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Eavesdropping on the FPA conference: a speech about scared investors resonates; and an embittered advisor speaks up

Plus, a top expert offers the next level of advice on social media

Tuesday, October 12, 2010 – 5:48 AM by Timothy Welsh, Marie Swift and Bob Glovsky
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Ready to blog after uploading podcasts: Chris Hall (left) coaches students Kimberly Curtis, CFP, and Gary Klaben, ChFC, at FPA pre-conference Web 2.0 Boot Camp.

Elizabeth’s note: The FPA’s annual convention is probably the industry’s broadest gathering of advisors, and it’s interesting to eavesdrop on some of the thoughts and conversations of attendees, especially those with decision-making roles in the industry. Here are three blog posts sent to RIABiz by Tim Welsh, f principal of Nexus Strategy LLC of Larkspur, Calif., Bob Glovsky, chairman of the CFP Board of Standards, and Marie Swift, president of Impact Communications. On the whole, in what advisors have described as a soaring new convention space in Denver, Colo., the conference seems to have an air of getting-down-to-brass-tacks. It’s a tough new environment – and advisors have a lot of work to do to adapt.

‘One of the best speeches’

Tim Welsh on the keynote speech given by Dan Ariely, faculty member at Duke University’s Sloan School of Management and at the Media Lab at MIT and Doug Lennick, managing partner of the Minneapolis-based Lennick Aberman Group, a consultant and corporate coach.

Dan Ariely’s keynote speech on behavioral finance was one of the best speeches I have ever heard, and his multiple examples of what makes people do things with their money was incredible. He is definitely someone to watch and recommend to all the conferences out there.

To illustrate how much emotion, versus rational thought, drives people’s behavior, Ariely gave an example of someone buying a pen. Say the pen is $15; but if the check-out person mentions that the same pen is on sale four blocks away for $7, how many people would drop their transaction mid-stream to buy it for less?

Then consider the purchase of an Armani suit. It costs $1,000, and the check-out person mentions you can buy it four blocks away for $992. How many would go elsewhere? Answer: no one. Same $8 savings, but it’s all relative.

In the well-executed opening keynote, Doug Lennick made the point that all decisions are emotional – which is why investors are in bonds now.

They’re scared.

But they don’t trust either Wall Street or advisors to help them. There’s too much emotional scar tissue.

To rectify the situation, advisors need to understand more and better where the investor is coming from. Yet, the soft skills that are required to do so are rarely emphasized in financial planning.

He also said that Wall Street destroyed itself ultimately by treating itself as more important than its customers. Then in one weekend two years ago, it collapsed.

Is new regulation punishing everyone for the sins of a few?

Robert J. Glovsky, chairman of the CFP Board of Standards and president of Mintz Levin Financial Advisors, on the conversations around the fiduciary standard at the FPA conference:

The biggest thing happening at the Financial Planning Association annual conference in Denver can be boiled down to one word: fiduciary. From sessions on the impact a fiduciary standard of care will have on broker-dealers to policy updates, there is clearly heightened awareness of this important issue. See: How the FPA’s national conference is nudging large firms toward fiduciary care

And that’s a good thing. Pre-Bernie Madoff and the financial crisis, the public and our industry were not as focused on the issue. But now the subject of fiduciary – which can be boiled down to putting your clients’ interest ahead of your own – is on everyone’s mind.

CFP Board has been a leader in promoting the fiduciary standard, starting with the requirement (as of June 2008) that CFP® professionals have to adhere to this customer-first standard. Along with our partners in the Financial Planning Coalition (FPA and NAPFA), we want to extend this consumer protection to broker-dealers providing retail investment advice because it’s the right thing to do.

This isn’t to say that everyone is happy. At a session on the Dodd-Frank bill featuring Dan Barry from the FPA; Barb Roper of the Consumer Federation of America and Joe Borg of the Alabama Securities Commission, one person stood up and said they didn’t like all of the new regulation – it was costing them too much money and moreover, he felt like he was being punished for the sins of others.

While he’s not being punished, this gentleman’s view reflects the fact that not everyone plays by the rules voluntarily. Not everyone voluntarily adheres to ethics’ codes. Sometimes you have to step up regulation to ensure that the public at-large is protected.

The conversations I’ve had with people from firms of all sizes, however, indicate to me that there is an acceptance of expanding the fiduciary standard, because it’s good for the consumer and it’s good for advisors’ businesses. If people know that you have their best interests at heart and you are transparent, they are more likely to trust you with their money – and stay with you as a client.

Here’s what advisors are really doing with social media

Marie Swift, president of IMPACT Communications on Web 2.0 and the FPA’s social media boot camp

There’s a lot of talk and questions among FPA Denver 2010 attendees about Web 2.0, Social Media and what they should/could be doing to embrace the latest technology. Those who are already using it assure colleagues that it’s not as scary or time-consuming as one might think.

While the compliance world is still trying to figure out how to deal with the privacy and disclaimer issues, forward-thinking advisors have launched themselves on LinkedIn, Twitter, blogs, etc. Most financial services professionals avoid mixing business with personal on their Facebook pages, but there’s a lot of mileage that can be gained by creating a comprehensive profile on LinkedIn and participating in the wide range of groups available for staying connected and building a wider network. Regular users report that once newbies get over the initial hump of resistance and the learning curve, maintaining one’s online presence becomes routine and is eased by the use of online dashboards (e.g., HootSuite, Netvibes, Jungle Torch, etc.)

This and more was laid out for those who attended “Managing and Leveraging Your Social Media Strategy” pre-conference afternoon option on Saturday, Oct. 9th. Coaches / speakers included:

• Chip Workman, CFP®, MBA, a lead advisor for The Asset Advisory Group in Cincinnati, Ohio (https://blog.fpaforfinancialplanning.org/author/chipworkmanfpa), who spoke about how he uses the advanced features on LinkedIn to build relationships

• Chris Hall (a.k.a. “The Professor”), senior multimedia training specialist for Securities America and co-producer of AdvisorPod.com (https://www.advisorpod.com/MeetUs), who offered advice and insights on advanced podcasting and blogging techniques

• Tom Nawrocki, founder of Triton Financial Newsletter service (https://tritonnews.com/aboutus.html), who discussed cross-linking strategies

• John Birrenkott, CEO of WealthBook (https://www.wealthbook.com/about-us), who shared how to set up a private social media site using Ning and “Referral Generation 2.0”

• Yours truly, Marie Swift, CEO of Impact Communications (www.marieswift.com), who discussed ways to harness digital assets, use social media dashboards and post news via online press release services (I served as head coach).

Participants in the morning “Web 2.0 and Social Media Boot Camp,” a 3.5 hour pre-conference workshop, jumped into the Web 2.0 waters to create their own blogs, record podcasts and video clips and upload them on-site with the help of several techno-savvy coaches. At the end of the morning session, virtually all had a branded blog set up on blogger.com and many had already posted their first entry and uploaded a podcast and/or video clip of their welcome message.

Andy Millard, CFP® (www.andymillard.blogspot.com), an advisor who attended the inaugural Web 2.0 and Social Media Boot Camp hosted by FPA in Dallas on February 28, 2010, spoke at length during the Denver FPA 2010 Boot Camp about what he’s done over the past seven months using his newfound knowledge and the blog he set up previously with the Boot Camp Coaches’ help. Tom Nawrocki, Chris Hall and several staff members from Impact Communications manned the video cameras, audio recording devices and content creation and file upload rooms.

Social media may feel like foreign territory. But as in any exotic destination, with a map and a sense of adventure, anyone can learn how to get around.

Follow Marie Swift on Twitter using handle @marieswift. Read her Best Practices in the Financial Services Industry blog at www.marieswift.com.

Brooke’s Note: I’m excited to see that advisors attended an industry conference and that the Iowa Writers Workshop broke out. I believe that many of these educated, intelligent professionals can take their skills from the blogging realm to writing a column showing off their knowledge and expertise to the readers of RIABiz i.e. their colleagues and clients.

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Mentioned in this article:

Nexus Strategy
Consulting Firm
Top Executive: Timothy D. Welsh

Financial Planning Association
Top Executive: Lauren S. Schadle, CAE, Executive Director and CEO

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