Portfolio Management 101 Portfolio Management 101 Portfolio - PowerPoint PPT Presentation

Portfolio Management 101 Portfolio Management 101 Portfolio Management Institute 2006 PMI Forum Chicago, IL Jeff Gerson Al Derosa, CFA Business Practice Mgmt Fixed Income Kurt Meyer Paul Davis Equities Marketing

Running a Successful PM Business Running a Successful PM Business Portfolio Management Institute 2006 PMI Forum Chicago, IL Jeffrey S. Gerson Senior Portfolio Management Director Senior Vice President – Wealth Management Director’s Council

Introduction Introduction � Always look at the big picture � People don't move mountains, ideas move mountains � Find a need and fill it.

Step 1 Step 1 Definition of Sales: The transfer of one’s conviction to another � Be Positive – Clients find it infectious � Be Confident – Clients will listen better � The Secret to Success is Not Knowing you Can’t Do It

Your Goals Your Goals � Become your client’s default FA � Position yourself as a Financial Professional, not the guy who sells people stocks � Try never to lose a client � Always prospect for new clients � Get existing clients to add to their accounts

Investing In Your Business Investing In Your Business � 10% of your income should flow back into your business � Time � Technology � Support � Client Appreciation

Time Time � Write a Business Plan � Hold daily /weekly meetings with your assistant and/or Team � For Teams – Set aside time to have team nights away from the office � Attend business building seminars � Get involved in the community � Learn the systems that SB has in place – Next Gen – FC Linx – SSB Access

Time Management Time Management Single Practitioners Single Practitioners � Partition your day – Prospect – Client Service – Portfolio Research and Management

Time Management Time Management Teams Teams � 2 types of structures – Vertical � Senior Decision Maker – Horizontal � Consensus Decision Making

Time Management Time Management Teams (cont…) Teams (cont…) – Joint Marketing – Delegation of Roles and Responsibilities – Conveys Depth to Clients – Think Tank – Smoothing of Peak and Trough Periods

Gerson Guarino & Meisel Group Gerson Guarino & Meisel Group � Jeff Gerson – – Inside – New Business Development & Marketing – Outside – Senior Wealth Strategist � Chris Guarino – Inside – Senior Portfolio Manager – Outside – Senior Portfolio Manager � Greg Meisel – Inside – Team Manager / Sales Manager – Outside – Relationship Manager � Shawn Landau – Inside – Planning / Marketing Follow-up / Sales – Outside – Estate, Retirement and Financial Planning

Gerson Guarino & Meisel Group Gerson Guarino & Meisel Group Support Staff Support Staff � Lisa Guzman – Lead Administrative Assistant – Executive Services, Trust Accounts – Administrative Delegation � Laura Micelli – New Accounts – PM Lead Assistant � Mike Gammarati – Sales Support – Common Proposal, HNW Fixed Income – Cash Book – Alternative Investments

Team Work Team Work � Nobody works for you, they work with you � Incentives for your sales assistant – With Money – With Praise � Enlist those more skilled to help close business – Firm Professionals – Seasoned FAs � Keep your manager/sales manager in the loop

Technology Technology � Contact Management � Presentation Materials � E-Mail – Internal & External � The Internet � Multimedia Proposals � Remote Computing � SB Access / FA Profile Web Page � Blackberry / Treo – be reachable

The Next Level of Service The Next Level of Service � Newsletters � Custom Brochures � Informational e-mails � Birthday Calls / Cards � Holiday Cards � Personalized Calenders � Holiday Gifts ($100 maximum) � Recognize what’s important to your client

Generating Business Generating Business � Harness Centers of Influence � Provide Services to Accountants, Business Managers, Attorneys, etc… � Be Accessible � Get Involved with your clients on a level other than the market � Ask for introductions

Building a Fee- -Based Based Building a Fee Business Business Create an Annuity For Yourself

Hypothetical Growth of a Fee Based Business Hypothetical Growth of a Fee Based Business Year-By-Year Analysis of How Assets = Gross at 2% Fee One Two Three Four Five Beginning Value $5,000,000 $5,400,000 $10,832,000 $16,698,560 $23,034,445 Growth at 8% $400,000 $432,000 $866,560 $1,335,885 $1,842,756 New Assets $0 $5,000,000 $5,000,000 $5,000,000 $5,000,000 End of Year Value $5,400,000 $10,832,000 $16,698,560 $23,034,445 $29,877,200 Fee 2.00% 2.00% 2.00% 2.00% 2.00% Annual Gross $108,000 $216,640 $333,971 $460,689 $597,544 Six Seven Eight Nine Ten Beginning Value $29,877,200 $37,267,376 $45,248,767 $53,868,668 $63,178,161 Growth at 8% $2,390,176 $2,981,390 $3,619,901 $4,309,493 $5,054,253 New Assets $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000 End of Year Value $37,267,376 $45,248,767 $53,868,668 $63,178,161 $73,232,414 Fee 2.00% 2.00% 2.00% 2.00% 2.00% Annual Gross $745,348 $904,975 $1,077,373 $1,263,563 $1,464,648

Hypothetical Growth of a Fee Based Business Hypothetical Growth of a Fee Based Business Year-By-Year Analysis of How Assets = Gross at 1.5% One Two Three Four Five Beginning Value $5,000,000 $5,400,000 $10,832,000 $16,698,560 $23,034,445 Growth at 8% $400,000 $432,000 $866,560 $1,335,885 $1,842,756 New Assets $0 $5,000,000 $5,000,000 $5,000,000 $5,000,000 End of Year Value $5,400,000 $10,832,000 $16,698,560 $23,034,445 $29,877,200 Fee 1.50% 1.50% 1.50% 1.50% 1.50% Annual Gross $81,000 $162,480 $250,478 $345,517 $448,158 Six Seven Eight Nine Ten Beginning Value $29,877,200 $37,267,376 $45,248,767 $53,868,668 $63,178,161 Growth at 8% $2,390,176 $2,981,390 $3,619,901 $4,309,493 $5,054,253 New Assets $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000 End of Year Value $37,267,376 $45,248,767 $53,868,668 $63,178,161 $73,232,414 Fee 1.50% 1.50% 1.50% 1.50% 1.50% Annual Gross $559,011 $678,731 $808,030 $947,672 $1,098,486

Hypothetical Growth of a Fee Based Business Hypothetical Growth of a Fee Based Business Year-By-Year Analysis of How Assets = Gross at 1.5% Assuming you raise 25% more assets than you did during the Previous Year One Two Three Four Five Beginning Value $5,000,000 $5,400,000 $10,832,000 $17,948,560 $27,196,945 Growth at 8% $400,000 $432,000 $866,560 $1,435,885 $2,175,756 New Assets $0 $5,000,000 $6,250,000 $7,812,500 $9,765,625 End of Year Value $5,400,000 $10,832,000 $17,948,560 $27,196,945 $39,138,325 Fee 1.50% 1.50% 1.50% 1.50% 1.50% Annual Gross $81,000 $162,480 $269,228 $407,954 $587,075 Six Seven Eight Nine Ten Beginning Value $39,138,325 $54,476,423 $74,093,326 $99,094,278 $130,863,678 Growth at 8% $3,131,066 $4,358,114 $5,927,466 $7,927,542 $10,469,094 New Assets $12,207,031 $15,258,789 $19,073,486 $23,841,858 $29,802,322 End of Year Value $54,476,423 $74,093,326 $99,094,278 $130,863,678 $171,135,095 Fee 1.50% 1.50% 1.50% 1.50% 1.50% Annual Gross $817,146 $1,111,400 $1,486,414 $1,962,955 $2,567,026

Building the Fee- -Based Book Based Book Building the Fee Life of a PM Business $80,000,000 $70,000,000 $60,000,000 Assets under Management $50,000,000 New Assets $40,000,000 Growth at 8% Beginning Value $30,000,000 $20,000,000 $10,000,000 $0 One Two Three Four Five Six Seven Eight Nine Ten Years

Evergreen Income Evergreen Income Annual Gross $1,600,000 $1,400,000 $1,200,000 $1,000,000 Fees $800,000 Annual Gross $600,000 $400,000 $200,000 $0 One Two Three Four Five Six Seven Eight Nine Ten Years

Why PM is good for your Clients? Why PM is good for your Clients? � Process vs. Product � You Buy High Quality Securities � Diversification � Charge No Commissions � Pre-Established Costs � Even Playing Field

Why PM is Good for You? Why PM is Good for You? � Leverage � Client Management � Predictable Earnings Stream � Differentiates you from the Competition � Breaks The 80/20 Rule

Why Did We Start Doing PM Business? Why Did We Start Doing PM Business? � Client’s Were Demanding It � We needed a way to differentiate my business from the 200,000 brokers We compete with. � We did not like having to oversell clients � We did not like charging commissions � We wanted to be paid for holding good companies � We wanted to run my business like a business

Marketing to Existing Clients Marketing to Existing Clients � Commission to Fee – Emphasize the alignment of your interests with client’s � Explain how PM gives us more flexibility to manage their account � Instead of calling clients, you spend time managing money � Discuss realities of running a successful business � If possible, insist that the client must allow you to handle the portfolio that way � Quarterly Reviews, Newsletters and Periodic Meetings � Ask for introductions