Financial Careers

Earlier this semester, I was a guest lecturer for a marketing class at Manhattan College. The topic was my book on career choice and the book market in general, but the students spent a fair amount of time asking about setting a career path, especially in light of my own experiences. They were fascinated by the various twists and turns that my career has taken, and wanted to learn the implications for themselves.

Well, that old saw about the best laid plans of mice and men seems to apply to many people. Adaptability is key, and quickness in responding to challenges and opportunities as they arise. Surprising to some, the best opportunities sometimes arise as the result of layoffs. Follow the link for examples.

While the rating agencies remain a premier place to learn the art of securities analysis, they've been under fire for their role in the current financial crisis. In short, they've got a spotty track record, and conflicts of interest don't help. Follow the link for details, including a discussion of how the invention of the Xerox photocopier aided and abetted these conflicts.

This reminds me of an excellent 1978 BBC TV series on the history of science and technology called "Connections" that also aired on PBS. In each episode, host James Burke would trace some essential element of modern technology back to completely unrelated events or discoveries that occurred centuries ago. Burke's breezy, witty style made the show as fun as it was educational, and it's had a few brief revivals since.

Oh yes, as more than one observer has remarked, if the folks at rating agencies were really good forecasters, they'd actually be highly successful money managers instead.

A while back, I wrote about the J.D. Power and Associates survey of financial advisors and their job satisfaction. A subtext was their inability to get a clean mailing list of people who are or were financial advisors.

During my Merrill Lynch years, I had some (highly frustrating) involvement with marketing mail directed at our wealthiest clients. I was utterly flabbergasted at the pervasive flaws in our own internal databases of client names and addresses. Follow the link for details. Among the lessons: never assume anything, even something as obvious as that client statements are going out to the correct addresses.

The smart job hunter will look at multiple prospective employers and compare them across various dimensions. One of my most unforgettable experiences was when a prospective employer insisted that I look at the competition before accepting their offer.

This was a unique man bites dog type of story. Usually, if you are an attractive potential hire, a prospective employer will try to shut off any further contemplation of alternatives on your part. However, the forward thinking employer recognizes that the most desirable and marketable candidates are apt to be the most footloose, eager to bolt when the opportunity arises, if they see greener pastures elsewhere.

While the use of loss leaders is a time honored marketing strategy, it often is employed with insufficient empirical analysis to back it up. Follow the link for details. The article includes a case study from my days at Merrill Lynch, when too many decisions regarding high net worth clients were based on gut feel and assumptions, rather than on hard analysis.

Additionally, the case study offers an example of how you can use knowledge of expert jargon to smoke out frauds who purport to have expertise that they clearly do not possess.

The European Union already has imposed limits on financial sector bonuses, and now proposes to set hard caps on bonuses. For details on the evolving EU bonus rules, follow this link.

There are numerous implications for financial services firms and financial services personnel in other corners of the globe, particularly in North America and Asia. For one, the EU caps are bound to encourage some top talent to flee Europe for greener pastures elsewhere. For another, the EU initiatives may embolden elected officials and regulators in other jurisdictions to follow suit, especially since this is a politically popular issue.

During an executive education class at Harvard Business School back in the 1980s, a marketing professor asks the classic question, "What business are you in?" One attendee was CEO of a chain of upscale seafood restaurants. His initial response was the obvious: the restaurant business. The professor instructed him to conduct an in-depth analysis of his company by the next semester. After doing this, the CEO revised his answer. He decided that he actually was in the fish business, as a purveyor of top-quality seafood. Restaurants were merely his primary distribution channel.

How should the typical financial advisor respond to that question? Think about it for a bit.

The restaurant CEO was Roger Berkowitz of Legal Seafoods, who shared this anecdote in a lengthy essay for the July 2008 issue of Inc. Magazine. This caught my eye because a mutual friend had introduced us in the late 1970s. Back then, Legal had precisely one location, on Inman Square in Cambridge, MA. It was a no-frills operation with long communal tables, bargain prices and a dizzying selection of the day's catch from the seafood piers in Boston. To speed the turnover of tables, payment was cash only and taken when you ordered. Most servers were no-nonsense Irish ladies. Groups of diners were not fed simultaneously. Instead, individuals got their food precisely when it was ready to eat. The menu was on a huge blackboard, with items erased when they sold out. The place was always jumping.

Roger's dad founded Legal as a fish market in 1950, offering cooked food and adding tables as an afterthought. It soon morphed into a restaurant, and ceased being a market. After taking over the business in the 1980s, Roger transformed Legal into an upscale chain, presently with 32 locations extending south to Florida, and with plans for continued (but slow) expansion. The original location, alas, was lost in a fire circa 1980 and never rebuilt. A commitment to serving only top-quality seafood has been the focus of Legal's ads, including radio spots with Roger as pitchman.

In reading Roger's essay, I was reminded of a memorable conversation I had circa 1992. With his usual insight, Jeff Bennett, then the CFO of Merrill Lynch's Private Client (that is, retail brokerage) division told me that financial advisors essentially are in the business of selling time. How's that? The financial and investing skills of the average financial advisor are well within the mental capabilities of the average person. However, only a distinct minority of people have the requisite time and inclination. Similarly, most people can be decent do-it-yourselfers in a variety of other spheres (auto repairs, home repairs, etc.), but prefer to hire professionals and save themselves the time necessary to acquire the skills and to do the work themselves.

So, if you are a financial advisor or a financial planner, or if you are contemplating entering these or allied careers, bear this bit of wisdom in mind. You are, to a large extent, selling time and convenience to your clients. Indeed, do not forget the harsh reality that only a small minority of financial advisors and money managers succeed in delivering higher investment returns than the market averages. Hence, the key to client satisfaction tends to be in quality of service.

The case study on reinventing yourself reminds me of someone else. The Rev. Dr. Nicholas Bradbury was ordained in the Church of England in 1973. It's a long story, but 36 years ago he embarked on a spiritual quest, a period of rethinking his vocation that briefly brought him to New York. During that time he taught a high school class that included me. Through the magic of Google, I relocated him in the summer of 2007, and met him for dinner while he was in New York a year later.

Dr. Bradbury is now a senior fellow at a charitable foundation in London called the King's Fund. A project of the future Edward VII while he was Prince of Wales in the 1890s, the King's Fund originally was concerned with delivering medical care to Britain's poor. With the founding of the National Health Service in 1948, that mission came to an end. Since then, the organization has repositioned itself as a sponsor of medical research and as a health care think tank that studies best practices in delivering medical services and advises the British government and the National Health Service.

Dr. Bradbury, despite no expertise in medicine or the sciences, nonetheless was found to be a good fit for this organization. His experience as a clergyman, as a scholar, and as a professor meshed with the organization's educational mission, especially in trying to improve communication both among medical professionals (who often are divided by specialties, and fail to cooperate adequately) and between those professionals and their patients. This progressive organization thought broadly about the types of skills its top people need, rather than being obsessed with matching prior experience precisely to its positions. This produced a win-win for Dr. Bradbury, the King's Fund and the people that they serve.

Lesson: steer clear of narrow-minded employers and managers. Look for those with imagination and vision, who'll give you chances to grow and thrive. And, remember, degrees from eminent institutions offer no guarantee that the holder has either imagination or vision.

Reinventing yourself through a radical change in career path is a tough enough sell at your current employer, where you are known. Trying to accomplish this through a change of firm is especially difficult. What kind of reception are you likely to get?

Well, it depends a lot on the mindset of the person you try to persuade to hire you, and the culture of the firm. Follow the link above for a case study illustrating the challenges that you may face, and for which you must prepare convincing responses.

Luckily, some firms recognize that letting the financial bean counters run amok is not the strategically sound approach to customer service. They recognize that a generous policy towards customer complaint resolution is wise, even if some customers get away with something.

Customer loyalty and confidence flow out of trusting them and acting as a partner with them, not an adversary. Moreover, the expense of new client acquisition places an imperative on client retention.