Advisors Top Resolutions for 2013

Sue BerginSue Bergin

The end of the calendar year presents an excellent opportunity to reflect on how your practice has evolved. It is an ideal time to make resolutions or identify actions that will yield positive changes in the year ahead.

We canvassed our advisor community and compiled the following list of top ten advisor resolutions for the upcoming year:

  1. Invest in upgraded technology and dedicate the time needed to adapt to the new tools.
  2. Better leverage existing technology
  3. Only take on new clients that are a good fit for the firm
  4. Increase brand awareness using social media
  5. Network more and participate in activities that have led to solid referrals in the past.
  6. Document and execute quarterly sales goals, identifying key results areas and align budget and resources accordingly
  7. Prevent employee burnout by making work more fun
  8. Add a new product line or service capabilities
  9. Invest in staff training
  10. Focus on succession planning


People who explicitly make New Year’s resolutions are ten times more likely to attain their goals than people who do not make resolutions. How about you? Are you making one of the resolutions on our list, or do you have a different one?

Looking Past the Fiscal Cliff

MagnottaAmy Magnotta, CFA, Brinker Capital

It looks like there will be some deal on the fiscal cliff that emerges from Washington before the end of the year—either (1) a large deal that includes a compromise on higher revenues, spending cuts and entitlement reforms, or (2) a smaller deal that results in a larger fiscal drag than consensus currently anticipates. Time is running out, and the market will likely be disappointed if Congress leaves for the Christmas holiday without a more specific plan in place.

In his research report today, Don Rismiller, Chief Economist at Strategas Research Partners, encouraged investors to look through the fiscal cliff and to take notice of the number of good things that are happening in the U.S. economy. Rismiller provided a dozen reasons for optimism after the fiscal cliff is resolved.

The Other Side

Positives on the Other Side of the Fiscal Cliff:

  1. The Fed has followed through on “QE4.”
  2. Additional global easing is expected (e.g., Abe & BoJ, Carney & BoE).
  3. The bond market has digested additional U.S. debt well (10-yr @ 1.8%).
  4. The U.S. dollar has held value (meaning there’s room for policy to operate).
  5. Housing has bottomed in the U.S.
  6. There’s pent-up demand for household formation (buy or rent).
  7. There’s pent-up demand being created for capex (which has already fallen).
  8. There’s likely some pent-up demand for autos (hurricane replacement).
  9. While small, nonresidential construction could increase with hurricane rebuilding.
  10. Domestic energy production continues to ramp up.
  11. Equity valuations look attractive.
  12. Equity multiples bottom before earnings, which is likely an early 2013 story.

Happy Holidays from Brinker Capital

Chuck Widger, Executive Chairman, Brinker Capital

Chuck_HolidayVideoChuck Widger
“This is just a short holiday message from all of us here at Brinker Capital.  All of us —  staff, management and the firm’s Executive Committee wish you, investors, advisors, your colleagues, and families the happiest of holiday seasons.  We hope that all of you will take time in the coming holiday season to get some rest and share quality time with those who mean the most to you.  A good quality of life involves a constructive and productive work experience and the joy of time spent with family and friends.”

2012 Highlights

  • Strategies favoring capital preservation have protected client assets
  • Strategies emphasizing income have delivered competitive yields
  • Absolute return strategies have managed volatility and provided appreciation
  • Accumulation strategies have participated and created attractive appreciation

“During this holiday season, as in holiday’s past, all of us at Brinker not only have you, the investors and advisors we serve, at front of mind.  But we also have in mind those in need, and organizations which serve those in need.  Contributions by Brinker have been made to Teach for America, The Wounded Warrior Project and The ALS Association.

With your good health in mind, Happy Holidays everyone.”

Dealing with Fear in Clients

Bev FlaxingtonBev Flaxington, The Collaborative

These are difficult economic times. Add the current economic climate to a market that hasn’t cooperated for some years, and you have investors with angst. Anyone with money saved, or looking at retirement, is feeling a bit worried and ill at ease. When investors are worried, it impacts the advisor. Sometimes a client will not make a decision out of fear. Sometimes referrals are impacted because clients hesitate to recommend friends and family until they see what happens with the markets. People often simply sit on the sidelines when they are fearful, because doing nothing always seems better than taking a risk.

Do advisors just have to wait out this period of angst? What if it doesn’t go away for some time? Are advisors doomed to live with fearful clients? Let’s look at some strategies for managing clients through fearful times, and perhaps even benefiting from the difficult conditions.

bev blog 12.13.12

(1)    Manage your own fears first. If you, as an advisor, are worried, this will impact your clients too. Remember, most of us recognize the “smell of fear.” We know when someone is scared or worried. If you aren’t managing your own reactions, it will be noticeable to your clients. Practice meditation or deep breathing. Go to the gym. Read books that make you laugh. Whatever you have to do to feel more upbeat and less worried, do it. And watch the way you speak. Your words should be balanced and realistic, but overall optimistic and connoting a sense of “in control” to your clients.

(2)    Stay proactive. Many of the fears come from the unknown. What will happen if our politicians can’t reach an agreement? What if they decide to do one thing over another? The news is filled with worst case scenarios. Stay on top of what’s being discussed, and provide education to your clients about what you will do in different scenarios. Show them you are paying attention and thinking about your responses based on different outcomes.

(3)    Provide education. This might be a great time to hold a client event or seminar on the things we do know about. Can you speak about long-term care? Can you talk about living well during the aging process? Can you examine 529’s and the college savings options? Find things that are more known and that may be impacting your clients now or in the future, and educate about them. Keep the focus on you and your expertise, while taking it off – even for a short time – the things that are distracting your clients.

(4)    Talk about the fear that clients and prospects have. Acknowledge that you are hearing about it from many people. Talk about how much having an advisor can put fears to rest. Instead of reading the paper every day and wondering what strategies they should take, your clients can depend on you to do this. It’s really the best time to have someone else looking out for them. Remind them of this whenever possible, and acknowledge the circumstances. You want to stay confident in your approach, but it can be helpful to let them know you understand their fears and concerns and that you are there to look out for them.

In many ways, times of uncertainty offer an opportunity for those who are confident and experienced in approach to be the beacon, or comfort, for worried investors. See what you can do to be that confident supporter during these interesting times.

Impatience and Sadness: Two Costly Emotions

Sue BerginSue Bergin

If you had to name the top three emotions that cause people to make bad financial decisions, you’d probably say anger, guilt and fear.  While these are true, there are two more emotions to add to the list—sadness and impatience.

Psychological scientists from Harvard Kennedy School of Government and Columbia University recently published a report on November 13 that show a correlation between sadness, impatience, and poor financial decision-making.

The researchers asked participants questions with both short- and long-term financial implications.  Before answering, however, half of the participants had to watch a sad video.


The study found that these two emotions could be quite costly.

Participants subject to “sadness conditions” earned significantly less money than the participants who did not view the video.  They valued future rewards on average 13% to 34% less than their “neutral state” counterparts.

The researchers concluded that sadness triggered impatience – another emotion that produces poor financial results. When sad, people craved immediate gratification.  Sadness triggers impatience; impatience causes people to forgo future gains in exchange for instant gratification.

Fiscal Cliff Update

MagnottaAmy Magnotta, CFA, Brinker Capital

The odds of a deal in Washington before year-end have increased as conversations between President Obama and Speaker Boehner have become more serious since Sunday. There has not been any public discussion of the negotiations, which is a positive sign. With less than three weeks left in the year, we need to see major progress soon, allowing for enough time to draft and vote on legislation before Congress leaves Washington for the Christmas holiday.

The highest probability outcome remains that a short-term deal is agreed on that serves as a down payment on tax and entitlement reform in 2013. This deal will include the framework for increased tax revenues and spending cuts, as well as an increase in the debt ceiling, which we feel will result in a fiscal drag of closer to 1% of GDP in 2013. It is our belief that this type of deal would be a positive for markets and confidence.

If time runs out on a larger deal, the House could pass a bill that maintains all of the current tax rates for those with incomes below $200,000, raises the capital gains and dividend taxes to 20%, and patches the Alternative Minimum Tax. However, the fiscal drag under this option is significantly higher than consensus. In addition, the brinkmanship would continue as the debt ceiling would have to be dealt with in early 2013.

The final potential outcome is that no deal can be reached and we go off the cliff completely. While we believe this is a lower probability event, it remains a risk. The markets would likely react negatively as the resulting fiscal drag would be greater than expected, and there would be a lack of confidence that Washington is serious about getting a handle on our long-term fiscal issues.

One big catalyst that should force both parties to reach a deal before year-end is that the Alternative Minimum Tax (AMT) patch expired at the end of 2011 and needs to be extended for this calendar year. If the AMT is not patched there will be a significant increase in the number taxpayers who are impacted, shifting the burden into the middle class. According to the Tax Policy Center, under current law if Congress does not act, the percentage of taxpayers affected by the AMT will increase from 4% to 32%. This increased tax bill would be a hit to consumers and a significant negative for growth in the first half of 2012.

12.11.12_Magnotta_Fiscal Cliff

Source: Strategas Research Partners, LLC

A deal on the fiscal cliff could restore some confidence that both parties in Washington can compromise on policy and are serious about setting us on a sustainable, long-term fiscal path. Some level of certainty on a deal could also boost business confidence, and as a result, investment and economic growth.

Follow Amy on Twitter @AmyLMagnotta.

Search and Selection: Finding the Right Hire for Your Firm

Bev FlaxingtonBev Flaxington, The Collaborative

It is often said that this isn’t a numbers business, it is a people business. Understanding the criticality of the human factor, it is interesting how often an advisory firm will simply hire to fill a role instead of putting the time and energy into search and selection to determine the right candidate, for the right role, in the right culture.

Success in a job comes from a number of factors. Let’s touch on a few and then talk about one in more detail, that of search and selection:

  • Behavioral fit – is the employee’s natural style right for the role? If he or she is a deeply analytical person, but the job calls for constant people interaction, will she or he be able to modify for success?
  • Cultural fit – are the values of the company in line with the employee’s values? Does the employee show a willingness to understand and uphold the company’s values?
  • Clarity of job expectations – does the employee know exactly what is expected of them? Has the employer clearly identified what success looks like for this role?
  • Compensation and motivators – are the right ones built in for this person, in this job?

In addition to these factors, advisors must consider where they find candidates (search) and how they determine who they will hire (selection). When looking for a new job, oftentimes people will focus on networking. However, in hiring for a new role networking may not be the best approach. In many cases, a person may get referred to the advisory firm and because they came from someone the advisor knows and trusts, they are assumed to be a good fit. An advisor may not go through as rigorous of a screening process in that case.

When searching for a candidate, ensure that you are pursuing all available avenues to locate candidates. In addition to the traditional posting options, be sure to include posting to groups such as the CFA Institute, or the FPA, or other financially oriented organizations. LinkedIn is growing in popularity and can be an excellent place to find candidates. Interview a minimum of three people for a role just to get an idea of different people.

Finding the Right Hire

Before you begin the interview process, establish how you will select the person. Who will be involved in interviewing? How much weight will each person have? Will you have an organized list of questions for each person to ask, or a matrix to assess feedback? What will be the feedback loop and how will people follow up on their thoughts? You want to establish final criteria for making the decision. In many cases a firm has a set of requirements but makes an exception based on “liking” a candidate. This might be okay, if all other criteria are met. Define this in advance.

Be sure to ask behavioral questions. Don’t just take a person’s “track record” for granted – ask how they found clients, what they did to work with them, how they go about generating referrals, how they work with COIs, etc. Pick those things most relevant to your firm and be sure to dig, dig, dig in your questioning until you really understand the background.

Lastly, be sure to check references. Don’t just do a cursory check-in with the three or four people that were listed on the person’s resume. Instead, try to do some digging on your own and find others to speak to. If the person is on LinkedIn or has relationships at prior firms, see if you are able to use your connections to learn a bit about the person outside of the given references.

It can sound like a great deal of work to find the right person, but the truth is that making a bad hire is costly for any firm.