How the Leaders Cope

When you ask a dozen advisors for their opinions on important issues you can expect some disagreement. Thus it was in the first IA Leaders’ Council, where a survey of the Leaders’ concerns and expectations was followed with a wide ranging discussion in a transcontinental conference call. In addition to the friendly disagreements, however, there was some remarkable unanimity on display in the written survey the Leaders filled out in early May and the call that followed May 9.

For instance, when quizzed about their own practices, 11 of the 12 report that they use a written investment policy statement with clients, nine have a written business plan and a written employee handbook/career path, and seven have a written practice transition plan.

Since this conversation was meant to serve as a mid-year checkup and forecast, in the call we asked first about the Leaders’ priorities for the second half of 2006. Then we discussed who they considered their competition.

New Clients; More Revenue

Gene Balliett of Balliett Financial in Winter Park, Florida, was one of the four Leaders who placed new client acquisition as his top priority. Why? “Retirement and debt. Over the last five years we’ve had any number of deep-pocketed clients die, and a number have retired. So we have some vacancies to fill.” So how does Gene get new clients? “Client referrals,” he says, but adds that there’s a problem there, too. Since many of his clients are physicians, when they retire they don’t see that many younger doctors who they can refer.

Four other Leaders picked top-line growth as their main priority. “We have a strong budgeting process, and we try to control our costs,” said Don Schreiber of WBI Investments in Little Silver, New Jersey. “But because we are trying to grow revenue–from existing clients and adding new clients but predominantly from third-party money management distribution, top-line growth is really important to us. We’re not at a stage from a business standpoint where we can focus just on controlling costs.”

Surprisingly, no one picked compliance as an area where they expected to spend more time and money. When asked if that meant he had solved the compliance puzzle, Stuart Zimmerman, of Buckingham Asset Management in St. Louis, noted that “because we have the size, we entered into a strategic relationship with NRS who helps us develop our standard materials. Our two lawyers internally review them, and we’re ready to put them up onto our Web site and ship them off to the other firms [more than 100 CPA firms doing planning] who want to model themselves after our billion-dollar RIA.” Zimmerman thinks “there’s a great future for small advisors, but there is a strategic advantage to size.”

Raising the issue of compliance prompted Peggy Cabaniss of HC Financial Advisors in Lafayette, California, to say she hoped she’d be spending less on compliance for the balance of the year, but voiced concern that still “many of the rules from the SEC are vague and grey.” She talks to other advisors who have been “getting different answers from different auditors,” when the SEC visits, so it’s difficult to know “how much money and time can we spend on it.”