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Better Books

I've been busy reading books this year, in part because people I respect in the profession have been writing them-and asking me what I thought about the manuscripts. I'm pretty selective about who I write blurbs for, but in several instances, I requested the opportunity to say what I thought about the book somewhere on the packaging.

Here's the best of the books that were published in our field this year-and a few books that I think are worth recommending from outside our field.

I'm going to start with “The Devil's Financial Dictionary,” by Jason Zweig, which I did NOT write a blurb for, but which is hilarious, true and perhaps the best articulation of the financial planner's worldview that I've ever seen. Basically it's a take-off on Abrose Bierce's brilliantly comical The Devil's Dictionary, which was published in 1906 at a time when it seemed like the world was going crazy.

Zweig's financial update of Bierce's book consists of words and definitions. Such as:

Bonus. On Wall Street, where success often goes as much to the lucky as to the skillful, bonuses are meant to motivate good performance but often backfire by inflaming the pursuit of risks that sensible people would otherwise avoid.

Bull. A person who believes that an asset will go up in price, a belief often based exclusively on the fact that the person happens to own it. A bull in full stomp is almost incapable of absorbing any evidence suggesting that the asset might go down instead.

Dead-Cat Bounce. A colorful piece of slang that makes market pundits sound as if they know what they are talking about when they don't.

Disclosure. A statement that, by law, absolves a company of all responsibility-including any responsibility to present the statement in language that isn't so stupefyingly obscure that nobody can understand it. Intended to protect investors, disclosure protects the firms that issue it.

Go-Anywhere Fund. A mutual fund specializing in stocks or a wider range of assets that can lose money in every imaginable way.

Headline. Whatever a trader will instantly seize upon in a government or company announcement as meaningful, even though it probably isn't in the short term and certainly isn't in the long term.

Long-Term. On Wall Street, a phrase used to describe a period that begins approximately thirty seconds from now and ends, at most, a few weeks from now.

Patience. A quality apparent among such lower life forms as snails and tortoises but rarely among humans who invest in financial assets.

Regulator. A bureaucrat who attempts to stop rampaging elephants by brandishing feather-dusters at them. Also: a future employee of a bank, hedge fund, brokerage, investment banking firm or financial lobbying organization. See: Revolving Door.

I wish I'd written that. The book manages to be hilarious and also far more true than the actual dictionary.

Let's move to a book where I DID write a blurb: Success and Succession, by Eric Hehman, Jay Hummel and Tim Kochis. Kochis is one of the founders of Aspiriant, one of the largest advisory firms in the country, who is currently running a consulting firm called Kochis Global. Hehman is the successor CEO at Austin Asset Management in Austin, TX, and Hummel is a former successor at one of the most sophisticated planning firms in the country, now serving as a practice management consultant at Envestnet.

The book they wrote actually came out of a panel discussion at our 2014 Insider's Forum conference, where successors shared their experiences. The audience was surprised at the view from the successor's perspective. We learned that they often felt as if they were being asked to overpay for minority shares of their firms; they were not consulted on the founder's retirement plans or how to manage and rearrange the firm they would inherit; and many of their suggestions were treated as if they were an insult to how the founder had been running things.

In the book, rather than exclusively recount the plight of the successor, the authors take the reader through an orderly process for collaborative communication and transition, helping both sides of the arrangement understand the other side, hopefully leading to a mutual vision for the firm that the successor gradually begins to control. The sticking points are discussed in detail: how much of the profits should be reinvested in the firm rather than the departing owner's retirement plan? What role should the founder play in the firm once ownership has been transferred? Who manages the firm, and does that depend on ownership or other factors? How does the successor prepare for ownership and operational responsibility? What psychological barriers will both sides encounter on the journey to full succession?

There's a lot of wisdom in the book, and the solutions and successions come from personal experience at handling all of these issues. If you're in a succession phase at your firm (and who isn't?), then this is probably the most important book to have all parties read-not once but twice.

While you're at it, you should add The Ensemble Practice by Philip Palaveev to your list of required reading-assuming you're not planning to stay solo forever. Palaveev runs a consulting firm called The Ensemble Practice, which provides hands-on training for some of the most ambitious advisory firms in the country. But you don't have to be trying to build an empire to benefit from the book; you just have to be running a successful firm that aspires to manage the transition from solo to multi-partner without blowing yourself up in the process.

Most successions create a very different kind of firm than the founding owner envisioned, with multiple partners collaborating on the work and decision-making. For many of us, this is uncharted territory. What will the structure look like to give us the best operational (and creative) leverage possible? When do you hire staff, and what kind of staff? How do you arrive at a consensus vision for the firm, and when do you know when it isn't working? How do you know when to add a partner? How do you know when somebody is partner material? How should the buy-in process work?

The book is basically a blueprint for a multi-partner firm, where you can fill in your own details and recognize the pitfalls that occur at various stages of the evolution that you may be going through right now without realizing it.

A third book I enjoyed reading this year, and also asked to blurb, is Greg Friedman's Advisory Leadership. Friedman is somewhat unique; he runs Private Ocean, an advisory firm in San Rafael, CA, and is also the founder of Junxure (and Junxure Cloud), a leading CRM software company that is at the forefront of automated practice management innovations.

The book is essentially about creating a people-first culture” in your office; the premise of the book is that you, as your firm's leader, have to be somewhat remarkable in order to create a culture where everybody pulls together and is passionate about what they do. You have to exhibit patience, honesty and integrity, compassion, respect, consistency and persistence, encouragement, and courage-and each of those qualities gets its own chapter. The idea is that most of us fall short in one or more of these areas, but fortunately for us, they are not innate characteristics that you have to be born with, which means we can improve if we consciously try to become remarkable in seven dimensions.

Advisory Leadership offers advice on how to hire into your firm's unique culture (with key interview questions); how to walk the walk of your firm's mission statement (including open and honest communication, but also collegiality with a sense of humor); how to truly care for your staff (Friedman calls them his most valuable clients); and the book also provides some contrasts between a 'me' culture and a heart culture. There's a chapter on promoting personal growth in the staff, and another on how, procedurally, to reward firm-wide collaboration and a team mentality. Like the other books I've recommended here, it's a relatively short read, information dense without a lot of the filler you see in magazine articles these days. All three books get right to the point.

I'll recommend one more book, completely off the beaten path: Conversations With My Daughter, which I wrote to create the funniest book ever written. You'll only find it funny, however, if you've ever been a parent or been parented yourself.

The advisors who think and read have an unfair advantage over the other 85% of the profession. You have access to a lot of great information that helps you avoid mistakes, blind alleys and lost expenditures, and offers faster ways to get where you want to go. The first three books represent valuable tools to give you quick access to that unfair advantage.