No matter what the market climate, some FAs will survive. And of the survivors, some will get rich. Even though there are more frowns than smiles among FAs today, there are still smiles.
It takes me about a minute in conversation to classify an advisor into one of two camps: invigorated or not. There are probably a bunch of subcategories for “not.” There is the deer-in-the-headlights crowd. Another group is confused over what to do now. Another group is more or less afraid to call clients. And obviously there is some overlap here.
More than just a few of the FAs I have spoken to this year are having a GREAT YEAR. Trust me, they are invigorated.
This letter is not for them. They are going to be fine.
What Your Peers Are Reading
Another group of FAs are not invigorated. They had a lousy year in 2008 and they’re not smiling right now. They are frowning. This letter is for the group of people kicking, paddling, rowing and pushing. Whatever your age, gender or experience, this applies to you. You can have a good, even great year. I will address you as “Frowning.”
Your business is down. You’re worried. Your investment strategy earned you a 40 percent income reduction plan and an equivalent asset reduction for your clients. My guess is that you want to survive and are willing to work to do so. But you could make some mistakes here that I want to warn you about.
You have probably also vowed to hang on to your cash. That decision may not be in your best interest. In good times, you, and some of the firms you work for, spray money around like water out of a fire hydrant on a hot day in New York City. In good times, what you and they should be doing is stashing some away. But no, that doesn’t happen.
Does this mean you do not cut costs? Absolutely not. You scrutinize every penny, taking care to eliminate every bit of toxic bloat added during the go-go years.
Not once in my many years working in this industry have I ever heard someone say, “Well, looks like the bad times are here. Time to punch up the local advertising. Get better organized. Better strengthen our client service. And let’s push staff training so we can give more and better service in less time.”
When the bad times come, and they have certainly arrived, what do you see your company and the FAs you know doing?
“First, let’s chuck some service personnel overboard.” Never mind that this results in forcing you to spend less time selling, further cutting revenue.
“It’ll cut expenses,” says one cost-cutter.
“What else can we cut?” asks another.
“Advertising!” says one.
“Postpone training!” cries another.
And so the survival potential of you and the company are cut even more. Does this make sense? Not at all. This is no way to run a business whether it’s Reliable Securities in Ditchwater, Texas or Smith Morgan UBS Merrillchovia — the new name for the one surviving firm once all the mergers and acquisitions are done. (Years ago, I named it AGMerrillWebberWitterBros. That had a better ring to it. But those were better times.)
Now is the time to rip open those purse strings and start promoting. Your competitors — those legions who are not calling your clients or even their own — have pulled back. You need to reach out.