Around the time of the first Presidential debates earlier this year, I heard several talking heads on television and radio separately but equally pronounce the coming vote as “the most important election in our lifetime.” When I heard those exact same words come from the mouths of several colleagues and neighbors in the days and weeks to follow, I knew the spin masters had done their job. What was once the “message of the day” had become accepted wisdom, at least among a certain receptive subset of the electorate.
What is it about politics and sports and business that leads everyone to hyperbolize about this election or that game or this upcoming quarterly earnings report as being “the most important ever?” Why can’t we act like adults and apply some perspective? Was I the only one who heaved a sigh of relief after that first debate upon realizing that while I was not enamored of either candidate, I was comfortable with the idea of either man as commander in chief? One of the great benefits of our political system and our economy is that their smooth running relies less on the folks at the top and much more on the folks underneath who actually do the work.
I suppose part of the hyperbole frenzy is fed by the popular media, which believes that hype is the only way to sell a newspaper or get a reader to crack open a magazine. Take Money magazine, for instance, which on the cover of its November issue promises to deliver “9 New Ways to Solve Your Toughest Money Hassles.” Wow! I thought there were only five or six new ways to solve my money woes! Of course, Money is an easy target. What it promises are the very actions and state of mind you must counsel your clients to avoid: the quick fix, the sure thing, the easy avenue to success. But what about your own success? What will you need to do now to ensure your success in an essentially unknowable future?
There are several articles this month that address those questions. Most prominent is the cover story (page 54) in which the very clever author (okay, it’s me) argues that what has made advisors successful in the past and the present will likely lead to success in the future: Consumers will always value personal, objective advice, and as clients climb the wealth ladder, they value those traits more than ever. A second feature (page 62) relates an intriguing Q&A session between Editorial Director Bill Glasgall and fixed-income master Bill Gross, who comments on the challenges bond investors and all Americans will face in the days ahead. Gross also discloses where he’s putting his money these days. Finally, Mark Tibergien and an old friend of Investment Advisor, Bob Clark, relate key findings of the 2004 FPA Financial Performance Study (page 64). This annual research by Moss Adams has provided insights in the past into the compensation and staffing structures of the elite advisory firms. This year, the survey found that many advisors report limited success: assets under management may be up, as are overall revenues, but profit margins are shrinking. Tibergien and Clark solve the mystery by suggesting that advisors must grow bigger to become more profitable: they must break the $1 million barrier in annual revenues before they can achieve the economies of scale that allow profit growth to match revenue growth.
One theme I kept hearing during my reporting for this month’s cover story from business consultants like Tibergien and his colleague Rebecca Pomering, technology consultants like Kip Gregory, and thoughtful advisors, was that to succeed in the future, you have to systematize your processes now for everything from prospecting to client service to employee compensation. Those firms that systematize become more efficient, attract more of the most desirable clients, build processes to keep those clients happy, and retain employees who serve those happy clients. It’s a formula for success at any time. And that’s no hype.