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Simplifying Your Practice; Seeking Hidden Value: April Research—Slideshow

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The cover story of Research magazine’s April issue looks into a growing trend in advisor training programs toward “Pursuing Simplicity.” This means enabling the development of advisory practices that are more focused, better organized and ultimately simpler to manage. Contributing Editor Ellen Uzelac looks at how this emphasis can translate into practical improvements in client communications, operational efficiencies and more.

Also in the issue, a feature article on “The Measured Approach to Value,” by Gerald Burstyn, describes how value investors today are applying their philosophy to a turbulent market, including through practicing time-honored virtues of patience, diligence and realism.

Among the April issue’s other offerings: Bill Good’s Sales Seminar column discusses a new way to seek referrals related to inheritance; and Kenneth Silber’s Political Monitor column scrutinizes the potential impact of the organization Americans Elect, which aims to provide a third major choice in this year’s presidential election.

Click through the following slides to preview the April issue of Research magazine.

Pursuing Simplicity

Advisor training programs have discovered the benefits of keeping it simple, as Contributing Editor Ellen Uzelac explains in Research magazine’s April cover story.

Billie Gray, manager of practice development for RBC Wealth Management in Minneapolis, sums up the new emphasis: “The ability to focus and simplify is critically important to every advisor’s success.”

The changed approach touches on a broad range of areas, including client communications, branding and identity, as well as operational efficiencies. One technique aimed at focusing on what’s important is phrasing an advisor’s value proposition in not more than 15 words, similar to the way Hollywood screenplays are sold using concise loglines. Done right, this can encourage clients to welcome further conversations.

Some firms are providing compliance-approved content for advisors to distribute via Facebook, LinkedIn, Twitter and other social media. This enables advisors to spend more time on client contact. Another technique aimed at streamlining procedures and focusing on what’s important is the use of disciplined timelines, such as a 90-day engagement schedule for clients new to a firm.

The Measured Approach to Value

Gerald Burstyn interviews value investors about their investment philosophy and how it applies to today’s turbulent stock market.

Patience, diligence and realism are the keynotes of the value approach. “You basically look for companies that you can understand, you figure out how much they’re worth, figure out the discount to the fair value, and that gives you a buy price,” says value guru Vitaliy Katsenelson. “When the companies get to the buy price, you buy them. Otherwise, you just wait.”

Data show that value investors have had a tough time in the past few years, but also that value portfolios over the past decade have outperformed the broader market.

Keeping expectations realistic is a priority for some value investors. “I try to be a singles hitter,” says portfolio manager David Merkel. “I like to come up to the plate and get a hit. I don’t try to hit a home run.”

Where are today’s market bargains? The value-oriented managers of Croft-Leominster, a Baltimore-based investment advisory, like auto parts manufacturer Dana (DAN) and blue-chip Johnson & Johnson (JNJ). Value investor Frank Voisin thinks traditional electronics retailers are “historically cheap” at the moment. He’s bullish on Best Buy (BBY), RadioShack (RSH) and GameStop (GME).

Clearing’s Expanded Mission

Clearing firms increasingly are coming to resemble consulting firms. Beyond their traditional core business of transaction processing and custody, clearers are offering a growing array of services, including giving advice to financial advisors on how to run their practices more effectively.

Helping advisory practices grow is a major focus. “With greater efficiency, advisors will have more time to bring in more clients, as well as more assets from existing clients,” says Sanjiv Mirchandani, National Financial’s president. “When we help our customers grow, we process more trades and custody more assets. So everybody wins.”

National Financial’s growth-oriented products include the Catapult Project, which brings wirehouse-type resources to independents, and Business Process Manager, targeted at creating the paperless office. Pershing is working on an ultra-efficient end-to-end multi-custodial solution, expected to be implemented this year. Upcoming at First Clearing: a business planning tool that helps advisors better segment their books.

Besides fostering organic growth, clearing firms are working to help clients expand through recruiting. For instance, Raymond James & Associates’ Correspondent Clearing organizes recruiting campaigns, and also provides transition and succession-planning services.

I Hereby Bequeath

Sales Seminar columnist Bill Good notes that credible studies show that when money is inherited, the heirs frequently seek new advisors. To be on the receiving end of such transfers, advisors would do well to network with CPAs, lawyers and other professionals.

Good unveils a project he and others are working on, called Final Transitions Planning. It involves developing a nationwide network, organized into local chapters, of trusted professionals who will provide referrals to each other when clients need services related to end-of-life issues.

Dan Murphy, a Wells Fargo advisor and key figure in developing the project, explains how being part of such a network could help preserve existing client relationships, as well as generating referrals: “Using the resource we have built, you have an opportunity to help a client through one of life’s most difficult times. You bring a steady hand, and you bring real help by directing them to a process that the average person never learns because they go through this only a couple of times, have no experience, and are emotional wrecks. When you can help a client during the loss of a loved one, you have a client for life.”

The Third Choice

Kenneth Silber’s Political Monitor column looks at Americans Elect, an organization working to put an alternative to the Democratic and Republican candidates on ballots in this November’s presidential election.

The group is conducting an Internet-based nominating process, culminating in an online convention in June. Among names that have risen high on a draftee list are Ron Paul, Jon Huntsman, Bernie Sanders and Michael Bloomberg. Some hopefuls actively seek the Americans Elect nomination, including former Louisiana Governor Buddy Roemer and Boston University economist Laurence Kotlikoff.

Americans Elect was founded by private-equity executive Peter Ackerman, and its backers include a number of financial industry executives. Consequently, Silber writes, the organization “is getting caught up in the contentious politics swirling around anything related to Wall Street this year.” Left-leaning pundit Robert Kuttner, for instance, decried Americans Elect as a “well-funded, faux-reformist group” and “hedge-fund-spawned third party.”

Silber cautions, though, that “if Americans Elect was designed to be a Wall Street vehicle, its engineers took a considerable risk in building it around a mechanism of online popular voting, especially at a moment of high public dissatisfaction with financial companies.” Indeed, he observes, the prospective nominees include some high-profile advocates of measures likely to generate strong Wall Street opposition, such as Jon Huntsman’s proposal to downsize the largest banks.

To access the April issue, click here.


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