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Who Speaks For the Future?
By Bob Veres
September 9, 2011
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In a little over a month, I'll be hosting the Business & Wealth Management Forum in Chicago, which I hope will become the best investment-related, practice management-related meeting of the year.
With the speakers we have lined up, and what they tell me they're going to present, I think we have a pretty good shot at achieving our goal. (See the agenda here: http://www.signupforconference.com).
Right before the meeting, I'll participate in a Leadership Forum meeting, an invitation-only event which will bring together people who have served the advisory profession as board members of the various associations. Our goal is to identify some of the key challenges for the profession going forward, and to figure out ways that we can organize the collective credibility of the participants to meet those challenges.
I expect that whatever we figure out in that pre-conference, all-day discussion will become the buzz of the BWMF meeting, especially since many of the participants have agreed to stay for the full conference experience.
We are still setting our agenda, which brings me to the point of this message.
The collective wisdom and experience of the people reading this message is significant, a resource that I hope I can tap into. What do you think are the most important things that we should be talking about? What problems or challenges do you think should we be figuring out?
I've received a few suggestions from the participants already. One is: how do we help the public understand the difference between professionals and nonprofessional agents or representatives whose business model is not to put the client's interests first?
Another: should we undertake research that would look at the client accounts of advisors vs. the investment accounts of people who are not working with an advisor, looking for meaningful differences?
Also, if expected investment returns for traditional risk assets are lower than historical numbers, and clients have experienced less-than-historical returns for the past decade, what can the profession do to salvage their future plans? Alternatively: are there better ways to add value than simply tending client portfolios?
Should the profession lobby for the regulation of financial planning? Or not? Why or why not?
How can our shared profession have a bigger political impact than we have today? If we increase our impact, should we try to influence major policy decisions like federal monetary policy, debt and economic stimulus, or limit ourselves to issues that most directly affect the planning profession, like the fiduciary and regulatory discussions?
I'd like to get your feedback, and make the pre-conference discussion -- and the BWMF conference experience -- the most interesting and rewarding activity that the profession has experienced in a long, long time.
While the recent FPA Convention provided some new and very interesting presentations and introduced some pretty high-brow concepts, Financial Planning columnist Bob Veres felt far too many of the presentations were bogged down by speakers who decided -- or were compelled -- to “dumb down” the material to appeal to the lowest common denominator. What did you think?
I think we all know that the financial planning profession is drowning in paperwork and the problem is only going to get worse. This vexing -- and increasing -- compliance hassle is generating a certain amount of frustration in the profession, and most of the people I talk with don't know where to turn. So who speaks for the planner?
Make no mistake. We are going to sail through a lot of these volatile periods over the next five to 10 years and the profession needs to brainstorm better ways to deal with them that won't harm clients and their investment goals. We need to better understand what's going on. And consumers deserve to be told more than just which way the wind is blowing today.
How do you talk to your clients about the debt ceiling and budget battles when so many people are strongly -- perhaps not always rationally -- on one side or the other of the political divide? Suddenly, loss of confidence in our country's legislative and executive leadership is driving loss of confidence in the markets and it seems the two are now linked in ways that we may never have seen before.
I think we as advisors are going about our lobbying effort all wrong. More to the point: does it make sense for us to keep lobbying on behalf of the consumer or should we act like everybody else in the universe and lobby for things that would better serve our own interests?
Lately, I've seen more and better thinking about asset management than you could find in the previous 20 years in the profession and I think it may be time to give modern portfolio theory a makeover. In fact, I think this fits a long-standing historical pattern.
I may be opening up an old wound here, and if I am, I hope you'll forgive me. But I find myself wondering about all the ways that the interests of a broker-dealer differ from the interests of its affiliated advisors. I've never seen this explored anywhere.
I have a lot of pet peeves but one of my biggest is how we, as a profession, tend to define other professionals by one number: their assets under management.
To me, the most interesting event of the year, so far in the financial planning space, is the Schwab organization's new Independent Branch Services initiative. The gist of it is that Schwab's retail division is looking for experienced advisors to come in and transform their practices into Schwab branch offices on a franchise basis.
I've put on my annual to-do list that sometime this year I'll create a Facebook page, and Lord help me, I may even start twittering before long. This means I'm about to stick my toe into the dreaded Social Media world.
The time and energy that the advisor focuses on the client produces far more terminal wealth for that client than anything you can get from the traditional investment management services.
The royal wedding, eliminating the notorious mastermind of the Sept. 11 attacks--this is going to be a week to remember forever. But I also wonder whether it might represent another milestone.
I have a very simple question to ask all of you. Suppose, by some miracle, that you were given an extra two hours a week to spend in your office. How would you spend that time?
Some advisors are averse to even DISCUSSING the value of portfolio management, possibly believing that we all spend too much time talking as if financial planning and portfolio management are the same service--which they clearly are not.
What portfolio management activities provide the MOST value for your time/money/energy/attention, and which activities provide the LEAST value for your time etc.?
One of the most interesting things to come out of this conversational thread about the regulators is the amount of fear advisors are expressing about speaking openly.
The current SEC inspection and audit process is kind of silly, at best, and a waste of resources, at worst. FINRA's process, from what I've been told, makes even less sense. But what can we do to improve things?
I see a lot of advisors who get very little interaction with the sponsors, and there is little in the design of today's exhibit halls that encourages that interaction--and THAT was my point.
One of the biggest wastes of time and talent that I see in the financial services industry is something you probably take for granted: the conference exhibit hall.
The more you hear about the SEC examination process, the more you realize that the examiners can't quickly recognize the honest advisors from the crooks, and are generally more interested in finding fault with the honest advisors than identifying the crooks.
It seems we have reached the absolute bottom of the barrel in terms of regulatory efficiency. If the SEC is spending weeks on trivial issues and completely missing Bernie Madoff then it is clear that something is seriously broken.
Having attended hundreds of practice management and motivational sessions at various conferences over the years, it has become clear to me that most of our roadblocks to business and personal success are (get ready to wince) self-created.
There seems to be a lot of "energy" (and sometimes anger) around the idea that some people provide full-service financial planning and some people call themselves planners while actually selling products or managing assets for a living.
We call this the "financial planning profession," right? So here's a topic for discussion: how is it that many people calling themselves a financial planner don't actually do financial planning work for their clients?
The community really needs to know if you are (or are not) satisfied with the service you're receiving, and how it has (or has not) helped you focus on your direct client services.
One of the postings after a recent chat has started us all on a discussion of another possible way to handle this macroeconomic chore: Actually do your own evaluation of the markets and decide whether to be in or out.
Ever since September 2008, clients are asking for more than you can possibly deliver: to keep track of the macro-economic big picture and help them get out of the market as soon as we start moving into another meltdown period. So the question is: How can we possibly respond to these lofty expectations?
The financial planning community has a lot of knowledge and wisdom – way more than any individual writer or commentator. But how do we tap the deep wisdom of the crowd to help us resolve important, complicated issues? Bob Veres, a columnist for Financial Planning magazine, is here to trigger conversations on important topics for advisors on issues and subjects facing the industry. First up: The regualtory standard.
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