Municipal Market Update by Dan Genter, RNC Genter Capital Management

The city of Stockton, CA has decided that it will file for bankruptcy protection under Chapter 9 of the Federal Bankruptcy Code. This announcement is likely to be a national news item that may catch the eye of many investors.

This call to bankruptcy was anticipated considering that Stockton had already defaulted on its debt and, for the last 90 days, had been in a mandatory mediation period in an attempt to negotiate concessions in labor costs and benefits, which are currently almost 70% of the city’s general fund. We do not believe this headline will be considered unexpected or that it will have a negative impact on the municipal bond market.

We also do not consider that this is the start of an epidemic among municipal entities to use default or bankruptcy strategies. Though there may be more smaller entities that will use this option going forward, we view this as more of a politically expedient approach versus a viable solution, which will generally be adopted by municipalities under financial stress.

Frankly, it is hard to understand after the Vallejo, CA experience that a municipal entity nearby would even consider the bankruptcy route. Vallejo spent many months initially having the bankruptcy proceeding approved (it is not as automatic as with corporations), spent three years in bankruptcy proceedings, spent $10 million in legal fees, and almost a year, after emerging from bankruptcy, is still struggling to meet the mandates that were dictated by the bankruptcy court. Considering that their tainted reputation has now effectively barred them from the capital markets, and that the ultimate concessions that they received in bankruptcy mirrored what likely would have been accomplished through diligent negotiations, they clearly have not established an attractive road map for others to follow.

It does reaffirm, however, that smaller municipal entities continue to be under stress and that clients should be very cautious in stretching for yield.

New Meaning to “Accessible At Any Time, From Anywhere”

Mobile technology has made it possible for clients to reach their advisors at any time, from anywhere.

And, that is exactly what is happening.

Clients expect immediate answers, and will check their phone at all hours, and in the most unlikely of places, until they receive a response.

According to security app Lookout’s recent Mobile Mindset Study, 58% of smartphone owners check their device at least once an hour. 24% of respondents admit to checking while driving. A whopping 54% of people surveyed check “while lying in bed”—in the middle of the night, before going to bed, or upon wakening. 40% of those surveyed even admitted to checking their phones while using the bathroom.

The bathroom mobile checker stat is debatable. Other studies show a much higher percentage. The integrated marketing agency 11mark released it’s IT in the Toilet report indicating that three-fourths of Americans with mobile phones either text, e-mail, surf the net, or talk on the phone while in the bathroom. 30% of the men interviewed said they did not go to the bathroom without their phone. The number of women who take their phones to the bathroom is slightly lower at 20%.

These statistics confirm what we already know. As a society, we are becoming increasingly dependent upon our smart phones. This dependency is redefining our notions of privacy, socially acceptable behavior and etiquette. Even more important to consider is how this trend impacts client expectations as to acceptable response times from their advisors.

Private Equity and Venture Capitalists Flocking to Personal Financial Management Systems

Successful venture capitalists and private equity firms often have a knack that is the envy of the common investors. They can tell what’s going to be hot, and they get in on the ground floor.

Lately, technology has attracted the lion’s share of private equity and venture capital funding. According to PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, the software industry received the highest level of venture capital funding for all industries with $1.6 billion invested during the first quarter of 2012. Software saw the most venture capital deals completed in the first quarter, with 231 rounds.

By comparison, biotechnology was the second largest sector for dollars invested with $780 million going into 99 deals.

Internet-specific companies received more than one billion dollars for the eighth consecutive quarter with $1.4 billion going into 188 deals.

What’s interesting is the companies that venture capitalists are investing in within the software sector.

Big bets are being made on personal financial management systems (PFM’s). PFM’s include software and mobile applications that help individual consumers gain control in their financial lives. They include web and mobile apps that give users the ability to perform tasks previously reserved for financial professionals, like investment analysis, total portfolio organization, aggregation and analysis. They also make other household finances easier, such as budgeting and bill pay.

According to a recent Wall Street Journal article, in the first quarter 2012, venture capitalists invested $150 million in companies developing personal financial management software and mobile applications. This is over twice similar investments made in the first quarter last year.

These investments provide us insights as to the types of technologies that venture capitalists believe may transform the way we live our lives. Consumers are becoming increasingly reliant on technology to provide instant answers, improve the organization of our lives, and provide support and guidance on areas where we have questions.

Financial advisors must see these technologies for what they are … disruptive. They will change the way clients’ consume financial data, and how they seek advice.

What’s Your Headline? by Beverly Flaxington @BevFlaxington

Gaining exposure through publicity, social media and PR can be very fruitful for financial advisors. In too many cases, an investor does not know how to go about finding an advisor to talk with about their investments – so they may read about someone, or see a financial expert speaking, and decide to contact them. A robust PR and publicity strategy can be a great complement to other business-building efforts.
What’s the best way for an advisor to start a campaign, or infuse an existing campaign with new energy? First, it is important to determine your budget, and decide what exactly you want to do. It is awareness building? Is it positioning yourself as the obvious expert? Is it placing yourself where potential new partners and other industry professionals will see you?
Like any marketing or business-building strategy, it is critical to know – before you do anything – what you are trying accomplish, what forums are best for what you need, and what budget you can allocate to your efforts.
The next most important thing is to understand your positioning. What do you have to say to the media? What’s your publicity platform? What’s the headline you can use that will grab the attention of the people you are targeting and reel them in to learn more about you?
There are many things an advisor can do to get broader exposure. Be sure, before you commit to anything, that you get approval from your compliance department.
Some areas to think about if you want to embark on a broader publicity campaign could be:
Identify opportunities in your local area for press. Could you write a column for a local paper (online or in print)? Could you be interviewed on the local cable station?
Find timely information in the national press and make a comment about it – this can be done on your own blog, or by writing in to a columnist or sending out a press release.
Find opportunistic places for advertising. Broad-based advertising seldom works, but running an ad in the symphony brochure, or at a local play, or for some other event can get your message to a targeted audience.
If you have the time and can do your own radio show, there are many options on Blogtalk Radio and others to have your own show. Or, if you’d prefer not to have to manage your own show, find radio stations you can contact and pitch your ideas about why you’d be a great guest.
Be sure you have an updated LinkedIn profile. Periodically post new information to keep it fresh and interesting.
Consider having a Facebook page for your business. Post interesting information about local activities, or market news.
Scan the Internet for people who are writing and blogging about topics you care about. Post comments and link back to your firm if possible.
There are many ways to get your message out there more broadly. Remember to establish what you are hoping to accomplish, how much time and money you can spend, and what you’d like to see as a result. Then pick the tactics that work best for you.
Remember, though, your headline matters. Stay consistent with your messaging and reinforce your platform points and positioning every chance you get! Repetition matters a great deal in marketing.

Second Opinions on Investment Performance By Sue Bergin

There was a day when you could sense when someone was looking over your shoulder. Technology, however, has made those days a thing of the past.

With the increasing number and sophistication of personal financial management software sites and mobile applications, it is getting easier for your clients to get second opinions on the investment advice you provide.

Technology-driven portfolio analysis boasts the ability to provide independent and objective investment evaluation, which is appealing to investors on a few levels. From a client’s perspective, they can get a second opinion on your recommendations at no charge, with no obligation, and relatively little effort. Once data is entered, they have a convenient place to go for aggregated and up-to-date information and continual guidance.

The functionality and sophistication of these personal financial management sites and mobile applications is evolving at warp speed. Take SigFig for an example. SigFig aggregates all investment holdings then makes recommendations based on current holdings. It compares the holdings in a user’s portfolio against other investments in the same category and share class. It then provides suggestions of other, less expensive investments that perform better than the user’s current holdings. It even goes a step further. After reviewing the user’s trading patterns, it evaluates the brokerage fees paid. Even individual advisors are evaluated based on the fees assessed and performance obtained. This functionality has led to all kinds of provocative “Find out if your financial advisor is overcharging you” headlines!

Another media darling is Jemstep, which scored a “Use Jemstep to See if Your Broker is Wasting Your Money” headline. Jemstep’s ranking engine analyzes 80 attributes of more than 20,000 mutual funds and ETFs.
Jemstep helps clients identify their financial goals, provides a ranked list of the “best investment options” for that client, and tracks aggregated investment performance.

These services and dozens of others are gaining in popularity. They are free or come at a modest fee, and they have seized the attention of both venture capitalists and the media. Your tech savvy clients are likely to be aware of them, and very well may be relying on them for a second opinion of your performance.

Bet on Success

  People are motivated by a lot of things, but money usually ranks somewhere near the top of the list.  Goals with associated financial incentives or disincentives are more often met than those without; at least that is the thinking behind a new wave of software services and mobile applications.

 New technology is giving life to creative ways to use money to incentivize success.  Take DietBet, for example.  DietBet calls itself a social dieting game.  It “supplies the motivation, support network and game structure[1]” to help users achieve their weight loss goals.  Users can challenge friends, family and co-workers to a 28-day competition to lose weight.  They can wager real money, or just bragging rights.

 Similarly, HealthyWage designs and organizes weight loss challenges and contests in which participants can win money for losing weight.  It offers challenges such as the 10% challenge wherein users who pay a $100 fee and lose 10% of their body weight in six months, win $200. 

 With GymPact, users commit to exercising a specific number of days per week.  They promise to pay at least $5 per day of the agreed-upon total that is missed.  If goals are met, there is a slight monetary reward.

 These health and wellness motivational companies have done what educators have been trying to do for years.  They’ve made something that is generally resisted into a game.  They’ve made a chore fun, and they use a motivator that works for many—money. 

 If it works for diet and exercises, would it work for another chore like budgeting or saving for a life goal? is currently testing that theory.

 Stickk users can elect to pay a financial penalty if they fall short of their goals.  In the June 15 article,“The New Money Apps”, the Wall Street Journal reported on a Stickk user with the goal of paying down half of her $10,000 credit-card debt.  Any week that she doesn’t meet her desired $180 weekly goal, the system automatically transfers $20 from her account to that of a friend.[2]

 The user profiled in the WSJ isn’t the only one leveraging Stickk’s functionality.  The article goes on to state that 30% of the Stickk’s 150,000 user base elect to pay financial penalties for underperformance on goals. 

 While it may seem outlandish to suggest clients bet on their ability to meet financial goals, it is helpful to know that these tools exist, and plenty of people are using them with success.


[2] Anne Tergesen and Joe Light. “The New Money Apps.” The Wall Street Journal June 15, 2012

Want to Serve Your Customers Better? Adopt a Mantra, (Part Two in a Two Part Series) By Stan Warchol, Brinker Capital

Mantras are one of the easiest and most cost effective tools you can use to increase the overall effectiveness of your organization.

A mantra is a word or phrase that is said aloud or silently. It is repeated again and again so that it’s meaning is internalized and produces a change in behavior.

One of the most effective mantras an organization can have is to appreciate time. In a previous blog, we talked about appreciating clients’ time. The notion of appreciating time, however, has ample applicability right in your own shop.

When every staff members’ time is respected, attentions are focused where they matter the most. Everyone feels more appreciated. They gain confidence that their roles are clearly defined and understood by others. The team thrives and clients get better service.

Here are five positive steps that demonstrate an appreciation of staff time:

1. Proactive. When the extra step is taken by one, it often saves time and effort for many. For example, if your assistant or service team keeps a client informed about the status of a particular case, subsequent inquiry calls are eliminated. The client gains a sense of confidence that his case is being dealt with and is less inclined to follow up with multiple calls. This of course means one less phone call for you to return. Oorah for the proactive assistant.
2. Responsive. In today’s world, people expect immediate gratification. It is no longer acceptable to have a “return calls within 24 hours” policy. If a call isn’t received within a day, a follow-up text or email will surely arrive in the meantime. The same response time standards should be upheld for both internal and external constituents. It is as important to get back to a co-worker on the status of a matter, as it is to get back to clients.
3. Avoid information overload. Ask any one of your staff members about their daily email inflow, and whatever the number (which they’ll know), they will probably say it is too much. If you don’t already have one, issue an email policy that purposefully cuts back on unnecessary emails. Re-iterate and model good email etiquette to cut back on the number of unnecessary emails received.
4. Right the first time. Mistakes cost time and money. Encourage staff members to take whatever time is needed to get it right the first time. Make accuracy easy with documented policies and procedures.
5. Confirm, confirm, confirm. Facts and procedures should be verified for accuracy before moving on to the next tasks. With the world changing as rapidly as it is, one should never rely on one’s memory or the way it always has been done. Double and triple check that the answers are correct before passing the information along to someone who is relying on it.

My team hears me repeat the “appreciate time” mantra over and over. It has nearly endless applicability and has made a significant difference to the level of service we provide to our clients.

Does your team have a mantra? We welcome the opportunity to hear how it has helped you become more effective.

Selling for the Non-sales Professional Beverly D. Flaxington

Selling is a fact of life if you want to grow your business. Some financial advisors look at “sales” with negativity. You do not pursue a CFP, or a CFA or any other financially oriented credential, because you want to be a salesperson! In fact, in many cases the core skills necessary to be successful as a financial professional are in opposition to those needed for professional sales.
There are ways to learn how to sell successfully even if you are a non-sales professional. Once you learn how to think about selling, and how to incorporate it into your daily activities, you might even find you enjoy it.

Here are five keys tips for any non-sales professional:

(1) Define your goals. Yes, it sounds basic but this is the first important step – and the one most often overlooked. An advisor might say “I want to grow!” but they haven’t defined what success really looks like to them. Grow in what area? Client referrals? New prospecting opportunities? Through alliances? What about specific products and services? It’s important to define goals very specifically and write them down.

(2) Have a plan. This one also seems pretty basic, doesn’t it? Financial advisors create plans for their clients, so they must have plans for their own selling objectives, right? Unfortunately it’s a rare situation to find an advisor with a clear selling plan – who will do the selling, what are their individual goals, what compensation is associated with selling, how will the sales effort integrate with client service and investing, how will the efforts be measured, etc., are all necessary questions to be asked … and answered.

(3) Selling is an extension of meeting needs. Instead of thinking of sales as “pushing” something, think of it as offering a solution to a problem, or meeting an unmet need. The best salespeople are those that are passionate about what they sell, but realize that what they sell isn’t for everyone. Instead of thinking “sales”, think “understanding other people”. How can you learn more about someone so you can truly offer a solution? What kind of needs do you best meet? What problems do you solve? Change your thinking on the process to make it less about pushing and more about filling – an unmet need.

(4) Learn to qualify! Even the best salespeople struggle with this area. Not everyone is a good prospect. Do not spend too much of your valuable time with people who will simply never buy. Learn to ask probing questions such as “Why are you interested now instead of six months ago, or six months from now?” “What would success look like to you in 2 years if everything was going well with our relationship?” “What obstacles might you face in making a decision?” The more you question, the more you learn.

(5) Be yourself – but learn to adapt. In the end, the buyer is buying you – after all, you are your services in the financial advisory arena. You want to be genuine and show the real you. At the same time, understand that most people listen best and understand others when they have similar communication styles. Become an observer – watch the style of someone you are speaking to and modify to meet their approach. People buy from people they like, and we like people who are like us!
Incorporating any one, or more, of these five tips will start you on the path to being a successful selling professional.

Appreciate Your Client’s Time and They’ll Appreciate You, (Part One in a Two Part Series)

Stan Warchol, Brinker Capital

The financial services business is one of relationships.  So much of an advisor’s time is spent building trust and fostering positive relationships.  One of the best ways to do that is to actively demonstrate ways in which you value your client’s time.

Here are 12 ways you can show clients that you value their time as much as your own:

  1. Schedule well in advance.  If your business model calls for annual meetings and quarterly update conference calls, then schedule them several weeks in advance.  Show your clients’ that you understand they have busy calendars, but that these meetings are important.
  2. Confirm appointments.  Staff members should make outbound calls confirming appointments one to two days in advance of the meeting.  Ensure that the client has directions or parking instructions and is reminded of any paperwork or materials needed at the meeting.  By confirming, you garner firm commitment to the date and time of the meeting and demonstrate flexibility if schedule changes need to happen.  Clients are now becoming accustomed to automated e-mails and text confirmations of appointments.
  3. Pre-work.  Any forms that can be filled out in advance of the meeting should be sent to the client.  Client intake surveys and risk tolerance questionnaires are examples of routine forms that can be completed in advance of the meeting.  To the extent possible, those forms should be prepopulated.  If you don’t have the technology to prepopulate certain fields, then have a staff member do so.  Clients will appreciate that you are asking for only new or previously unknown information.
  4. Preparation.  When clients come into your office, be ready and waiting.  Have everything that you need for the meeting all queued up. Make sure your receptionist knows to expect the client and welcome him or her accordingly.
  5. Under-schedule.   No matter how compelling your magazine collection, and even if you have CNBC looping in the background, clients don’t like waiting in your waiting room any more than you like waiting for a doctor or dentist.   Make sure your schedule isn’t overbooked.  If unanticipated issues come up that get you off track throughout the day, call clients in advance and let them know that you are running late.
  6. Watch the clock.  Clients should know how long to block off their calendars for your meetings.  If you tell them in advance that the meeting will only take an hour, make sure you stick to that timeframe.
  7. Full and self-serve options.  If there are forms or questionnaires that the client can complete online, direct them accordingly.  Do not, however, require them to self-serve if that is not their preference.  Always give the client the option of having you or someone on your staff either walk them through the form or complete it for them.
  8. Use preferred communication vehicles.  Proactively ask clients whether they would like to be communicated with via telephone, e-mail or text message.  Do they want paper reports or electronic?  Make a note of those preferences and use whenever possible.
  9. Avoid peak times.  Just because it is on your to-do list for the week doesn’t mean it is on your clients.  Avoid certain days and times in the week or seasonal business cycles when the client may be experiencing peak activity.
  10. Keep clients in the loop.  Proactively, let clients know the status of pending matters, even if there isn’t much to report.  Keep the communication flowing so the client’s mind can be put at ease and he or she doesn’t have to make the outbound call to find out what is happening.
  11. Don’t contribute to information overload. Pretty much everyone you talk to will tell you that they are on information overload.  Don’t send information unnecessarily, or simply to “touch” the client. Only send items that you are confident clients will value.
  12. Show appreciation.  Thank clients for their time.