Meetings of the Mind

By Staff Writer

December 01, 2001 at 07:00 PM

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If you're an independent financial planner, it can get pretty lonely out there. The more independent, the more likely are your chances of working in the dark, sometimes devoid of peer contact entirely. Frank Presson of Presson Financial Associates in Tucson knows the feeling. "You start your own business, you're running around having a great time, and at some point you start wondering, 'Gee, am I doing something right? I'd really like somebody to talk to.'"

Sentiments like these induce planners to join trade organizations such as the National Association of Personal Financial Advisors and the Financial Planning Association, which offer members plenty of resources, support, and a chance periodically to get together. As an adjunct to trade association benefits, however, an increasing number of advisors is discovering the value in local study groups. We hope that by sharing the experiences–from start-up to follow- through–of financial advisors who are local study group members or leaders, you may consider becoming involved, too.

My Place or Yours?

The study group trend applies naturally to small shops, but also benefits firms that have grown so large that not all employees can attend a given national or regional trade group conference. Formal or informal in structure, large or small in size, study groups afford like-minded advisors the opportunity to trade war stories, share vision and purpose, network, learn from one another, and have a good time together when they meet. As Dick Sawyer, president of Norton Financial Services in Portland, Maine, says of his eight-member New England-based study group: "It's not that we would have failed without the group, but we've all improved because of it–personally, professionally, and monetarily."

Some study groups are organized under the auspices of trade organizations. As such, they are a component formed by the natural hierarchical breakdown of a large national association into regional sections and sub-regional groups. They go by various names including chapters, societies, and study groups. Presson, for example, who runs a 10-person study group in Tucson that meets monthly, is a member of NAPFA and serves as the fee-only organization's liaison to some 30 NAPFA-sanctioned study groups nationwide. Sanctioned, in this case, means completing a certification process and "signing on" to the mission of NAPFA. It also means adhering to operational guidelines necessary to uphold the group's–and NAPFA's–integrity. "As always," he says, "the definition of what is a study group–open to others versus a private periodic gab fest among friends–caused NAPFA to establish some basic criteria for the group to be eligible for recognition and resources." Taking this step, he adds, has caused some groups to question their raison d'?tre while helping them solidify their own image.

The NAPFA study groups range in size from three to four persons to over 50. It's up to each local group to make decisions concerning matters such as dues, reimbursement of group-related expenses, and meeting schedules and logistics. Within NAPFA's Web site (www.napfa.org) is a private section set up expressly for study group leaders. It helps them solve problems they may not want to share with the entire NAPFA membership. Presson cites the instance of a study group wrestling with a member who was wreaking havoc through his chronic negativity. The question on how best to handle the matter was posted on the Web site, where it generated answers from other study groups across the country. "That sort of advice is worth its weight in gold," says Presson.

Unlike NAPFA, the Financial Planning Association–a much larger trade group, with 30,000-plus members compared to fewer than 800 for NAPFA–does not have affiliated study groups. "In a sense," explains FPA Director of Community Sean Walters, "NAPFA encourages or helps organize study groups in the same way that FPA encourag

Start your own group
Even if you're not a member of the National Association of Personal Financial Advisors, you can learn from NAPFA how to form a study group. We checked out www.napfa.org for the skinny on getting one together and adapted some of the association's suggestions. Among steps you should take: Put together a list of prospective attendees. Enter your list into a database. This facilitates merging mail lists and lets you export the data for use by the next person responsible for the upcoming meeting. Find a central location. Many planners work in buildings or share suites where there is a conference room large enough to hold six to 12 people. But restaurants may have banquet rooms set off from the main dining area that can be used for meetings. Hotels also have meeting rooms, but the crowd will need to be large enough to justify using one. Decide on a date and time. The basic decision should be between yourself and the planner whose conference room you will be using. Set aside approximately three hours for the session. Set an agenda. There are numerous topics that could easily take up two hours. This is also a good platform for discussing current market and economic trends and favorite investments. Consider using your last hour to discuss practice management–things like hiring staff and rates of pay in your geographic area. Very often, it's easy to get a speaker from a mutual fund or insurance company to do a conference call via speakerphone or even attend the meeting and talk about current issues. Send out invitations. Note not only the time, date, and location of the meeting, but also what is on the agenda. At the bottom of your letter, have a section that can be torn off and mailed or faxed back to your office indicating whether or not the person will attend.

Start your own group

Even if you're not a member of the National Association of Personal Financial Advisors, you can learn from NAPFA how to form a study group. We checked out www.napfa.org for the skinny on getting one together and adapted some of the association's suggestions. Among steps you should take:

Put together a list of prospective attendees. Enter your list into a database. This facilitates merging mail lists and lets you export the data for use by the next person responsible for the upcoming meeting.

Find a central location. Many planners work in buildings or share suites where there is a conference room large enough to hold six to 12 people. But restaurants may have banquet rooms set off from the main dining area that can be used for meetings. Hotels also have meeting rooms, but the crowd will need to be large enough to justify using one.

Decide on a date and time. The basic decision should be between yourself and the planner whose conference room you will be using. Set aside approximately three hours for the session.

Set an agenda. There are numerous topics that could easily take up two hours. This is also a good platform for discussing current market and economic trends and favorite investments. Consider using your last hour to discuss practice management–things like hiring staff and rates of pay in your geographic area. Very often, it's easy to get a speaker from a mutual fund or insurance company to do a conference call via speakerphone or even attend the meeting and talk about current issues.

Send out invitations. Note not only the time, date, and location of the meeting, but also what is on the agenda. At the bottom of your letter, have a section that can be torn off and mailed or faxed back to your office indicating whether or not the person will attend.

es or helps organize chapters. It's just a matter of scale." FPA has a nationwide network of 100 such local chapters, each promoting the "advancement of knowledge in financial planning, supporting programs and projects that enable members to better serve their clients." Nearly all members are assigned a chapter. But Walters estimates that between six and 12 chapters have some type of study group or special interest group associated with them. Like NAPFA, participation is not required, but it is encouraged. "We can't force community. We can only create environments for it to occur," he says. As for benefits, study groups "connect participants around areas of knowledge, interest," notes Walters, "and that tends to build relationships that help cement loyalty to the organization as a whole and to the profession as a whole."

Despite the panoply of programs and special events FPA sponsors nationally, regionally, and at the chapter level, Walters maintains that there is "a certain value that you get out of that study group involvement that's hard to get other ways." Study groups, too, became a focus of recent FPA research to learn the secrets of these groups' effectiveness, and as Walters says, "to apply that same sense of community to other endeavors we're starting up."

Same Head, Different Hats

Financial advisors come in many guises, and study groups affiliated with industry trade groups aren't the only ones flourishing. Take Boston-based Commonwealth Financial Network. With more than 800 broker/dealer reps nationwide–each with a minimum of $50,000 in gross commissions–it's a large firm with hefty resources that's nonetheless big on small study groups. Why? Because most of its reps are proudly independent–and many came from wirehouses and don't want to be told what to do. As Joni Youngwirth, Commonwealth's vice president of practice management, says, "Individuals off on their own and by themselves out there need someone." Part of her job is getting those individuals together.

Youngwirth says most Commonwealth reps are financial advisors and planners, with the majority holding RIA status. Although Commonwealth does not demand that its reps obtain planning-specific designations, such as the CFP, many do, in addition to normal NASD requirements. Thus far, about 75 Commonwealth reps have joined study groups, a number Youngwirth expects to grow as reps become more aware of their existence and benefits. A call to join can be found on the Commonwealth Web site (www.commonwealth.com), facilitated by Youngwirth's expertise in helping fledgling groups get up and running.

In terms of practice management strategies, study groups are hardly new. Youngwirth cites one such group in Massachusetts composed of broker/dealers from several different companies that has been meeting regularly for the past 10 years. But there's more and more talk about study groups, she says, "and when they work, they are exceedingly powerful."

A case in point would be the group launched by Dick Sawyer, the Portland, Maine, planner and Commonwealth rep. Like a lot of advisors, Sawyer, a CFP, CLU, and ChFC, has an insurance background, entering the field 25 years back as a MassMutual career agent. While there, he earned membership in the industry's prestigious Million Dollar Round Table and was invited to join an MDRT study group. That group became the genesis of his present study group, consisting now, as it did originally, of eight or nine members from New England. What's unusual about Sawyer's study group, apart from its longevity–12 years and running–is that the members rep for different broker/dealers. But they share in common a former life as insurance agents who have evolved into financial advisors "with some different orientations," each following his entrepreneurial bent.

Sawyer's group meets three times a year, for two days, at rotating locations. Two months ago the group was in Maine; in midwinter members will get together in Vermont. "So you know what that means–we're skiing," says Sawyer, adding that the group is "as much about male bonding as it is anything," along with entrepreneurial and personal growth.

If there's a problem with any study group, it often centers around issues of commitment. "I have to always stress that there is an obligation to participate," explains Youngwirth. "You can't make excuses to get out of a meeting. People have to be equally committed for it to work." Sawyer's group offers members a special incentive: The cost of each meeting is split evenly "whether you show up or not." Expenses typically include lodging, meals, entertainment, and an occasional guest speaker. This might be an attorney, or an accountant or vendor. Joni Youngwirth, for example, presented a session on best practices. As a rule, each member is responsible for his own travel, which, since members live in neighboring states, needn't require airfare. It's another advantage that local study groups have over trade association conferences, which can require expensive airfare, lodging, and related expenses, and are usually longer in duration.

Meeting agendas are set by the member host, a rotating position that the host may opt to share. "We try to commit to bringing to the table one good solid sales idea," notes Sawyer, "and so we'll spend one session focused on that, on what we're doing in our respective business, and another session, the next day, might be a presentation from an outside person." As for that one good sales idea, at one of the meetings, Sawyer was able to convince a member to rep for Commonwealth. "I got one of the guys to sign up, and I felt like saying, 'You get it?'"

A Different Approach

Another large company that's trying to help one-time product salespeople become better money managers is LPL Financial Services, an independent brokerage firm with dual headquarters in Boston and San Diego. The firm has close to 4,000 reps nationwide, and 3,400 are affiliated with LPL's corporate RIA. That makes them independent advisor reps. They may or may not be CFPs, but as LPL's Brad Fryer, vice president of advisory sales and marketing, notes, "A lot of them have moved in that direction to offer complete financial planning."

LPL doesn't have formal study groups, but has put together several programs that serve a similar end. Its best practices program, for example, was launched in 2000. Initially, Fryer and a team sought out the nation's top 50 advisors–anyone from any size firm anywhere managing more than $50 million in fee-based assets was deemed worthy of consideration. They then spent an entire day with each advisor, asking hundreds of questions. "What'd you do right, what'd you do wrong, what would you do differently?" says Fryer. Fryer and his colleagues also talked to each advisor's staff, and discussed practice management topics ranging from research, technology, office management, and client services to account management, prospecting, and how to effectively manage referrals.

Fryer's team then consolidated the material, and put together full-day voluntary workshops for LPL reps that this year were held at seven locations across the country. Follow-up consists of weekly e-mails, monthly newsletters, and quarterly conference calls, with enhancements in the works. "The last thing we want to happen with any training program or study group is lack of retention or implementation of the material," says Fryer.

LPL feels the program has paid off in improved productivity. By September of 2000, about 175 reps had been trained. This group was monitored the following year, along with 175 reps who were invited to the workshops but did not attend. Results were compiled in mid-October. While the economy made sure that both groups emerged from the study period with less assets under management than before the markets weakened, the group that attended the workshops still had about $100 million more than the group that didn't. Additionally, the attending group experienced a whopping 70% increase in the number of new accounts that walked through their doors.

While LPL has another program for its top advisors–those managing more than $50 million in fee-based assets–the point of these efforts is to provide all the company's independent reps with something they can't get elsewhere. Fryer notes that all reps are encouraged to participate in outside groups, and many do, such as those who are members of FPA. But what LPL offers, in addition to being able to "harness internal research and technology," is more closely tailored to their practices. "At some industry meetings you get a wide array of attendees from all walks of life and different professional backgrounds," says Fryer. "What our reps have found to be most beneficial is a chance to network and discuss matters among reps of like mind, like businesses, and at the same station of their practice."

Like LPL, New York-based Alliance Fund Distributors Inc., a unit of Alliance Capital Management, has a program designed to enhance employee and client productivity, through its Business Development Institute (BDI). Clients consist of broker/dealers and financial advisors who use Alliance mutual funds.

Alliance's team building program was launched just over a year ago, partly in response to flagging financial markets, and as an answer to the question, "How can a million-dollar broker who has plateaued in terms of knowledge and productivity move forward and better his business?" Nicole Nolan, vice president of Alliance Fund Distributors and head of BDI, explains that when requests started pouring in to BDI management via broker-clients and Alliance's 65 wholesalers, Alliance knew it had a hit. In addition to training its own people, Alliance also works with and complements client firms who are engaged in their own team-building efforts.

Like LPL's effort, the Alliance initiative is not a study group per se. A team is formed by a small group with complementary skills. Members get together and pool intellectual resources on a given client's behalf. "The whole reason that team-building is really growing, revolutionizing the way clients are served and how businesses are built," says Nolan, "is because no individual could ever offer the collective strengths of a team." To make sure, Alliance hired Jan Sparrow and Scott Asalone, who worked together in team-building at Merrill Lynch and left to form A&S Global Management, in Trenton, New Jersey. They help set up teams and troubleshoot for existing teams. Matching personalities is essential, explains Nolan, as is assuring a mix of skill sets. "You don't want to find somebody who is exactly like you; instead, you need somebody who complements you and your strengths and weaknesses."

Out of Whose Pocket?

Compared with the costs of trade association conferences or a trip to Bora Bora (write-offs included), study groups are a bargain. Expenses for Sawyer's New England group are split evenly among members. On average these run about $250 per meeting per person. This includes room, food, guest expenses, if applicable, "and of course, adult beverages," says Sawyer.

As for the NAPFA-sanctioned study groups, costs are nonexistent to minimal. Presson's Tucson group generally meets in a conference room of one of the study group members. "We usually have a brown-bag meeting, and those who want to order lunch pay for their own," he says. Sometimes the gathering will take place at a restaurant or a hotel that charges a modest fee for meeting space. His group did pay expenses this year for someone to fly in to give a presentation on practice management, but regional NAPFA funds defrayed those costs. He admits that if the group were to grow beyond the size most members can fit in their conference rooms, there could be some accommodation costs. "So far, there are enough meeting spaces in town for free that we do not anticipate this to be a matter of concern."

Sign Me Up

Commitment and compatibility, though key ingredients, aren't enough in themselves to sustain a successful study group. Sometimes you just need to be hit over the head a few times with the obviousness of it all (see sidebar at right). "Forming a group isn't necessarily a piece of cake," says Commonwealth's Youngwirth. She likes to see groups come together slowly, with members exercising much due diligence. "Members must really want to do this, as opposed to jumping up and saying it all sounds great and never knowing what they're talking about," she says. "Then there's a tendency to fizzle because the commitment isn't there." Presson reports that in trying to launch his group, he said to prospective members, "Let's get together for lunch, let's have it on a regular basis." At first, they didn't show up. Now he has a faithful group of 10 people. "It's growing and getting to be an institution of its own," he says.

Understanding the study group idea takes some work, admits Presson. "It takes a while for people who say, 'Gee, I don't need one more meeting in my life,' to get why this is such a good thing." Advisors invariably run into problems, and at meetings they discover others who not only share the same concerns, but have solved them. "You go into a meeting and someone says, 'Hey, I just had the SEC here to audit me,' and proceeds to share in detail what went on. That's valuable information. These are the things you wouldn't find out about except through the grapevine." Study group members need only experience a few such interactions, and before you know it, "you've got lifelong people in from that point on. It's experience you can't buy." But you can certainly gain that experience from peers who are willing to share in hopes you will share some of your own.

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