Cottage Industry

The news last week that one of the founding partners of Iconiq was leaving the firm emphasized how the wealth management industry remains a cottage industry.  Our blog this week will look at the pros and cons of cottage industries.  We will also examine how a cottage industry can become an enduring industry that will survive multiple generations.  Is this a goal advisors and their clients want and are they willing to make the necessary changes?  We believe it is worth considering.


Cultive Personalities

Cottage industries promote the existence of big personalities that define the company and insure the clients know what they are getting if they work with the firm.  Iconiq has done a great job answering this question.  Is it the right answer for you?  The wealth management industry is very competitive forcing firms to differentiate themselves from their competition.  A big personality is a memorable differentiator but it is ephemeral.



Most companies strive to create a brand.  This will help your SEO and will ultimately increase your firm’s value.   Creating a brand is easier said than done.   Building a brand starts with the firm’s executives and their marketing message.   Most established brands have defined their firm on the products they provide.  New independent firms use other firm’s products and differentiate themselves through their unique customer service.  Regulators have stepped into this debate and characterize products under the Suitability Standard and customer service under the Fiduciary Standard.  Some clients prefer great products and others prefer great customer service.


Policies and Procedures

Cottage industries are order takers.  If the client wants a shirt you design and deliver a shirt.  The client is happy until the designer/manufacturer leaves.  This is not the end of the world for the client but it is a nuisance to find another person that they trust.  This reality created the need for firms to evolve from cottage industry firms to brand name firms.  Brand name firms create policies and procedures to insure that clients know what to expect when they do business with the firm.  Seems like an obvious goal but there are some unintended consequences of branding. The biggest issue is who owns the client?

We all have a question to answer.  Do we want to be or Charles Merrill or Charles Schwab?  Not an easy question to answer.  The markets have an answer.



Career Hacks

We are in constant pursuit to be the best we can be in our profession.  Is there a hack to help us?  Some days it feels like others have found one.  The Baby Boomer hack was to be a Doctor, a Lawyer or work for Goldman Sachs.  Millennials believe in the power of social media hacks and that a job at Google is on the Yellow Brick Road.  This week I’ll look at other experts and share my opinion that there isn’t an easy solution to professional success.



Those who can’t do teach and those who can’t teach, teach gym.  Many of the established ideas that guide people in the wealth advisory business where researched in academia.  While their research is credible most academics remain as advisors not practitioners.  William Sharpe might be an exception to this rule.  He lost at Long Term Capital but was a recent winner with Financial Engines.  Resilient and richer.


Conferences and Media

We attend industry conferences looking for hacks.  The concepts presented by the conference sponsors are thoughtful but are often forgotten on our plane ride home.  Any follow-up is to sell us something from one of the conference “sponsors”.  The media also claims to have discovered hacks that grab our attention.  Editors of old school media are masters at this and bloggers in new media ride the click bait wave.  My skeptical opinion remains how many writers have transitioned their ideas into the commercial arena?  Not many.



Many firms require that new hires work as an apprentice to a tenured advisor.  This is helpful but I’ve observed two problems.  The first is that even when experienced professionals are required to help and train the next gen they spend more time and effort insuring they are paid for their time spent.  The next gen apprentices make the naïve and faulty judgment that the job is easy after watching the senior professional work.  Wonder if they make the same mistake when they watch sports on TV?


It is fun to look for professional hacks.  My search has found the perfect hack doesn’t exist.  Michael Kitces continues to look by asking guests on his great podcasts how they grow.  Most take a hardline stance against selling.  I have found that sales is NOT evil and that hard work and a sincere passion for your work is still the best hack in town.  President Roosevelt said it best.  Join me in the arena and ask for the order!

The Oprah Recipe

There is no argument on the positive impact an endorsement from Oprah can have on your business.  How did she become so influential?  After listening to numerous episodes of her podcast Super Soul Conversations it has become obvious.  Oprah does the work!  We can learn from Oprah’s approach and while we can’t play her celebrity card we can adopt the Oprah recipe.


Oprah actually reads the book of her guest.  She proves it by asking specific questions about statements on a certain page in the book.  She’ll state that I loved when you said on page 93 that you believed X.  Tell me more.  The statements are great conversation starters and they build a connection that the other interviews on the book tour don’t have as they ask the stock questions the publisher gave them.  Easy but lazy.  You don’t achieve great things by taking the easy rout.  Oprah’s recipe is hard but it tastes great.


Social Media

Media is changing and rather than sticking her head in the sand Oprah is embracing the change.  She has expanded her TV interview program to Supersoul Conversations, the Podcast.  If someone as recognizable as Oprah believes she can get her message out using a Podcast shouldn’t you?   Oprah also Tweets.  Her tweets come from her interviews where she will pause and proclaim – “that is a tweetable moment!” Maybe “the Real” Oprah can help Twitter’s image problem.



Oprah has done thousands of interviews and she references interviews that had an impact on her life.  The impact was emotional and she often compares that emotion to a feeling she is having with her current interview.  This practice bonds the two participants and shows that even with her celebrity Oprah has empathy.



Oprah does something we all can implement in our business and personal lives.  She asks a succinct question and she stops and listens to the person’s answer.  Sounds simple but we seldom do it.  You  can’t get a Tweetable moment unless you listen.


I won’t wait on the call or endorsement from Oprah.  I’ll make my own sunshine using Oprah’s recipe.

You are NOT the boss of me

We have all heard our kids or our siblings tell us “you are NOT the boss of me”.  The recent return of litigation (TRO) against departing brokers because their old firms have left The Protocol for Broker Recruiting focuses on the “ownership” of the clients.  The firms claim they own the clients … really?  Shouldn’t we resolve this dispute by asking the clients?  We will examine why this simple solution is more nuanced.


The Boss

Boss is usually a title given to us or it is one we bestow on ourselves.  Both have a short life span that can only be extended by earning the boss title.  Earning it is a combination of trust, humility and results.  Trust is an essential element of every interpersonal relationship. Trust is doing what you say.  Sounds simple but we all know it is very difficult.  Humility is RARE – it is difficult to admit that you don’t know or that you are wrong. And the final necessity of a good boss is they achieve measurable results.  Results for the people they work with and corporate results.



Money is power and bosses often control the purse strings.  Parents can state “as long as you live under our roof and eat our food you have to follow our rules”.  Maslow had this nailed in 1954.  Dan Pink’s book Drive addressed that there are other powerful items that trump money.  Autonomy, Mastery and Purpose!  Money$ your days are numbered.



The power of personal relationships is often the deciding factor on who we want to be around.  Relationships are the final arbiter when employees or clients are considering leaving.  Mistakenly corporations undervalue the power of relationships.  Good wealth managers excel in this area and their deep relationships with their clients are proven when they change firms and over 85% of the clients move to the advisor’s new firm.  The saber rattling of big firms and their TRO’s are a nuisance that will slow things down but will ultimately fail because relationships will win the day.   Big firm legal tactics can scare the over 56% of advisors who are considering moving but the segment that is being hurt the most is clients.  Who is the boss of the clients?


So you want to be the boss of me?  Put your ego down and earn it.  The questions on the test are hidden in this blog.

Monetizing Eyeballs

We all realize that word of mouth, referrals and political rallies cannot insure the success of our business or our election.  Recently this reality was exposed by the Cambridge Analytica scandal and has caused us all to question what is the right way to approach our marketing.  Unfortunately there will always be “bad actors” and our charge is to separate the wheat from the chaff and in this case separate bad actors from bad practices.  This blog will share our thoughts on the best way to monetize our new prospective clients without compromising their privacy.


We all want more people to understand and know our unique value.  Marketing has taken the baton to help us in this endeavor. Both Traditional and Digital marketing requires we create a succinct and understandable message for our business.  This process takes time and effort and will be achieved by working with an experienced traditional or digital marketing firm.  Once we agree on a message we can use it repetitively in all of our external and internal communications. I have found a good message will last a longtime.  Think about how long “Plop Plop Fizz Fizz” has remained in your brain.



How do we know if our marketing message is working?  The easiest and most effective way is to monitor how many new clients find you.  Traditional marketing and digital marketing firms have developed their own systems to show their clients the effectiveness of their recommendations.  Traditional marketing created  Nielsen ratings and Digital marketing uses Google Analytics.  Both seem self serving to me.



Once we employ a marketing campaign we need to shift our focus to monetizing all of the new eyeballs that are checking out our firm.  Traditional advertising includes our phone number and a our street address. Digital advertising includes our URL and a sign up page for our white papers.  Both marketing approaches encourage their clients to write books because a book can  position us as an expert and even though we seldom take books out of our bookcases the books will be there until we move and are forced to  organize our stuff.  Digital marketing provides another outlet for writers through blogs that are posted on the internet and similar to the advice we give our kids, once posted they are there forever…that can be a good thing too.


Traditional advertising has been around for over 70 years.  Does it work? Digital advertising is just getting started. Is it working?  There is no easy answer to either question but we can all agree that we need to get the word out about our firm just because we build it they might not come.  I believe PR and Marketing works but I’m just not sure if the multi-million dollar Super Bowl ad is worth it or what I should pay for clicks. Is that price worth risking my privacy?