TABLE OF CONTENTS
Letter from the Editor ..................... 1
In the News .................................... 2
Calendar of Events ........................ 5
Increase Productivity, Lower Costs ... 7
by Jennifer Goldman, CFP®
Improve Your
Use of
TECHNOLOGY
Page
Page 77
Are You
Your Own
Secretary?
Mark Colgan
Plan Your Legacy
Page 27
Advisor
"High-Five"
Page 40
Setting Up
Your
Independent
Practice
Page 11
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VI. How to Set Up Your Business:
What's In a Name? ....................... 11
by Sydney LeBlanc
Selling, Buying, or Raising Capital ..... 15
by Kenneth H. Marks
Beyond Reproach: Ethics
Integrity, Trust ............................... 19
by David Loeper, CIMA®,CIMC®
A Tale of Two Advisors ................... 23
by Ned Van Riper and Aaron Hasler
It's About Time You Look
at Compliance ................................ . 25
by Phillip Flakes and
Nicholas A. Gudz
Advisors: Stop Playing Secretary .. 27
by William R. Nelson, Ph.D. and
Scott Winters
Why do Business Owners Fear
Exit Planning? .............................. 31
by Bob O'Hara
You Are Replaceable ........................33
by Stuart Zimmerman and
Carista Luminare, Ph. D.
A Conversation with Nick Stuller
and Craig Katz, Meridan-IQ ............ 35
Advisor "High Five!"
Mark Colgan, Plan Your Legacy ... 40
Resource Directory ........................ 42
Grin & Bear It! ................................ 43
DISTRIBUTION PARTNERS
Meridian-IQ™ and
StarPoint Consulting Group
JULY 2010
Business Management for Independent Financial Advisors
Transitions
Magazine
ADVISORS:
STOP!
Playing Secretary
By Scott Winters and William R. Nelson, Ph.D.
L
earning to instill in clients the necessary
confidence to trust your judgment during good
times and bad is hard work, an ambitious
challenge with tremendous rewards, both financially
and psychologically. Operating a financial planning or financial advisory business involves not only
advising, but many other tasks including technology management, security selection, billing, customer
service, performance reporting, human resource management, and compliance. None of these tasks is worth a financial advisor’s time. An average advisor can earn $200,000, which,
assuming 50 work weeks of 40 hours each, equals $100 per hour. Of the 2,000 work hours assumed per
year, many are consumed by non-advisory tasks, meaning that the income per hour of advising is actually
considerably more than $100. Accordingly, you can substantially increase your income by freeing up more
time for advising by eliminating as many non-advisory tasks as possible from your schedule. Advisors’
money is made by interacting with investors, converting them to clients, and leading clients confidently
toward their goals. More time for clients and sales sounds good in theory, but how are non-advisory tasks offloaded without
significant risk, upfront work, or loss of revenue? Typically, one offloaded these tasks by hiring helpers. If lucky, these helpers were merely expensive. If unlucky, they alienated clients and drove you batty with
drama and lawsuits. Technology provides a welcome alternative — automation, which is easier said than
done. Despite halcyon dreams, technology implementation almost invariably involves people, expensive
people, performing a task most advisors know little about and thus cannot monitor effectively. The bottom
line is: implementing technology is complicated and costly. What is an advisor to do?
www.transitions-mag.com
July 2010
Business Development s
A financial advisor’s job is to advise, to
impart information, suggest alternatives,
and provide solutions. To earn a living as a
financial advisor, one must first acquire the
ability to advise. 27
Transitions
Magazine
Business Development
painful is the transition?” Don’t Offload, Outsource! What’s The Difference? Offloading involves managing the admin and/or tech
people who are supposed to make your life easier. But
managing people is not easy. The lazy answer is, "It depends." "On what?" "On who performs the transition."
The transition of all assets to a more efficient asset
management solution, often referred to as a book
Outsourcing involves allowing another conversion, is another task that, if performed by
company to do the work that you are skilled (but not advisor-level) professionals, can be
too valuable to sensibly do yourself. accomplished for you with little effort and with the
opportunity for an immediate cash flow injection. But,
when book conversions are attempted by the unpracticed,
Why does the difference between hiring individuals
debacles commonly ensue. As with other complicated
and using a firm allow you to make more money in
operations, without practice one is rarely perfect and
less time? The firm you will choose should be expert
often ineffective. Imagine your golf swing when first
in all facets of asset management other than the art of
starting to play or after not playing for several years
talking to and meeting with investors. Assume that
— hook, shank. Operations required for a smooth and
you hire typical administrative people to help you. efficient book conversion include but are not limited to
Who is going to know more about financial services
client information aggregation, introductory letters, risk
and how to answer the phone, run billing, perform
tolerance assessment, asset allocation modeling, money
due diligence on money managers? Obviously, you
manager selection, investment proposal generation,
will. Accordingly, you will be continuously training,
investment proposal mailing, follow-up to get proposals
and answering questions, taking away from the
signed, and account opening. One should not risk the
time you should be spending with investors. Don’t
relationships with their clients (and possibly their
consider hiring a technology team to automate your
spouse) by performing the book conversion themselves
processes unless you want to dedicate yourself to
but rather leave it to the experts. designing the system and managing the development
while still incurring great risk of failure. Instead, Who Are The Experts?
outsource to an established firm whose operations
The experts are the firms that have performed and are
are designed and honed to accomplish your goals by
constantly performing book conversions. Turnkey asset
automating the tasks that you should not be spending
management platforms and wirehouses have the most
your valuable time on. assets and thus the most practice converting assets
onto their systems. Some even have teams to guide you
Transition: Painful or No? through the process and perform all the work for you
You can spend 90% of your time working with investors
except for actually talking with clients. rather than managing tasks. Assuming you understand
this opportunity, the logical question would be, “How
28
July 2010
www.transitions-mag.com
Transitions
Magazine
Business Development
Scott Winters is National Sales Director
of Eqis Institutional, and Dr. William R.
Nelson is the Chief Financial Strategist
of Eqis Capital. Dr. Nelson’s acclaimed
original research has been published in
the American Economic Review, The International Conference on Information
Scott Winters
Transitioning your business to a more efficient Technology ITCC 2004 Proceedings,
the
Journal
of
Economic
Behavior
and
platform to improve operational efficiency does not
Organization, Latin American Finance
have to be painful. Some TAMPs will happily handle
and Capital Markets, among many oththe heavy lifting and logistics, allowing you more ers. Eqis Capital provides a turnkey
time to concentrate on consulting with clients about asset management platform that delivthe reasons for change-better investment alternatives. ers enhanced power, flexibility and effiAfter the transition, your life will be liberated from the ciency. Based in San Rafael, California,
travails of inefficient operations, allowing you to focus the company enables Registered Independent Advisors (RIAs) and Registered Dr. William R. Nelson
on your talents and passions. Representatives (RRs) to engineer portfolios that combine
uuu
diversification, sophistication and world-class insight. Eqis
provides pioneering technology with a global reach. For
more information, visit them at www.eqiscapital.com
Converting to a more efficient platform
can jumpstart your marketing with an
influx of cash through taking advantage
of an initial consulting fee.
www.transitions-mag.com
July 2010
29