The Affluentialist

Schiff Chosen as "Speaker-of-the-Month"

The International Association of Speakers Bureaus recently chose Lewis Schiff as it's "Speaker-of-the-Month" for January 2009. We thank the IASB, the most recognized association in the field of U.S. public speaking, for recognizing our efforts and for introducing us to its membership in such an exciting way!

Don't Waste This Crisis

The Friday after President Obama was inaugurated, I had a chance to spend a day in Toronto in the company of about 25 business owners from all over the U.S. and Canada. The gathering’s agenda was wide-ranging but focused mainly on ways for each of us to make smart decisions about our individual companies. In one exercise, for example, we devised concrete steps we could take to grow our businesses by a factor of 10--either in profits or revenues. Keep in mind that all of this took place as the economy was enduring its biggest swoon since WWII and many in the room were having their worst quarters in their professional lives. Still, the participants, from varied industries such as real estate, finance, manufacturing and technology, approached the day’s activities--including the “10X” exercise--with relish.

The setting was labeled as an entrepreneur’s event but I prefer the term “wealth creator” to describe the attendees because we were all there to grow and create more wealth--for ourselves, for our families, for our employees and shareholders, and for our customers and communities. When the talk turned to current events, these wealth creators urged a common refrain: “don’t waste this crisis.”

What a refreshing sentiment! While most people I know are preoccupied with how to survive through dark economic days, here was a group that sees it as an opportunity! Coming from gloomy Gotham where I live and work, it was comforting to bathe in the warm waters of their optimism. I was more than happy to spend the day away from the squabbling and dysfunctional siblings that monopolize the conversation on the east coast: big money, big media, big government and corporate America.

What’s more, this group’s ideas stretched far beyond personal enrichment. Several felt they had enough money already and now wanted to use their wealth and influence on behalf of their community at a time when people needed it most. Or to modernize their business to sustain itself for future generations.

A New Year, A New Leaf

When it comes to investing, January brings a clean slate. And we certainly need it. Last year, virtually every investor's portfolio in the country, perhaps the world, experienced a decline. (The exceptions: the Ghanian, Tunisian, and Ecuadorian stock markets all ended 2008 in positive territory.)

Over the next 12 months, in my blog on Inc.com, entitled "The Only Investment Guide an Entrepreneur Will Ever Need," I'm encouraging everyone to shake off the annus horribilis we've just emerged from and commit to a journey, a journey of financial re-invention. By the end of the year, we'll be able to create a portfolio that offers the following:

It should make sense to us even if we're non-professional investors. We'll understand the holdings in it, we'll understand why we bought them in the amounts we did. And we'll know how they fit in with the rest of our financial assets. (For example, do we hold a lot of tech stocks and work in tech? Probably not smart.)

We should be working with the right people. No longer will we keep our money at a brokerage just because our old college frat buddy or family friend's our broker. That's not a good enough reason to entrust someone with our assets. Instead, we'll keep our money where we want it. With a provider that's fair, accessible and reasonably priced

It should be transparent. No more oddball illiquid holdings or secret hedge funds from a guy named "Bernie." We want our passive assets in the public markets where we can see them, follow them and have faith that they're priced fairly at all times.

In the financial business, we talk about the "smart money," those people who are "in the know." Well, the smart money isn't always so easy to spot in times like these. So, let's remember on this journey towards financial re-invention that the best person to trust is ourselves. We are the smart money. Let's act like it, for our families, for our communities, and for us.

Join me at Inc.com where we'll commence a year's worth of blog posts and take back the driver's seat on our financial futures.

Lewis Schiff Interviewed by Biz Entrepreneur Pat Croce

Mega-entrepreneur and business media superstar, Pat Croce, recently interviewed Lewis Schiff on Middle-Class Millionaires, helping the super-wealthy and how regular people become rich.

Taped in November 2008, Pat sat down with Lewis, in his own inimitable style, to get the facts and just the facts. Visit "Down to Business with Pat Croce" at "DownToBusiness.com."

View the video here:

Middle-Class Millionaire Events Calendar

October 2008

October 9: University of Washington

• TOPIC: Lecture
• VENUE: University of Washington, Seattle, WA

October 10: Proequities. Vancouver, Canada

• TOPIC: "The Faces of Wealth"
• VENUE: Vancouver, BC  
• PRIVATE EVENT: Conference Attendees 

October 25: Top of the Table" event / Million Dollar Round Table

• TOPIC: "The Middle-Class Millionaire"
• VENUE: Austin, TX  
• PRIVATE EVENT: Conference Attendees  

October 29:  Pittsburgh Financial Planning Symposium, Pittsburgh, PA

• TOPIC: "The Demographics of the Luxury Market Customer"  
• VENUE: Pittsburgh, PA  
• PRIVATE EVENT: Conference Attendees 

November 2008

November 6 : Sport Court Conference, Scottsdale, AZ

• TOPIC: "How to Sell to Recession-Proof Customers "
• VENUE: Scottsdale, AZ  
• PRIVATE EVENT: Conference Attendees 

January 2009

January 20 : Securian, St Paul, MN

• TOPIC: "How to Market to the HNW Client in any Economy"
• VENUE: Scottsdale, AZ  
• PRIVATE EVENT: Conference Attendees 

February 2009

February 21: Travellearning, New Orleans

• TOPIC: " How to Attract, Retain and Service the Discerning Traveller in any Economy."
• VENUE: New Orleans, LA  
• PRIVATE EVENT: Conference Attendees 

American Library Association says "Middle-Class Millionaire" Top Book of Year

According to Brad Hooper, esteemed reviewer for the American Library Association's Booklist web site:

"It is the privilege and even the duty of the conscientious public librarian to make certain the business collection is as inclusive as possible and will appeal to as many readers as possible. Although management books are to be included, the collection should not consist entirely of management books. Below are 10 outstanding titles reviewed in Booklist over the past year that are worthy of inclusion in, and guaranteed to expand the range of, any public library business collection."

Mr. Hooper then goes on to cite The Middle-Class Millionaire as one of his top 10 books of the year, saying...

"This is an excellent perspective on an important consumer market."

We're proud to have had our book chosen as one of the top 10 business books of the year by the American Library Association's Booklist.

Earth to the Press: Where’s Robert Rubin?

Remember the early rush of press scrutiny that followed the surprise announcement of John McCain’s Veep choice? The virtually unknown Sarah Palin was the subject of intense media interest in those first days. As the Alaskan Governor prepared for her new national role, the press became more and more heated in their demands for a “press conference”. Even after interviews with individual journalists, including Charlie Gibson of ABC and Katie Couric of CBS, the press corps continued to demand a formal conference.

Well, Sarah came and went and, to my knowledge, the press conference never happened. The press failed to get their man—or, in this case, woman. But, lordy, it's all we heard about for three weeks of the campaign. It's worth noting that her Democratic counterpart, Joe Biden, who went on to victory, received only a fraction of the coverage that Palin did. Could it be that the press was more interested in catching a gaffe-prone beauty queen on video than hearing from the real newsmakers?

If you already have a jaded opinion about the press, then you won't be surprised to hear that there’s another incredibly important world figure, one who’s influence on the global financial stage touches literally every power center in this financial crisis, which the press has virtually ignored: Citigroup advisor and former Clinton Treasury Secretary, Robert Rubin.

If the press did have the stones to interview Rubin, perhaps they’d ask him about his final days as Treasury secretary, where he played an instrumental role in helping to repeal the Glass-Steagall act, which cleared the way for creating the highly leveraged mega-financial institutions we’re struggling to unravel today. Or what he had in mind when he took a job immediately after the Clinton administration with the very monster he helped to bring to life, Citibank, to advise them on how to maximize the opportunity he’d helped create during his tenure in Washington.

Maybe they’d ask him about his role within the globe’s most powerful private financial institution, Citibank, and how he failed to provide good guidance regarding their financial positions at every level, creating a more than $300 billion liability that they still haven’t come fully clean on. Or they’d ask him why he thinks he still hasn’t been called to testify in front of Congress about what happened at Citi during his tenure. Perhaps he, or someone else, can explain to me why heads are supposed to roll whenever a financial institution dips into to the $700 billion T.A.R.P. fund, including calls for the dismissal of the second Citi CEO in as many years, but no one ever suggests that Rubin has any culpability in this.

In fact, Rubin is the last man standing at Citi. The former CEO, the senior risk management, the senior derivatives traders have all been let go because of their role in nearly crippling Citibank. Meanwhile Rubin hasn’t even offered up one shred of explanation as to his role at the center of a global financial meltdown. Why should he? He’s only the Chairman of the bank?

When asked, he says he doesn’t have day-to-day responsibility of Citi, and therefore, he’s not responsible for the actions of the firm. Does that sound reasonable? According to New York Post, the bank’s paid him $107 million since joining Citi in 1999. Chairman, a nine-figure pay package and no responsibility? Where do I find that job?

Yes, Citi is a mess, and yes, Rubin’s at the center of it and yes, the taxpayers are going to have to dig them out of the mess he and the rest of them created. Sounds like every other story these days on Wall Street. What’s so different about this one? Why should Rubin have to submit to a press conference while other Masters of the Universe don’t?

Because Rubin is also at the center of the Obama administration’s new financial staff. He’s got close ties to virtually every important figure now being considered for a finance-related position in Obama’s White House, from National Economic Council leader Lawrence Summers to Treasury Secretary pick, Tim Geithner. Rubin has these guys on speed dial and they, along with other key Obama picks, are considered “Rubinistas.”

Now, don’t get me wrong: Robert Rubin is smart. He’s an asset to our collective financial intelligence. But why, oh why hasn’t the press or the Congress asked – strike that, insisted—that he explain his role, one that began more than 10 years ago while a government official, and continued straight through the Bush era (enriching him fabulously) leading him right into the seat of both financial and political power, without ever having been elected, ever having been questioned, ever having been threatened with losing his job, even though he’s presided over the most spectacular financial failure since the Depression?

Why did the press demand access to a half-baked Vice Presidential candidate but has given a free pass to a genuine Wizard of Oz? And where’s the U.S. Congress in all of this?

To the press, I have a question and a follow up question:

Why is Robert Rubin getting a such kid gloves treatment from the press?

And my follow up question:

What the #*&%?# is going on?

Call For a New Era of Austerity

The United States, the wealthiest nation in the world, has become the biggest debtor nation in the world. That simple, untenable, disgraceful fact explains much of what ails the stock market, the housing market, even the price of food at the grocery market.

It is a lack of leadership that is substantially responsible for our current sorry state of affairs. Leaders are supposed to show us the way. Instead, what we’ve had for decades, for my entire lifetime, I believe, is leadership that has chosen to pursue personal riches--in the form of money, power and satisfaction--at the expense of the people they represent.

And it continues today. Even on a daily level we endure these slights and abdications of leadership. Today, I read that the lame duck congress doesn’t have enough support from the Republican party to convene and seriously consider a stimulus package and a bailout for the auto industry. Whatever one thinks of these programs, the fact that our officials aren’t even going to get together to explore them is shameful. Instead, as power passes from one administration--and one party--to the next, the message from the losing party is: “not my problem.”

We’ve got approximately two months before the new administration takes office, along with a significant shift in congressional power. What difference will two months make? The potential for disaster over the next two months is great. From Wall Street to Main Street, everyone agrees that we’re in for a world of hurt in the short term.

The current state of affairs, whether we consider what’s gone on for decades, for eight years or for the past couple of months, or even the forecasts for the next couple of months, must primarily be blamed on a lack of leadership from all quarters.

Many are hopeful that things are about to change. Whatever one thinks of President-elect Obama politically, his victory was proof that our nation has the capacity to move forward. He represents a sea change in the previously intractable issue of race in this country. I don’t think it’s hyperbole to believe that he can help us address our economic principles as well.

We must address them at home, too. While the willingness of our governments--red, blue, local, state and federal--to spend more than it has is the root cause of so much of what ails this nation, it is also that same syndrome which effects virtually every American household as well. What ails our country has also infected our homes.

We can be hopeful that a new message of restraint will come from a new administration. Even given the historical perceptions of democrats, there’s early evidence that the soaring oratory of the newest White House resident will include a call for fiscal prudence and a return to the values of an earlier time.

With that in mind, I am putting in my two cents for a new era of austerity, both from the top down as well as from the bottom up. Every household--from the White House to your house--needs to re-consider its poor savings and debt-driven spending habits and work towards this new reality of personal financial responsibility. In order to be successful, it needs to happen at every level, including legislative, cultural and spiritual.

America’s government showed great leadership in the 1960s by taking up an unpopular civil rights agenda at a legislative and oratorical level. It took, arguably, forty years for these ideas to fully take root in America. We’re more mature as a nation now and ideas travel faster. We can’t afford to sacrifice several generations while we re- center our fiscal compass. If we take that long, there may not be much of an American ideal to save anymore.

Question: What Do Cars and Financial Advisors Have In Common

Answer: J.D. Power And Associates

J.D. Power and Associates, best known for telling us what consumers think about products, from cars to cell phones, is now extending its reach and research know-how to determine advisor satisfaction levels with their employers.

J.D. Power and Associates Reports:
Firm Performance and Organizational Support Are Primary Concerns For Financial Advisors in Volatile Marketplace

It’s a great time to see a report such as this. Why? Advisors, especially independent or independent-minded advisors, are “go-betweens” placed in the middle of a financial institution and an individual client. They are financial shock absorbers of a sort, working to align the capabilities of the financial markets (in this case, the road, unyielding and without emotion) and the client (the car hoping for the smoothest possible ride on the way to its destination).

Understanding satisfaction levels between advisors and their firms gives us an inside look at how these firms are doing in helping the individual clients reach their goals. I know many advisors and all of them want their clients to succeed. If the advisor is satisfied with their firm, it’s a good clue that their clients are satisfied, too. Or, at least, given the markets these days, they are as satisfied as they can be with the institutions they rely on to implement their financial plans.

Advisors care about other things besides just making their clients happy.  They care about having their job made easy and they care about making money. On any given day, there can be healthy competition between these three aspects of their job, but, all things being equal, it’s better to hire a happy advisor than an unhappy one. Especially now, when we have once again been reminded that no one, not even Warren Buffet, knows what’s going to happen in the markets in the short term. All you can rely on in times like these are that the firms you are connected with have integrity, communicate well and do their level best to do what they promise to do.

An advisor’s satisfaction with their firms, now measured by J.D. Power, is a useful clue in determining whether or not these institutions can live up to these expectations.

It's Class Warfare, I Think

With the Dow shooting up more than 500 points today in the wake of a ‘no’ vote on the Washington bail out bill, this is beginning to feel a little like “Who’s On First.” I can’t figure out who’s on which side and what’s going to protect us from them.

“Protect us from who?”

“The bad guys.”

“Wall Street?”

“No, Washington.”

“You mean the Democrats?”

“No, the White House.”

“Who are they protecting us from?”

“The Republicans.”

“The White house is protecting us from the Republicans?”

“Yes, along with the Democrats.”

“I’m confused. I thought you said Washington’s going to protect us from Wall Street.”

“No, Wall Street’s came roaring back today. They’ll show Washington they don’t need the taxpayer’s money.”

Let’s take a step back. For the past couple of years, some smart people have observed the absence of significant social class backlash here in America, even as the wealth gap between rich and poor increased. This theme emerged most clearly in the post-game analysis of George Bush’s easy re-election in 2004. In spite of having created tax policies that favored higher earners while real incomes dropped among the middle-class, the majority of Americans cast their vote for the “candidate of the wealthy.”

Not that W. would characterize himself as the rich man’s president. He launched something called the “ownership society” which was designed to hoist more Americans to the next rung on their personal economic ladder. In retrospect, however, it seems to have been interpreted as license for banks to drop all prudence and go on a lending bender.

Certainly borrowers shoulder blame for deciding to go into hock to the banks. After all, no one put a gun to their head and told them to join the ownership society. But, in my opinon, the lending terms for many of these new borrowers were obviously onerous and went too far in compensating the lenders for the risks they took in dealing with subprime applicants. Lawmakers and regulators could have easily created criteria and oversight to deliver fairness in this environment. It’s shameful that they didn’t. They could also do this right now in the credit card industry but they aren’t. Again, shame on them.

Now the tables have turned. As of this writing, the U.S. Congress has failed to pass any kind of a Wall Street bail out. We’ve learned that Congress, especially those in vulnerable districts, yielded to their constituents’ requests on the eve of election day and delivered a ‘no’ vote to the “Emergency Economic Stabilization Act of 2008.”  Main Street talked. Washington listened.

By sending Congress back to the drawing board on the Wall Street bail out, Main Street declared war on Wall Street and we’ve witnessed the re-awakening of class warfare. It’s not exactly the worker rebellions of the Twentieth Century but it has led to a number of angry emails and some pretty saucy talk from TV’s late night talk show hosts. Now, we’ll see how the power elite in Washington and Wall Street respond. One message from Main Street to Wall Street and Washington is clear: If this is what you meant when you called for an ‘ownership society,’ you can keep it.