Four Lessons from the Barron’s Winner’s Circle Conference

Saturday, August 28th, 2010

For the past two years, I have been a reg­u­lar con­trib­u­tor to Hors​es​mouth​.com, the lead­ing prac­tice man­age­ment web­site for U.S. finan­cial advisors.

In late March, I read a col­umn in Hors­es­mouth by Debra Tay­lor, a New Jer­sey finan­cial advi­sor who wrote about four lessons from a con­fer­ence in Palm Beach spon­sored by Barron’s that she had recently attended.

While writ­ten almost six months ago, these four lessons are just as rel­e­vant today and I reprinted them with her permission.

For sev­eral days, Barron’s Top 100 Women Finan­cial Advi­sors in Amer­ica (and another 400 women advi­sors who attended by invi­ta­tion only) dis­cussed their prac­tice man­age­ment ideas, invest­ment philoso­phies, and what has worked and not worked for them dur­ing the past year.

The Top 100 women all had min­i­mum assets of $250 mil­lion each (and most had much more), and many of them had over­come addi­tional road­blocks on their way to the top.

Les­son One: The need to val­i­date your process

The first les­son was that no sin­gle asset will save the day.

One of the com­mon themes of the con­fer­ence was that every asset class courts risk: oppor­tu­nity risk, credit risk, mar­ket risk, and so on. There­fore, although bonds may have saved 2009, when infla­tion kicks in, this approach will catch up with you.

Every invest­ment rec­om­men­da­tion should serve mul­ti­ple purposes-for exam­ple, dol­lar hedge and infla­tion pro­tec­tion. In addi­tion, advi­sors should always be con­cerned about down­side and stress-test everything.

Par­tic­i­pants were also urged to think care­fully about the sources of infor­ma­tion they relied on.

Some clients want to know that they can rely on your rec­om­men­da­tions, so they need to con­firm your research process.

Debra Tay­lor wrote that she is being asked this ques­tion more than ever before, and comes pre­pared to every meet­ing with her research binder and other exam­ples of her invest­ment process and performance.

Les­son Two: The need to tighten your ship

A sec­ond mes­sage from the con­fer­ence that Debra Tay­lor wrote about was that every­one on an advisor’s team needs to oper­ate as a unit and be orga­nized, just as they would be in the military.

Over and over, advi­sors heard from top pro­duc­ers that they should fire bor­der­line staff and keep only the A play­ers. As hard as this may be, it is a recur­ring theme of these top producers.

These top pro­duc­ers all shared sto­ries of revolving-door turnover, new hires that didn’t make it through the day, and so forth. Through­out the indus­try, advi­sors find it hard to hire qual­ity peo­ple who are truly pas­sion­ate about their jobs.

Of course, to main­tain and moti­vate the A play­ers, advi­sors should com­pen­sate well and con­tinue using incen­tive bonuses.

And top advi­sors often reit­er­ated the need for uni­form sys­tems and morn­ing meet­ings (or “huddles”.)

One ongo­ing theme of top advi­sors with large teams was to have a chief of staff or chief oper­at­ing offi­cer on your team to man­age the troops and keep the team on tar­get and account­able. More and more, Debra Tay­lor talked about see­ing that higher-producing advi­sors have a COO so that the advi­sor can focus on client rela­tion­ships and sales.

Les­son Three: Focus on the client experience

Char­lie John­ston, Pres­i­dent and CEO of Mor­gan Stan­ley Smith Bar­ney, dis­cussed the evo­lu­tion of the finan­cial advi­sory busi­ness and high­lighted the need to strive for invest­ment excel­lence, which he believes is becom­ing crit­i­cal again.

He also dis­cussed the impor­tance of the client expe­ri­ence, and focused on the client dis­cov­ery process, list­ing sev­eral key ques­tions as critical:

1. What does money mean to you?
2. What do you try to teach your chil­dren (or grand­chil­dren) about money?
3. If you could give just one thing to your chil­dren, what would it be?
4. What are the val­ues you hold most dear?
5. If you could live your life over again, what would you do differently?
6. Of all the gifts of your time and money that you have given to char­ity in the past years, which was the most mean­ing­ful to you?
7. If your doc­tor gave you 24 hours to live, what would be your biggest regret?

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Tags: 100 Women, Asset Class, Class Courts, Credit Risk, Debra Taylor, Financial Advisors, Horsesmouth, Inflation Protection, Investment Philosophies, Investment Recommendation, Management Website, Market Risk, Palm Beach, Practice Management Ideas, Risk Credit, Risk Market, Risk Opportunity, Roadblocks, Stress Test, Target
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