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TABLE OF CONTENTS Letter from the Editor ..................... 1 In the News .................................... 2 Calendar of Events ........................ 5 Increase Productivity, Lower Costs ... 7 by Jennifer Goldman, CFP®

Improve Your Use of


Are You Your Own Secretary?

Mark Colgan Plan Your Legacy

Page 27

Advisor "High-Five" Page 40

Setting Up Your Independent Practice Page 11

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VI. How to Set Up Your Business: What's In a Name? ....................... 11 by Sydney LeBlanc Selling, Buying, or Raising Capital ..... 15 by Kenneth H. Marks Beyond Reproach: Ethics Integrity, Trust ............................... 19 by David Loeper, CIMA®,CIMC® A Tale of Two Advisors ................... 23 by Ned Van Riper and Aaron Hasler

It's About Time You Look at Compliance ................................ . 25 by Phillip Flakes and Nicholas A. Gudz Advisors: Stop Playing Secretary .. 27 by William R. Nelson, Ph.D. and Scott Winters Why do Business Owners Fear Exit Planning? .............................. 31 by Bob O'Hara You Are Replaceable ........................33 by Stuart Zimmerman and Carista Luminare, Ph. D. A Conversation with Nick Stuller and Craig Katz, Meridan-IQ ............ 35 Advisor "High Five!" Mark Colgan, Plan Your Legacy ... 40 Resource Directory ........................ 42 Grin & Bear It! ................................ 43

DISTRIBUTION PARTNERS Meridian-IQ™ and StarPoint Consulting Group

JULY 2010

Business Management for Independent Financial Advisors

Transitions Magazine

From the Editor Dear Readers,

Everywhere we turn, we are reading or hearing about the passage of the 2600-page financial reform bill 237-192 by the House. If also passed by the Senate, it will empower the SEC to impose the same fiduciary duty on broker-dealers and insurance professionals currently met by investment advisors. An Investment News poll asked the question “Are you satisfied with the compromise that Congress reached in the fiduciary debate?” A whopping 83.87% of readers who took the poll voted “NO.” Well, we could have an interesting debate about that, as well as one about the BP oil spill and the ramifications on the economy, the market and on our environment. We could also have a heated discussion about the Health Reform Bill, Cap and Trade, Iraq, and Illegal Immigration challenges. But, let’s not. We all know these are crucial and significant issues—the biggest challenges facing us today. But, I believe many of us are exhausted from it all. With all of the additional struggles in our country today—working Americans and homeowners losing their jobs and their houses, let’s just focus for a few minutes on what we can be grateful for. Things that we appreciate, the friends, colleagues, and family members that we hold dear. Perhaps take some time to say “thank you” to those who have helped us through hard times, or through a personal crisis. Or to someone who helped encourage us when we were down.

“Thank you” to Tony Parr, Managing Director-Investments, and senior advisor of the Parr Financial Group of Wells Fargo Advisors in Minneapolis. I send these words of appreciation to you and your team for helping my disabled mom last year obtain a specialized medical device that was far beyond our financial reach. We weren’t clients, we weren’t neighbors, we had never even met in person—yet, your generous spirit and big heart reached out to us offering your time and energy which, ultimately, helped enhance my mom’s quality of life. I am especially grateful. “Thank you” to Ron Carson and Brian Smith. Ron is CEO and Founder of Carson Wealth Management Group and the #1 advisor with LPL for the past 18 years. Many of you may also know Ron as founder of PEAK. And Brian is Ron’s chief pilot for Carson Wealth and PEAK. Ron, Brian and the PEAK team do tremendous work as coaches, trainers and consultants to other financial advisors. Ron is an experienced pilot who volunteers through Angel Flight to fly his own plane for those in need, to hospitals across the country. Ron and Brian helped a friend of mine (a longtime caregiver for the elderly), who was dying of cancer, return to Mexico to be with her mother, sister and son during her last days. Because Angel Flight networks do not fly across international borders, Ron and Brian generously helped to arrange her travel from Southern California to Mexico on a commercial airline and personally handled all of the ground transportation and the many technical rules

From the Editor s

There are a few individuals I would like to thank, right here in my editor’s letter (even though they may not want the public accolades), but they are so deserved, and it might strike a chord in you, our readers, and bring to mind a few good memories and possibly inspire you to go the extra mile for someone today. Or to at least pick up the phone and say, “thank you for your help.”

Continued Next Page

July 2010


Transitions Magazine

Industry News Publishers Lyn Fisher & Sydney LeBlanc Editor-in-Chief Sydney LeBlanc Managing Editor Cami Miller Contributors Phillip Flakes Jennifer Goldman, CFP® Nicholas A. Gudz Aaron Hasler David B. Loeper, CIMA®, CIMC® Carista Luminare, Ph.D. Kenneth H. Marks William R. Nelson, Ph.D. Bob O'Hara Dave Williams, CFP® Scott Winters Ned Van Riper Stuart Zimmerman

In the News

IT Directors John Weeks Shane Hansen Advertising Sales • Stephanie Kunz 435.750.0062 x3 • Lyn Fisher 435.750.0062 x1 Director of Business Development Marty Jensen

Editor - Continued

and regulations of transporting a terminally ill patient internationally. Ron and Brian have touched many lives through their acts of kindness. My friend was able to be with her mother, her son, and her siblings rather than die alone in a cold hospital room. Ron and Brian…unselfish and compassionate heroes…thank you from the bottom of my heart. http://www.carsonwealth. net/gallery/angel-flight-hurricane-relief.aspx#_self And to my friend, Rick Gladney, wealth manager extraordinaire, and President of Gladney Consulting Group of Wells Fargo Advisors in Providence, Rhode Island. For being ethical, charitable, thoughtful and kind, and for so many reasons past telling. You set an extraordinary example. Thank you. Step outside of yourselves for just a bit and think of all the reasons you have to be grateful, and of the true abundance you have in your lives. Give some away and be thankful. Until next month,

949.929.7140 Financial Forum Inc. 550 North Main, Ste. 221 Logan, UT 84321 435.750.0062 •


July 2010

New Resource For Financial Services Wholesalers Promises Tailored Content To Motivate And Inspire Financial services wholesalers continue to demonstrate their desire for information that is targeted directly to their unique and challenging roles. As motivators, idea-generators and professional resource providers for financial advisors, registered representatives and the institutions that serve these professionals, wholesalers are in a unique position to make a difference in the industry – but who’s supporting and motivating them? I Carry The Bag … the official magazine of wholesaling launched in June to serve that need. Available quarterly, as both a print and digital publication, the magazine is the firstever publication of its kind. “While many publications that cover the broader financial services landscape occasionally touch on wholesaling, we know there is a need for a tightly targeted resource,” says Rob Shore, Editor-in-Chief of I Carry The Bag and 30-year veteran of the financial services community. “When you look at the proliferation of interest in blogs such as Wholesaler Masterminds []

Transitions Magazine

Industry News

With feature stories that delve into topics that are unique to the wholesaler’s craft along with articles written by nationally recognized columnists, I Carry The Bag offers insights and education on issues ranging from fitness on the road, to work/life balance, to food and wine education. “Our content has been explicitly tailored to the needs of our readers and is edited by veterans of the business,” Shore says. More information about I Carry The Bag, the official magazine of wholesaling is, available at First Allied Securities Appoints Matt McGinness Managing Director First Allied Securities, Inc. (First Allied), a leading independent broker/dealer, announced today the hiring of Matt McGinness as Managing Director. McGinness was selected to lead the firm’s Advisory Consulting Services and will report directly to J. Vere Reynolds-Hale, National Sales Manager. McGinness will be responsible for the strategic

mental role in helping position First Allied as a world-class independent broker/dealer committed to providing objective guidance and help advisors attain their financial goals,” McGinness to lead the firm’s Advisory Consulting Services

ment, ongoing maintenance, and sales and marketing of Guided Portfolio Solutions (GPS), First Allied’s highly competitive fee-based platform designed to empower the firm’s advisors to grow their businesses. In addition, he will play an instrumental role in the development of programs and tools to support the growth of advisors’ fee-based practices across varying stages from inception to mature growth. He will also be in charge of assessing the need for additional human capital and other resources to effectively support advisors’ growth and profitability. Adam Antoniades, First Allied’s President, said, “With Mr. McGinness, we have recruited a proven, high-energy and visionary executive. He will focus on First Allied’s growth by creating value-added initiatives and strategies that help our advisors grow their businesses. Mr. McGinness will also play an instruJuly 2010

McGinness, 36, has more than 12 years of consulting and strategic marketing experience in the financial services industry. His background includes the leadership of a broad range of key initiatives, both as a business owner within firms and as a consultant. His core expertise within the independent advisor market comprises compensation, staffing issues, financial management, client surveys, customer experience design, marketing strategy and tactics, as well as client service and satisfaction. Most recently, McGinness authored the 2009 Moss Adams/Investment News Advisor Compensation and Staffing Study and co-authored research reports for Pershing, LLC on transitioning to feebased pricing and the development of advisory program capabilities. Prior to joining First Allied, McGinness was Vice President of Business Consulting for LPL Financial Services. In that capacity, he directed the delivery of business analysis and practice management consulting services to LPL’s top

In the News

and the groups on LinkedIn that are targeted to wholesaling, this publication is clearly serving the right demographic at just the right time.”


Transitions Magazine

In the News

Industry News


financial advisors, focusing on actionable recommendations to improve both bottom-line profitability and gross revenue growth rate. Before that, he served as Associate Director at Cerulli Associates and managed the firm’s intermediary research practice. and product in the U.S. financial services industry. He also led and participated in strategic consulting engagements with numerous broker/dealers, asset managers, insurers, investment banks, commercial banks, and technology vendors that resulted in the development of new markets for these firms’ services or validated existing and proposed strategies. McGinness also authored numerous studies in the Cerulli Report series, including reports on advisor adoption of fee-based pricing, the RIA market, wholesaling, and alternative investments. In addition, he was a frequent keynote speaker at industry roundtables and industry conferences and has been quoted in numerous industry publications. Prior to joining Cerulli Associates, McGinness held positions in product development, RIA sales, and investment analysis with Columbia Management (formerly Liberty Funds.) McGinness graduated cum laude with a Bachelor of Arts degree from

Colby College. BofA’s Merrill Edge Online Brokerage Launched June 21 Bank of America Merrill Lynch expects to launch a new online brokerage service on Monday to attract less affluent investors who trade through discount firms like Charles Schwab or E*Trade, a bank spokeswoman said on Thursday. The service, called Merrill Edge, will court clients with $250,000 or less in investable assets and place it in direct competition with other online discount brokerages like TD Ameritrade and E*Trade Financial Corp. Roughly 500,000 existing Bank of America online brokerage clients will be transferred to the new service throughout the summer. Merrill Edge combines the bank’s legacy online brokerage operations, Quick & Reilly, and Merrill’s Internet and call-center platform. Charlotte, North Carolina-based Bank of America acquired Merrill Lynch in 2009. Merrill Lynch’s wealth operations typically work with accounts with more than $250,000 of liquid assets and sometimes those with several million dollars, primarily through its 15,000-member brokerage force. When Bank of America acJuly 2010

quired Merrill Lynch in 2009, it wound up with two online brokerage businesses: its own from Quick & Reilly, which was folded into Bank of America Investments in 2004, and Merrill Lynch’s internet and call-center platform. The new Merrill Edge combines those two businesses under a new platform that wealth management chief Sallie Krawcheck said is a priority for the merged companies. Reuters first reported Bank of America’s online brokerage plans following a February interview. At the time, Krawcheck told Reuters the service targeted Merrill clients who may like to trade “play money” at one of the online brokers. Merrill Edge also will target “the next generation (of investors) who are feeling pretty hurt by the downturn,” she said. New CRM for Financial Services Professionals Pareto Platform today introduced the Pareto Platform powered by Microsoft Dynamics CRM, a SaaS (Software as a Service) based CRM solution designed exclusively for financial advisors. “In today’s environment, organizations need to be equipped with the right technologies to help them succeed,” said Brad

Transitions Magazine

Industry News

The Pareto Platform Powered by Microsoft Dynamics CRM is a customized client relationship manager integrated with a complete suite of compliant practice management and business development tools and templates. It also includes a turnkey virtual coaching process with instant access to practice management and business development coaching modules consisting of video or audio tutorials, additional reading material and actionable steps and tools to implement each module/ concept   that relate directly to running a better practice. “I truly believe this solution will take the industry by storm. The strength of the Microsoft chassis along with the insights we have made over the years in terms of what functionality an advisor actually needs within a CRM will ensure this is a best of breed solution,” said Duncan MacPherson, co-founder and co-CEO of Pareto Platform. The Pareto Platform has a process that enables an advisor to build and strengthen client trust and chemistry by capturing and chronicling F.O.R.M.

tion as their relationships unfold. By having a clear understanding of their Family, Occupation, Recreational Interests and of course their Money as well as having a simple and easy place to document and access all this information, advisors can make themselves indispensible to their clients. “A financial advisor needs to be accountable to their client’s goals and objectives—not just their rates of return, and have a complete history of every activity that the advisor and his or her staff have ever engaged in with the client,” said David Miller, co-founder and co-CEO of Pareto Platform. “This will not only keep compliance happy but it allows the advisor the ultimate in communication consistency as client relationships evolve. And of course having The Pareto Platform built on the Microsoft Dynamics CRM chassis ensures integration with Outlook, Word and Excel, and easily synchronizes with Windows phones, Blackberry or other mobile device.” Pareto will also offer enterprise solutions and an on-premise model for wealth management firms that want to make this system available to their advisors to enhance productivity. For more information, please contact Shannon Hull at 800-215-3294 or uuu

July 2010

— 2010 —

CALENDAR OF EVENTS JULY July 19-20 IMCA Advanced CIMA Workshop Philadelphia, PA July 26-28 FPA Life Cycle Investing for Financial Planners Boston, MA July 26-30 CFA Institute Financial Analysts Seminar Chicago, IL July 29-30 NAPFA Core Competency Conference Atlanta, GA

SEPTEMBER Sept 11-14 NAIFA Career Conference & Annual Meeting Seattle, WA Sept. 22-24 NAPFA Practice Management and Investments San Diego, CA

OCTOBER Oct. 9-12 FPA Annual Conference Denver, CO Oct 17-19 REISA National Conference Las Vegas, NV Oct. 26-29 Charles Schwab's Impact 2010 Conference Boston, MA

In the News

Wilson, general manager, Microsoft Dynamics CRM. “This new solution shows that Pareto Platform is taking a step in the right direction to keep businesses in the financial services market sharp and competitive.”

To include your upcoming events, please email the info to:



July 2010

Transitions Magazine


Lower Costs

Reduce Staff and Technology Costs with Improved Systems

Taking your advisory practice to the next level isn’t as complicated as you might think. In many cases, improving your use of technology can significantly upgrade your businesses’ efficiency and productivity while lowering your staffing costs.

July 2010

Cover Story

By Jennifer Goldman, CFP®


Transitions Magazine

Cover Story


oo many advisors lose too much time, money, and great staff by using out-dated or lowgrade technology like Outlook to handle vital tasks such as tracking e-mails, to-do lists, and appointments. And even worse, that data is in jeopardy when it’s stored on company hard drives and onsite servers. This is not a great way to run a sustainable, efficient and compliant business.

You Need Robust Systems The case for moving your business to more robust systems such as a Client Relationship Management System (CRM), a Document Management system, and an E-mail Management system is extremely strong. If you’re interested but not sure you’re up for the work involved in making the transition, there are companies that will handle the set-up and data import so that all you have to do is sit back and be taught on how to use your new systems. The fact is that a nimble small business are providing great service and growing fast and affordably when they invest in time saving technologies. Happy, satisfied customers translate into more referrals and more business. Staff are also happier and tend to stick around when they are spending their time on challenging work and not the mundane day-to-day operations that can be done by technology. If you’re still not convinced, ask yourself if this sounds attractive: • $65/month for the staff to know what to do, for whom, how AND you being able to run a status report on all work with 2 clicks. • A 5-person firm with 100m AUM 500 accounts can spend $1,700/month to be fully compliant, have no server costs, and have all portfolio reporting and management be done by another, expert firm. • Less than 20 emails in your inbox at any given time. 8

Email Burdens First, let’s talk turkey about email. In 2005, professionals reported spending two hours per day processing email with 30 minutes of this time occurring after normal business hours. That was 2005 — what do you think 2010 looks like? A lot worse. Professionals admit that 25 percent of email processing time is wasted so that means the $40k salaried person is wasting at least $2,500 a year of your hard earned income. It’s also highly likely that you could find something better for the staff person to do such as proactive planning for clients, marketing or other client-value or revenue-generating activities. According to Forrester Research 38 percent of respondents in the U.S. and U.K. said they employed staff to read or otherwise analyze outbound e-mail. Client Relationship Management systems such as Redtail, Salesforce, Grendel and email management software such as Net Docs EMS, QuickFile and Clearcontext let you read an email and automatically move it to the to-do list and assign it to a staff person or to a document management area that retains emails for future reference. This solution eliminates five problems: a full inbox, complying with FINRA and SEC requirements for retaining email correspondence, tracking what was discussed with a client via email and paying the cost for email storage. Email software like Google Apps ($50/yr/user), GoDaddy (free), Microsoft BPOS Exchange ($600/yr/5 users), Redtail Email ($96/yr) allow you to set up your email and a support@ email so you can direct all client communications to support@ and your staff instead of you. That eliminates you having to be in the office all day and filtering e-mails. For one-man companies, put this in place if you plan on growing your business and adding staff. Clients love knowing there is only one email to use, that your entire service team will see the email and that it isn’t trapped in only one person’s email box.

July 2010

Transitions Magazine

Cover Story

heavy bags full of documents to read. It also saves you time backing up everything on a hard drive that you have to carry home to protect it OR saves you money you were paying to maintain your server.

You Need Two Monitors

The To-Do List Finally, it’s time to discuss the endless to-do list and who does what. There are a number of inexpensive systems and they keep track of to-do’s, contacts, emails, and a lot more. Check out systems such as Redtail CRM ($65/mo/15 users), Grendel CRM ($50/mo/15 users) and Salesforce ($125/mo/ user). You can access all the information from anywhere there is an internet connection and they all sync with Outlook, some integrate with Document Managements systems, and some have mobile apps so you can skip over Outlook or logging into the Document Management system. Second, let’s talk about increasing your screen space to Magazine upgrade your efficiency. When you spend a good part of your day in front of a screen, it makes sense to use at least two monitors. “Our (Microsoft’s David Williams) research shows that productivity gains for standard tasks, window management, office, switching between documents, you can get productivity gains with multi-monitor anywhere from 20 to 50 percent,” says Bill Gates. It’s unbelievable how much time wasted on opening and minimizing e-mail, web browsers and other software. Spending $160 for a monitor and dual monitor card is much cheaper than a $40,000 a year salaried person wasting at least an hour a day, which costs the business $5,000 a year.

Document Management Third, let’s talk about document management. The SEC and other national regulatory bodies are demanding formal document management systems– no more hard drives, zip disks and unmaintained servers. Systems like Net Documents or Knowledge Tree (~$30/month) or less complex systems like Redtail or Grendel Imaging eliminate time and money wasted on printing, archiving emails, walking files from one desk to another as well as dragging

Stop Wasting Time Harvard Business school’s experts Kaplan and Norton suggests that less than 30 percent of the tasks that executives and staff members spend time on actually contribute to achieving the business’ strategic plan. Many business owners constantly complain they don’t have enough time, enough money, and enough clients. The solutions are simple, inexpensive and they permanently solve the problem. If you need help, there are plenty of “doers” who will help you figure out the best software and that will do the work of moving all your data into the software, setting it up to meet your needs, and integrate the technology with other software and hardware devices. The bottom line is there is no excuse for not taking the next step to upgrade your productivity and efficiency by adopting a few win-win, low-cost business solutions. uuu

Jennifer Goldman, CFP ®, is President of My Virtual COO ™ and Co-Founder of Virtual Solutions Consortium, an online directory of outsource “doers” and resources for the Financial Advisory Community. Visit

July 2010


Transitions Magazine

How to Set Up Your Independent Business: Part 6 What's In a Name?

Editor’s note: This is a great article that originally was published in a book Lyn Fisher and I wrote for John Peluso, President, Wachovia’s FiNET division (now WellsFargo Advisors Financial Network). The book is called “Independent Business Ownership: Navigating to Your New Destination.” We think you will find it very helpful when starting up your new business.


efore you can forge ahead with the technicalities of either obtaining a business license, filing a fictitious name statement, signing any lease agreements on an office space, opening a bank account, or taking care of the many responsibilities on your list, you must have a company name.

So, you’re probably excited about creating a name for your new firm. Unless you decide to use your name as identification for the firm (which is perfectly reasonable, because it immediately identifies who you are: i.e., John Smith Financial Advisors, LLC, for example). However, if you want to add some creativity and branding, and make a memorable impression on prospects and clients, you might want to try something a little outside of the box. Branding consultant, Phil Davis, of Tungsten Marketing, says that naming a business is a lot like laying the cornerstone of a building. Once it’s in place, the entire foundation and structure is aligned to that original stone. If it’s off, even just a bit, the rest of the building is off, and the misalignment becomes amplified. So if you have that gnawing sense that choosing a name for your new business is vitally important, you’re right. Okay, let’s get started brainstorming.

Setting Up Your Business

By Sydney LeBlanc

So, What to Name the Baby?

“The Ancient Mariner would not have taken so well if it had been called The Old Sailor.” ---Samuel Butler, British author, poet 1835-1902

July 2010


Transitions Magazine

Setting Up Your Business

Successful — but purposely over the edge — firm-naming consultants, “A Hundred Monkeys,” agrees with Phil Davis and emphasis this point about naming your firm: “Naming is a competitive sport. It’s your first shot at being different. Don’t pick a name that makes you one of the trees in the forest and then spend the rest of your marketing budget trying to stand out from the other trees. The right name can give you a strong, clear voice in the world. It can support and leverage your brand, and provide you with a deep well for marketing. Fight the competition; not yourself.”

partner, all want to be part of the decision. It seems like a democratic thing to do — the more ideas, the better. But before you decide to use this process, here are a few problems with this approach. The most obvious is that you will choose only one name from the many that are suggested, so you risk alienating the very people you’re trying to involve. Second, you often end up with a consensus decision, which results in a very safe, homogenous name. A better method is to involve only the key decision-makers — the fewer the better — and select only the people you feel have the company’s best interests at heart.

For example: Notice the major difference in the names Wealth Management Consultants, LLC, versus The Millionaire Within Wealth Management, LLC? Or Estate Planning Group versus Legacy Planning Specialists, Inc.

Mistake #2: Employing the “what-does-it-mean?” method of creating a name. If you put off naming your firm until the last minute, you may be tempted to simply take part of an adjective and weld it onto a noun, essentially colliding the two words head-on to create a new word. The results are names that have a certain twisted rationale to them, but look and sound awful. A high-level financial firm becomes Hi-Val Investments … you get the picture.

Naming and branding your firm isn’t exactly a walk in the park. Choosing a name should not be gimmicky or cutesy, or hard to pronounce or remember. Every name should tell a story. Think about how you are different, and what that means for your positioning and branding and, ultimately, for your clients. If you spend time being introspective, you will soon find a way to live in the hearts and minds of your customers through the name you have chosen for your firm. Here are the top seven mistakes1 experts tell us that some financial advisors make when it comes to choosing a name for their business: Mistake #1: Getting a “committee” involved in your decision. Friends, family, colleagues, your assistant, 1 Phil Davis, Tungsten Marketing, April, 2005 12

Mistake #3: Using words so plain they’ll never stand out in a crowd. Let’s take for examples, a few general, well-known firms that have been able to get by with this: General Motors, General Electric, Bell Telephone, and so on. But once you have competition, it requires differentiation. Imagine if Google was introduced to the public as The name would be much more descriptive but hardly memorable. Mistake #4 Using geography to name your company.

July 2010

Transitions Magazine

Setting Up Your Business In the eagerness to start a new company, many financial advisors choose to use their city, state or region as part of their company name. While this may actually help in the beginning, it often becomes a hindrance as a company grows. For example, if you named your firm Chicago Investments, your clients will believe you only serve the Chicago area when, in fact, you serve clients in other cities and states. Mistake #5: Turning your name into a cliché. Once past the literal, descriptive word choices, your thought process will most likely turn to metaphors. These can be great if they’re not overly used to the point of being trite. For example, since many financial firms think of themselves as being the top in their industry, you see names like Summit Financial, Pinnacle Investment Partners, and so on. While there’s nothing inherently wrong with these names, they’re overused. Instead, look for combinations of positive words and metaphors, and you’ll be much better served. Words that convey strength, trust, integrity, knowledge etc.

or your areas of differentiation and “sit with them” for a while. Then make your decision. By tapping into your creativity and avoiding these and other potential pitfalls, you should be able to create a name for your firm that works for both the short and long term. Like the original cornerstone of a building, it will support upward expansion as your company reaches new heights. Good luck.

Mistake #6: Making your business name so obscure your prospects can’t understand it or spell it. If the reference to your firm is too obscure or too hard to spell and pronounce, you may never have the opportunity to get “past” this obstacle with prospective clients. So resist the urge to name your company with a little-known investment term like Wealth Optimizers, or the Italian translation for Value-Added Advisors, “Consiglieri a Valore Aggiunto” unless you’re in Italy, of course. If it’s too puzzling, it will remain a mystery to your clients, and this is not good for your branding. Also, don’t fiddle with the spelling of your name. Like AAA Advisors just so you can be listed first in the phone book. Or use slang spellings like Quik Consultants. Mistake #7: Choosing the wrong name and then refusing to change it. If the name you initially choose becomes a problem, don’t just ignore it. Take some time to re-think your value proposition, your mission statement,

July 2010


LEGAL REQUIREMENTS FOR NAMING YOUR BUSINESS Provided by Business Owner's TOOLKIT Depending on the business form you choose, you may have to register and/or receive approval from the local or state government where your business is formed. The name of your business must not be misleading or in any way imply something that the business is not. For example, you can't imply that your business is a licensed plumbing contractor if you haven't received a plumbing license. Likewise, you cannot imply that you are a professional and are providing professional services if you don't have professional credentials. Below are specific rules and requirements for each of the various business types: sole proprietorships, partnerships, limited liability companies, and corporations. Sole proprietorships. Sole proprietorships are presumed to operate under their owner's name. If the business will operate under a different name, most jurisdictions require that a fictitious owner affidavit be filed. A fictitious owner affidavit, or a "doing business as" (DBA) filing, informs the local government and the public that the business is operating under an assumed name and indicates who the owner is. The fictitious owner affidavit usually has to be filed with the county recorder of deeds' office rather than the secretary of state's office. If you are going to use a name other than your own for your business, contact the county recorder of deeds' office (or government equivalent) that your business will be operating in to get specific information and any necessary forms. 13

Transitions Magazine

Setting Up Your Business

Partnerships. Similar to a sole proprietorship, a partner-

which descriptions can be used.

ship is presumed to be operating under the name of its

Limited liability partnerships. Limited liability partner-

partners. If the partnership is going to operate under a different name, a fictitious owner affidavit is required. A fictitious owner affidavit is usually filed at the county recorder of deeds' office but may have to be filed with the secretary of state's office. A fictitious owner affidavit informs the government and the public that the business is operating under an assumed name and indicates who the owner is.

ships are similar to limited liability companies in terms of the tax advantages, but they differ in that limited liability partnerships are normally available only to select professions, such as doctors or lawyers. They're also recognized in fewer states than are limited liability companies, with only about 40 states now recognizing them. For more information on LLPs, see limited liability companies/partnerships.

Limited partnership. Choosing a limited partnership name involves more formalities than choosing a sole proprietorship or partnership name. A limited partnership name has to be reserved with the secretary of state's office. The name is usually reserved when the limited partnership files a certificate of limited partnership with the secretary of state's office to register its existence. The name of the limited partnership must include the words "limited partnership," the letters "L.P." or some other phrase indicating that the entity is a limited partnership. Most state statutes specifically identify which descriptions can be used.

Corporations. Choosing a name for a corporation is a formal process, just as it is for a limited partnership or a limited liability company. A corporate name has to be registered with the secretary of state's office. The corporate name must be unique and not be in use or reserved for another corporation. If the corporate name you choose is already in use when you file your articles of incorporation, the secretary of state's office will reject your articles of incorporation. You can call the secretary of state's office to find out in advance whether a particular name is available. Or if you have access to certain online services like Lexis/

A limited partnership's name must be unique. If the name is

Nexis, a legal research database, you can electronically

already in use by another limited partnership, the certificate

search your state's database of names to see which names

of limited partnership will be rejected. Save time and effort by

are available.

determining whether the proposed limited partnership name

If the name you have chosen is available, see if the state will

is available before filing the certificate of limited partnership.

let you reserve it. Most states will allow you to reserve a cor-

You can find out if the name of your partnership is available

porate name for a period of time, provided that the name isn't

by calling your state secretary of state's office and telling

already in use or already reserved.

them that you want to register that name. If the name has

The name of a corporation must include the words "corpora-

been reserved by someone else, they'll tell you.

tion," "incorporated," "limited" or "company," the letters "Inc.",

Limited liability companies. Like choosing a limited part-

or "Corp." or some other phrase indicating that the entity is

nership or a corporation name, choosing a limited liability

a corporation. Most state statutes specifically identify which

company name is a formal process. A limited liability com-

descriptions can be used.

pany name has to be reserved with the secretary of state's

S corporations. S corporations are subject to the same

office. The name is usually reserved when the articles of organization are filed with the secretary of state's office to register the limited liability company's existence.

name rules that a regular corporation is subject to. An S corporation does not have to indicate its status as an S corporation in its name. An S corporation's status as an S

The name of the limited liability company must include

corporation only has to be identified when the corporation is

the words "limited liability company," the letters "L.L.C." or

filing its federal income tax return, and, in some instances,

some other phrase indicating that the entity is a limited li-

when the corporation is filing its state income tax return.

ability company. Most state statutes specifically identify


July 2010


Transitions Magazine

Selling, Buying or Raising Capital

How to Build Your Deal Team By Kenneth H. Marks

Editor’s note: This is a terrific educational article that will help you in advising your small business clients. You can also share the article with them. Much of the information provided will apply to your business as well. Poor management is the number one reason for business failures and assembling a great team can position their businesses for a successful future, whether buying or selling.

1. Legal Counsel — a critical member of the team. As management considers its alternatives and potential actions, it needs to understand the issues and potential ramifications. Your lawyer should be experienced with transaction structuring and securities law issues, and should be someone whose judgment you value and trust. There are many issues that arise out of the various corporate finance and M & A (mergers and acquisitions, which includes selling a business) transactions. It’s important to have a lawyer who is a “deal doer” as opposed to a “deal killer.” Deal doers have the best interest of the company and shareholders in mind and are focused on completing deals and finding ways to make transactions close. In all deals, there are obstacles and emotions that arise even after the business principals have agreed on the major terms. A lawyer who can think creatively can facilitate solutions to overcome these obstacles.    Though you may have a long and successful relationship with personal counsel that may be strong

July 2010

Exit Planning


hinking about selling your company, buying a competitor, or maybe raising capital? Or are you helping your small business clients with these issues? In either case, you need a deal team with the right mix of talent and experiences to get the best value and to assure the transaction happens. As economic activity is starting to pick-up, some small and mid-sized companies are testing the waters and seeking to launch strategic initiatives to move their businesses forward.   In some cases this means raising capital and in other cases it means partnering with or selling to an investor or buyer with deep pockets or where there’s a strategic fit.  No matter what the case, having the right team can make the difference—not just in the value and quality of the deal, but whether you actually get the deal done.    So, before you jump into a transaction and start negotiating, make sure you have the right players on your side. Here they are:


Transitions Magazine

Exit Planning

in real estate, estate planning, or some other discipline, that lawyer may not be the right counsel for corporate finance and M and A transactions. Typically these folks will focus on the wrong issues and spend too much time getting up to speed, the end result being either a poorly done deal or a failed transaction. If current counsel lacks the skills you need to achieve a successful transaction, ask him to help you locate and evaluate new counsel with the right skills; do this before you begin the transaction process, not afterwards.   Having counsel that is known for doing deals and for expertise in transactions can be invaluable in the process and will lend credibility in reaching your goals. Lastly, some law firms have partners that cross over from counsel to an informal investment banker. This is not bad if they have the marketing skills, deal instincts, experience, and available staff time; but it can be problematic if their role is not well understood and defined.

process of a selling a business is reasonably complex and requires an integrated effort of the entire team to get the best results. The key is to have a partner-level professional with transaction AND business experience that understands the entire process, the subtleties, and the inter-related issues and opportunities. 3. Accountants — we use the plural tense because there are usually multiple accountants involved in the process.  First there is the need to have financial statements that comply with generally accepted accounting principles (GAAP).  Valuations tend to boil down to a multiple of EBITDA (earnings before interest taxes depreciation and amortization) or cash flow.  The audit accountant can help your team insure that you have defensible earnings information that will likely be required in negotiating the deal.  Without it, you will be operating from a position of weakness and constantly being second guessed by the investor’s or buyer’s team.   Second, there are the tax accountants.  Particularly in the sale of a company (vs. financing), there are a number of decisions that can directly impact the eventual after-tax cash proceeds to the shareholders.  Your ally and partner in making these decisions is either your tax accountant, which should have corporate finance or M and A transaction experience, or a tax attorney with the same.

Carefully interview and assemble a group of professionals that have the focus, expertise, network, and mind share to enable you to make sure-footed, solid decisions.

2. Investment Banker / M & A Specialist — if you are selling your company, this role is a must. If raising capital, others on the team may be willing and able to assume the position; it depends on the stage of the company and the type funding required. Investment bankers and M and A specialists are intermediaries that drive the transaction process, help present and market the company and may actively participate in negotiating the deal.  You can think of them as the “deal quarterback.”  In some cases you will find a strategic advisor or consultant filling this role, which is fine too.  The 16

4. Board Members and Management — no one knows your business better than you and your management. There is a dual purpose in choosing your internal players: (a) to have multiple eyes and minds focused on the deal that understands the intricacies of the business and its industry, and (b) to represent the interest of the sharehold-

July 2010

Transitions Magazine

Exit Planning ers and key stakeholders that will be required to get the transaction complete. A critical investment component for many investors and buyers is management. In addition, having your senior team members on-board early in the process is usually key to successfully presenting and marketing the company.  It enables outsiders to observe the breadth and quality of management, and allows management to evaluate potential investors or buyers in real-time as the process progresses.  At a minimum, expect to have your CFO or controller, and key board members ready to engage as required.

In Summary Carefully interview and assemble a group of professionals that have the focus, expertise, network, and mind share to enable you to make sure-footed, solid decisions as you contemplate and execute on the financing or M & A process. Keep in mind that not all advisors are needed at once—prioritize, and be aware of the cost and benefits of the engagements and timing of support. The mix of these professionals and their firms is a function of the credibility of your company’s management, size of the business checkbook, stage and industry of the company, and the realistic growth opportunity of the business. uuu

Kenneth H. Marks is a Managing Partner of High Rock Partners, providing growth-transition leadership, advisory and investment. He is the lead author of “The Handbook of Financing Growth” published by John Wiley and Sons. www.HandbookofFinancingGrowth. com You can reach him at khmarks@

July 2010


Sound Off!


Outstanding Wealth Management Teams to feature in the 4th Edition of The Wealth Factor: A Team Approach This customized, hard-cover book provides an objective, third-party endorsement for you and your team. It's authored by veteran journalist Sydney LeBlanc, and published by Financial Forum Publishing. Books can be distributed to clients, prospects, members of your network, editors and writers at targeted publications. Call today for details and to see if you and your team meet the criteria for inclusion. CONTACT: Lyn 435.750.0062 x1, or email *Fee includes 300 copies of the book and a complete marketing and PR package.

Transitions Magazine

Beyond Reproach Ethics, Integrity and Trust by David B. Loeper, CIMA®. CIMC®

Take for example a client with $10 million in assets. He has extreme disdain for oil companies. More than 20 years ago he flew to Prince William Sound to help save the wildlife threatened by the Exxon Valdez spill. Now, his younger brother who is a shrimp fisherman in the gulf has been effectively put out of business by the massive BP oil spill. The typical way the financial industry deals with such personal goals is to simply exclude stocks of oil companies from the portfolio. But, is this really the BEST way to make a material and meaningful difference, or is it merely a means of psychologically appeasing our client? If there was a more effective way for our client to make a difference against oil companies, considering his deep seated passion, shouldn’t we truly help him actualize his goals? Does Eliminating Offensive Companies from the Portfolio Achieve the Client’s Goal? The allocation model for this client’s Wealthcare plan targets 53% domestic stocks, 7% foreign stocks, 37% government bonds and 3% cash (our balanced allocation). The largest market capitalization domestic stock is Exxon Mobil, representing 2.45% of the total domestic equity market. With his $10 million balanced portfolio fully indexed, this means he would own about 2,000 shares of Exxon Mobil that cost around $130,000. This represents 0.007% of the average daily trading volume of Exxon. The typical bid/ask spread for Exxon is about a penny. Though unlikely, let’s say his one 2,000 share trade (or lack thereof) impacts the stock price by a full penny a share at the moment of the trade. The net impact of a penny a share on 2,000 shares is about $20, or less than the cost of filling his Prius with one tank of gas. Is this the meaningful

July 2010



n our role as financial advisors (financial actualizers?) some of the greatest value we can deliver is helping clients to truly make a material and meaningful difference in the social issues they personally value. Such social issues are often deeply personal and emotional, with clients having either extreme passion or outright disdain, depending on the issue. Our role is not to judge what a client is passionate about, instead it is to help them truly understand how to accomplish and actualize that goal to make a meaningful difference.

Integrity and Trust s



Transitions Magazine

Ethics, Integrity and Trust

and material impact he is passionately trying to achieve? Would there be a more effective way of actualizing his goal? If he is truly passionate and deeply emotional on this issue, wouldn’t he want to have the biggest impact he could? What does it cost to avoid owning Exxon? Generally, socially responsible funds are going to cost a lot more than the 7 basis point expense ratio of Vanguard’s Total Domestic Equity ETF or Fidelity’s 10 basis point cost for their retail Total Domestic Equity Fund. Say it costs 50 basis points more on this client’s $10 million, which means the client is paying an additional $50,000 a year. Is the client really paying $50,000 annually to have a onetime $20 impact on Exxon? No, Exxon is just the largest company. Many other offensive companies will be in the index fund albeit in far smaller proportions but with potentially larger per share impacts on the stock price. Chevron, for example, is the next largest oil company in the index with a weighting of 1.17%. The $62,000 of Chevron he’d beneficially own through the fund would be about 800 shares, and with only 12 million shares traded daily, in theory that trade could impact the price by two cents … at least in theory. That’s a $16 impact. By the time you get past the largest 25 positions (Exxon and Chevron are the only oil companies in the top 25) all positions are less than 0.66% of the portfolio. The bottom line is that to have a market value impact in one year to make up for the additional $50,000 every year in expense going to a socially responsible money manager (who may be driving around in a Hummer) you would have to avoid buying AT LEAST 2,500 companies. There aren’t that many publicly traded oil companies. So instead of psychologically appeasing a client by increasing his expenses, which accomplishes very little of what he is deeply passionate about, why not add a goal to his Wealthcare plan to make charitable donations that are specifically targeted to our client’s passionate goal? All other things being equal, instead of paying $50,000 20

to fund manager he could make donations of $50,000 a year to a direct charitable/educational effort on the issues he is so passionate about. Wouldn’t $50,000 a year in donations to Greenpeace or the Sierra Club have a greater impact than the $20 or $16 of stock price impact he’d have by not owning Exxon or Chevron? Bringing Emotions to Life to Make a Difference There are a lot of personal and emotional issues involved in this reality. It is our job as advisors (or actualizers) to educate clients about the reality behind the misconceptions. Those misconceptions get in the way of achieving the very goals they are passionate about, but this provides an opportunity for you to add significant value. For example, there are a lot of clients who mistakenly believe that when they purchase stock, the company gets the money. Of course, in the case of an IPO that is true, but IPOs generally aren’t in index funds. In reality, the proceeds from a stock purchase go to the previous holder of the stock. Thus, the proceeds from the purchase of BP made in an index fund might very well be going to the Greenpeace Foundation that may have held it based on BPs “Beyond Petroleum” alternative fuel ad campaign… until the recent spill. Conversely, the proceeds from the extra purchase of Whole Foods (the organic/ health food grocery chain) that is over-weighted in the socially responsible portfolio to make up for the missing oil companies might go directly to BP’s pension. The reality is that where your purchase proceeds ultimately go is completely unknowable, so this is not a means of accomplishing your deepest most valued social goals. Some clients feel as though owning a stock, or deciding not to own it, is a “vote” for or against a company. The stock market though is not an election, it is an auction. While millions of people all “voting with their dollars” by not buying a stock might add up with each $20 impact they’d have, it still doesn’t add up to something very significant and, more importantly, would have much less impact than they could otherwise have in actualizing a targeted charitable goal.

July 2010

Transitions Magazine

Ethics, Integrity and Trust Some clients can’t stand the notion of “profiting” from what some of these evil companies do in the form of the dividends they receive or in price appreciation. Here again though, with the addition of a meaningful charitable goal to the Wealthcare plan targeted to the client’s passion, one could view it as the client is taking the profits from those companies and redirecting those company profits to a charity that is on a mission to clean the company up. Isn’t this better than paying a money manager a bunch of fees to avoid buying certain stocks? Why not use those ill- gotten profits of such offensive companies to get those companies to clean up their act? Would you rather those “ill-gotten” profits on those shares go to an uncaring indifferent money monger? Think about it. There are a number of other issues where emotions get in the way of reason, and get in the way of achieving the goals a client values. For example, if you just can’t stomach owning the stock of some of these companies (and using the profits they generate to clean them up) where do you draw the line? What about all of the other companies that profit from the oil company’s business? The oil company buys all kinds of services. So, are you going to eliminate from the portfolio the hotel chain that hosts annual meetings for some oil companies? Clearly some of the hotel chain’s profits are coming from oil. How about the tractor company that profits from selling oil companies bull dozers? What about the office supply store the oil company uses? What about the waste and recycling program company that services the oil company’s offices? This ‘voting with your dollars’ thing appeases an emotion but, in reality, accomplishes little else. If it is okay to have some of these other non-oil companies in your portfolio that profit from the oil company’s business, how much is too much? And, even if you could draw the line at, say, no more than 2.45% of a company’s business, how could you even uncover how much it really is? Finally, what about the additional uncertainty being

introduced by not being as diversified? Additional uncertainty will impact the confidence level of what a client’s Wealthcare plan can incorporate in goals. So even if there is no additional expense to construct a socially responsible portfolio, the added uncertainty could cost our client significantly in the goals that would otherwise be funded. (For a 50 year plan with a balanced allocation, increasing the standard deviation by just 1% due to the lesser amount of diversification would cost this client $40,000 a year in distributions he could otherwise make.) When combined with the certainty of avoiding additional expense, our client could confidently fund $90,000 a year in donations for his cause when compared to a socially responsible portfolio. Despite Reality, I Just Can’t Do It What if, after educating a client about these realities, he still insists on a socially responsible portfolio despite it doing very little to actualize the goal he values? Here is where this ties to ethics. If you represent that you help clients make the most of their life, their goals and what they personally value, are you willing to accept an advisory fee from a client knowing that you aren’t able to deliver the value you represent? Is appeasing an emotion with an illusion the ethical thing to do? Go back to our New Year’s resolution and remind yourself of how that is a contradiction to building a practice that is beyond reproach. 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

July 2010


Transitions Magazine

Ethics, Integrity and Trust

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速 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


For more info, call 435.750.0062 ext.1 or email:


July 2010

Transitions Magazine

A Tale of Two Advisors


By Ned Van Riper and Aaron Hasler

Narrowing Down Your Choices

Upon first review of the BD landscape, the client was overwhelmed with choice and was skeptical of the messages coming from various vendors. The client was introduced to us and we created our working objectives for the project. The mission Aaron Hasler was simple: find a BD that fits the practice personality and has familiarity in environment, but improves upon critical practice areas indentified in the Finetooth business evaluation. Firms were identified as potential fit and introductions were made. It was important for the advisor to upgrade his technology platform, find a firm that can provide assistance with transition costs, as well as have a strong ongoing service orientation and culture. Suitors were able to set themselves apart by sharing their experience in succession planning, establishing professional partnerships, and working with the advisor on various ongoing practice development and office efficiencies. How does one go about narrowing down the incredible amount of choice in the independent landscape? Our firm’s process allowed the client to see a vast array of firms, more so than if they were completing the search alone. Big, small, brand name, unknown — the choices are as vast as the people who build and run them. Will there be enough large producers that I can share my ideas and have a strong peer network from which I can learn and capture information? Does the BD have experience in creating complex succession strategies to care for my staff? With goals of practice acquisition, is the BD going to have the reputation and features that will attract advisors in?

A View From the Inside s

client came to our consulting firm with a desire to evaluate broker-dealers. As is typical with many advisor transitions, the impetus for change was created when the advisors’ broker-dealer was making a significant structural alteration. A large single producer with a staff of four and a substantial client based depending on him, a smooth transition was important for workplace continuity as well as client and revenue retention.

Like many of our major decisions in life it took many hours of consideration, discussion, planning, and debate. With so many features in the marketplace there was not a clear and obvious winner, but several firms provided compelling stories. The advisor made his decision with utmost confidence and excitement resulting from thorough analysis. And as he prepares his staff for the transition challenges before them, he is doing so with an excitement and energy that comes with finding a firm that will be an ideal business partner and strategist. He looks forward to achieving his professional goals. — Aaron Hasler

July 2010


Transitions Magazine

A View From the Inside


t was mid-morning on a Thursday and John was anxious. He was about to walk into his manager’s office, someone he had come to respect and admire, to hand in his resignation. It was the last time he would walk the hall of his familiar office, because for one year John had been planning this day. John, my client, was referred to me by another financial advisor that I had helped transition to a more suitable firm. John is a smaller producer by industry standards, but for many years he was employed by a firm with a great culture and would have never considered a change; he didn’t need to.  After going through an acquisition, the firm’s culture changed immediately.  He didn’t feel appreciated or welcome, his payout was soon to go down unNed Van Riper less aggressive production goals were met, and his client’s fees were going up.  Essentially, because of a corporate decision made by executives whose best interests would never align with John’s or his clients, his world turned upside down.  For the first time in his career, he took a serious look at what he wanted for his clients, his family and for himself. John wanted to never be in a position again where his employer would dictate his direction.  He wanted independence, which to him, meant having control and ownership.  I had identified several broker/dealers that were appropriate for what he now wanted. John ultimately chose the one that he felt was most aligned with his best interests; he chose one that would treat him as the client.  Additionally, he needed a strong net-payout and all the investment platforms and selling-agreements he had at his prior firm. He wanted a b/d that has a strong compliance department and track record.  He demanded top level support from his new firm, and he would not take a step backward with technology. John is now sharing office space with other like minded, independent financial advisors.  He is experiencing very strong client retention, because after all, his clients have a relationship with him, not the firm he works with.  Although, only a few months into his transition, he is enjoying his career again; you can feel it just by speaking with him on the phone. He owns his practice and markets it under his eponymous brand. He told me a week after his resignation, that his anxiety on that Thursday morning was pure adrenaline and excitement because he knew he was creating a huge opportunity for himself.  Now, after so many years of being told “how” and “what," he now owns and controlls his practice, with all of the support of his new firm behind him, ready to help. — Ned Van Riper uuu

Ned Van Riper is Managing Director of Finetooth Consulting, Columbus, Ohio. He brings ten years of industry experience to the firm. Previously, he was Regional Director of Branch Development with LPL Financial and was directly responsible for transitioning dozens of advisors to their new firm. Prior to that, he was a Financial Consultant with both Smith Barney and Morgan Stanley where he serviced the assets and relationships of private clients. Aaron Hasler is Managing Director of Finetooth Consulting, Minneapolis, Minnesota. Aaron brings ten years of industry experience to Finetooth, most recently as a Regional Director of Branch Development with LPL Financial. Finetooth Consulting provides retail and institutional transition advisory and practice advisory services to financial advisors, registered investment advisors and broker dealers. Please visit 24

July 2010

Transitions IT’S ABOUT TIME … Magazine

…. you look at compliance

Compliance is considered to be the most essential service that a broker dealer can provide its advisors. With compliance requirements changing as often as New England weather patterns, financial advisors, now more than ever, need assistance to stay on the straight and narrow. Although, where does one draw the line between stringent and too stringent to successfully grow a business?


e recently spoke with a financial advisor with an independent broker dealer who had a great seminar idea for existing and prospective clients. Restaurant reserved, marketing dollars committed, a time-sensitive topic well researched; but invitations and slides, not yet compliance approved. Problem.

Is There Such A Thing As Being Too Compliant? On the opposite end of the spectrum, we have learned, by way of the recent fate of a number of IBDs this year, that there definitely is such a thing as being too passive on compliance. Compliance at times has been the driving force behind advisors seeking a new broker dealer, and rightfully so. While there are some compliance practices that can’t be avoided, there are certainly qualities that make one firm’s compliance better — or easier to work with — than another. Turnaround time and compliance department experience and competency rank among the highest of those qualities.

RIA Support s

By Phil Flakes and Nick Gudz

As consultants, when we research broker dealers and evaluate options for an advisor considering a broker dealer change, we look at compliance in a number of ways. Here is our process: First, we simply take a head count. How many people comprise the compliance depart (only those whose

July 2010


Transitions Magazine

RIA Support

sole responsibility is compliance, not those wearing many hats)? We then compare that to the number of producing advisors to get an “advisor-to-compliance officer ratio.” From there we will probe to find out their experience; i.e. whether they have ever been an advisor themselves, because typically they will know and understand when and why to expedite tasks that require compliance approval because they have walked in your shoes. Last, we will reach out to advisors to get their feedback on the compliance department. In addition to asking them about turnaround times and the competency of the compliance department, we also dig a little deeper to see whether the advisor feels like compliance takes the time to learn his or her business. Frequently, this proves to be the most valuable resource in our research. We would argue when a compliance department takes the time to understand your business, then they know what you are trying to accomplish. That— in most cases— can be the difference between getting a simple “no” answer versus a creative suggestion of how to still get your point across in, for example, a marketing piece. There is a quote we feel every compliance officer should live by, “It’s easy to say no, but it takes time, energy, understanding, and a little extra work to find a way to say yes.”

What Is A Realistic Turnaround Time? Well, we guess that depends on the subject matter, for one, and a combination of how quickly your back office responds to your request, or how important your request is in the pile of “things to do.” All too many times firms like to preach how compliance-friendly they are with regard to marketing support, seminars, mailings, etc. When it comes time to pull the trigger on the event, wouldn’t you just know it— there seems to always be an issue with the client letter, invite, or marketing piece. But why? The marketing piece clearly does not discuss product offerings or make suggestions or recommendations. 26

What is a realistic turnaround time for a piece to be approved, and what’s considered acceptable by the average compliance standards? Shortly put, it varies dramatically from firm to firm. So, there is no one specific answer to that important question. Obviously, if it becomes too much a struggle for you and you can’t seem to find a good compromise through negotiation and open dialogue, and your marketing efforts are being quashed, you need to look at your transition options. Editor’s note: I did ask Phil and Nick what happened to the advisor mentioned in the beginning of the article who couldn’t get compliance approval on his invitations and slides. They told me that the advisor did eventually get compliance approval, but never went through with the seminar because it took too long, he was very upset and it wasn’t the first time this had happened to him at his current firm. He changed broker dealers as a result. Food for thought. uuu

Nicholas Gudz is responsible for maintaining client relations and the overall management of StarPoint Consulting Group and its employees. Phillip Flakes is responsible for the overall management of Starpoint Consulting Group’s advisor placement division. StarPoint Consulting Group, LLC, is an advisor placement firm specializing in Broker Dealer and RIA transitions. The firm assumes responsibility for the due diligence and negotiations with potential firms so that financial advisors can focus on their business and clients. They research hundreds of independent, regional, bank, and wirehouse firms and look at variables such as technology, payout, culture, compliance, flexibility, product differentiation, and business development. For more information, contact Nick or Phil, managing partners, at (858) 456-5564 phillip.flakes@,, or visit their website at

July 2010

Transitions Magazine



Playing Secretary By Scott Winters and William R. Nelson, Ph.D.


earning to instill in clients the necessary confidence to trust your judgment during good times and bad is hard work, an ambitious challenge with tremendous rewards, both financially and psychologically. Operating a financial planning or financial advisory business involves not only advising, but many other tasks including technology management, security selection, billing, customer service, performance reporting, human resource management, and compliance.  None of these tasks is worth a financial advisor’s time. An average advisor can earn $200,000, which, assuming 50 work weeks of 40 hours each, equals $100 per hour. Of the 2,000 work hours assumed per year, many are consumed by non-advisory tasks, meaning that the income per hour of advising is actually considerably more than $100. Accordingly, you can substantially increase your income by freeing up more time for advising by eliminating as many non-advisory tasks as possible from your schedule.  Advisors’ money is made by interacting with investors, converting them to clients, and leading clients confidently toward their goals.  More time for clients and sales sounds good in theory, but how are non-advisory tasks offloaded without significant risk, upfront work, or loss of revenue? Typically, one offloaded these tasks by hiring helpers.  If lucky, these helpers were merely expensive. If unlucky, they alienated clients and drove you batty with drama and lawsuits.  Technology provides a welcome alternative — automation, which is easier said than done.  Despite halcyon dreams, technology implementation almost invariably involves people, expensive people, performing a task most advisors know little about and thus cannot monitor effectively.  The bottom line is: implementing technology is complicated and costly. What is an advisor to do?

July 2010

Business Development s

A financial advisor’s job is to advise, to impart information, suggest alternatives, and provide solutions. To earn a living as a financial advisor, one must first acquire the ability to advise. 


Transitions Magazine

Business Development painful is the transition?”

Don’t Offload, Outsource! What’s The Difference?   Offloading involves managing the admin and/or tech people who are supposed to make your life easier.  But managing people is not easy. 

The lazy answer is, "It depends."   "On what?"   "On who performs the transition."

The transition of all assets to a more efficient asset management solution, often referred to as a book Outsourcing involves allowing another conversion, is another task that, if performed by company to do the work that you are skilled (but not advisor-level) professionals, can be too valuable to sensibly do yourself. accomplished for you with little effort and with the opportunity for an immediate cash flow injection.  But, when book conversions are attempted by the unpracticed, Why does the difference between hiring individuals debacles commonly ensue.  As with other complicated and using a firm allow you to make more money in operations, without practice one is rarely perfect and less time?  The firm you will choose should be expert often ineffective.   Imagine your golf swing when first in all facets of asset management other than the art of starting to play or after not playing for several years talking to and meeting with investors.  Assume that — hook, shank. Operations required for a smooth and you hire typical administrative people to help you.  efficient book conversion include but are not limited to Who is going to know more about financial services client information aggregation, introductory letters, risk and how to answer the phone, run billing, perform tolerance assessment, asset allocation modeling, money due diligence on money managers?  Obviously, you manager selection, investment proposal generation, will.  Accordingly, you will be continuously training, investment proposal mailing, follow-up to get proposals and answering questions, taking away from the signed, and account opening. One should not risk the time you should be spending with investors. Don’t relationships with their clients (and possibly their consider hiring a technology team to automate your spouse) by performing the book conversion themselves processes unless you want to dedicate yourself to but rather leave it to the experts.  designing the system and managing the development while still incurring great risk of failure.  Instead, Who Are The Experts? outsource to an established firm whose operations The experts are the firms that have performed and are are designed and honed to accomplish your goals by constantly performing book conversions. Turnkey asset automating the tasks that you should not be spending management platforms and wirehouses have the most your valuable time on.   assets and thus the most practice converting assets onto their systems. Some even have teams to guide you Transition: Painful or No?             through the process and perform all the work for you You can spend 90% of your time working with investors except for actually talking with clients.  rather than managing tasks. Assuming you understand this opportunity, the logical question would be, “How 28

July 2010

Transitions Magazine

Business Development

Scott Winters is National Sales Director of Eqis Institutional, and Dr. William R. Nelson is the Chief Financial Strategist of Eqis Capital. Dr. Nelson’s acclaimed original research has been published in the American Economic Review, The International Conference on Information Scott Winters Transitioning your business to a more efficient Technology ITCC 2004 Proceedings, the Journal of Economic Behavior and platform to improve operational efficiency does not Organization, Latin American Finance have to be painful. Some TAMPs will happily handle and Capital Markets, among many oththe heavy lifting and logistics, allowing you more ers. Eqis Capital provides a turnkey time to concentrate on consulting with clients about asset management platform that delivthe reasons for change-better investment alternatives. ers enhanced power, flexibility and effiAfter the transition, your life will be liberated from the ciency. Based in San Rafael, California, travails of inefficient operations, allowing you to focus the company enables Registered Independent Advisors (RIAs) and Registered Dr. William R. Nelson on your talents and passions.   Representatives (RRs) to engineer portfolios that combine uuu diversification, sophistication and world-class insight. Eqis provides pioneering technology with a global reach. For more information, visit them at

Converting to a more efficient platform can jumpstart your marketing with an influx of cash through taking advantage of an initial consulting fee.

July 2010


Membership has its Privileges You are cordially invited to become a member of a vibrant, actively growing, collaborative network of like-minded professionals. Gregg Financial Network, LLC is one of the nation’s fastest growing financial services companies comprised of independent and objective member firms throughout the U.S. We leverage the collective strength, experience, skills, knowledge and collaboration to best serve our clients.

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Transitions Magazine

Why Do Business Owners Fear Exit Planning? By Bob O’Hara

Editor’s Note: This is a very helpful article to share with your small business owner clients. It will also be meaningful to your own practice because the concept of fear and other psychological aspects of exit planning is infrequently discussed.


With a comprehensive action plan, backed by the support of a team of advisors, even the most apprehensive business owner can see beyond the fear and build a successful future for all involved — self, family and the business. But first, you must define and overcome the obstacle(s) that have held your exit plan hostage.

Transition of Authority—Fear of Conflict For some, the fear of conflict can hold up the works – particularly if the business is family owned and operated or if key employees are not members of the family. An exit plan establishes a hierarchy of authority and some business owners see this as pitting one child against another … or a child against a highly valued yet unrelated employee. The long-term good of the company is the ultimate goal; the transition of authority must be based on the ability to perform. An honest assessment must be made of who can best helm the business upon your departure; while you want to believe your children are chips off the old block, they may not have – or want to have – the same skill set that helped you grow your business successfully.

Succession Planning s

ital not only to their future, but to that of their company, an exit plan is a business owner’s best defense against the unexpected. Yet, some otherwise savvy entrepreneurs will delay the process due to fear of conflict, of losing control or of not having enough financial reserve to support their lifestyle post sale or transfer.

Now is the time to determine if your successor currently exists within the company. Perhaps that individual is not ready for the position today but might have the ability to take over in the future; if that’s the case, some additional training may be in order. Recognize that sometimes, in the name of “keeping the peace” business owners will relegate top level

July 2010


Transitions Magazine

Succession Planning

lated staff member who has been with the company through the good and the bad. Or even worse, some avoid the situation completely, duping themselves into believing that the issue will one day resolve itself naturally. In reality, that rarely happens; instead chaos occurs in the absence of a clear line of authority or succession plan in place and the exact conflict the owner has avoided happens anyway.

Loosening the Reigns — Fear of Losing Control Fear of losing control is also high on the panic button list. While most owners are realistic enough to recognize they must vacate the helm at some point, fear that the company will fail to succeed in the absence of their leadership can be a driving force to no action. And herein lies the irony — this concern will undoubtedly become reality since the owner failed to plan for his or her certain and eventual departure. But by identifying and mentoring the key employees that will someday operate the business, the owner allows his or her vision of the future to be embraced by the next generation of management … while at the same time guiding their direction through experienced counsel. What some business owners fail to grasp is that stepping down as head of a company does not necessarily translate into stepping away completely.

Achieving Financial Freedom — Financial Fear And then there is the financial fear, the worry that you may not reap enough monetary benefits to truly enjoy retirement. You should recognize that a sound exit plan is not unlike a crystal ball. If properly prepared with the assistance of key professionals, a plan can provide an insight today into your company’s future worth, and how that worth will translate into after tax dollars to fund your retirement. The comprehensive exit planning process should also calculate how much you need in non32

business assets to achieve financial comfort independent of your business. Knowing the answers to these questions can mitigate this fear and put the owner on a course to achieving financial freedom.

Beyond the Fear Factor Once fears are identified, conquered or at least set aside, it’s important to realize that no matter how skilled or experienced a business person you are, executing an exit plan is not something that should be done solo. A successful exit plan involves a number of elements — legal, financial, tax, to name a few. It is in your best interest to hire an experienced team of professionals, including an attorney, CPA and financial advisor/planner to assist you through the exit plan process. Ultimately, your succession plan must integrate your exit desires — when you want to leave, how much money you need after business ownership and who you want to own the business. Exit planning is indeed a long and often emotional process. However, the benefits of a well-thought-out and documented succession plan can be invaluable. By overcoming the fears associated with the eventual “good-bye” everyone involved — you, your family and your key employees — will benefit when it comes time to hand over the company keys at some future tomorrow. uuu

Bob O’Hara, CPA/PFS, MST, CExP is President/CEO of O’Hara & Company, PC founded in 1995 to address the growing need for entrepreneurs to create a comprehensive exit strategy from their businesses. O’Hara & Company hosts an educational website for business owners at The company is located at One Olde North Road, Ste. 101 in Chelmsford MA. For more information please visit or call 978-244-9860.

July 2010

Transitions Magazine



By Stuart Zimmerman and Carista Luminare, Ph.D

et’s face it, as an independent financial advisor or RIA, your clients could easily replace you without changing their lifestyle one iota. From an asset allocation and portfolio management standpoint, they believe they may be able to come pretty close to your investment rates of return completely on their own. Here’s the question: “So what makes you valuable, unique and … irreplaceable to your clients?” Yes, you need to bring your skill set and wisdom about financial planning tools and risk/reward assessment. Yet, it’s your dedication to excellence of service, your ability to actively listen to your clients’ dreams and fears and your insight in determining your clients’ unspoken needs that sets you apart from the competition. As you know, this 3-D economic reality of Debt, Deficits and Derivatives is deeply disturbing to advisors and their clients. Maybe you’ve been unnerved by the volatility yourself with some sleepless nights or worry about the future. What you need and what your clients truly want is Inner Security – a foundation of self-confidence and peace of mind, especially in the face of turbulence in the markets. Without Inner Security, you feel anxious and have a sense of scarcity, often believing you don’t have enough time, energy or money. Clients and prospects pick up on this unsettled energy intuitively, if not consciously. As you could surmise, how they feel about you determines the extent of their trust and relationship with you. If you think the notion of Inner Security is too soft for you because your bottom line is a number, go read another article. Conversely, if you know that your business is all about relationships and you are open to learning new tools to distinguish yourself and be invaluable to your clients, it all starts with you.

Call To Action! 1. Identify three people who have been instrumental in your career success. It could be a mentor, a professor, a client, a friend or even a parent.

Personal Development s

Answer: “Who you are as a human being.”

2. Write each person’s name down on a piece of paper and what each has done to help you put food on your table. 3. Just sit with the feelings that arise as you remember the specific things they have said or done to have made such a positive impact on you. Notice your genuine love, care and/or appreciation for this person.

July 2010


Transitions Magazine

Personal Development

4. Experience how good it feels to have received their benefit. Soak in the good and warm feelings. 5. Then, give them a call and let them know how profoundly grateful you are to have them in your life and be specific in referring to a particular act or conveyance of wisdom. You my even want to ask them if there is anything you can do now to serve them. Notice how you feel in your body as you express your appreciation. This feeling of warmth, gratitude and connection is one dimension of Inner Security. Our upcoming articles will feature the additional dimensions of Inner Security. Look for them! uuu

Stuart Zimmerman and Carista Luminare, Ph.D., are principals of Inner Securities, Inc., a coaching and consulting company dedicated to meet the profound, evolving needs of today’s financial advisors and their clients. They know

what advisors are going through; they have been in the trenches. Stuart and Carista have several decades of experience in working directly with the investment and high net worth community. Stuart is a high net-worth life coach, former RIA, hedge fund manager, broker-dealer and stock broker; he has been on the front-line in the industry, and he knows the business, the high net-worth community and your pressures firsthand. Carista is a holistic therapist and business consultant, having guided high-achievers, people with inherited wealth and families of high net worth to deeper levels of inner peace and personal/professional fulfillment. For more information on their coaching and consulting, please visit or call 707425-2360. To view their YouTube video link, please visit

Get the Most from your Web Site Get a FREE 6-Point Analysis on your web effectiveness Includes: 1)Are you search engine friendly? Can you be found? 2)Correct use of meta tags and key words 3)Readability quotient 4)Google search ranking factor 5)Compelling offers made by site to get prospects 6)Comments on looks and design. Is it client friendly?

Get Your FREE Analysis at 435-753-8848 (mountain)


July 2010

Transitions Magazine

A Conversation with .., Nick Stuller President and CEO


Craig Katz SVP, Institutional Sales

Meridian-IQ™ By Sydney LeBlanc

Editor’s note: Meridian IQ is a relatively new firm, founded and run by industry veterans Nick Stuller and Craig Katz. Nick is a 25-year veteran and was the founding employee, CEO and President of the Discovery Databases. Craig is a 15-year veteran and was the National Sales Director. Meridian benefits various constituencies of financial advisors and firms, offering solutions through their online searchable industry database and workflow tools.Their database includes RIAs, Registered Reps and, soon, insurance professionals and trust officers. Meridian IQ takes on the challenges, and helps solve the problems, that broker-dealer execs, product manufacturers and advisors face on a daily basis. Following is our conversation: Stuller: Earlier this year, we decided to take a fresh look at the deliverable data to the various constituencies on Wall Street. Our new approach was not only to develop a new system for acquiring and interpreting data, but to create a series of workflow tools to make it easier to use the data. One of the problems is that people have too much data and are unable to quickly and efficiently use the data, both from a practical perspective as well as from an industry perspective. LeBlanc: Please tell us more about the workflow tools, which sound intriguing. Stuller: Well, we’ve created an entire series of them so, basically, whatever your job is in terms of working with—or communicating with— financial advisors, our workflow tools makes it easier to do your job, whether you’re recruiting someone to join your practice or your firm, or whether you want to acquire a practice or merge your practice. The workflow tools allow a firm to communicate about a new product or service to a financial advisor with less effort and training than it typically takes to reach those advisors.

In the Spotlight

LeBlanc: Nick, what led to the formation of Meridian IQ?

LeBlanc: Tell us more about your target markets, Nick. Stuller: There are different constituencies of practitioners and firms that will find our data and tools helpful — and it breaks down as follows:

July 2010


Transitions Magazine

In the Spotlight

• Those who are looking to acquire a practice—either an RIA practice or just a book of business from a wirehouse or regional IBD rep, called a breakaway. • Advisors who are looking to take their book and join an established practice. • Aggregators who are in the business of rolling up these different firms for the future. LeBlanc: So, for these practitioners and firms the challenge must be — how do they uncover their own target markets? Stuller: It’s a challenge.They can run ads, use social media, but most times it becomes a “shotgun approach” and it’s too passive. Let me use an example of an advisor’s need and the solution: Let’s say an advisor or a firm in San Diego is looking to bring on board a $20 million dollar practice, and is only looking in San Diego County. There is a very limited need here. This advisor/ firm can search the entire Meridian IQ database and in a few minutes find every advisor with a book of business or AUM of $20 million. Plus, a demographic search will return names of those with the background, the experience, a certain product mix and other information the advisors needs. LeBlanc: What do you offer the larger firm or larger practice — those who are trying to grow through acquisition or partnerships? Stuller: In each particular vertical, whether it is an RIA or in a broker dealer rep space, or a larger firm, they really want to know what is possible. They can find out to an exact count exactly how many fee-only or feeand-commission organizations are in their town so they know for sure. They know that at complete capacity, this is how many firms they can acquire. This gives them the information they need to get to the next level. A lot of firms don’t know how big their market really is—it might be huge or it might be very small, and by researching the demographics they can find firms they may never 36

even heard of. Then, of course, they can reach that contact. It saves an enormous amount of time and takes the guesswork out of the actual numbers, because various numbers of RIAs and advisors are often quoted, but are inaccurate. We are proud to have an extremely accurate account of exactly how many RIAs are out there. LeBlanc: And how many are there? Stuller: There are 26,089 RIAs currently and, and as I mentioned, you’ll hear a lot of other numbers out there and many of them are not correct because some folks who specialize in this data do it as an adjunct to some other business or they don’t have much experience in this space. Some say there are 30,000 RIAs but it’s just not the case. There are exactly 26,089. This has been my business base for 20+ years and there’s an art to understanding the marketplace and to analyzing all the data that’s out there. LeBlanc: Can your data help advisors research another firm if they are looking to make a move? Stuller: Yes. If you are an advisor, say you work within a wirehouse, a bank platform or an independent brokerdealer, and you want to make a move. If you don’t have access to the important information on the entire universe of firms that are applicable for you, you’re really not doing yourself justice. Some advisory firms are relatively unknown, and one of these unknowns might be just the firm you are looking for. There are the smaller practices or firms that manage $200/$300 million that are really below the radar screen in terms of the public marketplace — no advertising, no Yellow Pages— so it’s difficult to find them and even then, their websites may say a lot about their purpose and what offer, how they differentiate themselves — but sometimes they don’t. With the information and demographics we offer, this way you know exactly how many potential partners/employers are available. You know exactly who the owners and officers are. You know exactly how they are paid and what kind of relationships they have, you know their

July 2010

In the Spotlight

Transitions Magazine

In the Spotlight product mix. This makes your firm research incredibly easier. But, perhaps more important, for those looking to move their book, they might discover that many firms won’t acquire a practice outside of a certain geographical region (unless they are very large), so if there are only 30 firms in the sphere this is important for you to know because it sets your reality and your perception, and saves you a ton of time. We know from first-hand experience, when you’re working with bad data, you’re wasting a lot of time so it’s better to work with really good data and moreover, we feel that our team here at Meridian understands that space very, very well. LeBlanc: Can you tell us a little more about the benefits for B/Ds who are recruiting and product manufacturers who want to communicate with advisors and RIAs? Katz: In terms of the product manufacturers and broker dealers we work with— our combination of the best-ofbreed information, the cutting edge database functionality, and the workflow tools that Nick described—this all translates into high value in terms of both streamlining and helping to maximize the firms’ day-to-day distribution, recruiting, marketing tactics and strategy as well as an overall better understanding of the marketplace. We’re really excited to bring this tool to the market because we think it meets a growing desire and demand. As you know, we’ve been through a tough time in the marketplace and these firms have had to make a lot of adjustments and change their businesses in a way to allow them to operate more efficiently and effectively. Our tools fit beautifully into that mix, again, given the information and tools that we have available. To be more specific, firms are looking to be more strategic and thoughtful about their plans because they have fewer resources and even smaller teams covering more ground in a fast-changing, fast-evolving marketplace. So, with our data and tools, it helps them to understand and view the marketplace and build a strategic plan that

best fits their business and then to implement efficiently and effectively. They can really streamline their ability to identify, target and connect with their ideal markets and the advisors who fit that mold. They are either interested in either recruiting, marketing or distributing to these advisors, plus it eliminates wasted time and effort focused on those who aren’t good prospects. LeBlanc: And how does this benefit the advisor? Katz: Well, it ensures that the advisors are only receiving calls from vendors that are truly a good fit for their business and they are not spending lots of time and effort dealing with calls from firms that just aren’t a good fit. The efficiency is for both the product manufacturers and broker dealers — as well as for the advisors. LeBlanc: Craig, please tell us more about your new workflow tools. Katz: Our workflow tools are specifically designed to save time and to help our clients do their job much more efficiently. Our Trip Planner functionality tool is a great example of that. A distribution client or a firm who is recruiting advisors, for instance, might say to us, “Not only do we need to target all the advisors, but we also want to schedule meetings in our territory within a local area.” And, as most of your readers know, there is a lot of manual work involved in coordinating those trips once the initial arrangement have been made. Some of our clients spend half a day or more on Friday every week just preparing for upcoming travel . Our Trip Planning tool cuts down on the time it takes to coordinate that trip and will get the preparations done in a matter of seconds, literally. It’s tremendously efficient. So, in essence, our tools allow clients to not only target all of the top prospects that fit their exact mold, obviously eliminating wasted time and effort on those who don’t fit what they’re looking for, but it also goes further by helping to plan out their trips and coordinate them very efficiently right within the tool. LeBlanc: Why do you suppose this service and these

July 2010


Transitions Magazine

In the Spotlight

tools have not been offered by anyone else? Katz: I believe, in part, it’s certainly because of the expertise and background of the team here at Meridian IQ. Also, it is our mission to take a close look at the industry in order to be creative and practical about delivering a solution that the client and the market really need. Plus, the combination of those ingredients with the technology we have—which is extremely flexible, cutting edge and very powerful—allows us to integrate these workflow tools. This is what differentiates us and will continue to over time because our system will constantly evolve. Meridian’s integrated tools, in combination with the best of breed data, is just the starting point! As important as that information is, and how critical it is for us to successfully deliver for clients, we also want to ensure that the information is presented in a very streamlined and actionable way that enables a client to utilize the system so they can focus on doing their jobs and not worry about managing data and how to use a database. We also are constantly adding in new functionality and new tools, and we already have a long list of things in motion that we’ll be adding to the system that our clients will get high value from over time. LeBlanc: Your services really seem to give your clients a big advantage in many ways. Katz: No one has a crystal ball, but because of all the different market factors that are constantly changing, to at least to have the ability to build a plan, and not only base the plan on the actual up-to-date information, but also to be able to have the foundation for the plan itself “living on top of that data” as it’s changing, it’s much more powerful. You don’t have to redo the work in three or six months and make huge adjustments. You’ll be able to see it happening and refine it as you go. So, there’s really a double benefit,


if you will, where not only can we create the perfect plan and get this valuable insight on the market and create their plans based on the great data, but as the market changes, their plans will automatically be in sync with that. LeBlanc: Who do you believe is the best candidate for your services? Katz: In reality, we really are high value for firms of all shapes and sizes, whether it’s an established firm that’s been in this space for decades and just looking to refine their strategic initiatives, or a firm looking to distribute or recruit more effectively. They will have a view of the entire market as they target their subset efficiently. For smaller firms that are not in the advisor channel, are not fully committed, or are thinking about stepping into the advisor world, we provide a great deal of value with the data, the tools and also the combined experience and expertise of our team. LeBlanc: In terms of your offerings, how do you make your services available? By subscription? One-time use? Flat rates? Katz: We have our standard subscription package which is an annual service that offers unlimited access, use and ownership of all data, tools and support that we provide and we’re priced very reasonably, especially in terms of the value we offer. That said, we have a menu ranging from standard to custom engagements that run the gamut in terms of the smaller/ standard deal to the larger custom Meridian-DHS (Data Hygiene Services) engagements that are tied to helping firms clean their information and keep their contact management systems up-to-date. This helps them ensure they are driving their sales and marketing efforts as efficiently as possible. There’s a huge demand for that, as I mentioned a few moments ago — what with the firm’s fewer resources and time available to deal with a market that’s changing so quickly that information is also becoming outdated

July 2010

Transitions Magazine

In the Spotlight faster and faster. So, we have some standard options and the database workflow tools and even some outsourced marketing as well. A prospect or client can take a look at a menu of services we provide and different price points. Our packages are driven by what each client wants and needs. LeBlanc: Who is your ideal client or prospect? Katz: Our ideal relationship allows us to get involved and to truly be partners — a word that gets thrown around a lot — and in the end what we’re striving for, and that is working closely with our clients. We want to be there as more than just a provider of information, we’re really consultants to help them use the information, take action with the information and meet their strategic and tactical initiatives. We are really proud of our team and continue to grow it movMagazine ing forward. We are bringing people on board who understand the marketplace and the industry and can provide an exceptional level of service and experience to benefit all of our clients. LeBlanc: Any closing thoughts, gentlemen? Stuller: Our teams have been “in the shoes of our clients” both on the advisor side and the product manufacturer and recruiting side, so from our past work experience, we’ve done exactly what they’ve done and that also sets us apart and makes us unique from any other provider—we’ve done the work that they’re doing now. We can speak to that experience and help them succeed with the unique combination of our own experience and having the best data and workflow tools. We’ve walked a mile in their shoes. LeBlanc: Thank you Nick and Craig for telling us about your exciting services and tools. We appreciate your skills and insights which are meaningful to our ever-changing industry.

Nick Stuller is a 24 year Wall Street veteran, having spent 20 of those years supporting advisors and institutions. He is considered one of the foremost authorities on financial advisor databases. His most recent seven years were spent as Founding Employee and CEO of Discovery Databases, where he built and managed an industry dominant advisor directory. Prior to Discovery, Nick held senior business development roles at National Regulatory Services (a division of Thomson Financial), as well as TD Ameritrade. He started his career as a registered representative with Smith Barney. Craig Katz has been working in the financial industry for 12 years, with the majority of his career focused on helping firms serving the financial intermediary channels utilize information to maximize their distribution, marketing and recruiting efforts. Prior to joining Meridian-IQ as SVP, Institutional Sales, Craig spent over 7 years with Discovery Databases. As their second employee Craig was instrumental in growing the firm into the industry leading database provider. Before Discovery, Craig spent 4 years as Sales Director for Farley Business Magazine Specialists where he covered national advertising sales for the Journal of Financial Planning — the flagship publication of the Financial Planning Association (FPA). We invite you to visit Nick and Craig at Meridian IQ . Nick can be reached at 646.867.6455, and Craig can be reached at 646.867.6460 and


July 2010


Transitions Magazine

Advisor "High Five"


Plan Your Legacy "Breadcrumbs" Program Life After Death? Yes, If You Plan For It Help Your Clients Create an Enlightening Experience For Their Loved Ones

Advisor "High Five!" s

Certain things are just facts. No matter how hard we try, no matter how well we take care of ourselves and those around us, we simply will not always be here. But fortunately it’s also a fact that the positive impact we have on those around us does not have to stop when we’re physically gone. There are wills and traditional estate plans to prepare and provide for the financial needs of those we leave behind, and just as importantly, there is legacy planning to ensure that our values, memories and wishes are clearly communicated to all we care about after we’re gone. Without planning and simple organization of vital information, millions of dollars are lost every year. But much worse, more than money is lost. We hear it every day. Someone we know unexpectedly experiences an emergency, illness, incapacitation or death. And because Mark Colgan it was “unexpected” they were unprepared. We know what happens next, too. In almost every instance the lack of organization and preparedness results in individuals themselves and their loved one’s experiencing added, unnecessary stress and hardship — everything from family disputes and lack of clarity about final wishes to costly mistakes about the individuals’ personal matters. Let’s face it. Emergencies, illness and even death are not pleasant things to think about but they are to be “expected.” In fact, there is tremendous value in not only expecting to face challenges, but also making sure we are ready for them in every way. In most cases, the negative consequences listed above are easily preventable. By simply articulating and documenting personal and practical details, loved ones can focus on necessary grieving and rebuilding their lives with the meaningful guidance provided in a legacy plan. It is tragic that such a simple task with profoundly positive impact is often neglected. Yet the reasons are certainly understandable. First of all, people don’t like to face mortality. Secondly, even if we learn to embrace it, we rarely presume it’s imminent and fail to make all the necessary planning a priority. And, as if these two facts weren’t enough, the last is significant. Even if we accept our mortality, acknowledge the importance of being prepared and the value of legacy planning, until recently there has not been an easy and affordable solution. 40

July 2010

Transitions Magazine

Advisor "High Five" Today, there are services like Mark Colgan’s Plan Your Legacy “Breadcrumbs” program ( Colgan said he founded PlanYourLecacy. com when he realized first hand that too little is done to ensure that our personal beliefs and values will be clearly left to those we care about. His flagship service, Breadcrumbs, is a subscription service that allows financial planning and legal professionals to offer their clients the peace of mind of a comprehensive legacy plan as a stand-alone product or part of a larger estate plan. By helping your clients articulate and preserve important information about their values, life lessons and final wishes they can be confident and assured they will leave behind a meaningful legacy rather than a mess of unanswered questions. Designed with input from leading experts in the fields of financial planning, law, insurance, funeral planning, Magazine and disaster recovery, Breadcrumbs uses a simple online survey format to capture the essential information most valued by survivors, estate attorneys, financial professionals, insurance specialists and more. In keeping with “expecting the unexpected” the Breadcrumbs legacy planning software is available from any internetconnected computer, anywhere in the world—protecting critical user data from hard drive crashes, computer theft, or other computer problems stemming from fire, flood, earthquake or other natural disaster.

Mark Colgan CFP® is Founder and CEO of Plan Your Legacy and President of Colgan Capital. The combination of his personal and professional background gives him a unique perspective on financial and legacy planning. In 2001, he was a successful CFP who was been married to his wife, Joanne, for seven years. When she died unexpectedly at the age of 28, Mark’s wonderful life was dramatically changed forever. Inspired by the challenges he faced as a young widower, Mark authored The Survivor Assistance Handbook: A Guide for Financial Transition. Mark also founded Plan Your Legacy, a company dedicated to helping individuals live and leave meaningful legacies by building legacy plans that reflect and preserve their values, life lessons, memories and final wishes. Today, Mark is a national speaker and an often-cited expert on legacy planning. His articles have appeared in such national publications as U.S. News and World Report, The Journal of Financial Planning, American Association of Individual Investors, and Money Adviser, a Consumer Reports publication. He has also been cited by Fox News, CBS MarketWatch, Oprah and Friends, and other national media. For more information please visit www.


July 2010


Transitions Magazine

Resource Directory Click on ads for more information and to visit websites.


Independent Broker Dealers


Resource Directory s

Money Management

PR/Marketing Services


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July 2010

Transitions Magazine

The Body Story This is a story about four people named everybody, somebody, anybody and nobody. There was an important job to be done and everybody was asked to do it. Anybody could have done it, but nobody did it. Somebody got angry about that, because it was everybody's job. Everybody thought anybody could do it but nobody realized that everybody wouldn't do it. It ended up that everybody blamed somebody when nobody did what anybody could have done.

A Touch of Humor s


Grin and Bear It!

Something got your funny bone? Submit your jokes and cartoons to Entries selected for "Grin & Bear It!" will receive a $10 gift card.

July 2010



Remember how it used to be? Capital Investment Companies is one of the premier independent broker-dealers in the Southeast. We offer all of the resources of a large, corporate-backed firm to support our independent reps. But it’s our personalized support that gives us that “family feel”. This commitment to personal care has earned our company a loyal team of brokers and a following of investors that’s growing every day. If you’re looking for a place you can soar past corporate red tape to individual success -- as an independent rep or an investor -- then you should....

Come Home to Capital Integrity • Independence • Innovation Visit us at: w w w . c i c o . u s Or call Richard K. Bryant 800-849-5522

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Transitions Magazine - July 2010  

Business Management for Independent Financial Advisors

Transitions Magazine - July 2010  

Business Management for Independent Financial Advisors