New Wirehouse World; Advisor Peer Groups; Life After Wall Street: May Research—Slideshow

In this issue of Research, we look at the consequences of the industry’s M&A dance and different ways advisors channel their drive to help others.

The New Wirehouse World

Experts assess the consequences of the industry’s M&A dance.

As the financial crisis peaked in 2008, the wirehouse firms found their results and share prices plummeting. A toxic cocktail of bad bets on real-estate assets and collateralized instruments was dragging them down, way down. To prop up their capital foundations and ensure their operational future, most of them participated in what analysts call “shotgun weddings.”

To assess the pros and cons of those M&As—and the rumored possibility of a future merger involving UBS-Americas and Wells Fargo — Research spoke with a variety of experts and industry insiders. Their opinions vary widely on which organization has benefitted most (and least) from the shotgun weddings—and on the outlook as integration work continues and the pros and cons shake out.

 

The Power of Peers

Peer counseling groups offer distinct advantages.

Over dinner at a steakhouse in Portland, Ore., recently, nine advisors with Commonwealth Financial Network traded stories about clients, practice management challenges and their business models. By dessert, they had decided to form a study group.

“We all operate within a 30-mile radius but there aren’t a lot of opportunities to meet except at conferences or wholesaler meetings. This is just a great way to share ideas,” notes Pat Sturr, a partner in a retirement income planning practice in Lake Oswego.

Peer counseling—in the form of study groups, conference calls, even online chat rooms—has grown deep roots in the advisory community. While there is no definitive research to suggest it helps push advisors to new heights, the anecdotal evidence that it does is convincing.

 

Life After Wall Street

For some professionals, leaving finance is a step toward changing the world.

The “Me Generation” could be aging into the “Benevolent Generation” — at least evidenced by the humanitarian second acts of a number of Wall Street war baby and baby boomer retirees. For their next chapters, these men and women who built lucrative careers in financial services are following another passion, working not to make money but to make a difference.

At age 57, Credit Suisse ultra-high-net-worth advisor Virginia DeCristoforo adopted three at–risk children. IMCA co-founder and hedge fund manager Jim Owen channeled his passion for the values of the Old West into his Center for Cowboy Ethics and Leadership. Jamie Waller, a director of separately managed accounts, became a Christian missionary in Guatemala. And Bracek & Young Advisors co-founder Hal Young brings computers to destitute orphans in Guatemala so they’ll have skills to land their first job.

 

Realistic Optimist

Pershing CEO Brian Shea has an eye for opportunities.

For Brian Shea, a bit of good luck 28 years ago cracked open the door of opportunity. Brainpower and hard work propelled him to the top. Promoted last October to CEO of Pershing, the BNY Mellon-owned market leader in clearing—with more than $900 billion in assets in custody and 1,500 clients globally—Shea, 50, kicked off his long career at Pershing right out of college.

“Brian understands so many aspects of our business beyond most mortals because he’s had experience in so many different [areas] of it. That gives him a distinctive perspective,” says Richard Brueckner, Pershing chairman.

In tandem with Brueckner, Shea had been active in the company’s leadership as president-COO for nine years, when Brueckner, formerly chairman-CEO, promoted him last fall. Now he’s at the helm of all Pershing affiliates worldwide, which embraces 21 offices and 6,000 associates.

He came onboard when the clearing business was, well, strictly clearing. Now the client- and service-focused Shea calls the description, clearing, “outdated.”

 

Managing the Pipeline

Bill Good tells how to keep sales prospects moving.

At any one time, your prospecting pipeline consists of players in these categories:

Hot. The first appointment has been set. In case you are wondering, the sale begins with the first appointment.

Red Cherry. A “red cherry” is someone who is interested and financially qualified to do business with you within a reasonably short period of time. Typically, this person has requested information from you. They might stay in this condition for weeks, or even months, as you gently nudge them to the point they are interested enough to set the first appointment.

Green Cherry. This prospect is interested but either cannot make a decision now, or does not have funds available now. The "funds due date" or "decision date" can be months or years down the road.

Sales Seminar columnist Bill Good explains these and many more pipeline players—even how to resurrect some nearly dead prospects.

 

A Constrained World

Alexei Bayer argues America’s frontier ethos is obsolete.

The global economic system came into existence after World War II and at first it encompassed North America, Western Europe, Japan, Australia and little more. Over the past two decades, most countries, many after toying with various alternatives, also embraced financial capitalism, private enterprise and free markets. But, even though the U.S. economy has shrunk relative to the rest of the world, the system itself remains very much an American creation.

The United States devised the rules that control global commerce, provided the dollar as a reserve currency and lent military muscle to safeguard the system from non-economic disruptions. Not surprisingly, these U.S.-created arrangements particularly benefit the U.S., evidenced by the fact that American multinationals have expanded around the globe more readily than companies of any other nation. Half of the 100 most valuable global brands are American, including 17 of the top 25, according to 2010 data from Interbrand.

 

The Research Magazine Guide to Natural Gas Investing—2011

Investors can find attractive opportunities—thanks to several trends affecting the natural gas industry.

In remarks delivered before a meeting of the New York Society of Security Analysts, John Somerhalder, chairman of the American Gas Association and chairman, president and CEO of AGL Resources, explains why he expects continued growth in demand for natural gas.

Highlights: “When you combine shale gas with coal seams and tight sands gas—two other sources that are considered ‘unconventional’—your total is more than 5% of the gas we now produce in America. The ‘unconventional’ has become ‘conventional.’ ”

“Demand will also grow for natural gas as a back-up to renewables such as wind and solar power, and we also envision a time when there is a sustainable renewable natural gas market that will actually compete with solar and wind power.”

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