Billionaires Black Book by Robert Bailey

The Billionaires
Little Black Book
The Ultimate Secret Behind Sustainable Wealth

By
Robert M. Bailey
The Billionaires Little Black Book
THE BILLIONAIRES LITTLE BLACK BOOK

Copyright 2010 All rights reserved Robert Bailey
2
The Billionaire’s Little Black Book

Table of Contents – BOOK 1
Preface 5
Forward 6
Introduction 10
Chapter One 20
Chapter Two 24
Chapter Three 32
Chapter Four 35
Chapter Five 40
Chapter Six 47
Chapter Seven 59
Chapter Eight 62
Chapter Nine 65
Chapter Ten 67
Chapter Eleven 77
Chapter Twelve 79
Chapter Thirteen 80
Chapter Fourteen 89
Chapter Fifteen 101
Chapter Sixteen 103
Chapter Seventeen 110
Chapter Eighteen 117
Chapter Nineteen 118
Postscript 122
BOOK 2
The Billionaire’s Little Black Book 133
Part I: Core Objectives 134
Part II: The 7 Methods for Hiring 139

Successful Professionals
How to Create A Billionaire Team 148
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The Mighty Twelve 155
The Secret of FOCUS 166
Part III: Billionaire Teams 179
High Achievement Six-Pack 180
Tailored-To-Professionals Questions
Financial Advisors 181
Why People Don’t Ask Good Questions 185
Lawyers 187
Psychologists 191
Physicians 194
Accountants 198
Physical Therapists 202
Realtors, Developers and Mortgage Brokers 206
Specialized Professional Help 210
Illustrations and Support 214

#1 Scary Story
#2 The Color of Money
#3 Medical Missteps
#4 Tax Planning
#5 Too Many Lawyers?
Appendix 242
Economics or not Economics:

Discover and Leverage Hidden Value
4
Preface
Which is more important… Knowing the right people? Or,

getting consistent and reliable results?
It has been one of my favorite experiences to work with

great individuals who do both. These are intelligent and
hard working people, who also tend to be fun to work
with. The research behind this book suggests that these
successful people share an unusual characteristic, too.
They are both street smart and intellectually curious.
These last two characteristics can be difficult to locate

because they involve our own ability to “read”
individuals. Like any other skill, we get better at reading
people the more we do it. While there are strategies, some
might say “tricks,” to reading people most of us are just
interested in getting results. Such results might include
greater safety, more return on our investments,
better health… anything.
Getting results reliably and sustainably is what this book

is all about. Why the “billionaires” little black book?
The billionaires of our time are generally recognized to

have figured out the rules of the game sufficiently to
write their own.
Knowing several of the Billionaires’ trusted advisors, that

is precisely what I want to share with you now. I hope
you enjoy the ride as much as I am.
Robert Bailey
5
Forward
It is ironic that many investors are intimidated by finance.

Whether we like it or not, “finance” influences our lives
and our investments every day. This influence cuts across
the most common professional disciplines. It includes law,
accounting, investment, real estate purchase and sales,
medicine or personal therapy, essentially, any professional
service where clients offer their trust for intelligent
solutions. Such trust is laden with legal and process
conflicts. Where the issues are complex, it is likely that
there may be occasional unwanted and unintended
consequences.
Still, I contend, the “new” complexities of regulation,

taxation and a global economy present extraordinary (and
mutually-beneficial) opportunities for the professional
advisor and client relationship.
Many times the professional’s first job is to build a bridge

for their clients to their discipline. Once that is achieved,
the professional can address ways to reach the client’s
objectives.
It would be logical to think that because individual

professionals are also someone else’s client, they would be
sensitive to the discomfort around new jargon, new
concepts, and new ideas about money and investments.
Some professionals, regrettably the exception to the rule,
become experts at communicating and engaging, maybe
even infecting, their clients with their fascination in the
complexities of affluence and wealth. I am happy to say I
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am one of these clients. Our key advisor is extraordinary.
The client/advisor relationship would seem to be a fine

place to apply the Golden rule. Some professionals do
exactly that. There is more to being in the other person’s
shoes than might meet the eye, however. Every profession
has its own standards and customs. Each firm has its
processes. Each professional has his or her style of doing
business, and often a specific discipline.
There are frailties in being a professional. Training, testing,

and coaching concentrate on being “professional.” By itself
this encourages a gap between professionals and anyone
ignorant of or lacking in this information.
Our interest is how to weigh the human and financial aspects

and our professional advice. Information and the opinions of
our trusted advisors deserve fair consideration, but perhaps
not equal weight in our final decisions. The use of the team of
advisors eliminates several negative forces.
Professionals may unwittingly use unfamiliar terms with

clients. They may identify “strategies” which are merely the
current promotion of their firm’s products.
There are additional pressures on the client. Distracted by

the demands of their own lives, clients have a tendency to
depend to their advisor to the point of absolute trust. After
all, isn’t our financial class of citizens well trained? Don’t
they know more than the typical client?
By being open to collecting information through teamwork

and “enforcing” a collaborative process, the client and the
advisor relationship becomes a powerful tool for mutual
success.
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For the advisor, working closely with each client increases

the possibility that each client’s networks will open up to
share leads, as we will see.
The Billionaire’s Little Black Book goes far beyond how to

improve the client/advisor relationship. It shows advisors
how to work with strong characters, with talent, with big
egos to create win-win-win scenarios where the advisor, the
client, and firm all benefit by doing right by the client.
There are three touchstones, then, in this work.
• The first touchstone is the examination of the

client’s beliefs about acquiring and keeping money.
Unfortunately, many people are convinced that they
are incapable of making money. Some of these are
also fearful that if they do make money, they may
lose it all and end up with nothing. These fears only
create more doubt and resistance. Most people, to
all parties benefit, can overcome it. This book
discusses how well balanced management helps
overcome money doubts and turns it into actionable
plans.
• The second touchtone is how to “reverse engineer”

long-term success. The first objective--to get and
keep money--is easy to construct when the client
and advisory teamwork backward together from a
focused and specific goal beyond numbers. The
results are often stunning.
• The third touchtone is the pursuit of relationships

based on mutual respect. This begins with a
character assessment—we might call this the “gut”
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test for feelings of trust. There are several strategies

for building good relationships that support
investment ideas and earning capabilities. There is
an interesting side effect when professionals work
as a team. The individual self-reliance of each
member of the team increases by doing what is best
for the team.
A trusted advisor will demonstrate unusually high levels of

self-reliance as decisions get made and corrected to results.
The advisory team provides the input and balance, working
toward a common objective and contributing as if they are
an Olympic coaching staff. The team can leverage
confusion and confidence equally and resolve complex
business affairs in short terms. The advisor’s self-reliance
comes from working skillfully a team of complementary
advisors. Being part of professional teams is sound practice
and it makes good business. Moreover, it provides a high
financial and psychic return thorough the win-win-win
solutions that all parties desire and need to grow.
I think you will become very excited about what you are
about to learn. Equally important, I believe this process will
serve your income and feelings of security. So, let’s get
going.
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INTRODUCTION
We have all witnessed the vast and sudden shifting of
global capital.
This extraordinarily large and fast financial environment is

fuelled by many factors: internet technology, the opening of
national borders, and by changes in political structure
and physical security.
India, China, Russia, Turkey, Vietnam and numerous other

countries have implemented educational and trade policies
that allow them to both participate in and finance global
economic growth. Even with populations unschooled in
capitalism, they quickly assimilated themselves into global
economics and key strategic business and social issues.
The global economy changes the American investment

landscape, as well. Discussions about what makes a global
investment versus an international one persist. What makes
a domestic investment depends on where you live.
We might logically believe that every American would be

curious about whether our national systems for managing
financial and personal affairs are keeping up—much less
competitive within the new rules of global exchange.
Sadly, some people spend more time thinking about this
than about their own financial affairs. Or, maybe they feel
they mirror each other. I cannot say with any certainty.
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Common sense and common wisdom tells us that our

personal investments need to be correlated to what is
happening in the world, so we have investment stability
and growth. But, common sense also suggests that these
investments ought to, in some way, reflect our values and
objectives, too.
There are two immediate challenges to a common sense

investing approach. These challenges emanate from the
parties typically involved—from the advisor and from the
client.
Let’s consider the environment of a few professional

advisor specialties.
In the United States the professional class of advisors has

exploded. Harvard Law school alone has 1500 students and
14 law reviews. In 1995, the American Bar Foundation
counted 896,000 lawyers in the United States. The ABA
number had risen to 1,128,729 by the end of 2006, and grew
to 1,143,358 by the end of 2007. About 2% growth each year,
and competitive.
Let’s try another field.
The 2006 Bureau of Labor Statistics report shows the

following employment figures in financial advisory.
Financial analysts and personal financial advisors - 397,000
(Projections for 2016 are 544,000) Financial analysts -
221,000 (Projections for 2016 are 295,000) Personal financial
advisors - 176,000 (Projections for 2016 are 248,000). This is
an average growth of 4% each year, equal to the projected
growth in the healthcare professions.
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Here is an outline of the relevant changes:
-Demographic shifts:
• More women in leadership roles.
• Retirees are back in the workforce.
• Kids returning home
• Whole industries in flux
-Global economy
• Eurodollar is basis for more transactions
• London growing as a financial capital
• Asia booming as it embraces capitalism
• Low performing countries drawn to
"alternative" strategies (terror, drugs,
violence)
-Corporate entrepreneurs (United States)

• Sales of financial service companies are
increasing
• Divisions of financial services and banks
being closed or spun off
• Turnover of financial professionals is high
All of these areas are fluid. And yet, advisors are expected
to be responsive in each area, in addition to the core
demands of their profession governing laws and
regulations, the culture and expectations to the firm, and
their own professional objectives. Now overlay the clients’
needs and desires.
Over half the population is looking for investment talent

with “lifetime planning” skills. By our research, corporate
agents are less likely to have broad based knowledge and
skills, partly because of the structure of larger corporate
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firms. More entrepreneurial-minded firms and individual

practitioners often have broader personal range.
Some larger companies are claiming that they have the

team inside the firm. Usually they include the attorney, the
accountant and the investment advisor. I have yet to see
any firm that can demonstrate better results.
This is not to say corporate advisors can never provide

good advice; we just need to be careful. Ask questions (like
those provided in this book) and test all advisors for their
biases.
Professions segment into specialties like biological species.

With that, American society continues its increasingly
litigious course. Add to that the political tendency to alter
or modify the rules that govern the professions (to protect
the public, it is said) and you have an unpredictable
business environment.
Keeping up on information is a challenge made easier with

a team. Some reporters keep pace, are trained in business,
and are interested in solid business reporting. And
increasingly business media is being made available to the
public. Want a really sharp edge? Hire a professional who
is a reliable contributor to business media for your team.
Add to this to the difficulty in locating credible and reliable

advisers, the rapidity of change in tax laws, and changes in
regulations surrounding legal structures and business
management issues, and you have a complex series of
decisions to be tracked and managed.
This potential for chaos helps us understand WHY so

many clients permit a lack of control over their financial
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future. It opens to door for the Billionaire’s Little Black

Book to help. This is one of the best times to engage global
challenges and profit from them. But, this will only be
achieved by assisting those who have capital, will earn or
inherit it, or who are habitual amassers of entrepreneurial
capital globally in new ways and with new processes.
The Billionaires Little Black Book highlights three inclusive

paths of action, which I call the 3 Core Tasks of wealth
advisory. The Three Core Tasks are service, fiduciary and
scenario planning. Each adds value to client and advisor
information and competence, and so, to profitability.
My objective in this program is to help craft the best of all

worlds for you, the reader. Financial advisors and planners
have wonderful tools at their fingertips. They receive
countless hours of training in products and services for the
institution. So much so, in some cases, that it can feel
overwhelming to everyone involved.
The great mass of financial advisors and planners,

however, ignore or deemphasize, the needs and desires of
the customers. The idea that “one size fits all” leverages
hierarchy and command and control systems. It will not
work in the era of social media. Just think about this.
How can one advisor adequately, much less expertly,

manage each customer’s needs and desires? With all the
complexity, it is unrealistic to expect a single advisor to
understand and manage all of any client’s problems
independently. Isn’t it?
The trusted advisory team system blends information and

points of view from various disciplines and applies it to
individual problems and challenges. The benefits of this
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broader base of knowledge help the client and her advisors

manage decisions—in a systemic fashion that takes little
more time than how decisions are made now.
Some of the ideas in the trusted advisory system require

being better informed and more conscious and open to new
views and solutions. As example, I will occasionally have
fun in conversation, referring to prospects as customers,
rather than clients. Some people (advisors and clients)
noticeably fidget and become visibly upset by my
reference. It usually becomes an instructive discussion.
Maybe the idea of having a “customer” if you are a
professional challenges a professional self-image.
More important than this social exercise, however, is being

aware of how a blind-side bias can impact the ability to
produce. I can back up the notion that people aren’t
thinking thoroughly when it comes to money. Our research
shows numerous gaps between advisors and clients. Each
conceptualizes and values investments very differently. If
this gap is not addressed, is the investment advice “good?”
Any linguist, or psychologist, or sales manager will tell

you: Our words shape and demonstrate our critical and our
creative thinking, or lack of it.
Let’s not play word and concept games. Some large

advisory firms are bundling services. They provide an
accountant, a planner, and a broker—some provide a
lawyer. It is a way to sell the firm. But, why not call it what
it is? It’s a sales tool. Truly matching a client’s need to a
solution, is an evolutionary process, not an opportunity to
recycle old skills.
Financial advisors, attorneys, accountants, doctors, and
15
therapists often advertise and promote their services. They

should have that right. Regulations and governing bodies
separate the professional disciplines, ostensibly to protect
the public. But do regulations, created by politicians (many
with sharply limited life experience in business or
experience in coping with regulations) truly protect the
client or do they merely remove opportunities and alter the
nature of the risk?
After all, moral hazard and unintended consequences are

common. As we have said about the global economy, the
speed of change has quickened. No one said it was all
necessarily better.
The Billionaires Little Black Book illustrates a functional,

personalized, interdisciplinary system for managing one’s
important decisions. It invites various non-financial
expertise to the table for the creation and management of a
genuinely comprehensive long-term (or lifetime) plan. For
the advisor, the trusted advisory approach is an open
learning system and an income generator. For clients,
running the trusted advisory team opens a new level of
financial education, stability, and, managed well, vastly
increased income and asset protection.
The Billionaires Little Black Book was born deep inside

particular situations I witnessed in institutional investment,
where I saw reliability and information clash and
individual professionals obscure key details. There is no
place for ego in professionally managed long term
planning.
Originally "The Billionaires Little Black Book" was intended

for wealth advisors. I wanted to offer them ways to work
more cohesively with a large range of professionals to build
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strong networks for their clients. We all realized that this

would also extend their referral networks, instantly. Our
research showed that this market was only 1 to 2% of the
financial advisors. This roughly represents advisors who
work for their clients, first and foremost. This was a
distressingly small number.
A few years ago I was at a cocktail party in Palm Beach and

I mentioned some of the “Billionaire Little Black Book”
elements to a very engaging woman, possibly in her early
70s. She liked my ideas. In fact she noted a possibility I
hadn’t considered. With two fingers resting gently on her
chin she told me, “If I did that, oh my, my adviser couldn’t
steal from me.”
Thanks in part to the Palm Beach lady and her curiosity, I

realized that my message was welcome in a much larger
market, the clients. Any affluent client is seeking results
and control. When I expanded the advisor premise, it was
quickly evident that the trusted advisory team strategies
work even better when they are client driven.
In addition to the three tasks mentioned earlier (service,

fiduciary, and scenario planning) there are four plans that
put the tasks to work. These are: the business plan, the
succession plan, the estate plan and the wealth plan.
It is the wealth plan that attracts most peoples’ interest. It’s

not only a method of generating true wealth, a wealth plan
also bridges multiple generations. It addresses the origins,
the history, the operations and philosophy of the assets.
The wealth plan goes beyond the discussion of value,
though, to address the family’s values, what is important to
them as a family. And this is more important than many
believe. Values are the non-financial aspect of the assets
17
that make the difference between sustainable success and

family failure.
The trusted advisory team strategies favor advisors as well.

Most qualified new advisory business comes from referrals.
Imagine how efficient it is working together with other
advisers who are acting as a self-monitoring referral system
for each other. It is a sort of professional honor system that
favors client security and productive management of
business affairs equally.
At its core The Billionaires Little Black Book raises questions.
Productive and sensible choices must be and can be made

for you and by you. And it can be done very thoughtfully
in ways that you control, enjoy and fully understand.
Let’s consider each of the steps now.
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You are about the learn the

Secrets of True-Team Strategy TM
Which Explains…..
WHY YOU WANT SUCCESSFUL,

ROUNDED, Collaborative
PROFESSIONALS ON YOUR
TEAM. Think of this as--
The right people,

doing the right
thing, in the
right way, at the
right time, for
the right reason.
This True-Team Strategy is the

Mother of All Management Skills;
it supports and establishes your
purpose.
19
____
CHAPTER
1
_____
How The 7 Strategy System Preserves Your

Capital and Capitalizes on Future
Opportunities for Wealth
W ho do you trust?
In business there are many people and institutions we

expect to perform on our behalf and in our best interest.
The more we achieve, the more important and relevant the
axiom “inspect what you expect” becomes.
Without regular contact with our trusted advisors, we rely

upon our own decisions, which may or may not necessarily
lead to the most beneficial outcome for ourselves. What I
hope you will learn here is how to better create value from
your money and your time. (By the way, this is the first
secret—so write it down. Ask yourself how you can create
value from your money and your time? Write down what
you believe is the answer; it will be interesting for you to
return to this once you have finished this book.)
As we grow financially, we must diligently watch over our
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growing assets; almost invariably these become more

complex and can be overwhelming without well-
considered advice and a comprehensive business,
investment and life planning (BIF).
Wealthy people use advisory teams to manage their

substantial portfolios and other investments. This team
may include bankers, private money managers,
professionals in groups that offer combined services such
as investment, legal, finance, accounting, travel, security,
and even shopping assistance. The very wealthy tend to
use one team for their financial needs and, in turn, these
advisory teams tend to do well themselves. These clients
tend to be very attentive and know whether or not their
managers are performing.
Not long ago I consulted a family with a large residential

real estate transaction. The subject property had been
neglected for nearly 50 years. It wasn’t that the house
looked old. It looked very nice, if dated. But the structure--
the systems, the roof, the foundation the electric, water and
heating services—were below code and, it turned out, oil
fired heating system had become dangerous. It is not
unusual for city-dwelling second homeowners to have little
interest or ability in maintaining them.
In this case, however, this property was potentially the

worst house on the best block.
One sibling wanted to sell the property and move on. He

was not interested in renovating the old family home. The
other sibling wanted to keep the house, but soon
discovered a rat’s nest of legal, architectural and municipal
hurdles completely foreign to her.
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The first step was to clarify the ownership and future rights
to the title.
The parties met at an upscale New York City law firm. At

that first meeting I did one thing. I listened.
What emerged was a picture of abysmal management,

accurate but stifling legal advice, and an accounting history
that had missed opportunities to reduce taxes and benefit
from investments for over fifty years.
The original investments were permitted to sit primarily in

one or two industries throwing off a 2% dividend on which
the family lived. Over that time, the stock increased in
value, but never (until near the very end of the matriarch’s
life) was anything done to address the tax consequences of
the 35-cent basis value of the original shares.
The attorney presented his reasons for why the house

should be sold. The gap between the advisory team and the
clients became obvious during the first meeting. The
“lawyer’s side” was unyielding and stuck to the so-called
facts, mostly the threats ahead. “Our side” consisted of the
professionals acting as collaborators, who were beginning
to understand my arguments for using the “team”
approach to reposition the property and some other assets,
profitably.
While the attorney debated the effects of the situation, we

went to work. The sinecure grounds manager who had let
the property fall into disrepair was the first to be let go.
Next came anyone involved in the property’s downward
spiral--the plumber, electrician, the oil company, the
accountant, and financial advisor were dismissed. The
attorney stayed on (one of the siblings was dedicated to
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him.)
Still, over the next three years we were able to rebuild the
1910 home and improve the grounds. The value of the
estate at $3.5 million increased to over $10 million in under
three years. The investment in property improvements
alone beat the market, which was itself enjoying new highs.
The equities markets, however, have never offered the tax
benefits of well-considered real estate project investment.
The professional fees were all deductible. Needless to say,

the family was pleased. You will understand why, better, as
you read further.
23
____
CHAPTER
2
_____
A “New Day” for How to Think

About Your Assets
The profession of providing advice has a long history. The

European kings had their councils. The crown princes of
Europe used the Rothschild family to manage their money,
and borrow for expansion, beginning in the late 18th
Century. Like their European counterparts, American
industrialists of the 19th Century became confidants of
bankers to manage their cash requirements and broker even
their most aggressive investments and business
acquisitions.
As personal fortunes grew, private bankers began to offer

the “office” that would come to take over the lifetime
financial responsibilities of the financial elite, in return for a
fee. It is known as the family office, a home for the
management of the assets of and services for those with
very high net worth.
Wealth has become a broader and global experience as

lucrative investment opportunities and choices have
24
become available to more people. But, these multifaceted

and high-speed markets have also changed the calculations
and altered the skill sets necessary for success. This fact
calls upon our advisors to be better educated in
overlapping disciplines as never before. The client-directed
team approach is a logical way to address the challenges.
Contrary to the promises of some financial advertising, a

financial life plan requires hard work and careful planning.
And the nature of that planning has changed. Planning
decisions are no longer an event, but an ongoing process.
That correctly implies a balance where clients are
responsible and team members are accountable for all
results.
The complexities of money management and the laws that

govern this field simply require thorough and careful
study. We can receive proper professional advise on our
cash, property, education, health, and other investments
25
best when we have experts in each working as a team.
Clients work best with professionals when they are clear

enough to guide the professional. The best way to guide
professionals is not to become an expert, but to demand
and expect adherence to three tasks. The three tasks for
rounded and thorough business, individual and family
economic planning are:
• Service
• Fiduciary duty
• Scenario planning
These tasks are easily applied to the four plans for

sustaining growth; the four plans offer a philosophical
orientation whose elements are readily integrated and
managed throughout one’s lifetime. These include:
• The Business plan

• The Succession plan
• The Estate plan
• The Wealth plan
While these tools are excellent for securing financial

objectives, is getting more money and greater wealth the
sole objective? Not always.
Many of us want to engage in pursuits that enable us to

better the lives of those less fortunate. Richard Branson,
U2’s lead singer Bono and the late John Templeton each
engaged pursuits well beyond their core businesses.
Branson, while at this writing managing an airline, is also
committed to travel in outer space and to creating a
renewable jet fuel; Bono U2’s lead singer is an agent for
world peace; and the late John Templeton who ran an
26
investment empire, funded discoveries and new thinking

in religion and science.
That is why many come to believe that the most exciting of

the four plans is what I call the wealth plan. This plan has
the capacity to expand our sense of meaning in our lives.
Meaning, however, also emerges from our core business

and work.
I am not a financial advisor. I consult in real estate finance

and marketing. But, my first job after college was as a
licensed insurance agent for the Combined Insurance
Company. I lived in Virginia, just outside Washington, DC.
For me, sales was an eye-opening experience. I met
numerous people who excelled at sales of what we called
“sickness” policies that our company’s owner, Mr. Stone
himself, referred to as “the little giant.” It was so named
because it provided solid value to many at low cost. Stone
developed a system that attracted driven individuals and
then trained them according to his positive thinking beliefs.
This included a scripted ten-minute sales presentation.
One memorable attention checker in the presentation was

this: “We not only pay you if you are sick, Mrs. Jones, we
pay you if you are sick and tired—how is that? No we can’t
really do that, but…” A bit of humorous relief delivered.
Ideally, the serious sales presentation continued through to
the signing. Slick and scientific.
These low-cost “little giant” policies sold well and did

provide value to the customer. In 1979, it was rumored that
Clement Stone had a net worth of around $500 million
dollars. For my part, I struggled with whether this was the
best product I could be delivering these people. Perhaps I
27
was too soft for this type of selling. I felt I could be

successful at it, after all it provided me with a remarkable
insight into people and the compensation seemed good.
But, it felt awkward to be so impersonal, on what I felt was
a very personal decision. So we parted ways.
Over the last few years I have spoken with professional

advisers interested in real estate. They all like the potential
profit margin, the income and the tax benefits, working
together. In New York, where I maintain my real estate
broker’s license, I am not permitted to advise on legal
matters pertaining to real estate contracts. And that is a
wise law. Overall, I feel New York State’s real estate laws
are well written and well intentioned. They are balanced to
serve both the agent/brokers and the investors/buyers. I
believe they might be used as a model for good client
advisory, as you will see.
Real estate has provided me the opportunity to experience

financial opportunities that occur faster than most
professionals can even dream.
In the example of the house in Long Island from the

previous chapter, I recognized a negative scenario that could
have cost the family several million dollars in estate taxes.
Instead, with a trusted advisory team over a period of three
years, building the right team, and staying on track with
the client’s objectives, we restructured the estate, and made
investment changes that produced a 150% increase in cash
value invested. This exceeded even the bull market of the
period 2002 to 2005.
Here is the rest of the story.
Picture a large summer “cottage” in the estate section of an
28
old Long Island summer community. The house is in

disrepair, not noticeably to most people, except for some of
the obvious wear on carpeting, floors and doors.
However, it was not the desire for cosmetic changes that

hastened the decision to renovate, what led to the decision
to renovate was a structural hazard. The caretaker of the
property, using a clever but potentially dangerous short-
cut, had extended a 30 foot horizontal chase from the oil
burning furnace to the chimney. Over a 20-year period
fumes had begun to escape this unusually long chase to
leak into the house.
You can guess what happened next. The estimate to replace

the furnace turned into a rolling estimate as other problems
began to appear. It wasn't just the furnace that had been
jerry-rigged, but various parts of the entire house! As a
structural support, the same caretaker had placed three
concrete blocks on a piece of plywood. One of our new
team members brought to our attention that these three
concrete blocks were holding up the entire back section of a
three-story house.
What happened next was a series of drastic changes that I

described earlier. All the advisors were fired, with the
exception of the old entitled family attorney. A cohesive
partnership was created; a team consisting of a builder,
subcontractors, engineer, and other craftspeople required to
rebuild the house in its entirety worked together to create a
finely orchestrated process. Moreover, the house was
located in an historic district. It not only couldn't be
destroyed and rebuilt; the house had to be “replaced in
kind.” If you have ever worked on a historic home you
know the level of engineering and architectural skills
needed. Such skills exist, but it takes a team to make them
29
work.
Seeing is believing.
The orchestration of the legal and financial structure was

quite different from what had been. In a sense, the
creativity required to achieve the historic renovation,
sparked the creativity necessary to build the asset-
management and investment team.
In short, we devised a holistic plan that changed the

ownership; reinvested funds with taxable advantages and
addressed, as best we could, the concerns of the heirs.
This is the process we’ll investigate right now.
Several years ago, I was invited to teach institutional

investment advisors and institutional consultants, how to
market to their clients. Their clients are the endowments,
foundations, municipalities, pension funds as well as high
net worth families. They include organizations like Calpers
and The Bill and Melinda Gates Foundation.
During that period, I talked to hundreds of money

managers and institutional consultants, as well as top
executives of endowments, foundations, and managers of
corporate, organizational and high net or family offices. It
had become apparent at that time that few advisors were
listening carefully and providing what their clients wanted
and needed. I've tested and adapted the lessons and
approaches I learned from that research and work to help
others serve and expand the lessons on the wealth
management industry.
I generally have financial advisors in mind, however please

note that these lessons -- and I argue the accountability for
30
results -- apply equally to lawyers, accountants, structure

experts, business managers, in short, anyone with a
fiduciary responsibility to the client. More on this later.
Signing with an advisor is an important step toward one’s

financial future. Clients anticipate leadership from their
advisers. Clients also expect results. Clients also like to be
informed—some even like to learn. The advisor’s job is all
about response.
The corporate financial behemoths have been slow to notice

the renegade actions of rogue traders—Joe Jet and Nick
Leeson. The complexities of a corporate mentality that
permits delayed recognition of problems might well be
seen as evidence of a systemic problem.
By contrast, individuals can move more quickly to remedy

a problem. It's easy to see why. There are more choices
than ever before to be found on the Internet, better
marketing, and a greater ability for customers and clients to
know what they want.
Let’s start with an example of learning about how money

works.
31
CHAPTER
3
_____
How to Make Money
Warren Buffett is known for not sharing his specific

strategies; and yet his knowledge is so desirable that a
dozen or more authors have written about what they think
he does. By Buffett's own admission, the best book about
him is called The Essays of Warren Buffett, by Professor
Lawrence Cunningham. The book carries a series of articles
explaining why Mr. Buffet invests as he does, and how he
manages risk and opportunity.
People want to know what works.
Several wealthy people openly share their observations

about investment. Donald Trump and Robert Kiyosaki
cared enough to write a book about the importance of
investing as a wealthy person, called “Why We Want You to
Be Rich”; perhaps not the classiest title, but their direct
approach is refreshing, and their advice extremely useful.
The saying "the rich get richer" negates the opportunities

available and the type of work that makes one wealthy.
Kiyosaki and Trump have evolved themselves into
teachers. And they begin by encouraging a different
approach to money—that is their job #1. That is their key
advice. It is difficult to overlook Donald Trump's role as an
32
educator. After all, Trump’s television program, "The

Apprentice," provided MBA-level lessons on business
decision-making.
Another book on the subject of becoming rich is, “How to

Get Rich”, by Felix Dennis. Dennis is a publisher behind
such diverse publications as Maxim and The Week. He is
also a very talented poet. Dennis’ stories are both pointed
and funny, and they have much in common with Kiyosaki
and Trump. For one, he's really made a lot of money.
What's more important, though, is a sense of the humility
necessary to really "make it."
Get rich quick? If you are very, very lucky, yes, you can.
You can also lose it pretty darn quick, something I regret
being experienced in. Let’s dissect how to get and keep
what you want.
The lessons of the real rich are about sales, persistence,

teamwork, collaboration, networking and finance; and
using one’s intellect. It should not surprise anyone that a
very successful person's high standards are carefully
crafted, not manufactured.
Significant thought goes into their creation and execution.

Such is the case with one story Trump tells of finding a wet,
men’s room floor. He prompted a staff member to remedy
the situation. When he went back to the men’s room the
floor was still wet. He fired the staff member. Was it a
question of responsibility, promptness, loyalty? No. It was
a question of making sure there was no threat of a lawsuit
should someone fall because of the wet floor.
But, even before he was an hotelier and entertainment

executive, thoroughness was at the core of Trump's thinking.
33
In “The Art of the Deal” Trump speaks of a disagreement

with his father about the expense of marble walls at Trump
Tower. His father, Fred, argued that the expense was
excessive. Donald prevailed and the reputation for elegance
coupled with service continues today. Their views differed,
but their mutual respect was
always intact.
Knowing whom to work with, and how, is a science; the art

is in recognizing the opportunities.
Our discussion of the “7 Strategy System” begins with a

tale about a family facing many unknown elements in
situations where it might be too late to activate the
benefits of professional advice.
I believe you will find the following short story instructive.

Possibly even fun.
34
CHAPTER
4
____
Sunset: Day 1
Arthur Magnus cast a

glance across the room. It
was a brilliant sunny day.
Cool, but not cold. The
hawks flew in their wide
circles high over the main
field of Barcross House
when there was a knock at
the door.
“Come in,” said Arthur evenly.
“Hello Dad,” said Michael, Arthur’s eldest son. He entered

the room with his sister, Mary.
“Hi Daddy, are you feeling better?”
“Sit down you two,” Arthur said. He smiled warmly as he

motioned with his hand. “We need to have a little talk.”
Michael sat on the Windsor chair near his father and Mary
35
eased herself onto the chaise closer to her Dad. “What is it

Daddy?” Mary asked. Her voice was small and concerned.
“Yes Dad,” said Michael, “what is it?”
“Doctor Fulani just called,” Arthur began, “and while he

has inconclusive results, something inside me looks a little,
well, off.” Avoiding their glances, he continued. “I don’t
want you two to worry about me—or anything. We have
always planned well and been careful with our businesses
and investments. It’s just that now, business is increasingly
influenced by changes that seem to occur much more
frequently. Unpredictably. I cannot help but think we need
to review matters more closely. Differently.”
Mary leaned toward her father. “But Daddy, what are you
saying, surely Doctor Fulani will—“
“Not now honey, don’t be upset. Dr. Fulani will let me

know what the outcome of the results are as soon as he has
studied them.” Arthur said. “I want us to be as confident
as we can about our financial and living structures and
protect them to the highest possible extent.”
Michael leaned forward. “Dad, it sounds like you have

some concerns about the new joint ventures,” he said. “We
have been monitoring them for the last 18 months. The
Ingliss ventures are doing quite well. In fact, this year they
should return about 28% and--”
“Michael, that’s wonderful. And I read your report—

excellent work, by the way son. But that isn’t what I have
in mind. When I first started in the scrap business, matters
were simpler in general. Your mother and I worked very
hard. She was my bookkeeper and my second in charge.
36
And we built that business together. We were successful

enough that we were able to buy Megan’s Bay Farm—our
first--before you were even born, Mikey. Then when Mimi
came along, we decided to move out and live here year-
round. More space, you know.
Today the global

economy has the
A Brief History of
potential to provide us Financial Service
previously
In the early days of the American
unimaginable
colonies, Philadelphia was the
opportunity. At the
financial capital. Trading of "stock"
same time the took place under a tree, so the story
workings of the world goes. The original terms "board" and
has changed as well. I "chairman" derive from this period; a
don't need to tell you board was the table on which traders
about terrorism and operated and the chairman was the
global poverty. You lucky person who provided the chairs
are both great students for the meeting. The “market” was
and you know these anyone who could participate in a
things. You've done a trade. There were very few people at
wonderful job in first and the value of the shares was
learning about the often in question—sometimes hotly
businesses and helped disputed—as there was no formal
market. With time and sophistication
build them.
Philadelphia’s Chestnut Street became
home to the nation's most powerful
But, it seems to me financial institutions. Philadelphia
that the only way to remained the American financial
address the heady capital for almost 40 years, when in
complexity of the fast 1820 the fast-growing New York City
moving world today economy through the exchange there.
is to act like King Since then, Wall Street has become
Arthur with his wise synonymous with wealth derived
roundtable of good from stock exchange.
men — and now,
37
women. We need to get a bunch of trusted people, loyal to

us, who will watch out for our mighty kingdom, so to
speak,” said Arthur, smiling.
"It didn't turn out so well for King Arthur. He lost his
queen and the empire suffered, too" said Michael. Michael
and Arthur laughed. As Arthur nodded, Mary could only
frown.
"Dad, you have always had the knack for sniffing out
solutions before they're needed," said Michael. "And
increasingly, the financial journals and others talk about
having the CPA and insurance guys work with the broker
and the attorney," he added. "Is that what you have in
mind?"
"I don't think that's enough, Mikey," said Arthur. "I think
we need to be more -- what's the word -- holistic. There is
more detail in contracts, like the new stipulations and
limitations in insurance policies, for example. It's my
impression that expertise has a greater value working
simultaneously than ever before," Arthur added. "At the
same time most people concentrate and depend on a single
expert. And that's not very effective, or smart, because it's
so isolating. No. I'm thinking of something more like the
roundtable.” He winked at his son and gently patted the
young man’s shoulder in silent appreciation of the idea.
What I have in mind is a team of different experts around a

single table,” said Arthur, “refining our overall strategy
from different points of view?"
Mary leaned toward her father. “Daddy, you’ve always

said that we should find someone who can help us think it
through -- do you have someone in mind?"
38
"I certainly do," said Arthur. "I've set a meeting for the
three of us first thing tomorrow morning with John
Dockerty. You two have known John for a long time and
he’s an old hand at investments. What you may not know
is that John is a partner with us on a number of our
ventures. He's an unusual man who often questions
authority, even in his own firm. I think John's input on my
roundtable concept will be extremely helpful here," Arthur
said.
There was another knock at the door. "Mr. Arthur,” said the
housekeeper, “Dinner is ready.”
"Thank you Cynthia,” said Arthur. Arthur paused again to

look out the library’s main window. The sun was cresting
over the hills behind the field, bright golden rays filled the
room.
"What do you say we three have a quick cocktail in the

living room before Cynthia has a conniption about us
getting to the dining room for a cold meal?" Arthur smiled
and gently touched each of his children on the shoulder.
"Sounds like a good plan Daddy," said Mary as she hugged

her father. Across the field in the setting sun beside a giant
willow a relaxed red fox and her frisky cub absorbed the
warmth of sun’s narrowing rays.
39
CHAPTER
5
_____
Breakfast: Day Two
Arthur spoke first.
"John. I want to share some inside information with you.”

Arthur smiled to reassure his friend. “The three of us had a
little chat last night. It was the same discussion you and I
have had numerous times before. I think we need to look at
our financial house, but in a different way. Oh, it's not that
you've done such a bad job," Arthur mused and smiled
again at his old friend.
“One does not
Over the past 34 years, John X. have to be an angel
Dockerty had become financially in order to be a
independent, that is, working saint.”
side by side with Arthur Magnus.
Albert Schweitzer
He and his wife, Rebecca, had
met when Arthur and Ellie had
been running the scrap business
for just a few years. Then, Dockerty was a young lawyer
and CPA who dabbled in investments. Their mutual
interest in business and their passion for the fruits of hard
work had united them, instantly. The couples enjoyed
traveling together, and they all became close friends.
40
Unfortunately, John’s wife was killed in a tragic riding

accident. Devastated and alone, John threw himself into his
work. After nearly a year of this nonstop pace, Arthur felt
that John needed some time away and told him point
blank, "You have to pace yourself, John or it might kill you.
I want you to drop everything and fly down to our place on
St. Barths. Take all the time you need, we'll all still be here
when you get back."
When John returned he was rested and reinvigorated.

There he'd met a lovely woman and they had fallen in love.
John remarried three months later. And Ellie embraced
Carol as a wonderful new friend.
The group settled into the supple dark brown leather chairs
in John Dockerty’s office.
"John, let's start at the

beginning," said Arthur.
Team member job #1
"Let's talk about what's SERVICE
changed. You are a CPA Locate Talent. Test it.
and you've been an Take action.
attentive and genuine
investment counselor, as
well as a very insightful attorney, a businessman, really,
who knows the law. Actually, we will be needing your
ideas and combination of skills and business savvy more
today than ever before.”
John nodded in earnest and began speaking.
“Off the shelf financial advisory is the phenomenon of a

wealthy society,” he began. Throughout history, business
people made their investments pretty much on their own.
41
They may or may not have used a lender.
“After having graduated from business school, you two

probably know more than I do about these historical
details,” he said, looking at Michael and Mary.
“Needless to say, our society has become more financially

complex. I sometimes wonder if we professionals are
responding to the demand, creating it, or a victim of our
own successes and innovation.” Smiling he added, “Maybe
the reality is a combination of those.”
“Investments are now very large and the market swings are
more volatile. Though successes, such as the ability to
finance a popular chain like Starbucks, abound, there are
also glaring failures in our institutions, such as the disaster
of Enron, etc." said John.
“I’ve earned my living as a numbers cruncher" John began.

“When your Dad and I started, we were simply watching
cash flow, and profit and loss. Today, there are numerous
additional government programs like FICA, Social Security
and various state and local taxes that demand their due. So
investments have to be arranged differently. In business,
we must look to control our expenses in order to at least
stabilize, and ideally increase profits," John continued.
“Let’s think about a healthy, wealthy society," he said,

motioning across the horizon with his hand.
“In such a society the importance of the true professional is

how he or she defines and evolves service standards for
each client, particularly as each client’s wealth increases. A
service is the non-material equivalent of a good.
42
This definition implies that the buyer has recourse if he is

dissatisfied.”
Michael leaned forward. "Isn't that what fiduciary is about,

in the case of investing?" he asked.
"Fiduciary. That's a very important aspect, Michael," said

John. "Fiduciary used to be limited to the vocabulary of
savings-and-loan institutions and trust officers. Today, as
you probably know, the idea of an advisor being legally
TIP: How to Receive Reliable Professional Service
The bad news for the wealth advisor in the top 2% is the extra
homework. The good news is that over time she can systematize or
delegate much of that work so that she can focus on providing service.
These are the professionals on the rise that we look for.
With all advisors it is a good idea to deconstruct "professionalism." This

is a little bit easier now, because professionals can no longer hide behind
privilege or information monopoly. Moreover their clients and
customers can demystify the professional jargon themselves thanks, in
part, to the internet.
The short list below includes the most frequently mentioned praises
from the clients and customers of the top 2%. How many of them have
you experienced?
! Your advisor contacts you personally at least every 30 days.

! You receive regular life improving, financial-state enhancing, or
family asset-building or protecting suggestions.
! You get meaningful reports on achievement of your objectives,
or a full explanation of the status with specific costs and results.
! Your advisers report taking the precise actions you discussed
and approved.
! The advisor uses language, gestures or processes that put you in
a position of engagement, comfort and solidarity.
How did you do? Just as important, how did your advisors do?
43
responsible for their advice and their actions, is gaining

momentum," said John. “And it’s about time!”
“As I advanced in my career”, he explained, “I chose to

keep my practice small in order to be able to focus on the
needs of my clients. I learned that a good advisor works
closely with his clients and acts in their best interest. Some
of my advisory colleagues who chose to work in large
institutions do not always feel that is necessary.” John
stopped thoughtfully, then continued. “Those who used to
be called stockbrokers, overnight became financial
advisors. In the fine print, this might actually be a conflict
of interest, because many of these financial firms are
themselves publicly held companies. However, they easily
include their companies among the stocks that they tout.
They are subject to the decisions of their firm’s boards and

stockholders. They run in a traditional hierarchical fashion.
Advisors are generally considered to work for the client. In
reality they are agents, often employees, of large corporate
concerns. This is partly why these “advisors” are so seldom
independent thinking or independent acting,” John’s face
appeared to wince ever so slightly.
“Career turnover is inevitable. It has become commonplace

to read about layoffs. Unless they have separate agreements
with the primary broker and executive leadership of the
firm, advisors are dependent on a broker-dealer or
clearinghouse to execute stock and other investment
transactions. What I didn't like about these large firms is
that they may appear to guarantee a position.
This doesn’t work for two reasons.
Number one, I believe this is a disincentive to the

individual advisor, the advisor tends to lose competitive
44
energy. And number two, the advisor working in a

corporate environment cannot be a genuine entrepreneur.
I chose to be entrepreneurial. It's more fun, and it's

generally more rewarding -- in many ways," said John as
his eyes opened and he brightened with a wide smile.
Arthur Magnus leaned forward. "John, this hands-on

concept sounds like a very important piece of the plan we
need to assemble. What do you suggest we do to take this
further?" Arthur asked.
John sat forward in his chair, his pen in hand. "Arthur, I've
always believed it was good business to be honest and
responsible. I've always practiced what I understood to be
fiduciary," said John turning toward Michael.
"It's been part of your code John, as a man and a trusted

colleague," said Arthur to John. John continued.
"What I think you're asking, though, is about fiduciary

practices that will both maintain and build upon the wealth
that you presently have. Is that right?" John sat back resting
his chin on his intertwined fingers.
Michael spoke this time. "It's been interesting sitting here

listening to you two. I admire your trust in one another,"
Michael said glancing first at John Dockerty and then at his
father. Arthur was motionless. "Mary and I don't have
these relationships, not yet anyway. So my sense is that we
need to build fiduciary into our plan in order to acquire this
level of trust and respect… over time," Michael said.
Intuitively everyone turned to Arthur.
45
"I couldn't have said it better myself, Michael," Arthur said.

"Business is about collecting good people. The better the
people you surround yourself with, the better your
business. The better your business, the better your income,
and life," Arthur added. He was quiet and his eyes went to
his own hands, then to John Dockerty. "So John, what's our
next move—in your opinion?" Arthur asked, sitting back
again.
"With your permission, I'd like to suggest that we visit a

writer I know from the Times Union, Rita Sands." said John.
"She's been covering the financial markets for a long time
and she's very knowledgeable. Furthermore, I think she
would be interested in speaking with you about fiduciary,"
said John. "And so if you’re game…"
"I love the idea," said Arthur Magnus. "I've always been
treated fairly by the press. Of course, it helped that we’ve
never had anything to hide, I suppose," said Arthur
thoughtfully. "Can you set that meeting up with Ms. Sands,
John?"
"Consider it done my friend. I think you'll all enjoy

meeting Rita Sands,” said John as his hand grasped the
telephone receiver to his left on the desk.
46
CHAPTER
6
_____
Mid-morning: Day Two
"Investment advisory is challenging and complex—and it

can be a lot of fun," Rita Sands began, “if it’s done
correctly.” She was attractive, striking, and self-assured;
she dressed professionally yet with a stylish flair in a crisp
white blouse with an open collar that reveled a simple gold
chain, her blond hair pulled back in a tight knot. It was
clear from the way she carried herself that she was did not
easily suffer fools. Rita Sands was a self-made success
story. She had, in fact, earned her stripes in a man’s world
by being her own person, independent thinking and
confident.
The world in which she worked, reporting on corporate

leaders and financial wizards of profits, was also a world
where some trespassed into the wrong side of the law. Rita
was tough and informed and by day the clock was one of
her performance benchmarks. And so, Rita minced few
words.
"Clients have vastly different knowledge, risk tolerance and

personalities. Some people have a desire to be passive
investors. They put in their money. They close their eyes
and they hope for profits," said Rita. "It's not advisable as a
strategy," she continued, “with that said, just as many
47
people are active investors."
“American liberal education has done a pretty awful job of

teaching people how money works," she said. “Robert
Kiyosaki has made himself a household name by
illustrating this knowledge gap through his “Rich Dad”
books and products.
“The high school where I attended," she said, "offered a fun

program about investing in the stock market. The winner
made the most money and usually an “A” in the course.
Presumably there was a correlation between financial
acumen and one's academic competence," she said as she
raised her right hand as if
taking an oath.
Just then Rita’s telephone rang. "Excuse me," Rita said to

the group. She pulled off an earring and raised the
telephone receiver. "Hello?" she said. She listened and
looked at the group assembled in a room and smiled.
"That's terrific, see in a few minutes," said Rita. She looked
up smiling.
"Boy, talk about fate,"

said Rita. "That was Team member job #2
Steve Jones; he's FIDUCIARY
coming up here right Anyone touching your
now. You know
Steve, don't you money is responsible
John?" and accountable for it.
"Is he with Griscom-Jones Associates?" asked John.
"Yes. Chairman of the board and one smart cookie when it

comes to real estate," said Rita. The rest of the group
48
looked puzzled. "I'll explain why this is so appropriate that

Steve just called," Rita said.
"Making money may well be fun, as you, John, and Arthur

understand. We also understand something many people
don't. The ability to make money is not to be taken lightly.
It is a serious discipline," said Rita.
Rita sat back in her chair and placed her hands gently on
the leather top of her desk. "Permit me to tell you a short
story," said Rita.
“This story is based upon an old school, stockbroker. One

who is incapable of fathoming the possibility that his
customer could have a leading edge investment idea. As
you might already guess, the advisor provides few
investment ideas beyond his firm’s approved list. The
stocks on his list typically produce returns in the 8% range.
His best fixed yield investments offer a safe but stagnant
2% - 4% gross annual income.
In late 2006, I discovered an interesting company that paid

a 14% dividend, had strong management, and was
positioned for continued growth," said Rita, "I ran a story
on it, because I found it interesting.
A broker friend called -- not you John, someone else -- and

asked me about it. I never give stock recommendations,
very dangerous and it's not my job. But this fellow is very
persistent. I referred him to an old article that I had written
that I felt was appropriate about a value/dividend strategy.
The article suggested buying certain stocks on a dip and
holding them. Essentially it was about using a
value/dividend strategy. The next suggestion was to
reinvest the dividend into the same company. For most
49
people, and especially for entrepreneurs, the accrued

investment was to be used for a business money
management account, so it would typically be subject to
corporate income tax.
The broker begrudgingly thanked me and hung up the

phone. I never thought I'd hear from him again.
In an odd turn of events, I met with another friend of mine

some weeks later for lunch. She began to describe an
investment situation that sounded familiar. Her broker
raved about a stock opportunity and suggested that she
buy in. But instead of waiting for her to agree to the
purchase, her broker bought the stock for my friend’s
account. It had not dipped down to the buy price, which
was part of the strategy. About a week later the stock
dipped.
As my friend told me this, she recalled what he'd said in

the first conversation, ‘You may as well get it,’ he had said
at the time, “you won’t save anything by waiting.’
I sighed, anticipating what was to follow.
A few weeks later, my friend told me, her phone rang. It

was the broker, excited and happy as a puppy. ‘Incredible,’
he said. ‘That stock took off!’ We had noticed, too, of
course. After all it was my idea! It had in fact, increased in
value over 20% in a few weeks. ‘I sold it,’ he exclaimed to
my friend, overcome with his apparent brilliance in stock
picking. My friend told me that her broker had become
‘nervous about losing the profit.’ My friend was
frustrated, unsurprisingly.
She is a good friend, so I told her it sounded like the broker
50
I'd spoken to just a few weeks before. I told her the rest of
the story about the suggestion that he read my previous
article.
‘I'm glad you told me,’ my friend said. ‘But what can I do
now?’
I made two recommendations to my friend. 1. Buy it back.

2. Give no more money to this advisor. I learned that she
followed my recommendations. Not only did the shares
triple in price over the next seven months; she has a new
broker. And…the new advisor has been listening to his
new client.” Rita
folded her hands on
her desk and was WATCHING MANIPULATION
quiet.
Registration of investment company
John Dockerty spoke advisors was required under Investment
up now. "I've heard Advisers Act of 1940. Advisors
managing less than $25 million register
the same story
with their states. Both registered and
hundreds of times,"
unregistered advisors must adhere to
he said. “It was a bit state and federal antifraud provisions.
more usual in the old Day-to-day legal issues are governed by
days, but it still state law or the United States Securities
happens," he added and Exchange Commission (SEC).
as he shook his head.
"Unfortunately, Initially brokers sold other companies’
there's very little the stocks and bonds. In the 1980s stock
average investor can brokerages were allowed to become
do about it," he said, market makers, by trading their own
"The legal expenses shares, oftentimes very large blocks, of
usually exceed the company stock. This created an
loss." opportunity for the brokerage firms to
expand their business.
"That's why I'm glad
51
that Steve is on his way here," said Rita. There is a knock at

the door. "Maybe that's him," Rita said, "Come in, Steve...?”
"How did you know?" said the man as he opened the door.
He walked across the room toward Rita and clasped her
shoulders gently giving
her a peck on the cheek.
"Steve Jones every-one," WATCHING
said Rita. MANIPULATION, Part II
"Wonderful to see you During the “rolling recession” of

Rita. Hello everyone," the 1980s and 1990s, more
Steve Jones to the group. Americans were investing in the
markets and entrepreneurs began
Rita began again. "As a to add improvements that serve
broker, Steve lives by a customers. Banks were permitted
different set of rules. I by the Federal Reserve to
interviewed him recently introduce discount brokerage. It
was suggested by some that full-
on a daily radio program
service brokerage commissions
about acting as a fiduciary,
were excessive; the added "extra
the topic that we are services" were rarely used by most
discussing today," said investors. Why not simplify and
Rita. streamline the process and pass
the savings afforded by new
"Well, it’s not a topic many automation to the customer?
people find very enticing!" Today there are discount brokers
added Steve. like Charles Schwab and T.D.
Ameritrade, but deep discount
"Not where there's money brokers such as E*TRADE and
concerned, not any more," ScottTrade. The service lines
said Rita. between services are even more
blurred. Since the late 1990s, even
deep discount brokers have begun
Arthur Magnus leaned
to provide sophisticated charting
forward and asked, "Mr.
and tracking services online.
Jones, I'm a bit familiar
52
with fiduciary because

of the number of solid INSIDE INVESTING
real estate transactions KNOWLEDGE, Part III
I've been part of, but
I'm unclear as to how NASDAQ, the National Association
fiduciary skills apply of Securities Dealers Automated
defacto in other Quotations system, was created in
investments." 1971 as an electronic bulletin board
for new issues. NASDAQ helped
lower the difference between the bid
Steve Jones took a
price and the ask price of the stock,
chair and smiled at
called the spread. Somewhat
Arthur Magnus. paradoxically, it was unpopular
"That's how I got among brokerages because they made
involved in this, Mr. much of their money on the spread.
Magnus. Most people
don't see the Discount brokerage and the new
connection. And most exchange further blurred the public's
investment advisers ability to distinguish between
avoid fiduciary like stockbrokers and investment advisers.
the plague. But that's
changing," Steve said. Some investment advisers do not
charge commissions and do not sell
Steve went on to securities. They advise. Stockbrokers
are often salespeople, paid on
explain how recently
commission, who offer research more
increasingly he was
than experienced investment advice.
being called on to A registered investment advisor may
discuss the estates and charge fees rather than commissions
estate planning where and may also have client-approved
real estate was a discretionary authority. The registered
significant part of the representative is held to a regulated
assets. "Increasingly, standard of recording and
equities are less about demonstrating that typically all advice,
creating value than purchases, fees and sales are
they are about a claim appropriate, fair, and clearly in the
on cash or cash best interest of the customer.
53
equations; say a derivative or an option. If you look at

financial or business projections on a spreadsheet, you will
see that some profits are made from operations, not from
manufacture. This is true particularly for banks and credit
card companies," Steve added. “On the other hand, in my
business we teach, and we practice, fiduciary. Not only is it
in the law, it's good for business. Having a definition is
nice but I find it easier to remember a simple acronym
CCLOAD that reminds me and my gang about our
responsibilities in every transaction.”
"Is that a technical abbreviation or something?" asked

Michael. Steve smiled at Michael and said, "Oh no, no. It
actually stands for the elements of fiduciary: Care,
Confidentiality, Loyalty, Obedience, Accounting, and
Disclosure. Those are each the active parts of fiduciary,"
said Steve.
"That is remarkable," said John, "I love that. In fact, I wish

I'd had that as a benchmark throughout my career," he
added.
"You didn't need that, John," said Arthur Magnus, "I guess
you always did those things intuitively."
Steve Jones continued. "Actions that ignore fiduciary

demonstrate an inability for the customer and advisor to
work collaboratively or genuinely consider the future.
Moreover, for any financial professional today, be it a real
estate broker such as me, a lender, an attorney, a CPA or a
broker, like John, action without fiduciary responsibility
represents the perfect scenario for losing clients. The reason
is quite simple: The active and serious investor today
increasingly relies on the trusted advice of a team.”
54
“The combination of tax laws, and the complexity of

investments are part of the story," said Steve. But there are
internal rules in numerous brokerage/bank/credit card
companies that restrict their agents and employees from
referring to internal products and services. To do so is
called ‘selling away.’ It is easy to see how decision-making
systems put the client second, after the firm.”
“In these situations, the likelihood of your being introduced

to a wide range of investments, much less investments
tailored for you, is almost nil. I suppose, you could argue,
that in real estate the client isn’t subject to the same level of
restriction on opportunities. There aren't quite as many
options, and it's easier for the client to find deals by
themselves simply by calling another agent or searching the
internet and picking up a phone. That's part of the reason
the fiduciary is so useful to the real estate brokerage
community. It keeps us honest," said Steve.
Rita leaned forward, and spoke. "I reported on this theme a

number of times," she said. “Many advisors perform their
duties without acknowledging their customer’s real needs.
Our survey of affluent customers and advisors supports
Robert Kiyosaki’s warning that many people use advisors,
in order not to have to act on their own behalf.”
“I remain confident that a few advisors working as part of

an investment team can be immensely valuable and I wrote
about it recently," said Rita. "We need to look at wealth
differently, because mass affluence and wealth have
changed the roles of institutions,” said Rita.
“If you follow a few rules to organize the team, you can
win. This winning benefits both the customer and the team
advisors.’
55
“Robert Kiyosaki devised a teaching system about money

and our capability for getting, managing and using it that
works. Actually, it is a game called Cashflow™. The game
begins with a blind selection of a character. Each character
has an income, expenses and some assets. For example, a
doctor earns more than a superintendent. As the game
proceeds, however, each player has the opportunity to
invest, as well as address events that cost. I have seen the
superintendent beat the doctor’s income many times,” said
Rita.
"That sounds like a great game," said Steve, "one we could

all enjoy."
Arthur Magnus leaned forward. "This has been very

enjoyable Mr. Jones, and I appreciate your taking the time
to meet with us. I’d like to meet with you in order to go
over our real estate investment portfolio. I like the cut of
your jib, Mr. Jones, as they say. And I like very much your
thoughts about fiduciary," said Arthur. "If that's acceptable
to you, of course," said Arthur.
"Mr. Magnus, you and I have never met. But I have met
several people whom you have helped, and they speak
very highly of you. I'd be honored to help you if I can,"
said Steve. He turned back to Rita and smiled, "I need to get
going now Rita. This has been fun. Thanks."
They all exchanged business cards and agreed to schedule a

meeting the following week.
"You look confused Mary," said Arthur Magnus to his

daughter.
56
Mary and Rita exchanged glances. "I'm glad to have heard

this," she said. "I think women work differently from men
and in many cases have a different sense of ethics in
business than men." said Mary.
"I didn't put her up to this, John," said Rita, smiling.
John looked at Arthur and smiled and then turned back to

Rita. "The Magnus family is filled by very independent
thinkers," said John, "so, you can't tell anyone in this family
what to think."
"What's bothering you kid?" said Arthur.
"I can’t help but think that there's something missing.

We’ve discussed service, and the responsibility of financial
service, the fiduciary responsibility…" said Mary.
"Oh. I see where Mary's going," said Michael.
"Let's say we've got a great team now. We decide the

context of our financial decisions?" said Mary. She looked
around the room for agreement but saw none.
"Okay. When we make decisions in business we

understand the industry, we understand our customers,
and we understood our capacity. If we need to, we
innovate. And we are always looking for ways to cut
expenses, so we have more profit," said Mary stopping to
look around the room.
"Are you looking for a crystal ball, Mary?" Arthur asked his
daughter.
There was a silence in the room. But people began to nod
57
their heads, understanding that if you had a standard of

excellence in a standard for performance you would still be
missing the external information.
"You’ve just given me a great idea," Rita said, as she

reached for her telephone, and began punching in numbers.
58
CHAPTER
7
_____
Late Morning: Day 2
As Rita dialed, Michael rose from his chair. "Would anyone

like some lunch?" she asked, still dialing.
Michael looked around the room. “I think I’m going to take

a little walk, grab a cup of coffee. Can I get…” he said
haltingly.
Rita motioned to the door and John spoke up, "Michael, I'm
sure we can get coffee right here. Are you sure that..."
"Thanks. It's not just the coffee. If you don't mind, I’d just
like to get a little fresh air," said Michael.
Michael's father nodded and said, "No thanks Michael, my

coffee is just fine."
Michael took the elevator downstairs and walked out the

front door. Across the street was an attractive little coffee
shop called Bongos, a Tiki-bar styled coffee shop with
woven strips of wide grass and bamboo framing. Michael
ordered his coffee and sat down near the front window
looking out on the busy street. He had taken the first sip of
his coffee when the older gentleman at the next table spoke
to him.
59
"You look befuddled, young man," said the man.
"Excuse me?" said Michael.
The man smiled and sipped from his cup. "You looked
distracted and perplexed," said the man. And then he
resumed sipping his coffee quietly. Michael looked out the
window and sighed. He wanted to think and at the same
time he wanted to talk.
After a few minutes Michael spoke again. "My dad isn't

well and he's been leading my sister and me through this
maze of advice. It just seems... extraneous," said Michael.
He continued, "It’s kind of a distraction from what it seems
we should be doing if Dad is really as sick as, well..."
The man looked into his coffee cup and that of Michael
asking, "Do you mind if I join you?"
"I guess not. No, that would be fine," said Michael. The
man rose and walked to Michael's table to sit down across
from him.
"I take it your family is in business," said the man. Michael

nodded. "I have had businesses myself," said the old man,
"and they are more complex than most people realize.
Think about selling. Most salespeople want to get the
money and get the product into the hands of the buyer.
And they think that’s the job. But that's very shortsighted,"
said the man. Michael shifted in his seat.
"I know a man, Frederick Lehrman, who understands how

to generate sales. Basically, he believes that in order to
attain success in business, one has to earn the confidence of
60
the client by providing the best service possible. In doing

so, the client will have full trust in his abilities.” Michael
sat looking at the man.
"That's it?" said Michael. "I mean it's interesting, but..." he

added.
"Oh I admit it sounds a little simplistic," said the man. "But

it works. Trust me," said the gentleman. "What your father
is doing by asking all these questions is to teach you, and
hope that you learn through his example," said the man.
He rose from the table and shook Michael's hand goodbye.
Without another word, he turned and left the coffee shop.
The waitress came up to refill Michael's cup. "Like some

more? It's freshly brewed. I call this our Happy Blend --
can't have a better day without it," she said. Michael
politely declined and then thanked her. They smiled at each
other and Michael stood up to leave the coffee shop to go
back to Rita’s office.
The waitress smiled when she saw that Michael had left a
tip for her as large as his check. "Nice young fella," she said
to no one in particular as she walked into the kitchen.
61
CHAPTER
8
_____
Day Two: Lunch

"Hey, Michael." Mary smiled and appeared genuinely
happy to see him. "Daddy’s doctor is on the phone. Let’s go
join him."
"Any news?" he asked.
"I don't know. I guess we'll find out right now," said Mary.
Michael knocked lightly on the door and turned the handle,

pushing the door open slowly. He and his sister entered
and their father looked up and smiled. "Hold it Mandy; the
kids have just come in. I want them to hear what you just
said," said Arthur Magnus as he clicked on the
speakerphone.
The doctor spoke immediately, "Hi guys. Well I never

would've guessed it."
"It sounds like there's good news," said Mary happily.

"Yeah," Michael added.
“No, not quite. Not yet anyway. But, as usual, your father
has some tricks up his sleeve," said Mandalay Fulani,
62
Arthur's doctor of 20 years.
"Tell them what I said, Dr. Fulani," said Arthur.
"It seems that your father has been reading. Not just
business, but reports on recent medical breakthroughs. He
called to tell me about a study at Johns Hopkins on the
degeneration of the human nervous system. He may be
onto something, so I'm going to look into this,” said Dr.
Fulani. "I'm not even a little embarrassed by this, I'll have
you know. Increasingly, doctors need to listen to their
patients," he added. After a brief pause he continued.“ In
fact, it was Norman
Cousens who addressed
the need to listen to ReferenceTool
one’s patients years ago
According to our Trusted
in his wonderful little
Advisory survey, financial
book, Anatomy of an advisors have a much lower
Illness. He said that sense of the importance of
people today are far comm uni cat ion than do their
better educated in customers. This may be at
medical matters than the root of customers’ issues
they were just a quarter with their advisors. Along the
of a century ago. He felt same lines, a Harris survey in
very strongly that 2006, reported that only 17%
healing is a collaborative of the clients surveyed trust
process. And that's what their core primary financial
we need here," said Dr. advisors.
Fulani.
Michael spoke up, "So there's no news."
"I'm sorry Michael, no, no new positive developments

beyond that," said Dr. Fulani.
63
Michael remembered what the gentleman across the street

had said. "Doctor Fulani, I want you to know how grateful
we are. And I want you to know that we agree with you.
We need to work together," said Michael.
There is a brief silence in the doctor added simply, "Thank

you Michael. That means a great deal to me." He promised
to contact them again within two days.
After Arthur hung up the phone, he turned back to Michael

saying, "That was very kind of you Michael. Thank you."
“Rita ordered up a few sandwiches for us,” Arthur said.

She and John have a client call. We’ve got about 25 minutes
to relax and have a little lunch,” he added.
64
--
CHAPTER
9
______
Day Two: Afternoon
The Magnus family returned to Rita Jones’s office and sat

down.
She was on the phone.
“…your current views of work and income. You need to

watch your debt and understand that there is good and bad
debt. But do your homework,” Rita said, “read Kyosaki.
He demonstrates how one makes decisions based on new
sets of reference points. The first thing is to understand
what you want from the markets and how you want to
achieve those objectives. Ideally, the goal is for you to take
on the role of an active owner. This philosophy will serve
you well.” She smiled, shaking her head slightly as she said
goodbye to her client.
John spoke first. "I've seen that movie," he said.
Rita shrugged and smiled. “I advocate talking about the

markets, the investment sectors and occasionally having an
in-depth philosophical chat about investing, diversification,
tax risk and enjoyment of one’s labors. When we get into
specifics it becomes painfully obvious to everyone that the
client and I can't do it alone. A team is far more effective,
65
efficient, timely, and informative. This is the whole secret

to what makes clients very wealthy and their advisers
successful. It's about trust, educating oneself, and using
common sense—working with clients!” Rita added as she
stood by her desk and moved toward the door.
“With that said, I’d like you to attend Dick James lecture at
the University’s Finance department. The topic is on the
future of investments. Lecture begins at eight tonight. We
have front row seats!”
66
__
CHAPTER
10
______
Day Two: Evening Lecture
The packed lecture hall was filled with the buzz of

anticipation. “He’s launching his new book about the
markets and responsibility,” said a pretty co-ed to her
classmate. “This guy blows away proprietary standards,”
said another, “he shares a bunch of his best ideas—he is
incredibly generous with his thoughts about preserving
and building capital outside the normal constraints.” To the
appreciative giggles of her friends, an attractive young girl
said, “All I know, is he’s really cute!”
The Magnus family, Rita Sands, and John and Sally

Dockerty quietly took their seats close to the stage.
Professor James held his hands up to quiet the audience.
“I would like to talk to you tonight about the future. And I would
like to show you how to make a lot of money. Is that acceptable to
you?” Professor James smiled as the audience of university
students applauded and hooted.
“There is one thing I would like you to promise me, however. My

teacher Dr. Fuller dedicated his life to the benefit of mankind.” He
walked a few steps to the right and again turned and faced the
67
audience. “I have come to appreciate the wisdom and direct

benefit of such a philosophy of action. And so I will share my
thoughts with you with the understanding that you will dedicate
your gains to mankind. Is that fair and agreeable?”
Again there was applause. Michael and Mary looked at each

other and at their father. Michael shrugged and smiled broadly at
him.
Professor James continued.
“As never before,

financial advisors and Team member job #3:
clients can decide for SCENARIO
themselves what level of PLANNING
business they want to
perform. Like the Chinese
Consider in advance
symbol for crisis, having what might happen—
a genuine functioning practice being proactive.
global economy with
commerce represents both
a threat and an opportunity. Under the threat scenario is a world
undergoing massive substantial change in how it operates and
finances its dealings.
Most historians would agree that change is inevitable. Under the

opportunities, new service levels are possible as never before.
These run the gamut from creating interdependent long-term
relationships, and not just with existing customers, to educating
family members, and possibly their entire network of associates
and peers, to the creation, preservation and distribution of capital
at levels once reserved for the very rich.
New financial advisory, which is working closely with

increasingly affluent customer, functions in this constantly
68
changing environment. Business & Scenario Planning

The informed advisor and Dynamic Number 2 –
client can construct Owners of “traditional” and “nontraditional”
inclusive and holistic wealth are not similar and see the world very
personal and business differently.
planning systems and The annual Mendelsohn Affluent Survey
approaches if they reviews sales of consumer products
understand two dynamic purchased by millionaire households. People
in these households are referred to as the
shifts. "mass affluent" for which there are purchase
patterns and corresponding desires. A few of
Historically, wise and his observations on the Mendelsohn study
follow.
successful leaders and
influences have drawn key The mass affluent watch CNN, the
advisors together. Discovery Channel, ESPN, A&E and The
Winston Churchill History Channel. And what do the mass
affluent read Barron’s, Cooking Line, USA
explained that this is Today, and House and Garden. Twice as
precisely how the British many read the most favorite, People
Parliament was initially Magazine. This distinction; we can call it the
People Magazine syndrome, suggests to
created, “to listen to the some observers a newly monied and non-
people.” The most traditionally acting affluence. This is not
successful business people merely assuming that more traditional
affluents would only read Town & Country.
practice the same Rather, it suggests that some identification
discipline with their with easily-recognizable celebrities with
trusted advisors. whom they have financial and cultural
similarities.
Top success appear to lean Distinguishing between traditional and

on advisors: Warren nontraditional affluence provides a reference
Buffet depends on Charlie point for advisors to better understand their
customers’ decision-making processes.
Munger; Donald Trump Perhaps as importantly, understanding the
has George Ross…all characteristics of traditional and
billionaire’s have a trusted nontraditional affluence provides the wealth
advisor insight on their customers’ financial
advisor they depend upon, acumen. Traditional affluence will trend
and a team to further the toward protection and safety; the
ideas generated. nontraditional affluence is likely to have a
more aggressive view of opportunity, time
and money.
69
What is the function of these people, these advisors? It is two-fold.

To increase the value of the current decisions and to consider the
internal and the exegetic changes ahead. That is the known and
the unknown influences on our decisions.
Wealth is most often created in real estate. Perhaps that is because

the methods used can be duplicated and continue to throw off
income. Real estate has other benefits, however. Thanks to
generous tax laws, real estate can be depreciated. Many
improvements to a property are also deductible and one’s tenants
pay for the investment. Unlike many other investments, real
estate creates value superior to interest paid on the cash invested.
This is true to a similar extent in business. Many individuals are

simply trading time for money, but a duplicable business can
make money exponentially.
Successful business is not just limited to manufacturing or

service concerns, either.
Numerous popular artists through history have understood this

principle. One of the more famous early examples is Frederick
Edwin Church. Church painted very large and glorious canvases
that portrayed the Hudson River Valley of the 1850s. He observed
how people were entranced by his work. As you stand before them
they are, indeed, so glorious that you are tempted to reach into the
canvas. He then added a new dimension to his product. The son of
a successful businessman himself, Church decided to charge the
public for the privilege of viewing his new paintings; and they
did! Every day, hundreds of people paid one quarter for the
privilege. Church became a very wealthy man.
Another famous artist, Auguste Rodin, realized that there was a

market for miniature replicas of his smooth, white stone and
bronze sculptures. You have no doubt seen such models, still
70
manufactured and sold today. They include Rodin’s “The

Thinker” and his intriguing bronze sculpture, “Hand.”
It is the business and not the occupation that create renewable

income. Are the Rolling Stones artists first; or businessmen first?
It becomes difficult to separate the two roles.
So what can successful artists teach us? Wealth advisors and

their clients benefit from their examples. After all, one's inability
to carry a tune does not exclude you from enjoying music. The
lesson is this: We can grasp our occupations, or we can thrive in
flexible thinking.
Remember John Lennon’s famous statement: “I’m going to write

myself a swimming pool.”
For his second book, “Business at the Speed of Thought,” Bill

Gates traveled around the country, and held presentations for the
public at Barnes & Noble bookstores.” I remember wondering
why a billionaire would do this. He arrived with a contingent of
about a dozen individuals, and a few people from the company.
He spoke for a while about ideas from the book. And then he did
something I didn’t expect; he asked people what they thought was
important. As he listened his contingent took notes. He has
turned his book tour into a fact-finding mission about his
audience’s interests. He was making more money doing research
for more money-making products. This is the art of scenario-
planning.
There is art in finance, as well. "It's fun to make money," says

Donald Trump in a recent co-authored book. Is he an author now,
or is he a real estate marketer? I would suggest to you that he is
both.
Ken Fisher is a very successful money manager whose firm
71
manages over $30 billion in assets. The majority of money

managers can appear insulated and exclusive. Not so with Fisher.
Though a successful money manager, he is also unabashedly one
of the most successful direct marketers in the United States.
Using regular mailings to prospects—who responded to previous
advertisements and publicity—Fisher encourages prospects to
self-qualify themselves for his investment opportunities. It works.
From his Southern California office he is now launching a
campaign to roll-up (buy and combine) other independent money
management firms.
There are numerous firms that manage large amounts of money.

What distinguishes Fisher’s firm is his individualized marketing.
It is so rare in the investment industry, that the trades can
scarcely write anything good about him. In a single short article
“Investment News” referred to Fishers “junk mail” over 6 times.
Like much of the industry, they ignore the art, choosing instead to
defend the occupation.
Fisher’s customers probably don’t read the investment trade

publications. And Fisher likely believes the old axiom that any
mention is still publicity, because it’s better to be known, than
unrecognizable, in a crowd.
Is educational marketing then part of financial service?
And isn’t good marketing an exploration of our favorite topic—

the future?
There is a way to combine the effort of linking expertise,

presenting problems for solution, and arriving at a most-sensible
posture if the situation arises. Another aspect of the scenario
planning approach is your mental preparation for other events. It
is disturbing how many important decisions are made in the
absence of their future implications.
72
I will discuss how scenario planning helps.
When I was first exposed to corporate advertising I learned

something that shocked me. Many products, like cars and large
durable goods, advertise to support a sale already made. Cost of
dissatisfaction, returns, etc are thus addressed. Repeated
advertising supports one’s decision, sometimes educating the
buyer on additional benefits of a product they already own. Is that
sensible? Let’s look at this proposition more deeply.
Financial service advertising often appears untargeted for a good

reason; it is. Advertisers, like banks, brokers and insurance
companies seek a mass audience, rarely targeting a specific
audience that has a specific need. Everyone is a prospect. This is a
very expensive proposition. Financial service advertising is the
fifth largest spending category. That should tell you something.
From a marketing perspective, the shotgun approach dilutes the

message of what kind of service large firms can deliver. It is a big
challenge internally as well. Managing tens of thousands of
financial advisors with varying skills and competencies in a
single company is no simple matter. It is natural for larger firms
to appeal to human instincts like pay, and promotion, and
prestige, to manage the business.
There are some terrific agents and employees at these firms. For
the customer, the task is locating the right one for their needs. Far
too often a customer’s desperation and exhaustion drives their
decision to get started with an advisor. This kind of beginning has
mixed results for the advisor and the customers.
We are contrarians in how we view potential business. Words are

important to us; we believe the use of words shows how a person
thinks. This is why we choose to call our buyers ‘customers’,
73
rather than ‘clients’. One tends to regard a client as a human

hang file; easy to ignore, easier to take for granted. By
concentrating on a customer base with specific needs, the advisor
can learn about that base. After a time, such concentration
essentially guarantees expertise. And expertise is very attractive
to a buyer, and in this case, to an investor.
And of course, this runs against the popular use of a person’s net
worth statement as the core of the advisory relationship.
Think about how being an expert in a market niche changes the

financial advisory relationship.
Let’s say you are a professional ‘hingleslagger.’ Don’t worry

about what that is, or what the responsibilities are. Think of this
occupation as a light blue collar job. The long hours,
opportunities for incremental advancement, and bonuses for ideas
and added value. Oh yes, and benefits. If you are very analytical,
you will automatically question whether or not this occupation
even exists in the material world. I made it up to illustrate a
point; simply follow my train of thought.
When you and your fellow professional hingleslaggers met at the

annual industry conference, concerns arose about recent industry
regulations. As an advisor, you’re looking to manage the
hingleslagger’s money in a way that will provide him with all the
things the television ads promise—the boat, the happy retirement,
college for the kids, and a dream home.
Over there is a generalist from Big and Rich, Inc. She is handing
out brochures and the opportunity to open free-checking with a
low introductory interest credit card with a home equity line of
credit. One form! Amazing! How DO they do it?
Over here, however, is a woman who says, “I love working with
74
hingleslaggers, in fact, my parents were both in the guild. Are

you aware of the recent H-451 provision in the tax code that
benefits hingleslaggers using certain estate planning vehicles?
Perhaps I can explain…” This is real life. We both know it. But I
will prove it is true.
Doping some research for a book, I was on a call with two upscale
advisors. One is a very knowledgeable wealth advisor from New
Jersey whose name is Larry, familiar with our Trusted Advisory
processes. The other was an advisor, named Becky, a Rhode
Islander, new to our program. Larry asked her about the
customers she serves, many of them owners of real estate firms.
Like most advisors, bringing in assets is a primary focus of her
work.
That this is a mistaken concentration becomes evident in a single

exchange.
“Have you considered introducing them to the benefits of a

GRAT?” Larry asked Becky. For those unfamiliar with it, GRAT
stands for grantor retained annuity trust. The important point was that
Becky, the professional, didn’t know.
“What is that?” she responded.
Larry went on to explain the purpose and the estate planning

advantage of this for Becky’s target group. But, it was not in her
primary client’s interest, much less hers. Her energy was pointed
at simply bringing in more money. It was a missed opportunity
in her market. Larry, by the way, was recently promoted as a
Wealth Manager in New York at a major firm, where
management tends to leave him alone. They are very smart in my
opinion to do so.
Service objectives are easy to meet when expectations are clearly
75
stated and agreed upon. The same technologies that allow us to

instantly access learning, research and performance also enable
lifelong relationships with smart wealth advisors.
Sales legend Tom Hopkins, says that what has changed in the
service component of selling is that sales people don’t
communicate as they once did. “Before the internet, I always sent
hand-signed notes to my customers, who became wonderful loyal
customers for me.”
How much difference can simple communication make in dollars?

Dan Kennedy, the highest paid copywriter in the United States
and a marketing expert, provides an answer.
Kennedy tells the story of a dentist who started sending signed

notes to people who did not sign up after the case (a dentist’s
sales) presentation. The follow-up, Kennedy says, agreeing with
Hopkins, is powerful for the customer. Kennedy, who measures
everything when he markets, tells of a highly contented doctor.
“His business from those almost lost patients is up over 40% this
year,” Kennedy says.
Growth like this is unthinkable for most people. There's

something important to acting responsibly in an ongoing
professional relationship.
Large organizations and many professionals have simply

undervalued how technology is changing how customers work.
As we shall see, those wealth advisors who succeed in a big way
are addressing their customers’ emotional needs. One of the
biggest customer needs is a feeling of security and peace of mind
that comes with a commitment to fiduciary.
And obtaining and building on fiduciary will be the hallmark

of future global wealth.
76
CHAPTER
11
____
Dinner: Day 2
Arthur Magnus grinned at the faces around the table. “This

has been a very interesting day,” he said, to no one in
particular. “Michael, what did you think of the professor’s
ideas about the future?”
Rita Sands, John Dockerty, and Mary all turned to Michael.
“I haven’t really prepared any comments…” said Michael.

The throng sat back and laughed politely.
Mary chimed in, “that was a bit of a set-up wasn’t it

Michael. Not fair Daddy.” Arthur shrugged as Michael
began to summarize his thoughts.
“I thought Professor James’ ideas fit very neatly with our

day-long conversation,” he said. “I mean, think about it.
John and Rita discussed the changing nature of service.
They explained how the challenges are greater than any
one adviser can handle, and that a team adds balance and
integrity to the solutions finding process. Add to that the
concept of fiduciary that shares responsibility and
accountability, and we end up with principles of value that
create the foundation of long term sustainable business
practices. The trust factor is that much improved by
77
acceptance of ownership of the results—if not a sense of

stewardship of the capital itself,” concluded Michael.
Michael shifted in his seat and took a sip from his water
glass. “It is still a little academic, though,” he said. “As if
we have been to school and are ready for the exam, but we
have no specific actions we can take to activate the service,
fiduciary and scenario planning models, and I think, that is
leaving me wondering, ‘so what?’” he said.
There was a long silence before John Dockerty spoke again.

“If you can manage another day like today, I have
something that will provide structure to everything we
have learned today.”
“If we can start early, I am in,” said Rita Sands, “I have a

few afternoon meetings beginning with lunch.” Everyone
nodded in agreement.
“Great then,” said John Dockerty, “let’s meet at Nelson’s

for a breakfast meeting. I’ll book the small dining room.”
As they rose to leave, Arthur Magnus’ cell phone rang.
It was Doctor Fulani.
78
CHAPTER
12
____
Breakfast: Day 3
“I’ll have a Western omelet and coffee,” said Arthur

Magnus to the waitress at Nelson’s. “Little cream, please,”
he added. He pointed to Michael to place his order.
When we start off in life, said John Dockerty, we don’t

know much. You might say that we don’t know what we
don’t know.
John Dockerty continued. “I think you will like what I have

to show you, Michael,” he said. “You mentioned not seeing
the elements coming together yesterday in what we all
heard. And I felt the same way. I was thinking about how
we could bring the academic parts, as you called them,
together in a way that would make sense and make money.
And then I remembered a project I had worked on a few
years ago. I want to show that to you all—now.”
With that, John Dockerty brought out a leather bound

manuscript and placed it on the table.
“Now,” said Michael, “how do we put this philosophy of

active advisory and trust in advisors into manageable
service?” John smiled and said, “I thought you’d never
ask.” Every shared a hearty laugh.
79
CHAPTER
13
____
Essential Plan #1 The Business Plan

Experience Level #1: We Don't Know What We Don't
Know aka Unconscious Incompetence
John Dockerty's
Michael took the wire-bound handwritten notes
document from John Dockerty’s
hand. “What is it?” he asked. * Understand the
“partnership” role of
the business plan.
”Do you remember how I told you * List personal
I’d done a lot of research into how reasons for
I could deliver more of what my developing a business
clients were telling me?” and a business plan.
* Identify resources
where you can get
Michael nodded. help in creating your
business plan.
“My firm wasn’t especially * Identify the
interested in how I could change quantitative and
qualitative information
what was working, then. They that supports and
didn’t see that the changes were challenges your
coming fast in the financial business concept.
services arena, with discount * Have your business
plan outline in hand.
80
brokerage and newsletters for individual investors,” he

said.
Michael smiled. “Sounds like a professor of mine in grad

school,” Michael said and smiled.
“People seem to resist change most when it

forces them from their comfort zones. It “Life is
takes commitment and courage to pursue what
something different. I am afraid I was happens
focused on making ends meet. I didn’t when
pursue my ideas sufficiently. But, neither you're
have I left them behind. You have some of busy
them in your hand. And they have been making
working for us—your Dad and me - very plans”
well for quite a while,” said Dockerty. And
then he added, “I’ve got a few calls to make.
Have a look. I think you’ll see the same
-- John
Lennon
pattern that I saw so long ago.”
He rose and left the room.
Michael turned over the cover of the document. The first

page read: "Outline for Arthur Magnus..." And then beside
that it was dated September 16, 1970. He began reading.
Outline for Arthur Magnus -- September 16, 1970

INTRODUCTION TO RUNNING A PROFITABLE BUSINESS
More often than not, we begin our first business

with less thought than we use to plan our summer
vacation.
In developing the concepts of lifetime

investment, we found that employees often
believe that they don’t need a business plan,
because they have no business. Such people
81
misunderstand the true purpose of a business

plan. Business people have said they don’t have
time now, or they’ve never used one and they’ve
done okay.
Corporate employees say they don’t need a

business plan because they work for a company
that has one. Retired people simply say, I’m
retired and cannot be bothered!
These limited views are dangerous for the same

reason. They do not account for the speed of
change in an individual’s life. They do not
account for economic shifts or social and
political shifts. The majority does not under-
stand how a proper business plan can contribute
economic value.
Countless experts teach that a business plan is

a document used to secure financing. And while
it's important, it is not the only or best
reason to create a business plan. The small
business administration estimates that over 2
million businesses are created each year. Most
of those are financed through conventional loans
secured by personal property or through
government guaranteed loans. That’s the up side.
Logic and statistics show the high risk of

failure for a new business is over 50%. The
overwhelming fact that the lender will usually
want your primary home as collateral, should
tell you something.
What is your role as a businessperson? You will

have spent countless hours, including weekends
and vacations planning, mounting, selling, and
profiting from your labor. Are you going to get,
or are you getting, what you want from your
business? Is it important to you that your
community benefit through the products and
services created by your business? If so, is it
82
important to you to build the church, civic

organization, or other organization into your
plan?
Is it little surprise that this country, the

United States of America, has the largest number
of entrepreneurs per capita anywhere on the
planet? The United States is truly unique in
having the resources, education and political
and economic support to start numerous
businesses from the seed of the simple idea.
Still, other countries are also experiencing

high levels of entrepreneurial activity; among
them India, Thailand, China, the countries of
Eastern Europe and South American countries,
like Panama and Brazil. It may be useful for
you to consider including these areas in your
plans.
There's a good amount of “pre-thinking” about

your business that will help you in the long
run. What’s behind your drive to build a
successful business?
The size of your business is directly related to

the size of your dream and your aspirations.
Have you built that into your plan? When he was
a boy, Andrew Carnegie knew he would spend the
first half of his life building a fortune, and
the second half of his life giving it away.
Clarity matters. It comes from our fascination
with our business problems and challenges.
Here are a few areas useful in envisioning your

business.
PURPOSE:
What is your purpose (with this business)?
Is it about maintaining a lifestyle? Do you want

a business you can sell, once it is profitable?
83
Do you want a business that can be merged with

another business to increase opportunities in an
industry? Do you have some other objective;
maybe one that others have overlooked?
There are many ways to express opportunity, but

here is one of my personal favorites. Is your
purpose large enough? Robert Schuller has a
memorable expression for this? "Make your plans
big enough to let God in."
MOTIVE
Are you in business for profit alone? Are you
interested in learning about something while you
profit? Is this a business you want to pass
along to your children or grandchildren? Is this
a business that will provide employment to your
family, your parents, or other relatives? What
do you want, and not want, to do?
MISSION
This is perhaps the most misunderstood concept
in business. A mission statement is not an airy
proclamation of goodwill. What is your
conceptual commitment to the business and to
your visionary "summit?" In other words, this is
your big objective. Bill Gates wanted a computer
on every desk. Ben & Jerry wanted to make
premium ice cream that connected with their
strong social values. What’s your mission
and big objective?
Don't envision some messianic statement of what

the future holds. Do a reality check. What are
your perceptions and beliefs about how your
business will meet your objectives? Take time to
do a realistic analysis of the opportunity you
think you see. Consider its acceptance in the
marketplace and its profitability factor.
Now check your goals again, and consider making

them bigger.
84
VALUES
These are the statements that define your
character. Are you open to new ideas? Are you
interesting to be around? Are you comfortable
around others? This is your foundation. This is
the place where sense and soul meet and become
how others will see your business.
It is here that we will begin our journey to

fuse the vision necessary for you to succeed in
your life’s objectives.
We begin with a document called “Economy or Not

Economy,” that I created several years ago.
Reference Tool
Watch TV, Make Money… Sort of
Our role models are key success indicators. The Sundance Channel
produced a program called “Iconoclasts.” One high profile (and
intelligent) celebrity cross-interviews another high profile (and intelligent)
celebrity. This high level eavesdropping is fascinating as we listen to the
discoveries the co-hosts make about each other. Awkwardly. Imperfectly.
And wonder-fully. The Hollywood producer, Brian Grazer, interviewed
Viacom’s more reclusive Sumner Redstone in one episode. What was
apparent was that these busy, multidimensional and thoughtful moguls are
also personally interesting. Their complexities become more human. They
are “genuine” people.
Openness, as clumsy as it can be, is desirable in real life business partners.

Programs about the rich can feed on their oddity. The 1980s program
“Dynasty” captured Americans imagination about the rich and famous
then, just as it does in dubbed reruns today around the world. Today, in
the US there are “rich story” cable offerings from the BBC (“Hotel
Babylon”) and network television (“Dirty, Sexy, Money.”) We may never
lose our fascination for the stories and quirks of super-wealthy people.
Especially when they are made up by script-writers.
Locate solid role models on TV, or elsewhere. They are out there.
85
This document has proven to be one of the most

effective tools that I have ever used. Basically
they follow the principles of business
prescribed by Peter Drucker:
One: There are two Purposes of business:

Innovation and profit.
Two: Doesn’t work? – Work it out or drop

it.
Three: Too hard or costly? Refine it, and

then review number two.
Four: Unhappy with your results? – Start

again
Five: If you run out of motivation. Get a

job.
Use positive reinforcement to position any idea,

product, event, service, speech or presentation,
even an acquisition of a business
or property.
As you begin working on the document “Economy or

Not Economy,” you will begin to formulate what
you would like your business to look like and
how you would like to position it in this global
economy. Careful preparation of a solid business
foundation is imperative if you are
hoping for long term success.
Let’s begin.
The biggest single error people make in their

economic lives is the failure to focus on their
strengths. We are told to “get better” at many
things for which we simply have no aptitude.
Find what you like and are good at, and you have
doubled your chances of success.
86
Everyone who starts a business begins with some

hesitancy. Committing to something you aren’t
expert at is tough.
An idea or a theory about business is very

different from actually getting a business off
the ground. The very successful succeed because
they understand the power of building teams.
Oftentimes that team begins at home, with one’s
choice of spouse.
The importance of a sustaining a supportive

environment is tantamount to one’s success.
Financial advisers speak of trust. There are
very few people alive who understand the
importance of trust better than a successful
entrepreneur. It is virtually impossible to
achieve great success without trust in others.
As behavioral psychologist and author William

James writes, those who are inspired by a shared
goal often have a level of commitment that is
greater than any financial incentive. This would
apply not only to the client-professional
relationship, but also to the relationships
shared with and ancillary professional.
Simply put, there’s too much to know to try to

go it alone. Working as a team protects the
client, keeps the financial professional from
promising too much, and builds a referral
network of significance.
The business plan is much more than a document

and a series of business management steps. It is
a clear visualization of what is possible and an
initial idea of how that possibility can be
achieved in a specific period of time. Many
successful people never create any other
documentation other than those required by law
needed to establish their businesses.
87
At the bottom of the page Michael saw the last margin note
from John Dockery, which read:
“What if there’s not a clear right or wrong?”
88
CHAPTER
14
____
Strategy Shift
Michael rubbed his eyes and took a sip of his Earl Grey Tea
as he read.
At the top of the next page was another handwritten note

with a new title, "On Business Strategy." Below that, a
second note which read, "A presentation to the Senate
leadership conference in 1970."
"Wow," said Michael aloud. And then he read the

typewritten pages.
Sometimes it's smart to change

strategy; sometimes it's smart to
leave it alone. It's not necessarily
external conditions that change;
it’s usually our own perceptions
that change. Ideas go in and out of
style. What’s important to
understand is what changes are
occurring in our world and what has
precipitated these key changes.
It is important to first define your

terms, in order to encourage
communication and complete and
proper understanding between all
parties involved. In our Trusted
Advisory practice, we encourage
financial advisors to be transparent
89
in their business dealings. This

promotes trust and confidence. We
also promote the careful use of
language. Words are powerful tools.
They can help you achieve your
objectives, or they can hinder you
from achieving your goals.
Here are a few examples of words

along with their definitions that we
like to use:
“Address” is also a verb.

When we address an issue up front
it's an active process. To address
is to put on the table, to make
something known. This is precisely
what a professional who offers
advice is supposed to be doing.
Financial advisers and others for
their part are also under an implied
fiduciary responsibility, in which
case openness is a business building
merit.
Education has an uncommon meaning.

The first meaning provides an
interesting opportunity for us to
illustrate the difference between
"indoctrination" and "education."
Education comes from the Latin word
"educare," which means to lead out.
Indoctrination is something more
akin to persuasion or brainwashing.
Value and values are distant

cousins. Value represents an
intrinsic and absolute concept,
while values are relative.
We might say that your value to each

client increases as you discuss
important personal investment
90
decisions.
Value is a relative term because the

relationship and roles take on
different meanings depending upon
the individual client.
The Struggle with Values
It is important to address the topic

of “failure.” Many of my clients
have experienced failure; actually,
I have learned that the number of
failures any given person
experienced before meeting their
success averages about 11. Eleven
businesses, eleven jobs, eleven
titles. What mattered were their
drive, and their ability to pick
themselves up, dust themselves off,
and start all over again!
The advisor’s challenge is to

recognize their client’s fear of
failure. This may include a
realistic evaluation of their
expectations, in order to determine
whether or not these are attainable.
When creating a business plan,

follow a model that has a proven
track record; one that may move you
to think outside of the box.
However, often times, this is
precisely what one needs to do in
order to increase your chances for
success.
It is also important to work within

an environment that best suits your
needs. In today’s market, many are
choosing to work from home. With
both parents following their own
91
career paths, many find that working

from the home is more conducive for
achieving ones goals, while
maintaining a healthy and successful
family environment.
Values also have a lot to do with

the longevity of your business.
I was interested in this idea and

pursued it further. My hunt led me
to a brilliant man, IBM Founder
Thomas Watson. In Watson's book,
"Of Business and Its Beliefs" he
wrote:
"Of the top twenty-five

industrial corporations in
the United States in 1900,
only two remain in that
select company today.
One retains its original

identity; the other is a
merger of seven corporations
on that original list. Two
of those 25 failed. Three
others merged and dropped
behind. The remaining 12
have continued in business,
but each is fallen
substantially in its
standing.
Figures like these help to

remind us that corporations
are expendable and that
success, at best, is a
permanent achievement, which
can always slip out of hand."
Presumably, and I say this only
92
because they were publicly

traded, the companies that Mr.
Watson mentioned had business
plans. The point: There is a
lot more to a business plan than
putting "a good idea" to paper.
Michael opened a folded sheet of

paper that read:
ADDENDUM 2007
The Real Purpose of a Business Plan
The undertaking of creating a business

plan involves the exercise of thinking
through the boldest administration,
operations, marketing, financing, and
taxation requirements. An investor
looking at a company is most likely to
care only about the financial
projections. These are the folks who
believe that accounting is the only
language of business, and this can
stifle new ideas and new business
possibilities.
I prefer to create new opportunities

by promoting business practices that
are innovative and stimulating, such
as through the practice of
concentrated marketing.
Let’s look at this concept further.
The starting point of rethinking our

financial and life plans, and managing
them effectively, is to acknowledge
that:
93
We don't know what we don't know.
We watch a parent drive a car and

because it looks simple enough, we
believe that we can drive too.
The creation of a business appears at

first, to be the road to riches. We
get the financing, we target the
market, we have the plants and
facilities, we have the employees, and
we've done some marketing. Where's
the guarantee of success? The fact is;
there is no guarantee.
In their December-January 2006 issue,”

Fortune Small-Business” followed
corporate retirees who purchased
business franchises in everything from
muffler repair to fast food. Most of
those who own a franchise believe that
their franchise has at its core a
pretty good business plan. The
franchise possesses a tested process
and system, marketing materials and
strategies, top quality and low price
vendors, hiring and firing
documentation. But even with a
franchise the franchisees face
everyday business challenges.
The verdict of these retired, would-be

millionaires: "It's hard to tell in
advance who really has the skills that
will make a franchise work." In other
words, it's hard work, no matter how
good the franchisor business plan.
94
Michael smiled when he returned to the main text to read

the next notes. The label read “OVERHEADS.” Overheads,
Michael thought, smiling. I remember those!
Basic Business Plan Questions for Overhead

Slides: Business Plan Questions
Business Summary/Overview
What is the concept of the business?
What is the current situation of Company's
services' concepts?
What is necessary for the business to succeed?
What is its current financial need?
The Business and Its Mission

What do you foresee to be the nature and scope
of this business?
Who is the prospective customer and what are his
needs?
How do you propose to satisfy those needs?
How do you differ from the competition?
In what direction do you propose to grow and
expand?
What are your benchmarks or milestones for
measuring progress/timing?
Market Review
What is the market opportunity for the Company's
services' concepts?
What changes do you anticipate in the
marketplace and when?
What target market or customer segments are you
aiming at?
What are the characteristics of the ideal
customer?
What are these customers' needs in view of your
product?
How will these customers evaluate your product
and make decisions?
95
Competition
Who are you competing against?
How do you compare in price, quality and
service?
Why do you think you can compete with them?
What opportunities do you see that competitors
don't see?
Why are competitors not satisfactorily meeting
the needs of the customer?
What threat/risks do competitors pose?
Business Strategy
What are the competitions' strengths and
weaknesses?
What are your strengths and weaknesses?
What is your plan to capitalize on your
strengths and their weaknesses?
What is your plan to overcome their strengths
and your weaknesses?
What is your implementation plan and timetable?
Products and Services
Description of products offered.
Marketing Plan
How will potential customers know you exist?
What is your marketing strategy?
What advertising do you intend to do?
What promotion will you offer?
How will you get publicity?
Operations
Organization chart.
Key employees: names, positions, expertise.
Action program: who performs tasks and when.
Human resource plan: this includes pay and
benefits.
Financial Projections
Other Considerations
State the reasons why you are sure your

Company's services' concepts will succeed, or
anything else you may need to convince someone
96
to invest in, or finance this business.
And now, look at your business

differently…
Some advanced business planning. Open your

eyes to your differences. Ask--
Are you working in a commodity or a

specialty business?
And …for those working inside a larger

company
TRY THIS! Sample some deep-coaching

questions. See your situation with new
eyes. Come on. Play along--answer the
following questions about your work.
- What goes on around here?
- Can you give me an example?
- Why does that happen?
- What does that look like?
Your responses to these questions can

provide you with some insights on your
self. How did you find these questions—
Difficult? Funny? Stupid? A combination?
Learning more about our motivation and
those values which help us to govern, give
us unimaginable leverage over our
individual challenges. Now and for the
future.
And ...if you're an entrepreneur, or work in

a small company,
TRY THIS!
97
Here are some sample questions. Try seeing

your situation with new eyes. (Come on. Play
along and answer the following questions
about your work-related preferences.)
Have you been successful in developing

business opportunities?
Or, have your found you work better with some

structure?
Do you prefer working in one place, or do you

need to move around?
Do you like to develop long term

relationships?
Do you easily see others' point of view? Does

this need to be pointed out to you?
What are you willing to do to achieve your

goals?
Your thoughts around these questions begin to

give you insights on your self. Simple
questions asked by a trained business coach,
unearth key insights and expose the blind
spots that are the cause of our troubles.
Sometimes we just need a boost, a good idea,

something to reassess our thinking. Here are
a few ways to start doing that and to keep
doing it in your business life.
• Consider volunteering time to an organization

that works in an area that you really care
about.
• Seek the advise of a personal guidance

counselor in order to understand your
character and talents so that you might
98
benefit from this knowledge.
• Keep a journal. Record your dreams, daily

activity, ideas and concepts.
• Join or create a mastermind group.
• Find and use a mentor.
• Take 15 minutes a day to learn something, or

to develop a new skill.
• Remember, we are all one skill away from

success.
• Use a tape recorder to record your thoughts

and ideas. Transcribe them later and then
consider how they might move your dream
along.
• Create a new list of 10 ideas every day.
• When you are really ready to make changes and

do what needs to be done, hire a coach.
A trained business coach asks simple

questions that enable us to examine our
strengths and weaknesses. In advanced
coaching, we learn about our motivation, and
our governing values. This gives us
unimaginable leverage over our individual
challenges, now and in the future.
Thank you. JXD
Michael put the document down on the table beside

him. He stretched his arms over his head as he
considered the treasures and tips he had just read.
99
[A tool that will generate useful ideas and activate your

ability to follow through on can be found in the
appendix. It is based on the concepts Michael read
about in the library.]
100
CHAPTER
15
____
Reality Check
“So what do you think?” asked John Dockerty.
Michael had been so absorbed by the paper he hadn’t

noticed John re-enter the library.
“I’ve never seen anything like it. You’ve put your finger
on the intrinsic reasons behind creating a business,”
said Michael.
101
"With all the changes—the internet, high speed

transportation, financial wizardry—making money is
still about taking action and doing so quickly,” John
replied. “What do you think successful business people
have the most trouble with?” he asked Michael.
“That’s pretty easy. You don’t need to be a Buddhist to

know that one—they cannot let go” said Michael.
John laughed out loud. “Yes… you’re right there,” he

said. “There is a specific area that hurts the longevity of
their business, though. And that is what I explored in
the next segment of my study,” said John.
102
CHAPTER
16
_____
“Soon we must all face the choice

between what is right and what is easy.”’
-- Professor Dumbledore
Essential Plan #2: The Succession Plan
Experience Level #2: We know what we don’t know

aka Conscious Incompetence
John rose from the table and pointed at a brass plaque on

the wall.
“A few years ago, I conducted a survey of top financial

professionals that asked whether their firms had succession
plans in place. Less than a third had a succession plan,” he
said. “This interested me, and I wondered about what
consequences this could have in both financial and social
terms,” he added.
The detriment of not having a succession plan becomes

obvious with competition for talent. Your most talented
leaders and thinkers may not stay if they perceive a better
future elsewhere. Even clients perceive that minus a
103
succession plan the organization is unstable. Our surveys

consistently suggest that as advisers reach a certain age, or
possibly suffer a serious illness, clients are 50 to 80% more
likely to begin a search for a new advisor.
A succession plan suggests forethought. It acts as an

example of good business behavior. And it is really not that
difficult to put in place. One of the most successful
corporate examples of a succession plan is Northwestern
Mutual's purchase of the Frank Russell Company.
Prior to his retirement from his family firm, George Russell

sought an acquirer that would match the expectations and
values of the Frank Russell Company. He found such a
partner in Northwestern Mutual. The institutional
advisory firm had been privately held. George Russell and
his family owned 60% of the company. The remaining 40%
was held by company employees.
After the acquisition, the company kept its name,

management, headquarters, culture and employees. At the
time, the match was described this way: “Each company's
core products are unique, differentiated and demonstrably
superior within its own industry.” The acquirer saw
Russell as having the "same integrity, the same deeply held
human values and the same single-minded dedication to its
customers that made Northwestern perennially one of
Fortune’s ‘Most Admired’ companies.”
For its part, the Frank Russell Company had pioneered the
‘manager of managers’ concept, managed and marketed the
Russell 2000 index, and advised on $1 trillion in client
business. Specific terms of the transaction were not
disclosed.
104
The two largest succession plans of all time are linked

together.
In July of 1998, Bill Gates appointed Steve Ballmer as the

CEO of Microsoft in 2000. The press release for Microsoft
reported that the "promotion is part of Gates' plan to
broaden Microsoft's leadership so the company is well
placed to take advantage of the many new growth
opportunities ahead. Ballmer's new role will allow Gates
more time to focus on Microsoft's long-term vision and
product strategy.”
In early March of 2006 the New York Times reported that

the 75 year-old Warren Buffett had "selected an executive
who will eventually succeed him."
On June 16, 2006 Computerworld ran the following story.

"Microsoft Corp. Chairman and Chief Software Architect,
Bill Gates, plans to move away from overseeing his
company's day-to-day operations in July 2008 to spend
more time working with his foundation.”
You don't need to have seen the Net Jets advertisement in a

business magazine to know that Bill Gates and Warren
Buffett are friends. It is impossible not to know that they
speak regularly. Still, the June 26 story (NPR) surprised
most people. “Warren Buffett, billionaire investor and
founder of Berkshire Hathaway, has announced he is
donating much of his fortune to charity. Over time, most of
Buffett's $44 billion in stock holdings will be given to the
Bill and Melinda Gates Foundation.
He added more in the conference to the story, NPR and

others left it out. "I feel terrific," Buffett said at a meeting
Monday at the New York Public Library and monitored by
105
Webcast. "This has been coming for 50 years; the exact

method became clear in the last year."
There are tremendous lessons in the story. Wealthy people

are very decisive. Wealthy people are in control of their
destiny. And, most importantly, wealthy people have
succession plans when they have a successful business.
Or do they?
This story appeared in February 2007.
NEW YORK — Moving to shore

up its top management ranks,
Charles Schwab (SCHW) said
Wednesday that it has named Walt
Bettinger the brokerage firm's
president and chief operating officer.
It's a development that may put him

in position to someday replace the
company's chief executive.
The appointment, effective

immediately, means Bettinger, now
executive vice president and head of
Schwab's Investor Services unit,
will become chief lieutenant to
company founder, Chairman and
Chief Executive Charles Schwab,
who is 69.
Wall Street has long been

wondering what the company's
succession plans will be, and David
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Trone, an analyst at Fox-Pitt

Kelton, said in a research note that
Bettinger's promotion "essentially
signals his place as the clear
successor to the company's
namesake founder."
Shares of Schwab rose in early

trading Wednesday.
Hopefully for Mr. Schwab the transition will be smoother

this time. Two years earlier, Fortune magazine had covered
Mr. Schwab's efforts to sustain his company’s growth and
then extricate himself from the day-to-day operations. He
had handed control of the Corporation to his trusted
number two man, David Pottruck. It wasn't as smooth as
anticipated.
On Monday morning, July 19, the

board met as it usually did, but this
time Pottruck was asked to leave the
boardroom. He wasn't summoned
back. An hour later Schwab called
him into his office and gave him the
news: Pottruck's run was over, and
Schwab, then 66, would be
returning as CEO.
So ended one of the stranger

succession sagas in recent memory--
not the all-too-common kind in
which a founder can't let go and
sabotages his protégé, but rather a
case in which everybody tried to do
the right thing but somehow got it
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all wrong. So, too, began the latest

chapter in the death-defying story of
Charles Schwab, the man and the
company.
All three of these men ran public companies. One is

having a more difficult transition. Our task is not to
analyze the succession models, but to underscore their
importance.
Personalities play a big role in a succession plan. But so

does a clear-cut direction. As noted above, Warren
Buffett dealt with succession planning issues almost from
the very start of his career. And it's almost certain that
this topic came up in discussions between Gates and
Buffett when they were alone.
Benefits of a Succession Plan
Valuation Issues of a Company

• Client/Customer Retention
• Asset Turnover
• Net Margins
• Industry Growth Trends
• Debt Levels
• Length and Stability of Client/Customer
Relationships
• Billable Services and Receivables
Big mistakes that stem from failed succession planning

can lead to company failure, They include:
• Fearing the boss

• Accepting without verifying
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• Losing curiosity or connection with your

buyers
• Softening of commitment to success
“I see what you were saying before,” said Michael.

“Sleepiness in business management is a potentially
big threat for family businesses and even publicly
traded companies. Do you have any idea of how much
is represented by companies without succession
plans?” asked Michael. He was squinting slightly, as he
considered the figure for himself.
”Corporate businesses actually represent the lowest

number of employees and income distribution,” he
said. “About one third of the economy. Take the
remainder and apply the unplanned succession figure
and you’ve got trillions dollars of capital uncertainty,”
he said. “It’s not necessarily going to be bad news for all
these businesses of course. But they are very likely to
have some additional problems with staff and clients,
due to a lack of confidence in management.”
“And you believe that a succession plan at least

considers the negative prospects?” said Michael. John
leaned forward. “Succession provides the management
and the owners of the business with useful financial
information and customers with a sense of stability. For
any businessperson with discipline is essential.”
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CHAPTER
17
_____
Essential Plan #3: The Estate Plan
Experience Level #3: We know what we know

aka Conscious Competence
John rubbed his hands together and continued.
“Trend watchers have come to believe that a good estate

plan is a teaching tool for financial literacy. The legacy is
more about the knowledge than the assets. Of course, the
inheritors have a different view at first. But if the
arrangements are in place, their structure tells the story of
how to grow assets.
One night I wrote the essentials of the estate planning

process. They coincided with a terrific acronym--MAP.
This is what I wrote down as the interdependent pieces of
the planning process.” He handed Michael a well-
preserved sheet of paper which read:
Management
Accumulation
Philosophy
“You can’t tell most people—especially people like your
110
Dad—what to do,” said John. “I learned years ago though,

that I could coax him to think about decisions differently.
I started by getting my mind clear of any agenda I might

have had. Then I listed the areas where I was unclear about
your father’s approach, his vision, or his commitment. And
I would then ask questions around
those points.
The simpler the questions, the better the conversation.
It was rough at first. I probably sounded like a

schoolteacher, and Arthur seemed to resent my questions a
bit.
But I got better quickly. I learned to ask the questions in an

off-handed way. Like, “Arthur, how would you react to…”
If he made a statement that sounded final, I might probe it.
Once I remember asking him, “What’s important about
that?” He stopped for a moment. It made him think. And I
knew I was onto something very important and helpful.
I’ve been reading about people who do this kind of

questioning to help executives, coaching them through
difficult decisions or choices; just like I did with your
father.
This detached way of speaking with someone is very

effective when you work with people for the first time. You
get pretty good at spotting inconsistencies or character
strengths when you ask a question with no agenda other
than listening for the truth.
Locating someone trustworthy is important when you are

working with someone as successful as your father.
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It becomes challenging when you have to add in several

people and get them to work together, but it is necessary. I
used to explain it by saying we were accumulating assets,
and that some of those assets were going to be good people.
This was no time to surrender to the status quo.
Let me show you how it works when we put together our

teams for development projects and co-ventures,” said
John.
And then Michael began to read from a sheet in his hands.

At the top of the sheet he read in bold letters the title:
Living by Example
Toward Creating a Billionaire Team
The text was followed by another curious line…
About Leading a Quest
John continued, “There are broad changes ahead

for protecting and managing wealth. First of all,
the amount of money changing hands is the
biggest in history. It is at least twenty-six trillion
(that’s with a “T”) and it may be as much as one
hundred trillion.” He continued
“Current projections and advertising are based on

varying degrees of accurate information (and the
courage to change direction). Sixty-five (65%)
percent of all net worth is controlled by people
over 50. Seventy-five (75%) of all pharmaceutical
sales are to people over 50 years old. Women
make eighty percent (80%) of our household
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spending and healthcare decisions.” John stopped

and looked at Michael, then continued.
“None of this is static. All these numbers are

likely to increase…. On the other side of the
equation are the professionals. Popular
management wisdom says the top five percent
make up the aggressive, can-do portion of an
average company. These are the self-motivated,
self-starters who need little help, training, or
support. The remainder, according to this
generally accepted wisdom, is the corporate bloat
called middle management.” Again John paused
and looked in Michael’s direction.
“In the financial advisory industry, we refer to it

as the trusted advisory segment; the figure is
more like 2%. That’s right; about two percent
know what they are doing, what their customers
need and anticipate and are prepared for future
needs These few are committed to constant
improvement in this work. This we interpret to
mean continuous wealth generation for them
AND their customers.” Now John paused to sip
water from a glass.
The glass was touching down when he continued.

“They do it through simplified management of
complex teams. And why does anyone need a
professional team?
Just think about the complexity of investment

strategies…. First, you have the investment itself,
which consists of equities, bonds, and alternatives
like real estate, commodities, agriculture, rolling
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stock or livestock. When you invest in equities,

you must consider the following: Are they
domestic or global? Are they
large, mid, or small cap? And finally, do they

provide core value or growth? The same is true
with every investment strategy each with its own
jargon, culture and assumptions.” Michael
considered a question, but settled back into the
chair filled with warmth at the complex of issues
his new friend was describing.
John’s patter continued unabated and passionate.

“The strategy breaks down further. Assume for a
minute that you are successful. As your advisor I
also need to know, maybe even determine and
advise you on, your legal structures. Should you
own through an LLC? A corporation? Do you
want your assets in trust? How will this affect
your taxes? Are there tax credits? Are there
allowances? What's the timing -- long-term or
short-term? Overlay all this with related business
decisions.
Determine location, staffing, equipment, business

concentration and administrative costs. It all
expands quickly. Each step can become a
landmine if it is not monitored, changes in the law
addressed, and if the element is improperly
integrated into the whole picture.
It's precisely for this reason that most people lose

so much money over their lifetime. Is that because
of ineptitude and incompetence, or over-
confidence and hope? Either choice nets you a
114
loss. And, potentially that also brings exposure to

legal action. In the new world that means the
client and the advisor, by the way.”
Now John paused and smiled as he looked at

Michael. He was really enjoying this
deconstruction of the process, thought Michael. A
breath and John continued.
“One person simply cannot obtain sufficient

information to create, plan, and maintain any
financial decision of consequence without
substantially educating the customer.
When you build a house you (or your contractor)

hire licensed people with specific skill sets such as
a bricklayer, an engineer, a plumber, an
electrician, a sheet-rocker, a tiler, a flooring
installer, and so on. Do you really want to have
these people working without complete
engineering and architectural drawings?
Would you permit them to work without a

licensed and bonded foreman to orchestrate these
different trades? To do so could prove disastrous.
But everyday, people have their financial house

maintained in just this way. They visit with the
attorney who serves them expensive bottled water
they pay for dearly. They listen to their
accountant who baffles them with arcane tax code
citations to show his brilliance. They might visit
with their insurance agent, who may encourage
further reduction of risk through a policy update
and rewrite.
115
But rarely does any one of them bring the plan

together. And that is an outrageous situation.
I guarantee you Michael, this is the real and

mediocre world of planning for the majority of
Americans!” John stopped and, now, rubbed his
eyes. Disappointment ran through his being at
that moment. He sat back in his chair, sighed
deeply, and looked at the ceiling for a moment.
Michael swallowed hard. And they each sat in

anxious silence for a long moment. It was as if
they were waiting for a train that was running
much too late.
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CHAPTER
18
_____
“It does not do well to dwell on dreams

and forget to live.”--Professor Dumbledore
Essential Plan #4 The Wealth Plan
Experience Level #4: We don’t think about what we

know aka Unconscious Competence
That night Michael slept and had a dream in which John

Dockerty asked him one question: “How is it that you’d
expected to live?”
Dressed in a red suit with white piping John quoted Will

Rogers…”Buy stock low sell it high… doesn’t go up? Don’t buy
it” In the dream Dockerty smiled with a big clown smile for
Michael.
Michael said, or did he ask… “Legacy. A teaching tool.”
“Think about it,” said John. “All the great spiritual masters
espouse some version of the golden rule. This is the master
golden rule—to leave the world a better place. Isn’t it so?”
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CHAPTER
19
____
The Meeting
Dr. Fulani called and seemed quite agitated. “I have been

trying to reach you for days!” said Dr. Fulani. What have
you all been up to?”
Mary was surprised and anxious. She had never heard him
speak so fiercely.
“Well, Daddy’ is in the other ro--,” but she was cut off.
”Not your Daddy, Honey, I need to speak with John

Dockerty. I know that he is with you all and I need to speak
with him at once.” The doctor was persistent.
Just then she heard here father’s laughter and John

Dockerty’s voice. “I think I hear them now Dr, Fulani.”
She put her hand over the receiver and when she saw the
two men enter the room—said “Shhhhhhh!” And then
whispering loudly said,” It’s Dr. Fulani!!!”
Arthur Magnus stopped. His hand reached toward the

receiver as Mary drew it slightly back.
”Daddy, he wants to speak with Mr. Dockerty.”
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John shrugged and, smiling, took the receiver. The room

was silent.
”Hmmm. Hmmm. I know, yes sir. Yes, Doctor, I

understand. And thank you.” He hung up the phone. His
shoulders slumped a bit and his chest heaved with a heavy
sigh. He turned to face the room.
“Arthur, kids… as your advisor, I have some news I am

required to share with you. “
Arthur reacted swiftly. “John, I think we should…the

kids… my medical proxy… it’s…” Then, he appeared
silently thoughtful as he lowered his head.
John laughed lightly. “Arthur. My God, Dr. Fulani tells me

you are as strong as an ox. A little cholesterol, which a glass
of red wine will probably cure… you have all the time in
the world,” said Dockerty.
Michael looked around confused. “Then what is this all

about? If Dad’s ok then what is the suspense? I mean if we
all—“But then John raised his hand to quiet him. And
Michael froze.
“Dr. Fulani has been trying to reach me. Thank you, Mary.
I needed to accept his call. And, honestly, I was reluctant to
do that,” said Dockerty.
“John?” was all Arthur could say. Had his voice cracked
slightly?
“I have pancreatic cancer,” said John. “Dr. Fulani gives me

around, oh, two…maybe three months to settle my affairs.
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And then…well…”
Except for the uneven sounds of four people catching their

breath, the room was completely quiet. The clock tolled a
single bell. One pm.
”We have nearly forgotten about lunch,” said John. “And I

am famished!” And he walked toward the hallway waving
them all to follow him.
Arthur stood and walked to John and put his arm over his
friend’s shoulder as they turned back toward the room.
The two men now stood together alone before the group.
Arthur spoke.
“You know a few years ago I contracted bronchitis. It

lasted for weeks and it was a scary time—I couldn’t get my
breath. I felt what it might feel like to die. Instead of
giving in or becoming dependent on the pharmaceutical
treatments the doctors were pushing I ventured to other
ways to heal myself. Oddly, I had met a chiropractor at a
conference in Chicago. More strange was that I met him in
the hallway. He was actually at a completely different
conference.
The treatment led to discussions of the influence of food

and the healing power of alternative treatments.
Something as simple as a massage or yoga adds years to
your life if you do it regularly.” He looked at John. “We
will look after you too, John. We will find you the best care
we can—because we are able to, and because of what you
mean to us.” John smiled and tapped Arthur lightly on the
shoulder. Thank you.
“None of us can overlook health -- it's a very vital part of
120
our team,” said Arthur Magnus as his eyes welled with the
tears of affection for his friend and longtime business
partner.
“Supportive, loving family and friends, the laughter, the

conversation, the simple enjoyment of a game of golf,
tennis, swim, skiing. It makes our lives joyful. And work,
especially those of us who have been lucky to discover
businesses we love, is so richly satisfying. My lifetime
investment holds a far superior value when I appreciate the
simplicity and complexity that have been mine to choose,”
said Arthur to his friend, his partner, his brother, John.
End of this story… so far.
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Postscript
____
Wealth Beyond Wealth: The Truth about

Planning a Wealthy Financial Future
Experience Level #5: We easily share what we know
aka Conscious Unconscious Competence
Every Christmas, someone says to me with attempted

humor, “Are you related to George Bailey?” I smile and
think, yes, yes I am. Because I “got” the lesson of the Frank
Capra film, and resolved a long time ago to live my life
with appreciation.
The idea of having a “wonderful life” is abstract to too

many people in the world today. We’ve gotten a sampling
of the possibilities of living it from our story.
At last count, based on actual wealth, and not net worth,

there are 671,000 millionaires living in the United States.
Decamillionaires …Centimillionaires…Billionaires are all
increasing in number, too.
Are they really different from other Americans? Is there

any information or value to be learned from people
wealthier than ourselves?
122
As the story shows there are ways to manage ones total

wealth—and especially ones legacy. Not so important
while we are in the midst of our wealth creation, our legacy
becomes critical at the end. And as the story shows, we
shape our legacy over our lifetime.
By deconstructing what wealth is and can do and then

advancing, we can see how our investments of our lifetime
make a difference.
Successful individuals have clear life-purpose.
To be sure, money amplifies anyone’s range of choices.

Some say riches make the wealthy more sophisticated,
more entitled, or more capable. Some say the rich are in a
class of their own. Their fortunes are untouchable and
unattainable by the average American. This is proven to be
false every day.
Wealth also has its responsibilities. I am suggesting that

wealthy people are just as individualized, their
circumstances as varied and subject to choices, time
constraints, and processes as the rest of us.
Some financial gurus would have you believe the affluent

are vastly different. They suggest rich people can be
classified, appraised like fine furniture, and maintained
accordingly. Others believe luck is the defining factor.
Warren Buffett has referred to inheritors of great wealth as
members of the lucky sperm club. There are huge
distinctions in behavior, the main one being whether
people are aware of a purpose larger than themselves.
As with anything large, be it a desert, the ocean, or a vast
123
amount of knowledge, one needs a reference point to make

sense of the expanse.
F. Scott Fitzgerald’s short story, The Rich Boy, contains one

reference point on wealth. It is one of his most often quoted
phrases from “The Rich Boy.” It is often quoted
improperly.
Let me tell you about the very rich. They are different
from you and me. They possess and enjoy early, and it
does something to them, makes them soft where we are
hard, and cynical where we are trustful, in a way that,
unless you were born very rich, it is difficult to
understand.
That is but one view, albeit a popular one.
Like the rest of us, “the rich” come in all sorts of shapes.
Some are like the striking debutante whose inherited hotel
fortune permits her to be the world’s most famous party
girl. This is passive wealth; used but not understood,
neither is it interesting to the beneficiary. Others are like the
frugal and understated millionaire who runs a sound
business, looks through newspapers for information (and
sales), lives in a modest home, and supports schools,
churches and perhaps a political party.
There are the high-tech and hedge fund multimillionaires

whose passions are as varied as the huge yachts they drive,
like Larry Ellison, or those with private personal lives
punctuated by the occasional public outcry on public
policy, like George Soros. These each represent active
wealth. They are more conscious and often very aggressive
business people. These are the people who those without
money stigmatize as “the problem.”
124
Some people like to talk about successful people is that they

are "different." This thinking suggests that these people are
lucky in some extra way, or that they are blessed, or that
they were born with more money. Sometimes this is the
case. There is a distinction, however between these people
any actively wealthy of our focus. It is my belief that
inactive or passive people with money are not as successful
as they seem. They are merely rich.
Our research focuses on the truly successful people, the

actively wealthy. Across business lines and including
corporate executives, restaurateurs, owners of traditional
and innovative entrepreneurial businesses, very successful
people behave differently and tend to make decisions more
wisely with a longer view. In down times they tend to
know where to begin fresh.
In fact, there are important lessons from society's wealthiest

citizens, the active investors, those who assemble teams of
experts. We've touched on how they do this. Specifically,
we considered the behaviors of those who are wealthy and
successful in business or in a profession. Across business
lines and including corporate executives, restaurateurs,
owners of traditional and innovative entrepreneurial
businesses, very successful people generally share one
thing in common: the financially successful have different
behavior toward
money than the rest of the world.
This "success" behavior comes from a winning psychology

or more advanced knowledge about money, say some
financial experts. But, it is clear that any American can shift
his or her financial situation by mimicking the behavior of
the financially successful Americans to also become rich.
125
“The Billionaires Little Black Book,” is an instruction

manual on the basics of the behavior of financially
successful people from the point of view of a wealth
advisor. Financial advisory is a relatively new field in
American finance, and so it is still being tested for its
validity and value.
A true wealth advisor is obligated to gain a deep

understanding of their client. “The Billionaires Little Black
Book,” explains how these and other advisors can
positively affect our wealth as they observe, and then serve
customers. In turn, they will secure and maintain a
financially successful practice.
For anyone seeking to grow and protect wealth this book

simply provides the “permission” to succeed, offers new
tools and perspectives, and the steps helpful in influencing
results like those of the truly wealthy.
In our survey on gaps between wealth advisors and their

customers, we found that advisors are clearer about which
professionals are needed, while the affluent and wealthy
customers understand investment opportunities outside of
regulated markets. We discuss ways the technical strengths
of the advisors and the entrepreneurial strengths of the
customers can combine to help both parties.
The true-team strategy promotes a team style for soliciting

views and reaching consensus. The action of seeking
consensus however conservative in appearance
encourages thoughtful consideration.
This illustration will be helpful.
126
I attended a Quaker College. The small but financially

powerful Christian sect operates meetings by consensus. I
can attest to many an agonizing situation where I was
involved in student politics working toward agreement on
a college wide rule or funding some student activity.
It is hard for me to say whether this structure of consensus

or the more popular American Democratic structure
produces better results. But, I can say with certainty, that
the experience of persuading those final executive votes
stretched me in creative directions I would not have
otherwise been stretched.
Consensus may be slower, but the final decision is more

certain. Consensus, as frustrating as it can be to the parties
involved, brings intrinsic peace and nearly always adds
long-term value.
While I have not necessarily recommended it in this book, it

is instructive to understand how consensus is a powerful
alternative to the hastily made recommendations and
approval urged by many professional advisers for estates,
investment ideas, tax and real estate planning and in some
cases employer retirement plans.
A few professionals have suggested that bringing together

disparate views only confuses clients. What this usually
means is that it creates the appearance of a lack of control
by the adviser. I ask clients whether they like to have a
relationship with their attorney or accountant in advance,
or if they just like to see every proposal potentially struck
down by someone they don’t know.
In fact these ideas protect each player in the process –

professional and client.
127
Think of it this way. Tennis players play alone in singles or

with a partner in doubles. They agree to play by set rules.
Both games use a net, a few carefully placed lines, each
player’s racquet and a couple of balls. Having a partner
and playing another pair of players across the net changes
the game. It changes the opportunities. The speed of the
game sometimes changes. The importance of height and
the angles of each player’s change the shots, literally. So,
we can say that singles and doubles matches simply offer
different opportunities. The same is true for our mindset
versus the “traditional” mindset. Ours is naturally
entrepreneurial.
Mass affluence expert, Dan Kennedy, describes the

entrepreneur’s mindset. Says Kennedy, “when you force
yourself to be clear about your objective and how you will
get there, you get there faster.” This, he says, is what
distinguishes what he calls “renegade millionaires,’ - those
who repeat financial success almost at will - from everyone
else. What such millionaires possess is an understanding of
what is important to get successful results.
Unlike some popular get rich quick schemes, there is no

clean-cut template for getting rich. It requires behavior that
most people are simply unwilling to perform.
Entrepreneurs invest their energy on focusing on their

work. Unlike practitioners of the Protestant work ethic,
which dictates that hard work is its own reward, financially
successful Americans know that certain work focused on a
strategic goal produces wealth.
Actively wealthy individuals tend to have strong beliefs—

in themselves, in the projected outcome, and in their ability
128
to deliver. Their habits are generally opposed to someone

else’s structured work environment. What separates very
successful people (and very successful advisors) is an
advisor’s ability to understand how individuals view their
work and the world. Persistence, unstoppable problem-
solving ability, and decisive-ness in enacting their decisions
are some of the more important characteristics that separate
the rich. But, they can—and I argue must also--be their
advisors’ characteristics.
This behavior translates into a lifetime guide as well.

Quality healthcare presents a good model for examining
the behavioral patterns of the wealthiest segment of the
population. Withstanding elective medical procedures, the
wealthy will, in many cases, pay less in real dollars for
healthcare than their less affluent counterparts. Why?
On first look, we might assume the opposite is true—that

they would be willing to pay more! After all, the wealthy
have access to, and the ability to pay for, the best quality
medical care and health insurance available. They also
know how to locate it and go to it. And they are not limited
by geography or politics.
This also applies to our advisors. If they consistently fail to

meet the customer expectations, the customer will move on.
Unlike the rest of the world, the actively successful make

thoughtful decisions. They explore moneymaking
opportunities in detail, with an eye to saving money in the
process.
Wealth planners who merely sell investment products

cannot produce the results clients seek. Many financial
products are formulaic, and though that might work for the
129
average American, this does not necessarily meet the needs

of the very wealthy. In our survey, wealthy people felt
“these people are doing business the best they can.” Some
advisors are rash and un-prepared with their
recommendations. Some wealthy people excel at creating
their own investment opportunities, looking into the
details, working with persistence to find solutions, and
maximizing their investments. An informed client will
pummel the best advisor with questions, and take as much
time as they need to make informed decisions.
I advocate making decisions over relying on the “time-

saving” habit of providing approvals. Why? Because
decisions are active, approvals easily become passive and
thoughtless.
“The Billionaires Little Black Book” is a pathfinder of

wealth advice and processes that complement the client’s
wealth goals with life. By taking a long view and working
collaboratively with carefully selected professionals from a
variety of disciplines, the client becomes the focal person in
helping clients achieve their goals. Money buys the luxury
of not needing to worry. And money buys choice. Trusted
advisors understand that fruitful relation-ships take time,
they're challenging, and that the rewards are significant.
By adopting an interdisciplinary, collaborative decision-

making style, successful individuals and their advisors
solicit views and reach consensus that are more likely to
bring the desired result. The action of seeking consensus is
conservative, and it encourages thoughtful discussion that
affluent customers expect.
One of the biggest differences is the way the client and the
advisor invest their energy. Many clients have learned that
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focused, hard work will produce wealth. The more popular

Protestant work ethic is that hard work is its own reward.
This is a minuscule piece of the active wealth concept.
Many believe that very wealthy people have a projected
outcome always in mind and the confidence, if not always
the ability, to obtain it. The view of very wealthy people
sometimes opposes the structured work environments that
most of Americans perform today. In short, work, and not
money, separates the actively wealthy from everyone else.
In Titan, Ron Chernow’s biography of John D. Rockefeller,

the author provides us one classic view of work. It is
appropriate to remember because, happily, it is still alive
and living in the U.S.
In his youth, writes Chernow, Rockefeller spent the better

part of several months looking for his first job. He had
attended a trade school where he had become proficient in
bookkeeping and was finally able to land a job in
Pittsburgh. It was a turning point in his life. He referred to
this incident throughout his life as “Job Day.”
His skill in accounting became the cornerstone for

everything he did. How he thought. How he devised his
decisions. What he saw in the numbers created a metric for
innovations—such as transporting oil in height lines rather
than in wood barrels, and breaking oil into component
products such as light machinery oil and the heavier
asphalt— that made him the richest man in the world.
How many people today can claim such visionary skill for
building real economic value? And how many would work
as hard as Rockefeller did in building, and then again in
distributing, one of the biggest fortunes ever created? You
can count them on one hand.
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This behavior is very important for any financial adviser

who wants to gain and retain such a wonderful client and
do so for a long time. Let's begin with how actively
wealthy people got where they are and how informed
financial and other advisers will help themselves and
others get there, too.
My hope is that you will be making decisions for your

future by using this collaborative system. You have been
introduced to the concept of creating a trusted advisory. Be
curious. Get different professionals working in tandem to
develop and maintain your cohesive and complementary
financial and life plan.
If we are managing our investment of our lifetime well, I

believe it will be hard to tell our objectives apart from the
journey.
Doesn’t that sound like a wonderful adventure?
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Book 2
The Billionaires Little

Black Book
133
Part I:
Create an Information-Sharing
Wealth Advisory Team
Develop Strong Core Objectives

To Attract the Best Advisors
134
I often ask professional advisors why they choose to hunt

customers when they can fish for them. There is a myth
that rainmakers are all very aggressive and tough. I am
sure they can be. But I do not believe they are generally
pushy. I believe they can be very smooth. And I believe
their specialization “story” about why they are advisors
and not their physical being is what attracts most investors
to them.
Here are the steps true wealth managers take. Thomas

Stanley’s research confirms that wealthy individuals enjoy
a distinctive position in the marketplace of financial
opportunities. So their advisors tend to follow these steps.
• Develop a strong sense of the client’s business
• Learn all they can about the client’s business(es)
• Dig into the regional and local specifics, conditions

and variations
• Develop personal relationships with other

professionals working in those areas.
• Start helping clients, often before they're formally

hired
• Go back to Step 3 -- to do more research.
• Write. An article, a book, letters, a speech, a

website. Clarify how you differ, how you help
people, your passion and your experience doing so.
• Create advisory teams for their business
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• Check in on Step 1. Revise and repeat, if necessary.
You'll take similar steps to measure your actions. You'll

determine what gives you the most useful information.
Some of these steps will be very straightforward. Simple
measurements include such things as determining how
many think tank meetings are required (and at what cost)
to achieve increases in your income or enhanced protection.
Consider the value (or cost) of the long-term relationship.

It'll pay to take time to do the math. The potential benefits
you get from your advisory team should pay for that team
many times over. Why? Because, you'll have structures,
investments, additional opportunities and protections.
That’s a better picture, isn’t it?
Here are the steps for metrics that you will want to
consider.
Assess Your Advisor Prospects
Ask about the following areas:
Typical Customer Fees

Annual fees on assets
Special studies
Filing fees
Maintenance, advertising and “other” fees
(monthly or annual)
What do you do differently from others in your

industry?
Accounting system
Customer service
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Employee benefits and distinctions

Special programs
Consider the advisor’s lifestyle:

What do you and your advisors have in common?
What do their kids do?
What schools do they attend?
Do they have a personal passion for their work?
What sports, culture, leisure, and get-aways do
they enjoy?
Where do they live?
How do they live?
Knowing more about your advisor will help you to

establish a sound working foundation. Knowing the
advisor helps promote confidence and trust, as well as
awareness. This approach will also distinguish you from
their other clients. It will very likely provide you valuable
information you can use to manage your other advisors.
A recent Harris poll says only 17% of Americans have

favorable views of their financial advisors. That's pretty
poor. Don't you agree? Well it's not necessary. We want to
locate the great ones.
By now you should begin to be seeing a better way to work

with professionals. The question is whether you are ready
to be different?
The Secret of Adding Value
Begin by thinking “team” The act of creating a team forces

truth. No one is an expert in everything. The team concept
makes each member highly responsible and accountable.
You are caring for your team and encouraging them to
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make better decisions. Naturally, you are also the team

leader.
Consider which services should and should not be

outsourced. Refine your understanding of your advisor’s
needs and expectations. By locating supporting vendors
and accountable, reliable, courteous (ARC) professionals,
your results will be better, and your costs will be contained.
Inspire and collect stories and situational anecdotes that

illustrate real-world solutions. Advisors have a reputation
for dry, witless patter. It is a shame, because there are some
important lessons to be shared. A story has the advantage
of being memorable to draw upon later—you may want it
is an example.
Seek out other professionals working with clients like you.

Seek to constantly improve your advisor’s service. The
more qualified people you meet the more qualified and
powerful people you will continue to meet. The good
advisor will see your efforts as an opportunity rather than a
threat.
All this brings us to how you are going to locate and work
with the very best successful, rounded professionals
around.
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Part II:
Set the Example
The Seven Methods for Hiring

Successful Professionals and
Create and Develop Your
Billionaire Team
139
7 Strategies for Finding the Elite Top

2% Professionals For Your Billionaire
Team
1. Hire an attorney to write your will and to

discuss your state’s law and rules on
probate. Once you are a client, it is not
unreasonable for you to discuss referrals to
other professionals. Thomas Stanley
writes that affluent people turn first to
their attorneys and CPAs for investing
advice. He explains that affluent people
tend to have worked to build value, which
creates capital. Truly affluent people want
to first know the tax ramifications and the
legality of their investment.
Attorneys and accountants are not trained

to be problem-solvers, neither are they
trained to be good business people. And
few of them understand that your success
is a powerful marketing tool for their
business. But they can help in an
important way. They can help keep you
out of jail.
Find an attorney you can actually reach

and talk with first by phone, then in
person. A useful attorney will be diligent
and will bring you useful ideas. You can
usually tell when an attorney is ethical,
intelligent and diligent in running his or
her own business. Just look around.
Civility and courtesy are traits that I look
140
for, especially with staff. I do not want an

arrogant attorney, but I do want an
attorney who can hold his own against
someone else's. I also want an attorney
who works well with other professionals
because the attorney does not know
everything. Your capabilities in carefully
selecting a good attorney can be the
cornerstone of your and your family’s
future.
2. Questions. In my business, I work to help

clients change their manner of responding
to questions. I intend to help them see
things differently. In a non-adversarial
conversation that challenges us, we tend to
stretch our minds. We tend to move away
from learned behavior that may be holding
us back from recognizing new
opportunities.
Remember when you're interviewing a

professional; you're not responsible for the
answers. Fight the natural tendency to fill
in answers for your professional. They
should be providing solutions that you
haven't already seen. After all, if you're
going to provide the answers, why do you
need to professional?
When I worked on television I met a

psychic, who happened also to be a
hypnotist. He produced some stirring
results in those whom he was able to
hypnotize. I was not one of them. I have
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never been able to be hypnotized. (This

doesn’t appear to keep me from
hypnotizing others.) As I watched the man
work, a few things became evident. By
looking very closely at the person, by
asking very subtle questions and by
drawing from his great intelligence he was
able to deduce likely birthplaces, parental
and sibling situations, and other things
any of us might regard as personal.
The lesson was this. If he had been truly

psychic he wouldn't have needed that
other information. He was using his
subject’s information. The subjects merely
allowed themselves to be impressed.
A businessperson who really wants to

know the expertise of a professional won't
help the professional manage his needs.
Rather, a good professional should be able
both to respond to good questions, and
have a series of good questions for you the
client prospect.
An interview with a professional that

turns into a sales talk gives you everything
you need to know about that professional.
A sales talk should demonstrate to you
that your search for a professional in this
area is just beginning. Use as much time as
it takes to create your team.
3. Many practicing professionals write.

Account-ants, lawyers, CPAs, investment
142
advisors, even doctors, are likely to have

written papers or articles for professional
associations or community magazines.
The savviest professionals tend to be good

marketers. A proven way to market a
professional practice is to demonstrate
one’s knowledge. Capability often follows.
The professional who writes articles and
books can be checked out. An extensive
paper trail clarifies a person's thinking, but
it also provides insights into how a
professional works. You can also share the
professional’s article and ask for a review
and comments from someone else on your
team.
You're not hiring a writer though. Their

words on paper are merely a mark of their
diligence, confidence and competence. On
the other hand, hiring a professional who
can think, write, and execute a cogent
thought is almost certain to help you.
4. Use the team concept and build the team

as you go along.
Many professionals link up with other

professionals. It is not unusual to meet
professionals who have worked together
in the past. Sometimes they have a regular
working relationship. You need to be
careful, but sometimes you can become the
beneficiary of these existing relationships.
143
Many professionals like to work in

collaboration early on and they may be
interested in doing so with you and your
business. Explore the possibilities
carefully. Think twice before involving
professionals you do not know, or do not
have solid references for, regarding their
day-to-day operations.
One way to check a professional’s

usefulness to you is to examine your
mutual "idea chemistry." This is difficult
and relies on certain gut capabilities. What
happens when you offer a suggestion? Is
the professional negative, or interested?
The professional can either help you to

learn to manage your affairs while
providing you with excellent service, or
they can behave in a shortsighted manner
by dismissing your questions and ideas as
trivial. If that is his case, simply say, “No,
thank you.” Remember it’s your life, your
money, and your concerns that are to be
the focus of the conversations.
5. Work with people you already know.

Networking with friends who are
professional and business associates you
know is a very good way to begin. You
begin by doing what most people won’t do
-- ask questions.
If you're fortunate, you live in an area with

a strong Chamber of Commerce, strong
144
associations, or a business network. Use

them. One benefit of working within an
Association is that while they have no
direct benefit in helping you, they have
everything to lose by hurting you. Many
local organizations are aware of their
importance and influence. If your
business will help your local region you
will generally discover they sometimes
offer abundant help and support.
6. Develop a workflow plan for your

business; and ask for feedback. You may
find others have experience that will help
you. Increasingly professionals discover
that despite a lack of direct personal
experience, other professionals may have
garnered knowledge that is very useful.
Moreover, in your spadework and

discovery, you may chance upon an
interesting idea presented to you by a
professional. If it has merit for your
business -- pursue it. Building a successful
business is an art, not a science.
“Kaizen,” is a Japanese word meaning

constant improvement. In my experience
one does not have constant improvement
without a nearly constant input of new
ideas and revision. Business people do not
become discouraged by delays and
denials. What makes business people
successful is through consistent effort and
hard work. Professionals are no different
145
from anyone else in that they are human.

Be smart, and separate their personal
weaknesses and failings from their
profession.
If you are not happy with the professional

you locate, move on and find someone
using your newfound skill and
discernment.
7. Remember, when hiring a professional,

you are hiring a skilled employee. You
have a right to be choosy. You also have a
right to set standards and expectations.
It is entirely possible that you will find that

some professionals have expectations for
you as well. These would include
processes that show you how they work,
what you can expect from them, and their
administrative areas of billing, reporting,
and sharing information. Examine these
with the professional because they can be
very useful to you, saving you time and
money. There are those professionals who
are poor at creating structures and you’ll
find it helpful to recognize a lack of
helpful systems—up front.
Remain watchful and remember that

you're merely hiring someone with greater
expertise than you possess in one area be it
law, finance, accounting, or medicine. The
professional may or may not be a good
administrator. That weakness will cost you
146
time and create aggravation for you in the

future—sometimes more than the cost of
the services you desire. Resist paying the
“time and money” kind of excess fee you
may encounter with a disorganized
professional. These fees are simply not
acceptable.
Summary:
No one will ever know your objectives,

your values, your hopes and dreams more
clearly than you.
No doctor will feel your pain. No lawyer

will suffer your wrongs. No accountant
will take, nor manage, harassing calls on
your behalf. You must prepare yourself
for the downside of poor choices and
missed opportunities. Doing otherwise
might mean a longer work life for you,
higher taxes, evasive financial freedom,
slow healing or repetitive doctor visits.
But, preferably, you will now prepare
yourself to win. If any professional is not
helping you in the way that you need, in
the way that you desire from the
beginning, fire him and move on.
Other tips:
! Create milestones for your
professional relationships. Discuss
them with the advisor.
147
! Give the relationship a trial-period

of at six to 18 months.
! Be prepared for meetings.

Research. Draft questions—even on
simple concepts and “basic” terms.
! Allow yourself sufficient time to

locate good advisors.
Live by Example: Encourage your

beneficiaries toward developing and
managing their own billionaire team.
How to Create a Billionaire Team:

“Lead Quest”
There are broad changes ahead for protecting and

managing wealth. First of all, the amount of
money changing hands is the biggest in history. It
is at least twenty-six trillion (that’s with a “T”)
and it may be as much as one hundred trillion.
Current projections and advertising are based on

varying degrees of accurate information (and the
courage to change direction). Sixty-five (65%)
percent of all net worth is controlled by people
over 50. Seventy-five (75%) of all pharmaceutical
sales are to people over 50 years old. Women
make eighty percent (80%) of our household
spending and healthcare decisions.
148
None of this is static. All these numbers are likely

to increase.
On the other side of the equation are the

professionals. Popular
management wisdom
Great questions are
says that the top five
percent make up the
simple and can garner
can-do portion of an important
average company. information. Imagine
These are the self- the knowledge gained
motivated, self-start- from these short
ers who need little questions.
help, training, or
support. The "How many languages
remainder, according do your children
to this generally speak?"
accepted wisdom, is
the reason for middle "When was the last
management. time someone said to
you, "You know,
In the financial
you've got a powerful
advisory industry, we
style!"
refer to it as the
trusted advisory
segment; the figure is "What is the fastest
more like 2%. That’s way to your heart?"
right; about two
percent know what Interesting questions,
they are doing, what eh?
their customers need.
And they are
committed to constant improvement in that work.
We interpret this to mean continuous wealth
149
generation for them AND their customers.
They do it through simplified management of

complex teams. Why teams?
One person simply cannot obtain sufficient

information to create, plan, and maintain any
financial decision of con-sequence without
substantially educating their customers.
A few organizations are talking about using

teams. But, it is usually just the inclusion of an
insurance agent with a banker and a broker. The
really “radical” ones have a lawyer. That’s an
unbalanced professional team in our view. It is
grossly inadequate to truly add value where the
customer wants to enhance and protect assets.
The same steps we recommend for the customer
should also be used to protect the professionals
from errors and omissions, and sometimes more
extensive liability. The days of the lone gun are
pretty much over. And considering that it only
takes a few weeks to create a well-honed
Billionaire Team—we feel it’s worth your effort.
As we’ve said, few professionals have the capacity

to act at peak levels required to lead a Billionaire
team. Here’s a quick quiz. How long do you
think you would have lasted on “The
Apprentice”? Your honest response is an
indication of where you are right now.
This doesn’t mean you cannot radically alter your

position and move quickly up the ranks of top
advisor.
150
Not at all.
Just pay attention to developing teams along the

Billionaire model. It demands constant learning
about new ways to attract and keep strong
relationships with imaginative and trust-worthy
professionals.
Real professionals are constantly helping our

customers and clients locate new approaches and
processes to help them and their customers.
The best part is that along the way, we have the

opportunity to choose which people to work with
and not work with for a whole lot of different
reasons. They may not return our calls. They
may make scheduling a simple meeting difficult.
They may act overconfident in ways that aren’t
acceptable to us. They may have reputations that
do not compliment our business.
I’m going to share a series of questions that open

and maintain conversation about the other
person’s business. You’ll notice that most of these
questions are about basic things. The reason for
that is that we first need to “draw a bead” on the
other professionals real skills. Whatever they do
is just the grease that makes things possible. You
protect and enhance your own wealth by knowing
how they can operate on your behalf.
A really great question will cause a person to stop

and think. Sometimes we ask questions and
people respond without much thought. What
151
kind of music do you like? Where do you live?

These are questions that have throwaway, pre-
scripted answers and they aren’t great
conversation starters. I’m also going to reveal the
secrets of asking a power question. These
questions can be crafted in such a way that
provides information useful to wealth advisors.
Knowing how to question is an important art that

is often overlooked. It can be a very powerful tool
and provide one with important information.
Salesmen forget this. Executives forget this.
Statesmen and politicians forget this. Learning to
question and having the ability to listen will place
you heads and shoulders above your competition.
What keeps us from asking questions?
We take it for granted that the “other” party

knows, or we are sometimes embarrassed or
reluctant to ask questions of professionals because
we don't want to appear unknowledgeable. I
want you to know you have a right to question
your professionals. Be pushy here. A good
professional welcomes your interest.
Our lazy ways can kill big opportunities. Don

Miguel Ruiz in his book “The Four Agreements”
describes the appropriate awareness this way:
If others tell us something,

we make assumptions, and
if they don't tell us
something we make
assumptions to fulfill our
152
need to know and to

replace the need to
communicate. Even if we
hear something we don't
understand, we make
assumptions about what it
means and then believe the
assumptions. We make all
sorts of assumptions
because we don't have the
courage to ask questions.
Remember that the manner in which one

responds can divulge the true meaning of one’s
thinking.
When asking questions

what you need most is
confidence. Not simply Rethink your own
for yourself, but in motivation.
order to help you to
impart that knowledge Ask yourself…and be
to your customers. honest as the day is
long…
Deliberate questions
produce useful
information. Wealth “Am I more
advisors use such
information carefully. It
focused on
helps
whether
determine
you can
winning, or
provide help for this
business and/or
not losing?”
whether there is a
relationship to develop.
153
My goal is to get you to create questions that get

measurable and objective answers.
Jacques Werth, author of "High Probability

Selling," goes even further. When we meet
someone new, says Werth, we tend to want to
make a good impression, and it is a social stand.
It is culturally rooted in the United States that we
answer every question politely. It would be too
abrupt and break the flow of the social context. So
leverage it. Says Werth, "The first time I meet
someone I can ask them anything." Human
nature and our culture train most of us to respond
in kind. Or suffer feelings of guilt unless we
respond to a polite request.
Great questions perform numerous tasks:
1. To elicit information. You need to collect some

basic data, contact information, assets, experience,
any information required by law. A first
interview, however, should also be your time to
decide if you want this customer.
2. To verify information. Especially in referral

situations, information needs to be verified.
3. To share and encourage open discussion. Due

to the lack of financial confidence in the average
American, it is not unusual for a prospect to bring
a goal or problem with an idea already in their
mind about how to solve it. I cannot tell you the
number of times I've seen financial advisors save
people from going down “Wrong Solution Road”
154
because the advisor had done their homework.
4. To permit “appreciative inquiry.” Appreciative

inquiry is a concept from executive coaching.
Think of this is as acting like a counselor. Your
questions help the other person think through
situations, removing the emotion and replacing it
with logic and order. Sit and listen for a period of
time, encouraging the other side to go deeper,
without judgment or decision on your part.
Here's a list of questions that we recommend for

professionals working with other professionals.
Sometimes I use it as a guideline for the types of
questions that need to be asked. Many of these
can, and should be asked, right up front in
conversation.
Here are the baseline questions for professionals.

There’s more included here, too, toward the back
of this book. But, these will give you a useful set
of standard operating questions.
I call them the “Mighty Twelve.” They are the

ones people are least likely to ask and most likely
to need. I’ll use wealth advisors in my examples.
The Mighty Twelve Questions for

Professionals
1) Have you ever been sued or been a party

in a lawsuit professionally or personally?
This question is too often overlooked, or it
comes up later in the process than it
should.
155
2) What is your professional discipline?

Wealth advisors, for example, are not just
stockbrokers. With recent changes in the
law many of them sell insurance,
banking/credit services and brokerage. In
fact, they usually have some added
expertise, motivation, or philosophy that
will be part of this description of their
discipline. Personally, I prefer people who
are passionate about their work.
3) What percentage of your time and in what

areas do you keep current? You’re looking
for the extra-curricular here. Many
advisors go to their firms’ training, or golf
outings that are ostensibly workshops.
Find people that go the extra mile, and
who work to learn.
4) What percentage of your recom-

mendations do you personally invest in
(would you invest in if you met
compliance restrictions)? This is pretty
self-explanatory. Do you ever wonder if
this professional is investing in his or her
own ideas and recommendations? If you
discover there are other investments
they're investing in which they haven't
shared with you--why aren’t they sharing
their best ideas and opportunities? Less
than 5% of advisors price their advice and
invest themselves in their own
recommendations.
156
5) What is the average growth of your clients’

accounts? Don't let measurement scare
you, in fact, measure anything that gives
you a meaningful benchmark. What can be
measured can be improved.
6) What is the average period of time your

clients stay with you? Turnover occurs in
every industry. You're not trying to entrap
someone here, rather look to see what a
professional thinks about his or her clients
and about their practice. If they have a
skewed view of the industry, their
practice, or clients in general, it can come
out here.
7) Of your total client base, what percentage

of it is concentrated on assets in excess of
(your net asset range)? The truth serum is
in the eye contact. You need to know how
far along this person is in his or her wealth
advisory career and if they are expert
working with situations like yours.
8) How are you paid? This is a factual

question that gives you insight into how
the adviser works, whether they're good
marketers, and whether they're organized.
Please, strive to not take anything for
granted.
9) What kind of dollars for fees would I need

to allocate for what we've discussed
today? Ditto, from above.
157
10) How did you get to that figure? Follow-

up questions, like this one, check for
consistency.
11) How will we develop and build our

strategies? Lots of people have good ideas
and products, very few have processes.
This course is about being pro-active! Seek
out wealth professionals with adaptable
processes. That is how you will make the
most money.
12) What do we do if this goes sour? The

reality check question. There are legal and
accounting issues to be sure. This question
has more to do with working philosophy
and whether this prospect is thinking
about solutions -- constantly.
There they are. The “Mighty Twelve.” But we're

not done.
People tend to seek agreement; it’s how most of us

operate. We don’t want to behave in a
confrontational manner. In reality, much of
business should be more focused on skillfully
eliminating under-qualified people. There’s
more to this than meets the eye.
There’s an old story about Ted Turner. In his

heyday, before he was marketing buffalo meat
and quietly building major websites from his
Wyoming base of operations, he attended many
parties. He always left by 10:00 pm.; this was his
rule. He was sociable (somewhat, if you
158
remember the “mouth-of-the-south” you know

about this) but he was first and foremost focused
on his business.
Obviously it paid off for him, up to the Time-

Warner acquisition of AOL, anyway.
As wealth advisors, we are always seeking profit-

enhancing information. You will achieve that in
the creation of long-term thinking and your
billionaire teams. Like Trump in “The
Apprentice,” when you hire you are observing
how cooperative or uncooperative and creative
people are by nature. Troublesome people are ill
matched, or unqualified people may need to be
fired.
Let’s move to processes and character questions

for
Billionaire Team members.
Documenting Operating Character: Questions for

Clients and Advisers
Put a checkmark beside questions that you’d like
to ask.
“Experience
" What have you recently teaches only
purchased—either a
product or service-- the
that you think is really teachable.”
a good value?
Aldus
" What product or
service have you
Huxley
recently purchased for
159
your office or business, that you believe

will help your customers or earn you more
money?
" What is your single most critical business

challenge today?
" Do you "walk on egg shells" around

anyone and watch everything that you say
because they have a hair trigger temper?
" Does this person behave in a

condescending or superior manner
towards you? Do they treat you as if
you're incompetent?
" Is this person hypercritical? Do they

blame everyone else for what goes wrong?
" Does this someone around you have a

Jekyll and Hyde personality? Is this
person charming in public and cruel in
private?
" Does this person use aggressive body

language, inappropriate comments or
touching, or physical intimidation with
you?
" Does this person dominate conversations

and talk over people who try to get a word
in edgewise?
160
" Does this person insist on controlling the

decisions (for example choice, timing,
approach) and attack if you dare question
their judgment or authority?
" Has this person tried to isolate your from

friends or family? Are they resentful when
you spend time with others?
" Does this person challenge or criticize you

in public because they know you won't
cause a scene?
" If you threaten to end the relationship,

does this person change her behavior to
reel you back in, only to resume her
unacceptable behavior?
" If you object to this person's behavior, does

he go on the offensive and demand to
know why you are giving thim such a
hard time?
" Does this person indulge in erratic

behavior, such as breaking commitments,
reversing statements, or twisting things
around and then accusing you of
overreacting?
" Are you happier when you're not around

this person?
Questions for the “Inside Professional”

" What do you love about your field?
161
" What do you love about your

practice/business?
" How did you become an advisor?

" How has your practice changed?
" Do you see opportunities differently now?
" What do you believe is the most important

job of a ---- ?
" How important do you believe additional

professional
designations are?
“Plans are
useless,
" When would you
“fire” a customer?
planning is
absolutely
" Under what essential.”
circumstances should
the customer fire an
Dwight D.
advisor?
Eisenhower
" Let’s say something
bad occurs over which
you have some, but not complete,
control—what would you do?
" How often do you review your customers’

accounts for balance, the impact of the
current strategy and any changes in the
markets, or changes in the customer’s
needs?
162
" What is your process for introducing

customers to your practice and how you
work?
" What is your specialty?
" What do you enjoy most in your work?
" Who would you say is your best customer?
" What do you believe is the role of

promotion and advertising in your
industry?
A wealth advisor friend of mine, whose clients

have average personal net worth of over $20
million, provides some additional advice. This
advice is for professionals, but it applies to us all.
When you're in a selling type of situation, a

negotiation or any discussion around money --
ask questions regularly. Don’t worry about using
the same questions. You deserve to know what's
going on. You have a right to know what's going
on.
Here are questions around the Robert Kiyosaki’s

six areas of attention for building unlimited
wealth. You can see how well my questions above
match his. Understanding this is extremely useful
to you in ways I’ll describe further on.
Focusing on these will lead you directly to great

wealth.
163
Robert Kiyosaki’s Wealth Attentions
! Income.
! Expenses.
! The value of your assets.
! Liabilities.
! Financial education and management

skills.
! Insurance.
Businesspeople relate easily to the following

stages of a new Business process.
Introduction, customer intake, due diligence, first

business meeting, follow-up, a projections
meeting, update meetings, new business, and
referrals are all part of this process.
The typical advisor’s intake conversation is weak.

They tend to cover the most cursory information
before they push papers and pen across their
desk. That’s ineffective and even offensive for a
successful individual or the head of a wealthy
family. Using the following questions you will
enhance your personal power and locate the best
advisors.
Remember that you'll be separating yourself from

the typical client. Instead, you will be gathering
164
useful information from your advisor prospects.

You will begin by carefully teaching them about
your needs. By constantly being ahead of your
advisors you’ll be getting world-class service for
life.
When you exercise our wealth team model to

discuss investments, issues and solutions, you will
experience a shift in mood and results. This will
challenge you to seek out the best advice, and
your ability to make better, longer-lasting, fully
considered and profitable decisions will be vastly
enhanced.
THE KEYS TO CREATING BILLIONAIRE

WEALTH TEAMS
Here are some good questions for attracting top-notch

team members. These questions are extremely powerful.
Don't be alarmed by the simplicity of these questions.
Please notice how they concentrate on getting
information on one item at a time. Asking a broad and
unspecific question allows the other person to equivocate
and avoid a direct answer. Don't lose focus, concentrate
on what you need to know.
Here is your New Investment FOCUS anytime you

invest your TIME or your MONEY
FOCUS is easily remembered. As a tool it anchors goals

and team objectives. It stands for—
165
Forward Thinking
On Target
Clear Purpose
Useful Processes
Sincere Attitude
“Focus Questions” based on

these concepts are also “It has been
powerful thinking and my observation
planning tools. Imagine, for that most people
example, specific situations get ahead during
where you can use the the time that
questions below. others waste.”
The core FOCUS questions and Henry Ford
the interview questions overlap
in creating your powerful
trusted advisor team. By the
way, these same questions are easily adapted for
any situation where you want to use True-Team
Strategy.
166
General Focus Questions
" How would you rate your overall business

communications skills, and how is that
reflected in your business growth?
" Do other people and organizations trust you

and your organization?
" How do you know?
" How can you increase and strengthen that

trust?
" Are you reaching out to new people and

organizations?
" Do you approach networking as an opportu-

nity to launch your "brand," or to strengthen
a connection with others?
" Do you support and stay connected with your

alumni, and/or other contacts with other
businesses and communities?
" What information are you sharing with the

world? Are there other kinds of information
that you could share?
" Do your website and other communication

methods attract others?
" Can anyone looking at your information

figure out who you are?
167
" Who are the leaders in your organization that

matter most?
" Do your materials (your web-site, brochures,

plans, proposals, and reports) use words that
people understand, and language that
conveys to others that you are
knowledgeable?
" Do you consider questions from outsiders as

irrelevant and that you feel beholden to
respond to, or are they the beginning of a
meaningful conversation?
" What is your process for handling them?
" Do you ever introduce people that you feel

will be compatible with each other?
" Do your introductions include putting

organizations with potential prospects? And
vice versa?
" What are you expecting in return for these

introductions?
" Do your staff and partners ever talk to one

another about new endeavors without your
prompting?
" Can you help your staff start their own

conversations, have their own meetings, and
develop strategies that support your efforts
168
and objectives?
" Do you celebrate achievements by other

players in your business?
" Do all your staff, board members, clients,

vendors, participate in your businesses-plan
making process?
Going the Extra Mile
" What's important about this?
" Where is your energy

around this? “Going to work for a
large company is
" What matters to you like getting on a
about this? train.
" What's the meaning of Are you going sixty

this for you? miles an hour or is
the train going sixty
" In what way are you miles an hour and
attached to this? you're just sitting
still?”
" How does this work
for you? JP Getty
" How does this relate to

x? [Work, this
situation, etc]
169
" What do you hope for, dream for, aspire to?
" Let’s say there was one thing that would

make a difference, what is it?
" What really matters?
" What's required?
" What's needed?
" What's missing?
" What do you need to move forward?
" What would have to happen for things to

change?
" What are your beliefs about that?
" What would you have to believe?
" What do you have to let go of?
" If you only had 6 months to live… what

would change?
" If you had all the money you ever needed…

what would change?
" What if you didn't follow through/commit to

this/ complete this?
170
" What's your motivation?
" What's the opposite of [this occurring]?
" How have you embraced this in your life?
" Is that a goal of yours?
" What do you [feel, think] about that?
" If you had 2% more courage, what would you

be doing differently?
" What is causing this not to occur right now?
" What are you using as a basis to choose?
" What are your beliefs [around this issue, this

decision]?
" What are you going to do?
" What's the first thing that pops up?
" Which is the most important?
" What's the ideal?
" What choices do you have?
" What benefits will be desired?
171
" What is motivating your action in this

situation?
" Why is this, a dilemma for you now?
" What about this situation is difficult?
" What do you want to do?
" What don't you want to have happen?
" What is your heart telling you?
" What is your greatest fear?
" What needs immediate attention?
" What would help you most right now?
" Why do you think that's so?
" What do you most need right now?
" If you had a choice what would you do?
" What's frustrating about this?
" What would give you the most joy?
" What is your biggest obstacle?
" How can you remove these barriers?
172
" What do you want to focus on in this brief

moment?
" What's important right now?
" What would the answer be to this situation?
" Why is this important now?
" What would success look like in this

situation?
" What do you think success would be like in

this situation?
" What prevents you from being successful?
" What do you want to happen?
" If you could change one thing that would

impact this situation right now, what would it
be?
" Where are you getting stuck?
" What belief is getting in the way of you

moving forward in this situation?
" What belief do you need to release to help

you move forward?
" How else could you look at this situation?
173
" Is what you are saying about this situation a

fact or interpretation?
" What is your intention?
" What inspires you to want to solve this

situation?
" What needs to happen for this to work for

you?
" Who do you want to be in this situation?
" How can you apply resources to make the

biggest difference?
" What needs to change to have a successful

outcome?
" What kind of outcome is needed?
" What was the strategy behind your actions?
" What assessments did you make about the

situation?
" How do you have to be different, think

differently and or act differently?
" What can you create?
" What leads you to that conclusion?
174
" What one goal would you focus on?
" What is your vision?
" What is your purpose?
" What really matters to you?
" What is missing that would make a

difference?
" If you were helping someone else with this

situation, what question would you ask?
" What conditions will create a change?
" What is the most simple and logical thing to

do?
" What does your intuition tell you to do?
" How does this need to change?
" What would create high leverage?
" Where are the high leveraging areas?
" What are the easy things we could do to get

started and build some momentum?
" What is difficult about this?
" What inconsistencies do you see?
175
" What issue is important to you that will have

the most impact today?
" What are the outcomes of your actions?
" What are the consequences of not taking

action?
" If you could get help with only one more

thing for the rest of your life, what would that
be?
" If you had only 24 hours to live and could fix

one mistake you have made in your life, what
would that be?
" What do you want to accomplish?

“What’s great about
" What do you want to be? being a Rockefeller is
you grow up knowing
" What's on your mind you have a chance
today? and obligation to do
well and try to make
other people’s lives
" What's important about better than they are.”
that?
--Sen. Jay Rockefeller
" What's underneath that?
" What is one thing you could do that would

help you with this issue?
176
" What do you want to change?
" How important is change?
" What do you want to do now to ignite

change?
" Where do you want to go after the change

occurred?
" How would you like me to support you

during this journey?
" What's important to you?
" What are your guiding principles?
" What is your passion?
" What makes you want to get up out of bed in

the morning?
" What is your purpose/mission?
" What keeps you up at night?
" What drives you crazy?
" What is important to you?
" What do you mean?
177
" Can you say more?
" What would you like it to be?
" What example can you give me?
178
Part III:
Billionaire Teams and Your
Business
Finding Your Way Through

the Professions
179
The High Achievement Six Pack

Questions For you… and your family
# Do you have a strategy for making

money?
# Do you have sufficient reliable

sources for trusted information?
# Do you have sufficient reliable
people or groups to go over your
ideas and reconstruct them?
# Over what period of time are you
committed to making your
anticipated level of profit?
# Who and what are your secondary
strategies, information sources and
support groups?
# What don't you know now that
These focus questions are modeled on top executive-coaching questions.
could
They are powerful stand
to ask in the
of yourself way of your
and energizing when you ask them
of your customers. Pin this to your wall and achieve your monetary goals!
making profit?
180
Direct Tailored-To-Profession FOCUS

Questions
Questions for Professionals Seeking an Outside

Financial Advisor or Sub-Advisor
Wealth advisers are often representing their

clients and customers in negotiations and complex
matters. The lifetime of their firm and the
products they recommend are important. If they
are selling insurance, they must accurately record
and report customer’s payments. Low premium
"come-on" prices must be questioned. Policies
should not be frequently replaced, and neither
should health reports be fudged in order to get
the policy approved-- claims may not be
legitimately refused. The client should not be
pressured to hurry up, and neither should
affordability or usability be glossed over.
The point is this. Learn from how the family office

works—glean their strategies.
Forward Thinking
Who is your typical client?
Do you have an area of specialization?
Do you give advice only, or do you execute the

transactions?
Describe the worst client you have ever had.
181
How long will you expect me to hold a given investment?

Why?
Can I get out of investments quickly and without high cost?

What are the danger signs that the relationship is not
working?
What happens to me if you change firms?
How do I complain or seek restitution if there is a problem?
On Target
How many active clients will you work with at a time?
Reversing the roles, a minute; as a client, why do you want

to hire me?
What kinds of people do you not want as clients?
Will you take possession of, or have access to, my assets?
Do you have the discretion to modify my investments

without my approval?
How much commission will you and your firm earn on my

transactions?
What is your rationale for picking a specific product?
After all fees are paid, will you discuss with me how much
an investment must gain in value before I break even?
182
Clear Purpose
What service will I get?
How often will I hear from you, and what will prompt your
calls?
What is your investment philosophy?

Have you ever had complaints filed against you by
customers?
How were or how would-be complaints against you

resolved?
How do I know if your recommendation suits my needs

and risk tolerances?
Will this sale help you win any prizes or sales contests?
“…Smile when you read

Useful Processes a headline that says
‘Investors lose as market
What certifications, if any, falls.’ Edit it in your
do you have? mind to ‘Disinvestors
lose as market falls—but
Can I have a copy of your investors gain.’”
Form ADV (SEC
registration) both part one Warren Buffett
and two?
How (and how much) do you get paid?
What criteria do you use before deciding what to buy?
183
Under what conditions do you sell?
Can I review sample plans and statements?
Can I get the names of a few clients to provide me with

references?
Will anyone else be working with me?
Do you personally research the products you recommend?

How will we resolve complaints, if I am dissatisfied?
How do I terminate this relationship, if we do not reconcile
my concerns?
What standard do we set for performance; and how do we

monitor progress?
Sincere Attitude
What is your educational and professional background?
In what continuing education classes are you planning to

enroll?
How did you become a financial advisor?
What is your definition of "wealth?"
184
EXTRA: Why People Don’t

Ask Good Questions
Our surveys and interviews suggest that there are a
number of reasons why people fail to engage
professionals with tough questions. Here are the top
reasons.
1. The client doesn’t want to appear stupid.
2. The client doesn’t want to ask the “wrong”

question.
3. The client doesn’t know what questions to ask.
4. The client is intimidated by the professional

trappings.
5. The client is intimidated by the “professional”

attitude, speaking style, or advisors mannerisms.
6. The client resists feeling off balance; she may feel

uncertain. Am I about to have the burden of
making important decisions removed, or lose my
privacy while making the biggest mistake of my
life?
If you have ever engaged a professional, it is likely that

you experienced one or more of these feelings. (If you
are a billionaire already, good chance you learned how to
handle those feelings.)
If you aren’t a billionaire, or if you are a billionaire and a

great student you will want to go over the following
questions.
185
I always remember as a kid watching Star Trek. This

sci-fi TV show sent a crew of the Starship USS Enterprise
into strange and wonderful galactic adventures. Where
the crew would meet up with especially dangerous and
difficult individuals they would improvise solutions.
One of these was to call on Mr. Spock, the #2 after
Captain Kirk. Spock was a Vulcan endowed with powers
beyond any humans. One of these was the Vulcan mind
meld. Spock would grasp the offender’s shoulder blade
and gently neutralize the person by making him
unconscious.
I have included a few neutralizing questions to us on

professionals in several fields. Use them like Spock’s
mind meld, as appropriate.
There are questions for the following
• Lawyers
• Psychologists
• Physical Therapists
• Accountants
• Doctors
All are based on the work we did in creating the

Billionaires Little Black Book, and tested—to be an in
depth guide to hiring and managing professionals on a
Trusted Advisory team.
186
Refined FOCUS Questions for the

Professions
Use the following questions of professionals in
various professions.
Questions for lawyers

Attorney fees can be questioned, even with a rate
card, and the client has a right to receive an
expense and time breakdown for separate
charges. Communication must be adequate for
the client to understand. The client has a right not
to have the case, or legal work neglected, and the
client has a right for the attorney to be more than
adequately prepared at all times. The client has a
right to regularly detailed accounting of property,
assets, anything entrusted to the attorney’s care.
The attorney should be familiar with local courts,
judges, and other players in the legal system.
Forward Thinking
Do you give advice only, or do you litigate?
How long will you expect me to be your client? Why?
Can I get out of situations quickly and without high cost?
What are the danger signs the relationship is not working?
187
On Target

to hire me?
Do you have the discretion to modify my investments or

financial structures without my approval?
How much in fees will you and your firm earn on our
work?
What is your rationale for picking a “You shape your

specific strategy? houses and then
After all fees are paid, will you
they shape you.”
discuss with me how much must a
strategy gain in value before I break Winston Churchill
even?
Clear Purpose
188
calls?
What is your legal philosophy?
Have you ever had complaints filed against you by clients?

resolved?
How do we make sure we don't have a similar problem?

Will this sale help you win any prizes or contests?
Useful Processes
What certifications, if any, do you have?
Can I have a copy of your license?
What is your fee?
Under what conditions do you change strategy?
Can I review sample plans and documents for educational

purposes?

references?
189
Do you personally research the strategies you recommend?

my concerns?

monitor progress?
Sincere Attitude

enroll?
How did you decide to become a lawyer?
What is your definition of "justice?"
190
Questions for Psychologists

Psychologists should be able to deliver short-term
therapy. Any therapy they recommend should set
clear objectives within a time frame. They ought
to be able to establish a rapport. They can be
expected to be caring, confident and ethical.
Good resources for psychologists and
psychotherapists are counselors, doctors,
hospitals, management consultants, an
experienced wealth adviser, and friends.
Forward Thinking
Who is your typical client (patient)?
Do you mostly listen, or are you more interactive?
How long will our work together take? How do you

know?
Can I cancel your services without penalty?
What are the danger signs that our working relationship is

not working properly?
What happens to me if you change practices?
How do I complain if I have a problem?
191
On Target
How many active clients do you work with at any given

time?

to hire me?
Will you have any access to my assets?
What is your rationale for using a mode of treatment?
Clear Purpose
What service can I expect? “The important

thing is not to
Will I hear from you outside stop questioning.”
treatment, and what will
prompt your calls? Albert Einstein
What is your treatment
philosophy?

resolved?
How do I know if your recommendations are right for me?
Useful Processes
192
May I see a copy of your license?
What is your fee?
What criteria do you use in making suggestions to me?
May I get the names of a few references?
Do you upgrade your knowledge of the changes in your

profession?

my concerns?
What standards do we set for progress; and how do we

monitor progress?
Sincere Attitude

enroll?
How did you become a psychologist?
What is your definition of "normal?"
193
Questions for physicians

A physician should communicate sensitively, but
clearly. A physician can be expected to be on a
schedule. The ability to make a diagnosis and
encourage a second opinion is important. A
physician should not order too many tests. A
physician has a responsibility to protect the
patient's privacy. The professional medical staff
supporting the physician should be pleasant and
helpful.
Forward Thinking
Who is your typical patient?
Do you give advice only, or do you research?
Describe the worst patient you have ever had.
How long will you expect me to remain under your care?

Why?
Can I elect not to have treatments or procedures?
What are the danger signs our relationship is not working?
On Target
How many active patients will you work with at a time?
194
Reversing the roles, a minute; as a patient, why do you

want to hire me?
What kinds of people do you not want as patients?
Will you ever have access to my assets?
Do you have the discretion to modify my treatment

What is your fee?
What is your rationale for picking a specific medication of

procedure?
Will you discuss with me early how much additional

investment might be required for additional treatment?
Clear Purpose
What services will I get?
calls?
What is your care and treatment philosophy?

patients?

resolved?
How do I know if your advice is best for me?
195
Will my outside procedures, treatments or prescription

medications earn you additional income?
Useful Processes
May I see your medical license?
What is your fee?
What criteria do you use “One of the greatest

before deciding to treat? discoveries a man
makes, one of his
Under what conditions might great surprises, is to
I be referred to another doctor find he can do what
or specialist? he was afraid he
couldn't do.”
Can I review sample
treatment plans? Henry Ford
Can I get the names of a few

patients as references?
Do you personally research the products and treatments

you recommend?

my concerns?
196

monitor progress?
Sincere Attitude

enroll?
How did you become a medical doctor?
What is your definition of "healthy?"
197
Questions for Accountants

Accountants are state licensed to provide their
services to the public. Their experience, skill and
specialization distinguish and define what they
are capable of doing for their customers. They
include tax preparers, tax advisors, pubic
accountants and CPAs. They may or may not
perform bookkeeping tasks. Some of the
competencies to watch for are: Technical
competence in areas important to you,
organizational curiosity and depth of interest in
your situation, a view to year-round
comprehensive analysis, aggressive dealing-audit
capability, audit representation, a strong support
network (think of this as a sub team), and the
ability to direct you as the accountant’s silent
partner in record-keeping, sharing information,
and education.
Forward Thinking
Do you give advice only, or do you perform services?
How long will you expect me to work with you? Why?
Can I get out of your advice quickly and without high cost?
198
On Target

to hire me?
Will you take have access to my assets?
Do you have the discretion to modify my investments or

other business without my approval?
What are your fees?
What is your rationale for choosing a specific approach and

structure?
After all fees are paid, what is your responsibility to me?
Clear Purpose
calls?
What is your accounting philosophy?
199

resolved?
How do I know if your recommendations suit my needs

Will my business help you win any prizes or sales contests?
Useful Processes
May I see a copy of your state license?
What are your fees?
What criteria do you use before deciding a direction for my

financial affairs?
Under what conditions do you refer to an outside resource?
Can I get the names of a few clients as references?
Do you personally research the solutions and/or products

you recommend?
200

my concerns?

monitor progress?
Sincere Attitude

enroll?
How did you become an accountant?
What is your definition of "standard practice?"
201
Questions for physical therapists

A physical therapist should work with people of
the same age and condition you're seeking. The
physical therapist should be familiar with your
ailments. There ought to be a trained staff with
complementary skills and those skills should be
regularly updated. A physical therapist needs to
be a good listener. She needs to be good
communicator. And have good rapport. Perhaps
above all, a physical therapist needs to exhibit
patience.
Forward Thinking
Who is your typical client (patient)?
Do you give advice only, or do you perform the treatments

yourself?
How long do you anticipate me working with you? Why?
Can I get out of treatment, for any reason, if I wish?
202
On Target
How many active patients will you have at a time?

to hire me?
What is your rationale for picking a specific product?
Will you discuss with me how much additional, or outside,

care I might need if my situation does not improve?
Clear Purpose
What service(s) will I get?
calls?
What is your treatment philosophy?
Have you ever had complaints filed against you or the

practice?

resolved?

and tolerances?
Will my business help you win any prizes or sales contests?
203
Useful Processes
May I see your state license?
How (and how much) do you get paid?
What criteria do you use before deciding how to treat?
What are your fees?
Under what conditions do you deny treatment or refer

someone out?
Can I review sample treatment plans?

references?
Do you personally research the treatments, procedures, and

products you recommend?

my concerns?

monitor progress?
204
Sincere Attitude

enroll?
How did you become a physical therapist?
What is your definition of "mobility?"
205
Questions for Realtors, Developers and Mortgage

Brokers and Insurance Agents
It is rare for some project-oriented professionals,

like developers, to have the same sense and
understanding of fiduciary responsibility that,
say, realtors do. A good developer or realtor will
guide you. They will keep you up-to-date on
market conditions. They will arrange multiple
financing options that fit your needs and they will
not mislead you, or be deceptive. As I mentioned
in the story, fiduciary incorporates the following:
care, confidentiality, loyalty, obedience,
accounting, and disclosure. You have a right to all
of these in property and other project transactions.
Forward Thinking
Who is your typical client/customer?

*Typically a broker represents the seller; the buyer is the
customer. In some states there are buyer brokers, which move
the customer to client status.
Do you give advice only, or do you execute the

transactions?
Describe the worst client/customer you have ever had.
How long will you expect me to work with you? Why?
Can I get out of investments quickly and without high cost?
206
On Target
How many active clients/customers will you work with at

a time?
Reversing the roles, a

minute; as a “Long-term
client/customer, why do you investment success
want to hire me? depends not on
studying betas and
What kinds of people do you
maintaining a
not want as
clients/customers? diversified
portfolio, but on
Will you take possession of, recognizing that as
or have access to, my assets? an investor, one is
the owner of a
Do you have the discretion
to modify my documents
business.”
Warren Buffett
How much commission will
you and your firm earn on my transactions?
What is your rationale for picking a specific property

and/or strategy?
After all fees are paid, will you discuss with me how much
must an investment gain in value before I break even?
207
Clear Purpose
calls?
What is your real estate investment philosophy?

clients/customers?

resolved?
How do we make sure we don't have a similar problem?

Will this transaction help you win any prizes or sales

contests?
Useful Processes
May I see a copy of your license?
What are your fees?
Under what conditions would you sell?
208
Can I review sample plans and offers?
Can I get the names of a few clients/customers to provide

me with references?
Do you personally research the investment situations you

recommend?

my concerns?

monitor progress?
Sincere Attitude

enroll?
How did you become a broker (or developer)?
What is your definition of "quality?"
209
Questions for specialized professional help

Specialized professionals educated in asset
structuring, should clearly state the liabilities and
responsibilities of both parties. They should
advise you honestly about the risk from their
advice and suggestions, spending as much time
on this as on the structure itself. They should
commit and follow-up with keeping you up-to-
date on legal changes that might affect you.
Everything you do should be clearly explained
and the appropriateness and timing should be
fully discussed.
Forward Thinking
“You can't
Who is your typical client? build a
reputation on
Do you have an area of what you are
specialization? going to do.”
Do you give advice only, or do
Henry Ford
you execute the transactions?
How long will you expect me to hold a given investment?

Why?
Can I get out of investments, or structures, quickly and

without high cost?
210
On Target

to hire me?

Do you have the discretion to modify my investments, or
structures, without my approval?
How much commission will you and your firm earn on my

transactions?
What is your rationale for picking a specific product, or

strategy?
After all fees are paid, will you discuss with me how the
investment or structure will benefit me going forward?
Clear Purpose
calls?
211
What is your investment philosophy?

customers?

resolved?

Will this sale help you win any prizes or sales contests?
Useful Processes
Do you have business license I may have a copy of?
What are your fees?
What criteria do you use before deciding what to buy, or

how I should be structured?
Under what conditions do you sell investments, or change

strategy?

references?
212
Do you personally research the products and procedures

you recommend?

my concerns?
What standard shall we set for performance; and how do

we monitor progress?
Sincere Attitude

enroll?
How did you become an expert in structuring?
What is your definition of "proper?" “Appropriate?”

“Prudent?”
213
ILLUSTRATIONS OF
THE NEED FOR
TEAMS IN YOUR
BUSINESS
214
ILLUSTRATION #1
Scary Story
By Janet Arrowood
A registered rep in Utah did everything right by

his elderly clients. He even recommended long-
term care insurance as an asset-preservation tool,
but they had turned him down. Later, when their
son sued him after both parents tragically
suffered from dementia and began ringing up
incredible medical bills, the advisor assumed he
was covered by his errors-and-omissions
insurance. He was so confident, in fact, that he
didn't keep a record of his advice, which would
likely have helped him immensely in the suit.
Unfortunately, his confidence was misplaced.

While his actions routinely covered him from a
suit by his clients, it did not protect him from
their son acting on their behalf. His ignorance of
the fine print cost him dearly: He had to pay
$600,000, plus any legal fees incurred, to the son.
Although his penalty was exceptional, his

mistake was all too common. Errors-and-
omissions insurance, or E&O as it is generally
known, is a fundamental part of an advisor's life
that is too often taken for granted. When
215
interviewed, wire house representatives at

Morgan Stanley, A.G. Edwards and Merrill
Lynch, as well as the chief executive of a Denver-
based financial-services firm, were ignorant of
their coverage. They didn't know any details of
their deductibles, limits and exclusions, and they
all assumed they were covered for everything,
though that was not the case.
In a world where financial lawsuits regularly

make headlines, advisors that ignore their E&O
coverage do so at great risk to their careers and
their pocket books. Legal fees alone can empty a
wallet. The average cost for defendants, says
Jerry Reiter, founder of Financial Advisor Legal
Association and a former financial advisor, is in
excess of $42,000, and they are stuck paying the
deductible, even if they win.
Even if they never get sued, it behooves advisors

to know what their coverage is and how it
compares to other policies, because they
frequently must pay for some or all of it — an
amount that can run thousands of dollars
annually. The information may come in handy
when comparison shopping for a new job or, if
staying put, lobbying for changes in the policy so
that it fits particular needs.
What's in It for Advisors?
A boilerplate policy, says Z. Jane Riley,

compliance officer of The Leaders Group, a
broker/dealer based in Littleton, Colo., will pay
damages up to a limit:
216
* Typically the deductible is anywhere

from $2,500 to $10,000 per incident,
with a coverage limit of $1 million to
$5 million per claim.
* The firm usually has a separate E&O
policy with higher deductibles and
higher limits.
* Once the firm's aggregate limit is
reached, its advisors may not have any
E&O coverage.
* “Preferred” insurance companies may
have a lower deductible than other
insurance companies.
Whatever the deductibles, there are some things

that most policies will not cover. For example, in
the case of the Utah rep, his policy may have
helped protect him against the insured, but did
not protect him from someone acting on the
insured’s' behalf. This is a fairly common
exclusion, and advisors should be on guard
against it since, according to Riley, the plaintiffs
in a majority of suits are related to the clients
(i.e., not the actual client).
There is also the possibility that advisors may be

covered for some things and not others, like
when they are a fiduciary but not when they are
a trustee — or the opposite. Also, a policy may
or may not provide “past acts” coverage for
“claims made” (i.e., things you did in the past, at
another b/d and/or under a previous E&O
policy).
217
The Paper Trail
As important as it is to know what's in an E&O

policy, it is even more important for advisors to
keep good records of everything they do, so they
can provide any supporting documentation in
case they are sued or taken to arbitration.
In the Utah case, once again, the advisor didn't

have a paper trail or e-trail of his advice to his
clients. Had he created a paper trail, the son
would have likely have had no case against the
representative and the type of coverage the
representative had would not have mattered
much. In fact, there was a similar case where,
after much digging, the rep found a copy of a
letter he had sent to clients in an analogous
situation, and the client's attorneys squashed the
suit before it got under way.
Just how important is a paper trail? Client's

lawsuits, say most compliance and E&O
specialists, are almost always taken on a
contingency-fee basis. If an advisor is sued and
can produce paperwork to show that they acted
properly, the client’s lawyers will almost always
require their client to pay a large retainer,
because their likelihood of winning is much
lower. At that point, most clients drop thoughts
of winning big bucks from a lawsuit or
settlement and the case goes away.
Bruce Kantor, president of Kantor & Associates,

in Charlotte, N.C., agrees wholeheartedly with
218
the need to document every client and prospect

conversation, especially conversations where
the person declines to take recommended
actions.
Taking Change into Account
Even advisors well versed in their E&O coverage

shouldn't file their policies away in a drawer.
They need to review their policy at least once a
year, says Rick Eldridge, CEO of Intuitive
Insurance in Castle Rock, Colo., especially if they
change plans, retire or change b/ds.
Advisors who retire or leave their firm normally

will sign an “exit agreement,” “severance
contract” or a similar document, and they need
to make sure this document includes a “hold
harmless” agreement in defense against claims
that result from their employment.
This agreement should provide ongoing legal

defense and coverage, as if the E&O were still in
force, for the advisor's actions while he was an
employee. After all, as Yogi Berra might say, it
should be over when it's over.
REGISTERED REP.COM Apr 1, 2006 12:00 PM
219
ILLUSTRATION #2
MICHELLE SINGLETARY: THE COLOR OF MONEY
Contests buoyed improper trades
By Michelle Singletary
WASHINGTON - Imagine your brokerage firm

sends you a letter saying your account will now
be handled via a centralized call center. So one
day you call to ask a simple question about one
of your mutual fund holdings. Next thing you
know, you're persuaded to switch your money
into another fund, costing you extra fees and
charges.
What does the salesperson get for the unsuitable

switch? Tickets to a rock concert.
What just happened?
To borrow from the MTV show of the same

name, you got "punk'd."
However, unlike in the show hosted by Ashton

Kutcher, in which getting "punk'd" means you
are the victim of a prank, this is for real. This
allegedly happened to some Merrill Lynch
customers, according to NASD, the private-
sector regulator for the securities industry.
220
NASD announced recently that it fined Merrill

Lynch $5 million for failing to supervise
advisers, holding impermissible sales contests
and other violations in connection with the
operation of a financial call center with locations
in Hopewell, N.J., and Jacksonville, Fla.
Learn from this story. It's a lesson on how not to

get punk'd.
In 2001, NASD said Merrill Lynch began

handling thousands of customer accounts
throughout the country in what the firm called
its Financial Advisory Center, or FAC.
Generally, smaller accounts with assets of

$100,000 or less, or those with minimal
transactional activity, were moved to this
centralized financial center, in part so that
Merrill Lynch's full-service financial advisers in
branch offices could devote more attention to
larger accounts, according to NASD. The firm
failed to disclose that the brokers staffing the
centers often had five years or less brokerage
experience and that they were limited to
recommending mutual funds.
"These brokers weren't as experienced as the

brokers in the regular branch offices," said
NASD's head of enforcement James Shorris.
"And they didn't get enough supervision."
From 2001 to 2004, NASD said the

brokers/advisers were found to have "engaged
in a pattern of mutual-fund switch
221
recommendations that were accompanied by

misrepresentations and omissions of facts to
customers."
In settling this matter, Merrill Lynch neither

admitted nor denied the charges.
The company, in a statement, said it was going

through "growing pains" as it expanded the
financial center.
But it sure looks like a profitable pain.
Between March 2001 and August 2002, more

than 1 million customers were transferred to the
financial center. At its peak size in 2002, this part
of the firm had approximately 1.3 million
accounts holding approximately $20 billion in
assets. That year, the center had gross revenues
of approximately $210 million. Shorris said a
significant amount of that revenue was obtained
through mutual fund-switching activity.
Moreover, NASD found that several advisers

recommended mutual-fund moves that were not
suitable for their customers. Advisers also
recommended customers switch without first
telling them there might be comparable funds
within their existing mutual fund families, which
would have avoided sales charges.
Then there were the contests.
We all know companies often offer incentives to

their sales forces to boost revenues. But in the
222
investment world, certain contests are

prohibited.
NASD said its investigation found Merrill Lynch

conducted three contests that violated the non-
cash compensation rule because they favored the
sale of the firm's own proprietary mutual funds.
The regulator found that advisers who sold the

most proprietary mutual fund products were
awarded concert tickets to see Foreigner, dinners
and other perks.
Merrill Lynch says it's made significant changes

to its operation.
"We have acknowledged that we had growing

pains in Merrill Lynch's Financial Advisory
Center four and five years ago when it
expanded," the company said in a statement.
"We are confident we've worked them out."
I certainly hope so. But there are many perils out

there for investors. To protect yourself, I suggest
you take some advice from NASD.
If you are shifted to a call center, be wary of an

adviser who recommends that you move money
out of existing investments and into new ones,
particularly into their firm's own mutual funds
or investment products.
Specifically ask the adviser if there is a similar

fund within your existing mutual fund family.
Find out the cost to switch. Get him or her to
223
prepare a side-by-side comparison of fees and

expenses between your existing fund and the
recommended one.
To double check, use the NASD's "Mutual Fund

Expense Analyzer." You can find this analyzer at
www.nasd.com.
This is also not the time to be polite. I know your

mama or daddy may have said never ask people
how much they are getting paid, but in this case
ignore that advice. Ask how the adviser is being
compensated. Ask if selling you this product
would help him or her win a contest. Be sure to
take notes on what you are told in case you need
to complain to NASD later.
I was punk'd once.
A broker advised me to switch from one fund to

another. He earned more than $1,800 on that
transaction. Naïve me, I ended up in a fund
similar to the one I had owned. That was a costly
mistake I won't make again.
Remember the old saying. Fool me once, shame

on you. Fool me twice, shame on me.
224
ILLUSTRATION #3
DALLAS -- Peter Beasley is a busy man who

currently has no health insurance. He's also a
customer of TelaDoc Medical Services, a setup
that allows him to call an unknown doctor and
get medicine prescribed sight unseen.
Within an hour or so of his call to an 800

number, he gets a call from a doctor who
discusses his symptoms and will often write a
prescription.
TelaDoc provides its members -- which the

company estimates at 30,000 -- with access to a
doctor 24 hours a day, seven days a week.
While members like Beasley praise the service as

a convenient way to address nagging medical
needs at odd hours, others in the health care
industry say treating patients without seeing
them in person is worrisome, perhaps
dangerous. California's medical board is
investigating TelaDoc's activities in that state.
TelaDoc chief executive Michael Gorton said the

Dallas-based company is merely providing a
needed service and is not meant to replace the
family physician. The company began offering
its services nationwide this year after an earlier
test run.
225
"For the vast majority of Americans, being able

to talk to a doctor in an hour is next to
impossible," Gorton said. "Our motto is we're
there when your normal doctor is not."
TelaDoc subscribers are guaranteed to hear back

from a doctor within three hours of their phone
call. After paying a registration fee of $18 and
completing a medical history, an individual
subscriber pays $4.25 a month and a $35 fee per
consultation.
Gorton said ailments range from urinary tract

infections to strep throat to allergies.
But doctors' groups and medical ethics experts

question the notion of putting convenience first.
"Practicing medicine without seeing the patient

is still a dangerous thing," said Arthur Caplan,
chairman of the department of medical ethics at
the University of Pennsylvania. "From the
doctor's point of view, it's not standard care."
Dr. Larry S. Fields, president of the American

Academy of Family Physicians, said he doesn't
see the benefit of TelaDoc.
"As much as I'd like to put a positive spin on it,

most patients can get to their family physicians
just as quickly by telephone," he said.
Establishing a doctor-patient relationship should
involve an office visit with a general exam and
an ongoing plan for the patient's long-term
health,” Fields said.
226
While the American Medical Association doesn't

have a specific policy on such services, there are
some concerns for the patient, said AMA
president Dr. Edward Hill. "Nothing we think,
can replace a face-to-face with a doctor."
Gorton said that doctors with his network won't

hesitate to send patients to an emergency room if
their symptoms warrant it. And he notes that
many doctors have addressed the needs of
unknown patients by handling after-hours
phone calls for their colleagues.
He said that there are around 160-170 different

medical licenses represented in 50 states with his
service, which doesn't treat children under the
age of 12.
Five states -- Virginia, Florida, Tennessee,

Mississippi and South Carolina -- require an
examination, Gorton said. In those states, he
said, patients get bloodwork and have their
temperature and blood pressure checked to
enable them to use TelaDoc.
The Medical Board of California has opened an

investigation into the company. Spokeswoman
Candice Cohen said that meeting the
requirement of a good faith examination in
California includes an in-person visit.
Gorton says he welcomes the scrutiny.
227
"We expect boards of medical examiners to look

into what we're doing and we expect to come out
of it squeaky clean," he said.
TelaDoc does not write prescriptions for

controlled substances or narcotics. And
uninsured patients with chronic medical
conditions are limited in their use of the service,
according to Gorton.
Beasley, 47, who is starting his own software

company in Dallas, has had health insurance on
and off for the past two years. He's used TelaDoc
for treatment of poison ivy and to get a
prescription eye ointment.
"It's certainly not the answer for anything life-

threatening," he said. "For people that don't have
health care or are in between jobs, I think it's a
great add-on."
228
ILLUSTRATION #4
By Marc Siegel
When you go to a doctor's office, you expect to
be seen in a timely manner by a qualified
professional. Your concern is your health,
certainly not a distant issue such as the
malpractice-insurance debate. It's an industry
issue that doesn't affect you, right? But consider:
• Care is being affected. Doctors are rushing to

see more patients to cover the costs of rising
premiums. Much as a teacher is more effective in
smaller classrooms, physicians are best with
manageable caseloads.
• Legal distractions are becoming more

common. According to the American Medical
Association (AMA), one in six physicians face a
medical-liability claim each year. In high-risk
specialties, the number of such claims rises.
Now, many time-pressed doctors have even less
time because of lawsuits. Yet 70% of the cases
filed are found to be without merit.
Patients should consider that a demoralized and

distracted doctor is not an effective caretaker.
And doctors must begin to "heal ourselves" by
acknowledging that much of our anger toward
lawyers is misplaced.
The wrong message
229
At a recent AMA meeting in Chicago, some

doctors said they were going to refuse to care for
malpractice attorneys. But physicians' anger is
not an effective tool for change. Besides,
insurance companies, not lawyers, determine the
prohibitive malpractice-insurance rates while
ensuring their own profitability.
These skyrocketing rates, together with frivolous

lawsuits, are sending the U.S. health care system
into a predictable death spiral. Both must be
addressed through reasonable reforms, not knee-
jerk actions. If not, the patient will be the one to
suffer.
Doctors would be wiser to group together and

devise their own insurance than to target
lawyers. A plaintiff's attorney in New York has a
proposal to create liability insurance for
physicians. He believes premiums are so over
inflated that he can market malpractice
insurance at one-third the current price. If such a
notion were indeed possible, it would indicate
that insurance companies are more than covering
their costs.
Cost to patients
What should matter most to the patient is that

the frustration and animosity that envelope
malpractice-beleaguered physicians, many of
whom may have done no wrong, may affect
their concentration or even the quality of care.
Doctors have become defensive, forced to write
copious notes on each patient and order
230
unnecessary tests as ways to protect against

lawsuits.
No panacea exists for the malpractice dilemma,

but a system of peer review in the courts and in
hospitals would be a good start. Panels of
experts in both venues could serve as a
safeguard against frivolous lawsuits while
ensuring that patients who have suffered true
malpractice have their day in court.
Current Michigan law shows how a panel can be

a gatekeeper for malpractice actions. The law
requires a review of all potential lawsuits before
a mediation panel, which has two weeks to
determine whether care has deviated from
normal, accepted standards of practice. A patient
may reject the panel's opinion, but then must pay
the doctor's costs if the final verdict goes for the
defendant. This disincentive helps to weed out
frivolous suits.
Finally, the government should restrict insurance

companies. Premiums should be regulated,
much as doctors' fees already are through
managed care and Medicare. In order to heal the
system, health care reform must begin by
stopping the hemorrhaging caused by rising
malpractice-insurance rates.
The health care system must become less profit-

driven, less punitive and more careful in
identifying avoidable errors that really do hurt
patients.
231
The next time your doctor seems quiet in the

examination room, or offers short answers to
your questions, think about malpractice rates,
lawyers and insurers. And think about change.
Marc Siegel, an internist, is a clinical associate

professor at New York University Medical School.
232
ILLUSTRATION #5
Are There Too Many Lawyers?
”When there are too many policemen, there can be no

liberty.
When there are too many soldiers, there can be no
peace.
When there are too many lawyers, there can be no
justice.”
Lin Yutang (1895-1976), Chinese-American

writer, translator, and editor.
Just the other day I received a telephone call

from a gentleman who had been perusing our
Power of Attorneys.com web-site. He seemed
very frustrated in his futile attempts to compile a
list of law firms who were involved in class
action litigation. In an e-mail he forwarded a
little later, he stated, “This information is not
readily available, as you can imagine.”
I can imagine, all right. Trying to get a handle on

the number of lawyers in the United States is a
next to impossible task. But there's one thing for
certain about the number of lawyers in America
and it is this -- there is no shortage of them. In
fact, one could reasonably argue that there are
too many lawyers in America.
Let’s take a closer look.
233
In 1995, the American Bar Foundation stated that

the number of lawyers in the United States was
896,000. More recently, estimates from varying
sources places the number at around 1,000,000
lawyers in America. ONE MILLION
LAWYERS! One million people are a whole lot
of folks, but one million lawyers looking for
someone to sue – YIKES!
In a survey conducted back in 1972 by the

American Bar Association, seventy percent of
Americans not only didn’t have a lawyer, they
didn’t know how to find one. That’s right; thirty
years ago the vast majority of people didn’t have
a clue on how to find a lawyer. Now it’s almost
impossible not to see lawyers everywhere you
turn.
Lawyers chant their relentless “sue onto others

before they sue unto you” mantra 24/7. From
their trash talking commercials on TV, where
lunatic lawyers hoot and holler about how
they’ll fight for your rights, to the countless
tawdry billboard ads, trashy newspaper
announcements and tasteless yellow page
advertisements – lawyers are everywhere you
look. Boy, I’d say that things have definitely
changed since 1972 – and not for the better, I
hasten to add.
OK, I’ll grant you that there is, and always will
be a market for lawyers to ply their trade. But
come on, do we really need lawyers asking us,
“Have you been injured?” a thousand times a
day?
234
With a million lawyers, give or take a few

thousand, filing millions upon millions of
lawsuits monthly, America is leaving the rest of
the world in its litigation dust. Lawyers have
finally positioned us right where they want us –
busily scurrying all around looking for all sorts
of inventive new ways to sue somebody over
something or another. Suing has become the
American way of life, or at least so it seems.
Where innovation, creativity and ingenuity were

once the magnificent cornerstones of America’s
entrepreneurial drive and spirit, these precepts are
now merely platitudes used by hundreds of
thousands of trial lawyers that manipulate others
on a daily basis.
Interesting, isn’t it, that lawyers amass their

fortune through the redistribution of existing
wealth of others, rather than by creating wealth
through their own entrepreneurial efforts? In
other words, they rob from the rich, the poor and
everyone else in between in order to benefit
themselves.
Nowhere but in America are the individuals and

companies who create business, create jobs and
create opportunity so relentlessly pursued by
lawyers.
So do we or don’t we, as a nation, have too many

lawyers. I’ll let the numbers speak for themselves:
The U.S. has seventy percent of the world’s

lawyers, but only five percent of the world’s
235
population.
U.S. industry spends hundreds of billion dollars

annually on litigation costs and efforts to avoid
liability.
We have thirty times more lawsuits than Japan,

one of America’s primary trade competitors.
Product innovation in America has been

drastically curtailed due to overwhelming liability
concerns.
The health care industry, one of the trial lawyers

favorite targets, have costs that are spiraling out of
sight, leaving many Americans underinsured or
uninsured, and…
The costs of virtually every good and service has

an increased cost, reflecting the cost of rampant
litigation in this country.
Yet in spite of the immense wealth being

efficiently siphoned from the wallets of each and
every American into the bloated bankrolls of
avaricious lawyers nationwide, the legal industry
is awash in business.
In todays sue or be sued society, people are

flocking to lawyers in droves. Americans are
turning to lawyers to right every wrong or make
everything right again, suing virtually anyone
who can fog a mirror.
So even though lawyers suffer approval ratings
236
well below even the sleaziest of used car

salesmen, and are the butt of a never ending
barrage of lawyer jokes, lawyers are still swamped
with clients.
In America, where anyone, can sue anybody over

anything, anytime they feel like it, business for
lawyers has never been better. Never!
With all of the idiotic, nonsensical lawsuits that

continually clog our court system and the
stratospheric awards lame brain judges and juries
are handing out, it seems like everyone is trying to
cash in on the next lawsuit lottery.
With millions and billions of dollars for the

taking, everyone wants a piece of the action, and
nobody it seems wants to be left out in the cold.
Lawsuits, conflicts, fighting, fusing and fuming

now rule the day while the lawyers, not
surprisingly, rule the roost. So when it is all said
and done (and with lawyers, more is always said
than done), maybe we don’t have enough lawyers
after all?
Extra: Tax Guides
There are three categories of tax guides. One

type gives step-by-step instructions on preparing
tax forms and offers tips and suggestions along
the way. A second advises financial planning
strategy and recommends ways to allocate or
invest money in order to minimize taxes. A third
counsels the adversarial approach. It is this tack
237
that is taken by CPA Kaplan and specialist

Weiss. They portray the IRS as arrogant,
uncaring, vindictive, and rife with bureaucratic
incompetence. By revealing IRS operating
procedures that determine how and when a
return is audited, the authors provide tips on
minimizing the likelihood of an audit and they
spell out "endless" loopholes in our tax laws that
they say should be taken advantage of.
Recommended for libraries whose patrons
demand more than J. K. Lasser.
David Rouse
With tax laws constantly changing and existing

regulations hidden in volumes of tax code, very
little related to taxes is easy to figure out.
Businesses and individuals in every income
bracket need expert advice that cuts through the
IRS bureaucracy and shows them how to work
within the system. In “What the IRS Doesn’t
Want You to Know: A CPA Reveals the Tricks of
the Trade,” tax expert Martin S. Kaplan reveals
critical strategies that the best CPAs use for their
clients to file shrewd, legal, money-saving
returns.
Filled with in-depth insights and practical

advice, this book will help you answer such
questions as:
• How can you approach the "new" IRS to

maximize your tax return success?
• What are the latest IRS weapons?
• What are the biggest taxpayer
misconceptions?
238
• What are the most commonly overlooked

credits and deductions?
• How will new tax legislation affect you?
• How can outdated IRS technology benefit
you?
• What forms should you never fill out?
From deciphering the Jobs and Growth Tax

Relief Reconciliation Act of 2003, to
understanding the personality of the IRS, “What
the IRS Doesn’t Want You to Know” will help
you shape your tax strategies and stay on top of
your current financial situation.
Filled with in-depth insights and practical

advice, this book will help you answer such
questions as:
• How can you approach the "new" IRS to

maximize your tax return success?
• What are the latest IRS weapons?
• What are the biggest taxpayer
misconceptions?
• What are the most commonly overlooked
credits and deductions?
• How will new tax legislation affect you?
• How can outdated IRS technology benefit
you?
• What forms should you never fill out?
239
Reference Tool
Final Notes: On Financial Advice
Many registered investment advisers are licensed as stockbrokers to

execute purchases and sales. The vast majority of stockbrokers however,
are salespersons, authorized to provide financial advice as incidental to
their primary brokerage service.
The term financial services became more prevalent in the United States
partly as a result of the Gramm-Leach-Bliley Act of the late 1990s, which
enabled different types of companies in the US financial services industry
to merge.
The increase in affluence among baby boomers is making the title of

investment advisor even more blurry. There is the appearance of time-saving
competence in the televised image of a well-rounded, well-connected, can-
do professional who offers easy retirement planning. And this is happening
in the midst of new investment product introductions.
Investment advisers include hedge fund managers, pension fund managers,

mutual fund managers, trust fund managers and also individuals,
partnerships, or corporations which are registered under the act, including
certain exempt categories. Investment advisers, by law, owe their customers
fiduciary duty to provide full and complete disclosure of all fees, conflicts
of interest, and if so authorized, to exercise discretion in selecting
investments only with their client's best interests in mind.
There are over 600,000 financial service professionals. Financial service

companies represent the seventh largest national advertising category.
Clearly these large firms have an enormous management challenge. And
the competition for clients is fierce. Hypothetically, their ads keep the
financial services the companies provide at the forefront of the client's
mind. There is a deeper challenge, though, and that is to maintain a more
personal relationship. How does either the customer or the advisor verify a
personal relationship?
Nowhere is the popular verbal ascension of a “stockbroker” to an

“investment adviser” is there a general standard for service, fiduciary, or an
analysis of the long-term needs of the customer. We call this last part
"scenario planning" and consider it the third element in a wealth advisor's
list of primary tasks. To our thinking it is not possible to create a trusted
advisory without a specific service standard. The importance of that service
240
standard becomes paramount to understand the interdependency with

fiduciary and scenario, or long term planning and preparation. It becomes
highly desirable once both the customer and the wealth adviser recognize
the potential profitability.
Robert Bailey
241
Appendix
Economy or Not Economy…

A Power Tool for Squeezing Added Profits From
YOUR Business
This is a powerful self management tool and how to use it to rethink your
business.
This exercise is useful in thinking about how your

business “fits in” to the economy. Being a pioneer is
difficult and very expensive. But, if you "steal" ideas,
improve on them, alter them in some way others have
missed, or improve on a “normal” business by as little
as 1%, you will be better off financially and far likelier to
succeed with your personal goals. The business
failure statistics bear this out.
Richard Branson didn't invent the commercial airline

with Virgin Atlantic. Neither did Southwest under
Herb Kelleher. But each was innovative in ways the
major airlines never dared.
The purpose of this tool is to get you to think about

such opportunities well in advance. Too many people
think that they need to start today on the big idea. It is
far more prudent to have a “gap” idea, research
competitors, build your contact base, review profitable
marketing opportunities, and keep polishing your
marketing message.
This tool is meant to slightly shift your perceptions

about the ways business is done and consider how you
might get more in tune with your customers. Don't
misunderstand this. This isn’t a scientific procedure
242
loaded with certainty. It’s an art to be practiced. But use

this tool a few times and you will notice your
understanding improves a bit each time. The financier
George Soros has pointed out, that business is largely
an art accompanied by success measurements. Think
about the end and work backward. This is where your
confidence builds by imagining yourself a huge success
with your new ideas.
About this Business Power Tool: Economy or Not

Economy
Read through this description until you feel familiar

with the differences between the businesses. If you are
unfamiliar with the actual companies because you live
outside the U.S. please consider substituting a
business example that makes sense to you. For
example, in England you might think about Boots here
instead of one of my examples, Walmart. Our focus is
on helping you to understand the business concept.
243
Exercise: Economy of Not Economy

In each cluster, select the (one) numbered “concept”
that best describes the ECONOMIC framework of your
business.
1) Competitive Model: What distinguishes me within

our market?
" Cost (Walmart competes on price. They buy

wholesale at a huge discount and factor diminishing
margins into the speed of their sales that appear as
savings which they pass along to their customers.)
" Differentiation (GM has multiple lines of

automobiles. You might start with the Chevrolet,
and during your lifetime they will try to move you
up to a Cadillac.)
" Innovation (Microsoft not only owns the majority

operating system for PCs. It has virtually cornered
the market for PC software. Additionally, it
provides upgrades that pledge security and added
speed.)
" Customer intimacy (Your drugstore -- especially the

pharmacy -- is likely to have information about you
well beyond what you provide most people. The
smarter drug chains and small stores leverage this
with things like educational programs and alerts.)
2) Business Model: How do I initiate my process of

making money?
244
Most people forget about the type of transaction they are

proposing. Think about it for a minute. Below are seven
business models. Each of these has a vastly different way of
introducing itself to you, reminding you, and making you
care. Identifying which of these is closest to the way you
sell, will speed up the rates at which your customers find
you.
(Select one)
" accounting (accountant)

" insuring (insurance company)
" financing (financier)
" creating (Disney)
" connecting (AOL)
" transacting (Merrill)
" executing: (Fed Ex)
3) Functionality: What is my role? Where are you in

the food chain? Or, if you're innovative, where has
your business been, typically, on the food chain?
(select one)
" Wholesaler
" Retailer
" Manufacturer
" Service provider
4) Economic Model: How do I actually make

money?
245
This is about the transaction. Question number two

asked you how you initiate the process. After
you've got the customer working with you, ask
this—what is my transaction experience similar to
for that person?
What priority does your business play in the life of

your customer? Is the person purchasing for
herself? Is the individual purchasing for his
company? This question moves your initial process
into the transaction and gets you paid.
(Select one)
" Aggregator (Amazon)

" Banker (Bank One)
" Broker (Charles Schwab)
" Distributor (Staples)
" Gatekeeper (Microsoft)
" Lessor (landlord)
" Partner (Disney-ABC)
" Performer (Paul McCartney)
Follow up Questions
1. Do your choices align and complement each other?
Do they conflict? How might you resolve this?
2. Are there better choices, combinations and

possibilities for doing business? Review or redo the
document. I like to test out a few variations.
3. How can you test the possible impact of your

choices?
246
TRY NOT TO VIEW WHAT’S NEXT…
Until You Have Completed
YOUR Economic Framework
247
Sample: Comments to a fictional client, Ranan

Corporation.
(Innovation) Ranan doesn’t yet have the scale necessary

to complete on cost or differentiation. Customer
intimacy requires more time and greater involvement
than we may have with each and every client.
Innovation is a distinguishing and evolutionary
characteristic which the founders each possess and the
audience needs.
(Creating) The creativity and stimulation of the course

provide the opportunity to serve a loyal customer of a
brand, without end (see innovation – above)
(Manufacturer) As a creative business, Ranan is at the

heart of design; providing a behavioral and structural
experience. Using the available technologies, licensing,
and product extensions the company creates,
“manufactures,” and sells to numerous resellers and
distribution channels.
(Performer) As a brand, Ranan (and/or its hero) can be

personalized and modeled. Sales and cross-sales consist
of live, recorded and opportunistic products, licensed
goods and services. Testimonials enhance and support
the products’ value.
248
Study Guide for

“The Investment of a Lifetime”
and
“The Billionaire’s Little Black Book”
1. In “The Investment of a Lifetime” what does FOCUS

stand for? (page 168)
2. The true team strategy summarized, is:
The right ________, doing the right ________, in the

right ________, at the right ________, for the right
________. (page 24)
3. John Dockerty’s MAP planning process stands for:
M…………………
A…………………
P…………………
(page 112)
4. What are the four plans, in order, that support a lifetime

of investment?
5. Name three of the seven benefits of a succession plan.
249
(page 105
6. What are three of the five reasons that people don’t ask
good questions? (Page 186)
7. What percentage of professionals does the author

suggest represent elite advisors? (page 20)
8. Write five of the general focus questions mentioned in

The Billionaire’s Little Black Book. (Page 185 through 188)
How will you use them?
9. Write your favorite question from each of the

professional categories in The Billionaire’s Little Black Book,
with an illustration of how you will use the question.
10. Write your favorite quote from either “The Investment

of Lifetime” or “The Billionaire’s Little Black Book”…
explain how you will apply it.
250
11. What is the importance of the focus questions? (Page

168)
12. Do you have a story of your own about helping your

clients or customers, or your colleagues succeed? Share that
story with us. If we use your story in our next book will send
you $50 and a signed copy of this book.
Get your answers reviewed with personalized comments

(Please allow 2-6 weeks for response) Copy, complete and
Fax this document to 866 450 8017
251
For the complete Trusted Advisory Program Professional

Edition for you and your financial advisor visit:
www.trustedadvisory.com The home-study program
includes: Nine audio CDs 5 manuals and full support for
engaging a sustainable financial team.
More active and current suggestions and

insights on sustainable investing at:
www.trustedadvisory.com
We regularly review real estate and equity

investment for sustainable investments,
including sustainable development and projects
that meet stringent requirements as
demonstrating sound preservation economics.
If you want to put sustainable practices and your

investment of a lifetime strategy into hyper-
drive. Contact us at 866 450 8017
Or write rbailey@trustedadvisory.com
252
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Buying Low and Selling High
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John D. MacArthur, Empire
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William J. O'Neil
Stocks: A Winning System in 2002
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Geshe Michael Doubleday,
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Fundamental Approach to Swensen 2005
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255
About this work
The Billionaires Little Black Book is the result of a series of

surveys and conversations with professionals in the institutional
and wealth investment business. Originally it was a program
dedicated to helping financial advisors better serve their clients.
With the abuses and turmoil in the financial markets in the first
decade of the new millennium, my warnings had been validated
beyond anything I had imagined.
Where many do (and should) have faith in professional

capabilities, it stands to reason that, as in any competitive sport,
the better the client, the better the advisor. Where the emphasis
had been on the advisor, the author believes clients and
customers must now be accountable for their decisions, in a kind
of informed consent. The system described in this book is intended
to create the most cohesive and productive professional
relationships possible.
Robert Bailey has broad experience connecting ideas and people

in business through networking. He is the founder of The
Breakfast Club in New York City. For 2 years New York’s highest
achievers were introduced to some of the greatest leaders of that
time. Today he connects funding to “Long View” investments
and the development of forward thinking, community enhancing
real estate projects. Visit www.trustedadvisory.com or contact
rbailey@trustedadvisory.com
256

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The Billionaires

Little Black Book

The Ultimate Secret Behind Sustainable Wealth

THE BILLIONAIRES LITTLE BLACK BOOK

The Billionaire’s Little Black Book

Part I: Core Objectives 134

Part II: The 7 Methods for Hiring 139

How to Create A Billionaire Team 148

The Mighty Twelve 155

The Secret of FOCUS 166

Part III: Billionaire Teams 179

High Achievement Six-Pack 180

Illustrations and Support 214

Economics or not Economics:

Which is more important… Knowing the right people? Or,

It has been one of my favorite experiences to work with

These last two characteristics can be difficult to locate

Getting results reliably and sustainably is what this book

The billionaires of our time are generally recognized to

Knowing several of the Billionaires’ trusted advisors, that

It is ironic that many investors are intimidated by finance.

Still, I contend, the “new” complexities of regulation,

Many times the professional’s first job is to build a bridge

It would be logical to think that because individual

am one of these clients. Our key advisor is extraordinary.

The client/advisor relationship would seem to be a fine

There are frailties in being a professional. Training, testing,

Our interest is how to weigh the human and financial aspects

Professionals may unwittingly use unfamiliar terms with

There are additional pressures on the client. Distracted by

By being open to collecting information through teamwork

For the advisor, working closely with each client increases

The Billionaire’s Little Black Book goes far beyond how to

There are three touchstones, then, in this work.

• The first touchstone is the examination of the

• The second touchtone is how to “reverse engineer”

• The third touchtone is the pursuit of relationships

test for feelings of trust. There are several strategies

A trusted advisor will demonstrate unusually high levels of

This extraordinarily large and fast financial environment is

India, China, Russia, Turkey, Vietnam and numerous other

The global economy changes the American investment

We might logically believe that every American would be

Common sense and common wisdom tells us that our

There are two immediate challenges to a common sense

Let’s consider the environment of a few professional

In the United States the professional class of advisors has

Let’s try another field.

The 2006 Bureau of Labor Statistics report shows the

Here is an outline of the relevant changes:

-Corporate entrepreneurs (United States)

Over half the population is looking for investment talent

firms. More entrepreneurial-minded firms and individual

Some larger companies are claiming that they have the

This is not to say corporate advisors can never provide

Professions segment into specialties like biological species.

Keeping up on information is a challenge made easier with

Add to this to the difficulty in locating credible and reliable

This potential for chaos helps us understand WHY so

future. It opens to door for the Billionaire’s Little Black

The Billionaires Little Black Book highlights three inclusive

My objective in this program is to help craft the best of all

The great mass of financial advisors and planners,

How can one advisor adequately, much less expertly,