What We Don’t See Is As Important As What We Do See

Often what we don’t see is as important as what we do see. I love traveling the country and working with Financial Advisors. I’m in the field an average of four days a week consulting, teaching, and listening to concerns Financial Advisors have.

But there are several High-net-worth/Ultra-high-net-worth (HNW/UHNW) market niches which Financial Advisors never ask me about or even mention. Nor do I observe many Financial Advisors working to become experts in several important market niches.

Financial Advisors Are Avoiding Executive Compensation

Executive compensation is one area I see Financial Advisors avoiding because they fear the complexity. Get beyond the fear by doing. You can’t talk yourself into not being fearful. Don’t wait until you aren’t anxious. Doing what you fear will reduce your anxiety over time. It’s easy to think successful corporate managers will know more than you about personal finance, but this is frequently not true.

Concepts of Executive Compensation

Executive compensation does involve learning about new concepts and the different financial issues which confront highly compensated executives. But learning this subject is not as difficult as you might think. Remember, knowledge builds self-confidence.

What Are the Components of Executive Compensation?

There are six components of executive compensation for senior corporate managers, according to the Center on Executive Compensation in Washington, DC. [1]

• Base salary   
• Performance-based annual incentive (bonus)
• Performance-based long-term incentive (stock options)
• Benefits
• Executive perquisites (use of corporate jet)
• Contingent Payments (additional retirement assets)

You Already Have the Details

As a Financial Advisor, you already know about these six areas. You need to learn more, but you have all the information you need at your fingertips. You can find the training and information you need in any media from print to podcast to streaming videos on your desktop. Large firms already have this available for you. Or, go to the public library and check out a book on the subject.

Become an Expert in Something

Whether you are new to the business, mid-career, or a tenured advisor, become an expert in something having to do with our business. Yes, our industry is complex, but you know the basics or you wouldn’t be working in it.  Remember again, knowledge creates confidence.

 You Need Only Use 1% of Your Day to Become an Expert

By investing only 1% of your time every day, you can become an expert over a period of time in one or more areas of HNW/UHNW issues. There are 1,140 minutes in a twenty-four-hour day. Just one percent of that total equals about fifteen minutes.

Can You Find Fifteen Minutes to Become an Expert?    

We both know the answer is “yes.” The key issue is doing it. In a colleague of mine’s initial ten years in the business, he read six different magazines every week on personal finance. He read two more focused on the financial industry as a whole. He told me that as he got along in the business, clients would ask him, “how do know so much about all of this?”

He would smile and say, “I learned it all reading magazines.”

Everyone would have a quick laugh, but the truth is, he did build a vast storehouse of knowledge on personal finance by faithfully reading financial magazines for years.

Can you find just fifteen minutes a day to read something about finance? If you can’t, I suggest you take a closer look at how you spend your time.

Resource(s): 

[1] http://www.execcomp.org/Basics/Basic/What-Is-Executive-Compensation

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Contributing Writer: Subject Matter Expert Charles McCain