On this episode of Advisor Skinny, Mike Walters shares some surprising statistics about investors and their actions after a death in a family. By understanding these forces, an advisor will be better prepared to retain clients’ assets.
On this episode of Advisor Skinny, Mike Walters reviews many of the contrapositive actions advisors may be doing that are affecting the value of their businesses. Mike discusses how each has an inverse action and by targeting the activities that bring positive value, an advisor can make small changes that have a big impact.
On this episode of Advisor Skinny, Mike Walters discusses business valuation from the buyer’s perspective. He explains what it means to buy a business rather than a job and how that will ultimately lead to a more successful transition and future growth.
On this episode of Advisor Skinny, Mike Walters discusses contingency planning and how to prepare for the unexpected as a business owner. Join us at:
Google Play: https://play.google.com/music/listen?u=0#/ps/Izjprlaud476kbmiexoozvnmwwy
Here’s the Skinny,
I apologize for my recent absence. Very unexpectedly, we have moved homes.
My two oldest are in college (so mostly out of the house), which leaves just me, my wife, and our youngest. We had been halfheartedly (read as lackadaisically) looking for a new home over the past two years. We were in no rush. But then my wife stumbled onto a home she really liked and we could “see” ourselves in for many years to come.
And if you know the Walters, once a decision is made, we hit the gas pedal and get to high gear as quickly as possible.
Bang – bang real estate conditions in our area had a bit to do with the speed of things, but in a nutshell, we bought a new home in 24 hours and sold our existing home (of 15 years) in under 48 hours. Bang – bang – done. And to make things even more interesting, the previous owners of the home we purchased were relocating to Hawaii, so we bought their furniture as well. Then the buyers of our home expressed a desire to buy our furniture as they were relocating from Chicago. Bang – bang – done.
Its like we were in college all over again, throw the cloths in the car, bang – bang – done.
Or so I thought. We soon learned, the traditional moving companies were not interested in “our small job” as there was no furniture involved. That left us to do all the packing (not something we had anticipated) ourselves. But the good news is that we were able to prune & purge 15 years of accumulated clutter. This cut the moving job in half, literally.
In the end…
In that vein, below is a link to a great article from John Jones, Digital Marketing & Communication Manager at USA Financial. He shares great insight on using Facebook as a marketing & seminar tool. May I suggest you focus on John’s article while thinking how you could revamp, streamline and enhance your seminar/event marketing?
Here is the article link from July 24, 2018, Investment News, “Why advisors are turning to Facebook ads to fill seminar seats”.
I’ll be back at it with regular blogs and podcasts in August.
That’s the Skinny,
Here’s the Skinny,
We’ve all heard before the statement, “the only constant is change”…
Take a moment to reflect upon your business 5 years ago, even 10 years ago. Was it exactly as it is today? Or is it dramatically different?
Many in our industry started out as agents in the insurance/annuity business or as registered reps in the securities business. Yet today, a primary focus is more often directed toward assets under management. But even that segment has evolved.
Years ago, many advisors were managing their own portfolios for investors, Rep as PM (portfolio manager) is the common terminology today. Yet, now, the Rep as PM model is dwindling as advisors embrace the scalability of using third-party asset managers and TAMP programs like USA Financial Exchange. Indirectly, this new model has solved two crucial problems for advisors…
The point is, to use another true cliché, “if you aren’t growing you are dying.”
If you do not adapt and remain agile, eventually the marketplace may diminish your worth to the point of disaster. I am not a close follower of Sears, but it did not surprise me to see hundreds of stores closing. (Sears previously announced 166 stores to close this year. Now they’ve added 68 more to the list. There are less than half the Sears stores today as there were just 5 years ago.)
Strictly from my own consumer perspective, they do not appear to have kept pace with digital or online sales, their storefronts have fallen out of favor and seem out of touch with today’s shopper, and the few times I’ve wandered into a Sears store they struck me as being almost vacant on product and in a state of disrepair. At some point simple math will grind such a business to a halt.
Similarly, in our industry, think of the advisors who have not evolved. Conducting their business as if it’s from the 1980’s or 1990’s. Trying to live on commissionable products alone. It’s an uphill battle and we’ve all seen their decline. Business models need to adapt and evolve as the business changes… Or you end up feeling like Sears in an Amazon world.
So how do you stay ahead? Keeping your business on the cutting edge?
Things are not the same… Thank God… Are you ready?
Everything can (and will) always get better and better with time, as long as you continue to nurture your business as if it is a loved family member. It’s a mindset. And the beautiful option is that you get to choose… Adapt and grow rather than decay and decline.
That’s the Skinny,
Here’s the Skinny,
Socially responsible investing is great in theory, but lacks in real life traction.
Sad but true.
People talk a good game, but as I’ve always said, “If you really want to know what people think or believe, study their actions, not just their words.”
Nuveen just released a detailed study titled, “Investor interest in responsible investing soars.” The study/survey includes great detail within its 9-pages of results, but one graphic including the core questions really caught my attention…
I do not question the validity of the verbal responses from those surveyed. However, in answering questions number 2, 4, 6, 7, and 9… I can’t help but wonder, do their “actions” really support their “words” in real life?
Human nature is tricky.
In real life, our asset management firm, USA Financial Portformulas, offers 30+ investment model strategies, and one of our least popular models (according to assets invested) is our socially responsible model based upon the S&P 500 universe. Interestingly, investors seem to love knowing that we have such a model even though they may not invest in it themselves. I find that predictable, but still intriguing.
Similarly, cigarette smoking is the leading cause of preventable disease and death in the United States, yet over 13% of adults age 18-24 still smoke and almost 18% of adults age 25-44 continue to smoke. In the United States, over 70% of adults age 18+ drank alcohol in the past year (and that’s including ages 18-20, when age 21+ is drinking age). With a growing trend toward marijuana legalization, 22% of adults admit to current usage (even more than cigarettes). I believe it’s safe to say, most adults know these things are not good for their health and most would steer their children away from such things… Yet these industries are all thriving.
Does investing work similarly?
I think, all things being equal, investors prefer the idea of socially responsible portfolios. But if the socially responsible portfolio does not live up to its “less socially responsible peers” and/or it costs more to return the same or less, then investors generally tend to revert back toward traditional portfolio allocations. And financial advisors know this, so many do not broach the subject unless the investor makes such a request.
Do I sound cynical or am I just a realist?
I love the idea of socially responsible investing. And speaking as asset manager, it’s not that difficult to add socially responsible screening mechanisms in order to de-select the socially irresponsible stocks. But until market demand supports the effort, the effort isn’t worth the price of mass deployment (at least not yet). Like I said, we promote a socially responsible investment model, yet it is one of the least utilized models we provide.
Additionally, socially responsible investing can become a bit murky. When does an investment cross the line? If you wish to invest with social responsibility, but you enjoy craft beer or a nice glass of wine, do you re-include the alcohol industry even though it would normally be excluded? Or what about a tech firm that has poor data security and/or outright sells data you would deem private – include or exclude?
I’ve read that the socially responsible investing category under professional management is currently as high as 22%, but again, that math is a bit murky as it does not include passive management (only active or professional management).
In the end, many lay claim to millennials being the force behind the ultimate push toward socially responsible investing. And in many ways that argument makes perfect sense, yet millennials are also credited with the push toward marijuana legalization… And it may be difficult for those two things to coexist. Not all that different from previous generations wrestling with ways for socially responsible investing to coexist with the popularity of alcohol.
It’s an emotional subject and a trend to watch closely. But I contend the trend is probably further off in “action” than it is in “words.”
That’s the Skinny,
On April 1, 2018 we celebrated 30 years in Business at USA Financial. I’m assuming most who are reading this have not spent their career in the financial industry, so rather than focus on the minutia and details of “our” story… I’d like to share a few crucial high-altitude observations I’ve gleaned over 30 years of evolutionary corporate leadership (albeit, my leadership experiences are derived from steering a financial services holding company and its collection of synergistic subsidiaries).
Looking back, our growth falls in to 4 stages:
Cornerstone 1 – Walking Flatlands and Climbing Mountains
Cornerstone 2 – The Corporate Security Fallacy (aka Avoiding Valleys)
Cornerstone 3 – Give ‘Em What They Want, Followed by What They Need
Cornerstone 4 – Moonshots are Crucial
I wrote about each of these Cornerstones and my biggest breakthroughs and learning experiences in the latest USA Financial Trending Report. I invite you to take a look and hope you find the cornerstones valuable and entertaining. Next time I’ll get back on task with my financial writings.
That’s the “30-Year” Skinny,
Here’s the Skinny,
Most of the world does not understand the difference between being self-employed and being an entrepreneur.
The vast majority of small businesses are comprised of self-employed individuals as opposed to entrepreneurs. Yet, in error, many self-employed folks will refer to themselves as being entrepreneurs when they are not.
What’s the difference? Well, let’s start with the definitions from dictionary.com:
Earning one’s living directly from one’s own profession or business, as a freelance writer or artist, rather than as an employee earning salary or commission from another.
A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.
As you can see, there is a distinct difference.
This month, USA Financial celebrates its 30th year anniversary and I’m blessed to have shared in the growth over all 30 years (except for the first 2-3 months anyway). When I reflect back over those three decades, hindsight 20/20, for the first 2 years of USA Financial’s existence, we ran solo and were undoubtedly self-employed. For the next 8 years we were a more sophisticated version of self-employed, as we had support staff, but we were not much different than a business manager who has gained success and respect enough to be assigned subordinate staff and/or personal assistants by their employer/boss.
It wasn’t until ten years into the life cycle of USA Financial that I can confidently reflect back and realize we transitioned from being self-employed to being entrepreneurs. In fact, our turning point was a one-two punch beginning in 1998, when we…
Together, this combination of change required we reconstruct an entirely new business model (and strategy) that took two full years for us to completely re-tool, re-educate and re-deploy. By year 2000, USA Financial was unrecognizable from its former self.
That was our watershed moment in time. From 1998 to 2000 we transformed ourselves from being self-employed to being entrepreneurs… And we’ve been growing ever since.
Someone who is self-employed is simply their own boss, working “in” the business. Whereas an entrepreneur is building a sustainable business model that is not solely dependent upon them for the entity’s ongoing success – and therefore – they tend to spend more time working “on” the business (versus “in” the business).
In our case, the visual transition from self-employed to entrepreneur was dramatic. Notice the permanent and dramatic change in our revenue growth line in 2001 vs. previous years. Prior to 2001, we had minimal incremental increases as we worked hard and performed better at our jobs. But in 2001, we started running an entrepreneurial organization. And for us, that was the ticket.
Please understand, that being self-employed is a perfect choice and solution for many business owners. Not everyone desires to grow an organization and take on the entrepreneurial status. The key is knowing which you desire to be, considering exactly how you desire to intertwine your work life and personal lifestyle so that they successfully co-exist, then structuring your business model and staff accordingly.
That’s the Skinny,