Daily Archives: May 14, 2014

Principle 21: Goals vs. Dreams

They are Not the Same Thing

A goal is a tangible, measurable, attainable objective for which you have developed and implemented a reasonable plan to achieve. Otherwise, it is merely a dream. Dreams are what you hope for, but goals are what you actually achieve. Focus on establishing and achieving goals. Through the years, I have had more than one employee tell me that they had a goal to earn a college degree.  When I have offered to fund it, they have either backpedaled or dropped out after a semester or two. I have had financial advisors declare their goals to make a certain amount of money, but then renege on the plan I helped them develop to get there. These were not goals, these were just dreams. Dreams are nice, but we tend to keep them at a safe distance. Goals are what we fight for, lose sleep over, and skin our knees trying to reach because we can’t imagine living life without having achieved them. Dreams are risk free.  Goals are fraught with fear, setbacks, and potential calamity, because they are real. Dreams occupy idle brain time.  Goals consume us. Dreams require luck. Goals require skill, determination, and sacrifice. Dreams are ethereal. Goals are concrete.

Some Basic Rules

Set only a few. Don’t start the New Year with a long list of hope-tos and want-tos. Choose two or three specific things as goals, develop a plan for each, and then go to work. Words like more, less, better, lower, be, have, want, hope, think, and become, cannot be used to describe a goal. “I want to become a better golfer.” is not a goal. That is a dream. “I have hired a chipping and putting coach and scheduled 8 lessons on Saturday mornings over the next two months with a golf pro to shave 5 strokes off my game.” is a goal, and one that will likely be achieved. Goals have a time limit, a specific quantitative objective, and a reasonable chance of achievement. Write them down and share them with others , especially with those who will hold you accountable and help you stay focused. Review your progress regularly. If you determine halfway through that the goal just isn’t possible, revise it so it is possible, and then keep going.

Everyday you should take steps toward your goals. Take big steps when you can, but keep taking steps.  Never stop progressing. Never stop moving forward. If you work at your goals, you will eventually achieve them. It took me 10 years to complete my undergraduate work in my mid 40s, but I kept enrolling, semester after semester.  Sometimes, I only took one course at a time, trying to balance it all, but I made it. I am in my early 50s now, and I have nearly finished a master’s degree. I will begin a Ph.D. program in the fall of 2015, and by 2018 my friends will have to call me Dr. Noel.

Now, Get Started!

Start turning your dreams into goals. Start right now. Don’t procrastinate. Remember, the longest journey begins with the first step. What are your dreams? How can they be turned into real goals? Which ones should you abandon, and which ones should you pursue? Is it a college education, or a master’s degree? How about getting into shape and losing weight? Maybe you want to get married and need to find the right mate.  Whatever your dream, turn it into a goal by writing it down, setting a schedule, developing a plan, and getting started. What do you have to lose? The satisfaction of accomplishment has few equals in life. I don’t want to look back at the end of mine and see a rough draft or a life that resulted from the sum of my stupid choices, laziness, procrastination, and happenstance.  I want to see a masterpiece. Design and build yours.

Principle 20: Vendors, Bless Your Hearts!

Working with Investment Sponsors

Relationships are key. Investment sponsors issue securities and raise investor funds for same. Build great relationships with your sponsors.  Not only do they create and manage the investments you place into your clients’ portfolios (you should have a voice in how those products are structured), but they can be a terrific source of financial support for your marketing efforts. Most investment sponsors set aside a predetermined percentage of your sales of their investment products which is allocated to help support your marketing efforts. We have used these funds to cover food costs at our public seminars, prospective client direct mail campaigns, charity fundraising event donations, and costs related to special client appreciation functions, to name several. Most sponsors are thrilled to help you with your marketing expenses.  You need only ask. Direct investment sponsors (REITs, BDCs, etc.) are perhaps the most well funded, but many insurance and annuity carriers, and even some mutual fund families, are also happy to participate in your marketing budget. You should take advantage of these available funds. Contact your investment sponsor wholesalers for details on their respective policies.

The Cold War

I have made some pretty derogatory remarks about external wholesalers over the years.  Wholesalers are those fine people that investment sponsors hire to get out in the trenches, zigzag the country, meet financial advisors, live out of suitcases, and promote the sale of their investment products. An honest enough proposition. But, I have said things like, “Wholesalers are of the devil.” and “I don’t trust them as far as I can throw them.” I have banned wholesalers from my offices, denied them access to my advisors, and refused their phone calls for years. I personally approve all wholesaler visits to my office, including lunch and dinner invitations for my advisors and staff, and most requests are not approved. I could literally eat an upscale steak lunch or dinner with a wholesaler every week. Mind you, these folks are some of the hardest working, and well paid, people in the industry (if they’re any good).  And, their capacity for hospitality and their thick skin endears them to us all.  But, like the Cold War, working with wholesalers can be a clandestine affair full of misdirection and subterfuge. Cute, cuddly snakes-in-the-grass, they are.

Now, allow me to put some of my somewhat tongue-in-cheek remarks and attitudes into perspective. I consider a number of these people to be my friends. Most of them are decent folks.  But, one must remember that investment sponsor wholesalers are essentially sales people. They are NOT financial planners.  They are paid to raise money for their sponsors’ investment funds, not give advice on your clients’ accounts. Their goals are not necessarily in line with your goals or those of your clients.  I was recently speaking with a wholesaler who was trying to get me to offer more of his various products to my clients. When I said I would offer this one, but not that one, he replied that he was pleased and that my strategy would not “hurt” him since he needed more sales of this rather than that. I was not taken aback because he did not do anything unexpected.  It is his job to raise money for his sponsor’s funds.  But, it is my job to manage my clients’ money. The two responsibilities somewhat overlap, but they are decidedly not directly correlated. Keep wholesalers in the proper perspective and at arms length. And keep your clients’ best interests clearly in focus and close to your heart.

For Straight Talk, Go Straight to the Top

Fact-checking is a must. Never trust a wholesaler when it comes to anything related to risks, performance or anything else under the headings of due diligence or regulatory compliance. Get your facts from the top. If it isn’t in writing and if it doesn’t come from printed and approved sponsor materials, then it has to come from the executives.  I have learned that the clearest picture of an investment’s risks and outlook will come from the top. Executives (Presidents, CEOs, CFOs, COOs, VPs, Fund Managers, etc.) tend to be more concerned with forthrightness and disclosure because their compensation and futures do not rely directly and solely on how fast money is raised for their funds. Wholesalers, on the other hand, are paid exclusively in direct proportion to how much money they raise. This doesn’t mean that executives always tell the truth. In the past few years, financial industry executives have been imprisoned at an alarming rate for their dishonesty with investors, and the trend doesn’t seem to be losing any steam. But, when given the choice between getting your information from wholesalers or executives, choose the latter.  The odds will be in your favor.

Principle 19: Advisors Don’t Do Paperwork

 

The Paperwork Reduction Act

When I launched my practice ten years ago, I lived in a vicious, relentless cycle. It was like the film, Ground Hog Day. Do a little marketing, then win a couple of clients, then do the planning work, then process the business, then work to get paid on it, and then start the process all over again. I was a one-man show, and I was meeting myself coming and going. I was only actually producing new business about every 3 or 4 weeks.  The rest of the time I was either marketing or processing paperwork in one form or other: ordering forms, filling out forms, copying forms, filing forms, mailing forms, tracking forms, etc..  It was madness.  I knew there had to be a better way, but I didn’t want to pay someone else to do something I could do myself.

Over time, I began to realize that I should only have one job: seeing clients. Every moment that I spent outside my conference room was costing me money. Big money. I learned that I needed to pay other people to do anything and everything that took me out of the conference room. My notions about efficiency were simply off base.  Doing work myself so I didn’t have to pay others to do it was a false economy. Since I was the most financially valuable person in the practice (I brought in the accounts), the real economy was in my avoiding anything and everything that took me out of the conference room. It was a tough habit to break, but I have fully recovered. Now, I am like one of those reformed smokers who can’t stand second hand smoke of any kind whatsoever. I can’t stand paperwork of any kind whatsoever. I am allergic to it.  It makes me nauseous. The slightest whiff of it can send me into a panic attack or a stress-induced coma, really.

One Exception

Advisors don’t do paperwork. That’s the policy.  Of course there are exceptions to every policy.  As an advisor, I am not above doing the work.  It is a matter of profitability and efficiency.  That said, new advisors are allowed, in fact required, to do their own account and investment paperwork at the beginning of their careers, and for two reasons. First, they need to be able to fill in for the operations staff in a pinch if they have a client emergency, such as a last minute, unexpected drop-in or a late appointment with a client who has an urgent transaction that needs processing. Second, they need to understand the basics of how our operations department works, if for no other reason than to become sympathetic with the struggles and challenges the department faces each day in support of the advisor staff. The more everyone on the team knows how everyone else works, the more efficient we will be. And, this promotes esprit de corps (a team spirit of enthusiasm and camaraderie, for you rednecks). Now, there limits to this exception. New advisors may only do their own paperwork up to a point.  Once they no longer have time to do it, because they are too busy (and valuable) seeing clients in the conference room, their pencil-pushing days are over.  Paperwork is just a part of their initial training, and nothing more.

The Efficient Document

In today’s technological world, there are service providers that can map the data fields (name, address, Social Security number, date of birth, beneficiaries, etc.) from your client resource management (CRM) data base to digital web-based investment, account, and service forms.  These systems are brilliant at pre-populating your client documents from the information in your own database.  Virtually all broker-dealer, clearing firm, investment sponsor, and insurance carrier forms are available through these service providers. LaserApp and Quik! are two such providers. For a nominal fee, you can subscribe to one of these services and virtually eliminate filling out forms by hand. Once populated the forms can be printed or emailed directly from the application. If you are not using one of these services, you simply don’t understand them.