WTF is a roboadvisor?
Advisors, get warm referrals now – with Justin Wisz
The holy grail for investment advisor marketing is getting your existing clients to refer you to their friends.
Where traditional marketing may close 5% of the time, warm referrals result in new business close to 90% of the time.
Blogging has helped put advisors on the map, on the Internet, but it hasn’t resulted in a ton of new business for most advisors.
Vestorly aims to change that. Co-founder and CEO, Justin Wisz joins us on Tradestreaming Radio to discuss why traditional content marketing isn’t working for advisors and why Vestorly is a better solution for garnering warm referrals.
Listen to the FULL episode
Continue reading “Advisors, get warm referrals now – with Justin Wisz”
Sh*t investors say
I know, I know…It may be trite but I thought it would be a fun post to write.
Sh*t investors say
- “I want to turn $100k into $5 million”: Possible? Yes. Likely? No. It’s a real discussion going on on Quora now. The best way to grow a portfolio is by continuing to add to it (even better if your employer can match — that’s free money). To get 75% compounded returns, I personally like the answer to buy a $7 million life insurance policy and have an “accident”.
- “But Suze Orman says to…”: I hear this one a lot. It’s best not to have gurus. Not Suze. Not Dave. Not me. These guys are great to learn from. Go ahead and glean. The good ones are great teachers and offer great learning opportunities. But they’re out to build their own businesses. And as we’re learning in SuzeOrmanGate (my term), they’re liable to sell you stuff that’s just not good for you. I’m not picking on Orman — she’s done great things for people. But gurus are human and stumble sometimes.
- “This investing stuff is easy”: No, it’s not. Sure, clicking buy or sell on your online trading account is pretty simple but the act of investing — planning, risk management, asset allocation — is hard. At least just for the fact that much of the process requires us to fight against our natural, human inclinations.
- “This strategy is a printing press — it always works”: Strategies work until they don’t. Many strategies, like my hedge fund piggybacking strategy, was developed by backtesting results. I don’t expect it to EVER work as well as the results because I designed it to maximum those results.
- “Well, Buffett owns it”: Hey, I’m a big fan of following the smart money. Heck, hedge fund replication strategies are built upon the idea that they know more than we do. But don’t ever confuse a single stock pick for an investment strategy. When Buffett buys something, it’s a piece of a larger pie, an additional piece in an investing puzzle known only to him. Beware of cherrypicking guru stock picks.
- “You should check out this hot little small cap I just bought. I’m up 100% already”: OK, tough guy. I’d like to see your cost basis on this one. Not that I accuse you of lying but people stretch the truth when talking about their winning ideas. They also don’t happen to mention the ones that they got wrong. Unless they’re audited results like Chris Camillo posted (he turned $20k into $2M — I guess they could be forged), take these claims with a very large bucket of salt.
- “You should really subscribe to this penny stock newsletter I get. Great info”: Investors — many smart, educated people — turn their brains off when they subscribe to free or premium newsletters. Many blindly swing at every pitch. The penny stock newsletters are published by stock manipulators. They get paid by large investors to prop up prices, so they can exit their positions. Many are compensated in stock, which incentivizes them to pump ’em up.
- “I’m out! This market is rigged.”: Well, it might be but it still plays by some rules. Insiders have always profited — leveling the playing field with REG FD (requiring public disclosures of important information) didn’t change that. But use the tilt in the field to your advantage. Mimic the insiders and create strategies that follow their trading. I just wrote a free ebook: The Harvard Guide to Insider Trading that describes this technique.
- “I don’t know what to do — my broker sucks a$$”: He might. Many do, but there are plenty of trustworthy good financial professionals (yes, even brokers) out there. They put their clients first not matter whether they have taken the fiduciary duty or not. But if you’ve had bad luck, keep looking. Try an online advisor like Covestor (I do freelancing work ) or Personal Capital. or Wealthfront (I’m a freelance writer). Use Wikinvest portfolio tools (I’m an editorial contributor) or portfolio optimizer, Jemstep. I especially like what Hedgeable is doing. Don’t be complacent – there are new solutions out there that may just work better than the old ones.
- “My friends and I are getting into a small real estate deal. We’ll let you in if you behave.”: Sounds like an investment cult to me. If they’re really your friends, I’m not sure you’d have to beg to get into a small deal they’re putting together. Friends get burnt all the time by getting sucked into sucker deals. That doesn’t mean to take a pass on everything that comes your way but it does mean to be very, very, very, very, very picky about who and what you invest in.
[presentation] optimizing your portfolio with ETFs
Wealthfront is pivoting — away from the marketplace of RIAs model like Covestor employs and towards fundamental, portfolio management delivered over the Internet.
The firm appears to be joining a growing bunch of firms focusing on the online delivery of financial advice, like:
- Personal Capital: a portfolio manager with A-team management, providing portfolio management over the Interwebs (see my interview with the president of Personal Capital)
- LearnVest: Focused on a younger, female demographic, delivers financial advice, courses, bootcamps, and now, a subscription model that gives clients financial planning and access to CFPs for ongoing advice.
- Hedgeable: up over 10% in 2011, this upstart — founded by two experienced hedge fundies — provides institutional-type strategies to individuals for insanely affordable fees (some services are free).
- Jemstep: Plug in your portfolios at different brokers and the Jemstep platform analyzes everything and makes suggestions to help your optimize your holdings. (here’s my interview with Jemstep)
Wealthfront’s new approach is to emphasize its adherence to MPT (Modern Portfolio Theory) and this is the first presentation from the newly-focused firm. I think it’s pretty sweet.
Engineer Your Portfolio with ETFs
View more presentations from Wealthfront
Bringing investment services online – with Personal Capital’s Rob Foregger
Delivering investment advisory services solely through the online channel is a game changer. But getting it right has eluded even the biggest of investment managers.
Fresh after a big funding round, Rob Foregger’s Personal Capital aims to be a dominant player in online finance. Rob’s got over 20 years experience in direct-to-consumer finance that he’s bringing to the table with the rest of Personal Capital’s A-team management.
Join Rob and me as we discuss the genesis of Personal Capital, how the online advisor intends to scale, and the future of online investing.
Continue reading “Bringing investment services online – with Personal Capital’s Rob Foregger”
[Free Webinar]: From the ground up: Building a better money management business
This event was already held. Check out this event’s presentation, Building an investment advisory business from the ground up.
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From the ground up: How to build a successful money management firm |
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Looking for investment advisors interested in building their practices
Can’t beat awesome free resources
I’m testing a new weekly email (called the AdvisorInsider) full of tips, tools and resources to help you build your highly profitable business .
Based on my writings here, my book and my consulting business, I think I have a lot to share with investment/financial advisors looking to better harness the web, technology, and techniques that are becoming best practice in the financial services industry.
I’ll eventually charge for this but I’m looking for 100 investment pros to trial this for free.
All I want back is a little feedback.
What to expect from me
I’ll email you insightful emails 1x week full of tools worth way more than the cost of this email. I’ll share with you some of the techniques, tools and technologies many of the largest and most successful investment professionals are using to boost their businesses.
If you email me at zack.miller at gmail.com I’ll add you to this list. It’s going to be awesome.
10 reasons to write an investment book
Must like the cliche, writing a book is a labor of love. Tradestream took me about a year from start to finish.
And it’s true: Very few people make real money penning their investment ideas. But that doesn’t mean writing an investment book is a losing endeavor.
Here’s 10 reasons why you should write a book:
- New clients: Bringing in investment advisory/financial advisory clients in today’s market requires having a wide sales funnel. The book and international distribution allow me to scale my presence into various markets I wouldn’t normally penetrate.
- Another revenue stream: In Tradestream, I discuss how some advisors are creating new revenue streams (also, see here). A book, though not big money, gives you some diversification in earnings.
- Expanded media opportunities: Newspapers, blogs and other media outlets are always looking for fresh ideas and new authors are an age-old source of them. Writing a finance book puts you in play to be included as a guest author/contributor.
- Reputation builder: walking into meetings with a book in hand that you’ve written brings a lot of cred with it. Investment advisory clients like to know that their advisor is respected in his field. A book spells respect. When journos look for a source on a particular topic, a books presents you as the go-to expert.
- Deal flow: Writing and publishing Tradestream has brought me new business, sure. But it’s also brought me consulting and speaking gigs that I wouldn’t necessarily have received if I wasn’t in the market with my book.
- Change momentum: As Seth Godin says, “If you want to change people, you must create enough leverage to encourage the change to happen“. Books change lives everyday. Writing a book can create a movement, not just forward ideas.
- Looking for a job/career change: If writing a book builds reputation, then doing so is one of the best ways to land a sweet gig or job. Prospective employer: “I’m not just hiring anyone…I’m hiring the guy who wrote the friggin’ book on X”
- Create cornerstone for more products: Not everyone in the investment field is interested in managing portfolios. There are opportunities in training, job search, education, compliance (yech). If you’re interested in other parts of the investment business, a book creates a cornerstone to launch new products like courses off of.
- Get chicks: Well, this hasn’t worked so well for me. But seriously, books are cool and the process of conceiving, writing and publishing a book impresses people. Well, at least it worked for James Altucher.
- Leave a legacy: Many of the authors who participate in my podcast, Tradestream Radio, say that one driver behind their book writing is to leave something over for their kids. Books, in their concrete and virtual form, are commemorations of the thought process and human experience. That goes a long way.
photo courtesy of AngelaShupe.comWhy would you write a book?
Output volume and velocity trending up at top investment sites
From Mick:
High volume biz publishers: @businessinsider is averaging 1015 posts/week and @seekingalpha 1033 (Google Reader stats for last 30 days)
That’s amazing — not only in sheer volume but in breadth. Admittedly, a lot of what’s going up is crap and some of it has nothing to do with business/investing (I’m thinking BusinessInsider’s gratuitous slideshows). It’s a deluge of content.
There is definitely something in the long tail of financial content for everyone. There is absolutely no excuse anymore for investors not to better themselves or pick better investment/financial advisors to represent them.
Retail Brokerage Manifesto
I’ve been in the investment business for 10 years now wearing a variety of hats. I’ve been a hedge fund analyst (small cap/tech/retail/food), ran business development for Seeking Alpha, and hold both a brokerage rep license (Series 7) and an investment advisory license (Series 65).
For the nuanced, a broker makes a living transacting stuff and an advisor is prohibited from doing this. Even though the vast majority of my business is done as a fee on assets (not based on commissions), it’s sometimes strange wearing both hats. I approach the business as an investment advisor would but typically manage accounts under my brokerage license — this allows me to develop unique portfolios for individual clients. It’s inherently less scalable than an one-size-fits-all portfolio but it’s also good service and good business.
As I reflect on the past and plan for the future, I’d like to share the tenets of how I personally approach the business of investments. It’s the creed I live by and it’s what helped me continue to grow. Some of this is required by law, regulatory statute or is just plain my opinion.
Tradestreaming Broker’s Manifesto
- I don’t believe it’s inherently wrong being paid to manage client assets, even if I get paid a commission
- That’s because I always have the client’s best interest in mind
- Even if it conflicts with my own personal financial incentives
- Even if I *lose money* on the trade (independent reps have transaction costs on trades that they need to cover)
- I always told myself that in spite of the power a broker has over client decision making, I would never hard sell anything
- Always look for ways for clients to save money
- That may mean comparing Mutual Fund A vs. Mutual Fund B but it also means comparing Mutual Fund A vs. ETF A (one pays a trailer, the other is a transaction)
- Nobody says anyone needs to be in the market or needs to have a 60/40 portfolio
- The extension of this is that the best client performance sometimes comes from designing a portfolio from the ground-up, not top down and not by cramming a client into a pre-ordained portfolio or allocation
- I don’t believe in the Efficient Market Hypothesis (EMH) and do believe that clients can do better than the markets without having to assume more risk
- That said, while the potential to beat the market exists, it may be elusive and in specific cases, may not be worth trying
- Sometimes an honest broker makes his money by keeping clients out of trouble and that’s worth something, too, even if clients don’t necessarily recognize this
- There are a lot of brokers making their clients a lot of money and really doing good by them. I want to be part of this group.
- Everyone in financial services has conflicts of interests and how you get paid is just one of them. Regardless of licensing structure, good financial advice requires being honest and open with yourself and clients.
- Clients don’t begrudge their advisors making money and some feel good giving the business even if they could transact using an online broker
- But they won’t forgive if it’s done at their expense
- That said, very few clients could rightfully decipher if this was the case so the whole thing rests upon the broker/advisor being honest and open with him/herself.
- There aren’t many of us who behave as we do and that’s OK.
Do you have anything to add? Let me know in the comments.
photo courtesy of battlecreekCVB