Important Content For Advisors


The launch of advisorsforadvisors this month is moving ahead and our growing list of bloggers began providing important content for advisors. Some of the posts:






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A "W-Shaped" Recession


Last Friday, at the Financial Advisor Webinar Series, economist-turned-money-manager Rob Stein, predicted a "W-shaped" recession.



Forecasts of a W-shaped recession are drawing attention. See the Carlos Lozada commentary in The Washington Post on April 19, FT Columnist John Authers’ on May 17, or economist Nouriel Roubini on July 16
.



Stein, who heads
Astor Financial LLC, predicted that technology will be among the sectors that gain disproportionately from the coming economic rebound. Stein’s also bullish on China.



Stein, who began his career at the Federal Reserve in 1983, believes The Great Recession of 2008-2009 has combined two recessions in one: a traditional V-shaped recession and a credit-bubble recession. While the US economy is now slowly coming out of the traditional recession and economic growth starting up, a second downturn is likely to follow in the next couple of years because of continuing losses from the credit crisis.



Using a macroeconomic approach, Stein actively manages three styles of broadly diversified ETF portfolios: a long/short balanced fund, growth fund, and low-volatility program.








You can view a reply of Stein's presentation, "Actively Managing An ETF Portfolio." It's free, but you need to register. You can also download his slides.



Next week, CFPs will be able to get continuing education credit on replays of the Financial Advisor Webinar Series at advisorsforadvisors.com.



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Changes In My Blog


Those of you who regularly read this blog know that I cover a mix of news for independent advisors—technology, compliance, marketing and a wide range of other topics. I also write about what's new at my company, Advisor Products, which makes websites, newsletters, and brochures for about 1,800 advisory firms.



Apropos of my schizophrenic role as reporter and service provider to advisors, I am splitting this blog in two.



This blog will now only cover what's new at Advisor Products. Articles I write about industry issues will now be posted in my blog at
advisorsforadvisors.



advisorsforadvisors is a new practice management website. It's in beta, but you can sign up now for a 30-day free trial. (Advisor Products clients will receive an email next week about how to sign up for a free one-year subscription.)



Two veteran financial journalists have teamed up with me to create advisorsforadvisors. Mary Rowland is a former columnist at The New York Times who now writes a monthly column for Financial Advisor, and Bob Casey started up and ran Bloomberg Wealth Manager and is now a managing director of the Family Wealth Alliance.



advisorsforadvisors has strong social networking and provides crucial information to run an advisory business, including:



· Links to all important market and economic news stories by 8:30 a.m. EDT every business day

· A way to objectively compare advisor software applications feature-by-feature, side-by-side

· Social networking features that connect advisors who practice the same way as each other

· Advisor reviews of software applications

· User groups for software applications

· Daily analysis of industry and financial news by veteran reporters and industry experts

· Free access to weekly webinars with CE credit for many sessions and replays of all webinars 24/7

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Jon Stewart’s Double Play


In a hilarious double-play, comedian Jon Stewart last night hammered Lenny “Nails” Dykstra, a former Mets centerfielder turned financial-advisor-in-bankruptcy, and then tagged TV financial personality Jim Cramer with a jarring comedic blast.



Stewart began a segment on last night’s show by focusing on the irony of the bankruptcy filing by Dykstra, who touted himself in recent years as a successful investment advisor and was profiled in 2008 as a “financial whiz kid” on the HBO program Real Sports. Dykstra, who told a Real Sports reporter that he did not read books because it was bad for his eyes, reportedly was sued by 20 creditors by the time he filed for bankruptcy on July 7.



Stewart revived his public humiliation of Cramer by playing an interview of Cramer on the HBO show in which he hails former Mets hero Dykstra’s as a brilliant financial advisor, “one of the great ones in this business.”



The irony of the baseball legend turned stock-guru’s misfortune provided Stewart with great material. Dykstra, 46, became a New York Mets hero for hitting a walk-off home run in Game 3 of the 1986 World Series, when the Mets defeated the Boston Red Sox in seven games to win one of baseball’s most memorable World Championship Series.



Cramer, the extremely energetic host of CNBC’s “Mad Money” and founder of TheStreet.com, is a former hedge fund manager. Prone to hyperbolic rants, Cramer was the subject on March 4 and March 9 of scathingly funny blasts by Stewart. Stewart, the popular host of Comedy Central’s “The Daily Show,” assembled a string of video clips in which the self-proclaimed “infotainer” of finance made glaringly wrong investment predictions. Stewart wrecked any credibility Cramer might have had in the financial media by showing Cramer urging stock investors to “be buying things and accept that they’re overvalued, but accept that they’re going to keep going higher” a few months before the global financial crisis caused a stock market collapse. Stewart and Cramer’s public showdown became famous and then faded—until last night.










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Financial Planning Coalition Gets It Right

The Financial Planning Coalition (FPC) released a statement this morning clarifying its position on the Obama Administration regulatory reform proposal.



The FPC applauded the Obama Administration proposal to require a fiduciary standard of care to brokers, repeating a position first articulated in its release of June 18, the day after the Obama Administration’s white paper on regulatory reform was released. However, the FPC now also expressed concern that the fiduciary standard would be “watered down” by the proposal.



The FPC is a recently created group comprised of the Financial Planning Association, National Association of Personal Financial Advisors, and the CFP Board of Standards. Please note that my blog of June 18 swiped at FPC for not mentioning that the fiduciary standard could be watered down by the Obama proposal.



Apart from qualifying its support for the Obama Administration proposal, today’s FPC statement, which I’ve highlighted for quick scanning, clears up an important part of the Obama Administration’s June 17 white paper. The 88-page white paper called for establishment of a Consumer Financial Protection Agency (CFPA) to help protect consumers from bad financial advice. Some observers interpreted this to mean an entirely new regulatory regime would replace the current regulatory framework. Not so.



FPC explained that the CFPA’s jurisdiction “would cover consumer financial products such as credit cards, savings accounts, and mortgages, and possibly insurance, but notably leaving securities transactions and investment advice to the SEC.”



This makes a lot of sense. While coverage in the trade press would have led you to believe that the CFPA was taking over responsibility for regulation and enforcement of advisors, it’s clearly not. Point is, wrangling over regulatory reform is going on behind closed doors and we know little about the structure of what’s to come, much less who the winners and losers will be.



With that qualification, I’ll speculate that our government bodies and existing institutions are likely to be relied on more heavily as reform is implemented. My guess is FINRA will gain power to regulate RIAs advising consumers.



FPC’s effort to prevent the watering down of the fiduciary standard of care for clients is important. If brokers are fiduciaries but can continue to be compensated on commissions, then the fiduciary standard of care has no teeth. And if the U.S. government bans commission compensation of independent financial advisors, as was done last week by Great Britain’s Financial Services Authority, an extremely unlikely reform, then telling the difference between fiduciaries will be difficult.



Clearly, once the fiduciary standard of care is defined under a new regulatory regime, it could be watered down as to be almost meaningless. The reform measures may not make it easier for a consumer to know the difference between an advisor who puts a client’s interest above his own and one who does not.



The FPC’s release today is laudable for pointing this out and for giving advisors tools to speak out. The bottom of the FPC release contains “message points” advisors can borrow to write letters to legislators.









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Building Client Loyalty


We’ve made it very easy for you to remind clients why they need you.



All the tasks you’ve completed for a client over the past 12 months are now conspicuosuly displayed on each client’s home page.



This important new feature in the Advisor Products Client Portal is integrated with Redtail Technology’s CRM. So when you input an Activity in Redtail, it shows up automatically in a client’s portal.



With advisory firms under financial pressure because asset values have plunged in the past year, showing each client a list of tasks you’ve completed is a way of building loyalty. In light of the bear market and advisor Ponzi-scheme scandals, it is critical to regularly include this information in client communciations.




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Feds Want All FAs To Be Fiduciaries


Way back on page 72 of the regulatory reform white paper released yesterday by the U.S. Treasury is some pretty big news for financial advisors.



“We propose the following initiatives to empower the SEC to increase fairness for investors,” says the Treasury white paper. “
Establish a fiduciary duty for broker-dealers offering investment advice and harmonize the regulation of investment advisers and broker-dealers.”



Entitled, Financial Regulatory Reform: A New Foundation, the white paper makes official the Obama Administration’s intention to put registered reps and advisors at RIAs under the same set of regulatory rules. That’s not a surprise to anyone.



“Retail investors are often confused about the differences between investment advisers and broker-dealers,” according to the white paper. “Meanwhile, the distinction is no longer meaningful between a disinterested investment advisor and a broker who acts as an agent for an investor; the current laws and regulations are based on antiquated distinctions between the two types of financial professionals that date back to the early 20th century. “



What is a surprise is that the Administration is asking to impose a fiduciary obligation on brokers. Of course, only advisors at RIAs are now fiduciaries, and thus obliged always to do what is in a client’s best interest. That is a much higher standard of care for clients than is imposed on registered reps, who must only ensure they are giving advice suitable for their clients.



The Treasury says in the 89-page paper that RIAs and Registered Reps are the same to retail investors. “In the retail context, the legal distinction between the two is no longer meaningful,” says the Treasury white paper. “Retail customers repose the same degree of trust in their brokers as they do in investment advisers, but the legal responsibilities of the intermediaries may not be the same. The SEC should be permitted to align duties for intermediaries across financial products. “



“Standards of care for all broker-dealers when providing investment advice about securities to retail investors should be raised to the fiduciary standard to align the legal framework with investment advisers,” according to the Treasury Department. “In addition, the SEC should be empowered to examine and ban forms of compensation that encourage intermediaries to put investors into products that are profitable to the intermediary, but are not in the investors’ best interest.”



The Administration is calling for new legislation:




requiring that broker-dealers who provide investment advice about securities to investors have the same fiduciary obligations as registered investment advisers

providing simple and clear disclosure to investors regarding the scope of the terms of their relationships with investment professionals

prohibiting certain conflict of interests and sales practices that are contrary to the interests of investors.

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CE Credit On Webinar Replays


When the U.S. economy seemed like it might collapse last October, Advisor Products hosted a webinar for advisors in an effort to help to help them cope.



Attendees were so grateful, we did it the following week.



Pretty soon, it became clear that advisors wanted us to bring them this information regularly. Thus was born the Financial Crisis Webinar Series, which brings advisors leading thinkers from the financial advisory profession every Friday at 4 p.m. EDT



We’ve now hosted 32 webinars , replays are always available, and since January we have offered continuing edcuation credit for Certified Financial Planner
® licensees.



Last week, we upgraded our registration platform. As a result, you are now be able to receive continuing education credit when viewing webinar replays.



With the new registration system, you register just once. We’ll drop a “cookie” into your browser—
a short line of texton your computer's hard drive—and you’ll be recognized without registering the next time you return. If you use a different computer, you’ll need to log in again, however. Before this upgrade, you had register your information each time you wanted to view a webinar replay.



The new registration system also allows you to access videos and request more information about our services from the Advisor Products website. Videos explain our client portal system, newsletters, AdvisorVault, and Online Reporting for Advent Axys or PortfolioCenter.



Advisor Products clients will continue to use their existing log-in credentials for accessing the BackOffice for managing your website, email newsletter, and newsletter. That is unaffected by these changes.



It is our privilege to be able to bring you The Financial Crisis Webinar Series. Join us this week to hear Mark Tibergien, CEO of Pershing Advisor Solutions, speak about the link between operational efficiency and human capital.







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Redtail Technology Integrates With Advisor Products


How would you like to be able to show clients a list of all of the things you’ve done for them lately?



What if you could automatically feed that list of achieved tasks from your CRM system to a secure personal website for each client?



Or how would you like to be able to assign clients tasks from your firm’s CRM system, and feed these To-Dos automatically to each client’s secure personal website?



This is all totally doable right now.



In fact, these are just a couple of the many powerful features in the new Advisor Products integration with Redtail Technology.



Integration between Advisor Products and Redtail extends one of the advisory profession's most powerful customer relationship management (CRM) software applications to a client-facing application.



Redtail’s easy-to-use web-based CRM system helps you manage your internal staff; Advisor Products' secure Client Portal system helps you communicate with clients effectively.



Redtail CRM tracks and organizes all your client activities. Featuring online calendaring as well as task management, Redtail is easy to use and offers a low cost of ownership.



The Advisor Products Client Portal lets you provide each of your clients with a secure financial home page. Information is fed from your firm's applications for performance management, financial planning, and client relationship management. Client Portals also feature a vault and newsletters written by Advisor Products that are personalized to each client’s profile, making a great presentation of all the information clients need from you.



Utilizing eXtensible Markup Language (XML) feeds, data flows automatically from Redtail to Client Portals and vice versa. The XML feeds save you time and money because you don’t need to re-key data from one application to another.



Using the Advisor Products-Redtail integration is simple. In Redtail, which is a web-based CRM, there’s a page where you fill in details about an Activity your firm is performing for a client.



At the bottom of every Activity page is a checkbox to “Share with Advisor Products.” Checking that box automatically sends that activity to your clients' portals.



Whenever your firm completes an activity for a client, you can insert a note about the completed task in the Activity page in Redtail and it will flow automatically into the corresponding client's portal.



Clients, thus, can see all of the work you do on their behalf. That's important since most of the work advisors do is unknown to clients.



The Advisor Products Client Portal system features a “To Do Manager.” The To Do Manager is where all Achieved Tasks are displayed to your clients.



When you click the “Share With Advisor Products” checkbox in Redtail, that activity is displayed in your client’s secure personal portal as an “Achieved Task.”



In addition to showing clients all of the work your firm does for them, you can also assign clients tasks in Redtail that will automatically be fed for display in To Do Manager.



From the Activity page in Redtail, just pull down the Category menu and choose “Portal Client To-Do.”



That Activity in Redtail, as well as any updates to it, will be fed into the client’s portal.






The integration of these two applications means nothing falls through the cracks with clients anymore.



The integration of Advisor Products with Redtail also makes it easy to provision new client portals, as the demographic information from Redtail can be automatically fed into the Client Portal Platform.




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Reducing The Rate Of Client Failure



Why do some advisors annually get fired by 10% of their clients or more while other advisors consistently lose just 2% or 3%?



With the impact of the financial crisis hitting advisory firms and clients alike, the answer to this question is critical and may not be that complex.



Clients fire you because they feel disconnected from you and your firm. They leave when you lose credibility, when you fail to touch them in meaningful ways, when you fail to confront their crucial financial issues with them.



Clients don’t fire you because of investment performance. They fire you because they feel you let them down and do not provide enough value.



When a client fires you, it’s not just you who loses. They, too, often lose. Clients that fire you may hire an advisor who is not as devoted or competent. Or they may try to manage their money on their own, which may lead to failure. When a client fires you, it’s often not just you who has failed. They also fail.



What can you do about it? How can you stem your attrition rate and help more people by giving them good financial advice?



The answer doesn’t lie in a new financial product; we have enough products. The answer is not in a new market-timing strategy; we all know diversification is the wise course because no one can predict the future.



The answer is in your communication with clients. It’s in your ability to draw people out, to make it safe for them to share with you their greatest fears, and your desire to actively listen and then meet their demons head-on with reason and intelligent solutions. The way to retain clients is to be deeply engaged in ongoing financial conversation with them about their greatest fears and dreams.



So I asked one of the world’s foremost experts on crucial conversations for help—the authors of The New York Times bestseller, Crucial Conversations: Tools For Talking When The Stakes Are High. To my amazement, the authors were intrigued and have designed a way for financial advisors to better understand how to conduct crucial financial conversations with clients.



Published in 2002, Crucial Conversations, has influenced millions of business leaders. “This is a breakthrough book,” said Stephen R. Covey, author, The 7 Habits of Highly Effective People. “I found myself being deeply influenced, motivated, and even inspired.”



The authors of Crucial Conversations, Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler, established a consulting firm, VitalSmarts, which has developed dozens of corporate training programs for dozens of Fortune 500 companies.



David Maxfield, a respected academic, was named head of research at VitalSmarts. Maxfield has taught at Stanford University and the Marriott School of Management at Brigham Young University. He is the recipient of Motorola University’s Distinguished Teaching Award and Stanford University’s Dean’s Award for Innovative Industrial Education. Maxfield is also the author of the 2007, Influencer: The Power To Change Anything.



Maxfield has been working with me to research how well financial advisors handle crucial conversations with clients. On July 10, at what promises to be a special session, Maxfield will lead a presentation at The Financial Crisis Webinar Series in which he will teach advisors the basic skills needed to conduct crucial conversations with clients.
You can reserve a place at this free webinar now by taking a 10-minute survey designed to measure financial advisors’ ability to conduct crucial conversations with clients.



The full impact of the financial crisis has not yet been felt by advisors. Investors have been paralyzed by fear. Many advisors are likely to be fired in coming months as the shock of the crisis subsides. Please take the survey and join us as we all heal the wounds of the meltdown and try to learn from it.










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