The term “producer” rubs me the wrong way. It’s insulting to clients. Someone who trusts you with his wealth would cringe if he heard that because you sell a lot of securities, insurance, or financial advice, you are referred to by colleagues as a “big producer.”
Steven Drozdeck concedes that the title of his latest book, The Mega Producers (Dearborn Trade, 2003), was a mistake. But beyond its title, the 200-page volume has a lot that will be helpful to many advisors.
Practice management is the great weakness of independent advisors. Many planners and investment advisors simply do not know how to run a business. Even the Certified Financial Planner Board of Standards does not give credit for practice management topics in its continuing education program. It’s no wonder that while we have many qualified financial technicians, only a small number of successful independent advisory businesses compete effectively with the giant Wall Street firms. So Drozdeck’s contribution is important. Drozdeck was a broker in the 1970s, trained thousands of Merrill Lynch brokers in the ’80s, and started his own broker training company in the 1990s before becoming a coach, consultant, and motivational speaker.
Explain the concept behind your book. Mega Producers are mostly people who started off as transactional brokers and then shifted their approach to business. Instead of being a typical top producer who manages between $100 million and $300 million, these people are managing anywhere between $500 million to $27.5 billion, with an average of well over a $1 billion apiece. Steve Winks at Senior Consultant, a newsletter, says there are approximately 5,000 such senior consultants in the U.S. managing 25% of all U.S. personal assets. They represent not only the best producers or the best advisors, but also the model toward which the industry is headed. They have really well-integrated teams, processes that are superior, and are able to manage large amounts of money efficiently.
You interviewed about 50? The big thing that I did was to say, “Talk to me,” and then shut up and listened. I’d ask about the biggest mistakes they made, what they wished they had done differently, what they will do differently now.
Where were they from–wirehouses, regional brokerages? A combination. A few came from wirehouses and regional brokers. Some were RIAs. I would say about 50% were independent.
What were their most important ideas? I like to divide that up into four categories, with one or two key ideas in each. These categories represent the key things that everybody needs to master to be very successful: communication skills and client management, practice management, professional knowledge, and personal and personnel motivation.
Where do most advisors go wrong with regard to these four categories? They are deficient in one or more of them. Maybe they are not running their businesses effectively or are trying to do things by themselves instead of creating a team and delegating responsibilities.
You advocate building a team and building your business and adding people to do so. A growing number of advisors are saying they do not want to grow. They say they can’t find the right people. The payoff is not there. And it requires different skills. Yes, yes, yes, yes.
Why do it, then? If you want to have a large business, manage substantially larger sums of money, and create an organization, then there is a different approach. Some people aspire to this. The fact that some advisors have tried the bigger business model and failed doesn’t mean it doesn’t work. It really means they tried in an inappropriate way. That’s what this book says: There are a number of approaches of doing it well.
But why do it? Remember, we are not living to work. We are working so that we can have a lifestyle that we want to achieve. Being a financial advisor is a profession that allows us to achieve a lifestyle that gives us fulfillment. The vast majority of Mega Producers are able to step away from their businesses and spend a lot of time with friends and families, or working on charitable activities. They have created a business where they can walk away and have other people do the work, allowing them to take vacations or to do only that aspect of the work that they truly enjoy the most, whether it’s being the rainmaker or the portfolio manager. If you have a smaller business, you not only have to play to your strengths but to your weaknesses. But I don’t want to say that this is the only way for everybody to go.
You also create an entity that you can transfer. Most certainly, you are creating a business organization that you can sell. So when you are transferring a business that is managing $1 billion or more, it will go for a substantially higher price than a one-man shop.