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Portfolio > Asset Managers

Making Your Presentations Count

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If you read the premiere Tactical to Practical column last month, you know our charter: fight the big competitors with small-unit tactics. This month, we’ll show you how to reformulate your verbal presentations to create a more powerful effect. What follows is a method that will help you turn your ordinary presentation into a motivational speech–one that engages the audience and imprints your message. Our objective is to add power to your presentation narrative to move people into action, such as leaving their existing broker to join you.

Robert McKee, the screenwriters’ guru and author of Story (Regan Books/HarperCollins, 1999), explains it best: To create a receptive environment, the narrative should progressively build by moving dynamically between negative and positive changes in what McKee calls “story values.” Here’s an example traditionally used in Hollywood. Boy falls in love with unavailable girl. That’s a negative value. Boy becomes girl’s buddy: positive value. Girl’s boyfriend mistreats her: negative value. Buddy comes to girl’s rescue: positive value. Then there’s the rush of insight: Girl realizes she loves ‘buddy’. These values build the story’s intensity and capture the audience’s emotions. The impact is made on an emotional level rather than an intellectual one, and is more likely to make the recipient open to new ideas.

You can use the same approach to convey your message in a verbal presentation in a way that your audience can relate to. This establishes a context within which they can receive and understand your message and make a decision regarding how it applies to them. The result is a self-selecting choice rather than a “sold” one.

To illustrate how this works, the following example is paraphrased from a remarkable seminar, “What’s Wrong with the Industry,” developed by Joe Kiely, an independent advisor in Greenville, North Carolina. Joe wasn’t aware that he was using the same tactics as famous screenwriters; he only knew that educating his prospects was the only way he could combat the encroaching industry giants. His two-hour workshop has proven highly successful, allowing him to single-handedly capture more than $300 million in new assets over the last five years from right underneath the giants’ noses. I’ve broken out Joe’s central message into five “beats” so you can follow the changing values and the building intensity.

Joe hooks audiences and draws them into his spell, holding them slack-jawed as he spins his tale, building them up and easing them down, making them laugh, maybe even cry; holding all in high suspense as he pays off with a dynamite summary. Upon his conclusion, his audience leans back, satisfied, murmuring agreement, “Yeah, that’s just the way it is for me, too.”

First beat. Here is Joe’s opening question: “Do you know what a good investment return is? Do you have any way to compare your investments independently?” Most everyone answers “No.” This is a negative value.

Then Joe answers the question by explaining that the vast majority of investors underperform the S&P 500–and don’t know it. Joe tells them that they need a tool they can use by themselves that will show them what their investments are doing. He explains the concept of asset classes and that each asset class has a benchmark. “Once investors understand which asset classes their funds represent, they can simply look them up in USA Today’s stock index section of the paper. All the indexes for the various asset classes are here. You now have a third-party source you can go to daily to compare your funds to a benchmark, independent of what your broker or advisor says.”

For most investors, it is the first time they have been given this liberating information. This is the first positive value.

Second beat. Joe asks the audience, “How many of you know if you are effectively diversified?” Most people admit they have no clue, and probably aren’t sure they know what qualifies as “effective” diversification. This is another negative value.

So Joe continues by explaining that diversification means that the actions of any one investment will never affect the entire portfolio. “There’s a reason why mutual funds contain hundreds of stocks,” he says. Investors understand; they don’t want another dot-com or Enron to devastate their portfolios.

Joe introduces the concept of asset allocation by further explaining that investors need to be equally invested across all asset classes to be truly diversified. “Look at what small-cap funds have done over the last three years, or even this year, versus large-cap funds.” He shows the audience an academic study using a grid that tracks asset classes over time, and demonstrates how value does better than growth and small cap does better than large cap, and so on. Investors are surprised to learn that small caps have outperformed large caps two to one, as Joe adds, “Generally you see the complete opposite in a portfolio, as investors load up on blue chips–large-cap growth stocks sold to them by their broker.”

He explains that if all of an investor’s money is in several investments, but in only one asset class–large-cap growth, for instance–that constitutes ineffective diversification. “If your investments move together, you really only have one investment,” Joe continues. Then he gives them the solution: “It’s only when each of your investments move independently in the market that you can accomplish effective diversification of your portfolio.” This is another positive value.

Third beat. Joe asks another question. “How often do you rebalance your portfolio?” Few individual investors have ever even heard of the concept (negative value).

Then Joe educates some more: “The definition of rebalancing is periodically selling the winning asset classes and repositioning the proceeds into the so-called ‘losing’ asset classes (selling high and buying low) to maintain the balance of percentages of the portfolio.” If you followed the method of keeping only the winners–selling low and buying high–you’d soon have 80% of your portfolio in a handful of winners. Then, when the market turned around, which it always does, and those winners turned into losers, it would dramatically affect your total portfolio.

“Only by systematically rebalancing your original portfolio at least annually,” Joe advises, “will you gradually sell those asset classes that have gone up while buying those that currently have lower returns.” This approach eliminates the negative results of investing driven by emotions. This is another positive value.

Fourth beat. Next, Joe asks, “Do you know how much you are paying in commissions or fees?” Charges have different names and amounts and vary from product to product and from advisor to broker. It’s almost impossible to do a cost comparison, so most investors just take the advisor’s or broker’s word for everything.

“Common sense tells you that the lower your fees, the higher your returns,” Joe tells the audience. “But just look at all the commissions and front-end fees, yearly fees, back-end fees, trailers. If you don’t understand how all these fees work, you’re probably paying all of them.” When members of Joe’s audience hear this, they cringe. This is, of course, a negative value.

Joe explains that the advisor doesn’t have to be paid by front-end or back-end fees. Instead, an advisor can use no-load mutual funds or go to a discount broker. In fact, most people don’t even know how their broker gets paid. Brokers often say, “It doesn’t make a difference how I get paid–what makes a difference is whether or not this mutual fund is good or bad.’

Joe recommends to his audience that they pay for advice on an ongoing basis, just as you pay for haircuts, meals, or any other service. “Never pay an up-front fee and never pay a back-end fee.” The audience quickly understands that if you eliminate the front-end and back-end fees. and you pay an advisor as you go and hold that advisor accountable, you have a better chance of winning. Here’s another positive value.

Fifth beat. Then Joe asks, “Can anyone here understand their brokerage statement?” Laughter erupts as the audience agrees that no one reads, much less understands, Wall Street brokerage statements (negative value).

Joe neatly ties up all his points this way: “If the vast majority of brokers underperform their benchmarks, and the majority of investors don’t know how their investments are doing, don’t understand their fees, are not effectively diversified, and don’t rebalance their portfolio periodically–well, then, why would their broker send them a statement that they could understand?” While everyone is nodding and chuckling in agreement, Joe reviews his own firm’s performance report with them, point by point. Back to a positive value.

The goal–providing a rush of insight for each member of the audience–is now achieved. You can almost see the room light up with comprehension. Joe’s audience leans back, satisfied, feeling empowered.

The last beat of information should be followed by a revelation of truth previously hidden from view. A believer is won when truth is perceived by the listener. The giants depend on fear and ignorance to attract and hold assets. Your weapon is simplicity and clarity in your delivery of information.

Larry Chambers spent 10 years as a broker before becoming an independent coach and writer. In addition to the 30-plus investment-related books he’s written, he has helped high-profile industry spokesmen gain expert-recognition status. He can be reached through


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