Aiming High—6 Strategies for Success

Much of any success you enjoy in life is about transitions.

How does the rookie transition from endangered species to survivor? How do you, the survivor, transition to affluence, and from there to the pinnacle?

All these transitions are tough. If 100 rookies start today, in two or three years only a handful will still be in the race. Of those who survive, some get stuck at a low level, and still more fall on the way to affluence. From there, only a handful of them make the toughest transitions from affluence to the uppermost reaches.

Let’s say you’ve made it to affluence. You are bringing home $250,000 a year, certainly a good living. But that’s not all you wanted. You want to go to the top.

How do you get there?

To answer that question, I recently had a series of conversations with an advisor at the very top of his game—Ira Walker. Previously in Research, I have said Ira and his team are the “No. 1 team on Wall Street.” OK, he’s in New Jersey, where he was ranked first for the state in Barron’s rankings for 2010 and 2011. Note that the highest-ranked tend to be advisor teams that more resemble branch offices. Ira is one advisor with a very well-organized, well-disciplined team supporting him.

To see my previous coverage of Ira go to www.billgood.com/IraWalker. There you can also download some resources on team building and the Model Day.

Coach Is Also Student

Some background: I first met Ira in October 1988. By that time, he had been in the business three years. He was just wrapping up a year of $300,000 in gross revenue at Dean Witter. He bought into my system. I remember well a comment he made during class that week, “I’m going to be the biggest broker on your system.” My immediate thought was, “Yeah, you and everyone in this room, and everyone I know.”

But I started paying very close attention shortly thereafter when he went out and borrowed $25,000, put the full team in place, and hit the ground running with a full attack on the New York City area pension and profit-sharing marketplace.

Since then, Ira and I have formed a loose partnership. I have both helped him and learned from him, and vice versa.

How High Is Up?

In the early 1990s, Ira and I used to argue, “How high is up?”

I argued that for most advisors, “up” was $2 million a year tops. I based that conclusion on my discovery that the average financial advisor was worth $1,000 an hour working as a financial advisor. I have discussed this conclusion in several Research articles and will not revisit it here. Let’s just assume it’s true.

Based on $1,000 an hour, I felt “up” was $2 million a year in gross revenue—40 hours a week times $1,000 times 50 weeks equals $2 million.

Ira argued—correctly—that “up” was much higher than $2 million a year. When he blew passed the $2 million mark about 1993, he won the argument.

Understanding Leverage

The key is leverage. You and everyone else have exactly the same amount of time each week. Why then do some make it to the end of the rainbow and others don’t?

Obviously some are smarter. Some may be gifted speakers. Some are investment geniuses. But there is one force that must underlie all of your gifts: leverage.

Ira Walker understood and implemented the concept of leverage better than anyone I’ve seen.

Once I grasped the concept of the $1,000 hour, simple logic dictated the team concept and Model Day. By the way, I still believe that a single advisor with a correctly structured team operating in the mass affluent market will peak out around $2 million. To get beyond that, there are two other points of leverage: How money is managed and having wealthier clients.

To transition from affluence to pinnacle, the concept of leverage must permeate the entire business. The rainmaker only makes rain. He or she does not scrub the sidewalk, clean the gutters or take a day off when the sun shines because the sun never shines at the top of the mountain. There, it’s all about rain.

Ira extended my concept of leverage to money management and high-net-worth marketing. In his view, it doesn’t take any more time to manage $1 billion than it does $100 million, or $50 million or $10 million. It doesn’t take any more time to manage 100 high-net-worth clients than it does to manage 100 affluent clients.

The Strategy

In our conversations, Ira and I concluded that a six-part strategy over perhaps five years would set a decent producer on a path that could arrive at the pinnacle. As an aside, yes, Ira is the top retail producer at UBS, a national wirehouse. And yes, there are services available at a national firm that help the rich become richer. But independents and RIAs as well can make this transition. I’ve seen and helped them do it.

Here is the six-part strategy. I will now let Ira speak in his own words:

1. Manage Your Own Assets

“You have to be very, very good as a financial advisor to handle high-net-worth clients.

“You have to be very well versed in diversification, asset allocation, estate planning, derivatives, structured products, and things of that nature. So you become an expert in those areas.

“One of the biggest mistakes I made in my career is that I was more of a money management consultant researching and recommending a diversified group of investment advisors. I can count on one hand the number of great money managers who are still responsible for their track record and still performing well.  I don’t even know if I can get to five.

“In the early 2000s, due to money managers selling their businesses, retiring or underperforming, I decided to take over management of my client assets.

“Because of intense study for years and because of my own record in managing my own money, I felt I could do as good or better job than these money managers.

“Due to the expansion, liquidity, fee structure and tax benefits of ETFs, I decided to utilize ETFs as the basis for my money management strategy, and today, we have seven different models, six of which are ETF-based. We have conservative, moderately conservative, moderate, moderately aggressive, aggressive, that kind of thing. The seventh model is a blue-chip, large-cap blend. The reason why we have it is that some people prefer to see the names of companies they are familiar with. I have been doing this now since 2002, and I can tell you that ETFs are a better way to manage money.