Posts Tagged ‘Brad Pitt’
Thursday, December 20th, 2012
by Dan Richards, ClientInsights.ca
In the Oscar winning film Moneyball, baseball General Manager Billy Beane (played by Brad Pitt) challenged conventional wisdom by taking a data driven approach to acquiring players for the Oakland As. Central to his success was employing statistical analysis to identify the factors that contribute to winning teams and the players whose value was underrated based on those factors, replacing intuition.
Recently, Toronto software firm PriceMetrix released a report Moneyball for Advisors. Using its detailed database of performance by 35,000 advisors at a cross section of Canadian and US firms, PriceMetrix first looked at production in 2006 for advisors who’d been in the business for between 5 and 20 years. It then looked at production in 2011 for these same advisors – with a view to identifying advisors’ behaviour in 2006 that predicted production five years later.
Designed as a resource for head offices when recruiting advisors at competing firms, the report is also useful for advisors looking to maximize their future production. PriceMetrix looked at dozens of variables, before homing in on three that correlated with future production:
1.The source of revenue
It’s no surprise that production in 2006 was strongly correlated with production five years later, but PriceMetrix found that when it came to predicting future production, all income was not equal. Of the three forms of income – transactional, trailer and fee-based – fee revenue was far and away the most predictive of production in 2011.
2.The profile of client households
The second factor that predicted future production was the composition of books and the number of large vs small households. You could have two advisors with the same level of production but different household composition led to significantly different levels of future production. An above-average number of larger households (those with assets over $250,000) led to higher future production, an overweight of smaller households with assets under $250,000 led to lower future production.
3.The depth of relationships
The final variable that correlated with future production was the depth of client relationships; PriceMetrix used having the client’s retirement account and the number of accounts per household as the proxy for depth of relationships. The more frequently that an advisor held clients’ retirement accounts and had multiple accounts, the greater the production in five years time.
As you think about your own plans for 2013, consider how to factor the three variables of fee revenue, focus on larger households and multiple accounts into your priorities for next year. To read the full report on Moneyball for Advisors, go to http://www.pricemetrix.com/moneyball-for-advisors/
Tags: Assets, Baseball, Billy Beane, Books, Brad Pitt, Choices, Conventional Wisdom, Cross Section, Dozens, Driven Approach, Household Composition, Households, Intuition, Moneyball, Profile, Software Firm, Statistical Analysis, Surprise, Variables
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Tuesday, January 24th, 2012
If you have seen the movie or read the book Moneyball, you know the story of how Billy Beane, GM of the Oakland A’s, who following a loss in the post season, the loss of three star players and the inability to complete with the “big boys” payrolls, hires Peter Brand, a Yale economics graduate to revolutionize the way talent is evaluated using statistical analysis rather than relying on the “gut feel” of his scouting staff.
Billy Beane’s new approach helped the A’s to be a playoff contender and win a record 20 consecutive games in 2002 with one of the lowest payrolls in baseball. More importantly, it changed baseball.
Beane took the Wall Street concept of value investing and applied it to finding undervalued players. If you watch the 2-minute clip below, you will hear Brad Pitt say “What these guys decided was we’ve got to look for new knowledge and we’ve got to question everything. They found great efficiencies in the way they were valuing players.”
The financial services industry has changed a lot since I became involved in 1981. It is a relatively new industry and strategies and tactics employed by advisors have changed numerous times over the past thirty years. Today is an interesting time to take the Moneyball approach to your business. It is time to look for new knowledge, question everything and find the inefficiencies in your practice and your industry.
Failure to change may result in consumers looking for alternate and more technological ways to satisfy their wealth planning and investment needs.
One clip that addresses one of the problems in the industry is a meeting between Billy Beane, assistant GM Peter Brand and manager Art Howe. It is a great example of some of the roadblocks that innovative thinkers encounter in moving forward with their ideas. In this scene, Billy Beane confronts manager Art Howe, who fought him and refused to implement his new strategies by playing Carlos Pena at first over Beane’s choice of Scott Hatteburg.
Beane had to take drastic steps to “encourage” manager Howe to play Hatteberg.
One problem that will slow the necessary changes is the antiquated thinking of senior managers in financial services. Many of these individuals have been advisors but have not been on the front lines for many years. As a result, their policies reflect their experiences during the 80’s and 90’s and making the politically correct decisions. Combine that with compliance restrictions that discourage new approaches and technology that can increase collaboration and transparency and improve client relationships and the ability to change becomes increasingly difficult.
Spend a minute or so and listen to the lyrics of a song from Moneyball. As an advisor, you may see the necessity of changes but you’re “just a little bit caught in the middle” and in some cases you’re “so scared but” you “don’t show it.”
It is time for change. – Time to play Moneyball. Time for a new way of thinking.
This is the first in a series of article written by Bob Simpson, President of Synchronicity Performance Consultants. Future articles will address strategies and tactics to make positive changes to your business model so you can thrive in a world of change.
About Bob Simpson
Synchronicity Performance Consulting has been coaching financial advisors since 1998.
Bob Simpson, president and founder of Synchronicity has been involved, directly or indirectly in the financial services industry since 1981. He has been a very successful financial advisor with Nesbitt Thomson Inc., a major Canadian financial institution. Between 1981 and 1989, he built a business with more than $120 million in assets under management and was one of the first Canadian advisors to build a team.
Tags: Assistant Gm, Big Boys, Billy Beane, Brad Pitt, Consecutive Games, Efficiencies, Gm, Inefficiencies, Knowledge Question, Manager Art Howe, New Approach, Playoff Contender, Roadblocks, Star Players, Statistical Analysis, Thinkers, Thirty Years, Value Investing, Wealth Management, Wealth Planning
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