We live in a world of alternatives and choices. Sometimes the alternatives we have are not the ones we would like, but we have to make choices anyway. Now, as we prepare to enter a new year, we must make choices about how to position portfolios for an uncertain future. No one has forgotten the pain of the recent market declines and many people question the strength of the recent recovery. So where do we go from here?No one knows where the market is headed. There are many opinions, but there is little agreement about the future. At times of great uncertainty, it can be tempting to try to time the market. Usually this involves taking money off the table and recommitting it once the direction of the market becomes “clearer.”Read More
Building Business Relationships That Last
Are you maximizing your relationship capital?You probably won’t be surprised to read that recent research has shown that over 85% of executives attribute their success to their business relationships. And even though this study wasn’t strictly focused on the wealth management space, the results would appear to fit our industry well. Unfortunately, it also demonstrated that 78% of business professionals also overestimate the quality and strength of their relationships!Now we all know relationships are the lifeblood of our business. Managed well, clients will stay with you through thick and thin. Great relationships result in solid business referrals. But even the deepest of relationships can be derailed through inattention or an insensitive comment – just try forgetting your Mother’s birthday!Read More
Four Rules to Drive Home Your Message
What distinguishes highly successful RIAs from less successful ones, regardless of their skills and industry knowledge? The answer is their ability to communicate the true value of their service offerings to their key constituencies. This is achieved by identifying key messages that clearly articulate your key differentiators and convey the significance of the role that you and your expertise play in the lives of your clients.These messages must resonate with your key audiences and demonstrate your unique skills and capabilities. In addition, you must ensure that they are consistently featured across any marketing piece you use, including your Web site, brochure, newsletter, etc.Read More
For Art’s Sake: Client Appreciation Nights with a Cultural Twist
Client appreciation nights are nothing new to wealth managers. But, many are scurrying these days to host events to thank their high-net-worth clients for the continued trust and confidence they have shown during trying and volatile times.Traditionally, these occasions are dinner gatherings or seminars with cocktail hours where current clients attend with a friend or business associate, most often resulting in quality referrals for the wealth manager. But, today, wealth managers must think creatively. How do the wealthy spend their time? What are their special cultural interests?Many say art is their number one passion.Read More
Billion-Dollar RIAs: What is Their Secret?
A billion dollars or more under management–for many RIAs and wealth managers, it’s the stuff of which dreams are made. But for a skilled few, it has become reality. Even with the higher asset levels being gathered by wealth managers today, it’s hard to imagine how even to approach the billion-dollar mark, much less break through it. According to industry studies, an estimated 400 – 450 advisory firms have achieved this lofty level and they seem to fall into four different categories:
- Wealth managers who work with multi-million dollar corporate executives
- The classic money manager aiming to outperform a chosen benchmark and usually focused on a single style
- Family offices, which provide a full slate of customized services including wealth management
- Institutional consultants who bring unique asset allocation skills into the high net worth businessRead More
Surzimiacin: A Simple Prescription for Treating Madoff-Stanford Disease
For months now the media have been trotting out experts — financial intermediaries, for the most part — to advise people on avoiding the likes of Bernard Madoff and Allen Stanford. That’s like asking gun manufacturers to weigh in on ways to lower homicide rates.Predictably, the real issue –lax due diligence — has been lost to such sterling insights as be suspicious of good performance and insist on financial audits.Beside the pointThese insights are bad placebo prescribed by those who spread the disease. Skepticism about performance is the province of financial intermediaries, not investors. Investors rely on their consultants and fund-of-fund managers to scrutinize performance for potential fraud. Similarly, financial audits are not designed to validate reported performance; audits verify procedures and pricing.The best defense against fraud is a strong offense in the form of real due diligence rather than the sham that has been played upon investors by their advisors. Hedge-fund due diligence has, by and large, been a big fat fakeout. The gun in Madoff-Stanford’s hands was advisor complacency; the fallout from Madoff-Stanford should be greater scrutiny of advisors by their clients.Read More
What’s in a Name? Professional Development for Wealth Managers
In an industry that is continually evolving, individual career paths are not always clearly marked. Wealth management specialists come from a variety of disciplines, professions and industries. Whether an adviser uses the moniker of wealth manager, wealth adviser, wealth planner, or wealth specialist is only a semantical distinction. The more appropriate question is, ‘Does this professional offer an integrated, coordinated and comprehensive approach that provides customized solutions, devoid of any conflict-of-interest, which employs a collaborative, multidisciplinary methodology and multigenerational strategy?While professional development, education, and designations may answer this question, they can also help differentiate a wealth practice. But it is necessary to first define the duties and role of a wealth manager. If a wealth manager is charged with selecting, coordinating and monitoring a select team of tax, legal, investment, risk management, philanthropic advisors, etc., he or she should be familiar with each discipline. That, of course, requires training, coaching and higher learning—and with this education comes specialized designations like Certified Investment Management Analyst (CIMA), for example.Read More
Defining Value and Growth Investment Styles in 2009
Investment styles go in and out of favor, so market observers are speculating on which style will lead us out of the current recession – value or growth? To answer this question, someone has to define those companies that are value and those that are growth. The brand indexes, namely S&P and Russell, use Price/Book (P/B) to make this determination. High P/B is growth and low P/B is value. But there are alternatives to P/B that result in materially different style classifications, especially when it comes to the financial sector in this economic environment.To appreciate the differences, we need to understand how these investment-world sausages are made. After all, the indexes we use affect our decisions every day. First and foremost, asset allocations are based on the style make-up of the market. For example, we might misallocate if some stocks are being called growth that could be better viewed as value. Moreover, performance evaluation relies heavily on comparisons to style indexes.Read More
Do You Really Want to be a Wealth Manager or an RIA?
The days of solitary financial advising may soon be a thing of the past. The abundance of complicated investment products coupled with the complex needs of high net worth investors require the skills of knowledgeable wealth managers and RIAs.The question is: are solitary advisors ready to become wealth managers or RIAs or, more importantly, are they willing to be members of a wealth management team? Is the title “wealth manager” and the ensuing responsibilities really clear in the minds of advisors? If so they need to get ready to shift their way of thinking and acting.Anthony Reguero, ChFC, CLU, and Investment Advisory Rep of First Allied Securities, Inc., had this to say, “The only financial advisors who will survive on their own are those who are capable of multitasking and understanding the multitude of products and the requirements of the affluent. And these advisors are few and far between.”Read More
Marketing with LinkedIn: Create Your Own Group
By now it is common knowledge that LinkedIn is an effective tool for connecting with existing contacts and facilitating introductions to new contacts. If you have read my other articles about LinkedIn, you know the site also offers opportunities for advisors to market to their target market and centers of influence through LinkedIn groups. Participating in various groups is one way you can utilize LinkedIn as a marketing tool, but for the more ambitious marketers out there, creating your own group can present even greater opportunities. Creating and administering your own group is a time consuming strategy but it increases your exposure to your target market and allows direct access to your group members via LinkedIn email.Before you start your own LinkedIn group, you will want to consider who your target market is. Is there a large enough pool of people in your niche on LinkedIn to warrant a specialized group? If not, don’t waste your time. This strategy is a numbers game, so if you don’t have a large enough pool to start with, it won’t work. But if you specialize in a large niche industry, this could be a very productive way to spend your time.Read More
