11/28/2009
IMPARTIAL FINANCIAL ADVICE - WHAT DOES "IMPARTIAL" MEAN?
Free of product sales compensation as a direct derivative of financial advice..
11/25/2009
THE RELATIONSHIP ECONOMY - WHAT IS YOUR SOCIAL STRATEGY?
A Definition of “Social Strategy”
A social strategy defines how the organization can better “relate and communicate” with all its constituents. Constituencies includes people (markets, suppliers, customers, investors, society and employees) who interact with the organization, internally and externally.
Because the reach and richness of social technology is new it has never been considered of strategic importance until now. The ability to relate and communicate impacts everything, everyone and at speeds never before experienced. The knowledge domain of these issues simply does not exist but is evolving day by day and the related changes impact everything and everyone.
Creating a social strategy begins with mapping out how your organization currently relates and communicates with its constituencies. Additionally it is also of critical importance to conduct relevant research which defines what, how, when, where and why the market may be discussing your organization, its products, services and people. From these two assessments the data collected will help define the vital few issues needing immediate attention and the critical issues needing change over the long term.
Learning is always an element in strategic development and creating a social strategy will require a plan for the entire organization to learn who,what,where,when, why and how to improve “relations and communications” internally and externally.
Strategy is about having a road map to reach strategic objectives. Social strategies is about how to ensure your organization is ready to follow the map effectively and what new knowledge is required. Although knowledge about the technology is a given more importantly knowledge of the inter-related dynamics it creates and the impact those dynamics have on results is critical.
The disciplines and knowledge required to develop and execute a social strategy. requires a new frame of mind - a new paradigm that is in opposition to business as usual and defines a new road map for business thinking and processes that are unusual.
Not having a social strategy means your organization will likely fail in the emerging markets that are quickly replacing all markets.
As more and more businesses migrate to use of social media it quickly becomes evident that they lack a strategy.
What Will A Social Strategy Encompass?
Since social technology is new there is a lack of knowledge relative to its impact on strategic thinking and the related disciplines. Traditionally strategic thinking has encompassed organizational alignment of key elements present in most organizations. These elements included: organizational design, culture, leadership, management, communications, marketing, technology, human relations, finance and market research. There are a host of subset elements for each of the primary elements but in essence strategy was about the development and deployment of a road map that maximized the efficiency and effectiveness of the entire organization.
Methods for developing a strategy have varied over the years but for the most part all relied upon the collection and assessment of relevant and relative data which verified and created the strategic direction. Directions were aimed at maximizing performance. Now with the emerging influence of social technology a new element has entered into the process of building and deploying effective strategies.
From: The Relationship Economy
11/24/2009
LINKEDIN - SOCIAL MEDIA - ITS ROLE
The use of Linkedin underlines the global interest among more than 50,000,000 members in the notion of sharing their best in real time.
My interests have taken the form of invitations to those individuals for whom collaborative communication, teamwork and critical strategic thinking are essential skills in their chosen fields.
It is a very effective social media platform in assembling intellectual/social capital for the sole purpose of satisfying a common good. In my case and that of my industry that includes but is not restricted to serving 90,000,000 boomers in North America who are at various stages of preparation for a 30 - 40 year retirement and for whom access to impartial financial advice is a challenge.
Longterm retirement takes substantial sustainable income - given that no employment income is expected to be available. The sustainabilty of retirement income given the financial meltdown is in serious question.
Members of Linkedin who are a part of my network have expressed a genuine desire to help in any way they can. It is my purpose to provide a collaborative opportunity for each of those members to provide their input as we continue to develop a real time solution to the need for direct access to the best and the brightest financial retirement practitioners whose education, training, skill and genuine concern are essential in assisting in the income sustainability challenge being faced in our foreseeable financial climate.
I am grateful for the opportunity Linkedin has provided to communicate with numerous professionals who care enough to reach out and to contribute their best.
My interests have taken the form of invitations to those individuals for whom collaborative communication, teamwork and critical strategic thinking are essential skills in their chosen fields.
It is a very effective social media platform in assembling intellectual/social capital for the sole purpose of satisfying a common good. In my case and that of my industry that includes but is not restricted to serving 90,000,000 boomers in North America who are at various stages of preparation for a 30 - 40 year retirement and for whom access to impartial financial advice is a challenge.
Longterm retirement takes substantial sustainable income - given that no employment income is expected to be available. The sustainabilty of retirement income given the financial meltdown is in serious question.
Members of Linkedin who are a part of my network have expressed a genuine desire to help in any way they can. It is my purpose to provide a collaborative opportunity for each of those members to provide their input as we continue to develop a real time solution to the need for direct access to the best and the brightest financial retirement practitioners whose education, training, skill and genuine concern are essential in assisting in the income sustainability challenge being faced in our foreseeable financial climate.
I am grateful for the opportunity Linkedin has provided to communicate with numerous professionals who care enough to reach out and to contribute their best.
11/22/2009
HOW DO YOU SELL SOMETHING FOR WHICH THE NEED IS 100% AND THE DEMAND IS ZERO?
We are referring to the fact that we all die (Need - 100%). No one wants to buy life insured instruments. (Demand - 0%)
In the case of life insured financial instruments........you don't sell it.
Commodities are sold.
Life insurance is not a commodity.
It is a legal document that binds a financial institution to provide the capital necessary upon the death of a policyowner to assure the lifetime income that a loved one, a business entity, a charity or any number of possible beneficiaries may require to survive financially.
The act of insuring one's life is a highly personal value statement. It is the antithesis of a conventional market transaction.
For this reason it cannot be sold.
The top 2 - 3% of the professional practice leaders in the life insurance sector engage their clients through numerous sequential acts of leadership - one on one. Their objective is to help their clients become aware of, understand and feel comfortable making a values based decision that reflects the core of their character, integrity, love, moral and ethical responsibilty for a family member, business colleague or partner to eradicate a financial debt or obligation which will arise upon their death and which would otherwise remain a financial burden to those who were financially dependent upon the deceased individual.
This values based decision is anything but transactional.
In a product driven commoditized financial marketplace the need for ethically unbiased consumer centric financial advisory leadership is paramount. The same leadership principle applies to our need for open and direct competent diagnosis and advice from those physicians upon whose medical practice we depend for our physical and mental well being.
Such professional practice leadership is rare.
When it appears it is a work of art and empathetic compassion.
In the case of life insured financial instruments........you don't sell it.
Commodities are sold.
Life insurance is not a commodity.
It is a legal document that binds a financial institution to provide the capital necessary upon the death of a policyowner to assure the lifetime income that a loved one, a business entity, a charity or any number of possible beneficiaries may require to survive financially.
The act of insuring one's life is a highly personal value statement. It is the antithesis of a conventional market transaction.
For this reason it cannot be sold.
The top 2 - 3% of the professional practice leaders in the life insurance sector engage their clients through numerous sequential acts of leadership - one on one. Their objective is to help their clients become aware of, understand and feel comfortable making a values based decision that reflects the core of their character, integrity, love, moral and ethical responsibilty for a family member, business colleague or partner to eradicate a financial debt or obligation which will arise upon their death and which would otherwise remain a financial burden to those who were financially dependent upon the deceased individual.
This values based decision is anything but transactional.
In a product driven commoditized financial marketplace the need for ethically unbiased consumer centric financial advisory leadership is paramount. The same leadership principle applies to our need for open and direct competent diagnosis and advice from those physicians upon whose medical practice we depend for our physical and mental well being.
Such professional practice leadership is rare.
When it appears it is a work of art and empathetic compassion.
11/18/2009
PEOPLE CAN'T RETIRE FOR THE SAME REASON THEY DEVELOP DIABETES AND OTHER HIGH RISK DEBILITATING ILLNESSES
As we get older our body organs become less effective. In the case of diabetes the organ that slows down is the pancreas. It produces the insulin we need to carry the glucose in our blood vessels to our body fat cells. As the pancreas slows down it does not produce enough insulin to remove the glucose from our blood stream.
One day the doctor says "you have developed diabetes", i.e. too much glucose (sugar) in our blood. Why? Because besides diet the only key variable we can control is our weight. Our body fat cells demand glucose - the more cells the higher the demand. The key is to lower the demand i.e. our weight to a level that is compatible with the level of insulin the pancreas can deliver.
.
Simple? If it is so simple why do we have an epidemic of diabetes among young and old? We are unaware that our body has become less efficient and our eating habits have not adjusted to balance the supply of insulin with a lower demand by our body's cells - i.e., a lower weight. Losing weight is not easy or fun so we ignore it. We choose our palate over our lifestyle.
We can't retire with a guaranteed lifetime income for the same reason. We are unaware that we must guarantee our income throughout our final 30 - 40 year retirement years and we have not adjusted our financial focus to guaranteeing our life sustaining income - risk free - our primary focus has been to accumulate capital. Accumulation stems from our need for financial security. Risk is distateful so we ignore or deny it as a factor in both our mortality and our morbitity.
In the case of diabetes our denial results in building up too much glucose without being aware of it. One day our financial 'physician' informs us that we will run out of income - prematurely. What we don't measure can disable us - physically or financially.
Solving this financial health shortfall is our life work and our passion.
One day the doctor says "you have developed diabetes", i.e. too much glucose (sugar) in our blood. Why? Because besides diet the only key variable we can control is our weight. Our body fat cells demand glucose - the more cells the higher the demand. The key is to lower the demand i.e. our weight to a level that is compatible with the level of insulin the pancreas can deliver.
.
Simple? If it is so simple why do we have an epidemic of diabetes among young and old? We are unaware that our body has become less efficient and our eating habits have not adjusted to balance the supply of insulin with a lower demand by our body's cells - i.e., a lower weight. Losing weight is not easy or fun so we ignore it. We choose our palate over our lifestyle.
We can't retire with a guaranteed lifetime income for the same reason. We are unaware that we must guarantee our income throughout our final 30 - 40 year retirement years and we have not adjusted our financial focus to guaranteeing our life sustaining income - risk free - our primary focus has been to accumulate capital. Accumulation stems from our need for financial security. Risk is distateful so we ignore or deny it as a factor in both our mortality and our morbitity.
In the case of diabetes our denial results in building up too much glucose without being aware of it. One day our financial 'physician' informs us that we will run out of income - prematurely. What we don't measure can disable us - physically or financially.
11/16/2009
BEYOND ASSET ALLOCATION - PRODUCT ALLOCATION - INCOME THROUGHOUT RETIREMENT
Historically, advisors have accepted the strategy of asset allocation as a great way to protect clients from risk while maximizing their potential returns over time. However, 2008 proved to us that no matter how well assets were allocated or diversified, this strategy just wasn't enough to protect a lot of investors from the thrill ride the market provided.
The downturn may not have upset your clients too much if, for the most part, they were living on guaranteed pensions; most likely, the markets only wreaked havoc on their vacation or spending money. But for clients whose financial survival was threatened, it would have been a different story. Clients in the retirement risk zone — five years or less from retirement or already retired and living off their invested assets — had a very rude awakening. Unfortunately, so did we—the advisors.
Everything we've been taught told us that the best possible outcome would occur if we just made sure our clients' assets were appropriately diversified according to risk tolerance among good quality investments. Many economists and fund managers, as well as the investment companies they work for, agreed that this was standard operating procedure. This was certainly backed up by the information we had at the time. I'm sure if you close your eyes just for a moment, you can picture the standard asset allocation slide that showed 91% of a portfolio's long-term performance could be attributed to asset allocation. Can you see it? I can.
So what are we to do post-2008 now that we know better? How can we actually do better? Thankfully, there have been some breakthrough strategies on this front. One ground-breaking concept that I was lucky enough to learn of first-hand as an advisory board member, is an approach called product allocation.
The first product allocation tool for advisors was developed by Manulife Investments in collaboration with Dr. Moshe Milevsky and the QWeMA Group. The product allocation tool's primary function is to estimate the sustainability of a client's retirement income plan and then determine the optimal allocation of assets between various products in order to sustain retirement income for the client's lifetime. To arrive at these conclusions, Milevsky developed the concept of retirement sustainability quotient (RSQ).
Product allocation is meant to be the final step of a written financial plan, or retirement income plan, for those in the retirement risk zone. Once you've completed the traditional portion of the financial plan, the next step is to determine the best product selection to create a high probability of sustaining the client's required retirement income. The product allocation tool puts assets into three different categories: immediate annuities, guaranteed minimum withdrawal benefit (GMWB) products and systematic withdrawal plans (ie, GIC's, mutual funds, seg funds other than GMWBs, stocks, bonds, cash, etc.). For many of us, this might mean looking at products we've either never sold, or haven't sold in some time.
I know changes and regulations are coming at us a mile a minute, but clients deserve our best. I believe this so much that that I've used my first official column with Advisor.ca to get the word out: we need to make sure we have a thorough understanding of product allocation and how it can fit into our current practices.
Not only are the best interests of our clients at stake, but the best interests of our businesses are as well. Failing to grasp this concept, or worse, ignoring it altogether, could not only make you vulnerable to losing clients to advisors who "get it," but you may be considered by some to be negligent. In a world where you can sue someone if you spill hot coffee on yourself, your time is well spent protecting yourself; even more so when you're protecting your clients at the same time.
About 38% of Canadians have pension plans today, only some of which are guaranteed. The other 62% have no plan beyond basic government benefits. This leaves us with a giant wave of DIY retirees, something we've never experienced before. While you may have to let go of some product biases to integrate product allocation into your practice, it's a necessary step. This is a new era and we need to use new tools.
If you take a closer look at the sustainability of your clients' retirement income, you may find many holes. You owe it to your clients to carefully consider any tool or product that may give them the best chance at the retirement they have planned for. Product allocation is not about any one product or any one company. Any advisor can access the product allocation tool and related resources at www.productallocation.ca.
11/12/09
Filed by Stephanie Holmes-Winton
Originally published on Advisor.ca
The downturn may not have upset your clients too much if, for the most part, they were living on guaranteed pensions; most likely, the markets only wreaked havoc on their vacation or spending money. But for clients whose financial survival was threatened, it would have been a different story. Clients in the retirement risk zone — five years or less from retirement or already retired and living off their invested assets — had a very rude awakening. Unfortunately, so did we—the advisors.
Everything we've been taught told us that the best possible outcome would occur if we just made sure our clients' assets were appropriately diversified according to risk tolerance among good quality investments. Many economists and fund managers, as well as the investment companies they work for, agreed that this was standard operating procedure. This was certainly backed up by the information we had at the time. I'm sure if you close your eyes just for a moment, you can picture the standard asset allocation slide that showed 91% of a portfolio's long-term performance could be attributed to asset allocation. Can you see it? I can.
So what are we to do post-2008 now that we know better? How can we actually do better? Thankfully, there have been some breakthrough strategies on this front. One ground-breaking concept that I was lucky enough to learn of first-hand as an advisory board member, is an approach called product allocation.
The first product allocation tool for advisors was developed by Manulife Investments in collaboration with Dr. Moshe Milevsky and the QWeMA Group. The product allocation tool's primary function is to estimate the sustainability of a client's retirement income plan and then determine the optimal allocation of assets between various products in order to sustain retirement income for the client's lifetime. To arrive at these conclusions, Milevsky developed the concept of retirement sustainability quotient (RSQ).
Product allocation is meant to be the final step of a written financial plan, or retirement income plan, for those in the retirement risk zone. Once you've completed the traditional portion of the financial plan, the next step is to determine the best product selection to create a high probability of sustaining the client's required retirement income. The product allocation tool puts assets into three different categories: immediate annuities, guaranteed minimum withdrawal benefit (GMWB) products and systematic withdrawal plans (ie, GIC's, mutual funds, seg funds other than GMWBs, stocks, bonds, cash, etc.). For many of us, this might mean looking at products we've either never sold, or haven't sold in some time.
I know changes and regulations are coming at us a mile a minute, but clients deserve our best. I believe this so much that that I've used my first official column with Advisor.ca to get the word out: we need to make sure we have a thorough understanding of product allocation and how it can fit into our current practices.
Not only are the best interests of our clients at stake, but the best interests of our businesses are as well. Failing to grasp this concept, or worse, ignoring it altogether, could not only make you vulnerable to losing clients to advisors who "get it," but you may be considered by some to be negligent. In a world where you can sue someone if you spill hot coffee on yourself, your time is well spent protecting yourself; even more so when you're protecting your clients at the same time.
About 38% of Canadians have pension plans today, only some of which are guaranteed. The other 62% have no plan beyond basic government benefits. This leaves us with a giant wave of DIY retirees, something we've never experienced before. While you may have to let go of some product biases to integrate product allocation into your practice, it's a necessary step. This is a new era and we need to use new tools.
If you take a closer look at the sustainability of your clients' retirement income, you may find many holes. You owe it to your clients to carefully consider any tool or product that may give them the best chance at the retirement they have planned for. Product allocation is not about any one product or any one company. Any advisor can access the product allocation tool and related resources at www.productallocation.ca.
11/12/09
Filed by Stephanie Holmes-Winton
Originally published on Advisor.ca
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