http://www.advisorfreedom.comAdvisor Freedom  As my friend Dan Sullivan would say: Facts are not trends and trends are not certainties but there are certain trends that are more certain than others. Here’re the big trends that I see that will affect the advisor community in the next couple of years. While we are dealing with clichés, bromides, and trite sayings, just remember that forewarned is forearmed, no one ever went broke taking a profit, and never interrupt your enemy while they are attempting to destroy themselves…   Trend 1: Commissions are gone or going- The Financial Services authority in Great Britain has outlawed all commissions on Financial Services products by the year 2012. This means that Advisors will have to negotiate their compensation with the clients directly. This will be perfect for Advisors who have packaged and branded themselves properly. For those who haven’t, start storing up those sleeping pills and vodka.    Trend 2: Regulation increases and freedom of self expression decreases in the US. The SEC becomes the new barrier to innovation and creativity under Mary’s leadership and FINRA becomes the new SS with enforcement powers that make the coming environment look like a developing republic. For the most part these bumbling morons do not understand how capital works, flows, or helps people get to their goals in life. Look for more meetings, more mandatory attendance at those boring meetings, and more compliance that has nothing to do with anything EXCEPT COMPLIANCE.   Trend 3: The Big Financial Services Companies look a lot more like GM and Chrysler and less like Apple. Run, do not walk from these monstrosities. You will need to be a part of their President’s Council or Top Producer Group going forward like you will need to have Herpes 4 to get a date. They are simply manufacturers of products and that’s it. Any relationship you have at the top or bottom of those organizations you can duplicate on a street corner in West L. A.   Trend 4: Consumers want partners to STRATEGIZE their future and not just vendors TO SELL THEM THINGS. In about two years, the APPS on the IPHONE will bring investment analytics that were only available to the financial elite a few years ago to every 11th grader’s cell phone. You can be smug and say they don’t know how to think about the future but trust me here, they will figure it out.     I think all of this is really positive news for creative advisors who see that the packaging of their wisdom and experience into Unique Processes is the key to increased income and freedom and deepening of client relationships. In order accomplish this new packaging, you will have to be involved in a program like The Strategic Coach (www.strategiccoach.com) or hire someone who understands how to do this like Jon LoDuca at www.thewisdomlink.com). Both these companies are excellent at training the new advisor and getting them focused.      My friend Lewis Walker (www.lifetransitions.com) has come up with a platform that focuses an advisors attention on the life transitions that clients go through. His focus is helping them work through and create the experiences they want about changing jobs, spouses, children leaving home, disposing of property using money as the means to facilitate all that and not as the sole focal point. He’s got a real hit on his hands as I have watched him develop this over the past few years and if the BD’s can get their Future IQ above a number resembling tepid water, he will build a huge national movement.   So, with all that said, what are my recommendations for the top folks?   Go INDEPENDENT: There’s nothing the big firms have that you can’t create for yourselves technologically, legally, financially, or organizationally. Just paint a picture of what you want, package it, staff it, structure it, and like the WHIZ, just get on down the road. In terms of the big firms, be like a good shepherd and get the flock out of there as soon as possible. If none of your clients come with you, you will have it all back again in less than three years. The risk of loss at starting over is about 1 millionth of the risk of loss of losing your business because your OSJ won’t stand up for you or because Mary and he Morons got a reg through you didn’t know about. PACKAGE AND BRAND YOUR WISDOM: Use Sullivan’s program to get a hold of your attention, time, and money and Jon’s program to take the packaging to a new level.  WRITE AND PUBLISH ABOUT WHAT YOU BELIEVE AND WHAT YOU THINK PEOPLE SHOULD DO WITH THEIR LIVES AND MONEY. THEY ACTUALLY WANT TO HEAR FROM YOU ABOUT THAT.   Do not ask for permission to write a book. The first amendment to the Constitution gives you that right when you are born. Just write the book, publish it, and ask for forgiveness. If Mary gets mad let’s let the Constitution sort it out. Above all, do not collaborate on your life’s treatise with some 28 year old compliance officer team leader who read “Danny and the Steam Shovel” or “Olivia Saves the Circus as their last book”.   CREATE THINGS THAT MAKE YOU MORE USEFUL AND MATTER TO THE PEOPLE YOU SERVE AND WHO HAVE HIRED YOU TO PROTECT THEM. NEVER LEAVE ANYONE BEHIND IN THE NAME OF BURAUCRATIC ADHERENCE, OBEDIENCE, OR COMPLIANCE. KNOW THAT THE ONLY EASY DAY WAS YESTERDAY AND THAT IT PAYS TO B A WINNER EVEN IF YOU HAVE TO DIE IN THE PROCESS.   If they ask you who told you to do these things, tell them I did. Also, tell them to FEAR THE DARKNESS FOR I AM IN IT.12/4/2009http://www.advisorfreedom.com/comments.asp?id=238The only thing less transparent that Mary Shapiro could do to announce her future plans for compensation reduction in the industry is to take out a billboard in every city in the country that says: “Hi, I’m Mary Shapiro and I’m going to screw you and your business like your first after prom experience. I’m going to do that by making the mutual fund vendors Low Ball their expenses to be able to market to the general consumer. I’m going to increase the costs of compliance for you both in time and money by 20% each and every year until Jesus comes. Finally, I’m going to phase out all commission compensation over the next five years.” Now, if you don’t believe this is happening, go back and look at the last four months of Investment News for the little articles that predict this. Understand that ENGLAND, just put a plan in place to outlaw all commissions on financial services products by 2012. The Financial Services Authority (their version of the SEC) made that announcement in a position paper early this summer. The recent articles about fees raising to individual reps from FINRA ( a doubling as a matter of fact) is a perfect example of increasing costs without value added.  Of course Mary will approve this since it makes FINRA more self sufficient.  The rationale is that FINRA is down 37% due to market fluctuations and they need more money.  No kidding.  If only the reps could double their fees when the market went down because they need more money. These clowns are the relatives to Mary and the SEC. If the FSA were part of my family in West Virginia, they would be the second cousin you slept with on your mother’s side. Every idea Mary and the Morons have had has comes from Great Britain or Russia. In fact, Mary’s most creative idea for the industry was the awakening that perhaps they needed to upgrade their technology at the SEC because the new products were becoming more sophisticated. That’s an understatement. The SEC's current took kit is something like the blade of grass the chimps use on Discovery to pull ants out of the mounds. Part of the SEC’s problem is that it is running a manual count inventory business in an RFID world. Not only do these people do not KNOW what is going on, they don’t know how to THINK about the products they are looking at. That’s because they are focused on the regulations and not the products that the regulations affect. It’s sort of like being warden at Chino in California and making sure the cells are clean but leaving them unlocked. Here’s what I would consider doing if I were an advisor and gave a flip about the industry and your future: Band together with your fellow advisors using YOUTUBE or FACEBOOK creating a social networking site devoted to suing and replacing the SEC with something . One hundred thousand advisors paying $10,000 into a legal fund can create lots of paperwork for Mary to respond to. My personal feeling is that Mary and her Morons and the SEC could be liable under the Federal Torts Claim Act for their breech of duty in both the mortgage meltdown and Maddoff. Missing Bernie’s little scam, despite dozens of warnings, is like a High School Principal hiring a pedophile as a night janitor and then not noticing that home room has fewer children each day. If you use the video technology that’s available, social networking sites, and technology aggregation platforms, you as an advisor or group of advisors have more power than you ever imagined. There’s no platform for courage though. You have to bring that yourself.  8/23/2009http://www.advisorfreedom.com/comments.asp?id=236One of the last acts of a dying civilization is to write a rule book.  The next to the last act is trying to enforce it. The suggestions offered by Mary Shapiro and the SEC team as to pop quizzes for advisors makes little or no sense.  It's sort of like Gun Control: the bad guys are always going to find ways to get them. The bad guys in the securities industry are going to find ways to misrepresent things to clients.  Simply knowing a rule that says you shouldn't doesn't make it any less likely. Nonetheless, Mary's heart is in the right place even if her brain is parked in neutral.  Seeing as how she's probably pretty busy right now, I thought I would do the first quiz for her and then let her team improve on it.  Here goes:                                                   FINANCIAL ADVISOR POP QUIZ 1.A Bond is: a. A connection between two human beings, b. Something that a glue creates between physical objects, c.A spy created by Ian Fleming or d. Something the Government issues when it's spending too much. 2. Commingling means:  a. Two people of the opposite sex connecting in some way, b. Mixing your assets with your clients, c. Mixing two different client's assets together or d. What you do at a cocktail party to network.  3.An Investment Policy Statement is:  a. Plaintiff's exhibit no. 1, b. A plan for deploying assets until they are all gone, c.A guide to justify decision making, or d. A script for an investment sitcom. 4. A Registered Representative is:  a. Someone who is licensed to sell investments, b. Someone who has been formerly associated with a multi-level selling group but now isn't, c. Someone whose alleged transgressions can be found on the web on their U-4, or d. Someone who could not get a job at Jiffy Lube. 5. Modern Portfolio Theory is industry jargon for:  a. Explainng how investments should work even when they don't, b. Just a theory to explain why you have no money left, c. A course at Harvard, d. What every advisor should know and understand. Obviously, the quiz could go on and on but since this is the first one, we should just let it be a warning of more difficult ones to come.  I know if, as an investor, that if my rep were subject to this sort of intellectual scrutiny, I would feel much safer. I know you would too.6/18/2009http://www.advisorfreedom.com/comments.asp?id=234  If you are going to be a prophet or seer, you have to be right a lot more than you are wrong.  As you look back over the Acts of Liberation Blog posts, I think I'm lining up to be Prophet of the year when it comes to the new regulatory environment under Mary and the Morons.  If this imbecile has her way, here's what I think is going to happen: 1. B shares go away:  Her current argument is that they are too confusing for clients to understand.  What's confusing about telling someone you earn 4% up front and if they get out before 5 years they pay your fee back.  Seems like simple math to me.  This is about reducing costs to investors and reducing your compensation.  Low hanging fruit is always easy for lazy folks to reach.  C shares are next along with reduced RIA fees.  You may also have to get your office furniture budget approved in advance. 2. Insider Trading by the SEC Staff:  I didn't know those guys made enough money to trade anything except baseball cards.  What a ridiculous effort on Mary's part but a brilliant strategy of misdirection.  It's sort of like making sure that a burgular wears footies so as not to mar the floor.  Across the street, Madoff and his buddies are stealing billions right underneath Chris Cox's nose and Mary is focusing on whether any of her staff got a new tip they can benefit from. 3. Random Calls to Clients:  This is the 'stupid pet trick" of the year.  It's guaranteed to bring more lawsuits and allegations of wrongdoing based on nothing.  On the surface, it seems really protective and foward thinking.  Underneath, it's like the Quiznos Franchise owner calling you up to see if you had a bowel movement after the new mesquite chicken sandwhich was purchased. 4.Reduction of RIA fees:  A clear way to get popular support is to cut fees and taxes.  Only here's the problem:  Mary is cutting your compensation while upping hers.  The last person to be this overpaid in public life was Rick Waggoner at GM. Look at the trend lines:  Increased scrutiny, reduced compensation, pervasive regulation, and supervision by people who don't have any money and hate people who do.  Sell the practice and get the dog shampooing van franchise.6/3/2009http://www.advisorfreedom.com/comments.asp?id=233                             There are a couple of signs on the horizon that you should be paying attention to as an advisor.  The conversations around A, B, and C share pricing are more than trial balloons.  They portend the end of this type of compensation for Advisors and Brokers.  The promotion of Mary Shapiro to the head of the SEC also says that your old enemy is now your new enemy with more power and authority.  She doesn’t like you as an advisor and doesn’t believe you create value.  The final trend is the consolidation of broker dealers into the consolidation of banks.  Mary would like about 12 broker dealers to keep track of and not 4,500.   The trend lines will converge to create this type of environment: 80% of the advisors will end up being salaried employees for banks and mutual funds with toll free numbers, model portfolios and a life that is so boring that it will make cud chewing seem like the Amazing Race.  Watch what Ken Lewis does with Merrill over the next few years.  It’s the model for the future. 20% of the advisors will have a chance to shape their future for themselves and their clients.  They will reduce their dependency on fee income from portfolios and increase it around new capabilities that clients will pay for separately from asset management. The independent RIA’s will have the front movers advantage for a while but know that Mary and her Morons want your compensation, status and influence reduced. Mary is under the mistaken assumption that we need more regulation. What we need is smarter people working at the SEC and greater enforcement of the regulation that we already have.  Here are my thoughts on how you can begin to escape the environment above:   Create a Family Resource Center that combines the best of investment management capabilities with the other support that families need. You will need a separate company to do this. Create a separate legal entity that provides these other capabilities that uses the service of your RIA but isn’t dependent upon it. Establish a pricing model that works from a balance sheet basis for managing the information, conducting the meetings and facilitating with other advisors on behalf of the family. Use a data aggregation platform like eMoneyadvisor to create a platform of technology support that can take advantage of the coming convergence of cell phones, web, and cloud computing to allow you 24/7/365 access with your clients and their other advisors. Create a video learning channel inside this company to where you become the “source” of current and valuable information.  It may need to be established as a not for profit.  Media management will be incredibly important through all the channels.  You cannot wait for three weeks any longer for some 23 year old in compliance to approve your polysyllabic words when they don’t use them.  A separate learning channel brings you under the protection of the First Amendment and takes you out of Censorship world with Mary. Become an “Agent of Convenience” while creating Federations of Support for your clients.  These are terms from “The Support Economy”, a brilliant book by Shoshanna Zuboff and her husband James Maxim.   Finally, get yourself out of the commodity business as quickly as you can.  Investment Management is a commodity and will be more so as we move forward.  The array of software and do it yourself capabilities will drive the need for specific personalized strategy and planning around more than just the investments.  The financial services business looks a lot more pastoral than it does product oriented going forward.  People will pay for processes that provide direction and capability.  You just have to create them.   Focus on your autonomy and independence.  Forget about the status and regulated industry you’ve been a part of for 20 years.  Your brand, identity, and level of service is about to become bigger than any of the old names and legacies.   Finally, just believe in you as much as I believe in you.  I have high hopes for you.4/27/2009http://www.advisorfreedom.com/comments.asp?id=232Just when I think that the SEC and the securities industry in general cannot come up with any more ridiculous and impotent ideas to protect the American Investor, I read where Mary Stupido ( sorry, I cannot even give her the courtesy of last name) is thinking that it would be a good idea if staff members started calling clients of RIA's to see if everything is on the up and up. In addition to violating about 3000 privacy rules from the advisor to the client and from the client to the num nut who's asking the questions on behalf of the SEC, the shear suspicion that this can create on the part of the client that something "Might" be going on is sure to make for lots of stressful times for advisors and their staff. I can't even imagine how Mary and her team of Morons even create a script to go by. Perhaps, it's like this: "Hi Bob Smith Client. I'm Drago with the SEC and we're just conducting our own little random inspection of relationships between advisors and their clients. Do you have a few minutes to answer just a couple hundred truly invasive and irrelevant questions?"  "Whoa, wait a minute...is my advisor under investigation or is he in trouble with you guys?' "No, not exactly. What we are doing is making sure that there is no reason to be concerned with the advice that he is giving you or any contradictions between what your account statements say and what you really have in your acccount."  "Are you saying I'm missing money and my advisor has been lying to me?"  "Well, no not really but maybe if we find something" "Have you found something/" "Not, but if we did, wouldn't you want to know?" "Yes, but I was hoping not to find out anything like this?"  "Sir, just remember that we haven't found anything and this is just a spot, random check"  "So, what was the purpose of the call again? "  "Well, it was, now it's not, to restore your confidence and deepen your relationship with your advisor". "OK. Thanks for calling. I feel better already."  Good strategy Mary. Building relationships with investors and the industry one train wreck at a time.3/13/2009http://www.advisorfreedom.com/comments.asp?id=231As I read the trade journals and listen to advisors talk around the country, I see why everyone is so depresssed.  Most of the conversations I hear and the ones that are repeated to me have to do with with worn out bromides of investment advice and logic that are best suited for some beginning wealth builder class in a Ohio Community College or a late night listen  with everyone's favorite guru, Suzie Orman.  I like her but I want to take her teeth down three shades lower.  You could land Air Force One with the reflections of the front eight. The two big lines that keep showing up are the "flight to quality" and the "return to frugalness".  I'm not sure where the flight to quality is going to much less where it's taking off from.  What I do know is that in a world where the Internet absolutely correlates everything absolutely in a nanosecond and fraud is the shopping bag and wrapping paper you bring financial instruments home in,  I am hard pressed to find the "quality" from my flying around vantage point. The sector allocations mean less and less as we go forward as well as the typical classifications of big cap, small cap, foreign, global, etc.  For example:  Is GM a Big Cap US Company or a small Cap Global company?  Neither.  It is a broke company on it's way out.  Years ago, it may have been one of those things.  Now it's just on life support with no corporate living will.  Is B of A a valid financial services sector player or just a collection of Maddoff like strategies with more convenient branches. Why should I worry about my credit rating or house payment or car payment when those who haven't get a chance at a new car, reduced mortgage, and repaired credit rating?  Why do I have to have a 720 credit score to even be considered for a loan by a bank that just got bailed out for 22 billion because its CEO lost track of the money it lost.  Why am I planning for a retirement and sacrificing when the value of my portfolio is off 50% from a year ago and the investments banks who caused that drop are same one's managing my money for retirement. ( I am actually planning because of a fundamental belief that the country can withstand Nancy and Harry until their terms are over). I understand that spending it all and saving it all are not the answers and that somewhere in between those two extremes there's a place on the continuum where I should be able to spend a few weeks in the winter in Sarasota or Cabo even if I mess up really badly.  The challenge for me is how much do I save versus how much do I spend.  My financial advisor has all these neat little reports and schedules that show what happens if I do certain things.  The problem is that I can't identify the environment that's just right to do them even if I were certain they were the right things to do. I can tell you the one thing I'm not going to do and that is to become frugal at 56.  Frugal is the second cousin to cheap.  It means calculating 5 times the tip on a $27 dinner bill to make sure you don't over do it.  It means taking a really crappy vacation (Rock City in Tennessee) instead of a great one (Ritz Carleton- Amelia Island).  It means talking about what you saved on your purchases instead of what you enjoyed purchasing.  It means paying your house and car off early to just discover that when you do that, you can't borrow against either of them because the banks aren't lending.  It means having a perfect credit rating and being off work for Cancer Treatments and missing one payment and having your credit rating of a lifetime plummet 125 points because some algorithm says you are a loser.  FICO stands for F*&^%$ing Innocent Consumers Over My advice to advisors:  Stop being frugal and stop telling your clients to be frugal. No one ever saved their way out of a recession.  Here's the new formula: Give 10%. Save 20%. and spend the rest like a drunken sailor on 6 months leave. Avoid all the taxes you possibly can and pay the ones who owe late.  If you are going to live like you are broke even though you aren't, then just be broke.  Think of the money like tickets to the greatest show on earth:  your life.  You can't spend all the money on the popcorn but you can spend a lot.  There's always someone to take you home if you need a ride. I don't know how much you will accumulate for your clients or for yourself as an advisor if you do everthing just right.  What I do know is how much you will leave if  you don't enjoy some of it along the way: All of it.    2/28/2009http://www.advisorfreedom.com/comments.asp?id=230If there is a more incompetent group of regulators that have been assembled to oversee the financial future of Americans, I would be hard pressed to find it.  Barack has assembled the most consistent group of tax evaders, financial illiterates, and clueless bureaucrats on the planet to oversee the capital business in the United States.  My prediction is that is "Dream Team" turns into a huge nightmare for all of us before it's over.    The very idea that the Secretary of the Treasury can't get Turbo Tax to work correctly ( a poor workman always blames his tools) gives me zero confidence about the plan he has.  The real expertise as head of the NY Federal Reserve, is apparently just being able to find your way to the office building. Here are some trends that I think you need to be aware of over the next 12-18 months: 1. The AUM Model is DOA- From a compensation standpoint, your fees have gone down this year and will continue to go down from market forces and withdrawals.  With all due respect to the AUM crowd, the philosophy is based on nothing more than the belief ( unnfounded by the way) that assets will continue to grow and  your fees will not diminish.  As of this writing, the DJIA is of 40% from almost a year ago, net outflows exceed net inflows for the most part, and clients are trying to figure out how pay their house payment, not contribute to the 401-(k). 2. Mary Stupido and the new SEC-  The new SEC is the old SEC with less vision.  Mary's plan is pretty simple unless you just arrived on planet:  Over the next 3 years the consolidation of banks and brokerage firms will continue.  What this means is that 80% of advisors will end up working as salaried employees for banks and mutual funds.  B of A's 9 year payout for top producing brokers is nothing more than a talent annexation program maxquerading as "one for all and all for one" merger incentive.  Ken Lewis did not get to be in charge of B of A by giving the store away now or in the future.  The brokers who stay will have B of A tatooed on their underwear and on their forehead like the mark of the Beast.  They will end up being salaried new buisiness development people with no ownership of assets and a future who's brightest  professional spot is lunch and learn seminars in Wilson, NC. 3.Compensation Reduction and Price Compression-  AUM and Modern Portfolio theory  just don't work in a world where  algorithyms are fast and getting faster.  Unless you've just arrived on the planet, we really don't have cross correlation coefficients anymore:  we're all in the soup.  Your best thinking in this environment, ( unless you're Bernie Maddof) only mimized the loss, not created gain.   Even if you did create the gain, the trick is duplicating it. Your older clients will continue to buy this BS that you're selling but my daughters' generation will show up and ask "Now what is it I'm paying you to do that I can't do for myself". 4. Data Aggregation:  In about two years all the financial information that someone needs will come over their cell phone or Blackberry.  Your older clients are still amazed at this and depend on you to give them information that they could learn how to get in the time it takes to watch one episode of Dancing with the Stars.  Enjoy this state of ignorance as long as you can because it's about to end.  Cloud computing, RFID transmission, SAP software for calculating everything from multiple retirement scenarios to whether you should have children is on the horizon.  In the next ten years, everyone will have the equivalent of EMONEY Advisor (www.emoneyadvisor.com) at their fingertips. 5. Platforms of Support- As a busy guy, living and working in two countries and four cities, recovering from a malignant brain tumor ( by the way, kicking its butt along the path) I want one place to go to in order to manage my life and one person to talk to.  AUM is just one service I want.  I want an entire platform of support that allows me to enjoy my life and not be stressed by it.  And by the way, I don't care if it coms from Merrill Lynch, B of A, Smith Barney, or the Salvation Army. So, here's how I would deal with this as a practioner: 1. Disconnect immediately from the "Together We're Bigger" brands.  These brands are the ones who think size matters.  It didn't work for Citi, it isn't going to work for Morgan Stanley, and the exodus from B of A down the road by Merrill Reps make Africa look stable.  These big brands are worthless except in the minds of the executives who are being paid to pretend they are and lie to you about your big future.  My private banker at B of A just got terminated after 14 years of service with fundamentally nothing more than an e-mail goodby.  Well, I think there was some takeout Chinese but not much more. 2. Focus on a Unique Process that makes your competition disappear:  You can learn to do this by becoming a member of The Strategic Coach Program (www.thestrategiccoach.com).  Stop winning trips by selling stuff and start investing in programs like the Coach so you can create stuff that is not regulated and can't be commoditized.  I've been there for 15 years as an attendee and 10 years as coach.  If there's a smarter group of people that Dan Sullivan, Babs Smith and the team members there, I'm not aware of them.  There's more intelligence about the future on their lunch buffet than in any of the industry meetings I've seen and been to.  It's sad when Suzie Orman is the bright morning star.. 3. Commoditize the AUM Business:  Unless you have a unique value proposition that you are consistently engaging your AUM clients with, Mary and the morons are going to make you reduce your fees.  Now, why would they do that?  (1) It's low hanging fruit.  It's alway easier to cut expenses that come up with any new real value creation capaiblities.  Mary doesn't like you or what you earn although with her 25 million defined benefit plan waiting in the wings, her former 3 million salary as head of FINRA and whatever else she's manuevered to get, she is hardly the example of fiduciary compensation control.  Take the AUM business down to 10 basis points, put it in a separate company, hire a CFA or ex-accountant to run it and transfer your former AUM fees over into Unique Process fees. 4. Give up your Licenses-  The regulation, complexity, overhead, and stress, all come from being in a commoditized industry.  Whenever you are selling things to the masses you will be regulated by the bureuacrats.  Eighty per cent of your overhead is devoted to making sure that the 70 year old with 45k in their IRA is being handled properly.  You don't have to give them up now, but you do have to not be clueless anymore about what the real trends are which includes the trend that you will be earning less, working harder, and enjoying life not at all while you are in the industry. 5. Find out what your BD's real plan is:  Except for LPL and a couple of other large independents, you are going to see 60% of the industry merge over the next 36 months.  Part of this is because of just the pure compliance requirements that will be placed on them.  Their are a couple of ways to make your competition disappear as a firm: (1) to actually create more value than they do  or (2) Opt for more 'protective' regulation to keep the consumer safe.  It's interesting that the two largest scams in the financial services industry (subprime and Bernie) occurred right underneath the noses of the regulators.  Here' a thought on hiring new inspectors:  Try to get people whose expertise and bank accounts  reflect their knowledge of money and how it works and not their training in font size and ad placement. Create processes that people want to pay for.  Become a partner in strategizing the future and not a vendor.  Understand the consumer knows that a 1% asset management fee is a semantic distinction only.  It is a commission pure and simple. It's just less than 6%. The "You can touch my left leg but not my right leg" of professional morality is on its way out. And if you get a chance, write your Congress Person and encourage them to have everyone involved in financial services regulation take a Turbo Tax Refresher course and disclose where all their conflicts are.  My sense is that if you  start with Mary ,the rest of the rats will be start pouring out.2/22/2009http://www.advisorfreedom.com/comments.asp?id=228    It is not too often that I wake up in the morning and am excited about seeing someone being sued.  As a lawyer, I can tell you that a lawsuit is like having a can opener scraped across your brain while standing barefoot in broken glass waiting for a barium enema to take afffect.  Even if you are trained to file lawsuits and win them, they are excruciating experiences. My hope this morning is that the lawsuit against Mary Shapiro becomes the textbook example for pain and misery for her and her team of Morons.. This morning, I am almost giddy that Mary Shapiro, (apparently the new industry scam artist) is being sued for alleged false statements ( excuse me, Misstatements) concerning the amount of monies that could be paid to BD's who were going to vote for the consolidation of the old NASD and NYSE into FINRA.  Apparently, Mary has taken it on herself to issue her own preemptive tax rulings on what is possible in these situations.  My hope is that the IRS reminds her that they sort of do that thing.  Minimally, she should understand that this type of action borders on the criminal.  Think of it like the mob in Michigan and the UAW.  A thug with lipstick is just a lipstick thug.  For the record:  MISSTATEMENTS are just lawyer talk for lies with window dressing.  Clevel talk by clever counsel to cover up less than clever things said.  Richard Nixon, Hillary Clinton, Bill Clinton, are all masters of the Misstatement Defense.  Mary  has esteemed company.   No one as calculating and protective of a potential lifetime bureaucratic career makes missstatements.  They just lie and  hope they don't get caught.  In the end, I am willing to bet that all of Mary's misstatements were carefully thought through by both Mary and her counsel.  Otherwise, why have the information under seal?.  I they weren't, then just consider what I said as a misstatement on my part. I'm absolutely sure that with a potential 57% pay raise at stake, the domination of an entire industry and the chance to continue to make indentured servants out of representatives, while driving small firms out of business with unnecessary regulations and standards,  the motives of Mary and her team were just simply pure.  I almost feel ashamed questioning her motives...well, not really. The good news about this new standard of truth with FINRA is that registered reps will have the Mary Misstatement Defense Available to them in future claims.  I can hear it now: "I  know Mr. Client that I told you that your investment was safe and the Screw You Lifetime Annuity was guaranteed to never let you run out of money.  What you may have heard was simply a misstatement on my part as to the actual structural underlyings of the investment choice we made for you.  See, isn't that all better."  There will be a new miracle occurring in the number of arbitration settlements using this.  After all, if Mary can get off with this, why are the reps any less fortunate. Regular readers of this blog will find a melody line of suspicion from me concerning Ms. Shapiro and her intent with the industry.  This is a lifelong bureaucrat lawyer whose contributions pale in comparison to the harm done to the individual advisors and the fear spread throughout the BD Community  over the last decade.  She has added zero value to the industry, protected apparently no one, and made life utterly unbearable and unaffordable for BD's and their reps. Her intent has been to consolidate the industry into a few big firms so her job and the job of her Morons gets easier.  .   My belief all along has been that Mary has been intent on building her own empire, increasing her compensation, and dwindling the ranks of the independent advisors as quickly as she can..  I could take a first year law student, someone who has read all Grisham's novels, or an avid viewer of Boston Legal and create a circumstancial evidence trail that would make the case.  Mary's empire building couldn't have been more transparent had it been a Banner Ad on Google.  IT IS TIME FOR MARY TO GO AND TAKE HER MISSTATEMENTS WITH HER. I think a couple of things need to happen to Ms. Shapiro and Company at FINRA: 1. Mary's 2 million compensation probably on examination by the IRS would fall within the guidelines of "Unjust Compensation" for a not for profit executive.  FINRA is a not for profit the same way that Russia is a incubator for democracy.  Nice shell, just no filling inside.  When it is finally revealed that she engineered this merger and a pay raise for herself at the same time all the while pretending to protect the industry and the consumer, it will make the investment in Detroit by the American taxpayer look like the M&A deal of the year. Both Detroit and Mary are losers from an investment point of view.  Let's get the IRS involved in a little compensation review.  They have a 1-800 TIP LINE.  I'm making my call today.  Why don't you?.  .   FINRA IS A SCAM FROM A NOT FOR PROFIT STANDPOINT AND THE IRS SHOULD SEE IT FOR WHAT IT IS:  A PRIVATE TRADE GROUP OPERATING FOR THE EXCLUSIVE BENEFIT OF IT'S MANAGERS AND EXECUTIVES WITH NO ASCERTAINABLE VALUE CREATION OR BENEFIT ... FINRA is Just OSHA without the promise of a building for it's efforts. 2.Ask the Department of Justice to examine her NASD/NYSE merger promotion activities.  My sense is that there is a Civil Rico Claim that can be brought if she has been as pre-emptive and pre-meditated in her planning as it appears to be.  IF she made those statements to induce the mergers she initiated under false pretenses, she is guilty of FRAUD, pure and simple.  She's just a scam artist with a nice desk and title  and bad hair..  Do not let her off the hook with this.  If a registered rep had talked with a client around investment options using the same strategy of subtefuge, the rep would be in jail, out of the industry and subject to restititution.  Mary, in the end should be subject to the same standards. 3. Protest her appointment as the Head of the SEC-  This woman will do more in the next 5 years to destroy the independent advisor environment than any force imaginable.  She is a witless, imagineless, hard wired bureaucrat who's record of protection of anything but her career is deplorable.  Underneath her watch and her co- worker Chris Cox, the American people have lost trillions of net worth through mortgage and investment scams perpetuated right underneath their noses.  It wasn't because they didn't see them, they just weren't smart enough and motivated to deal with them.  After all, why go after Bear Stearns when you can partner with the AARP. Any private sector business would have fired them years ago.  Mary's  real brilliance lies in bureaucratic deftness and opportunism...especially for herself.   Both Mary and Chris are just mall cops masquerading as SWAT. As a member of the advisor community you have a golden opportunity to get rid of the one person that promises to derail your future. Start writing the people in your districts that can derail this appointment.  IF Mary has done what the media is alleging, she is as much of a scam artist as Madoff and a bigger opportunist than the latest round of Wall Street thieves. Her compensation of $2 million per year is based on the same valueless compensation that the now failed Wall Street firms exhibited during the subprime scam.  Made up value, marked up way too high, with no accountability and responsibility for anything or to anyone but themselves.. Get her fired and get your life back.   The SEC has powers that FINRA only dreams about and under Barack's arrogance will have even more..  Think of the new SEC under Mary as Zimbabwe without the kindness.  Let her continue and no one has a future, including you. '1/14/2009http://www.advisorfreedom.com/comments.asp?id=227I think there are some assumptions that are fatal for you as an advisor if they are the ones you are going to base your practice growth on going forward.  Forewarned is forearmed here and while I am under no illusions that this gets paid attention to, it's at least nice to have the thoughts on the record.  My purpose in discussing these assumptions in this piece is to have you look at the world through telescope in terms of your practice and not the microscope that the industry would have you use. FATAL PRACTICE ASSUMPTIONS: 1. Asset Management Fees will stay the same-  Mary Shapiro is to the financial services industry what Putin is to the Ukraine's Gas Supply- a deal killer.  Mary is going to begin a sweep of RIA practices going forward that will force you to justify every single dollar that you charge a client and ramp up the complexity of delivering those services.  Great Britain is her model and right now, there is 45 page new account form the Brits are having to use as a way to engage clients.  Mary doesn't like you as rep, an RIA, or a practioner.  She actually would like you to work for a bank or a mutual fund on a salary so it's easier for her Moron Squad to police you. 2.You will capture the Boomers' inheritance to manage:  Here's a news flash: Unless you've had an intergenerational strategy to work with the children of your older clients, they already have an advisor in the wings.  So, what you have done is work your entire life to build an asset mangement business for your inheritor's advisor.  Start asking  the children of your clients what they want from you and start creating it for them.  Do not assume you are entitled to manage those assets or to engage them. 3.The Regulation will Decrease under Mary:  The coming regulatory complexity will make the IRS look like the epitome of simplicity as we go forward.  Regulation is the harvester that makes the low hanging fruit of compliance easy to get.  You simply pass enough onerous and Draconian requirements that small practioners cannot comply and are forced into merger and less independent situations.  Your next hire will be a full time compliance officer paid for out of decreasing asset management fees designed to reduce your profitability and increase complexity. 4. You can use Technology to capture new Clients- There are three trends you will not be able to take advantage of under Mary:  Streaming Video, Social Networking, and Technology Aggregation.  Apple Computer gets the next generation and what they want. That's who is inheriting the money, folks.   Mary and Company are fundamentally clueless about these areas and fearful of what is possible for reps.  They will continue to ramp up the censorship and compliance standards until even the most pain tolerant of reps cannot go through the process of creating new and innovative strategies. 5. The Boomers will sustain your asset growth and cash flow: Guess again.  The vast majority of Boomers will be drawing down on their assets and whatever inheritance they possibly will receive to subsidize their own lifestyle and needs.  Making sure you get paid for telling them the markets  are going up or down isn't going to be a priority  You just took a 40% cut in pay this year due to market volatility and you experience the equivalent of that as Boomers start drawing down assets.  No real complicated math here:  Markets down, contributions down, withdrawals up.  Even in North Carolina I can do that math.. So, here's how to beat all this: 1. Spin the AUM business off into a separate holding company, staff it with a geek, use TAMPS, and commoditize yourself.  Own a part of that company but don't work in it. 2. Create a Portfolio of Possibilities in terms of new capabilities that you can bring to clients that they will pay for.  Clients want things done that you can't imagine and they will pay you for them if you will package and create them. 3. Create a Private Capital Fund for you and your clients. The great investment opportunties going forward are going to be in the private sector of real estate, closely held business monetization, and services for aging parents and disabled families.  People will pay to be a part of these situations. Stop doing estate planning for buisiness owners and start providing liquidity for them with the biggest asset they have...their own business. Go create a little portfolio of  your own, register it and license it properly, and ask your clients to be a part of it. 4. Privately Brand and Package Yourself- Go get enrolled in Sullivan's Program, The Strategic Coach.  You will learn how to do more in the first three years to increase your confidence and capability than you ever imagined.  Take a look at all of the things that have been created at www.advisorfreedom.com.  None are regulated, none deal with securities, none do anything but address problems that clients have that they need help with. And surprise, people actually pay me to do those things. Amateur night is over in the industry.  It was never supposed to last this long anyway.  Take control of yourself, your practice and your client's future. Or just roll over and let Mary roll over you.1/11/2009http://www.advisorfreedom.com/comments.asp?id=226