zack is the snuggle dog. At night watching television or curled up beside me he wants nothing more than to win the Westminster Dog Spooning Award. In a thunderstorm, snowstorm, or windstorm, he becomes like your second skin … furry Velcro. He just breathes affection and appreciation. Julia is the Guardian. A rescue, she knows what it is not to be looked after. She waits. Just waits. She watches everything; the cats, the people on the street, the cars that drive by late. It’s in her genes to watch over her flock and to protect them from those who would do them harm. She’s the one late at night to jump up on the bed for just a moment as if to say, “I’m going off duty now but I’ll be right here if you need me.” And then she lays down beside the bed putting herself between me and whoever may come through the door … no hesitation … no doubt … her life for mine if need be … without question. There’s a Native American Legend that says when the Great Spirit created us he knew we would be alone. So, he breathed a piece of himself into each dog to remind us that there’s someone always watching over us, taking care, reminding us that we are worth being cared for. It was said that when a warrior died his dog would die with him … just to never leave him alone. I can’t imagine either the rest of this life or forever without them by my side. I feel a lot the same way about my partners, friends, and family. Take an older person for a walk. They, like my dogs, will let you see some things for the first time. uuu
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January 2010
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Transitions Magazine
Grin and Bear It!
It's the Truth On New Year's Eve, Daniel was in no shape to drive, so he sensibly left his van in the car park and walked home. As he was wobbling along, he was stopped by a policeman. "What are you doing out here at four o'clock in the morning?" asked the police officer. "I'm on my way to a lecture," answered Roger. "And who on earth, in their right mind, is going to give a lecture at this time on New Year's Eve?" enquired the officer sarcastically.
Dieting - New Year's Resolutions 2006: I will get my weight down below 180 pounds. 2007: I will follow my new diet religiously until I get below 200 pounds. 2008: I will develop a realistic attitude about my weight. 2009: I will work out 3 days a week. 2010: I will try to drive past a gym at least once a week.
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Something got your funny bone? Submit your jokes and cartoons to info@transitions-mag.com. Entries selected for "Grin & Bear It!" will receive a $10 gift card. January 2010
A Touch of Humor s
"My wife," slurred Daniel grimly.
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January 2010
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