Archive for the ‘business management’ Category
My wife Kathy and I recently attended a function at Stonehill College in Easton, Massachusetts. We both graduated from Stonehill more years ago than we care to remember but our ties to the college remain as strong as ever since our daughter, Julianne, is a freshman there.
As we look back, one of the most important influences in our lives was our college education. Depending on the chronological period you were enrolled, you may have experienced anything from Vietnam protests to Wi-Fi in the cafeteria. Suffice it to say, America’s college campuses have evolved significantly over the past few decades and will continue to change to meet the needs of incoming students.
If you are in a position to do so, I urge you to consider contributing to your alma mater. The recent economic turmoil has not only wrecked havoc with endowment funds but has also increased the number of students requesting financial aid. Given the importance of a college education in today’s world, it is vital that qualified individuals receive the funds they need to succeed.
Tags: business, clients
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On Monday, March 22, 2010, the Senate Banking Committee (Committee) approved the Restoring American Financial Stability Act of 2010 (RAFSA) by a party-line vote of 13 to 10. I am pleased to report that the bill passed by the Committee contains a provision directing the Securities and Exchange Commission (SEC) to study all the issues surrounding harmonization of broker-dealer and investment adviser oversight.
As mentioned in my March 15 blog, I supported the inclusion of this study in the RAFSA because it will provide the SEC, investor advocates, financial services industry professionals, and other stakeholders with the opportunity to shape these important regulatory reforms without a rush to judgment in a politically charged atmosphere. From the start of this important debate, we have embraced regulatory reforms that support universal access to competent investment advice, clear and concise client disclosures, and uniform and effective regulatory supervision of all market participants. We still support the creation of a new universal standard of care and an industry-funded self-regulatory organization for investment advisers. We believe the study represents the best available opportunity to achieve our goals. I will continue to monitor RAFSA as it makes it way to the Senate floor in the next few months.
Many of you responded by letting your Senators know how you feel about important aspects of this legislation. We are grateful for your support and involvement in the process. It does make a difference.
Tags: business, Compliance, independence
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A growing number of Senate Banking Committee members are indicating their support of a provision that would replace the regulatory reform draft legislation’s requirement that all financial advisors become registered investment advisers with an amendment that would direct the SEC to study all the issues surrounding harmonization of Broker/Dealer and investment adviser oversight.
I support the adoption of the study because it will provide an opportunity to shape regulatory reforms in a manner that is workable for all client situations and across all business models. Furthermore, I continue to support the creation of a new universal standard of care and an industry-funded self-regulatory organization for investment advisers. I believe the proposed study represents the best available opportunity to achieve these goals.
I urge you to call or write your Senator in support of an SEC study of these important issues. The Financial Services Institute provides a link that can help you quickly contact your Senator through the FSI Advocacy Action Center: http://www.bipac.net/issue_alert.asp?g=FSI&issue=Senate_Banking_Committee_Study&parent=FSI
I have personally contacted my Senators and asked them to support this study. I urge you to join me so we can maximize our impact.
Tags: business, Compliance, independence
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The Commonwealth of Massachusetts passed final regulations concerning the protection of its residents’ personal information. The regulations outline minimum standards that must be met with regard to the protection and maintenance of paper and electronic records that contain personal information. To view the rule in its entirety, please click on the following link:
www.mass.gov/Eoca/docs/idtheft/201CMR1700reg.pdf
The regulations apply to “all persons that own or license personal information about a resident of Massachusetts.” This means that any person or business that collects personal information in the course of their business and has customers or employees who are residents of Massachusetts must comply. It does not matter if you or your business is not actually located in Massachusetts.
Massachusetts considers personal information to be a resident’s first and last name or first initial and last name in combination with one of the following: Social Security number; driver’s license or state-issued ID number; financial account number; or credit or debit card number.
The deadline for compliance is March 1, 2010.
If you determine that the rule does apply to you, there are a few steps that you should take. First, read the regulations. It is important for anyone these rules affect to fully understand their scope and requirements. Second, identify the types of personal information that you or your business collects and maintains. The typical Rep/Advisor has multiple pieces of client information that must be protected. Third, develop and maintain a comprehensive written information security program. This program is required by the rules and must cover various items. Finally, implement necessary computer security requirements. As part of your written security program, you will need to maintain certain minimum standards of protection for electronic records.
Tags: business, Compliance
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The Financial Services Institute (FSI) is the “Voice of Independent Broker-Dealers and Independent Financial Advisors.” The organization has done a terrific job of speaking out on issues that affect independent advisors.
FSI President and CEO Dale E. Brown said last week that proposed legislation that could require independent broker-dealers to reclassify independent financial advisors as employees would destroy their business model and reduce their independence. “The independent broker-dealers and the independent contractors they license have a three-decade record of compliance with applicable rules, so there is no need for the IRS to be given any reason to question whether or not our industry is appropriately classified,” Brown said.
Currently independent brokerage firms pay reps on an independent contractor basis, allowing them the independence of working for themselves. But legislation that was introduced to the House in late July by Rep. Jim McDermott (D-Wash) and to the Senate in December by Sen. John Kerry could lead to high costs and extra hassle for independent broker-dealers.
Please contact your representatives in Washington and urge them not to support S. 2882, the Taxpayer Responsibility, Accountability and Consistency Act of 2009.
Tags: business, client ownership, independence
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I recently had an enlightening conversation with a financial advisor who told me that her broker dealer was charging her $300 for each advisory account- and she couldn’t pass that fee along to clients. Another Representative confided that his brokerage firm charges 30 basis points on all advisory accounts- even those that he manages himself.
The bottom line is that payout isn’t the only thing to consider when evaluating a broker dealer. Be careful to ask about ticket charges, account fees and other “add-ons” that can significantly impact your take-home compensation.
Tags: business, transition
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Here are some ideas for helping you deal with the current economy:
- Tip #1- Keep Your Eye on the Ball.
Develop a strategy for your business that allows you to set realistic goals – and to support those goals with cost-effective marketing and communications strategies. We have all heard the adages, “If you fail to plan, you plan to fail” and “It is better to attempt great things and fail than to attempt nothing at all and succeed.” These statements reinforce the importance of knowing where your business is going – to plan for the future. Take the opportunity to step back from the day-to-day operations of your business and reassess what has made you successful to date. Analyze your business by taking an in-depth look at your previous year’s revenue. How does your revenue compare to past years? From where did your revenue come? What services are most profitable for you? What industries are you serving?
- Tip #2 – Know the Criteria for Your “Ideal” Client.
When building a services business it is important to attract the right kind of clients – not just clients with a willingness to pay your fees. Think for a moment about your very best clients. Now think of clients you wish you weren’t working with. Create a list of attributes of your best clients. What characteristics do they have in common? How were they attracted to you? Why do you like working with them over other clients? Make it a goal to grow your business by selectively adding clients you know are a good fit.
- Tip # 3 – Know How You Got Here in the First Place.
What made you successful when you started your business or went into practice? If you woke up tomorrow and had no clients, what would you do first? Now is the time to refocus your efforts on what has worked for you in the past. Your future success is dependent upon being able to replicate what made you successful when you started your practice or business.
- Tip #4 – Target Your Audience and Your Message.
It is highly likely your marketing strategy will be focused toward a number of target audiences – prospective client groups, referral sources, industry sectors. Make sure your messages are uniquely targeted to the audiences you seek to reach and that you are responsive to the needs of each group.
- Tip #5 – Show Them, Don’t Tell Them!
Clients want to see you have done what they need. Focus on providing representative examples of your expertise. Don’t just create a list of services – show prospective clients that you have the breadth and depth required to work with them based largely on your past experience. Create case studies of your best work that summarize each client’s situation, your approach to the problem, and the solution. Results sell!
- Tip #6 – Focus on Relationship Building.
If you are in a service business, the vast majority of your clients have likely come from referrals. Past clients, other professionals, industry associations, friends, family, and business associates have all contributed to your current success. Make a list of everyone you want to reconnect with and promise yourself that you will call a few people each week – just say “hello,” check in, and see how they are doing. Meet for breakfast, coffee, or lunch. Staying connected to the great people you have met throughout your career will lead to opportunities you may never have imagined.
- Tip #7 – Reinvigorate Your Sales Strategy.
Put a process in place to track your sales progress based on where you are with each contact. Track the logical flow of developing new business. Identify your A-level prospective clients and referral sources, track initial communications, summarize your contact’s need, summarize your solution, propose and present your solution, follow up, and negotiate your fee structure. Track both the opportunities you win as well as those you don’t. Remember to stay in touch with your A-level contacts.
- Tip #8 – Be a Stickler for Responsiveness.
If a client or contact calls you, call them back. If they send you an email, respond – the same day. Even if you have no news to report, call them back. It continues to amaze me how many service providers do not return their phone calls and emails.
- Tip #9 – Exceed Your Clients’ Expectations.
When you exceed client expectations, not just meet them, their view of you as a service provider is remembered…especially when they are evaluating their continued relationship with you and your firm.
- Tip #10 – Focus on the Media.
When the economy is tight, there is no better way to expand name recognition and awareness of your firm than to focus on strategic public relations. Develop a public relations plan that will enable your firm to communicate with the media on a regular basis, position members of your firm as subject-matter experts, help you pitch articles to targeted publications and to communicate newsworthy events at your firm. For increasing name recognition, there is no better tool than a targeted strategic public relations effort.
- Tip #11 – Communicate with Your Clients.
Keep your clients in the loop on the work you are doing for them. Let clients know what changes and service enhancements have been made at your firm to better serve their needs. Send a newsletter, an email communication, direct them to your website, or call your clients personally. However you choose to do it, stay in touch with your clients on a consistent basis.
- Tip #12 – Use Your Invoices as a Marketing Tool.
Every month you have the opportunity to communicate the value you deliver to clients through the invoices you send. Ensure this important tool conveys the value of your good work. Don’t just send a bill “for services rendered” with a dollar amount due. Take the extra time to provide a detailed summary of the time spent on your client’s behalf. Make sure the process and outcome justifies the fee. Doing so allows you to sell the ongoing value your firm brings to the relationship.
- Tip #13 – When in Doubt, Ask Your Clients.
Before moving forward on a new marketing campaign, expanding into another market, or launching a new service, consult with your clients. Many services firms have benefited from a conducting client interviews, satisfaction surveys, or focus groups. One client was able to save $40,000 per year on an advertising strategy that respondents to a written survey said had no bearing on their decision to use or refer clients to the firm. Particularly in a tight economy, you need to know your clients’ perceptions and what is important to them.
Tags: clients, Marketing
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Much has been written and discussed lately about alternative products. That is, those investments that are not deemed to be a “standard” part of a client portfolio. Of course, that could lead into a significant dialogue on what is “standard” or “normal” and what isn’t, but we’ll leave that for another time.
When considering alternative products, the first step is to “know your investment.” At Cambridge, we are fortunate to have a top-notch due diligence staff that carefully screens products before they are made available to Rep/advisors. This extra attention enables Rep/advisors to better assist clients with alternative investment programs.
But the result of such scrutiny is a wide variety of alternative investments that Cambridge Rep/advisors can choose from. Managed futures, direct participation programs, non-public limited partnerships, structured certificates of deposit and other products enable the Cambridge Rep/advisor to create a portfolio that better meets the client’s needs.
Alternative investments won’t be the core of a client portfolio. But they can be important components that are critical to helping someone reach their financial goals. I know many of our financial professionals are using these products confidently, thanks to the work done by the Cambridge due diligence staff!
Tags: business, clients
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Financial professionals seeking to change their broker dealer affiliation should carefully consider the effective date of their transfer. After Labor Day, we begin to (understandably) get more questions about whether a Rep/Advisor should transition now or delay their change of broker dealer until next year. Unfortunately, the answer isn’t a simple one and making a correct decision depends a lot on the individual circumstances of the Rep, their clients and their current BD.
As you are probably aware, FINRA fees and state registrations are paid on a calendar year basis. This means that if you switch broker dealers at the end of a calendar year, you will have to pay most of your licensing fees again in January. Similarly, some Reps pay E&O premiums on a calendar year schedule. So if you’ve pre-paid many of your expenses this year, it may make sense to delay your transition until January. But if your revenue will more than offset those charges, making a move now may be prudent.
Another factor is paperwork management- that is, when is the best time for you to make your move? We have assisted Reps with transitions in every month of the year, and I can only say that there is no “right time” for everyone. For example, we’ve had accountants make the switch at the end of the year, wanting to be done with the process before tax season. But we’ve had other CPAs who transferred in January, knowing they would see their clients during tax season and could have the necessary account forms signed at that time. So whatever works for your situation is the way to go.
You will also want to check the timing of any quarterly payments you receive, such as fees from advisory accounts and 12b-1 trails. It’s best to time your transition soon after you are paid, thereby giving yourself the maximum amount of time to complete the account transfer process. If you receive a large payment in January (typical for fee-based accounts), you’ll probably want to transition in the fourth quarter.
Finally, FINRA closes in mid-December for the remainder of the year. Therefore, if you wish to transition in the beginning of January (an obviously popular month), you should have your licensing documents submitted to your new broker dealer by December 1st at the latest.
Tags: recruiting, transition
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The status of financial professionals as independent contractors is in jeopardy given recent legislation which proposes blanket removal of a safe-harbor provision that has been in place since 1978. On July 30, Rep. Jim McDermott (D-WA 7th) introduced H.R. 3408, the Taxpayer Responsibility, Accountability and Consistency Act of 2009. The bill’s core provisions make it more difficult for employers to classify workers as independent contractors.
While the proposal is intended to address worker classification problems in other industries, it would have serious unintended negative consequences for independent Broker/Dealers, independent financial advisors, and the clients they serve.
Negative impact from the passage of this legislation and repeal of the safe harbor provisions would be significant:
• Independent financial advisors would be exposed to IRS scrutiny of worker classification status
- And could be subject to back taxes, penalties, and interest
• The IRS could force independent financial advisors to become employees of their Broker/Dealer
- This would undermine true independence and mitigate their ability to best serve their clients
- Ownership of clients and the practice could move to the broker dealer
Please call or write your Representatives and urge them not to cosponsor H.R. 3408.
Tags: business, client ownership, independence
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