Watching the Iraq air war cov-erage on CNN, viewers may have gotten the impression that our military has pilots who merely select a target, point, click, and a smart bomb hits its objective. But it's not that simple to locate a bunker at night from 30,000 feet while traveling at subsonic speed.
If they took the time to think about it, those viewers probably would realize that satellite technology plays a part, and they may have some vague Hollywood idea about Special Forces going behind enemy lines to observe, identify, and laser-mark their targets long before that bomb was dropped. Few, however, have any exposure to the basic principles of network-centric warfare: See first; understand first; act first; finish decisively.
You can employ those same principles with deadly accuracy in your struggle to out-maneuver your competition–even the Goliaths of the industry. But before you can begin your intelligence gathering, you must first commit to what you stand for. The Constitution defines the stand of the American people and that is what our military swears to defend. By definition, the purpose of every U.S. military engagement should be to correlate with that stand.
While not a perfect analogy, don't doubt its applicability to you and your business. If you don't take a stand, your client base will determine one for you, by default. Your daily actions and words reflect what you believe. Like a beacon, your stand guides prospects to you, attracting the type of client who fits and repelling the type who doesn't.
Determining what you stand for can be a powerful experience. It is your core belief that dictates the rules of your business; makes relationships clearer; manages expectations; and helps product selection.
When you direct money into a mutual fund, for instance, you select it based on the manager's stand–his or her investment objectives. You are counting on the fund to stick to that style. Value managers are a good example. They've had to be true to their stand, even while watching assets pour into the hands of growth managers. They know that value will outperform growth over time; they just don't know when it will. So they must stick to their stand even when the whole financial world and media say they're wrong.
In selecting your products, you'll have to make some decisions. Do you believe the markets are efficient, or not? Do you believe in market timing and stock selection, or asset allocation? A stand is your core belief, not a judgment, made without proof of the final outcome.
When I was a stockbroker, I focused on putting my clients into a 3% wrap management program. Not long ago, I mentioned this to a magazine editor (not at Investment Advisor) who responded by telling me wrap accounts were a ripoff. He was obviously too young to know that when I put my clients into the stock market in 1975, other brokers laughed at making such a small fee. Meanwhile, my firm's product department gave us incentives of 8% commissions and bonus trips to exotic locations to sell tax shelters and limited partnerships on which they received a 25% management fee. Ten years later, most of those people had lost their principal, but my clients had just entered the greatest bull market in our financial history. Investors who stayed in the market turned $100,000 accounts into millions, net after fees. I didn't know that was going to happen, but I believed fee-based money management was best for those clients.
Standing Out
Here are some examples of professionals who have taken stands and stuck with them. Dale Rogers, president of The Rogers Companies in Ft. Worth, believes the 401(k) plan is the salvation for the average 50-year old's retirement. He also believes that asset class investing is the only way to manage those assets. He is unwavering in his stand.
Michael F. Lane, director of TIAA-CREF Advisor Services in New York, believes that "financial planning is about advice and direction, an ongoing client-counselor relationship designed to educate and increase the likelihood of the client achieving defined goals and objectives so as to make a difference in their lives and their ultimate legacies,"
Lewis Walker, an independent advisor at Walker Capital Management Corp. in Norcross, Georgia, believes that his job is to help clients "understand the true purpose of their money, and then develop an investment strategy that gives them the best chance to achieve that specific purpose." John Byrd, of Byrd Capital Market Advisers, Inc., in Arlington, Texas, argues that it's not enough to just take a stand. "You must then make a truthful assessment of your own offerings and align those with your beliefs. This will determine the effectiveness of your marketing activities to become a viable and preferred choice of your target market. If you miss this step, your actions to reach your objective may waste valuable resources and you may lose ground."
So how do you form your stand? First, begin to gather intelligence (see first; understand first), and ask these questions: What, exactly, is at stake (market share, niche, prospects, existing client base)? Who are your opponents (Wall Street firms, CPAs, attorneys, other advisors), and what is their stand? How do their weaponry (products, services, pricing) and delivery systems (advertising budgets, adjunct services, name recognition, strategic alliances) demonstrate and facilitate their stand?
You might say this research seems like a lot of work, and wonder if is it useful. But don't take my word for it; listen to a peer.
Ray E. LeVitre, a former Merrill Lynch office manager and now president of New Worth Advisory Group in Salt Lake City, uses his behind-the-lines knowledge of this giant competitor to fashion his own marketing strategy. He educates prospects by exposing Goliath's high-commission products (B shares) with back-end charges and no incentive to provide service long term, in comparison to his practice of ongoing, consistent service with objective financial products and a transparent pricing model.
