1/31/2010

REQUIEM FOR A BAY STREET TITAN - A CASE STUDY IN DUE DILIGENCE

Before his untimely death at the controls of his private float plane, Jack Lawrence was a legend.



Ravi Sood does not want to be quoted.


Ravi Sood does not want to be photographed.


Ravi Sood, you see, is not seeking publicity.


Yet here he is with his dark eyes and small smiles talking at length about the wealth management company he runs, Lawrence Asset Management Inc. About the shellacking the company’s hedge fund took in the fall of 2008. (Down 80 per cent in ’08, I can tell you that. That’s a fact.) About the aftershocks, including the bleating of wounded investors, which reverberated through the higher echelons of Toronto society — Toronto Lawn, the Beaumaris Yacht Club, etc. — and continue to this day. And energetically of the plans and prospects for the skinnier company going forward. (India!)


Seated in the company’s sparsely adorned boardroom, Sood reflects, too, on his relationship with Bay Street lion Jack Lawrence, whose very name was enough to bring high-net-worth Torontonians flocking to the company’s doors. And the moment last August when at which he heard the news that Lawrence had suddenly and awfully died in a plane crash.


But I can’t tell you what he said about that.


That August day.


Brian Lawrence is standing on the dock of his father’s cottage at Sandy Point on Lake Muskoka.



Shards of conversation. He remembers asking: Can I help with the floats?


The reply from his father, Jack, that he himself had already pumped the floats on the Cessna 206.


A colour memory: The short-sleeved yellow shirt Jack Lawrence was wearing that day. And a light brown sweater vest.


The son helps with the luggage, turns to his father, who has been flying for decades, and says, “Dad, fly safely.”


To which Jack Lawrence replies, “Brian, that’s the plan.”


The floatplane taxis along the lake past the cottage. There’s the take-off, then followed by Brian Lawrence’s near immediate thought: What the hell is he doing? He’s not lifting. He’s not lifting.


Ravi Sood drives a yellow Corvette. That’s a fact.


He signed on with Jack Lawrence 12 years ago, a freshly sprung undergrad, eschewing advanced academics for a career, elbow to elbow, with a Bay Street legend. Sood the wunderkind. Lawrence the mentor.


Obsessively fit, aggressively competitive, Lawrence had scrabbled on the bond side to the top of the Bay Street heap and ended up running brokerage Burns Fry.


This is back in the day, mind, when brokerages were brokerages — traders, punters, bond guys. You know, masters of the universe. Places with personality. None of the staid culture of deposit-taking, mortgage-issuing banks.


Lawrence was there for the transformation from Fry & Co. to Burns Fry to, ultimately, the brokerage’s takeover by the Bank of Montreal. It sounds very go-go, which it was. But investment banking didn’t initially carry the financial rewards that we know today: in an affidavit filed as part of a long-ago divorce proceeding, a Burns Fry executive attested to Lawrence’s 1977 salary of $41,500 a year as president of the brokerage, and 52,500 shares valued at $455,000.


Over time, Lawrence’s reputation grew and grew like some sort of super hero, a seer of interest rates. The bond guy of Canada.


In The Traders, published in 1984, writer Sandy Ross decreed that Lawrence was “the single most influential member of the Bond Establishment.” Burns Fry then commanded close to 20 per cent of the country’s total bond business.

And then there was public policy, as in deficit slaying. Tom D’Aquino, the past chief executive officer of the Canadian Council of Chief Executives, recalls a road trip in which he and Lawrence took Bay Street’s deficit-slaying mantra to Main Street.


“We literally crisscrossed the country giving Power Point presentations,” D’Aquino remembers.


“I say Power Point because it was just invented.”


For Lawrence personally, his business acumen brought material rewards: one home, and then another, in Rosedale; one home, and then another, at Lost Tree, the exclusive waterfront Palm Beach enclave with a golf club that demands a $180,000 (U.S.) membership fee. Cars. In latter years, Lawrence drove a black Maserati.


In the mid-`90s, Lawrence left the brokerage behind and established Lawrence & Co. with a mandate to pump venture capital into high tech and health care. Positioned within the umbra of the big bank towers, Lawrence wanted it known that even in his sixties, he had no intention of retiring any time soon. He intended to live, he would say, to 120.


(On this point, reports vary. Clive Caldwell, president of the Cambridge Group of Clubs and a long-time friend, says Lawrence believed he was headed to 150.)


In 1998, former Ontario deputy health minister Michael Decter partnered up, with the newly created Lawrence Decter Investment Counsel designed as a boutique wealth management firm. That relationship eventually came unstuck, with Decter buying out Lawrence & Co.’s position. In the meantime, in 2001, Lawrence and Ravi Sood launched Lawrence Asset Management, offering niche investments to the monied crowd. It was under that umbrella that Sood, in 2005, launched a hedge fund that carried the Lawrence imprimatur, Lawrence Partners Fund Inc.



For Jack Lawrence personally, 2005 was a tempestuous year. There was the March separation from his second wife, Janice, the former Miss Argonaut he had married in September 1977. In May 2005, Lawrence redrew his will, with five of his six children from two marriages as beneficiaries.


According to court documents, the subsequent wrangling with Janice Lawrence over a financial settlement was still ongoing two months before his death. The dissolution of the marriage was finalized last July.


Divorce records are such curious artifacts. The thick court file is testament to a seemingly exhausting and acrimonious battle, the more tawdry details of which are the stuff of low-grade society commentary. Keeping to the high road, we can state that Lawrence expressly insisted that Janice Lawrence was never to be allowed to enjoy the use of the Muskoka Lake property. That Janice Lawrence bought a Wheaton terrier in January 2009. And, more to the point, that the pitched battle assessed Jack Lawrence’s net worth as of August 2008 at close to $32 million.


It was a year before that, perhaps two, when Mr. X gave Jack Lawrence a call. Mr. X is a multimillionaire, and does not want to see his name in print. What he wanted was a recommendation from Jack Lawrence as to which fund Mr. X should consider making an investment in. The Lawrence Partners Fund was Jack Lawrence’s recommendation.

“The notion that was put forward was that this was their way of growing their own capital,” says Mr. X, meaning that Sood and Lawrence both had skin in the game and, he believed, substantially so. “That’s where I put my money and some of my kids’ money,” is how he recalls a telephone conversation he had with Jack Lawrence.

The fund performed spectacularly in 2006 (75 per cent) and respectably in 2007 (21 per cent). Here is where the story becomes a cautionary tale. Mr. X did not read the fund’s offering memorandum. He made no effort to scrutinize the fund’s assets, nor the level of investment risk. He would have signed a subscription agreement, which, among other things, would have confirmed his qualifications as an “accredited investor.” This is not, in today’s terms, a particularly high financial hurdle: An individual with a net income of more than $200,000 in each of the past two years qualifies. Or a net worth of more than $1 million. The point is significant in that selling exclusively to accredited investors relieves the fund-raising company from the obligation of filing a prospectus with the Ontario Securities Commission. (“You can use the accredited investor exemption to raise any amount, at any time, from any person or company who qualifies as an accredited investor,” the OSC guidelines state cheerily.)



Is that good enough? “Accredited investor status purely has to do with numbers, what someone earns and what their net worth is. It doesn’t have anything to do with their sophistication or knowledge of investing,” says Preet Banerjee, a former financial adviser who runs the popular WhereDoesAllMyMoneyGo blog.


As for the term “hedge fund,” that, too, is a misnomer, says Banerjee. “A lot of people think ‘hedge’ refers to the fact that you’re hedging either risk or currency,” he continues. A better way of looking at the investments is to think of them as we-can-do-anything funds. “You can employ any strategy you want, as long as you disclaimer the heck out of it,” says Banerjee. (Mutual funds, to provide a on contrasting example, can’t own more than 10 per cent of any one company.)


Michael Decter has thoughts. Not on the dissolution of his business relationship with Jack Lawrence, but on hedge funds.


“I don’t know why it is we regulate the hell out of the more cautious stuff and we don’t regulate this,” he says. “It’s cowboy territory out there in hedge funds.” And the high net worth test? “A million dollars in assets? That’s not really much more than a house.”


At the end of the day, investor X took the kind of short-cut that could make regular folk feel better about their financial acumen. “The Lawrence thing was just a phone call and there was a subsequent meeting and that’s about it,” he says. “That was my due diligence.” He lost more than $1 million. He won’t say how much more.

Mr. X is still in and, with time, well one never knows.

In September 2008, the credit crisis hit. Lawrence Partners, leveraged and illiquid, went into meltdown. Bank of Montreal, the fund’s prime lender, called its loan. In November, redemptions were halted pending a restructuring of the fund. No happy news anywhere.




Reflecting on those times, Ravi Sood eloquently expresses how he felt then and how he felt nine months later upon hearing the news that his mentor, at the age of 75, had taken off from his beloved cottage, clipped the tree tops and crashed. But I can’t tell you what he said about that.


If you had lost a vast sum of money, would you be willing to go on the public record and say so? Well, would you? Or how about merely a substantial sum of money? Hmmm?


Peter C. Newman and I are seated at a window-side table at Biff’s, the Peter Oliver/Michael Bonacini bistro on Front Street. There’s a great deal of noise and clatter and Newman, ever the author, insists that my tape recorder will have a tough time picking up our conversation. He is wearing his ever-present fisherman’s cap and a merry red turtleneck.


Oliver himself drops by for a chat before Newman muses about his current book project, a biography of Liberal Leader Michael Ignatieff. At 80, the writer is nowhere close to stepping away from his keyboard.


As it turns out, this is a very good thing.


Newman knew Jack Lawrence, slightly, having observed him from his metaphorical perch over Bay Street as he chronicled the shaping and shifting of the Canadian establishment. “We weren’t exactly friends. He was somebody who was trusted. Certainly I trusted him,” he says.

And then? “It’s a tragedy,” he says, recounting the tale of what happened next. The meeting with Lawrence. The signing on the dotted line. The investment in Lawrence Partners. How he was wooed by the halo effect of that famous name.


If Newman were writing this story he would note that as he speaks Frank Sinatra is crooning through the sound system: They can’t take that away from me.


Well. Newman had money looking for a home. He won’t quantify the sum. “I had very good sales on the Mulroney book and my autobiography,” he says. “Together, they sold about 100,000 copies, so I had some money to invest.”


He was surprised, after the fact, to learn that the assets of the fund included such investments as a potash prospect in the Congo. Due diligence? No.

Phone conversation with Newman.


“I got out my calculator,” I say.


“I knew you would,” Newman responds.


“So I’m thinking. A base of 8 per cent on trade paper and a max of 15 on hard cover and I don’t know what your advances were and you said 100,000 books in total. So I max out that the most you could have lost was $376,250.”


“No, it was more than that.”


“It was more than that?”


“I didn’t do the math.”


The story isn’t over.


At the time of Jack Lawrence’s death, the estimated value of his estate was $22.2 million. The bulk of the estate, $16.7 million, is defined on file as simply “shareholdings.”


There’s speculation that Lawrence had a considerable sum tied up in Lawrence Partners. Friends say they will be willing to talk on the record when the estate is finally settled, which, says a long-time associate, is expected to happen soon. Brian Lawrence is insistent: “I just want you to put down .. .. . that I loved him and that he was loved.”


At Lawrence Asset Management, Ravi Sood says his goodbyes, moves across the deathly quiet grey slate floor and disappears. He’s wearing a sapphire tie and a dark suit with a silver bracelet on one wrist. That much I can tell you.


Jennifer Wells
Toronto Star
Published Jan 30, 2010

1/23/2010

THE VALUE OF FINANCIAL ADVICE


THE VALUE OF FINANCIAL ADVICE
                  ...
The ability to provide impartial advice to concerned, often harried clients is a critical feature of the financial advisor profession. But Michael Callahan writes that in today's market it has to be more than just an intangible, wishy-washy element of your practice - it must be demonstrated through specific, measurable steps .

Sound financial advice is not about beating the mar­ket. It's not about outperforming neighbours or co-workers. And it's certainly not about finding the mutual fund with the lowest MER.
It's about helping clients realize their goals. It's about them being able to put the kids through uni­versity and enjoy a comfortable retirement. It's about passing the family business to the next generation. It's about achieving financial independence.

As advisors, it's your job to help clients establish plans for the realization of those goals, while avoiding costly mistakes along the way.
The past year has no doubt been a rough ride for investors.

From an all-time high of about 15,073 in June 2008, the TSX reached astonishing lows in 2009. Bottoming out in the neigh­bourhood of 7,567 in March 2009, the market had essentially been cut in half. While a market rally characterized the latter half of the year, people are still nursing their losses - and pay­ing careful attention to value.

"We're in an environment of dramatically heightened scep­ticism," says Dan Richards, founder and president of Strategic Imperatives. 'This has caused many investors to question what they're getting for what they're paying."



The Cost of Advice



It's no wonder, then, that fees are a hot topic with investors these days. Just about everywhere we look, we see literature suggest­ing that individuals would be better off managing their financial affairs on their own. The idea is that, with access to numerous online brokerage accounts and virtually limitless sources of information, individuals can take matters into their own hands and save themselves the cost of dealing with an advisor.

Many investors have done just that, by subscribing to a do-­it-yourself philosophy and investing in no-load, and no-advice, type products. They didn't feel the need for any professional advice and therefore didn't pay for it. But these days, many of those same investors are no doubt having second thoughts ­perhaps finding out the hard way that they aren't properly equipped to manage their own investment plans after all. A 50 per cent drop in the stock market has a funny way of doing that.

"While it is important to be mindful of fees, what's not always in the investors' best interest is trying to find the cheapest products, or cheapest delivery of those products;' says Jerry Witteveen, CFP, financial advisor and branch owner of Val core Planning Solutions (Manulife Securities Incorporated). "It's important that clients focus not solely on cost, but also on what they're getting in return."


Indeed, price by itself can never be the issue. The cost of working with an advisor really only becomes an issue to the extent that ~he value of dealing with that advisor is in question. But determming value isn't always easy: transparency of fees is a chronic problem in our industry. While it's important that clients understand the fees they're paying, unfortunately, this is not always the case.


"Most new clients that we meet have no idea how their exist­ing advisor gets compensated;' notes Heather MacDonald, CFP, CSA, and financial advisor with Valcore Planning Solutions. "Even more alarming is the fact that many are under the impression that some products with embedded fees are free. It is in the industry's, advisor's and client's best interests that every­one has a clear understanding of what fees are charged. This way, an accurate comparison can be made of the services being delivered by the institution or the advisor."


Witteveen and MacDonald run their business with a team approach. "Fees can be a sensitive topic, but we strive for a high quality of service and frequent client contact. We are certain­ly not shy to discuss our fee structure with clients - what fees in particular are charged and what the client receives in return for those fees," adds MacDonald.


Demonstrating Value


While it's true that most individual investors would be better off working with a trusted financial advisor, not all will come to this conclusion. And simply talking to clients about the value of our advice is just not good enough. "We I).eed to demonstrate that value:' says Richards. "Advisors need to realize we're in the 'show me' environment. Make them see the work, and make them see the value of that work. We need to be as specif­ic and as concrete as possible. Case studies and examples are a great way for advisors to demonstrate value to clients."

For example, instead of talking to a prospective client about the merits of financial planning, advisors can provide an illus­tration - a sample financial plan for a fictitious client high­lighting the features and benefits of the planning process. Or when it comes to client contact, instead of saying "we'll talk on a regular basis:' advisors can establish a schedule, put it in writ­ing and stick to it.


According to Richards, those are all great ideas, but unfor­tunately the reality is that not every advisor follows through. It's imperative that advisors offer services they can actually deliver. You wouldn't want to hold yourself out as an expert in business succession planning if you simply lack the knowledge or tools to do it effectively. Advisors need to set realistic expec­tations of the services they can provide.

"Let's recognize that certain things are often talked about more than they're done," says Richards. "For example, many advisors call themselves financial planners, but really don't do a lot of planning. This is unfortunate, but it's a reality of our industry."

A client service agreement (CSA) is an excellent tool to help advisors offer a more concrete value proposition. The CSA is where advisors layout, in writing, their commitment to clients. Serving as somewhat of a contract, a CSA can help advisors clarify exactly what they offer, and at what cost, there­by managing expectations for both the advisor and the client (see sidebar).

"We're in a world where everyone is focused on value," adds Richards. ''And whether we like it or not, we have to demon­strate that value." This is especially true in difficult times, like the current roller-coaster-like stock market environment. Clients need to feel they're in good care, that they're receiving adequate value for the fees they're paying and that the advisor-client rela­tionship is a fair one.


Industry designations, such as the CFP and the CLU, can help strengthen an advisor's credibility. Outside the industry, however, the meaning of such acronyms is easily lost.



As Witteveen demonstrates, advisors can further deepen client relationships by taking a proactive approach. "I think the recent news of fraud and criminal activity in the financial serv­ices sector shows the importance of ensuring advisors have pro­fessional credentials," he says. "This demonstrates not only edu­cation, but also-the regulatory framework that comes with car­rying a designation, proper credentials and licences."


Witteveen's team sent an email to clients addressing recent scandals. In addition, he showed his clients how to find out the licensing status of advisors, their firm, if any complaints had been made against them and if they are currently in good standing.


"Even though clients weren't questioning us, we knew they must have questions about what they were hearing in the media. Clients really appreciated that information coming direct from us;' adds Witteveen.

Professional Expertise

The financial services industry is becoming increasingly com­plex in terms of laws, rules and regulations. In fact, the land­scape can change so quickly, it is challenging for even the most seasoned advisors to stay on top. Vast amounts of information from government departments, regulatory bodies and from within the industry itself cross our desks every day.


Complicating matters further, the density of products is ever more complex, making it harder for investors to under­stand exactly what they're buying. Investments such as mort­gage-backed securities, asset-backed commercial paper, hedge funds, credit default swaps and funds of funds can prove very confusing, even for experienced investors. This can cause a great deal of confusion to advisors and clients alike.

It is important that clients have a professional to help decipher, research and analyze information on their behalf. Advisors have the resources to bring fresh ideas to clients and help clarify details that were previously unclear.
 

"As full-service securities brokers, the product shelf of mutu­al funds, ETFs, closed-end offerings, stocks and new issues through capital markets is staggering. We have a responsibility to be sure that any product we place in a client account is appropriate," says MacDonald. To that end, she has organized a product review com­mittee in her office. "We pool our resources. This avoids duplica­tion of research and due diligence, and combines advisors opin­ions and experience with different products and companies."

For example, recent budget announcements, such as the new income splitting arrangements or the details of tax-free savings accounts and registered disability savings plans, contain a lot of important information potentially impacting clients' finances. Professional advisors have an obligation to perform their own due diligence, thereby ensuring appropriate plans are structured within their clients' best interest.

Witteveen notes that this is especially important for clients running their own businesses.


"The business owners know their own industry and how to be successful in it," he says. "They then depend on us to help preserve, protect and grow the wealth they have built. It's impor­tant that we review any appropriate financial planning strate­gies to ensure the financial security of our clients, their fami­lies and their companies."

Witteveen's practice focuses on bu'siness owners and their families. He notes the importance of working with a knowl­edgeable advisor: ''A trusted advisor can help implement com­plex tax, investment, succession and estate planning strategies. These strategies often involve the services of other profession­als, such as accountants and lawyers. We can help quarterback that process, thereby ensuring everyone is working toward the same goal."

"As full-service securities brokers, the product shelf of mutu­al funds, ETFs, closed-end offerings, stocks and new issues through capital markets is staggering. We have a responsibility to be sure that any product we place in a client account is appropriate," says MacDonald. To that end, she has organized a product review com­mittee in her office. "We pool our resources. This avoids duplica­tion of research and due diligence, and combines advisors opin­ions and experience with different products and companies."

It is important that clients have a professional to help deci­pher, research and analyze information on their behalf. Advisors have the resources to bring fresh ideas to clients and help clar­ify details that were previously unclear. For example, recent budget announcements, such as the new income splitting arrangements or the details of tax-free savings accounts and registered disability savings plans, contain a lot of important information potentially impacting clients' finances. Professional advisors have an obligation to perform their own due diligence, thereby ensuring appropriate plans are structured within their clients' best interest.


Witteveen notes that this is especially important for clients running their own businesses.


"The business owners know their own industry and how to be successful in it," he says. "They then depend on us to help preserve, protect and grow the wealth they have built. It's impor­tant that we review any appropriate financial planning strate­gies to ensure the financial security of our clients, their fami­lies and their companies."

Witteveen's practice focuses on bu'siness owners and their families. He notes the importance of working with a knowl­edgeable advisor: ''A trusted advisor can help implement com­plex tax, investment, succession and estate planning strategies. These strategies often involve the services of other profession­als, such as accountants and lawyers. We can help quarterback that process, thereby ensuring everyone is working toward the same goal."
A Behavioural Coach

Working with clients to help define goals, and ultimately imple­menting plans for the realization of those goals, is no doubt one of the most important ways advisors add value for their clients. However, getting clients on the right track is one thing, keeping them on track is something entirely different.


Market volatility can make any investor uneasy. Preventing clients from making hasty, emotional investment decisions is a critical part of an advisor's job. But that's sometimes easier said than done. Often times, clients will want to give in to their emotions and abandon their long-term strategy. They may want to grab onto the latest trend in an up market or wait on the sidelines in cash during a down market.

According to MacDonald, a comprehensive financial plan is one tool advisors can use to help curb emotional behaviour. "We work hard to get to know our clients well and make all financial decisions in the context of their financial plan. When a properly developed plan is in place, and portfolios are built with specific goals and pre-determined timelines, both the client and advisor are less susceptible to making emotional decisions." But as MacDonald points out, this does not mean buy, hold and forget. It does, however, allow the advisor to man­age a client's portfolio in accordance with long-term goals as opposed to short-term market fluctuations.


Of course, a financial plan by itself is not the remedy to irra­tional investment decisions. There must be human interaction, and advisors can act as a behavioural coach, working with clients to help manage behaviour and stay on track. In this sense, many clients will have far better investment success, with far less stress, under the direction of a trusted, knowledgeable advisor. But this is not to suggest that clients should be left in the dark either.

"We have a lot of clients who are very involved in the invest­ment decisions that go into building their portfolios," says Witteveen. He notes that in some cases, clients like to do research on their own and may even bring some new ideas to the table. In the end, however, it's essential that clients have a professional advi­sor help them make important investment decisions and main­tain confidence in those decisions through good times and bad.

 
The Bottom Line


There is no end to the new investmen ideas and complex planning strategies available to investors. Most individuals, however, lack the time and expertise to develop, and the temperament and discipline to maintain a successful lifetime financial and investment plan. This is where professional advice is required.

"These are tough times and when ir comes to managing client relationships we really need to be holding our clients' hands" concludes Richards.

Unfortunately, clients don't always come to this realization. Advisors need to reach out and demonstrate to clients the value they provide. Email and newsletters are a good starting point, but advisors really need to find some form of face-to-face contact.


This is where it comes down to focus. There will always be lots of things to do and lots to cover in client meetings. One of those things has to be communicating the value of dealing with the advisor.


Disclaimer:

 


The opinions expressed by Jerry Witteveen and Heather MacDonald may not necessarily reflect those of Manulife Securities Incorporated.
 
Michael Callahan
Forum Magazine
Advocis
January 2010

1/22/2010

WHAT DO YOU DO?

  • I help business owners realize their financial "clock" is ticking and get them to plan before the alarm goes off.

"What does it mean that my financial clock is ticking?"

  • You have only so much time to accumulate sufficient capital to look after your income needs during 30 - 40 years of retirement.


"What will happen when the alarm goes off?"

  • You may run out of time to accumulate the capital you need and you will run out of income during retirement.


"What do you do to pre-empt these problems?"

  • We provide solutions which are matched to the time you have.

1/21/2010

FINANCIAL SERVICES - A DISTRIBUTION PARADIGM IN CONFLICT


A Personal Note from Dan Zwicker


Insights into the distribution problem and the solution:

I am attaching 2 items which I would appreciate you reading when you can.

The first is a BIo posted on Weigh House Investor Services Inc.'s website. In particular, the summary in the column at the right says it best.

The 2nd is a blog that I use to describe the the problem and the solution (note the date). The problem is that 14,000,000 Canadian boomers are involved - 1 out of 2 Canadians. Their successful retirement will have an extraordinary impact on every business and service they use.

Finally, last year the difficulty in moving the issue of boomer real time access to those financial services professional practitioners who provide unbiased advice forward became clear when I met Warren MacKenzie of Weigh House.

The industry is caught in a distribution paradigm that places every advisor in a conflict of interest position each time a product solution is proposed. Thus, there is no easy case to be made for real time access to the existing distribution paradigm. There are simply not enough advisors available who offer independent, unbiased advice free of financial 'prescriptions'.

My conclusion was simple. The trusted financial advisor of choice is the Chartered Accountant the individual uses and trusts. Therefore, our focus is a collaborative relationship with the CA community to serve the best interests of the boomer demographic.

I felt that it is important that the context of my interest in this subject over the past year be laid out - hence this note..

All the best!

Dan.



For further details on the problem and a solution please visit:


C:\Documents and Settings\HP_Administrator\Desktop\Weigh House Investor Services Bio.mht


C:\Documents and Settings\HP_Administrator\Desktop\BEYOND RISK. blogspot.com.mht

1/18/2010

AFFLUENT INVESTORS RETHINK RETIREMENT: US STUDY

The worst of the financial meltdown may be over but it appears to have had a big impact on affluent investors in the U.S. According to Merrill Lynch’s ‘Insights Quarterly’, a survey of the values, financial priorities and concerns of affluent Americans, that group is rethinking and reworking their vision of retirement. The study also offers lessons learned from retirees who wished they had done things differently.


Recession changes goals


More than half (56%) of the survey respondents, who were identified to have more than $250,000 in investable assets, said they found a silver lining in how the recession altered their conceptions of retirement. Many respondents emphasized they were holding on to core values, including an enhanced focus on things that will matter most in retirement, such as family and friends (33%) and a realization that there may have to be trade-offs in retirement or a scaling back of their current lifestyle (23%). Nearly one in five respondents (19%) expect to take a more active role in managing their retirement plan.


2009 apparently spawned a number of lifestyle changes with this group, the study reports. Wealthy Americans expect to reduce or control their spending. Forty-three per cent of respondents spent less on personal luxuries last year, while 21% gave less to charities. Nearly 50% of survey respondents expect to reduce energy costs, while 38% say they are becoming more aware of their day-to-day costs of living and short-term cash flow.


Half the respondents expressed concerns about the recession's impact on their retirement goals. Among non-retired respondents who now feel off track, 68% cited that the recession has in some way taken its toll on their finances, while 29% expect to retire later than originally planned. That number is down from 37% from Merrill Lynch's previous survey released last October.


"The recession has caused attitudes toward retirement to evolve at an unprecedented pace," says Andy Sieg, head of Retirement & Philanthropic Services at Bank of America Merrill Lynch. "For many, retirement is no longer a specific date at which an individual goes from working to not working. Today, the transition into retirement is tending to be more gradual and fluid. As such, an effective retirement strategy should go beyond an accumulation target and retirement income planning and take into account what is truly important to an individual or couple, as well as the challenges they may face down the road."


Advice from affluent retirees


When asked if they could re-plan their retirement, roughly half (51%) of retired respondents indicated that they would have focused more on their "life goals" and less on "the numbers" rather than hitting a specific nest egg dollar amount. The remaining respondents (49%) indicated they would have focused more on the numbers.


The study finds retirees who wished they had focused more on their life goals indicated they would have spent more time determining how they wanted to live in their retirement years (38%) instead of basing their needs on a specific nest egg goal. One in ten respondents wished they had crafted a plan that would help them live their ideal lifestyle during these years. Additionally, 8% would have created a plan to better support their philanthropic missions.


Among those who indicated that they would have focused more on the numbers, 23% wished they had started working with a financial advisor earlier in life and 18% would have given up more luxuries in order to reach their retirement goals. Among all retired respondents, three out of 10 (31%) worked with a financial advisor when planning for retirement, however in hindsight, more than half (55%) wished they had started doing so sooner.


Retirees were asked where they would recommend those within 10 to 15 years of retirement focus their attention on. More than half of retirees (51%) advised younger generations to "build a plan around what is most important to you in retirement". Nearly half (47%) of retirees says it's important to have a plan to manage income, while 40% said to pay down debt. Only one in five retirees said it was necessary to be cautious with investment risks.


"Understanding our clients' retirement-related realities and pursuits is a tremendous asset and helps us to guide them on their journey," says Claire Huang, head of marketing for Bank of America Global Wealth Management, Global Banking and Global Markets. "Through continuously conducted surveys such as this, we have greater insight into their current priorities and concerns. These findings, along with our market research, help us stay on top of an evolving marketplace and offer better retirement advice and solutions."

Mark Noble
Advisor.ca
01/14/2010

1/16/2010

BEING VS USING SOCIAL: DO YOU CARE?


It dawned on me that if you really care about fulfilling market intentions then your media must reflect a caring attitude. A caring attitude wins the hearts and minds of people when the intent is matched with a real desire to serve. Using social media to push out your proposition to the masses reflects that you don’t care at all.


What Do You Care About?


Sellers are consumed with selling. Their media reflects their obsession with selling. The buyers' media reflects an intention to find solutions and they care about how much care sellers put into helping them find solutions. Most businesses care about results but they don’t care how they get them.


The mindset of today’s seller is to capture the buyers attention using old and new media. Their model is based on getting the market's attention so they can convert 2-3% into a sale. This model is reflected by the sellers behavior.


97% of the ads on Facebook never get “clicked through” because buyers don’t care. Sellers ignore what buyers want and continue to follow models that satisfy what they care about….short term results.


Brands are driven by results. All businesses are driven by results. However, the methods of getting a result determines the quality and quantity of results. Using social media for quality and quantity are two different things. You can buy followers and show how popular you are by having the most followers but what is the quality of those followers.


How Do We Know You Care?


The word “care” reflects an attitude which is concerned about fulfilling others' needs. To care about someone or something means we make provisions to fulfill their needs. It means to have an inclination, liking, fondness, or affection for someone’s intent.


When we look at the thinking and subsequent behavior of today’s marketplace of sellers few are concerned about our intent rather their behavior screams of attitudes aimed at fulfilling their intent.


Do you really need examples? Go to 99% of the websites used by brands and organizations. What will you find? A clear intent on selling us something and making the process very difficult. Follow a sample of businesses and individuals on Twitter. What will you find? A clear intention to push out their message instead of listening to what the buyers are discussing and engaging with an intent to serve buyer needs.


Caring about buyers ought to be foremost in every business owner's mind. Being social means you care about serving people’s intent. Using social does not require you to care rather using it for the wrong purpose demonstrates your carelessness.


Do you really care? Guess what? Everyone, your employees, suppliers and customers know. If you don’t buyers will reject your message. If you do you can use social media to demonstrate just how much you care. But you can’t demonstrate it unless you are indeed being social. Get it?


Jay Deragon
The Relationship Economy
Linkedin
01/14/2010

1/12/2010

MASTERING THE ART AND SCIENCE OF SALES


Accelerate the Journey toward High Performance


Through Customer Relationship Management



Organizations of all kinds face numerous
performance challenges today:

understand
and respond to changing customer needs,
support growth, improve profitability.


Leading organizations address these
challenges by transforming the performance
of their sales teams through a combination
of art and science.



High Performance Sales


Introduction



The debate over science versus art in
sales has been running for decades.
In Accenture’s experience, healthy
doses of each are needed for a truly
optimized sales force. When blended and
configured correctly, this fusion results
in a business architecture that can foster
world-class selling.


The science side enables sales through
the development and application of
step-by-step operational processes
that are monitored and measured.
These processes help organizations
to track outcomes and influence the
probability of success at each stage of
the sales lifecycle. Scientific approaches
include rigorous application of standard
processes and tools, fact-based
approaches to identifying areas needing
change and use of technology tools to
deliver insight.
The art includes softer skills, such as
how individuals apply processes and
tools, how various elements interconnect
and influence customer decisions,
and how actions are orchestrated
across the enterprise. Additional
“soft” capabilities include relationship
development, political savvy, adaptability,
trustworthiness, active listening and
guiding and influencing decisions—all of
which are vital to superior selling.
Enhancing both art and science is not
easy. But in an era in which globalization
and expansion into new markets have
made it critical to build sales capabilities
that can be leveraged and scaled on
a global basis, a sales organization
that excels in both art and science is a
strong competitive differentiator and
contributor to high performance.



Optimizing the Science



When setting out to optimize the science
aspect of sales, a company should start
with its sales process: one of the most
fundamental elements of a world-class
sales organization and frequently viewed
as a “playbook” of required steps and
actions for the sales function. This
playbook highlights activities required at
each stage of the selling process—from
account segmentation and territory
definition; to account profiling, planning,
engagement and solution definition;
and finally to opportunity management,
negotiating and closing.


It is equally important to apply the
science of selling towards creating a
distinct set of processes and rules for
sales managers. Optimizing the science
of sales requires defining manager
activities—such as coaching sales teams,
observing and correcting suboptimal
behaviors—and instilling best practices
across the team. In addition, identifying
key performance indicators and tracking
performance against them using
technology tools increases rigor and
Optimizing the Science
helps improve process adoption. Most
sales effectiveness programs rely on
sales force automation to complement
the development of these processes and
help generate the intended benefits.
Critical to the success of this approach
is ensuring that business people “drive
the tool” versus allowing IT to lead the
definition.


Accenture’s client experience provides
several concrete examples of the
challenges inherent in optimizing the
sales process. For example: facing
revenue and profitability pressures
common to many companies, one large
North America retailer we work with
decided to expand its presence in the
small and medium-sized business market,
which offered substantial revenue
opportunity and which the company had
left largely untapped.


However, the small and medium-sized
business market was very different from
the company’s traditional consumer
market: It featured the practice of
buying products via purchase orders and
invoices, the desire for volume pricing
and the need for products ready for
commercial use. Unfortunately, the
organization’s retail salespeople were
not trained or equipped to address these
unique small and medium-sized business
needs. While the retailer did have a
field sales force trained to manage large
accounts, its cost structure did not
always align favorably with the size and
profitability of small and medium-sized
business transactions.


To complicate matters further,
small and medium-sized business
customers often visited retail locations
to make purchases, in contrast
to larger customers who shopped
primarily through their dedicated
sales representatives. The company
recognized that if it were to be
successful in its growth strategy, its
sales force would need not only new
skills and capabilities, but also a better
process for serving small and mediumsized
business customers.




The retailer turned to Accenture for
help. Accenture began by developing an
understanding of the profitability of our
client’s different channels and customer
types. This analysis revealed that the
greatest overall profits would be attained
by handling simple transactions in the
store, routing smaller business customers
to an inside sales channel, and reserving
the highly skilled field sales force for
the largest opportunities and customers.
This would require ensuring that store
operations were capable of handling the
simple small and medium-sized business
transactions, that in-store personnel
were trained properly and, most
importantly, that everyone knew how to
route different customers properly and
was incented to do so.


To achieve these goals, Accenture
first created business rules and
processes to help ensure that larger
business customers—those with the
most need for expertise and service
and with the most revenue and profit
potential—would be routed efficiently
to the field sales force for follow-up
and engagement as appropriate. Next,
Accenture implemented new technology
and business processes to manage
compensation and rewards in a way
that incented all members of the sales
organization to provide a seamless,
multi-channel customer experience for
small and medium-sized businesses.


In addition to the revised compensation
structure, Accenture leveraged its deep
technology experience to implement
TrueChoice, a predictive selling tool, and
integrate it with the company’s existing
customer relationship management
system. TrueChoice gives each sales
person access to vital customer
insights such as purchase likelihood,
decision drivers, willingness to pay,
key arguments, deal breakers and
solution component preferences. Using
TrueChoice, sales people can integrate
these pieces of data into an overall
“deal score” that helps them prioritize
leads. Finally, Accenture developed a
metrics dashboard for key executives
to easily check and manage the sales
organization’s performance and sales
pipeline. This vital, real-time information
supports more effective business
planning and performance management,
enabling the company to adjust its
processes and business rules continually,
for optimal results.


This project’s focus on the “science
of sales” generated encouraging early
results. For example, the TrueChoice tool
paid for itself in just a few months by
driving increased revenue. In addition
to increasing revenue, the project
has boosted margins. By switching
responsibility for handling small and
medium-sized business customers to instore
retail sales people from more costly
field sales representatives, and providing
retail sales people with time-saving
tools such as TrueChoice, our client has
substantially reduced its costs to serve
the segment.




Enabling the Art



Indeed, the science of selling is vitally
important as the foundation for the sales
organization. On its own, however, it is
insufficient to achieve the full potential
of sales effectiveness. The art of sales—a
sales person’s talent, competence
and personal strengths throughout
the process—provides the ultimate
differentiator. While some salespeople are
natural artists and already understand
the “how,” others must be taught many
of the foundational skills. Fortunately,
many foundational skills can be taught,
including effective communication,
guided discovery, developing business
solutions, interpreting account profiles,
reading a power map and building
networks.


Accenture has determined that the art
includes more than individual skills,
and that successful companies give
equal importance to the capabilities of
supporting roles. Perhaps most important
is the art of the sales manager. Once
again, while scientific management
processes may dictate steps for assessing,
guiding and coaching sales teams, the
“how” of sales management is what truly
differentiates performance.


For example, many new sales managers
struggle between “coaching” and “doing.”
As a difficult client situation arises, some
of these managers tend to take over
instead of observing outcomes. They
may talk more than listen, and assume
the individual they are developing is
motivated by the same factors driving
the manager. The sales manager who
has mastered the art can “read” a
salesperson’s behavior, ask the right
questions to determine motivation, assess
in real-time the mistakes a sales person
might be making that are acceptable
versus those that are detrimental to
the particular pursuit (and to stand by
or jump in as a result), and to continue
coaching well beyond the event.


Another company we have worked
with illustrates the value that can be
created by investing in the art of sales.
After learning that its sales training
program was not enabling the desired
performance results, the company asked
us to recast the program. First, a team
of experts researched the competencies
and behaviors that have been shown
scientifically to be predictors of highperformance
selling. We assessed the
company’s current sales force against
these factors, and by applying our
High Performance Sales Force Asset,
we identified their competency and
behavioral gaps by sales role.


This analysis enabled us to redefine
both the training program and sales
role definitions, and select sales talent
management processes accordingly. As
a result of this program, the company
has been able to focus its training dollars
on programs designed to improve the
most critical competencies of specific
people in specific roles. They are also
creating a long-term plan to continue
the assessment process yearly, as part
of their ongoing effort to improve skills
development, coaching , competency
modeling and training program
management.


Such focused training—delivered over
a sustained period—is a key success
factor for building a successful sales
organization. Indeed, while some
managers and salespeople are natural
artists, the majority achieve their full
potential over time. Effective listening,
recognizing social styles and modifying
communication to connect with different
team members are artistic talents
that can be cultivated and improved.
Developing these skills and transforming
the manager from a member of the
team to its leader develops a rhythm
that unites and motivates, and can yield
highly positive outcomes.




Competing in today’s market requires
building superior capabilities in both
the “science” and “art” of selling.



Fusing Science and Art




In the quest for better sales results,
companies often wonder which aspect of
sales they should emphasize: science or
art. In Accenture’s experience working
with companies that have successfully
transformed sales, the answer is both.
Science provides the rigor and discipline
to conduct consistently and efficiently
those activities that are common to all
sales organizations and, thus, are vital to
having a sales force that makes the best
use of its precious time and resources.
However, merely having efficient and
disciplined sales people will not result
in higher sales or stronger customer
relationships. That’s where the art comes
in, helping to build on the foundation
of science and providing the means
by which a company can differentiate
its sales capabilities from those of
competitors with the same foundational
tools and processes.


This notion that the best results come
from combining art and science was
validated by a research effort conducted
by CSO Insights and sponsored by
Accenture. CSO Insights analyzed sales
performance based on the strategies and
tactics companies used to engage their
clients. The findings indicated companies
that employed rigorous levels of sales
process enjoyed significantly greater
sales performance and predictability.
The researchers then conducted further
analysis on relationship-development
tactics to look at the impact on company
sales effectiveness.


They found that while developing
and nurturing relationships were
widely accepted to be more art than
science, companies that addressed
the full relationship spectrum—from
entry point as an approved vendor to
coveted trusted-partner status—enjoyed
the greatest levels of success. They
uncovered the most compelling evidence
for this conclusion upon evaluating the
business performance of $1 billion-plus
firms against a matrix of businessprocess
rigor (science) and level of client
relationships (art). This examination
showed that companies with formal and
dynamic processes, coupled with deep
and trusted client relationships, enjoyed
significantly stronger results in the areas
of opportunity wins, forecast accuracy
and reduced turnover in the sales force.
In other words, the study determined
that neither the science nor the art could
be optimized independently.


Similarly, Accenture’s work at a leading
Linux software provider is another good
example of striking a balance between
the art and science of sales. We initially
focused on instilling the company’s
sales capability with increased rigor and
process discipline. More specifically,
we helped the client better manage and
document customer activity plans, more
accurately define opportunities and
their probability for closure, forecast
with greater consistency, and run more
effective sales management calls. Next,
we focused on balancing their new-found
sales science with art, developing a sales
coaching program focused on when
and how sales managers coached their
teams, and working with the company
to optimize the capabilities and skill
sets of the sales force. The results were
dramatic: an improved pipeline, bigger
deals, shorter sales cycles, and much
better forecast accuracy.


In the preceding and other projects
Accenture has completed with clients,
we leveraged a number of proprietary
Accenture tools and assets (three of
which we discuss in the sidebar on
page 11). Using these tool and assets,
Accenture can help clients enhance both
the art and science aspects of their sales
organizations—and thus begin realizing
results—more quickly.




An optimal
balance of data,
technology,
process and
talent is the
foundation of a
high-performing
sales force.



Conclusion

As the global economy slowed in the
past year, companies’ lack of robust “sell
side” and operational processes became
exposed. Indeed, with strong growth
no longer masking sales inefficiencies
and ineffectiveness, companies
began increasing their focus on sales
effectiveness initiatives. Yet despite the
fact that companies spent billions on
sales force automation, comparatively
few realized significant gains.


In Accenture’s view, the preceding clearly
indicates there’s more to the equation
than tools that beef up the science side
of selling. Facing increasing pressure to
generate revenue and a greater return on
their sales force investment, companies
must spend just as much energy
bolstering the art side of selling to build
the critical relationship-building, listening
and negotiating skills that define sales
leaders.



Only when a company achieves the
optimal balance between art and science
will it fully leverage its sales capabilities
in support of the organization’s pursuit of
high performance.

Accenture

Authors

Richard Bakosh


Richard (Rick) Bakosh is managing
director of the Sales Transformation
practice at Accenture, where he leads a
global team of experts in sales strategy,
sales enablement, talent management
and sales operations. For more than two
decades, he has helped Fortune 500
companies improve business performance
by increasing revenues and improving
sales productivity.


Yusuf Tayob


Yusuf Tayob is a senior executive with
the Accenture Sales Transformation
team, with extensive experience in sales
strategy, methodologies, processes and
sales technologies. As global lead for this
group’s Sales Enablement offering, he and
his team help companies achieve sales
objectives by designing and implementing
process led on-premise and software as a
service-based solution architectures.
Only when a company achieves the
optimal balance between art and science
will it fully leverage its sales capabilities
in support of the organization’s pursuit of
high performance.
01/12/2010