Wednesday, December 31, 2008

Writing a business plan is one thing, using it is another

Employee Benefit Adviser

By Jack Kwicien

November 1, 2008

...This month we want to talk about the potential uses for a written business plan. Clearly it can be used as a roadmap with your own management team to run your business. ... In addition, it can be referenced when important strategic decisions need to be made. New initiatives need to be consistent with your stated goals and business strategies. Or if your firm is going to branch out in a new direction, at least it should be a conscious strategic decision, and it should be evaluated against the back-drop of your existing written plan. And you will want to periodically update the document as your business evolves so that it remains current and reflective of how you are conducting business at a point in time.

... Consideration should be given to sharing it with your trusted advisers, including your attorney, accountant, and tax adviser. Obviously you will want to have any third parties execute a confidentiality and non-disclosure agreement ...; however, astute business people will expect that request. It will be helpful to them to better understand your business and its plans for the future. As a result, they will be in a better position to provide you solid counsel, and in all likelihood it will be more cost-effective as well.

In addition, if your firm is seeking financing, ... [your] banker will be most interested to see that you have logically developed your business strategy, goals, and financial projections. ... In fact, in most types of financial transactions it will be required. ... A business plan will be critical to explain to a third party how you currently conduct business and what your vision is for the future. And comparing your plan with theirs will enable you to see where any potential synergies may exist.

... Excerpts from your plan can be shared with your entire staff. ... Most employees work better when they understand where they are going and how they are going to get there. ... [Your] business overview, the markets you serve, the products and services that you offer, will be important information for potential recruits to understand. ... Likewise, excerpts could be provided to carriers and important vendor relationships. That will enable all parties to understand their respective roles in your future success.

... [There] are many uses and audiences for a written business plan:

  • Managing your business;
  • Enabling smart strategic decisions;
  • Informing your important business relationships;
  • Raising capital or pursuing a merger;
  • Contemplating a sale;
  • Motivating your staff;
  • Improving your recruiting.


Kwicien is a managing partner at Baltimore-based Daymark Advisors, a consulting and advisory firm. He can be reached at

Averting Disaster

(This article is written for Financial Advisors, but the concepts apply to all businesses.)

Business continuity plans are needed to minimize any risks that would disrupt your firm.

Financial Advisor magazine

By David Lawrence

Business continuity plans have taken on greater importance in recent months after a plethora of natural (or unnatural) disasters afflicted many parts of the nation. August and September ... saw several storms rage across various parts of the eastern and southern United States, causing widespread damage, power loss and subsequent business interruptions. Elsewhere, earthquakes, tornadoes, wildfires, flooding, mudslides and other natural phenomena have created havoc for financial advisors and their clients.

Thus, disaster planning is just one important reason to have a business continuity plan. ... Any potential risk to the continued operation of a firm should be covered in a properly prepared plan. A few questions to ask yourself might include: How prepared is your business to reopen within 24 to 48 hours following a natural or man-made disaster or epidemic? What is your anticipated disaster recovery time...? Have you formulated a plan and strategies to limit the risks to your business? Where will your clients and suppliers go during your downtime if your building is destroyed or damaged or if your employees are quarantined and your business unavailable for some length of time? Does your building have emergency lighting or a generator? What features do you have in place to protect paper files in the event of a fire, water damage or theft? What would happen in the event that you could temporarily not work? ...

The objectives of a business continuity plan should be to protect the firm, its employees and clients; to stay in business no matter what; and to protect the interests of the economy and your community.

A business continuity plan should embrace a planning process that includes: • Vulnerability assessment; • Risk identification and quantification; • Risk transfer; • Protection and mitigation; • Business impact analysis in case of the interruption of operations; • A plan to curtail operational and financial risk; • An emergency response in case of an operational or financial upheaval; and • Plans to resume business and to recover and restore the technological and physical infrastructure that supports a firm.

... The disability or death of key employees could prove to be just as devastating to a firm that has not anticipated it with proper succession planning. Inadequate insurance during a disruption could prove to be a huge vulnerability, too. Many firms carry business insurance, but is it enough? And does it cover the appropriate risks? ...

... In April of 2004, the Securities and Exchange Commission (SEC) approved rules proposed by the NASD (now FINRA) and the New York Stock Exchange that required their member firms to establish procedures to handle an emergency or significant business disruption. ... The rule further required member firms to conduct an annual review of their plans and update them whenever the firms made any major changes such as realigning their business structure or operations or changing location. ...

In May of 2006, FINRA ... [stated] that all firms must include ten critical elements specified in the original NASD Rule 3510:

1. The firms must secure data backup and recovery (both in hard copy and electronic form); 2. The firms must secure all mission-critical systems; 3. The firms must make financial and operational assessments; 4. They must create alternative channels of communication between clients and the firm; 5. They must create alternative channels of communications between the firm and its employees; 6. They must be able to remove their employees to another physical location; 7. They must assess the impact of a disaster on critical business constituents, banks and counterparties; 8. They must maintain regulatory reporting; 9. They must maintain communications with regulators; and 10. They must consider how their firms will assure clients’ prompt access to their funds and securities if the firm determines it is unable to continue business.

... Take into account how much it would cost for any of these things:

• To establish and use a temporary alternative location (which requires equipment costs, rent, start-up expenses, etc.); • To route phone calls to new lines, establish Internet/e-mail connections, etc.; • To pay restoration costs (for rebuilding computers, reinstalling software, recovering electronic files, rebuilding destroyed paper files, replacing equipment, furniture and other office items); • To pay temporary employees; • To suffer the loss or disaffection of clients after a perceived violation of trust; or • To possibly fall out of compliance or compromise your security and private client information.

Many stories have surfaced in recent years about violations of privacy. ... Therefore, it is incumbent on all financial advisors to prepare a properly written plan and share it with their clients to alleviate such fears. It is also simply a best business practice. For more information on the current regulations and to obtain a free small firms template, visit

David L. Lawrence is a practice efficiency consultant and is president of David Lawrence and Associates (DLA), a practice-consulting firm based in Tampa, Fla. DLA publishes a monthly subscription newsletter, The Efficient Practice, which focuses on operational efficiency ( David is a much-sought-after public speaker on a variety of leadership, financial and technical topics. For details, visit

Ten Tiny Things Every Small Business Owner Should Do in 2009

OPEN Forum by American Express OPEN

Guy Kawasaki of How to Change the WorldGuy Kawasaki of How to Change the World December 31st, 2008 - 02:45 AM

On this, the last day of 2008, I provide a list of ten tiny things that every small business owner should do in 2009—hopefully in early 2009. Don’t consider it a New Year’s resolution because there’s a whole psychology behind such things. Just do it.

  1. Act like a prospective customer and call your company to see how the phone system and receptionist treat you.

  2. See if your website has a “Contact Us” section. If it doesn’t, add one. Ensure that it has a street address.

  3. Send your company an email asking for customer support and see if someone responds to it.

  4. Answer customer support calls or emails (not the one you sent in) for a day.

  5. Go out on a sales call with your salespeople and a service call with your service people.

  6. Read the documentation or manual that your company provides. Extra credit: See if you can do this without reading glasses.

  7. Pretend that you lost the documentation or manual that came with your product or service and try to find it on your website.

  8. Register your product or service including finding and reading the serial number of your product. Extra credit: See if you can read your serial number without reading glasses. Extra extra credit: If you use a Captcha system for registration, see how many times it takes to get the word right.

  9. Add a signature to your email. A “signature” is a block of text at the end of your emails that contain all your contact information. It saves your recipients the hassle of asking for your address and phone number or searching for them on your website.

  10. Join Twitter and then search for your company name, your product, your competition’s name or product name, or market sector terms from your business. For example, let’s say you’re in the web design business. Extra credit: Use Twitter as a twool.

If these tasks are helpful, you would probably enjoy “The Top Ten Stupid Ways to Hinder Market Adoption” and CustomerService.alltop. Kick butt in 2009!

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Tuesday, December 30, 2008

You must show clients how to value your superior service

Employee Benefit Adviser

By Mel Schlesinger

November 1, 2008

Last month one of my coaching clients called with a rather urgent matter. One of his clients had just given an agent of record letter to another broker. ...

My coaching client wanted to know what he could do to save the account and my answer was, "Absolutely nothing. They see you not as their benefits adviser but as a vendor of a product." ... [If] they had seen him as anything more than a vendor they would have called him before signing an agent of record letter. ...

Last month we discussed the art of asking really great questions. ... Without the use of really great questions it is impossible to deliver really great service. More importantly it is impossible to get your client to provide a meaningful analysis of the value of the service that you do provide.

Setting the stage

... So why should you expend the energy necessary to change what you are doing?

And how do you transform customer service into something that is truly great service?

To the first question, my answer is that you want to change what you are doing to accomplish two objectives. First, make your account competitor-proof. Second, generate a massive number of active referrals. Before we can answer question number two we must first define the term "truly great service." ... Great service is defined by the client.

Establish benchmarks of excellence

... The establishment of benchmarks of excellence serves two distinct objectives. First, it creates a significant amount of differentiation between you and every other agent. More importantly it creates a competitor-proof account because the client has a way to measure your effectiveness as their adviser. ... Your goal is to help the client or prospect identify exactly what is important to him in the way of services. ... Begin with a list of your services and create questions that can be answered with a simple one word response or just a yes or no. Your questions might include:

  • Is it important to work with an agent who can provide regulatory updates that impact how you manage your benefits?
  • In choosing your group agent would it be important that he visit with employees on a regular basis to answer questions?
  • Would an online human resources library be of value to you?
  • How important is it to you that your employees have a good understanding of all the benefits that you provide?
  • Can you see where a better understanding of the value of the benefits that you provide would have an impact on employee morale?
  • If I can help reduce employee turnover would that be beneficial to you?

Once you obtain a positive answer to any question immediately follow-up with a request for elaboration. It is critical that the prospect (or client) tell you how a particular service will be helpful to him. This line of questioning not only establishes important benchmarks, but also it provides that tool that eliminates the incumbent. When a prospect identifies a particular service as having value and then explains how it impacts the company you need only ask, "So what has your current broker suggested to deal with this?" ...

You close the process by asking that the client or prospect commit to a meeting every six months to review this list of expected services. By using this list at the evaluation you are providing the client a frame of reference for use in evaluating the level of service that you are providing. This will also be a great time to ask for referrals. Follow these instructions and you will never lose a client to an agent of record letter.

Schlesinger has more than 23 years of insurance industry experience, with the last decade focused on helping other insurance agents achieve success. He is a 2002 graduate of CoachU and he completed the Certified Guerrilla Marketing Coach program the same year. Schlesinger runs the Certified Employee Benefit Consultant Academy, which is dedicated to teaching benefit professionals how to differentiate themselves by engaging prospects in a Compelling ConversationTM. He can be reached by telephone at 336/774-3075 or e-mail at

Advisers can do much with 'set it and forget it' investment options

Employee Benefit Adviser

By Michael Kaplan

November 1, 2008

... Much has been written about how the proliferation of fund options in DC plans leads to "analysis paralysis," in which participants are overwhelmed by the number of choices and choose not to participate in the 401(k) plan at all - or make an inefficient allocation, such as putting all their assets in one fund option.

By offering lifecycle funds, plan sponsors can make it easier for participants to select an appropriate portfolio that optimizes their risk/return preferences.

Four main decisions

Plan sponsors have four main decisions to make in choosing lifecycle funds for their DC plans ...: target-date versus target-risk funds; customized way of using the plan's core funds versus an off-the-shelf product; actively managed versus indexed underlying strategies; a fund with or without a tactical asset allocation component.

Target-date funds typically link each investment portfolio to an expected retirement date, with the asset allocation adjusted periodically to reduce investment risk and protect assets for the retirement years. Target-age funds operate similarly, but instead of focusing on a selected retirement date, the asset allocation changes in tandem with the participant's age.

Target-risk funds (categorized as conservative, moderate or aggressive) maintain a specific asset allocation to provide an even exposure to investment risk.

With target-risk funds, participants typically need to initiate transfers to more conservative funds as they approach retirement. But with target-date funds, the shift to a more conservative allocation is accomplished systematically by the investment manager. A potential problem with target-date funds is that participants may place too much emphasis on the date in the fund's name when deciding their selection. ...

Depending on a participant's circumstances (such as investment assets outside the plan, spending habits or the value of their home relative to the mortgage), a more aggressive or less aggressive fund may be a better fit. ...

Meanwhile, there is increased interest in custom lifecycle funds. A sponsor's custom lifecycle fund uses a combination of the core funds, ensuring the same group of funds is offered to all participants. ...

A customized approach provides the opportunity to include higher-risk and alternative asset classes in a lifecycle vehicle. This can be more appropriate than having these asset classes as a stand alone option, and their risk can be minimized, since the lifecycle vehicle will be highly diversified.

Advisers should help sponsors consider the additional costs associated with creating and managing a custom lifecycle-funds program, compared to an off-the-shelf product. Plans of sufficient size construct their lifecycle funds using separate and commingled accounts, rather than mutual funds. The use of these vehicles may offset some or all of these costs through lower investment management fees. ...

There's also the issue of fiduciary risk in a custom program, since the plan sponsor needs to develop the asset allocation and roll-down strategies (resetting the target asset allocation over time by shifting assets out of stocks and into bonds and cash), thus opening the door for criticism if they turn out to be unsuccessful.

Where creating custom lifecycle funds is desired, but not practical, some plan sponsors are turning to indexed or passive off-the-shelf lifecycle funds. ...

... Participants who prefer lifecycle investing may prefer indexed strategies. Lifecycle investors seek to minimize their active involvement.

With index funds, there is minimal risk of style drift or underperformance due to active management decisions. On the other hand, there are disadvantages to indexed lifecycle funds. Participants choosing these funds do not benefit from active management, which can outperform passive investing. Fund expenses ensure passive lifecycle funds will always underperform their benchmark on a net-of-fee basis.

Obtaining exposures to classes that offer diversification benefits but are not easily indexed, such as real estate or infrastructure, may be difficult.

Lifecycle funds may strictly adhere to or tactically deviate from their asset allocation targets, based on the manager's market outlook. Tactical shifts are usually enacted within a narrow range. ... Managers want to avoid the risk of underperforming due to poor tactical decisions. However, a manager with strong tactical asset allocation capabilities can add value while maintaining an allocation close to the strategic targets for each target year. ...

Kaplan leads Mercer's DC investment consulting business in the U.S. Northeast region. He can be reached at

More than half of employers offer auto 401(k) enrollment

Study shows that more plan to, or are mulling, adding the feature


By Lisa Shidler November 16, 2008, 6:01 AM EST

Automatic enrollment of employees into defined contribution retirement plans such as 401(k)s has grown so quickly that more than half of employers now offer it to their employees, according to a new study.

The analysis from Mercer LLC of New York showed that 51% of employers surveyed offer auto enrollment. It also found that 6% of the employers planned to add auto enrollment in the coming months and another 18% were still evaluating the feature. ...


The study showed that employers have embraced auto enrollment, said Amy Reynolds, a Mercer principal and DC retirement plan consultant.

It also found that 45% of employers that offer auto enrollment have participation rates of 90% or more. Just 7% of employers that don't offer auto enrollment achieve these levels of participation. ...

In addition, 70% of employers that use auto enrollment also used the automatic increase feature, in which plan sponsors increase participant deferral rates each year by a given amount.

Industry leaders wonder if auto enrollment may slow down, especially if the economy worsens.

"It's possible it could slow down, certainly when plan sponsors look at the cost implication," Ms. Reynolds said.

Employers that didn't use auto enrollment cited cost as a reason for not offering the feature. Employers that offer matching contributions have to pay more money if the participation level rises, which usually occurs with auto enrollment. ...

Auto enrollment has soared in recent months, said Kevin Crain, managing director of institutional client relationships for the Merrill Lynch Retirement Group in Pennington, N.J. He is based in Hopewell, N.J.

Merrill's DC business serves about 1,700 employers with about $90 billion in assets and 2.7 million participants.

Merrill's auto enrollment business has increased by 85% between October 2007 and October 2008.

Mr. Crain said that overall, about 20% of companies offer auto enrollment. Among larger companies, about 35% offer it, he said.

So far the economy has not caused employers to slow down on their auto enrollment, [said Kevin Crain, managing director of institutional client relationships for the Merrill Lynch Retirement Group in Pennington, N.J.]

Mr. Crain also said that he has seen significant growth in companies that might choose not to use auto enrollment but have instead changed their procedures so that it is easy for participants to enroll. Many companies are offering 401(k) enrollment alongside online enrollment for health benefits.

"I really see momentum building," Mr. Crain said. "I see pretty creative thoughts on the best way to get people enrolled in a 401(k) plan."

Auto enrollment is definitely increasing, agreed Joe Ready, senior vice president of retirement services at Charlotte, N.C.-based Wachovia Corp.

He said that employers are split between offering auto enrollment to new employees and those that make auto enrollment retroactive to all employees. ...

Joseph Leonard, an adviser with Coastal Investment Advisors LLC in Southport, N.C., ... is concerned that going forward more employers may be reluctant to offer it because of the economy. Mr. Leonard also wrote "Retirement Vault: A Guide to Protecting Your Assets in an Age of Uncertainty," (Second River Healthcare Press, 2008).

"They're debating it because of the finances," he said. "Companies are looking to cut costs in any way they can. Period."

E-mail Lisa Shidler at

Monday, December 29, 2008

'Unbundled' 401(k) providers to expand offerings

Small companies like having choices from many sources


By Lisa Shidler November 9, 2008

... Chicago's Spectrem Group found that 54% of companies that featured unbundled plans intended to add investment options, compared with 35% of full-service purchasers.

Most companies hire a single financial provider to offer such "bundled" 401(k) services as investment products, administration and employee education. About 12%, or 63,000, plans are unbundled — that is, they offer services from a variety of companies, according to Spectrem. ...

Companies most likely to use an unbundled plan structure are those with plans whose assets are below $200 million, the survey found. For example, 61% of plans with less than $5 million in assets offered unbundled platforms, compared with 2% of plans with $200 million or more in assets, according to the survey.


Sixty-one percent of employers that used an unbundled structure involved an outside consultant in their decision making, compared with 58% of those that used a bundled format. ...

"There are consultants who are particularly focused on the investment side of things," said Gerald O'Connor, a director at Spectrem. "They're not as much involved in setting up the record keeping.

Often, advisers who provide unbundled services to employers bring in TPAs and other firms to provide these additional services, Mr. O'Connor said.

There are benefits to both bundled and unbundled plan structures, said Geoff Mettler, an adviser and vice president of retirement services with Jenkins Insurance Group, a Concord, Calif., firm that manages about $300 million in assets. ...

"I think the appeal of the bundled is, it's a lot simpler," Mr. Mettler said. "It's cheaper and a turnkey solution.

"But when things go a bit wrong, ... [they] don't have the resources to fix the problem," he said. "There's a lack of accountability on the bundled side. When it's unbundled, everyone's accountable."

Also, employers tend to get more attention from each service provider when they choose an unbundled solution, Mr. Mettler added.

Using a bundled solution is typically easier for employers and advisers, said Terrence Morgan, an adviser and president of Oklahoma City-based OK401k Inc., which advises companies on their 401(k) plans.

"It makes more sense to the adviser to have everything under one roof," he said. ...

Still, Mr. Morgan said, there are times when savvy employers want specific fund choices and pick an unbundled solution. Employers often don't have as much choice over the plan's investment options in a bundled plan, said Mr. Morgan, ...

"It's not to say you don't do as good of a job if you use a bundled vendor; you just don't have as much freedom," he added.

But advisers should realize that if they negotiate with vendors, they can obtain more options in a bundled solution, and typically, it's more cost-effective for smaller employers, said Barbara Delaney, an adviser with StoneStreet Equity Inc., a Pearl River, N.Y., firm that manages about $2 billion in assets.

Many providers of bundled plans are willing to offer customized services to employers, she added. ...

E-mail Lisa Shidler at

Wednesday, December 24, 2008

Retirement plan fiduciaries face new risks in historically safe investment options


By Keith Soranno November 9, 2008

In the wake of the market meltdown and the current credit crisis, 401(k) plan participants are agonizing over the dramatic decline in the value of their portfolios. Investment options previously considered safe — fixed-income and cash equivalents — have proven to be highly volatile.

And, while investors in their 20s and 30s may have time to make up even a 30% loss, a boomer retiree can suffer permanent financial damage with a 10% loss. The underlying fact is that all variable investment options, even fixed-income and cash-based options, carry market risk, and always have.

Plan sponsors typically have been very concerned about lawsuits pertaining to suitability of equity investment options ... and less concerned about the cash and fixed-income options and the holdings within those options. ...

They have focused intently on benchmarking the equity funds versus their peers and indexes, with little concern about the potential volatility of fixed and cash options. In this environment, fiduciaries need to focus at least as much effort on fixed-income and cash investment options as they do on the equity options in their retirement plans.


Plan sponsors can mitigate this risk by taking an active look at the overall makeup of their fixed-income and cash portfolios. Here are some steps to take:

• Ask your vendors and managers for their views on the market and their investment strategies for weathering the storm.

• Add additional fixed and cash accounts that allow your plan participants to fully diversify. If necessary, add options whose holdings are materially different to ensure that participants have a well-diversified safe harbor to help weather financial storms.

• Monitor your fixed-income investment options closely, applying the same logic to monitoring these options as you do with your equity strategies.

While risk in equity funds is more transparent than ever in retirement plans, fixed-income and cash accounts may be the next big wave of fiduciary exposure for plan sponsors. They need to be aware of all risks and strategies they can use to reduce their exposure, then take steps to offer diversity and reduce risk.

Keith Soranno is a regional sales executive with Securian Retirement Distributors of St. Paul, Minn.

10 Ways to Get More Business During Your Lunch Hour


By Lori Tripoli

... asked experts for their ideas for drumming up new business in as little as an hour. Here’s what they told us:

1. Put on a seminar. Give a talk to potential clients at a lunch-time meeting. “Some of our representatives do informational meetings on parent-care solutions that deal with the challenge of aging parents,” explains Kim Richardson, senior vice president and chief marketing officer at Associated Securities Corp. in Los Angeles. “They’re a good draw for new clients because everyone deals with the issue at some point in time,” she explains.

2. Set up your own study group. “A group of our representatives runs a practice management group that meets informally,” Richardson says. “About six associates share their best practices and network with each other,” she continues.

3. Research potential clients. “For us, it’s about targeting the segment of the market we want to go after,” explains Sylvia Diez, team director for PNC Wealth Management in Pittsburgh. If, for instance, you’re interested in getting business from executives at large public companies, you might research ... those companies so ... observes Bill Stone, senior vice president and director of investment for PNC Wealth Management in Pittsburgh. ...

4. Practice your pitch. One mistake financial advisors sometimes make is not branding themselves well, observes Richardson. “Have your elevator speech ready” should you come across a potential client, she suggests. ...

“Ensure that your opening description about your services to a potential prospect offers a clear definition of who you serve and the value you bring,’ says Richard Steiny, president of AssetMark Investment Services in San Mateo, Calif.. “Don’t allow your definition to be a ‘catch all,’ which will not excite anyone and will only attract ‘average’ clients,” Steiny says.

5. Read a company’s annual report. ... Reading them can help you “know more about them before you ever meet,” observes Stone.

6. Return phone calls and e-mails. “It’s easy to do business with us because we are accessible,” Diez says. ...

7. Ask for a referral. ... “The willingness for a client to refer builds from the very first meeting in terms of the trust and service level that is perceived,” says Steiny. “Some advisors like the phrase, ‘Please don’t keep me a secret; who else do you know that could benefit from my service?” Steiny notes.

8. Draw more business from your current clients. “So many representatives ... don’t go back to their existing book of clients. Go back to that same group of individuals and re-engage them,” suggests Ryan Shanks, vice president for business and practice development at Associated Securities Corp. in Los Angeles. “Let them know what new services you can provide,” he says.

9. Get a lawyer. “Lunch hour is a great time to begin to meet other professionals within your community to develop joint business referrals,” explains Steiny. ...

10. Meet the press. Get your name out there. A great thing to do during lunch is “to phone local reporters and leave a comment about that day’s financial news on their voice mail,” Finora says. “When done with discretion and consistency, more often than not, this leads to a press relationship, which is a great draw for new clients,” he says.

Tuesday, December 23, 2008

Consider Collaborating With Other Business Owners for Increased Profits

December 23, 2008 by Christian Fea

... Collaboration Marketing may not be a must for your business, but it’s certainly something worth exploring. ... But even if you are not looking to grow, change, or expand, a collaboration strategy may help you maintain the smooth running of your current operations, which could mean less day to day work for you.

There are two distinct types of Collaboration Marketing that are important to understand. One deals with the actual advertising and marketing of your products, the other relates to the market in which you sell and distribute your products. Before making a decision about whether a collaboration strategy is right for your business, it is important to understand and explore both aspects of this type of marketing.

Advertising Collaborations focus on shared industry resources and word of mouth partnerships. If you have a small business specializing in making wedding cakes, you will benefit by making contact with other wedding industry professionals such as photographers, caterers and consultants. If a photographer has a client who has not yet decided on a bakery for their special cake, the advertising collaboration creates a point of contact and referral to recommend your wedding cake business to the client.

By the same token, if you have clients who have not yet selected a photographer for their wedding, you can recommend your collaboration partner, who is a wedding photographer. The success of your Advertising Collaboration will depend on your ability to form and develop successful business relationships.

Market Share Collaboration deals directly with the market in which your products are bought and sold ... This type of collaboration has to do with banding together with other small businesses in your area, and forming a small cooperative to maximize cost savings for products you all use or need to do business.

For example, the Central Minnesota Buckwheat Growers formed a 16 member cooperative in order to market their buckwheat directly to larger buyers, and they received a substantially higher price for their product than they could have received individually.

... If you are a small business, you may benefit from partnerships with other small businesses in your same industry just like the Buckwheat Growers did when they formed a collective.

Collaboration Marketing is a model I believe you will find merits exploration. If done properly, it will provide a helpful way of expanding and solidifying your business for years to come.

Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.

Join his JV Wealth e-zine at

Monday, December 22, 2008

Tackling Longevity Risk

Wouldn’t it be nice if we could use 401(k) money to buy annuities with pretax dollars?

Financial Advisor Magazine

By Mary Rowland

When I have questions about changes in the retirement landscape, I go first to Ethan Kra, worldwide partner and chief actuary for retirement at Mercer, the New York-based benefits consultants. Kra has been—for nearly 20 years—an infallible guide to what’s going on in this marketplace. ...

... The biggest danger is longevity risk—the possibility retirees will outlive their money. ...

He has done considerable work on longevity risk, and says the average 65-year-old has no concept of how much risk he has. There’s a one-in-four chance, for instance, that one of the spouses in a 65-year-old couple will celebrate his or her 95th birthday—and there is a one-in-ten chance that one of the spouses will live into the 100th year of life.

“For a 65-year-old couple, the odds are greater that one will see their 100th birthday than that the house will burn down,” Kra says. “How many people don’t carry fire insurance?” And, he asks: “How many don’t carry longevity insurance?”

Not only are the chances for an extremely long life good, but as people pass the age of 85, their ability to manage their finances decreases. “We’re asking people to do something they’re not capable of doing,” Kra says.

His solution? Longevity insurance in the form of an annuity that starts paying at age 85 and pays for life. He suggests that a person at age 60 take 10% of the money from his 401(k) plan or IRA, go to an insurance company and buy an annuity that spreads the money across the risk pool—an annuity that starts paying out when the client is age 85. The client then takes the other 90% of the money and spends it down over his expected remaining life. There is no provision yet for someone to do this with pretax dollars, Kra says. ... “That would require an act of Congress,” he says. “They’re looking at it.” ...

... “It doesn’t pay anything to those who die.” That means there is less possibility of “adverse selection” against the insurance company, in other words, for the less risky policyholders to opt out and the more risky ones to opt in and inflate premiums. Therefore the product would pay out two to three times what you would expect to get for a life annuity. ...

Although it seems that it might be difficult to persuade people to buy a product that might not result in a payoff, Kra points out, “When you buy fire insurance, you pray you don’t need it.” ...

Having A Reliable Income Stream These questions come amid vast changes in the way people are retiring.

Kra frets, for instance, that over the last generation we’ve moved from annuities to lump sum distributions. ... And if you are pondering whether lump sums are better for society, Kra says consider this: Half the people who take one will outlive their money.

People’s anxiety about how much they might have after retirement can also be seen in the re-emergence of the defined benefit plan. Since their introduction 25 years ago, defined contribution plans such as the 401(k) have slowly eclipsed DB plans and been touted for portability. In a defined contribution plan, the amount of the annual contribution is defined instead of the amount of the ultimate benefit (the pretax contribution limit was at $15,500 for 2008).

For young people who moved to new jobs often and got nothing from a DB plan, the 401(k) once looked good because the money you put aside could travel with you. But now that bias has flipped, according to Kra. “Today American workers appreciate the defined benefit plan,” Kra says. For instance, in Florida and Nebraska, he says, state workers were offered a choice between the defined contribution plan and the defined benefit plan, and 97% chose the latter.

Kra says people start thinking about their pensions in their 40s. Baby boomers are now beginning to retire. The next generation, Generation X or the baby busters, born between 1965 and 1979, will demand better pensions. Thus he predicts defined benefit plans will be a competitive draw for companies, especially those that are going to see a talent drain with so many employees retiring. ...

Dealing With A 401(k) With a 401(k) plan, on the other hand, employees have an increasing responsibility for their own retirement. Still, it is the responsibility of the employer to look at fees and performance and determine whether they are acceptable. The employer must decide that the funds it offers are good ones so that a diligent employee could build up an adequate retirement stake by contributing to the 401(k) plan.

Kra says the government is focusing more and more on the details of 401(k) plans. ... Now under new law, employers can automatically enroll their workers. When enrollment was voluntary, the employer had to do complex nondiscrimination testing to demonstrate that the plan did not favor highly compensated employees over the lower-paid ones. But automatic enrollment eliminates the requirement for such testing.

Kra says that the touted Roth IRAs and Roth 401(k)s offer no advantage over their non-Roth predecessors if all the assumptions remain the same. ... For example, if you receive $3,000 in regular income and you pay one third in tax, you can put in $2,000, and in 20 years, you have $8,000. If you put the entire $3,000 into a regular IRA, in 20 years you have $12,000. But then you pay one third in taxes and have $8,000 left. “As long as the tax bracket is the same and earnings are the same, there’s no difference in the amount of money you have,” Kra says. ...

Thursday, December 18, 2008

Recession Cost-Cutting No-Nos - Business in Recession

Resist the temptation to make these bad business decisions during the downturn.

By Jennifer Wang December 15, 2008

In a sluggish economy, running leaner is a must, but not every money-saving measure is a good one. These experts discuss the moves you shouldn't make during tough times, even if they seem like easy ways to cut costs.

Finances Having started his own business during the 2001 economic recession, Virgin Money USA CEO Asheesh Advani knows how to trim expenditures to keep a company afloat through a downturn.

"The natural thing for business owners to ask is, 'Do you cut marketing, overhead or staff?' I think the right answer is to do a little bit of all three, but to be very careful on cutting what actually protects you on the downside," he says, noting that cost savings should never come at the expense of the ability to execute a long-term vision. ...

Human Resources Penny Morey, founder of human resources consulting firm RemarkAbleHR, believes that the biggest errors in judgment relate to poor communication on management's part.

"Instead of [employees] focusing on what they're supposed to be doing and helping the company to succeed . . . they tend to be looking for jobs, panicking and spending their time talking to each other about the bad news in the economy," she says.

Morey suggests regular meetings with employees--weekly if possible. And certainly if the work force has been reduced, management should sit down with those left behind and acknowledge the changes.

"It's not easy, but you can still boost morale," Morey says. "To me, people can be on your side or feel excluded, and most people want to be part of the solution if given the chance."...

"If management is taking a salary cut along with everyone else, communicate it. People just want to know they're being treated fairly."

Putting together a benefits statement is another way to emphasize positive thinking. "Include a summary of vacation, paid time off, insurance--show what the company is still doing to take the focus off what's being taken away."

It's important to think long-term, Performance evaluations, even if no longer tied to monetary incentives, still need to be done. ...

"You need to make sure people are still setting goals and working toward them, and employees will want to know how they're doing and what's expected of them going forward," Morey says.

Technology Business owners with websites shouldn't cut corners on things that relate to quality of service, says Todd Thibodeaux, president and CEO of the Computing Technology Industry Association.

"Don't downgrade from T1 to DSL," he says. "Make sure you're maintaining the security of customers' data, and keep your infrastructure in place. Don't hold off on buying a better piece of equipment."

... "Companies can offload obligation to maintain equipment and software through managed services and bring stability to their bottom lines," he says.

According to Thibodeux, it's also an opportunity for businesses to reposition themselves for the anticipated green technology revolution.

"It's a good time to see how you can increase energy efficiency and look for better sustainable technology."

Marketing "Mistake No. 1 is thinking that marketing is the best place to cut when businesses are looking to tighten their belts," says Ann Hadley, chief content officer at MarketProfs. "But it's not the time to jettison marketing. If business is slow and you're reining in your plan to get your name out there, it means fewer leads, less business and, ultimately, less income."

In fact, increasing the frequency of communications with customers can boost revenue and stimulate demand for your offerings, especially if competitors are busy slashing prices instead of promoting the quality of their services. ...

In addition, Hadley cautions business owners against taking on marketing responsibilities themselves.

"For an entrepreneur, what you contribute first and foremost is your vision and leadership, and if you get mired in taking over someone else's job, you'll probably be less effective as a leader."

To Hadley, the most important thing is to think past the immediate pain and position for the post-recession period. "The economy will go up and down, but now is a good time to be an industry leader, just like it is in every kind of environment."

Wednesday, December 17, 2008

Real estate impact to be 'massive'


By Arleen Jacobius October 5, 2008, 6:01 AM EST

The credit collapse and the ensuing de-leveraging from financial institutions are expected to have a colossal impact on the real estate investment market.

If industry executives are right, fortunes could be made, but also the number of real estate investment managers will shrink because of the lack of available capital, and portfolio returns might suffer.

"I don't think anybody has lived through what we are living through right now unless they are 100 years old. The magnitude is so massive," said Tim Ballard, chief investment officer of Buchanan Street Partners, a Newport Beach, Calif.-based real estate subsidiary of The TCW Group Inc. of Los Angeles.

"This will affect ... job growth, consumption and other things. The [savings and loan] collapse did not have nearly the same effect," he said.

Commercial real estate is in the second or third inning of a game that might go into extra innings, industry insiders said. ...


Financial institutions nationwide might have to reduce leverage by trillions of dollars, insiders said.

According to Buchanan Street estimates, that reduction could amount to $5 trillion.

"There will be some fabulous opportunities in this," Mr. Ballard said.

"There will be folks who are forced to sell because they can't refinance," he said. "There will be more sellers than buyers, and purchase prices will decline."

But observers say that while bargains will abound, buyers shouldn't expect fire sale prices.

For one thing, managers are sitting on billions of dollars, waiting to scoop up distressed assets.

For another, under the administration's $700 billion bailout plan, the government would be paying higher-than-market prices for securities financial institutions haven't been able to unravel and sell, thus keeping their securities from hitting rock-bottom pricing. ...


In the medium term, real estate professionals expect that the credit collapse will lead to a meeting of the minds between real estate buyers and sellers on price. ...

"Some real estate investors expect distressed sales to come within the next few months when short-term debt comes due and owners can't refinance and have to sell assets," said Susan M. Smith, director in the real estate advisory group of PricewaterhouseCoopers LLP of New York.

Deals will be different, though. There will be a "flight to quality," with well-located fully leased properties' fetching the best prices, Ms. Smith said.

Real estate with empty space will be tough to sell, because the banks that are still lending will lend only to the top-quality properties, she said.

Still, real estate investors won't see appreciation in their return equations, and they will have to shift their growth assumptions downward, said Sarah Snyder, vice president of Callan Associates Inc., a San Francisco-based consulting firm.

"I think you will have some good opportunities. We are starting to see some distressed debt filter back into opportunistic strategies that are more diversified," Ms. Snyder said.

"I think investors will look closer at how managers leverage and structure their debt," she said. ...

Mezzanine funds will become extremely important to lenders because they will be among the few with money. ...

"The amount of equity needed will be twofold what it was in 2006 and early 2007, impacting valuations and impacting the speed of transactions, which will be much, much slower," Mr. Ballard said. ...


Commercial real estate across the board will face significant challenges because capital issues are creating lower valuations, Mr. Ballard said.

The number of real estate investment managers will shrink because "capital will not be available for everybody," he said.

Philip J. McAndrews, managing director and head of global real estate at TIAA-CREF of New York agrees: "As we move further into the cycle, there will be fewer players."

The field will be left to investment managers with ready cash who can move quickly and who can make returns with a minimum of debt, he said.

"You need the acumen to find the best relative value among the opportunities. A distressed transaction is not always an excellent transaction because it's under distress," Mr. McAndrews said.

Arleen Jacobius is a reporter for sister publication Pensions & Investments.

Monday, December 15, 2008

I got tagged...


Seems I got tagged for a meme! I don't know what that is--I guess it's what too busy people do when they really should be doing something else. FreshFocus tagged me, so I'm researching and emulating (i.e., stealing) her blog post layout.

For those who are in the dark, like I am, I think these are the rules:

a. Write a blog entry about yourself that lists 7 things that may not be known about you.

b. Add links to 7 blogsites and notify the owner that they have been tagged.

c. Tell your tagger something they don't know about you.

d. I guess the purpose of this exercise is to spread your blogsite. Check out your tagger's 7 entries--perhaps you'll find something you really like!

  1. I cycle to work.
  2. I'll be paying for my kid's college with my Social Security check.
  3. Wife and I will be married 25 years in March.
  4. We have 3 kids- girl, boy, girl.
  5. I was trained as a chef.
  6. I was a radio announcer.
  7. I work on the Sunday New York Times crossword all week (with 3 kids I don't have a lot of open time).

Well there are seven useless things that you now know about me! Tell me one thing that I don’t know about you!

Oh, and I get to tag seven people:

David Altizer

Penny Aronson

Julia Atkinson

Austin Baker

Spencer Dillard

Michael Graber

The Magic Doug Sparkman

Sunday, December 14, 2008

Give Til It Hurts

Private Wealth

By Hannah Shaw Grove , Russ Alan Prince - 10/3/2008

Despite the wide appeal of philanthropy, most of the wealthy don’t capture the benefits of planned charitable gifts.

... In an effort to understand how actively the wealthy are involved in the stages of the giving process, we surveyed 446 individuals with a net worth of $5 million or more and a history of giving at least $50,000 a year to non-profit organizations.

One of the first issues that surfaced in our study was how much authority and control affluent givers want in the selection of the charities they support and, then, how the contributions are used. Almost three-quarters of survey respondents characterized themselves as wanting a high degree of both—we refer to them as high-influence givers. By contrast, the remaining quarter were less interested in participating in the process—low-influence givers (Exhibit 1).

Typically, most charitable gifts—regardless of the total wealth of the donor—can be considered “checkbook philanthropy,” meaning monetary gifts made in response to fundraising requests or one-off situations such as benefit events and auctions. While this form of giving is no less important, it often occurs without much advance thinking or planning and may not allow either the donor or the charitable organization to benefit as much as possible.

To ensure maximum effect, many wealthy individuals have begun planned giving to structure their philanthropic activities. More than half of our survey participants had already established a planned gift, but there was a greater disparity when viewed by segment. About two-thirds, or 62%, of the high-influence individuals had established a planned gift, while just 39% of low-influence givers had done so (Exhibit 2). ...

The opportunity to proactively reduce taxes was of material importance for 87% of high-influence givers, but far less significant to low-influence givers. Just 35% of that group cited tax implications as one of the major drivers in their decision to establish a planned gift (Exhibit 3).

A large portion of both segments, however, cited a broader planning effort as playing a principal role in their decision to create a planned gift. Of high-influence givers, 97% said the planned giving process was part of a broader effort that focused on financial planning, estate planning or both, as did 90% of low-influence givers (Exhibit 4). ...

... The most popular vehicle for high-influence givers was the charitable remainder trust, with 60% having established one. The second most frequently used structures were private foundations and supporting organizations, used by 34% of high-influence respondents. By contrast, almost three-quarters of low-influence givers used a simple will bequest as the way to structure their charitable gifts.

Donor-advised funds were the second most frequently used vehicle, established by 29% of the low-influence segment (Exhibit 5). ...

About half of the 247 wealthy individuals that have established planned gifts have additional planned giving needs. A much larger percentage of high-influence givers, 58 percent, expect to enhance their existing gifts or established additional gifts as compared to just 19% of the low-influence givers (Exhibit 6).

While high-influence givers cited the same gifting vehicles—private foundations, charitable remainder trusts and charitable lead trusts ... The vehicle of greatest interest to the low-influence group was a private foundation, as cited by 52% of the segment. After that, interest in other giving structures dropped off considerably with just 13% identifying the donor advised fund as a product of interest (Exhibit 7).

... The planned giving process can help all types of donors get the maximum benefit from their gifts as it provides a forum to have a dialogue with selected charities, creates opportunities to involve family members, and can ensure tax codes are interpreted and leveraged to the greatest degree possible. Still, many affluent givers continue to make contributions without any advance planning and, as a result, may be sacrificing some substantial benefits.

Hannah Shaw Grove

Ms. Grove is a respected author, columnist and speaker and a leading authority on the mindset, behavior, concerns, preferences and finances of high-net-worth individuals. She is the executive editor of Private Wealth, the first and only magazine for professionals with ultra-affluent clients, and Cultivating the Affluent, a practice management newsletter for financial professionals.

View all articles by Hannah Shaw Grove

Russ Alan Prince

Russ is an editor of Private Wealth magazine and the president of Prince & Associates, Inc., the leading market research firm specializing in private wealth. He is a highly sought consultant to the ultra-high-net-worth and elite advisors and originated the use of high-net-worth psychology in the financial services sector. He is the author of more than 40 books on private wealth and is frequently cited as an expert in the national and international press.

View all articles by Russ Alan Prince

Friday, December 12, 2008

Driving Business Value

Helping owners understand the strengths and weaknesses of their businesses can provide a blueprint for increasing value.

Private Wealth

By Grover Rutter - 10/3/2008

As business owners approach retirement, many begin to realize that they know very little about the value of the asset into which they have invested significant money, time, sweat and tears. ... In short, a seller’s perception of business value ... is [not] based on the marketplace’s perceptions [but] the seller’s idea of phantom value. Fortunately, huge value enhancement opportunities exist for business owners ... and the implementation of timely strategies can replace “phantom” business value with real and bankable wealth.

Managing The Client ... I’ve found that most business owners have one of three common mind-sets when it comes to their understanding (or misunderstanding) of business valuation issues, as discussed in the [first] chart [below].

... A variety of things can impact the actual or perceived value of a business... Fortunately, there are ways for a business owner to increase the value and at the same time manage risks ... An understanding of these issues ... will help advisors better prepare their clients for the valuation, and, ideally, for a highly profitable transaction.

Value Drivers Informed buyers will engage in a thorough due diligence process designed to find both the assets and the risks in a business. ... When business owners know what characteristics about the business offer value and how to improve on these advantages, it strengthens the overall performance of a business and can result in a better price at the point of sale. You should work with your business owner clients to ... substantiate these “value drivers” and, when possible, position them so they can be transferred to a buyer.

The [second] chart [below] discusses some common value drivers and how they can be developed more fully.

Value Detractors Risks, or problems, can detract from the value of a business in many ways. ... [Potential] buyers will respond to high perceived risk by decreasing their offering price. ...[When] risks are eliminated or mitigated it can increase the price of a business. ...

The [third] chart [below] includes potential risks facing a business and some questions to determine if the situation can be improved or requires attention.

... Furthermore, an owner’s personal style and stated goals can heavily influence how the opportunities and issues identified during the valuation planning process are handled. ... More information and educational tools on business valuation is available through The National Association of Certified Valuation Analysts at

Grover Rutter, CPA/ABV, CVA, BVA, is a partner in the firm of Grover Rutter Mergers, Acquisitions and Valuation in Findlay, Ohio, which specializes in valuing and selling middle-market companies. With more than 30 years of experience in accounting, taxation, valuation and business sale transaction experience, Mr. Rutter is the author of numerous articles and books, and a frequent speaker at industry events.

Captives save business owners money

Special-purpose insurer ideal for pretax wealth accumulation, asset protection, other goals


By David T. Phillips October 5, 2008

Through the creation of a captive insurance company, businesses can cut their taxes and increase the value of their estate. [The] business can also use the captive for pretax wealth accumulation, to protect assets, for efficient estate planning and to retain key employees. ... The strategy works best for companies that generate at least $1 million in annual net income, making it viable for physician groups, associations, franchisees and other businesses. ...

Captives were established more than 30 years ago, and today, there are more than 6,000 captives and $100 billion in annual insurance premiums.

There are two broad ways to employ a captive.

First, a captive can replace existing insurance, such as workers' compensation, general liability, medical malpractice, auto liability, property or other conventional insurance.

Through a captive, the overall cost of insurance is reduced, and the captive owner can capture underwriting profit and investment income.

Second, the captive can purchase insurance that covers exclusions, deductibles and self-insured risk.

In the event that claims don't materialize, the captive will capture a substantial pretax nest egg that can be used for future business risks, or it can be used for distributions to owners, family members or key executives at favorable tax rates.

Moreover, under the U.S. tax code, if the captive receives less than $1.2 million in insurance premiums a year, the entire amount is received tax-free by the captive. The insured business might then deduct the $1.2 million annually, saving about $500,000 a year in taxes.

Remember that premiums paid to a captive ...can be invested in stocks, bonds, mutual funds, real estate and other investments. A captive can also hold life insurance.

Generally, these are specialized life insurance policies with a high cash surrender value to ensure that the policies qualify as a proper investment under insurance regulations. The captive can hold the life insurance directly or loan money to a life insurance trust to buy the insurance.

Also, the death benefit of the life insurance is outside the estate. This means that because of the captive, a $10 million or even $25 million death benefit is created for the estate's beneficiaries without any gift or estate tax liabilities.

David T. Phillips is the founder and chief executive of Estate Planning Specialists LLC in Chandler, Ariz., a national network of estate planners. He can be reached at

Wednesday, December 10, 2008

Retirement Experts Urge Plan Sponsors to Shift Focus

HARTFORD, CT, December 2, 2008 -- Generating secure lifetime retirement income should become an urgent priority for plan sponsors and participants, according to the Institutional Retirement Income Research Council (IRIRC).

In its first white paper, Institutional Retirement Income Solutions: A Call to Action, available through the organization's website,, the IRIRC discusses why defined contribution plan sponsors should consider adding retirement income solutions to their plans.

"We realize that the current defined contribution approach is leaving retiring participants unprepared to construct a sustainable draw down of their assets in order to generate secure lifetime income that they will not be able to outlive," said IRIRC co-chair Martha Spano, who is the West Division Practice Leader for the consulting firm Watson Wyatt. ...

"The current economic crisis has exposed the flaws in the existing retirement system and the IRIRC can provide tools and information to help plan sponsors and participants fill in the gaps, and capably manage the ever-changing defined contribution marketplace," Spano said.

...[Defined]contribution plan assets are projected to be the primary source of retirement income for future retirees, and the responsibility to save for and generate a guaranteed retirement income has transferred from institutions to individuals.

"The shift toward individual responsibility has swung too far," said Dr. Jeffrey Brown, William G. Karnes professor, Department of Finance at the University of Illinois and Director of the Center for Business and Public Policy in the College of Business. "Participants are unprepared to manage the dizzying amount of choices and decisions they must make in order to prepare for retirement." ...

Institutional Retirement Income Solutions: A Call to Action suggests:

  • Increasing longevity, poor financial literacy and behavioral biases are compounding the challenge for plan participants;
  • Plan designs should evolve ... and expand to encourage participant behavior that accomplishes the goal of securing lifetime income during retirement; and
  • Success of the DC plan should be based on whether the plan facilitates adequate retirement income versus participation rates.

"The only way to quell the increasing public angst around the ability of Americans to retire in the future is for stakeholders from all areas of the retirement industry to come together and encourage plan sponsors to implement optimal retirement income solutions that address many of the problems retirees face in generating secure lifetime income," said Spano.

About the Institutional Retirement Income Research Council

The Institutional Retirement Income Research Council, an independent think tank, was established in 2007 to advance the interests of retirement savings plan participants, plan sponsors, plan advisors and consultants by: analyzing innovative approaches to in-plan, institutional retirement income solutions; creating acceptable best practices and evaluation tools to supplement the decision making; discussing and identifying regulatory, legislative, and fiduciary issues pertinent to in-plan, institutional income solutions; and producing and publishing relevant findings through various media outlets.


Click here for more material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues on 401k plans.

This is a press release provided by the company or its representatives., LLC is not the author of this release and is not associated or affiliated with any firm or organization mentioned unless otherwise noted. Use of any information obtained from this release is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by, LLC.

Monday, November 24, 2008

S&MM SoundOff: A Tool to Help with Reference Selling

Unless your sales method provides processes, tools, training, and measurements for leveraging existing customers as references, you are probably leaving money on the table. ...

One way savvy salespeople can leverage referrals is through the online service, a business networking site. This company provides an invaluable tool to many of their 6.8 million members.

... Your reps can learn where their targeted prospect worked before and with whom. The rep can then see whether the target connects with anyone in his or her business or personal network. There may be people within your company with connections to the target executive.

LinkedIn shows you those connections. The site eases the rep's pitching duties and is less intrusive for the prospect. It makes getting in contact much easier from the rep's point of view and much more acceptable for the prospect. LinkedIn is one technology helping salespeople sell more effectively.

Speaking of useful Web sites, be sure to check out Sales & Marketing Management's new online home: You'll enjoy the same management tools and resources you rely on--and a whole lot more. Click here to enter the Smart Sweepstakes!

Posted by dsteinSMM in Business Technology, Marketing Strategy, Sales Strategy Permalink

S&MM SoundOff: A Tool to Help with Reference Selling

Wednesday, November 12, 2008

Fannie, Freddie to ease some mortgage payments


Tue Nov 11, 2008 6:14pm EST

Photo By Patrick Rucker

WASHINGTON (Reuters) - ...Homeowners facing foreclosure who are spending more than 38 percent of their income on mortgage payments could have monthly payments reduced by Fannie Mae and Freddie Mac in an effort to keep their homes, [James Lockhart,] the head of the Federal Housing Finance Agency said....

Soaring mortgage defaults are at the root of the global credit crisis that threatens the U.S. economy with a deep and long recession, and some economists say putting a floor under the housing market is a prerequisite to recovery. ...

Lockhart said eligible homeowners could see their mortgage rates cut, the life of their loans extended or their principal reduced in an effort to ease payments. Borrowers would need to be delinquent 90 days or more to qualify for new loan terms. ...

FDIC Chairman Sheila Bair, however, faulted the new plan for focusing so narrowly on Fannie Mae and Freddie Mac, which means it will not cover the 60 percent of seriously delinquent home loans held by Wall Street firms and other investors. ...


Lockhart said he hopes other mortgage finance companies will adopt the new plan as an "industry standard," but mortgage investors often stand in the way of changes to failing loans.

In recent weeks, Citigroup Inc, Bank of America Corp and JPMorgan Chase & Co have all said they will ease some loan terms.

But critics say those efforts are also part of a piecemeal approach to the housing crisis that has so far failed to reverse the trend of increasing delinquencies. ...

The plan outlined on Tuesday was conceived in part by Hope Now, an industry group midwifed by U.S. Treasury Secretary Henry Paulson last year to help troubled homeowners.

Hope Now has spurred mortgage finance companies to ease terms for borrowers, but those voluntary efforts have not been enough to halt the growing pace of foreclosures. ...


Bush administration officials for weeks have been trying to agree on a fresh program to aid borrowers, and Tuesday's announcement could mark the first step in a wider effort.

[FDIC Chairman Sheila Bair] has emerged as a strong proponent of more-aggressive action, but others fret too much government aid could create a perverse incentive for homeowners to game the system.

The Department of Housing and Urban Development is mulling how to expand its Hope for Homeowners program, which gave the Federal Housing Administration a $300 billion kitty to underwrite failing loans...

That program ... went into effect in October. However, it got off to a slow start and officials are eager to loosen the terms and cut some red tape to make it more appealing to mortgage companies.

Under the program in its current form, a mortgage finance company must have a home reappraised and then erase 10 percent of its value before the loan can win a government guarantee. Officials are considering lowering that required write-off, sources said.

(Reporting by Patrick Rucker; editing by Gary Crosse)

© Thomson Reuters 2008 All rights reserved

Tuesday, November 11, 2008

Early Stage Algae Biofuel Company Closes $10.5M Funding Round; Additional $5M for Pilot Plant

Green Car Congress

11 November 2008

WeyerSolix calculations on the theoretical maximum production of algal oil. (See below.) Click to enlarge. Source: Kristina Weyer, Solix Biofuels

Solix Biofuels, a Fort Collins, Colo.-based early-stage company focused on algae-based intermediates for fuel and chemical production (earlier post), has raised $10.5 million in its first round of outside funding, and has reached an agreement with investors for an additional commitment of $5 million, to be used to build an algae biofuel facility near Durango, Colo. The pilot project is intended to showcase Solix’s ability to produce biofuel and feedstocks for the chemicals industry at commercially-feasible production levels and costs. ...

Two primary factors contribute to algal oil yield: the productivity of the algae, and their lipid content as a percentage of the biomass. Both vary with the species of algae. ...

Solix says that currently, algae grown in photo-bioreactors at its headquarters yield more than five times the amount of fuel per acre of land per year than agriculture-based fuels including ethanol from corn and biodiesel from soy and canola, at their current commercial yields. ...

Solix engineers have created systems that automatically adjust for environmental changes such as sunlight and temperature to optimize growing conditions. The Solix system has the ability to capture emissions directly from power plants and factories.

Solix Biofuels is a spin-off and technology partner of Colorado State University in Fort Collins, Colo. Solix seed funds were used to sponsor research by CSU faculty and graduate students to identify algae species with the best potential to grow at large scale and produce high yields of fuel and chemical feedstocks, and to develop technology that can bring the process to commercial scale. ...

Monday, November 10, 2008

Commercial-real-estate bust is coming, report warns

But downturn will present buying opportunities over the next 18 months, industry expert says


By Janet Morrissey October 26, 2008, 6:01 AM EST

Economists and market experts say a doom-and-gloom report on commercial real estate released last week confirms the industry's worst fears about an imminent major correction.

The widely respected annual report, "Emerging Trends in Real Estate," by the Urban Land Institute of Washington and PricewaterhouseCoopers LLP of New York, predicts that in 2009, commercial real estate will suffer its worst year since the industry's crash of 1991-92, with a noticeable rebound unlikely until 2011 at the earliest. It also forecasts a decline of 15% to 20% in property values, on average, from their 2007 peaks, with even sharper declines coming in weaker markets.

Amid the gloom, however, there will be pockets of opportunity for cash-heavy investors in discounted loans, distressed debt, raw land, apartment buildings and other niches, the report said. ...

"If you look back, there were tremendous opportunities available to anyone who would take the leap and buy properties at a discount from the [government-owned] Resolution Trust Corp. — and that set the stage for strong growth among REITs," said Robert Bach, chief economist with Grubb & Ellis Co., a commercial-real-estate-services and investment company in Santa Ana, Calif.

At the time, though, there were dire predictions "that there would be no need for another square foot of commercial real estate until about 2010 or 2015," which spooked investors, Mr. Bach said. "But people who bought properties back then did very, very well."

Nevertheless, the report throws cold water on any hope for a speedy turnaround. ...

"This is going to be the worst year since the 1991-92 industry depression," Stephen Blank, senior resident fellow for real estate finance at the Urban Land Institute, said in a webcast. "We expect to see drops in value, negative returns, sharp increases in delinquencies and foreclosures — it's a bleak picture." ...

"The private commercial markets need to correct; they're lagging everything else," said Jonathan Miller, a partner in Miller Ryan LLC, a real estate marketing advisory firm in New York, and author of the ULI/PWC report. "That [correction] is going to happen over the next 12 to 18 months." ...

Of the 50 metropolitan markets tracked, the study found only two — Dallas and Houston — where prospects for investment and development in 2009 were better than in 2008, thanks to their exposure to the energy industry. ...

In general, the report urges investors to sit tight and be patient "because the markets have yet to correct as much as they're going to," Mr. Miller said.

However, the report cited investment opportunities for those with cash and low leverage, noting bottom-fishing opportunities among distressed sellers and lenders, whose highly leveraged loans are upside down. ...

On the bricks-and-mortar side, rental apartment properties should continue to show strength due to the reeling housing market. Infrastructure and transportation projects are also good bets, the report said.

Mr. Miller added that residential lots and raw land should offer good investment opportunities over the next 12 months, but investors should avoid hotel and retail properties. "It's going to be ugly in retail," he said. ...

In a recent report of its own, The Goldman Sachs Group Inc. predicted that commercial real estate values will tumble 19%, and vacancy rates will approach 1990s levels. The New York firm recommends that investors avoid REITs with high leverage, near-term refinancing risk and a reliance on development and merchant building for growth. ...

The report predicted that the debilitated housing market will bottom in 2009, but not before pricing levels tumble to 2003-04 levels. Distressed Florida condos with ocean views could offer good long-term investments when they bottom sometime in 2009, Mr. Miller said.

Fitch Ratings Ltd. in New York thinks that 75% of the housing correction is already behind us and that prices may tumble only another 10% before hitting bottom in the next few quarters.

"2009 will be downer, and 2010 may not be much better, but maybe by 2011, a slow recovery will be under way," Mr. Miller said. "It all depends on the economy — we need a jolt."

E-mail Janet Morrissey at

Friday, November 7, 2008

Wellness critical for advisers in stressful times

During rough patches, scheduled exercise and eating right are even more important


By Joni Youngwirth October 26, 2008

...Rising to this occasion, being able to manage your clients' expectations and calm their fears — all while you might have fears of your own — requires advisers to be at their very best. With that in mind, here are some tips to help you stay healthy in mind and body.

Breathe: The Internet is a treasure trove of instructions on how to improve your breathing, especially when you are stressed. ...

For now, simply being aware that stress tends to make us breathe more shallowly may help us to reverse the tendency. Taking just a few deep breaths three or four times during the day may be the best thing you can do.

Talk to other professionals: ... What advisers need to share is not just the technical aspect of what they are doing with accounts but also how they are coping with their own emotions.

Exercise: If you have a regular exercise routine, be sure to stick to it. If you don't have a regular exercise routine, consider starting slow and easy with something of which your health care professional approves. The obvious choice is simply to take a 15- to 20-minute walk a couple times a week. Taking the walk at lunch or some other time during the workday provides the added benefit of removing you from a stressful physical environment. Consider providing this healthy boost to your entire office by scheduling a walking break for everyone.

• Diet: Nutritionists recommend we eat a variety of foods, especially whole grains, fruits and vegetables. ... If you don't have healthy habits, it is going to be difficult to make a major change right now.

But perhaps you can focus on one or two incentives for healthy eating for you, and possibly for others. For example, one adviser I know sent a fruit basket to his office to thank employees and colleagues for their extra efforts.

Sleep: Have you ever noticed how things don't seem nearly as bad the next morning as they do if you dwell on them during the night, when you can't sleep? ... Make a concerted effort at least to relax, even if you aren't getting the deep sleep you are used to.

Disclaimers aren't just for financial professionals.

With all the above, remember to use good judgment. If you have doubts about making any changes, contact your health care professional.

Certainly, more serious issues such as substance abuse require professional help.

These are unprecedented times for clients and advisers. So much is outside of our control right now that it is easy to feel despair.

But the attitude with which we choose to approach each day is key. Healthy individuals, consciously or unconsciously, choose the attitude they apply to life's experiences. ...

Take a minute and list all the things for which you are grateful. Then take that gratitude and turn it into one random act of kindness — it may be the most important stress reducer of all.

Joni Youngwirth is the managing principal of practice management at Commonwealth Financial Network in Waltham, Mass. She can be reached at

Thursday, November 6, 2008

All Mixed Up | Tips on choosing right media for multichannel campaigns

Direct Magazine

Oct 1, 2008 12:00 PM, By Grant A. Johnson

Creating an effective campaign in today's chaotic, competitive multichannel marketing environment is anything but easy. But you stand a much better chance if you remember to apply tried and true techniques to the media options of your choice.

...You're no longer limited to television, radio, print, public relations, telemarketing, direct mail, trade shows and good, old-fashioned door-to-door sales. Now you also must consider cable/dish TV, satellite TV, satellite radio (it's not all commercial free), airline advertising (no longer limited to in-flight magazine ads), cinema advertising and TV/movie product placement, plus everything available online — including Web-site and microsite marketing, Internet radio, banner ads, podcasts, pay-per-click advertising, organic search, blogs, microblogs, mobile marketing, instant messaging, virtual trade shows, Webinars, e-mail, social network marketing, viral and word-of-mouth marketing…well, you get the point. The choices can seem limitless — and overwhelming.

Because there are so many options, it's easy for marketers to overcomplicate things, think too far ahead and not maximize spending on multichannel media. As pressure mounts to get better results faster and cheaper, it's critical to test multichannel alternatives correctly.

Testing involves a proactive process as opposed to a quick-fix approach. ... That's where understanding your customers' buying preferences — like frequency, spending and channel choices — become paramount.

To implement a winning strategy you need to test, measure, analyze and move forward. ... Sorry, there are no shortcuts. That means adding media elements more slowly, keeping in mind that newer media options like e-mail, pay-per-click and search typically will yield results faster than mail, space ads and public relations.

Regardless of your media mix, it's important to keep some proven success-determining factors top of mind:

  • Understand your audience. ... Understanding customers' buying preferences and the competitive landscape is key. ...

  • Make an offer. Include a coupon, debut a “gotta-have” new product/service, announce a sale or give a sincere thank-you. Position your offer as something that will increase the recipient's desire to respond.

  • Ask and you will receive. ... Make it absolutely clear what you want your prospect to do. Make it easy for him or her to ...

  • Answer this. In just a few seconds you must communicate the answer to the common question “What's in it for me?” ... In short, succinctly tell them you have what they want or need to make a decision to respond.

  • Make it personal. ...With your fact-based, comprehensive “ideal” customer profile in hand, along with any historical customer data, you can make a greater impact on your target audience with relevant personalization. Use this data to incorporate meaningful messages and information that can add convenience or value to your message. ...

  • Start strong. ... Within seconds you must make it clear that you have something they need. Pitch your product with a solution, provocative question or irresistible offer. Position your pitch within the communication where it will get the most readership; subject line, masthead, the first paragraph of your sales letter, brochure cover, headline or photo caption. And don't forget to reiterate it in a “P.S.”

  • Be ready to respond. After receiving personalized messages, prospects expect prompt action to their responses. Be careful to acknowledge when and how requests will be fulfilled, how to prioritize responses, and most importantly, how your customer service/sales team will move the inquiry from lead to sale.

  • And remember: Test, test…and then test again.

GRANT A. JOHNSON ( is CEO of Johnson Direct LLC, Brookfield, WI.

A primer for executing a succession plan

(While the article addresses investment advisers, the principles apply to any service business. DMW)

'Dearth of talent' in the business makes finding a successor difficult for retiring advisers


By Beverly D. Flaxington September 28, 2008

Many advisers are in their 50s or 60s, and they are thinking about retirement. ...

An adviser might consider selling the business or look for an opportunity to affiliate with a larger firm and stay involved in the business.

Another alternative is the adviser selects a successor, ...

Let's face it, an adviser with a thriving business who wants to transition out of a practice has worked hard to develop relationships that are based on trust and performance, probably in that order. The clients — and the firm — matter.

The practice could have the owner's name on the sign, and is the "baby" that the adviser has nurtured for years, making the decision to leave difficult.

The transition process is difficult. Taking the time to consider what constitutes success in this process is done infrequently. ...

It is important for a person facing a transition — or considering one — to ask, "Am I ready to do this? Why am I doing this and how motivated am I to make this work?" If there is any hesitation, the adviser will not be open enough to alternatives.

During the process, it is important to set priorities for the transition, with an emphasis on what matters most. ...

Taking the time to plan the priorities, to write the goals and to articulate them to a successor will help ensure the success of the transition.

Many times an adviser will set the priority as "cashing out" or "getting the most value from my firm." These are fine goals, but to achieve them requires a well-developed plan and a method of measuring success.

An adviser needs to consider what he or she is willing to give up to a successor, and the changes he or she is willing for a successor to make to the firm. Surely, a successor will want to put his or her stamp on the business.

The process of finding someone should also include identifying the qualifications, and most importantly, making certain the cultural fit between the firm and the successor is a good one. ...

Last, the process must include bringing the clients into the fold — not "announcing" a transition once it happens, but rather implementing a process so the transition is smooth and easy.

In addition, set checkpoints once you have prioritized and worked with the successor to measure what is working and what is not. ...

Beverly D. Flaxington is a principal of The Collaborative, a Medfield, Mass., firm that helps clients improve business practices

Natural Beauty

Financial Planning Magazine

By Donald Jay Korn

October 1, 2008

...A lesser-known member of this exclusive club is the conservation easement, the gift of development rights on a piece of property to a government body or land trust in order to keep the land partially or fully wild. A landowner donating an easement may get breaks on income, estate and property taxes.

Even better, the recently passed farm bill allows easement donors to deduct gifts of up to 50% of their adjusted gross income (AGI), so long as the easement doesn't prevent farming or ranching on the property. (Farmers can deduct up to 100% of their AGI.) Gifts in excess of that amount can be carried forward up to 15 years. ... In 2010, the tax benefits may revert to lower ceilings: up to 30% of AGI and a five-year carryforward. (These provisions were originally part of the Pension Protection Act of 2006, which expired after 2007 and were revived in the farm bill.)

In many cases, though, clients seeking conservation easements are not driven by tax concerns. "One of my clients recently donated an easement worth $600,000 to a local land trust," says Tom Rogers, a principal at Portland Financial Planning Group in Maine. "She was oblivious that she'd be eligible for a significant tax deduction until I told her about it."

Income Tax Treatment Rogers' client owns acreage that abuts a beautiful lake in Maine. "The property, which has been in the family for nearly a century, contains a vacation home," Rogers says. "My client wanted to keep the property in the family and also wanted to prevent development on the land."

To accomplish her goals, the client donated an easement to a local land trust that "permits the vacation home to remain there, but prohibits future development," he says. "Before going ahead with the easement, my client checked with her children, who were on board with the idea." Discussing an easement donation with heirs can be vital because the property's resale value will likely be reduced by the restriction, which is in perpetuity.

An appraiser hired by the landowner provided valuations, before and after the donation. The appraisal showed that without the development rights, the property lost $600,000 of its value. Thus, the donor got a $600,000 income tax deduction for making a charitable contribution to the land trust.

Due to the sharp loss of appraised value, easement donations commonly result in six- and even seven-figure charitable deductions. A deduction this valuable used to be hard to realize, and could be so again if the new rules are not extended. For example, under the old rules, which are set to return after 2009, a donor entitled to a $600,000 write-off would need an AGI of $333,333 to take a $100,000 charitable deduction each year for six years, says David Scott Sloan, partner in the Boston office of the law firm Holland & Knight. Under the tax rules for 2008 and 2009, that client could have an AGI as low as $80,000 and still be able to deduct the full amount: $40,000 over 15 years.

But it may make sense not to stretch the charitable deduction from an easement donation far into the future. "My client with the $600,000 deduction is a retired professor with over $1 million in tax-deferred accounts," Rogers says. "I suggested she convert some of that money to a Roth IRA, which would increase her AGI, and use the easement deduction to offset 50% of that income." After five years and after age 591/2, all Roth IRA withdrawals will be tax-free.

Estate Tax Treatment Cutting a property's appraised value by $600,000 will reduce the size of the owner's estate and may eventually save estate tax. There is also a federal estate-tax exclusion for easement donors "worth up to 40% of the value of the land, but not structures, subject to a donated conservation easement," Sloan says. ...

Property Tax Treatment Reducing the property's appraised value with a conservation easement may also reduce property tax payments. ... Rogers says, "... [If]the property was assessed as a regular lot, the tax savings can be important."

Mark Jendrek, an attorney in Knoxville, Tenn., says that some states automatically reduce the tax on properties subject to a conservation easement. ...

Paying the Price Even after donating a conservation easement and reaping the tax advantages, clients still retain property ownership rights. They can use the real estate themselves, give it, bequeath it, or sell it, and they needn't permit public access.

Thus, a conservation easement donation may offer multiple benefits, especially for clients who want to preserve open space, forest land or scenic views. But the process is costly. "You'll probably have to hire an appraiser, an engineer, a surveyor, lawyer, title search expert and perhaps a tax professional," Sloan says. Donors are likely to incur thousands of dollars in fees. .... Before-and-after appraisals are likely to get close scrutiny, so they should be well-reasoned and from a reputable firm.

Other hurdles must be cleared in obtaining a conservation easement. For instance, it is necessary to find a recipient: The client must locate a local government or a qualified not-for-profit conservation group that is willing to accept the gift. Leads to groups that will accept conservation easements may be available from the Land Trust Alliance, the Nature Conservancy and the Trust for Public Land.

... But a land trust or similar organization will accept a conservation easement only if it perceives a significant benefit from preventing development in that area. "The group that accepts the easement becomes responsible for monitoring it in perpetuity," Jendrek says. "Someone has to go to the property periodically and make sure the provisions of the easement haven't been violated. If there is a violation, the group has an obligation to bring an action."

Typically, the recipient will expect some financial help to offset the costs of enforcing the easement. "My client made a cash donation to the local land trust, along with the easement donation," Rogers says. ...

On the Sell Side Not all conservation easement transactions involve donations. "Another one of my clients owns some property in New Hampshire that has been in her family for decades and is very suitable for a conservation easement because of its location," Rogers says. Not only is the property in a scenic area; there are also many second-home owners nearby who have a keen interest in preventing extensive development.

This client wasn't in a financial position to give away the conservation easement, so she put it up for sale. Selling the entire property without an easement wasn't an option, according to Rogers, because the client feared that the buyer would allow development.

A local conservation group was willing to buy the easement. ... "Some of the funding came from a federal farmland protection program and the balance came from private citizens," Rogers says. "Ultimately, my client received $475,000 by selling off the property's development rights." ...

History Lessons Conservation easements must serve a valid purpose to qualify for tax breaks, including preservation of certified historic structures. ... Owners can create easements on commercial as well as residential properties.

... Now an easement donated on property located in a historic district must preserve the entire exterior of the building, not just the facade, in order to qualify for tax benefits. Taxpayers must attach to the relevant tax return a qualified appraisal, photos of the entire exterior of the building and a summary of all development restrictions in the easement. City or country, easement tax breaks may not come easily. Senior Editor Donald Jay Korn's mystery novel, Payable on Death, is available at Amazon and other online booksellers.