Bringing discipline to client portfolios

Wednesday, December 7th, 2011

In light of the events of the last nine months, investors and advi­sors alike are reex­am­in­ing the process used to build portfolios.

A May 25 in the Globe and Mail high­lighted two tools to over­come investors’ (and some advisors’) emotional reac­tions to mar­ket move­ments, cre­at­ing the impulse to buy and sell at exactly the wrong times. The arti­cle quoted  the words of Walt Kelly’s 1950’s car­toon char­ac­ter Pogo:  “We have met the enemy and he is us.”

The solu­tion for advi­sors lies in bring­ing much more dis­ci­pline to how client port­fo­lios are man­aged, using two tools from insti­tu­tional investors. The goal is to bor­row War­ren Buffett’s dis­pas­sion­ate approach to invest­ing, which he sum­ma­rizes as: “Be fear­ful when oth­ers are greedy and be greedy when oth­ers are fearful.”

To read the arti­cle click on :

http://​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​/​f​e​a​t​u​r​e​s​/​e​x​p​e​r​t​s​-​p​o​d​i​u​m​/​b​r​i​n​g​i​n​g​-​s​t​r​i​c​t​-​d​i​s​c​i​p​l​i​n​e​-​t​o​-​y​o​u​r​-​p​o​r​t​f​o​l​i​o​/​a​r​t​i​c​l​e​1​1​5​2​2​22/

    Lat­est Advi­so­r­An­a­lyst Prac­tice Growth Sto­ries

Tags: Advertisement, Buy And Sell, Buy Sell, Cartoon Character, Client Portfolios, Emotional Reactions, Globe And Mail, Globe Investor, Globe Mail, Impulse, Institutional Investors, Investing, Investment Ideas, Investor Investment, Lt, Mail Tools, Nine Months, Podium, Pogo, Portfolio, Strict Discipline, Target, Two Tools, Walt Kelly, Warren Buffett
Posted in Dan Richards | Comments Off

Working Smart vs Working Hard: Your Most Important Resolution for 2012

Wednesday, November 30th, 2011

There are lots of res­o­lu­tions advi­sors could make in 2012. But here’s the one that for many advi­sors could have the high­est pay­off – and that’s to work smarter this year, by build­ing reg­u­lar think­ing time into your business.<br>

We’ve all become incred­i­bly busy with more demand­ing clients and an always-on world of email and black­berry. As a result, most advi­sors are work­ing hard but they aren’t nec­es­sar­ily work­ing smart. And the only way to ensure you’re work­ing smart is to con­sis­tently step back and take a bit of time to think hard about your business.

Quar­terly think­ing time

This process starts by hav­ing writ­ten goals in place for the next three to five years and a writ­ten plan of action for the year ahead on how you’re going to achieve those goals. That writ­ten 12 month plan is a good start­ing point but that’s all it is unless you sched­ule reg­u­lar time into your rou­tine to review, update and mod­ify that plan.

This should hap­pen at four lev­els – quar­terly, monthly, weekly and daily.

For your quar­terly think­ing time, you should sit down for half a day with your team or two or three other advi­sors that you respect and trust.

And in that half a day, you ask your­self a num­ber of key ques­tions:

What were my goals for the last quar­ter and how did I do against those goals?

What worked in the last quar­ter, what didn’t and what can I learn from the last quar­ter? In other words what I am I going to do dif­fer­ently in the next three months based on what hap­pened in the last three months?

And finally, what are my goals for the next quarter?

Monthly, weekly … and daily

For your monthly think­ing time, you go through exactly the same review process … except you do it more briefly, tak­ing an hour or so rather than half a day. But you ask your­self the same fun­da­men­tal ques­tions, how am I doing against my goals, what’s worked and what hasn’t , what am I going to do dif­fer­ently next month as a result.

For your weekly think­ing time, you’re look­ing at ten min­utes to review with your team what hap­pened last week, again what worked, what didn’t , what can we learn from this.

A few years back I talked to a very suc­cess­ful advi­sor who for thirty years had taken ten min­utes every Sun­day night at 9 o’clock to review all his meet­ings in the week that had just passed and asked him­self what he needed to do dif­fer­ently based on that – and attrib­uted much of his suc­cess to that process.

Finally, for your daily think­ing time I sug­gest advi­sors either end each day or start each day by tak­ing two or three min­utes and ask­ing one key ques­tion – what can I learn from the day that just passed.

And then write down the answer.

    Lat­est Advi­so­r­An­a­lyst Prac­tice Growth Sto­ries

Tags: Blackberry, Br, Email, Fundamental Questions, Goals, Good Starting Point, Half A Day, Last Quarter, Lt, Plan Ahead, Resolutions, Sit, Smart, Thinking Time, Three Months
Posted in My Practice | Comments Off

Working smart vs working hard: Your most important resolution for 2011

Wednesday, January 12th, 2011

There are lots of res­o­lu­tions advi­sors could make in 2011. But here’s the one that for many advi­sors could have the high­est pay­off – and that’s to work smarter this year, by build­ing reg­u­lar think­ing time into your business.<br>

We’ve all become incred­i­bly busy with more demand­ing clients and an always-on world of email and black­berry.  As a result, most advi­sors are work­ing hard but they aren’t nec­es­sar­ily work­ing smart. And the only way to ensure you’re work­ing smart is to con­sis­tently step back and take a bit of time to think hard about your business.

Quar­terly think­ing time

This process starts by hav­ing writ­ten goals in place for the next three to five years and a writ­ten plan of action for the year ahead on how you’re going to achieve those goals. That writ­ten 12 month plan is a good start­ing point but that’s all it is unless you sched­ule reg­u­lar time into your rou­tine to review, update and mod­ify that plan.

This should hap­pen at four lev­els – quar­terly, monthly, weekly and daily.

For your quar­terly think­ing time, you should sit down for half a day with your team or two or three other advi­sors that you respect and trust.

And in that half a day, you ask your­self a num­ber of key ques­tions:

What were my goals for the last quar­ter and how did I do against those goals?

What worked in the last quar­ter, what didn’t and what can I learn from the last quar­ter?  In other words what I am I going to do dif­fer­ently in the next three months based on what hap­pened in the last three months?

And finally, what are my goals for the next quarter?

Monthly, weekly … and daily

For your monthly think­ing time, you go through exactly the same review process … except you do it more briefly, tak­ing  an hour or so rather than half a day. But you ask your­self the same fun­da­men­tal ques­tions, how am I doing against my goals, what’s worked and what hasn’t , what am I going to do dif­fer­ently next month as  a result.

For your weekly think­ing time, you’re look­ing at ten  min­utes to review with your team what hap­pened last week, again what worked, what didn’t , what can we learn from this.

A few years back I talked to a very suc­cess­ful advi­sor who for thirty years had taken ten min­utes every Sun­day night at 9 o’clock to review all his meet­ings in the week that had just passed and asked him­self what he needed to do dif­fer­ently based on that – and attrib­uted much of his suc­cess to that process.

Finally, for your daily think­ing time I sug­gest advi­sors either end each day or start each day by tak­ing two or three min­utes and ask­ing one key ques­tion – what can I learn from the day that just passed.

And then write down the answer.

There’s indis­putable evi­dence on the power of writ­ten goals — just by writ­ing things down, things seem to stick. And if you write down your key take­aways in one con­sis­tent place, say the same file on your com­puter, chances are that over time you’ll see a pat­tern emerge.

Mak­ing think­ing time happen

Some advi­sors may look at this and ask if you can afford to spend this much time reflect­ing on your busi­ness. I’m going to sug­gest that’s the wrong ques­tion – the ques­tion isn’t whether  you can afford to spend this much time think­ing about your busi­ness.  If your goal is to work smart rather than hard in 2011, the ques­tion is whether you can afford NOT to invest this kind of time on a reg­u­lar basis think­ing hard about your business.

We’ve talked about spend­ing half a day a quar­ter, an hour a month, ten min­utes a week and two min­utes a day. Add that all up and it works out to about five days of think­ing time over the course of a year – add another day for annual plan­ning and that’s six days.

That’s six out of let’s say 200 work days, when you fac­tor in hol­i­days and vaca­tions.  What that means is that advi­sors would be spend­ing 3% of their time think­ing and 97% of their time doing. And spend­ing that 3% of your time reflect­ing on your busi­ness will pay huge div­i­dends in mak­ing the other 97% of your time more productive.

If you like this idea, here are two final steps.

First, go to your cal­en­dar and iden­tify when you’re going to do those three minute daily reviews and ten minute weekly reviews.

And while you’re at it block off the first one hour monthly review for Feb­ru­ary 1.

And sec­ond, iden­tify who you’re going to invite to par­tic­i­pate in these monthly and quar­terly review s. You could do it with other mem­bers of your team, or if you’re work­ing on your own invite between one and three other advi­sors in your office to par­tic­i­pate. Send them a copy of this arti­cle and invite them to join you at that first monthly review.

Resolv­ing to build more think­ing time into your busi­ness may not be as obvi­ous as resolv­ing to lose weight or get in shape – but as impor­tant as those may be for your phys­i­cal health, increas­ing the qual­ity of think­ing time is just as crit­i­cal for  the health of your busi­ness … and may well be a res­o­lu­tion that pays big div­i­dends long after vow­ing to lose weight or make it to the gym have been left in the dust.

    Lat­est Advi­so­r­An­a­lyst Prac­tice Growth Sto­ries

Tags: Blackberry, Br, Email, Fundamental Questions, Goals, Good Starting Point, Half A Day, Last Quarter, Lt, Plan Ahead, Resolutions, Sit, Smart, Thinking Time, Three Months
Posted in Dan Richards | Comments Off