T R
HE
UMMAGE
R
EPORT
The “Sports Agents” Of The Financial Industry
Opportunities
Available:
The Rummage Group is a career consulting firm specializing in the
Financial Industry. We are the “Sports Agents” for Financial Advisors.
Wire Houses
There are over 1,000 firms that employ Financial Advisors and the
Regional Firms
average advisor is only familiar with a handful. When an Advisor decides
Large Banks
to start looking at other opportunities it can become very time consuming
Small & Medium Banks
and frustrating. Finding good accurate information on the firms available,
RIAs
transition packages, platforms and the pros and cons of each can be
Small Financial Planning Firms
overwhelming. An average advisor only speaks with a couple firms when
Independents
making a move. The move is usually made with limited information much of which comes from a
Boutique Firms
biased associate, friend or manager that works at the interviewing firm. Many miss out on very
Discount Firms
Insurance Companies
good options because they are unaware they exist. At The Rummage Group we save advisors
the heart ache of having to do it alone and rely on biased information. Because we do business
with many firms, we can provide accurate unbiased assistance during such an important change.
Tip Of The Month
The Rummage Group is truly a one stop shop that can save advisors time, provide accurate up
to date information and keep them from possibly making a big career mistake.
Moving Your Book
Let me start with a disclosure, since
they are so popular in this industry.
Always consult with an attorney
before taking any action
regarding communication with
clients regarding the move to a
new firm.
Rick Rummage
With that out of the way, here is just
one trick that works well when you
are changing firms – regarding
moving your clients.
Areas Of Expertise:
Brokerage: we work with Senior Level Manager, Branch Manager, Sales Manager,
Financial Advisors, Financial Analysts, Operations Managers and Compliance Officers.
The hardest part of a move to a new
firm is actually moving your book.
Some clients will send in the ACAT
paper work very quickly and some
will require work. Depending on
how strong your relationship is with
your clients, it could take many
months and in some cases years, to
Banking: we work with Senior Level Managers, Commercial Lenders, Private Bankers,
Wealth Managers, Credit Officers, Portfolio Managers and Branch Managers.
For more information on Rick Rummage and The Rummage Group visit:
www.therummagegroup.com or http://www.linkedin.com/in/rickrummage
get signed paper work. The clients
do not have the same agenda as
you. It can be very difficult in many
cases to pin your clients down to a
meeting to discuss your move and
why they should move with you.
Here is the step by step process.
1. Pick a move date at least 30
days in the future. As an
example let’s say you are
moving on June 1st and it is
currently May 1st.
2. Call all of the clients you
want to take with you.
Schedule a breakfast, lunch
or dinner with each client for
every day starting on June
2nd at a restaurant of your
choice. Tell them that you
would like to do a quarterly
portfolio review (which you
will) or another important
business matter. You
should have at least 4-5
meetings scheduled every
day for the first month or two
depending on how many
clients you have.
3. Show up at the restaurant
as scheduled with all the
paper work the client will
need to sign. The client is
forced to give you an hour of
their time to convince them
to make the move with you.
This method will allow you to
have face to face meetings with
all of your clients. It is much
harder for a client to tell you no
to your face than over the
phone. Always remember that it
is a process that will take time.
Some Financial Advisors are still
moving clients two years after
they move, but don’t panic, most
will move within the first 6
months.
Quote Of The Month
“For a long time it had seemed to
me life was about to begin - real life.
But there was always some obstacle
in the way. Something to be got
through first, some unfinished
business, time still to be served, a
debt to be paid. Then life would
Featured Article
6 Scripts That Move Clients to Invest
By Lloyd Williams, CIMA
Convincing clients and prospects to get back into the market or change investments can be
difficult after three years of sub-par returns. Use these solutions and scripts to overcome their
objections and put their minds at ease.
Clients so skittish that they're protesting your best guidance? The following are
six of the most common objections voiced by clients against managed money,
along with proven responses for addressing their concerns:
1. If I sell that fund, I will be hit with a back-end redemption fee (or
capital gains) and will have less money to invest. Why is this a
good idea?
First, let's address the capital gains issue. Here, the client is making a
common assumption: that he'll need to pay 100% of the capital gains tax,
i.e. 15% on the total investment if he's in the United States, 25% if he's in
Canada. The good news: That would require a zero cost basis on his
investment portfolio, which is virtually never the case.
The first step in answering the client's question, then, is to realize that
he's thinking of a much higher number than you are. To remedy this
problem, calculate the actual capital gain. In most cases, when dealing
with mutual funds and the like, the capital gain will run around 5% of the
total investment, substantially less than the 15% or 25% that the client is
expecting to owe. This calculation alone may be enough to prompt a
positive response from the client, along the lines of: "Oh, I had no idea it
would be that low. No problem, go ahead and do it."
Now let's turn to the issue of the back-end load, which is usually some
declining redemption starting around 5% and dropping to 0% over time.
Suppose that the client has $100 invested, for example, and that his
assets will immediately decline to $95 if the recommendation is
implemented.
Here, you should do a breakeven analysis, which looks at the forward
rate of return of the current investment portfolio and then calculates a
forward rate of return on the future investment. Make these net return
figures, net of all expenses, management fees, and internal costs, so you
that you're comparing apples to apples.
Now calculate time. When do the two lines cross? Where is the
breakeven point? If the breakeven is within a short enough period of
time, then going ahead with the investment change is a prudent,
economically viable step. For most clients, an 18- to 24-month breakeven
begin. At last it dawned on me that
these obstacles were my life”.
Fr. Alfred D'Souza
For more information contact:
Rick Rummage
Managing Partner
The Rummage Group
Off 703.435.2822
Fax 757.299.4677
Cell 443.739.7866
[email protected]
www.therummagegroup.com
is fairly insignificant relative to the long-term growth of the portfolio.
Running this calculation, figuring out the time necessary to reach the
breakeven point, and explaining this logic to clients will almost always
successfully overcome this objection.
2. Why should we change what we are doing? You are buying stocks
for me—which has been working well—and I like working with you.
Here's a sample script for responding to this objection:
"Mr. Jones, imagine for a moment that you were just made the custodian
of a $5 billion trust. Would you go to a local stockbroker and then,
between the two of you, decide upon 25 to 30 different stocks and
manage the $5 billion that way? Doubtful.
"Instead, you would do what institutions have done for decades. You
would hire a consultant who would identify your risk profile, determine
the holding period for the money, run an asset allocation analysis, and
then select managers who match the needs of the portfolio and the
objectives of the funds. Your consultant would monitor those managers
and, when necessary, recommend firing and replacing one or more of
those managers. That is what you would do with $5 billion.
"If technology today allows us to do with $500,000 what, in the past,
could only be done with $5 billion, shouldn't we take advantage of it?"
3. The market is going down and fluctuating too much for me to
invest right now.
"Mr. Jones, the markets are volatile in both directions, up and down. We
understand that each individual client has a specific risk profile at
specific points in his or her life. For this reason, it is important for us to
run our risk profile analysis to identify exactly where you are on the risk
spectrum. Using that information, we can build an appropriate portfolio
that reduces the volatility of the markets and their impact on your assets.
This allows you to continue participating in the market.
"Going to cash is not an alternative. After tax and after inflation, cash has
always lost money over 15-year or longer periods of time. You cannot
afford for the purchasing power of your money to stagnate or decline."
4. How do I know the investments you select will do better than those
that I can buy on my own?
"Mr. Jones, Morningstar started a survey a number of years ago that
looked at 218 growth funds and their performance over a five-year period
ending in 1995. The funds compounded on average a 12.2% return, while
at the same time, the investors in those funds compounded a -2.2%
return.
"You are assuming that you are going to be substantially smarter than the
herd and not do what the average investor does. Unfortunately, that's
what every investor thinks. Most investors allow their emotions to get
involved. They tend to become attached to their decisions and to have a
tough time letting go.
"As consultants, we are able to stay detached and objective and look out
for the best interest of our clients—and that's reflected in the fact that our
fees are based on being paid the same way you are. If your assets are
declining in value, we're losing money, just like you. But as your assets
increase in value, our revenue increases, so we have an incentive to
ensure that the investment choices we make are for your benefit."
5. I am tired of losing money. With the market in recession, I'm not
sure that I want to invest in stocks.
Here, the solution—as in every other situation where a client loses
money over an extended period of time—is to go back and look at the
capital markets. For example:
"Mr. Jones, there has never been a 15-year period, after tax and after
inflation, when stocks have not had a positive return. There have been
many periods, almost every period in history, over a 15-year stretch,
when fixed income and cash have lost money after tax and after inflation.
The issue here is looking beyond the short term and seeing past what's
happening right now.
"The only condition that should stop people from investing in business
and the markets would be if, looking into the future 25 years, we could
say that we will no longer be curing diseases, we will not have better
health care, we will not have better technology or faster computers, and
so forth. If that's your view of the future, then yes, you should stop
buying stocks. But if you look into the future and see hope, better
technology, better medical services, better means of communication, then
yes, you want to be an investor. Stocks are your way of participating."
6. You only have 40 managers in your program. How do I know
these are the best?
"Mr. Jones, what we are looking for are the most consistent managers—
the most consistent in terms of their business practices, in terms of their
tenure, in terms of their business philosophy, their style of management,
and the process by which they manage their portfolio, and in terms of
their expenses.
"For our purposes, the 'best' managers are those who most consistently follow
their purpose in a portfolio. We are hiring a large-account growth manager and a
small-cap value manager. We want a manager who will consistently manage
money with that style. Remember, performance is not made by the manager; it is
made by the asset mix being proper, prudent, and within the guidelines of the
risk profile of the client."
Lloyd Williams, CIMA, is an author, business coach, and speaker helping advisors transition their
business to fees. He is the founder of Lloyd Williams & Associates, LLC and publishes a free monthly
eLetter.
Benefits of
The Rummage Group
We work very differently than other firms in the industry and truly are a
“One Stop Shop”. Whether or not you decide to utilize the Rummage
Group and its services, you will at least benefit from a better awareness
of your options. Some things to think about……….
“A Knowledgeable Partner To Help You”
Rick Rummage spent 20 years in the Brokerage Industry as a Top Quintile
Producer, Sales Manager & Branch Manager. He has hired, coached and
trained over 100 Financial Advisors. He worked at a Wire House, Regional
Firm and Bank Brokerage and has had first hand experience moving a practice.
Rick knows firsthand the challenges of being a Financial Advisor as well as
what it takes to move a book of business.
“How We Save You Time & Frustration”
Changing firms can be a full time job. Each market has anywhere from a dozen
firms up to hundreds and the average Advisor is only aware of a few. Each one
of these firms has strengths and weaknesses. Financial Advisors need to focus
on their clients at all times instead of researching which firms exist in their
market. We have spent hundreds of hours researching & building relationships
with many companies, so that you can focus on building your business.
“How To Get A Good Transition Package”
We know the mindset of the typical hiring manager, how recruiting affects
his/her goals, his/her negotiating flexibility, the approval processes, and how the
entire recruiting process is typically managed. This allows us to help you get a
very competitive transition package.
“The Real Pros & Cons Of Each Firm”
Because we do business with many firms on the street, we can give you
firsthand knowledge of each firm’s management, product offering, clearing firm,
technology, grid payouts, T& E allowance, administrative support, benefits,
culture, titles etc.
“Questions You Should Be Asking”
Transitioning your clients is the number one question during a move. There are
various strategies that can help you transfer more of your clients. There are
many things to think about: Should I have a business transition coach? Is my
firm part of the protocol? What will happen with my Non-compete or contract?
What should I tell my clients and how should I contact them? Who puts the
ACAT packages together and when are they mailed? Will clients get the same
margin rate and fees as they currently do? Should I have an Attorney and who
pays the fee? We can help you with these and many more important questions.
“How To Select The Right Firm For You”
Since we have relationships with many firms, we are unbiased about which
ones you consider. We can get you in front of multiple firms when necessary.
We work with Wire Houses, Regionals, Independents, Banks, Insurance
Companies, RIAs & Discount Firms. We can help keep you from possibly
making a big career mistake by ending up at a firm that does not meet your
needs. We don’t try to sell you, we try to help you. We build our business via
referrals from happy clients and we hope you become one soon.
.©2010 The Rummage Group
The Rummage Group
Off 703.435.2822
Fax 757.299.4677
Cell 443.739.7866
[email protected]
www.therummagegroup.com