Bill Sherman helps advisors move from the level of being merely good to the high plane of investment superstar.
How?
Bill's The Sherman Sheet (TSS), a daily market research service and guide, frees professionals to concentrate on gathering assets and building customer relationships. TSS does the heavy investment lifting.
A daily conversation, in writing, with your own market guru and CIO
TSS hits an advisor's inbox overnight, ahead of each workday. It provides a straight-ahead investment roadmap -- each issue is precisely calibrated and tuned for the next market day. Additional reports arrive on weekends. Extensive information is also available from the TSS Web site 24 hours daily. There are 252 market days yearly, and TSS provides support for each and every one.
The Sherman Sheet's simple design allows the advisor to see required action for the next market day immediately. On most days, for most portfolios, no activity is required, and "no action" can be determined instantly by glancing at the top of the first page of each day's report.
There are normal rebalancing days for some of the portfolios, and when mid- or long-term indicators change to bullish or bearish, changes need to be made. Such changes are typically simple and require a minimum of time.
When portfolio changes need to be made, the very simple and easy-to-follow instructions are crystal-clear and require a minimum amount of time or fuss.
Why not be your own investment guru?
Do you know about the 10,000 hour rule? It's Malcolm Gladwell's suggestion for the amount of time it takes to become an expert in any subject. Does the average advisor have the ability to become a market savvy expert?
Sure. Will the advisor take the time to study and learn -- will he or she actually spend the required 10,000 hours? Maybe, but probably not. Would it make sense to let a team that has far more than 10,000 hours of experience act as an advisor's investment expert?
You answer that question, okay? (I have been an advisor for about 42 years, with a few years out here and there, working or consulting for companies. I love doing investment portfolio work. However, if I had the benefit of knowing about TSS 42 years ago, I would have used it in a heartbeat and devoted my time to building a client base and helping more people.)
TSS does not have retail customers and is exclusively for investment professionals, not the general public. If an advisor had to do what Bill Sherman and his team do daily, he or she wouldn't be able to do all the other things necessary to have a successful practice -- tasks like meeting with customers and prospects, moving accounts and sponsoring seminars.
And, for that matter, what about arranging customer dinners and lunches, hand-holding for nervous Nellies, managing staff, visiting with wholesalers, meeting continuing education and compliance requirements, and the seemingly endless list of duties we all have?
Using TSS is a lot different than checking the box to select an Ibbotson or Morningstar portfolio for a variable annuity customer. Bill's company makes you the expert; you use TSS model portfolios and daily market analysis to manage your customer accounts. To the customer, TSS is invisible. The advisor is the driver and the investment star.
A personal experience
Years ago, at a broker-dealer meeting, on a short bus ride to one or another venue, I sat next to another advisor. After a time, we got around to asking each other about assets under management. At the time, my broker-dealer said I managed around $50 million, and so I gave him that number, which I thought approximately right. I told him how lucky I felt and how much I loved the work. I thought $50 million to be a decent figure.
"Gee," he said, "my two sons and I really do no portfolio management or portfolio work at all. We farm out 100% of the management, mostly to two third-party firms." In essence, he was saying I'm not like you at all.
"Well," I asked, "what's your AUM?"
"Roughly $2 billion," he answered.
Interesting, isn't it? With a staff that seemed to be about the same size as mine, this advisor had 40 times the assets under management. TSS is not a third-party advisor, like the ones my bus advisor used; it's a subscription service. The idea, though, is the same: the advisor chooses TSS or a third-party manager and then is able to bring clarity and focus to the super-important business of gathering assets and performing well for customers.
By managing the process of investing in a time-efficient way, TSS frees the investment professional to grow his or her business geometrically. Because it stays in-house, managing portfolios with TSS allows you to apply your skills to more client situations, not just those eligible for third-party management.
In a nutshell
By freeing himself (and his staff) from the business of trading and all the "stuff" that goes on in the daily life of a financial professional -- research and study, trading, fund webinars and conference calls, Morningstar Advisor Workstation or other portfolio-building programs, and the other chores involved in being a portfolio guru -- my bus companion built a practice 40 times the size of mine.
At 1%, their small firm (I seem to remember that there were five or six people all told), would earn $20 million yearly. Even if they kept only 95%, that's still $19 million. This group focused exclusively on the business of building assets under management.
They did no portfolio work at all. However, I would bet the farm that the gentleman I visited with knew every nuance -- chapter, verse and line -- of how investments were managed by the third-party advisor he and his sons used.
If advisors use TSS, will they earn $19 million yearly?
Is that the point? No, it's not. The $19 million man may have been a genius at prospecting, able to attract huge numbers of wealthy individuals to one-on-one meetings or group seminars. The important point is that an average advisor should be able to double or triple his or her income while doing less work, or at least by doing work for the same amount of time. It puts the advisor who works at it in a situation where he or she could reasonably earn $500,000 yearly, or perhaps a bit more.
One successful advisor I know well admits that he feels as if portfolio construction and management are, in his case, prospecting-avoidance techniques. He thinks he fools himself into doing portfolio work so that he won't have to make prospective calls. If other advisors are in the same boat and adopt TSS methodology, they might only increase revenue slightly, at least until word gets around that they have a focused and successful practice with superior investment results.
It is, however, unlikely that such individuals or firms will subscribe to TSS -- the typical monthy TSS subscriber is most often ready to streamline his or her practice and engage in meaningful asset gathering. It's as if the subscriber has said, "Enough! I'm not going to be a market guru any longer. Instead, I'm focusing on building the practice and bringing long-term success to my customers."
Usually, when an advisor shifts his or her focus to attracting assets, a practice grows nicely. Assets tend to grow almost of their own volition after a time, as customers begin to take notice that a more focused and client-centric approach has taken hold. Even the most dedicated non-prospectors may succumb to new forces of market and marketing success.
Supply and demand: What makes TSS tick
TSS is built around the belief that fact-based investing is by far superior to prediction-based investing.
Prediction-based investing is what we are all used to -- strategic asset allocations, pie charts, efficient-frontier scatter plots and the like. But each of the old school tricks of the trade is based on predictions of future returns, correlations and variances. Study after study has shown that such predictions are fraught with error; most are never right.
Fact-based investing, as implemented by TSS, is premised on the idea that continual analysis of supply and demand relationships inside the markets provides more than enough facts upon which to base high-probability investment decisions. Bill and his staff continually analyze supply and demand relationships at several time frames, the most important of which is the cyclical bull- or bear-market period.
Cyclical bulls and bears are those trends lasting months to several years that occur inside of secular (long-term) bull and bear markets. For example, during the last 11 years (which most experts acknowledge as a secular bear), there have been two cyclical bulls and two cyclical bears. Bill Sherman believes that getting TSS subscribers -- and their customers -- on the right side of cyclical bulls (by profiting from them), and on the right side of cyclical bears (by being defensively protected from them) is TSS's single most important service.
Fact-based analysis of supply and demand also drives TSS portfolio recommendations, typically with quarterly portfolio changes.
The 10,000-Hour Rule redux
The idea here is that you can be a bit nuts like me and fall in love with investing and portfolio work and help a handful of people, or you can focus on letting a master and his team be your back office, in essence letting TSS be your invisible chief investment officer. By making such a simple change, you may help perhaps hundreds or maybe a thousand people
Nationwide, people are crying for sound, solid investment help. Do you want to spend 10,000 hours learning the ropes, or would you prefer to let Bill and his team of professionals, who have spent far more than 10,000 hours on the job, handle what they do so well?
Other firms use sophisticated trading signals -- Trim Tabs, for example, combines many market and economic indicators, as does TSS, in order to determine probable outcomes. Accessing such firms may cost $20,000 to $50,000 yearly or, depending on the reporting required, even more. According to Investment News, accessing economist Nouriel Roubini's private advice is in the $50,000 yearly retainer range.
The advisor who uses The Sherman Sheet may enjoy a great level of expert advice for a surprisingly modest $100 monthly. This modest outlay also includes as many custom reports as an advisor desires.
TSS is not in any way a competitor to any advisor. The current number of advisors supported is set at 2,000.
TSS daily signals may be used with other portfolios an advisor has designed on his or her own. Or TSS may be combined with, say, a third-party manager. In that event, 50% might be based on the third-party manager and 50% on a TSS portfolio.
Portfolio suggestions for many popular investment annuities, such as variable annuities, are included.
Is TSS infallible?
No. A thousand times no! No one is infallible and no one can accurately predict market direction 100% of the time. Bill and the TSS team are more successful at market and trading calls than probably 98% of advisors. After all, it's their business. Bill successfully avoided the 2008 meltdown and has strongly outperformed the market since then, showing clearly that TSS plays well on both sides, offense and defense.
One thing I like about TSS is that its calls won't take one all the way into the ditch. In other words, TSS has safeguards; unlike some, it won't keep following a downward spiral to the very bottom. Bill has market humility, and that's a very good quality. The Sherman Sheet multiplies an advisor's opportunity for success, and it frees him or her to work on asset-building. To me, that makes perfect sense.
To contact TSS, phone Gordon Case at 888-957-3438, ext. 1. He handles marketing and sales for The Sherman Sheet.
The TSS team
Bill Sherman is a long-time professional money manager who has spent much of his business life providing investment management services to money management firms and individual advisors. He has directly managed $600 million and, before starting TSS, provided investment advice to mutual fund managers, registered investment advisors and brokers throughout the United States.
A native of St. Louis, Bill graduated in 1969 from Washington University with a mechanical engineering degree. He is a recognized expert, nationally, in computerized investment analysis and statistical measurements.
The TSS chief of staff, John Scott, is a 1980 graduate of Southern Illinois
University with a B.S. in business and marketing. In 1986, Bill hired John to assist on a currency-trading project at the Hong Kong-Shanghai Bank. Since that time, he has been responsible for all business and administrative activities at W.E. Sherman & Company and The Sherman Sheet. John also produces the Web site and graphics for TSS.
An overview of John's work and TSS information is available at www.theshermansheet.com. It's worth a look -- not only will you see unusually great graphics, you'll get the message of The Sherman Sheet in a heartbeat.
Gordon Case handles marketing and sales for TSS. Gordon has 15 years of investment experience wholesaling mutual funds, variable and fixed annuities, separately managed accounts and non-traded REITs, along with third-party management experience. He also originated "Navigating through the Fog," a forum for advisors to share and discuss ideas.
Passionate about his alma-mater, the University of Nebraska-Lincoln, Gordon was the subject of a Life Insurance Selling Investment Edge column some years ago. Here's a quote from me about Gordon that is quite applicable to TSS: "Think about doing things differently and separate yourself from everyone else."
Editor's Note: Owing to the length of this column, Broker's Bookcase is absent but will appear as usual in next month's Investment Edge.
This information is intended for financial professionals only, not the general public. This is not a solicitation to buy or sell any specific security. Mr. Hoe may have positions in the securities or other investments discussed. Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions, and when sold or redeemed, you may receive more or less than originally invested.
Evaluation copies of software and review copies of books are sometimes furnished by publishers without charge; however, Mr. Hoe only reviews books and programs he feels will be of value to LIS readers and avoids writing about books and programs he feels would be of little interest.
