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I’ve been traveling this past week to several different conferences, and have already picked up some great ideas to share with our advisers. Through my travels, I was struck by a couple of comments that really hit me—about the simplicity and authenticity of business. I’m always surprised about how the simplest and most direct statements are often the most valuable. I had the great honor of speaking at The Society of Financial Service Professional’s (FSP) Arizona Institute. As I was preparing for the event, I remembered that FSP played a large part in one of the largest sales during my retail career. After receiving a large...
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The 10-year Treasury has jumped nearly 75bps since Donald Trump’s election. If you talk with some economists, they’ll say the rate increase will continue; others predict a softening of rates back to the average over the past three years. The Fed has indicated they would like to see rates above 3 percent by 2019. In reality, we simply do not know where rates are going—short term or long term. So, what should you do with your clients in an uncertain rate environment? I suggest you take advantage of this uncertainty and talk to your clients about how to properly mitigate interest rate risks—now and in the future. As rates...
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Part of my presentation at The Arizona Institute focused on the demographic changes over the last 20 years, changes that are likely to impact the retirement income space for several decades. Some changes are the costs associated with increased longevity. Others are the rate of savings in the United States, which has been declining since the late 1970s, resulting in smaller asset values to work with as we seek to generate future income. But, I think the one change not discussed enough is the shift from defined benefit to defined contribution plans we have seen over the past 20 years. Defined contribution plans continue to grow in popularity due...
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In 2016 we experienced a large rise in the sale of fixed annuities. This makes some sense as we moved through an uncertain political landscape in a falling interest-rate environment ... clients were looking for safety and guarantees. However, the use of fixed indexed annuities can provide the same downside safety and produce similar, if not better, returns than a traditional fixed annuity. Our office took a look at the past 30-year-returns of a fixed indexed annuity—using current cap rates—and compared the results from a multi-year fixed rate annuity. The results surprised me. With a 5.25 percent cap rate in years 1-4; a 5.00 percent...
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Momentum continues to move toward the advisory business. I think there are two reasons for this. First, we have unprecedented potential regulation coming in April 2017 favoring advisory business with fees tied to assets under management. Secondly, we are seeing a continued industry shift to more passive investments and lower cost models—both are forcing advisers to use the lower fee structures found in advisory models. Many industry experts expect those fees to continue to be driven down over the next 24-36 months due to regulation and market forces. I agree. So, how can we prove our value to our clients and prospects and protect our revenue...
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I recently listened to a 30-minute podcast featuring Jeb Banner, CEO of Smallbox. Smallbox develops web sites and consults on transformative ideas like putting employees first. The owner works with clients on Factory Days and/or Weeks. At their core, Factory Days are about reinvesting in yourself and your support staff. Smallbox shut down its business for the first time in 2011 for a Factory Week, allowing everyone to get away from the business and work on themselves. And, of course, we can all use time to improve ourselves—recuperate, recharge, relearn and discover new possibilities. Although the experiment was not perfect, it did focus...
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As many know, I am a big college basketball fan. When you look at some of the most successful programs in the country, you’ll find one thing in common: consistency in coaching. Coaches like Roy Williams at North Carolina, Coach K at Duke, Bill Self at Kansas and Rick Pitino at Louisville have all been at their schools many years. Some years have been better than others at those schools, but no one can deny those programs have stamina and a level of excellence that is well above the average college program. Even with successful programs that have seen coaching changes over a period of years, the same culture will likely exist throughout the program....
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If you ask most people what the biggest change the financial services industry is facing, they will likely say regulation. The DOL’s fiduciary standard and conflicts of interest rule has certainly captivated everyone’s attention for more than a year. Regardless of implementation date, firms across America are already changing how they conduct business. But, regulation is only a small percentage of the changes that likely will force us to change our practices—and for the better. Several trends will impact the expectations of our clients in the future as they plan for retirement. Each creates a certain amount of risk, but three...
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I’m not sure about you, but the Garmin advertising campaign excites me every time I see it. It works around the idea of beating yesterday’s performance. As I train for a half marathon, I’m constantly reminding myself that it’s about getting better after several years away from running. Regardless of where your financial services practice is today, you should adopt the same philosophy when it comes to preparing for the new fiduciary and conflict of interest rule. With more than 1,000 pages of text, the new rule can be overwhelming. At times, I find myself wondering how our firm will be able to adapt to all our interpretations...
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Living in Fort Wayne means I can usually find very few direct flights. On a recent connection at a national “hub” airport, my plane was running a few minutes late. So I had a chance to sit down, eat my dinner of M&Ms I’d bought at a kiosk, and relax for about 20 minutes. I chose a bench facing the middle of the concourse and began watching people pass me one-by-one. Some were running to their next connection; others dragging their children through the concourse. A few were simply strolling through the airport, while most were walking briskly. One poor soul was just leaning against the handrail on the moving sidewalk after an...
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The “Boomer”ang Effect Let’s talk about the elephant in the room: Despite what you may think, most baby boomers who transition out of a C-Suite role after age 60 are not “retiring”… Sure, it’s easy to label it that. The indicators are all there -- they are dangerously close to traditional retirement age. They are exiting their current role. They have achieved a high level of success so they have clearly ‘earned the right’ to kick back and enjoy life… It’s easy to conclude they must be ‘retiring’! But they’re not! They are...
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Adversity can come in many forms, sneaking in slowly but then spiraling out of control. How many times have you described a sales slump just like that? I certainly have had my share of slumps during my nearly three-decade career. However, I think it’s important to look inside the problem to keep the adversity in perspective. First, we have to look at the root cause of any adversity. This may seem easy, but almost always the obvious cause is not the real cause. You have to look deeper than just looking at the obvious. Key performance indicators (KPIs) are a great place to start, but even KPIs might not show the heart of the problem. You have to...
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I recently spent a couple of beautiful days in Washington, D.C. Although many people were on fall break visiting our nation’s capital, I was not. My days were spent preparing for, and talking to, members of the Department of Labor. I found the experience intriguing, interesting and awkward—all rolled into one. But, significant change requires all those factors. As financial professionals, we must always be intrigued by our fiduciary responsibilities to our clients, even if we believe we are already providing that level of care. No matter what specialty your financial services practice focuses on, you have to think about all the possible...
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Like many professionals, I am trying to incorporate meditation into my daily routine. With meetings for seven to eight hours of the day and many nights taken up by client dinners, I find it difficult to be present while at home or to simply rest my mind. It’s hard to start a new habit, especially when you don’t feel results immediately. However, I know in the long run that meditation will make me healthier and help me make better decisions for my sales division. One of the reasons I started to look in to meditation was the advice from my business coach. But, I found a lot of other information about the brain and reasons why I needed to...
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With the U.S. Department of Labor Conflict of Interest and Fiduciary Rule looming, many people predict a loss of sales and financial professionals. I’ve talked extensively about the opportunity to expand one’s financial practice, but I fear the new rule will create a barrier to entry for many individuals – young and old – thinking about a financial services career. A recent study by The American College found a large segment of the population scored poorly on a financial literacy test, indicating a tremendous need for retirement education, which can best be served one-on-one and face-to-face, not through a digital interface....
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Recently, I’ve been reading “A Beautiful Constraint,” a book I would highly recommend to any financial professional thinking about how to implement changes to their practice. And, a couple of weeks ago, I witnessed an analogy the authors use to discuss creativity. I was walking home to meet a repairman when I noticed students at a nearby school were out to recess. As I waited for the repairman to show up, I watched the kids play on the playground. They ran freely around the designated area, which was enclosed by a chain-linked fence. They pushed the boundaries of the recess zone – some were even climbing up the fence and had...
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Near the end of August, my daily Google search brought an article to my attention: “Advisers seek income replacement as interest rates tumble.”* The article addressed how financial planners are looking at changing the conversation with their clients to increase the return and yield in their portfolios. There were some interesting statements made in the article that I think need to be discussed. The firm being highlighted manages to the asset return minus inflation. They are targeting a long-term return of 3.5 percent to 4.0 percent, which is very reasonable. However, their model portfolio to achieve those returns consists of 25-30...
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I have always been told sales is similar to a teenager’s first car – if you turn the car off to get gas, you aren’t 100 percent sure it will start again. It inevitably does, but you really have to work at it. The summer lull is over and many advisors tell me they don’t have a reason to contact their clients. The stock market continues to be bullish and clients aren’t complaining. Low interest rates don’t seem attractive enough to reach out to clients. There is a lot of complacency in our industry. Let me give you a few reasons to contact your clients right now: Take the option to lock in some gains...
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At the end of August, Vanguard Group’s First Index Investment Trust turned 40. While many people laughed at John Bogle as he rolled out low cost investing designed to match the index instead of beating it, the fact is that the S&P 500 Index Fund now stands at $252 billion in assets. Client sentiment has changed since the launch of indexing. Between the concept and the perception, our world evolved to embrace mediocre investment performance subsidized by low cost management. Over the past four decades, the philosophy of matching the index instead of outpacing it grabbed the attention of many clients. While most managers do not beat the index, it’s...
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I have long discussed the need to position your products and services on value propositions besides rate. However, I want to talk about the advantages of selling in today’s low rate environment and placing the client in a better position using rate as an example. In the long run, the value you bring to your clients by talking about current fundamentals will bring more people back to your office. As I looked at today’s rates (Sept. 6, 2016), the current 30-year Treasury Yield is 2.24 percent. Currently, several insurance carriers are offering five-year, multi-year guaranteed rate annuities with similar rates. I constantly read in the Wall...
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