Practice Management
Are Team Meetings Worth It? edit
Monday, August 04, 2014 01:58

Tags: advisors | human capital | managing | Meetings

 I've had my own firm for a long time (more than I like to admit at this point!). Throughout the years, I've tried many different approaches to team meetings, including:

Not having them
Having daily meetings
Having weekly meetings 
Having biweekly meetings 
Of course, the easiest approach is to have no meetings at all. We're all busy and meetings simply cut into work time. It's true that busyness can interfere with holding meetings, but it's hard to argue that no meetings are better than some meetings. Meetings have all sorts of great benefits, we're told, such as building a team culture and promoting communication. But it's hard to find the right approach to accomplishing these great benefits. 

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Through our hard work, we found, like Goldilocks, that daily meetings were too many, biweekly meetings were too few, and weekly meetings were just right. Daily meetings were truly a waste of time. They quickly became repetitive, with each person reiterating what was said the previous day. With such frequent meetings, there was no incentive to prepare or look long term. Biweekly meetings were not frequent enough. There was no continuity, no opportunity to create momentum on new ideas or initiatives. 
Weekly meetings were optimal frequency, but what about content and organization? After a concerted effort over a period of months, I believe that my firm has arrived at the perfect formula (at least for us!). We have a structure to our meetings with requirements for preparation. At a minimum, each person must read a current publication or two and be ready to present anything relevant to our practice. Additionally, we need to be prepared with updates or information to share with the group. The agenda is as follows:
Calendar updates - client appointments, vacations, group meetings along with coordinating who needs to be present at what. 
Client updates - new or lost clients, clients about to retire or other significant planning situations
"Good and welfare" - life events, illnesses and any other notable happenings for clients and team members
Educational sharing - Individual team members share relevant educational material from their current reading.
Technology/practice management - individual ideas and brainstorming on areas that can be helpful to our practice either internally or in terms of client service
Anything else - This can include anything from coordinating plans for a client appreciation event to developing team goals. 
By having an agenda, with preparation and full participation, our team meetings have truly been accomplishing a lot - not only specific tasks and projects but also a more cohesive team with a genuine focus on being the best that we can be. And, that's "just right!"
Andrew Putterman, “Mr. Inside” In Colossal Wealth Management Firms, Comes Forward At An A4A Webinar With An Operational And Strategic Business Proposition To RIAs edit
Tuesday, July 29, 2014 21:32

Tags: advisor industry people | client service | leadership | practice management | productivity | productizing | profitability

Andrew (Andy) Putterman was Mr. Inside in two colossally successful wealth management businesses. He and his longtime partner, Steven Lockshin, a master at building relationships, created a wealth management firm between 1997 and 2007 with $8.5 billion AUM, a firm where the average client’s AUM was a mind-boggling $45 million.


Along the way, Putterman craftily streamlined the way RIAs advise UHWNIs, which gave rise to a new company, a turnkey asset management provider with $70 billion on its platform.

The wealth management business, Lydian Wealth Management, was sold to City National Bank of Los Angeles in 2007 — just before the financial crisis and crash, and the TAMP, Fortigent, LLC, was sold to LPL in 2012.

With his employment at LPL behind him now, Putterman, for the first time in his career, is out of work. Although it’s safe to assume Putterman need not work ever again, not building something is simply not an option.It's just not the way he's built.


So Putterman recently started consulting. He will be Mr. Inside to a group of RIAs. He's talked about it at this A4A webinar, in a session entitled "Ensure Great Execution Through SMART Goals And Key Performance Indicators."

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I have high confidence in Andy Putterman's abilities to manage a wealth management firm for UHNWIs. Since I know his primary motive is to help people, I am happy to help do anything I can to facilitiate Andy Putterman's consulting services improving RIAs operations and profitablility.
Putterman’s wealth management firm became a client of mine in 1998, when it had about $400 AUM, and I watched it over the next decade grow to $8.5 billion. Putterman has always treated me like I was the smart guy, but he has reached business heights I'll probably never know, and he’s still passionate, curious, and trying to help people, which is an irresistible way to achieve success.
Putterman is a humble guy who can help serious, smart advisors who want to grow. While I must emphasize it would require deep engagement, I beleive Putterman will engage and invest as much in you and you do in his ideas. I feel privileged he came to me to tell advisors what he’s doing and how you can partner with him. I trust him.
Before this webinar I guaranteed that if you attended, Andrew Putterman, a brilliant businessman and all-around nice-guy, would speak about how to improve an RIA business and that you would be unable to complain that you got nothing out of it. I predicted that at least 80% of attendees would say that Putterman is brilliant and that they learned from his session. The session was held yesterday and so far, good: Putterman received a 4.6% rating on our five-star system.
However, Putterman's presentation was all muscle and be describes an elaborate organizational system of checks and balances that could be applied by any disciplined manager at an RIA. It requires a commitment to implement it. It's fair to say his consulting services are best suited for RIAs with at least $100 million in AUM but would also  be a  good investment for RIAs managing billions. So it will take some time to see just how much he helps RIAs who hire him grow their businesses. 
I also predicted before the webinar that 1-2% of those attending will hire Putterman and that this group would prosper as a result. It will take a year or two to see if that prediction comes true. If you're an A4A member and want to join a small group of advisors that will be coached by Putterman, please contact Andy Putterman directly at 1812 Park LLC and let him know I sent you. Let's please track your progress and let me know if I turned out to be right.     

Replay this very cool session about how to strategically operate an RIA business.

Build Your Bench: Hire Long-Term Interns For Your RIA And Benefit From A Low-Cost Talent Pipeline edit
Sunday, June 15, 2014 11:40

 Internships that last a summer or a semester do not add value to a busy RIA practice, but that doesn’t mean you shouldn’t take on interns. The key to a productive internship program is to hire interns for much longer periods, up to three years. Louis P. Stanasolovich, CFP®, president of Legend Financial Advisors in Pittsburgh, explains how in a new webinar at Advisors4Advisors. 

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RIAs who put a well-organized internship program in place can train interns to be fairly productive within a few months, and they become progressively more productive after that, says Stanasolovich, whose firm has employed more than 300 interns since 1994. He has hired more than 25 as regular staff, and two are currently shareholders.
Interns allow advisors to focus on the firm’s highest priorities, Stanasolovich says. “We do it to take the low-end tasks away from existing staff, and we continue to train interns so that (the interns) can take on more higher-end tasks in time.”
Interns help your bottom line. Legend Financial, which starts interns out at $8.50 an hour (plus bonuses), hires 4½ interns for the cost of a new member of the advisory team. It’s important to avoid draining off those savings through repetitive training of interns, however, and that’s where Legend’s well-honed system comes in. Here are some major aspects:
Recruiting Methods
Legend never hires college seniors, because their time would be too limited. The firm primarily hires freshmen and sophomores and requires them to work for 1,000 to 1,500 hours a year, including extra summer hours.
The company locates good candidates through career fairs at area universities, by communicating with guidance counsels, by speaking at student functions on campus, and by posting information on the internship program online.
Training Tools
It’s counterproductive to use billable staff time to train interns, so Legend uses videos. Vendors provide some videos, but Legend has created more than 2,000 short training videos using the Camtasia software program.
Once the initial training period is completed, new interns receive face-to-face training by senior interns. Finally, senior interns, who are performing higher-end tasks, receive one-on-one training with staff members.
Plan Ahead
The tasks performed by interns are lined up before the intern walks in on his or her first day. “You can’t afford to be coming up with things for them to do every day,” Stanasolovich points out.
Legend limits interns’ clerical duties to 20% of their time. These can include scanning and auditing documents, cleaning, mailing, organizing office celebrations and cookouts, filling copiers, delivering supplies and documents, and setting up conference rooms for client meetings.
Develop Skills
Once an intern has been on the job for a couple of years, those who qualify take on more important duties. Second-year finance interns, for example, may prepare performance reports, build cost basis of securities, run stock screens, do basic research, run analysis charts, and even execute some trades.
“It’s not just about us,” Stanasolovich says. “Interns get great experience for their resumes.” Legend also teaches basic office and social skills, he adds.
Stanasolovich recommends two books to learn more about the process of developing talent: Topgrading by Bradford D. Smart, and Moneyball by Michael Lewis.
To view the hour-long webinar, click here.
Rating and Comments
Advisors who logged onto Advisors4Advisors to view the webinar live gave Stanasolovich an average rating of 4.5. Here are some of their comments:
“Lou is amazingly generous in sharing what he has learned about building an effective internship program. Great program Andy. Thanks.”
“Good overview of how a robust internship program can function within an RIA.”
‘Started out a little slow and picked up steam along the way. Especially valuable were the Word documents offered as attachments, which included intern interview questionnaires and the hiring process. Speaker is well known in the industry and it would appear that interns at his firm are fortunate to be affiliated with him.”

“Thanks for sharing this information with us. Excellent!”


Here's How To Make Your RIA GIPS Compliant And Reap A Marketing Windfall To Grow Your Practice edit
Saturday, June 07, 2014 11:18

Tags: GIPS compliance | high net worth | integrity | investment management | marketing | RIAs

Global Investment Performance Standards (GIPS) are spreading from the institutional market to the UHNWI market. Failing to become GIPS compliant likely will become a competitive disadvantage for RIAs over the next decade. More to the point, becoming GIPS compliant will provide your RIA with a significant competitive advantage for at least the next few years.

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“Making Your RIA GIPS Compliant,”  a continuing professional education webinar for advisors taught by Amy Jones, CIPM, and Arin Stancil, CFA, CIPM, of Guardian Performance Solutions, explains why UHNWIs are likely to move toward requiring GIPS compliance of wealth managers, provides insight into some of the operational challenges you are likely to face to make your RIA GIPS compliant.
Wealth Managers And GIPS
CFA Institute developed the Global Investment Performance Standards to give investors a uniform way to calculate investment performance, allowing comparisons of one money manager versus another. While applying the standards leaves some room for interpretation by an RIA, it is a credible system for promoting transparency and inspires investors trust. Failing to comply with GIPS when you claim to be in compliance could subject an RIA to civil charges of fraud and, depending on the intent of the people involved and the scope of the problem, could expose an advisor to criminal charges.  Just this past week, a Florida advisor was barred from the industry and fined $660,000 after the SEC alleged he had fraudulently claimed GIPS compliance.
Marketing Benefits From GIPS Compliance
Complying with GIPS makes it easier to use performance results in your marketing and advertising materials. I'm not suggesting an RIA would become compliant and then launch a marketing campaign screaming that you gained X% annually since inception. But when you meet with a potential client, you can show your track record and explain it, and you can tell the prospect to ask other RIAs under consideration if they are GIPS compliant. Since it is likely that just a few thousand firms in the U.S. are GIPS compliant -- and only a small number of them serve UHNWIs and the mass affluent because they are all institutional investors -- you'll gain an important marketing advantage over RIAs not complying with GIPS.

CFA Institute, in what I believe could be a step toward becoming the pre-eminent professional-licensing body in the financial advice industry, recently proposed requiring public disclosure of GIPS compliance. If the proposal is adopted by GIPS Executive Committee, a listing of all investment managers worldwide claiming GIPS compliance will be published annually at beginning January 1, 2015, along with a link to each GIPS-compliant firm's website.


Requiring that advisors claiming GIPS compliance in advertising be listed on the public website helps remove any ambiguity about whether an RIA is indeed compliant. If a firm is claiming compliance is found in a regulatory inspection not to comply with GIPS, it's subject to civil and possibly criminal charges. The public listing makes GIPS compliance verifiable by anyone, promoting public trust in GIPS. In addition, I'd bet it won't be long till Google updates its search algorithm to factor into search rankings the higher credibility of firm's linked to on the GIPS list.       



RIA Operational Issues And GIPS
Jones and Stancil said that becoming compliant could generally cost an RIA $10,000 or $20,000 and will involve every aspect of your firm. Your compliance officer, marketing personnel, and staff downloading data will all need to be involved in GIPS compliance process. Jones mentioned names of two composite management software applications and said those are good investments since PortfolioCenter, Advent Axys, and other popular performance management applications do not natively allow you to create and manage composites.  

The heart of the GIPS system is in formulating “composites,” which are collections of portfolios that include the same investment strategies or objectives. For example, you may decide to collect together all your firms "growth" or "income" accounts as separate composites. The portfolios must be discretionary and fairly represent performance of clients with in those types of accounts.


Advisor Ratings And Reviews
The webinar received an average rating of 4.1 from attendees. Since this session is ahead of the curve, it is not surprising that attendance at the live session was light -- about a 25% of the attendance we normally attract every week. To me, that just means only the smartest advisors are paying attention and it strengthens my contention that advisors will gain a competitive advantage by becoming GIPS compliant. Here are the comments from attendees:
  • Good information. It would be nice if they would be able to quote an hourly rate, average cost, etc. For me, it gave me a starting point of what to look for.
  • Not the most applicable webinar but the information was useful.
  • Very informative. 
  • Very helpful and proactively answered several of the questions I was wondering about.
  • Good, and a scary subject!
  • The fact that the presenters ‘traded off’ during the presentation was very effective, given the topic and subject matter, which was very interesting, but a bit esoteric at times. They obviously know their stuff and as Andy said, are ‘pioneers’ in the field of GIPS. Thanks.
Do Ethics Matter? edit
Tuesday, April 29, 2014 02:55

Tags: business ethics | ethics

We live in an age of investment fraud, tax evasion and patent infringement. We are business owners trying to make a buck. Can we effectively compete while holding ourselves to high ethics? Does it matter?

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We face ethical decisions every day, when bringing in new clients, gathering AUM from current clients, choosing the tools we utilize, dealing with employees and managing our practices. If our primary goal is to increase revenue while minimizing expenses without working nonstop, does it matter how we get there? Does the end justify the means?

Let’s look at some everyday choices we face:

  • A potential new client asks you to evaluate what her current advisor is doing. From the looks of it, he seems to be doing a fine job. Do you attempt to convince the prospect that the advisor is not doing right by her? 
  • Your client owns a rental property that is producing a good return, while not representing a disproportionately high percentage of his investment portfolio. Do you recommend that he sell it, knowing that will increase your AUM?
  • Do you evaluate your hardware or software suppliers based solely on price and promises? Or do you also consider the integrity of the provider?
  • Do you hire primarily lower level employees and keep wages low? Do you minimize raises and push for extra work from your team in order to maximize profits?
  • Do you try to lure clients away from other RIAs? Do you badmouth your competition?

Advisors who run their businesses this way can be successful. I’m not here to say that making choices slightly outside of the lines will or should ensure financial ruin.  It’s not about “Karma.” We all must make our own choices. 

I would handle the above situations as follows:

  • If a potential new client comes in with a portfolio that appears to be invested well, I will tell the client exactly that. I will also say that her choice should be based on a multitude of factors including her comfort with communicating with her advisor and whether other services are important such as financial planning and tax preparation. I will even say that any investment portfolio that my firm manages would likely perform similarly to what she has now. I will certainly say that I would like to work with her if she so chooses.  That way, if she decides to change advisors, I will have gotten the business honestly.
  • If a client asks me whether or not he should sell his rental property, I will perform an unbiased financial analysis and allow him to make his decision. I will also proactively point out that there is a potential for conflict of interest even though I have done my best to present the information in an unbiased manner.
  • We deal in critical, sensitive, confidential client information. Integrity of the vendors and providers I work with is crucial. A company that misleads its clients or was funded illegally or cuts corners on compliance will not get my business. Period!
  • Employees are the backbone of my business. I believe in fair pay, good benefits and pleasant work environment. A team that is appreciated and not overworked will be happy and productive. In the end, that makes for happier clients and easier management!
  • In my (humble?) opinion, there is plenty of business to go around. Investors need the guidance of RIAs. There is no need to go after other advisors’ clients. By working cooperatively with your colleagues, you will establish a network of resources and promote the “public good.”

I once heard a speaker say that he always strived to meet the “grocery store” test: Would he be able to comfortably look his client in the eyes if he came across her at the grocery store? For me, I need to pass the “mirror” test: Can I look myself in the eyes and know I’m doing right?

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