Poor ol' Metrics America. The executives at major corporations are still managing their companies via metrics or numbers. This is the masterful management skills of Corporate America in a nutshell. The Regional V.P. gets an email saying that his regions numbers are not hitting their metrics. So, the RVP sends out an email to his management team telling them that they are not hitting their metrics. Upon receiving these emails, the managers send out an email of their own to their employees that they have not hit their metrics. All this does is make employees fear for their jobs.
This is the brilliant strategy used by most of Corporate America right now in how they run their companies. Is it just me or is this an idiotic way of management?
People are people, not metrics acheiving machines. This unfortunate style of management and I hate to even call it management, is a totally ridiculous way of running a major corporation. Corporate America has been runnning their businesses in this manner for the better part of a decade now. Guess what fellows? It doesn't work.
A much better way of managing people is to first have respect for them. You would do far better as a company if you respect your people and quit threatening to fire them everyday because of some email management received from their RVP. I think what you are now finding out the hard way is that you are having a hard time keeping employees. There is a lot of turnover when you run your company on metrics. Why? Because people do not hit metrics every month, quarter or year. They get fed up with the metrics and quit, or say "screw it" and wait to be fired. You idiots in management actually believe that after treating your employees this way, that somehow you can coerce them into acheiving their metrics. You have got to be kidding me!
Corporate America and their management is like a hamster on the wheel. No matter how fast the hampster runs in the wheel, he never goes anywhere. Corporate America cannot improve their businesses based on this style of management.
Another thing that Corporate America mistakenly continues to do is to bring in sales consultants. After quarter after quarter of not hitting their metrics, the Executives come to a miraculous conclusion that their employees are not hitting their metrics. So, their solution is to bring in an outside sales consultant. The problem to them is obvious. Their employees need sales training. If they knew how to sell properly, then the metrics would be better, or so they think. These Executives are just plain stupid. They have no management skills. They are the ones that need to be fired!
I just recently saw an ad from a firm in the financial services industry. They are bringing in a sales consultant to help their employees boost their metrics. Let me save you some money. No sales consultant in America can boost the sales of your employees. I have seen them all. They all are abject failures. I do not care what they say or what you may believe.
You have to treat your employees with respect. Encourage them. Do not threaten them. You cannot have 12 people on a team and expect all twelve of them to reach the same metrics! That would be like having a baseball team where everyone on the team is required to hit .300 and hammer 30 home runs a year. It doesn't happen on the baseball field and it doesn't happen in Corporate America. Baseball managers know their personnel and try to get the most out of their players based on their own ability, not the ability of their best player. If they told all their players that they had to hit .300 and belt 30 home runs each year or they will be fired, then how good a team do you really believe this would be? It would be awful, because the players would not be able to acheive such a metric. This is exactly what Corporate America is doing. They expect every employee to acheive a metric based on the best player on the team. It is not going to happen and they are totally missing the point.
Think of how successful Corporate America could be if they worked towards the goal of getting the best out of their employees on an individual basis. What if they knew each person's ability and worked with them instead of against them to help them attain their best? This is the foundation for success in Corporate America. Get your head out of the metrics and out of those worthless sales consultant books.
If you want to hire someone to evaluate your operations, then hire me. I will free you from the metrics nightmare way of management.
Monday, September 27, 2010
My eBook
I was in a Barnes & Noble the other day and a young fellow showed me The Nook eBook Reader. I had him pull up my book, Keep Your Assets Take My Advice, It is Easier to Climb Out of a Shallow Hole. There it was! Right before my eyes! Of course you know this also means that I am on the Amazon Kindle and the Apple iPad. This is absolutely the most economical way to purchase my book. It is less than $5.00 as an eBook. Now you have no excuse for not buying it.
Tuesday, August 31, 2010
Upcoming Changes to Registered Investment Adviser Disclosures
The SEC and the States have come out with their joint effort on the Final Rule for Registered Investment Advisers known as IA-3060. This final rule has a couple of clauses in it that will dictate more disclosures for both Registered Investment Adviser firms and their Investment Adviser Representatives.
The firms will now have to explain the risks associated with what they primarily invest in for their clients. Form ADV II Part 2A (Brochure), Item 8.C. of the rule reads says "If you recommend primarily a particular type of security, explain the material risks involved. If the type of security involves significant or unusual risks, discuss these risks in detail."
In my case, I primarily recommend Exchange Traded Funds or ETF's. My interpretation of this clause is that I will need to provide a summary of the significant types of risks in detail. To me, this means a summary of items like Stock Market Risk, Country/Regional Risk, Emerging Markets Risk, Currency Risk, Index Sampling Risk, Interest Rate Risk, Income Risk, Credit Risk, Sovereign Debt Risk and Stock Exchange or OTC (Over-the-Counter) Risk. It also means that ETF's are not guaranteed or insured. This new disclosure requirement is good in that it makes people understand more about the risks of investing in general.
Another interesting item in the required disclosure for the actual person giving the investment advice. In the past, you did not have to disclose your disciplinary history unless your were an officer of a Registered Investment Adviser firm. Now, as a result of this new SEC rule, all disciplinary history will not have to be disclosed in writing in the Brochure Supplement. This is surely going to "separate the wheat from the shaft" so to speak. My experience is that there are numerous financial advisers and insurance agents who have had some type of complaint on their record. I personally will be curious to see how they explain themselves and their records going forward.
Also, there is a clause that says if you say that you have a financial designation to your clients, then you must disclose the requirements for obtaining that designation. This means the minimum qualifications to obtain the designation. Although this will also add more pages to the required disclosure Form ADV Part 2B (Brochure Supplement) for Investment Adviser Representatives, it will give the client the ability to look at the designation and see if it is "something of value" as stated in the SEC rule. The end result is that the Investment Adviser Representatives with financial designations will have more pages of disclosures than those who do not hold a financial designation.
All in all, these new items will be beneficial for clients who are looking at Registered Investment Adviser firms (Brochure) and their Investment Adviser Representatives (Brochure Supplement), although you may have twenty plus pages to read.
The firms will now have to explain the risks associated with what they primarily invest in for their clients. Form ADV II Part 2A (Brochure), Item 8.C. of the rule reads says "If you recommend primarily a particular type of security, explain the material risks involved. If the type of security involves significant or unusual risks, discuss these risks in detail."
In my case, I primarily recommend Exchange Traded Funds or ETF's. My interpretation of this clause is that I will need to provide a summary of the significant types of risks in detail. To me, this means a summary of items like Stock Market Risk, Country/Regional Risk, Emerging Markets Risk, Currency Risk, Index Sampling Risk, Interest Rate Risk, Income Risk, Credit Risk, Sovereign Debt Risk and Stock Exchange or OTC (Over-the-Counter) Risk. It also means that ETF's are not guaranteed or insured. This new disclosure requirement is good in that it makes people understand more about the risks of investing in general.
Another interesting item in the required disclosure for the actual person giving the investment advice. In the past, you did not have to disclose your disciplinary history unless your were an officer of a Registered Investment Adviser firm. Now, as a result of this new SEC rule, all disciplinary history will not have to be disclosed in writing in the Brochure Supplement. This is surely going to "separate the wheat from the shaft" so to speak. My experience is that there are numerous financial advisers and insurance agents who have had some type of complaint on their record. I personally will be curious to see how they explain themselves and their records going forward.
Also, there is a clause that says if you say that you have a financial designation to your clients, then you must disclose the requirements for obtaining that designation. This means the minimum qualifications to obtain the designation. Although this will also add more pages to the required disclosure Form ADV Part 2B (Brochure Supplement) for Investment Adviser Representatives, it will give the client the ability to look at the designation and see if it is "something of value" as stated in the SEC rule. The end result is that the Investment Adviser Representatives with financial designations will have more pages of disclosures than those who do not hold a financial designation.
All in all, these new items will be beneficial for clients who are looking at Registered Investment Adviser firms (Brochure) and their Investment Adviser Representatives (Brochure Supplement), although you may have twenty plus pages to read.
Friday, August 20, 2010
Why Do Bankers Rule the Mortgage Market?
There has been a lot of talk lately about what to do with Fannie Mae and Freddie Mac. Should the government get rid of them altogether? The banks say no. Have you ever wondered why they say no?
Currently, FHA guarantees loans including the very popular 30 year mortgage with as little as 3.5% down. When a bank loans you the money for a house, they turn around and package your loan with other similar loans and sell them on the secondary market. At this point, they become mortgage backed securities. In recessionary times, the government steps in and buys these mortgage backed securities, because the banks do not want to hold onto the responsibility of the loan in case of default. This is a situation where a bank has a financial incentive to sell the loan, but not to be responsible in case of loan default. In other words, they have no risk. If they have no risk, because of the government stepping in, then they have no incentive to do proper loan underwriting. Therefore, today, the banks are jumping up and down saying that they are not going to take the risk on 30 year mortgages. The banks are putting political pressure on Congress to continue to snap up these 30 years mortgages.
Now, let us examine this in a little more detail. What if the government quit stepping in on the bank's behalf? Then, the banks would probably not offer 30 year mortgages. If you could no longer get a 30 year mortgage, then what kind of mortgage could you get? Mortgage interest rates would temporarily go up, but if you look at things today, this will not really be a problem. If people are not willing to buy a house now with rates under 5%, then why would a bank think that people are going to rush out and borrow money at higher rates? They will not, believe me. However, once things settle down and the banks realize that they actually need the consumer to make money, then they will realize that they have to offer residential loans, like it or not.
Even if the banks do what they threaten to do and abandon the mortgage market altogether, I still believe that American Capitalism would take over and somebody would step up and offer 30 year mortgages. The banks are frankly too stupid to stand idly by and watch some other firm make the money on mortgages. Look what happened with credit default swaps. Once one bank starting making money with these instruments, then all the other banks followed suit. What did we poor consumers end up with? A bailout.
Personally, I do not think that banks should be allowed to underwrite a loan and pass off the risk. This is totally ridiculous. If they approve the loan, then they should keep the risk. Period.
Conversely, if banks take the risk, then they will underwrite the loans a little tougher. Yes, this means less people in housing and higher down payments, but this is the way it should be. There is no right to a house. I do not know about your neighborhood, but not too far from my house, there are some really nice apartments that are way better than anything that I ever lived in when I was younger. They have garages, exercise rooms, pools, whirlpools, saunas and even restaurants in some. Apartments are not so bad anymore.
This is a serious conflict of interest here when the bank can lend the money, but not be responsible for the loan. When did we agree to this? In reality, when we allowed the same people to stay in Congress for years and years. These terrible people have caused the problems that we are having today. Fat chance that these same people will do anything to fix it. They do not work for the American people. They work for the banks. It is patently obvious by now.
It may take an election or two, but we need to vote them out of office. It is really the only hope we have as Americans to get back control of our country.
Currently, FHA guarantees loans including the very popular 30 year mortgage with as little as 3.5% down. When a bank loans you the money for a house, they turn around and package your loan with other similar loans and sell them on the secondary market. At this point, they become mortgage backed securities. In recessionary times, the government steps in and buys these mortgage backed securities, because the banks do not want to hold onto the responsibility of the loan in case of default. This is a situation where a bank has a financial incentive to sell the loan, but not to be responsible in case of loan default. In other words, they have no risk. If they have no risk, because of the government stepping in, then they have no incentive to do proper loan underwriting. Therefore, today, the banks are jumping up and down saying that they are not going to take the risk on 30 year mortgages. The banks are putting political pressure on Congress to continue to snap up these 30 years mortgages.
Now, let us examine this in a little more detail. What if the government quit stepping in on the bank's behalf? Then, the banks would probably not offer 30 year mortgages. If you could no longer get a 30 year mortgage, then what kind of mortgage could you get? Mortgage interest rates would temporarily go up, but if you look at things today, this will not really be a problem. If people are not willing to buy a house now with rates under 5%, then why would a bank think that people are going to rush out and borrow money at higher rates? They will not, believe me. However, once things settle down and the banks realize that they actually need the consumer to make money, then they will realize that they have to offer residential loans, like it or not.
Even if the banks do what they threaten to do and abandon the mortgage market altogether, I still believe that American Capitalism would take over and somebody would step up and offer 30 year mortgages. The banks are frankly too stupid to stand idly by and watch some other firm make the money on mortgages. Look what happened with credit default swaps. Once one bank starting making money with these instruments, then all the other banks followed suit. What did we poor consumers end up with? A bailout.
Personally, I do not think that banks should be allowed to underwrite a loan and pass off the risk. This is totally ridiculous. If they approve the loan, then they should keep the risk. Period.
Conversely, if banks take the risk, then they will underwrite the loans a little tougher. Yes, this means less people in housing and higher down payments, but this is the way it should be. There is no right to a house. I do not know about your neighborhood, but not too far from my house, there are some really nice apartments that are way better than anything that I ever lived in when I was younger. They have garages, exercise rooms, pools, whirlpools, saunas and even restaurants in some. Apartments are not so bad anymore.
This is a serious conflict of interest here when the bank can lend the money, but not be responsible for the loan. When did we agree to this? In reality, when we allowed the same people to stay in Congress for years and years. These terrible people have caused the problems that we are having today. Fat chance that these same people will do anything to fix it. They do not work for the American people. They work for the banks. It is patently obvious by now.
It may take an election or two, but we need to vote them out of office. It is really the only hope we have as Americans to get back control of our country.
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