From Starvation to Prosperity

The title of this chapter refers to practice-building: going from a start-up with few clients and little revenue to a successful consulting firm with more business than it can handle. He mentions that only the successful few are lauded in the industry - the "other 90%" of practitioners are struggling to build their businesses.

He looks at "success" as wealth, but also as "service" - the financial planners who have not made millions, but have helped hundreds, and count that as their "success" in their profession, or who have achieved the goal they set for their own clients: a level of income that sustains a lifestyle that is satisfactory, if not stellar, generated from work that they truly enjoy.

He downplays income, and looks to the criteria that define professional excellence as a measure of success: the example of how a surgeon is lauded for his skill, technique, and inventiveness in his work, not for the amount of money he makes by doing it.

He also stresses that wealth comes from serving many customers, and there is a finite limit to the number that a single planner can feasibly serve and still provide quality service: the example of a planner who became so successful by providing good service that he was spread too thin to provide quality service.

Some degree of growth is possible by hiring support staff and delegating tasks to them rather than handling everything personally. There are a lot of clerical tasks that eat time, but require little or not expertise.

Reiterating earlier information, he stresses the need to move from a fee-based service to get out of the sales/commissions model and into the consulting/fees model for long-term viability.

Another perspective: often times, the advisor gave the planning away for free, in hopes that the customer would implement the plan (which many did not) or buy through them (which was not guaranteed), thereby enabling them to earn commissions. The for-fee model ensures the planner is paid for their advice (which is also more likely, as a result, to be regarded as "valuable" advice rather than a sales pitch).

Anecdotal evidence supports that clients are largely open to this, especially those who are new customers (not accustomed to getting free advice on the hope of a sale). The cases cited suggests simply walking away from clients who don't value your expertise, whether they do not wish to pay or want to haggle over the price of service, is the better course.

On setting fees, it is noted that "price connotes value" - working at a discount draws a different sort of customer, one who does not value the advice and is unlikely to benefit from it.

He also stresses the value of long-term relationships with clients - a 2% difference over a 20 year relationship can make a huge impact in the end.

There's quite a lot about delegation - designing a business that allows the consultant to focus on the core tasks and delegating ancillary tasks to others.


The author opines that the financial press, in an effort to make the markets seem exciting and compelling, is encouraging bad investment practices in the general public. His general advice is not to pay any attention - maybe subscribe to one monthly periodical to keep abreast of trends, but otherwise to ignore the market and those who wish to speculate upon its performance.