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Friday, February 26th, 2010

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Become a Celebrity in Your Target Market

Wednesday, February 24th, 2010

This is a guest post by Bill Bachrach, Bachrach & Asso­ciates.

You may never see your name in lights or daz­zle the crowd at Carnegie Hall. Yet there’s no doubt that a trusted advi­sor can achieve celebrity sta­tus among the peo­ple who mat­ter most—your tar­get market.

This kind of “star­dom” means prospects rec­og­nize your name as soon as they hear or read it, you are looked upon as an expert, and your busi­ness is 100% referral-based. The ben­e­fits of this kind of usi­ness are obvi­ous: extra­or­di­nary cred­i­bil­ity that leads to count­less intro­duc­tions and nat­ural, easy prospect­ing conversations—plus the bonus of know­ing you are truly out­stand­ing in your field.

Eight Roads to Star­dom

1. Write a Book on Mak­ing Smart Finan­cial Choices, Specif­i­cally for Your Tar­get Mar­ket.
This is not as dif­fi­cult as you may think. You don’t have to rein­vent the prin­ci­ples of finan­cial suc­cess. Your book should sim­ply com­bine the fun­da­men­tals and your philosophy—all in your own words. The research must be fac­tual, but your opin­ions are what will make the book unique.

Write about an area in which you have exper­tise, and address the issues that are cur­rently rel­e­vant to your mar­ket. Then tar­get the book nar­rowly and specif­i­cally so that the peo­ple you want to reach will imme­di­ately see that it is of inter­est to them.

Pub­lish­ing a book gets your clients’ egos cook­ing: “My finan­cial advi­sor wrote a book!” Its a great way to get referrals—sending an auto­graphed book to poten­tial clients is much bet­ter than send­ing pro­mo­tional lit­er­a­ture, and it’s a great enhance­ment to your value-added mail cam­paign for referrals.

2. Sub­scribe to the Pub­li­ca­tions Your Tar­get Mar­ket Reads.
The pro­fes­sional asso­ci­a­tion for your tar­get mar­ket prob­a­bly has at least one pub­li­ca­tion and pos­si­bly more, rang­ing from sophis­ti­cated mag­a­zines to desktop-published newslet­ters. Build a rela­tion­ship
with the edi­tors of these pub­li­ca­tions so they will invite you to par­tic­i­pate as an author or as a mem­ber of the edi­to­r­ial board.

By read­ing these pub­li­ca­tions, you will become famil­iar with the lead­ing fig­ures and cur­rent issues in your tar­get mar­ket. You send an arti­cle of inter­est to a client, or even write an arti­cle in response. This demon­strates your value to clients: you not only know your busi­ness, you also know their business.

3. Write Arti­cles for Pub­li­ca­tions That Give Spe­cific Finan­cial Advice for Your Tar­get Mar­ket.
To find out which pub­li­ca­tions are best for your arti­cles, read each journal’s mis­sion state­ment and author’s guide­lines. Often the edi­tors are happy to receive arti­cles giv­ing finan­cial advice writ­ten specif­i­cally for their read­ers. (They might even pay for them.) Check the mast­head in the front of the pub­li­ca­tion to see if it lists a finance edi­tor. If it doesn’t, vol­un­teer to be one!

4. Get Involved. If you become involved in pro­fes­sional asso­ci­a­tions rel­e­vant to your tar­get mar­ket, you may be asked to speak at meet­ings or con­tribute arti­cles. All these activ­i­ties give you the name recog­ni­tion that is the begin­ning of celebrity.

By all means, get involved in the asso­ci­a­tion, but don’t try to sell any­thing to other mem­bers right away. First get to know the deci­sion mak­ers. Prove that you are a con­tribut­ing mem­ber with a gen­uine inter­est in the orga­ni­za­tion. By resist­ing the temp­ta­tion to sell any­thing, you are show­ing the mem­bers you are dif­fer­ent. You are a con­trib­u­tor. Then you’re on the way to mak­ing great con­tacts who will help you under­stand the market.

5. Cap­i­tal­ize on the Infor­ma­tion You Get From Pro­fes­sional Meet­ings and Soci­ety Pub­li­ca­tions.
Infor­ma­tion about your tar­get mar­ket is out there if you pay atten­tion. Some­times you can get asso­ci­a­tion pub­li­ca­tions, a great source of infor­ma­tion, with­out being qual­i­fied for mem­ber­ship in the orga­ni­za­tion. For exam­ple, I sub­scribe to the Mil­lion Dol­lar Round Table’s pub­li­ca­tion, Round the Table, which I had ini­tially assumed was for mem­bers only. Don’t assume! Check it out. There are many pub­li­ca­tions non-members can sub­scribe to.

6. Become a Good Pub­lic Speaker. If you enjoy speak­ing and have worked on devel­op­ing this skill, you can give sem­i­nars for pro­fes­sional orga­ni­za­tions that rep­re­sent your tar­get mar­kets. Vol­un­teer for the plan­ning com­mit­tee and sug­gest a sem­i­nar such as “Man­ag­ing Your Money” or “Cre­at­ing an Effec­tive Busi­ness Plan.” If they like the idea (and they usu­ally will), vol­un­teer to present the program.

How can you become an impres­sive speaker? Give a lot of speeches and get com­fort­able in front of an audi­ence. This may include join­ing your local chap­ter of Toast­mas­ters Inter­na­tional. Get feed­back so that you can con­stantly hone your skills. Hire a coach. Make a com­mit­ment to becom­ing a good speaker by estab­lish­ing goals and mile­stones, and fol­low through on your commitment.

7. Research and Inter­view the Most Respected Peo­ple in Your Tar­get Mar­ket. Don’t you hate it when some­one approaches you and tries to sell you some­thing with­out know­ing any­thing about you? Under­stand­ing your mar­ket and the peo­ple in it is cru­cial in build­ing high-trust, long-term rela­tion­ships. Mak­ing the extra effort to be informed about the hot issues and unique per­spec­tives of those in your tar­get mar­ket will not only help you build bet­ter rela­tion­ships, but it will also help you to meet other poten­tial clients.

Get to know those peo­ple who will pro­vide you with intro­duc­tions to other key peo­ple. The smaller and tighter your mar­ket, the eas­ier it is to become well known. And once your cred­i­bil­ity is estab­lished, your con­tacts will con­tinue to pro­vide you with refer­rals. Soon you will have a referral-based busi­ness with Great Clients.

8. Get Tes­ti­mo­ni­als From Peo­ple Who Think You’re Won­der­ful. Believe it or not, the first step in get­ting tes­ti­mo­ni­als is to ask for them. Next, you can ask three spe­cific ques­tions, the answers to which become the basis for the tes­ti­mo­nial letter:

• What did you expect to get when you first met with me?
• What did you actu­ally get?
• What have been the results of our relationship?

The out­come of these pointed ques­tions is often a glow­ing tes­ti­mo­nial let­ter that you can use in your brochures or the fore­word of your book.

Start on the road to celebrity by choos­ing the path on which you feel the most com­fort­able. As you prob­a­bly noticed, some of the routes lead nat­u­rally to oth­ers in my list of sug­ges­tions. If you com­mit your­self, tar­get your mar­ket, and stay focused you will attain stardom.

Don’t just be a sales­per­son; be a trusted advisor!

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Tags: Bill Bachrach, Carnegie Hall, Celebrity Status, Conversations, Credibility, Egos, Enhancement, Financial Choices, Financial Success, Introductions, Mail Campaign, No Doubt, Professional Association, Prospects, Publishing A Book, Referrals, Sophisticated Magazines, Stardom, Target Market, Write A Book
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How a Small Change Made A Big Difference

Wednesday, February 24th, 2010

When advi­sors think about ways to drive their busi­ness for­ward, they often look for dra­matic ini­tia­tives that hit the ball out of the park.

Last week, I had a con­ver­sa­tion with a twenty year vet­eran who’s a peren­nial qual­i­fier for his firm’s Chairman’s Club. He described a change he made to his rou­tine ten years ago that’s had a big impact on his business.

Every morn­ing, his assis­tant prints out a “Con­ver­sa­tion Diary” which has four columns.

The left hand col­umn lists all the clients and prospects he’s meet­ing with or are on his sched­ule to call that day.

Under Client Goal, he writes down the one thing he wants to achieve in his meet­ing or phone con­ver­sa­tion that would serve the client’s inter­ests. It might relate to rebal­anc­ing their port­fo­lio, talk­ing about using appre­ci­ated secu­ri­ties for char­i­ta­ble giv­ing or dis­cussing strate­gies around min­i­miz­ing cap­i­tal gains on a cot­tage property.

Under My Goal, he writes down the one thing he wants to achieve in the con­ver­sa­tion that would advance his busi­ness ….  for exam­ple, Invit­ing the client out to an upcom­ing din­ner for key clients, get­ting to know their spouse or chil­dren or obtain­ing an intro­duc­tion to their accountant.

Finally, under Infor­ma­tion Gap, he writes down the one new piece of infor­ma­tion about the client he wants to take away from the meeting.

After the meet­ing or phone call, he goes back to the Con­ver­sa­tion Diary and writes down a score beside each of the three goals –  0 if he’s didn’t make any strides on this, 10 if he achieved it com­pletely and 5 if he was partly successful.

He then writes down a total score for that meet­ing or phone call, out of 30 – that score rep­re­sents the suc­cess of that conversation.

At the end of each day, his assis­tant takes the diary and cal­cu­lates a com­pos­ite aver­age for all of that day’s con­ver­sa­tions with clients and prospects.

The advi­sor tracks that score over time – each day, each week, each month and each quar­ter – and has all of the mem­bers of his team who make proac­tive calls to clients do the same.

This has become a cen­tral mea­sure of how this advi­sor tracks the effec­tive­ness of meet­ings and phone calls. At one level, this isn’t a big thing – many might say that this was in fact a triv­ial change in how he operates.

And yet as this advi­sor looks back, he attrib­utes a large part of his suc­cess to the dis­ci­pline that the Con­ver­sa­tion Diary brought to his client con­ver­sa­tions – and the greater pro­duc­tiv­ity and effec­tive­ness of these con­ver­sa­tions as a result.

So when you look at ways to advance your busi­ness, by all means con­sider the big break­throughs … but at the same time don’t ignore the small things that can have a dra­matic impact over time.

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Tags: Accountant, Capital Gains, Compendium, Diary, Gap, Information Gap, Initiatives, Left Hand Column, Phone Call, Phone Conversation, Prints, Prospects, Score, Strides, Target, Veteran
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Proof That Active Managers Can Outperform

Wednesday, February 24th, 2010

In the invest­ment indus­try, few debates are waged more intensely than that between “active” and  pas­sive” invest­ing. As investors read media cov­er­age about the futil­ity of try­ing to pick stocks and the advan­tages of invest­ing via ETFs instead, more and more are ques­tion­ing the fees they’re pay­ing for invest­ment advice.
That’s why an award win­ning research paper by two Yale aca­d­e­mics, look­ing at active man­agers in a dif­fer­ent light is so impor­tant. This research, which is the focus of my col­umn in today’s Globe and Mail, iden­ti­fies a new mea­sure called “active share” – and demon­strates that man­agers with high active share can in fact beat their index over time.

The roots of the active pas­sive debate
The pas­sive argu­ment really began with Prince­ton pro­fes­sor Bur­ton Malkiel’s clas­sic 1973 text “A ran­dom walk down Wall Street.”  The book argues that the stock mar­ket is fun­da­men­tally effi­cient, reflect­ing every­thing that is known at a given point in time. As a result, it is futile to try to out­per­form the stock mar­ket – and the best way to invest in stocks is through low-cost index funds that essen­tially match the market’s over­all per­for­mance.
In the United States, the growth of index invest­ing was spurred by Van­guard Funds and its founder and Chair­man, John Bogle – today Van­guard man­ages over $1 tril­lion dol­lars (almost twice the size of the entire Cana­dian fund indus­try) and is among the top three U.S. fund com­plexes.
Over the past decade, the launch of exchange traded funds has given pas­sive invest­ing a boost, as these offer investors the oppor­tu­nity to par­tic­i­pate in an ever more focused group of indexes.
The major­ity of aca­d­e­mics sub­scribe to the effi­cient mar­ket the­ory and sup­port pas­sive invest­ing – but the events of the past cou­ple of years have called into ques­tion just how effi­cient the stock mar­ket actu­ally is.

A dif­fer­ent def­i­n­i­tion of active man­age­ment
In 2006, Mar­tijn Cre­mers and Antti Peta­jisto of Yale Uni­ver­sity pub­lished a paper titled “How active is your fund man­ager? A new mea­sure that pre­dicts per­for­mance.”  Win­ner of best paper at the Finan­i­cal Research Asso­ci­a­tion 2006 annual meet­ing, the authors exam­ined over 2500 U.S. mutual funds from 1980 to 2003, look­ing in par­tic­u­lar at what the authors called their “active share”.
The active share of a fund is the extent to which its hold­ings don’t over­lap with the bench­mark index that the fund tracks – a fund with active share of 100% would have no over­lap with the index, while an active share of 0% would exactly track the index. You’d expect index funds to have a 0% active share, but what about so-called actively man­aged funds?
Some of the key con­clu­sions from the authors:

• In 2003, only half of self-described active funds were truly active, with an active share of 80% or higher. This com­pares to eight out of ten funds with a sim­i­lar active share in 1980, at the begin­ning of the study.
• And larger funds tended to have lower active share. When looked at by assets under man­age­ment, the per­cent­age of assets with active share under 60% grew from under 2% in 1980 to over 40% in 2003. By con­trast, the per­cent­age of assets with active share over 80% fell from 58% in 1980 to under 30% in 2003.
• Part of the decline in active share is due to the rise of index funds. Beyond this, how­ever, the authors iden­ti­fied sig­nif­i­cant growth in what the indus­try calls “closet index­ers” – funds that charge man­age­ment fees for active man­age­ment but that closely track their index.
• There is a direct cor­re­la­tion between true active man­age­ment and per­for­mance. Funds with the high­est active share out­per­formed their index after expenses by 1.5%; the least active funds under­per­formed by 1.5% — so there is a gap between high active and low active share funds of almost 3% annually.
• Size mat­ters – smaller actively man­aged funds out­per­formed large actively man­aged funds by about 2% per year.
• Fees were not an indi­ca­tion of active share – closet index­ers charged just as much as funds that were truly actively managed.
• High active share doesn’t mean greater volatil­ity – the study showed that funds run by strong stock pick­ers had sim­i­lar volatil­ity to their bench­marks, even though their port­fo­lios were quite dif­fer­ent and their returns tended to be higher.

Extrap­o­lat­ing per­for­mance
While attend­ing the annual meet­ing of the Amer­i­can Eco­nom­ics Asso­ci­a­tion in Atlanta at the begin­ning of Jan­u­ary, I had a chance to chat with Mar­tijn Cre­mers, one of the study’s co-authors.
Cre­mers dis­cussed a key find­ing on the per­sis­tence of above aver­age per­for­mance – as long as they have a high active share, man­agers who have done well in the past three years tend to do well in the next three.
He also talked about the dra­matic growth in closet index funds, sup­pos­edly active funds that didn’t appear to be active funds at all.
He attrib­uted this to three fac­tors: First, as funds became suc­cess­ful and grew in size, some man­agers became more risk averse and cau­tious about mak­ing big bets. Sec­ond, the greater dif­fi­culty of devi­at­ing from the index as a fund grows in size. And finally, he sug­gested that in the U.S. some man­agers with demon­strated skill had left the mutual fund indus­try for the greater finan­cial rewards in hedge funds.
Finally, he dif­fer­en­ti­ated between two types of funds with high active share.  The first were run by tra­di­tional stock pick­ers, whose focus was on tak­ing con­cen­trated posi­tions in a rel­a­tively small num­ber of stocks, mak­ing deci­sions on the mer­its of each indi­vid­ual stock.
The sec­ond cat­e­gory were run by fund man­agers who made what the indus­try calls “fac­tor bets” – essen­tially mak­ing macro judge­ments to rotate from one indus­try sec­tor to another or in some cases go to cash entirely.
Cre­mers said their research showed that as a gen­eral rule, funds focused on stock selec­tion had bet­ter returns than those that made mar­ket tim­ing calls, although as long as they were truly active, both tended to out­per­form their index after expenses.

Today, Cana­di­ans go to great lengths to ensure they get good value on major pur­chases. This research sug­gests that when it comes to rec­om­mend­ing actively man­aged mutual funds, advi­sors need to go beyond just per­for­mance num­bers to dig deeper into how a man­ager deliv­ered those num­bers – and in par­tic­u­lar the extent to which they devi­ated from their under­ly­ing index and had a high “active share” as a result.

To read today’s col­umn in the Globe and Mail on active share, click here: http://​www​.the​globe​and​mail​.com/​g​l​o​b​e​-​i​n​v​e​s​t​o​r​/​i​n​v​e​s​t​m​e​n​t​-​i​d​e​a​s​/​o​n​l​y​-​t​h​e​-​t​r​u​l​y​-​a​c​t​i​v​e​-​f​u​n​d​-​m​a​n​a​g​e​r​s​-​l​e​a​d​-​t​h​e​-​p​a​c​k​/​a​r​t​i​c​l​e​1​4​7​6​6​55/

To watch the inter­view with Yale University’s Mar­tijn Cre­mers, click here: http://​cli​entin​sights​.ca/​v​i​d​e​o​/​m​a​r​t​i​j​n​-​c​r​e​m​e​r​s​-​n​e​w​-​r​e​s​e​a​r​c​h​-​o​n​-​o​u​t​p​e​r​f​o​r​m​a​n​c​e​/​t​y​p​e​:​i​n​v​e​s​tor

And to read the award win­ning study by Cre­mers and Peta­jisto, click here: http://​rfs​.oxford​jour​nals​.org/​c​g​i​/​r​e​p​r​i​n​t​/​h​h​p​0​5​7​?​i​j​k​e​y​=​M​0​n​o​S​3​O​1​M​6​Q​v​z​d​G​&​a​m​p​;​k​e​y​t​y​p​e​=​ref

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Tags: Active Share, Award Winning Research, Book Argues That, Burton Malkiel, Chairman John, Cost Index, Different Light, Efficient Market Theory, Exchange Traded Funds, Globe And Mail, Investment Advice, Investment Industry, John Bogle, Launch, Low Cost Index Funds, Princeton Professor, Professor Burton, Random Walk Down Wall Street, Target, Vanguard Funds
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Final Words: Building community

Wednesday, February 24th, 2010

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Bulloch: The impact of retirement

Monday, February 22nd, 2010

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Holmes-Winton: Garth, you don’t impress me much

Monday, February 22nd, 2010

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Covering expatriate employees

Wednesday, February 17th, 2010

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Focusing on Big Problems

Wednesday, February 17th, 2010

A recent post con­tained a warn­ing from a top pro­ducer about the risks of being seen by clients as dis­mis­sive of their losses – I got lots of pos­i­tive com­ments on this article.

Last week, I talked to a thirty year vet­eran of the busi­ness who’s con­sis­tently ranked among his firm’s top ten producers.

I asked him about the sin­gle most impor­tant thing he’d learned over the course of his career – he answered with four words.

Those words: “ Focus on big problems.”

He went on to say:

“When I meet with prospects, I con­cen­trate all my time on under­stand­ing the biggest issues that they’re con­cerned about, the things that are really both­er­ing them. In my expe­ri­ence, there’s no bet­ter use a meet­ing with a prospect than dig­ging deep to under­stand their hot but­tons … the more you can get a prospect to talk about what’s really bug­ging them, the bet­ter the chances of a pos­i­tive outcome.

“And the same applies to clients.

“When I’m meet­ing with clients” he said, “I make it my num­ber one pri­or­ity to ask what’s caus­ing them the most con­cern, the thing that’s keep­ing them up at night.

“And you don’t always get the obvi­ous answers” he con­tin­ued on.

“These days you’d expect peo­ple to talk about los­ing money on invest­ments, mar­ket volatil­ity and out­liv­ing their, money …. and you cer­tainly do hear that.

“But ear­lier this year I met with my biggest client and asked that ques­tion. This is some­one with over $10 mil­lion dol­lars …. and they talked about how dis­ap­pointed they are about the lack of ambi­tion among their kids and con­cerned about whether this will be passed on to their grandkids.

“ My clients said they couldn’t do any­thing about their kids at this point … but still had hope for their grandchildren.

“We talked about what they could do about this … and ended up decid­ing to set aside some money to fund activ­i­ties for their grand­kids to open their eyes to more pos­si­bil­i­ties, things like tak­ing them to Europe or Asia on hol­i­days, maybe fund­ing sum­mer school at Har­vard or Oxford when they were in their teens, per­haps encour­ag­ing their par­ents to look at some­thing like Pear­son Col­lege on Van­cou­ver Island when the kids hit 15 and offer­ing to pay for this.

“We also talked about the clients set­ting up a trust fund for their grand­kids’ edu­ca­tion – so that they could go any­where in the world to study with­out wor­ry­ing about pay­ing for this …. but struc­tur­ing it in a way that that they couldn’t use it for any other pur­pose. While we were in the meet­ing, I actu­ally called a lawyer I work with and booked a meet­ing for them to meet with me and these clients to talk about this.”

The advi­sor fin­ished by say­ing: “Even though I’ve been work­ing with these clients for many years, this is the first time this came up in con­ver­sa­tion. And it wouldn’t have hap­pened if I hadn’t asked about what was caus­ing them the most con­cern these days.”

There are lots of things you can talk about in con­ver­sa­tions with exist­ing and prospec­tive clients. As you think about how you use the time dur­ing meet­ings, con­sider adding a focus on the really big prob­lems they’re grap­pling with to the list.

And to read the tip from the top pro­ducer a few weeks ago, dis­cussing the risk of hav­ing clients feel you are dis­miss­ing their losses, click here:

http://​www​.strate​gicim​per​a​tives​.ca/​b​l​o​g​/​?​p​=​201

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Tags: 10 Million, Ambition, Asia, Europe, Grandchildren, Grandkids, Hol, Hot Buttons, Losses, Market Volatility, Million Dollars, Money Investments, Money Market, Possibilities, Priority, Producers, Prospects, Single Most Important Thing, Top Producer, Veteran
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