Stephen Caine works at being retired, mostly. Not an easy job, but he’s handling it well, working as the Board Chair at Hillel at the University of Arizona. He also does some travel agency work, working with his wife Heather setting up cruises through www.cruiseholidays.com.
We did discuss Steve’s prior careers, first as a printer and, then, as a financial advisor. Not a totally typical career change, but Steve’s a guy from the 60s who didn’t want to stay in any one place for two long. We talked printing briefly. Steve saw the problems pretty early, selling out by the late 1980s. (There are printers who are very successful, still, but paper as a delivery platform has some serious competition that was non-existent decades ago.) There’s also an evident connection between printing and helping people handle their money: both occupations involving dealing with people, and Steve likes people!
Steve got into the financial advising world when most people still thought they had a stockbroker, although he reports to me that the times “they were a changin’” already. The old days, where the broker read the Wall Street Journal, checked the news every day and night, read the analysis from his company’s research department, and pitched this or that company, were going away! The people who made their living that way were still around, but they were being pushed toward a new model, where they helped their clients by developing an investment plan that involved placing their money in mutual funds or with money managers. The old stockbroker becomes the point person between the client and people who actually invest their funds.
By the time Steve retired from the industry in 2011, he’d seen a third wave, where the financial advisor went a step further and assisted clients with financial planning. This processed involved, with training, gathering the information necessary to recognize estate, retirement and other planning issues, articulating those needs to clients and then refer them to attorneys, tax professionals and even foundations to aid in setting up their trusts, LLCs, etc. His company did not prepare legal documents, but did offer products—including life insurance, annuities, and securities—to help meet a client’s needs in a one-stop manner.
So what did Steve do? As an older newbie in the field, in his early days he spent lots and lots of hours at work. First, there was studying for exams and learning the industry. Then, lots of cold calls, as well as meeting with people he knew, all in furtherance of getting business, but also with an underlying goal of learning from each and every experience. (I’ve never read The 7 Habits of Highly Effective People by Stephen Covey, but the successful people I know have learned how to pull the nuggets from every encounter.)
Steve became a Branch Office Manager within a few years. In baseball the team leader is the manager, while in basketball and football he’s the head coach. I’ve never understood the difference, but for Steve being in management meant, significantly, being a coach. He told me he would meet with every broker regularly, but would also do “walk arounds” a few times a day. “Walk arounds” have as their purpose checking-in in real time, to have a sense for what is really going on. Is so and so working? Calm or crazy? Playing by the rules? Management in the money management business means two big things, which can be in conflict with one another. First, you need for your people to be making money, and whether that involves selling individual stocks or developing an investment plan and sending the money to a manager, a financial advisor needs clients with money and a willingness to invest it. So, management involves motivating your people, lots of encouragement, advice, and knowledge-sharing, coupled with being a psychotherapist for some!
Second, you need to be sure your people are compliant with securities laws. Remember, at the retail level brokers make money when people buy and sell. This model can be at odds with good investment planning, which may mean buy and hold. So, being a manager means making sure your hot-shot, leading sales guy is doing it straight and not churning—lots of buying and selling, signifying nothing (other than commissions)—his clients’ accounts. Alas, Steve tells me the churning issue also changed. By the late 1990s very few advisors made money when a client bought or sold; instead, they earned fees based on a percentage of assets under management. Thus, suitability became an issue, as advisors wanted to outperform their competitors but needed to ensure they weren’t being too risky with their advice. In a bull market, these issues did not present themselves readily, but they became readily apparent when the bear showed up. Steve reports that portfolio review for suitability was a big part of his job, as well as dealing with complaints. “If a rising tide lifted all boats,” Steve says, “when the tide recedes you find out who’s been swimming naked.”
The other significant aspect of Steve’s job involved reporting and compliance. Lots of reporting to higher ups. Lots of paperwork. And lots of meetings, both on the phone and in person. My big takeaway from talking with Steve? He was in two industries, printing and investments, which have undergone tremendous change over the past few decades. He survived these changes more than well. (Actually, although he and Heather are not long-termers in the travel agency world, it’s also a “major change” industry.) Going forward, those of us who are still working and are in industries which are also changing quickly—are there any that aren’t—will need to be very adaptable, for the change will come, with us or without us.