Integrity Matters Broadcasts

March 1, 2005

Investment Integrity

Dear Friends:

Investment integrity can be both a personal and an organizational concern. On the personal side, it is important to find the right formula for leveraging one's wealth, whatever its size. It is also essential, when entrusted with investment dollars from others, to be prudent and productive with their trust, returning to investors a reasonable profit, consistently. A wise associate once said that making money was only a part of the task; the harder work, he insisted, was keeping it.

Expanding the integrity conversation is our business. We are not investment counselors. However, we are, on occasion, asked to offer guidance, regarding assessing the integrity and effectiveness of those who do manage money. What two questions help evaluate the competence and integrity of those who "sell" their services as financial planning and investment specialists? 1. How do I identify the integrity and expertise of a financial planner? 2.What should I expect from a competent financial advisor?

So, as is our custom, when challenged to offer advice in areas outside our "integrity-centered leadership" arena, we solicit input from professionals. With satisfactory answers to these 12 questions you should be able to identify, qualify and even hire (or retain) an integrity-centered and qualified investment advisor:

Qualifying a financial planner:*

  1. What experience do you have?
  2. What are your qualifications?
  3. What services do you offer?
  4. What is your approach to financial planning?
  5. Will you be the only person working directly with me?
  6. How will I pay for your services?
  7. How much do you typically charge?
  8. Could anyone besides me benefit from your recommendations?
  9. Have you ever been publicly disciplined for any unlawful or unethical actions in your career?
  10. May I have it in writing: agreement, references and track record?
  11. Do I like and trust the individual who wants to serve as my financial planner?
  12. Will the planner score well against the Bracher Center's Eight Attributes©?

According to Kenneth B. Petersen, of Petersen & Ramistella, Inc. of Monterey, California, this is what a competent investment manager does.

Competent investment managers:

  1. Match your objectives, goals and level of risk tolerance with an appropriate investment plan and then keep you on course.
  2. Design a portfolio that is appropriately allocated between multiple asset classes and continually monitor the investments and, at least once a quarter, review the allocation and suggest changes when necessary. Changes could be prompted by a need to rebalance because the allocation is out of whack or because of a change in your investment goals or risk tolerance.
  3. Manage your expectations. It's easy to get caught up in current market trends and react irrationally. The people who do this end up buying high and selling low. They also will end up investing in "popular" investments - those that have recently performed very well - without giving much thought to what makes sense. Your investment manager's job is to keep you focused on what makes sense for you and deflect the "investment noise" that you hear every day.
  4. Reinforce the hard fact that we never know ahead of time which investment and asset class will perform the best. Because we only know after the fact, we maintain a diversified portfolio to mitigate the risks of being out of a well-performing asset class and of being in an under-performing one.

Predicting Leadership Performance: due diligence

Experienced investors, board members and operating executives routinely conduct due diligence regarding finances, legal issues, intellectual property rights, product potential, market size, and scalability. Sometimes, perhaps too often, the human equation is left to positive memories, previous accomplishments and personal relationships. Certainly these factors are important. However, with increasing demands on performance within growing governance constraints, more stringent evaluations could reduce hiring risks. So, we offer an alternative "predictive" approach for capital investors and boards of directors.

Investment Integrity. There are five "moments of truth" to be faced and six critical questions that must be answered when investing in leadership: Investors must know -- through due diligence -- the behavior and the potential of senior members of leadership teams. Capitalization opportunities require accurate information about leadership capacity. Our leadership capacity "due diligence" pinpoints the expertise and potential of senior leaders. With our efficiency in determining the preparedness of those leaders in whom you may be investing, we reduce your expenditure of time, which is money. In the process, we clarify needs that complement the counsel you routinely provide. We enhance your effectiveness as investors. A building block for this work is our Portrait Process ©.

The Portrait Process© provides a "mirror" offering increased self-awareness and represents the greatest single opportunity to leverage interpersonal integrity and effectiveness. Objective behavior information obtained through an in-depth effectiveness study helps leaders recognize their strengths and vulnerabilities. The Portrait © is more than a snapshot. The interpretation and application of the data capture the capacity and the potential of the individual. Our Portrait Process © answers six key questions by assessing, presenting and validating, with precision, the nature of an individual's potential for effectiveness. Our measurements address:

  1. problem-solving (strengths and vulnerabilities)
  2. operational preferences (prioritizing, details, interpersonal ease and creativity)
  3. internal motivations (consistencies and conflicts)
  4. external behaviors (tendencies and habits - constructive or counter-productive)
  5. leadership-management (task versus people and security versus self-actualization)
  6. decision-making (options desired and time-frames needed)
April Broadcast: Integration for Productivity and Global Integrity and Multicultural Organizational Integrity


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