The moving walkway vs. the hamster wheelArticle added by Russ Wagner on March 28, 2014
West Des Moines, IA
Joined: January 19, 2009
Ranked: #138 (437 pts)
After spending 30 years in this business, I feel the following analogy puts the retail agent/advisor business into perspective: The professional is the moving walkway and the novice is the hamster wheel.
Being on the hamster wheel is a neverending chase for new shiny toys, marketing initiatives, silver bullets and trinkets advertised by
our industry to “change your life”. These novelties are typically short-lived, unsuccessful ploys to get you to contract with an FMO in the hopes that you will write business.
The bigger picture is that these “initiatives” end up costing you time, money and an interruption in the production of your firm. This business interruption causes you to lose confidence and trust in our industry and yourself.
By always chasing the next new toy, an advisor never implements a successful business development system that drives activity and solidifies their current client relationships. Ninety percent of agents live a life on the fringe, never having consistent activity to become truly successful.
Because of this fractured business plan, they also never build up any residual income for their own retirement years. If they stop working, they stop getting paid. This creates several problems:
1. No business development process
In contrast to the hamster wheel is the moving walkway analogy.
2. Inconsistent activity and production
3. Distractions and stress
4. Failure to culminate effective client relationships
5. Wasted time, money and effort
6. No recurring revenue
7. No business value
This is a progressive process in which an advisor knows where they are going, how to get there and what the results will be without exception.
As they progress down the walkway, their business is fed with new prospects from a host of activities which are simply a part of their business development function.
The moving walkway provides a distinct and meaningful process for growth quarter over quarter and year over year.
This approach creates numerous short- and long-term benefits:
1. Structure and known outcome
The stark contrast between the professional and the novice is not only evident in the incomes generated by the two, but in the value of their practices.
2. Business focus, analysis and understanding
3. Progressive business development
4. Consistent activity and production
5. Less stress and higher quality of life
6. Quality client relationships
8. Better use of time
9. Recurring revenue
10. Monetary business value
A recent discussion involving an agent trying to sell his firm after seven years of producing annuity premium of $5 million to $7million annually resulted in an offer of less than $75,000. That’s a hard pill to swallow.
A similar advisor with equal numbers but using a 70/30 approach, meaning 70 percent safe money and 30 percent AUM has a business valued in excess of $500,000. The reason is the recurring revenue for years to come. The business would be sold at a multiple of annual revenue.
The moving walkway or the hamster wheel? Which makes more sense?
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