Smart Money = Smart Plans. Right?

If you look at and search for "Best Places to Live" some pretty cool places come up.  But it’s no mystery why these places are on the lists there, like the list of top earning cities.  It is a little deceptive to have that list so close to the "Best Places" list

One small city (it used to be called a town) is Greenwich, CT. I am familiar with Greenwich because I lived there as a kid.  My brother and sister were even born there.

Greenwich didn’t just happen.

It was thought out by hundreds of predecessors to the hedge fund managers and dance show hosts who live there now.  The fact is, Greenwich set itself apart and drew many many well-heeled, very bright and interesting people.  Andres Segovia, Sen. Lowell Weicker, architect Philip Ives, the (mill owning) Milliken family… are just a few of the names that come to mind.  (Alice Cooper came to town later.)

They are drawn by the same things.  It’s classy, clean, and country.

The last part is pretty critical.  Greenwich has a real country feel because as it was growing, and some very wealthy people built staggeringly beautiful home there (of natural materials made by truly skilled labor) the town ALSO created a 4 acre minimum zoning restriction for much of the residential area. 

You want to be out of the City?  There’s no better way to do that than to have a nice swath of personal space–say 300 yards–from your neighbors.

We had a big space in what still is called back-country Greenwich.  It was forty five minutes to New York City, sure.  But I had box turtles in the stream that ran through the woods behind my family’s home.

Today Greenwich seems as familiar as Beverly Hills.  And that is what makes it less desirable to some people.  We all want a nice place to live.  Where "everyone knows your name" as the song says and yet where it is relaxing to live there.  There’s pressure enough without having to compete (even psychologically) with the Smith-Jones (and the fortune they made yesterday on shorting some third world currency.)

Greenwich has attracted people who brought their hedge fund lifestyle with them.  The attraction was that they could earn like kings so they should live like kings.  And that is certainly possible there.  But Greenwich is not even one of the top 100 places to live.

This proves, I suppose, that it is possible to have everything and still not be invited to some people’s parties.

Greenwich’s plan has worked to protect the value of the property there.  As was it’s intention.  But the values that where there when I was a kid appear to have moved on– away from the kingdom, and maybe even to another country.

Some have said this is society moving from "class and style" to "crass and vile." If it is, this is the new progression and we may just need to get used to it. 

I am an optimist.  There is historical reference to money eventually supporting taste and style.  Commodore Vanderbilt, of NY Central Fame, was allegedly one of the crudest men around.  And yet he and his immediate heirs have left us with the most elegant grand homes to view, including The Breakers, in Newport, and the largest home in the country, Biltmore in Asheville, NC.

If money can ultimately buy style, there is hope for the future prosperity and comfort of American towns.  Even back country locales. Like Greenwich.

The Future of Declining Value

To notice a decline in the value of what we offer our clients isn’t
about religious fervor.  It is about keeping a practical view and
performing the occasional reality check.

What IS value?

Value is what we–and our products and services–offer clients and
customers.  In fact, the very act of identifying our value can identify

This process is overlooked by smart people everyday–and by
my rough estimate costs them between 50% and 150% of the
sum of their 2007 salary, outside income and bonus combined. 
I shouldn’t need to remind but, for some of us this is a LOT of
money and/or potential power to create change in our businesses.

What is the process I am thinking of?  It’s obvious.


Re-Definition: Communication is our ability to match the client’s
questions and concerns with solutions to gain their TRUST.

For investors and money managers presentations of new ideas
and reallocation of investments to "higher" ground cannot work
as a monolithic, adviser driven action.  In the popular 130/30
space (the investors account is long 130% and short 30%) the
client will ALWAYS want to know what is happening with her

There are three "bits" to good communication in creating
a trusted advisory business.  I will start outlining them in a
few days.


There is nothing more important, and more personally gratifying, than a successful holiday.

What’s that?

Consider what life would be like if you always and only thought of yourself.  I have recently been reminded of what happens when I think mostly about MYself, and it isn’t pretty.  That is not to say self-centeredness is altogether a bad thing.  For example, the anger generated by my own actions is propelling me to quick changes that are already showering new opportunities.   

The holidays are best when lived with others in mind. It seems that the safety net around the craziness of the winter holidays, in particular, is to "do" them for kids (yours or others’ kids), for older people who may be alone, or for people you don’t even know well.  Actually, that is the antidote to hyper-commercialization of traditional Christmas–thinking about others.

I guess this is on my mind because of my call last night with Dr. Eric Plasker.  I asked him about assumptions we make about older people.  Within his response he offered an interesting thought about graceful aging.  Surround yourself with a range of people of many different ages as you grow older.  The ratio of weddings and birthday parties to funerals in youth is 10:1.  As we age that ratio reverses–and leads to a depressing lifestyle.

Antidotes to emotional "rough surf" are within us.  Holidays present  a great time to share this knowledge and add years of happiness at the same time.

Best Time of the Year–and Why?

I grew up with Christmas Carols, sang in the choir, got and gave GREAT presents.  I even got a taste of how others live Christmas once, when I spent Christmas with some Jewish friends. We ate Chinese food, no kidding. (It also revealed to me how isolating Christmas–and we Christians–can be with our Holidays.  Against the many giggling beside Christmas trees this was a very lonely place.)  It was a lesson I share freely.

But that isn’t why this is the best time.

This time of the year, while everyone else is crazily eying stuff made offshore to match with a person on their list, I start working on my annual review of my successes. By taking tally of the stuff that went well, I feel good.  I also make lots of calls to people I need to talk to. This is not only because I am cheap (I am) or because I think a conversation with me has immense value (I do).

It allows me to give them the gift they REALLY REALLY want.  And that is the promise of something successful in the near future.

You can imagine then how I feel as we make agreements for new business–now for next year.  While everyone else is rushing around worried about Henry Kravis earning $51,315 an hour… my friends and I are considering how we can make $1500 or $30,000 or more.  Multiply that by the number of people I call and you can see another reason why I smile at this time of the year.

Most salespeople (and we are ALL salespeople in some fashion) take off this time of the year.  Too bad.  This is a wonderful time to be contrarian.  I call because 1) people are often very glad to hear from me 2) because no one else is calling 3) because they know I am likely to call with an idea that will make us each more money.

This is all in the plan that Napolean Hill shared in the 1920s to maintain your concentration on a specific goal–on rising and on going to sleep–until it becomes a burning obsession.  The tweak that I like is that part of my goal is to find people with whom I can share the neat ideas available everywhere for generating profit and doing interesting things.

Well, I need to make a few more calls now.  Writing this just gave me a great idea for Dr. Plasker.  I need to give him a call.

Are You “Non-Essential?” Congress Might Think So

The recent rollback of the deduction for financial planning is, at best, disheartening.  At worst it is another mark of legislative cynicism about whether Americans (still) have (any) rights under the Constitution and the Bill of Rights. 

There are mixed messages and advertising claims coming from financial behemoths about individuals’ futures which are likely to lead them straight into the waiting arms of IRS auditors and the neo-stormy economic and political forces. Add to the "we can do it for you" claims (or is that TO you?) of financial services advertising on TV and it seems the customers only real protection is "caveat emptor." 

Not much protection is a work-weary world.

For its part, the Financial Planning Association (FPA) has consistently advocated for greater openness and transparency between customer and advisor.  Some might add, facetiously, they the association is actually lobbying for its members. 

That is true.

And yet, FPA member organizations, unlike their fatter and richer counterparts in the financial world, depend on their customers short- and long-term success and security.  Their colleagues from across the table tend to regard fiduciary as so much dog poop–bothersome and smelly in the seams of their $1800 Lobb Shoes.

The teachers gaining ground in this area are propelling a different strategy.  It is the stuff founds even in popular books by Kiyosaki, Russ Allen Prince, and Warren Buffett (remember books?) The superwealthy use teams, niched to specialize in the issues around their clients professional world. Be it film, manufacture, finance, real estate or the other Forbes 400 top 10 sources of wealth, you can bet THESE advisors are immersed and care a lot!  Fiduciary is common.  As importantly, responsibility to the client is defined with razor-blade sharpness (especially, I’d add, for those clients with international ties.)

Another popular program, the Billionaire’s Little Black Book, instructs financial consultants of all stripes–legal, accounting, management, real estate, even medicine–to work in a team, much like a family office does.  The result is a cohesive, realistic and meaningful plan for head of household and family. 

This financial concierge position also benefits the financial consultant and the others on the team for that person or family.

In a world where corporations vie for control over individuals, the advisors themselves are safer from corporate whims–and they generate better fees for meaningful education and updating of plans–when they collaborate with other professionals.  This is not necessarily about generating more from the individuals; it is about providing more of them precisely what they need and want in services.  Can you say "strong referral?"

The term "trusted advisory" maintains value where it is sincere and where it works for the customer–first AND foremost.  If financial planning isn’t going to be permitted as a deduction, at least it might be allowed to embrace the rule of rough and ready capitalism. 

No matter what the TV told you.

Missed Opportunities for Clinton Are An Investment Opportunity For You

It was disappointing to see this past week that the Clintons chose to liquidate the larger portion of their investment portfolio, much of it invested in socially unconscious companies.

It was a hypocritical act.

For a candidate looking to be the first woman president, who is an exceptionally bright and savvy person, it would seem that the blind trust that held their investments might have at least included social screens.

Their social screens would be relatively simple.  On the negative side: no big oil, no alcohol, no tobacco, no guns, no pornography. On the positive side:  agricultural "chemical" companies, water, innovative energy and alternative energy companies, fashion, food companies, consumer products, emerging market companies.  There are also plenty of opportunities today in private equity investment where the Clinton’s can play. There are many innovative and successful small cap stocks. There are terrific dividend paying real estate and oil trusts.

This level of direction of a blind trust by a politician differs greatly from the episode in 2005 with Senator Bill Frist of Tennessee. In that case, Frist allegedly ordered the sale of HCA, a company which comprises a large part of his personal wealth.  The ethical question turned on the timing of the sale and his prior knowledge.

In this case, the direction would have borne political kudos and saved the Clintons lost income. 

It is many years since Paul Simon sang "New York you’ve got money on your mind…"  It seems that we all except that it’s true even when substitute America for New York.  Sometimes we seem to care about money more than… well…anything.

Let’s say that that’s true.

Wouldn’t it be wiser, then, for the Clintons to invested in whenever they wanted to.  After all, like it or not, we do have the right to invest for profit in this country.  It’s a right.  For the public side of the Clintons and their political aspirations they might have held stock in Exxon and PP and even Fox and become activists for change within those companies.

I worked at the grassroots level of the environmental movement and it is not unusual in a campaign to fall back on "voting with your wallet." In an environmental action this sometimes works effectively because it can hurt the bottom line and the actions can also tarnish the image of the company being boycotted.

Unfortunately, in this case the opposite appears also to be true. 

I would much rather be sitting here telling you how Hillary Clinton’s campaign is completely integrated into her personal values.  Because of her leadership role and popularity, I hope that’s not the case at all.

The lesson: If you have kids, they will likely be living your values and living your values. Long after you’re gone. Take the lesson from Hillary.  Consider living your values today throughout your life. Especially in your investments.

Where The One-Eyed Man is King

Our recent survey suggests that advisory principals may, in fact, be savvier about the importance of succession planning than other businesspeople.  In the survey, 33% of advisors said they have a written succession plan; only 8% of other business leaders say they have such a plan.

Some advisory firms have a succession plan that was passed down to their leadership as part of the company culture. Based on the experiences of several advisory firms, the succession plan has the added value of reassuring the staff and clients about a stable future of the firm.

But don’t look for a succession cookie cutter.  Advisors, principals, and partners have numerous options.  Over half the advisors opt for the orderly transition to junior partners.  Alternatively, firms with over $1 billion under advisement are more easily sold than smaller ones.  Sometimes a merger or direct sale, sometimes called a consolidation, constitutes a viable solution.  In a family business, ownership, control and distribution of the business assets tend to be the focus.

The advisory business tends to be more complex because the skills that make it work today are highly specialized, says Dan Smith, a Connecticut–based attorney specializing in helping maximizing business value. "Defining who’s going to run the firm and who is going to be the rainmaker help significantly in the creation and enforcement of a succession plan," he says.

Smith questions whether the key manager can also be the firm’s rainmaker.  While this arrangement may work on a day-to-day basis, the acquirer, Smith adds, wants to know if the firm has the ability to continue what “used to happen.”  A single multi-talented individual may sharply affect the firm’s valuation.  Transition to fee-based compensation is helpful, says Smith, because ongoing profits are more accurately projected than with asset-based compensation. 

Former Evaluation Associates (EAI) President Jeff Van Orden embraces the concept of transferring the firm from one generation to the next inside the firm, part of the company’s culture since its founding in 1947. “You need to find people willing to embrace the risks of ownership and entrepreneurship,” he says. 

When a process is in place and understood, it tends to provide the principals, senior advisors, advisors and the associates, and management, the added level of stability and consistency they desire, says Van Orden.


The Problem with Affluence

Money (or any owned value) is generally thought of as positive. When it arrives quickly in unexpected amounts it can cause confusion.  This has most recently occured where the increased value of many Americans’ homes made them paper-millionaires.

We’ll discuss the pros and cons of including your home in net worth calculations another time.  Here I want to discuss wealth protection.

Some Americans fear losing property value in the future. Can one manage future losses in property value?

Do home equity
futures exist?  HedgeStreet online offers a strategy and the Chicago
Mercantile Exchange are offering futures contracts tied to the future
values of residential real estate. Is there a housing bubble?  Housing
futures could soften the economic blow to homeowners, writes James
Suroweiki in the New Yorker.

A friend told me recently that
he’d see a survey that showed that HALF of the jobs in this country
push money around.  That’s a far cry from an agricultural based economy
at the turn of the last century.  Choices, especially those we commit
ourselves to by contract, require more than thought.  Consider not the merits or pocket-rich feelings now, but the best ways to prepare for what might lie ahead for you and your family.

I look at it this way, expressed nicely by the outstanding financial professional trainer Dan Sullivan, when he said: "The future is your property."

Living by Learning

Travel bugaboos.  Everyone has them.  Late flights and trains.
Rude attendants at car rental counters and garages.  Cold, flavorless
food, bad coffee.  Beds that leave your back throbbing in pain in ways
that redefine “inflame.”

But one travel bug leads the list of most despicable.

We prefer to forget about it—because we think there’s
nothing we can do about it.  Actually, we avoid thinking about
it all the time, it’s just that business travel brings it out long
in sufficient amounts that we recognize it for what it is.

When I was in my late teens, I drove cross-country through South
Carolina, Georgia, Alabama, Mississippi, Texas, Arizona, New Mexico
and  finally Southern California.  At that time I was prepared for what
was to come. Actually there were two things:  One was a sense of
tremendous adventure—seeing the wonder of this big land of ours.
The other was the raw time I had on my hands.

That three and a half day trip cross country has a special memory
for me today because of the books I read along the way.  “A
Separate Reality” and Kurt Vonnegut’s “Player Piano” became
part of my southern crossing experience. A life memory.

I am always amazed when I see men and women traveling for
business.  They are on their cellphones (pernicious), on a laptop
(despicable), or reading the newspaper (dumb).  With so much
“free” time, this is a great time to “advance.”  Do something
beyond what you normally do.  Wouldn’t this be the time to
work on your stuff?  Learn something?  Practice something?

I know a few people who practice languages when they travel.
Or, they write.  Or they read and study things that feed their
minds.  The exhaustion of the American executive is one of the
most under-reported stories of our era. Maybe it’s boring to
editors, but it is how many people live!  The truth of the matter
is it’s what many people accept.

Seriously—consider what could be in store for you if you started
a personal program of improvement, enrichment, or growth.

Could your destiny change by your reading Napolean Hill,
or Dan Kennedy, or Robert Kiyosaki, or Jim Rohn—instead
of reading business news?  If you aren’t making money from
reading newspapers you are not investing time—in reality you
are “losing” time.

Most people, financial advisors included, are unhappy with their
jobs. How much time do people spend moving themselves to
better situations?  How about the people you hang out with?
How much company travel time is simply written off as an
business expense?  What is the ratio of productivity to “the
chance” of doing business?  How much loss can you endure?

There are no victims in the battle for time and advancement.
There are only volunteers willing to go along with the habits
of mediocrity.

The next time you are sitting in an airport, a traffic delay,
a subway… consider how you are using time in your life.
Then, play a game—ask yourself what steps might start
providing you with useful time.

Make no mistake about it. You are at the controls of your own
life.  You are the pilot, engineer, the driver of your own life.
Accepting your possible future is inherently more rewarding
than traveling in cargo like a bag of beans.

– rb

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