George Hartman – How Financial Advisors Prepare for Succession

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THE TECHNICAL TRADERS PODCAST TRANSCRIPTION

TheTechnicalTraders.com 00:00

Jim Goddard: 00:47
My guest is George Hartman, the President and CEO of Market Logics in Toronto. You can find him online at where George?

George Hartman:
Marketlogics.ca

Jim Goddard: 01:00
George, first off, can you maybe just tell us a little bit about Market Logics?

George Hartman:
Well, Market Logics is a firm that is dedicated to working in the financial services industry. Generally, more specifically, with retail financial advisors, brokers, and so on. And our attempt is to elevate their business to the highest level possible.

Jim Goddard: 01:22
You’ve switched from being a kind of a person who provided financial services into becoming a business coach and mentor for financial advisors. How did you get started in that?

George Hartman:
Well, I got started way back when. This is my 50th year in the business, so pretty proud of that, which means I started at the age of six, of course. I answered a blind newspaper ad for a management position, which turned out to be a recruiting ad for a life insurance company. Spent a few years there. The management position never materialized. I had some success as an advisor and was invited into head office in the training department and kind of worked around and ultimately ended up as the head of a dealer firm in Vancouver, by the way. And then on to become a vice president of marketing of a mutual fund company. So in that role, my job was to represent our funds to financial advisors across the country.

George Hartman:
And I found the best way to do that was to teach them how to communicate about the value of the funds and also align them with an investment philosophy that made sense to me at the time. And it’s just graduated from there. I moved from there. I wrote a book on asset allocation, probably the first retail book on that subject. And as people started to ask me to speak about it and to guide them and train them, and as they’ve gotten older and I’ve gotten older, then I went into coaching business to help them again, as I said, elevate their business. And now, in particular, we spend a lot of time on succession planning because they’re getting old like me.

Jim Goddard: 03:06
Is there anybody you really admire or influenced you to become involved in the financial markets or coaching?

George Hartman:
I think it probably goes back to my early days in the insurance industry, and I moved into the head office, and I was being toured around the executive suite and introduced to the senior management in the firm. And my role was as a training person. I think it was a vice president of marketing who actually later became a great mentor of mine in life. And his words to me were. “George, we are not going to know how good a job you’ve done for us here until two years after you’re gone.” And that’s kind of a philosophy by which I have lived and tried to perform my activities as a coach, for example, not to get immediate results necessarily, but to get long-term growth.

Jim Goddard: 04:00
We’ll have more with George Hartman right after this.

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Jim Goddard: 04:27
Welcome back. We’re speaking with George Hartman. What is your business and investing philosophy? What set of principles, beliefs, or experiences drive your decisions?

George Hartman:
In the role of a mutual fund company representative, there were certain investment mandates associated with all the funds quite confusing at the time. And it was a time in the industry when new funds were coming out, investing in new markets overseas, and so on. And I was looking for a way to communicate the value of putting these funds together in a portfolio. I attended a pension management conference in New York City. And one of the speakers talked about the whole concept of asset allocation, which I had never heard of before. Despite being in the financial services industry for so long. And I thought, well, that can easily be applied at the individual investor level. And so I became interested in modern portfolio theory and behavioral finance and all of those types of things, wrote a book, and just began speaking and teaching.

Jim Goddard: 05:34
You’re the author of three bestselling books. What can you tell us about them? That’s a lot of books for the average person.

George Hartman:
Well, the first one was called Risk is a four-letter word. And it was about taking mutual funds and building a portfolio according to modern portfolio theory and using asset allocation as a strategy. Then along the way, as I mentioned, my clientele for coaching started to get older and older, and I shifted my emphasis to practice management to teach them how to run their business effectively. Very few advisors in the industry who run a business. They come in to practice their craft as advisors, but like many professionals, they need eventually to get serious about managing a growing business. And so, I focused on that. And then as those clients have aged and are looking forward to their own retirement, then succession planning, exit planning has become the more popular topic. So all three books, Exit Is Not A Four Letter Word is the most recent one. It’s on succession planning. Blunder Wonder Thunder was the middle one that was on practice management, and Risk is a Four Letter Word was the first one on asset allocation.

Jim Goddard: 06:47
George, how important is it for someone to have their own investment philosophy or practices? I know some people are natural risk-takers, others think GICs are the way to go because you don’t have to think about it and their low risk. How important is it to have your own style of investing?

George Hartman:
I think it’s very important, and I think you hit on the right criteria, and that is a proper assessment of risk. Which is a whole topic that is an area of study that has become increasingly sophisticated over, over the past few years. You know, previously, asset allocation was kind of a self-assessment exercise, and now there’s some actual scientific, almost AI-like evaluations that are going on. I think it’s important for long-term stay stability. They call it in the market at the right time.

Jim Goddard: 07:43
At the time of our interview, the markets seem toppy, and a lot of people think, well, you can’t put money in there. Are there certain times where yeah, you just have to walk away and hold onto your cash? And you know, wait for better times are, even in bad times. Can you still go in and make money?

George Hartman:
I think there are opportunities in every market. I’m not sure they should be pursued by everyone. The challenge, of course, with timing the market is you have to get it right twice; once in, once out, once out, once in sort of thing. So I’d rather have a long-term strategy with kind of guardrails on the side. There are times when I’ll deviate from perhaps the portfolio max asset allocation that I chose and then work my way back to it when things are more favorable.

Jim Goddard: 08:34
George, what’s the best advice you ever got, and who gave it to you?

George Hartman:
Oh gosh. The best advice I ever got actually was from another advisor portfolio manager. I should describe him as and looking at. I asked him the question about, you know, should I keep this stock, or should I sell it? And the best advice he gave me was to ask yourself, if you didn’t own it today, would you buy it? And if the answer to that is no, then sell it. If the answer to that is yes, then keep it.

Jim Goddard: 09:13
So pretty simple. George, I’ve heard you’re working on a new program to help financial advisors grow their businesses and create a succession plan. What is that new program?

George Hartman:
Well, the official name of it is Succeeding at Succession. We hope to launch it in May. It’s an online program that walks advisors through the process of putting together a succession strategy. It talks about getting ready emotionally and financially. It talks about picking the right time, choosing the right successor, selecting the best exit option, and then putting a deal together. And that’s kind of the process. Most advisors are ill-prepared to do that. And most entrepreneurs, in general, don’t think far enough ahead and plan well enough for their eventual exit from their business. So that’s something we’ve been coaching on and talking about, lecturing and speaking at conferences, and my latest book is about that. So I just decided to move some of it online.

Jim Goddard:
The Rogers broadcasting Dynasty is a perfect example of when things, perhaps, weren’t lined up right.

George Hartman:
Exactly. It doesn’t have to be in a big deal either. I mean, the fact is, I built three books of business through my career, never sold one of them. In those days, you just kind of walked down the hall, found somebody you trusted, and said, will you take care of my clients. And as I moved around the industry and across the country and so on, today, there’s a big industry in buying and selling financial advisory practices or books or business. And some of them are trading hands for millions of dollars. We just did an evaluation on one that’s about 25 million. So it’s a big deal today. So we can’t approach it in a casual fashion. We’ve got to take control of the exit.

Jim Goddard: 11:00
What’s something you wish you had known before you started trading and investing?

George Hartman:
Probably it would’ve been a better understanding of behavioral finance, my own. What motivated me to act at times inappropriately and then understand later what I had done wrong. So I became a bit of a student of behavioral finance. I wish I had done that earlier.

Jim Goddard:
Now, of course, in very volatile markets, people are always being given advice or being told, oh, you have to sign up with this person. They’re a true winner. But along with good advisors, how do you avoid those scammers out there? They sound like they have a great program, but at the end of the day, you have no money and they’ve got all of it.

George Hartman:
Well, and we hope that doesn’t happen too frequently, obviously, but it’s unfortunate the amount of money that’s at play in the industry or in people’s investment accounts and so on makes it attractive to all kinds of people, including those who are not so scrupulous. So the best way I’ve always found is having someone that I trust to advocate on their behalf. So someone willing to provide a referral, show me their experience, demonstrate and so to the type of work they’ve done for them, and so on. I’ve always found that to be the best. You know, online reviews, I suspect I would say, they’re people who stand out in the industry. No question, and usually, they’re very successful at what they do because they do their job well.

Jim Goddard: 12:52
Are there any investing myths that you’d like to bust?

George Hartman:
I think the big one we alluded to already is that I just do not believe that we can accurately predict markets to the extent that we can do it consistently. I have a philosophy that says it’s better to be approximately right than precisely wrong. And I think that applies to investing very much. So, find a strategy that keeps you within guardrails or boundaries that you’re comfortable with; recognize that nothing goes straight up, nothing goes straight down forever, in either direction, so establish your path and stay on it.

Jim Goddard: 13:40
George, before we go, is there anything else that you think we should have covered and let people know that you’re pretty passionate about something?

George Hartman:
I’m extremely passionate about the value of financial advice. No question. The markets are becoming, as you indicated, increasingly volatile; products are becoming too complex. There are too many of them to choose from. We’ve gone through periods of do-it-yourself investing that generally hasn’t proven to be true. So I would say, you know, financial advice in whatever form it comes, that you trust, whether it’s someone that you follow or whether it’s someone that you deal with directly or whatever, become educated, become smart about it. There are a lot of really good financial advisors out there who take their jobs seriously and are well qualified to assist.

Jim Goddard:
George, thank you so much for chatting with us.

George Hartman:
Yes, my pleasure.

Jim Goddard:
We’ve been speaking with George Hartman, the President and CEO of Market Logics. Where can we find you online?

George Hartman:
Marketlogic.ca.

Jim Goddard:
I’m Jim Goddard. Thanks for joining us this week on the Technical Traders podcast. If you found value in our show, subscribe and give us a rating or share it with a friend that would be greatly appreciated as well. Thetechnicaltraders.com is your source for technically proven strategies to make more money with less risk. So you can take your trading to the next level. Comments made on the Technical Traders podcast are an expression of opinion only and should not be construed as investment advice or recommendations to buy or sell any financial instrument. This information is for general information and educational purposes only. Guests on the show are not compensated for their participation. If you are a full disclaimer, please visit our website at www.thetechnicaltraders.com.

If you found value in our show, subscribe and give us a rating or share it with a friend that would be greatly appreciated as well.

TheTechnicalTraders.com is your source for technically proven strategies.

The technical trader’s podcast or an expression of opinion only, and should not be construed as investment advice or recommendations to buy or sell any financial instrument. This information is for general information and educational purposes. Only guests on the show are not compensated for their participation to view our full disclaimer, visit our website: www.TheTechnicalTraders.com

GEORGE HARTMAN PODCAST VIDEO

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