The Prospecting Professor

If the Shoe Fits...Buy It!

Remember Imelda Marcos? She liked shoes. Reportedly, she owned more than 3000 pairs...including a pair of plastic, disco-sandals, with three-inch high, flashing, battery-operated heels.

Apparently, American consumers are now following her lead. Shoe sales are up...way up. For the past two months, sales of shoes have been up sharply, for a variety of reasons. Department stores, specialty chains, high-end retailers, low-end retailers...are all reporting big sales increases.

• At Shoe Carnival, a lower-priced chain, October sales were up 21%.
• Hawley Lane Shoes, in Connecticut, reports a record October-November.
• Footwear sales figures from the US Commerce department show steady monthly increases over the previous year...after about a year of mostly flat sales.

Why? What's happening?

1. A lot of new fashion trends are hitting the industry right now, e.g. fancy decorative shoes, Western themes, etc.
2. Because of overseas production, retailers are keeping their prices down.
3. Consumers, especially women, seem to be in the mood to buy.

Bill Boettge, president of the National Shoe Retailers Association, has a theory himself. "Women love footwear, and use if for a psychological boost." "See Washington Post article"

Speaking of the National Shoe Retailers Association, see their website for a list of interesting articles, as well as a list of manufacturers, distributors, suppliers, and shoe retailers in your area."www.nsra.org"

"A lie can travel halfway around the world while the truth is still putting on its shoes."...Mark Twain

Selling to Women "of a certain age"

"I am woman hear me roar...in numbers too big to ignore."...Helen Reddy

Helen Reddy was 29 years old when her Grammy-winning single, "I Am Woman", hit #1 on the pop charts. She recently celebrated her 63rd birthday.

In the October 31st issue of National Underwriter, Shelly Kostrunek discusses the senior women's market in her article, "Find Strength in Numbers: Sell to Women 50 or Over." Check out these factoids:

• About 85% of women die alone.
• Currently, more than 50% of women over the age of 75 who do not have a spouse...are living in poverty.
• Studies show that women have only half the personal savings of their male counterparts.
• Among couples of all ages, the female has sole or joint charge of the household finances in 9 of 10 circumstances.
• 75% of the nation's wealth is currently owned by people ages 50 and older.

By themselves, these numbers indicate a glaring need for financial planning...especially among women. Indeed, research indicates that many women begin to think about retirement as a reality at around 50 years old.

Ms. Kostrunek goes on to point out that many women make decisions differently than men. Compared to men, women generally take longer to make decisions, but can be motivated to take action once they have been informed sufficiently . The "hard sell" is less effective with women. Women want advisors who will take the time to teach them what they need to know about planning for retirement. Women seek an affinity with an advisor, and trust is a very important element of the relationship.

Given these general characteristics, seminars can be particularly effective...with the caveat that the focus of the seminar/workshop should be on education, not on selling "products".

Finally, when considering this audience, think in personal terms. Think of your mom, grandmother, sister, or daughter. Maybe you have witnessed the serious financial impact precipitated by a death, a health crisis, a lack of planning, etc. Use this personal experience to help the senior women of today face their unique financial realities...and their need to accumulate sufficient assets and make certain that those assets are protected.

Small Tech Buyouts: Money in Motion

There's been an interesting trend the past few years...the larger tech companies are buying up the small tech companies once they start to get some traction.

In the past, technology entrepreneurs might be more likely to consider going public as a way to "monetize" their sweat and brain equity. However, with Sarbanes-Oxley a factor, fewer startups are going public today. Who needs the hassle of running the gauntlet? Seeking venture funding is itself a full-time job.

So here's what happens. Small tech entrepreneur identifies a gap in an existing product line, or a useful feature that could be added to the existing product of a much large firm. They create a shoestring operation that is focused on the rapid development of narrow technologies...and go out and look for a deep-pocketed munificence to gobble them up.

Last month, at a conference at Harvard, Chris Sacca, in charge of new business development at Google...said as much. "Bring us your startups early", he said. In other words he is saying that we want to acquire startups just at the point where they would do a "Series A round"...venture capital parlance for the first round of real VC funding, which usually happens in the first year.

This phenomenon has largely gone unnoticed because most of the deals are too small to get attention. Last year, Mergerstat reported that the average reported selling price of tech acquisitions was $12 million, yet two-thirds of the deals were so small that the buyers didn't disclose them. In the past four years, Microsoft has purchased more than 46 companies. When you take out the $100 million+ deals, most of the acquisitions average a few million dollars.

How do financial ad visors take advantage of this trend? Attending conferences like the aforementioned conference at Harvard wouldn't be a bad start. The "Start up School" was attended by 500 fresh-faced tech entrepreneurs and hackers, who gathered to hear speakers like: Chris Sacca of Google...Steve Wozniak, co-founder of Apple...or Steven Wolfram, (Sergey Brin's first boss).

Similarly, you might start with building networks with the venture capitalists in your city. Or better yet, how about taking an Intellectual Property attorney out to lunch? The good ones will be completely attuned to the small tech activity that is bubbling along in your area.

Target Audience: University Employees and Executives

Although this is not comforting news for those of us who are on the hook for college tuition payments, there have been some recent reports on the high levels of compensation for university employees, researchers, and executives.

In a November 14th article in the San Francisco Chronicle, it was reported that 2,275 University of California employees earned more than $200,000 during the last fiscal year...up 30% over the past two years. 496 employees earned more than $300,000. "See article"

Many of the top-paid UC employees are administrators, yet more than half are faculty.

Of course, the other side of the coin is the apparent inequity of this compensation distribution. In recent years, the UC system has frozen the pay of many low-paid employees, raised student fees by 79%, increased class sizes and curtailed student services.

Also, in a recent report by the Chronicle of Higher Education, five university presidents now make more than $1 million in total compensation annually. All are at private institutions. The leader is Donald Ross of Lynn University in Boca Raton, FL...at $5.04 million. The compensation of leaders of public institutions is increasing as well...with 23 presidents now being paid more than $500,000. "See article"

The salary competition is being fueled by a wave of retirements of baby-boomer college presidents, and by the growing desire of governing boards to hire only presidents who have already been presidents elsewhere.

In 1776, Adam Smith first began writing about Supply and Demand in The Wealth of Nations. Apparently, this phenomena is still in effect.

Niche Focus: Pharmacists

The nation has a pharmacist shortage...with drugstores, hospitals, and clinics reporting 8,000 unfilled positions.

Starting salaries in some regions of the country are $100,000+...with some employers offering signing bonuses and paying relocation expenses. Says April Shaughnessy of the American Pharmacists Association, "We call it hyper-demand. I don't think that there's anyplace in the country where there's an oversupply."

Why the shortage? It's simple, really. Americans take a lot of drugs. 3.27 billion prescriptions were filled in 2004, or more than 11 prescriptions per American per year. The number of pharmacies has grown as well; with many supermarkets and retailers like Wal-Mart requiring round-the-clock staffing.

The shortage is not expected to dissipate any time soon. Quite the opposite, in fact. As the population ages, they will consume more drugs. Moreover, under Medicare's new plan, the government will pay pharmacists who counsel some patients and monitor their prescription drug use. One study predicts that the U.S. will need 400,000 pharmacists by the year 2020...that's double the current number.

The country's 89 pharmacy schools can't turn out graduates fast enough. Pharmacy colleges are expecting their own job squeeze, with faculty vacancies now at 11.5%...and expected to grow.

Pharmacist Resources. The national association is the "American Pharmacists Association". Online publications include: Pharmacy Times, and U.S. Pharmacist.

By the way, October is American Pharmacists Month. The industry plans a nationwide informational outreach initiative. As a financial advisor, it might be an opportune moment to begin your own campaign towards the pharmacist community in your region.

Market Segment: Asian Americans

The high school of my youth was Lowell HS in San Francisco. Lowell is the oldest public secondary school west of the Mississippi...established in 1856. Lowell's student body is drawn from the entire city. Since admission is selective and competitive, and given that San Francisco's general population was (is)  significantly Asian-American...Lowell's student body had a high proportion of Asian-American students. This is even more true today, with close to 74% of Lowell's students claiming an Asian ethnic identity. I mention this all as a prelude to today's topic...Asian-Americans as a market segment for financial services.

In the first place, "Asian American" is a misnomer.The U.S. Census defines Asian as those having origins in any of the original peoples of the Far East, Southeast Asia or the Indian subcontinent, including Cambodia, China, Japan, Korea, Malaysia, Pakistan, Vietnam, Thailand, and the Philippine Islands. It also includes all Pacific Islanders. Each group carries their own distinct culture and language. For example, Chinese are the largest of the Asian American groups, and hail from four distinct regions...Taiwan, Hong Kong, the People's Republic of China, and Southeast Asia. There are many different regional dialects, but two major languages: Mandarin and Cantonese.

As a group, Asian Americans compose the most educated, wealthiest, and fastest growing of the U.S. population. Consider these facts:

• Although just 5% of the U.S. population now, the Census Bureau forecasts that the Asian American population will increase by 213% by 2050.
• Asian Americans now account for 5% of affluent U.S. households.
• Median income for Asian Americans is $52,018...compared to $42,409 for the general population.
• Asian Americans have the highest median home values at $199,300.
• 47% of Asian Americans age 25 or older have a bachelor's degree or higher.
• The Buying Power of the group is $344 billion, after-tax.
• 1 million of all Asian businesses are Asian-owned.

At the same time, there are significant cultural distinctions with the Asian community. For example, 67% of the population prefers to speak a language other than English. Asian Americans tend to get their news and information from ethnic media...and there are now more than 600 Asian media outlets in the U.S.

Asian Americans are more likely to have home mortgages, auto loans, and personal loans than the general market. They value savings, owning their own homes, and education. As a result,  they are generally good candidates for mortgage lending, education savings plans, and IRAs. Generally, education, family and savings are three aspects of the culture that are very strong.

Although the Asian population is considered to be risk averse by some, 22% own individual stocks...the same percentage of non-Hispanic whites. Moreover, 75% of English-speaking Asian Americans use the Internet, and 53% have sought financial information online.

At the same time, there are some important cultural differences with regard to the topic of money and finances. For example, the Chinese prefer not to talk about death, and the mention of death, especially in a first meeting, is considered very disrespectful to elders.. Because the topic is taboo, Chinese-Americans prefer to refer to "life insurance" for the deceased as "life ASSURANCE" for the family that are alive.

Despite any differences, it probably makes the most sense to treat Asian Americans, first and foremost, as customers, in a non-stereotypical, non-pandering manner. Although, the group is, collectively, a very appealing market segment...any generalizations are false, including this one (to paraphrase Mark Twain.)

Niche Focus: Machine Tool Industry

The machine tool industry is the backbone of American manufacturing. High-tech, computer-controlled machine tools, which are used to cut and shape metal and other materials, serve every manufacturing sector...and are often used as a barometer of the nation's economic health.

From January through May, the United States had $1.2 billion in machine tool sales, up 18% from the same period in 2004, according to a recent report from the American Machine Tool Distributors Association. The factors driving a rebound in machine tool sales are:

• Higher profits have allowed certain companies to invest in more capital equipment,
• There was a pent-up demand as the manufacturing industry under-invested during the miserable years of 2001-2003,
• Companies have realized that they need new technologies to stay competitive.

In parts of the country, the machine tool business is especially strong, and the upturn in business has made it difficult for the machine shops to keep pace with orders. In Arizona, many machine and tooling shops serve the defense industry, where orders have increased by 71% over the past three years. Another factor is the construction boom, which is pushing the production of windows, doors, and furniture. "We're all busy...it's a thriving market," says Ray Rubin, president of the Arizona Tooling & Machining Association.

A limiting factor for certain machine tool manufacturers is the lack of qualified workers. Employment in the industry hit its peak in 1998, and during the industry's downturn through 2003, workers who lost their jobs turned to other industries that were hiring, e.g. construction, services, and commercial trucking. They aren't enthusiastic about switching back to the career that dumped them.

The two national associations that serve the industry are:

• the American Machine Tool Distributors Assn., www.amtda.org,
• and the National Tooling and Machining Assn., www.ntma.org.

Financial advisors who are interested in building relationships within this niche are encouraged to learn more about industry trends and concerns through these, and other, resources.

Niche Focus: Sales Professionals

Compensation for sales professionals is way up these days...according to the 2005 Compensation Survey compiled by Sales and Marketing Management magazine. Base compensation...and bonus levels are both rising.

There are three reasons for the compensation increases: extremely competitive pressure, a slowly improving economy, and growing sales volume. Most industry experts expect these trends to continue through the balance of 2005.

Sixty percent of sales executives saw a salary increase, 45% received bigger bonuses, and 71% expect more of the same in the coming year. Total average compensation for executives was $145,978...with base salaries of $96,774 and bonus levels at $49,204.

Sales executives can become great clients for financial advisors. Not only are their compensation levels handsome, yet they can be great advocates and sources for strong introductions/testimonials. This seems to be true because they are familiar with the sales process, and can "be on the same page" as many financial advisors. Moreover, sales executives can provide entry portals to referrals to other executives within their own corporation.

How does one find sales executives? Here are three possible sources:

1. Sales Marketing and Executives International, www.smei.org has chapters in most states, and many urban areas. Start building your network by joining the local chapter and attending the monthly meetings.
2. Chamber of Commerce. Many chambers seem to have a higher proportion of salespersons who attend the meetings, than they do business-owners.
3. Google. When in doubt...Google! Google provides a surprising number of sales executives to contact. Use Google-Local, and type in one of the following phrases: national sales manager, regional sales manager, or district sales manager. Restrict your search by enclosing the search terms in quotation marks.

The downside to sales professionals as investment clients is that a certain number can fall into the Spending Trap...Upscale Home, Upscale Car, Upscale Lifestyle...and Downscale Savings. (I know a few financial advisors in this same category.) It's funny how one's spending can always rise to meet one's income...regardless of the levels.

Concrete Information

The Romans invented cement-based concrete more than 200 years ago, and used the materials to build masterpieces like the Pantheon.

A typical mix of concrete consists of 60-75% sand/gravel/crushed stone, 15-20% water, and 10-15% cement...which is prepared by roasting limestone and clay. Cement is the paste that binds the components into concrete.

The labor  market, and the pursuit of environmentally friendly materials, are causing  engineers to improve upon this already essential construction material (500 million tons of concrete were laid in the U.S. last year alone.)

The concrete industry is witnessing a shortage of laborers who can mix, pour, and work with concrete. Additionally, the average age of concrete workers is increasing as fewer younger people enter the field (For more on this trend, see Monday's post, "Blue Collars, Green Pastures). In response, the Paris-based manufacturer, LaFarge, has developed "Agila." With regular concrete, 8 people would take 8 hours to lay one floor for an office building. With Agila, the job takes 2 persons, 2 hours.

Cement consumption increased 7% in the 1st quarter of '05, over a very strong '04. Cement shortages are now in 23 states. U.S. cement plants are operating at full capacity, and an additional 25% of total consumption will come  from imports. Shortages are particularly acute in  the Southeast and Mid-Atlantic states.

The cement industry contributes to 7% of the global human production of carbon dioxide, as a result of cement production.

Here's a thought for financial advisors. Contact someone in the concrete or cement industry, and use the above facts as conversation-starters or small-talk to get things going. Some industry associations are listed below.

Industry Associations for the cement and concrete industries:

• Operative Plasterers and Cement Masons International Association, www.opcmia.org
• American Concrete Pavement Association, www.pavement.com
• American Society of  Concrete Contractors, www.ascconline.org
• Portland Cement Association, www.cement.org
• American Concrete Institute, www.aci-int.org
• National Concrete Masonry Association, www.ncma.org
• National Ready Mixed Concrete Association, www.nrmca.org

Niche Focus: Employees in Motion

Sir Isaac Newton's First Law of Motion is often stated as: An object at rest tends to stay at rest, and an object in motion tends to stay in motion unless an external force is applied. The Prospecting Professor's First Law for financial advisors states that: Money in motion is better than money at rest.

Can you think of a better way for financial professionals to find money in motion than to develop credibility and a network within the group of professionals who specialize in global and domestic workforce mobility? I can't either.

The Worldwide Employee Relocation Council (Worldwide ERC) is the global professional membership association for workforce mobility. Members include: relocation professionals, global workforce mobility specialists, realtors and appraisers, and the business community (Corporations from Abbott Laboratories to Zale Corp.) Their mission is to provide leadership, networking opportunities, best practices, specialized research, training, and information exchange for global workforce mobility professionals.

Membership in Worldwide ERC is $135.00 annually.

Although their annual convention in San Diego has just concluded, the Worldwide ERC 2005 Global Workforce Symposium looms ahead. September 28-30, in Chicago at the Hyatt Regency, the symposium will provide international assignment sessions focused on global workforce mobility issues...educational sessions focused on U.S. domestic workforce mobility issues...and professional development training for attendees looking to take their career to the next level.

Newton's Third Law states that: For every action in nature, there is an equal and opposite reaction. The Third Law can be used to explain the generation of lift by the wing of an airplane, and the production of thrust by a jet engine.

The Prospecting Professor's Third Law for financial advisors states: Do not delay your action. Buy a plane ticket to Chicago today, and thrust yourself into the network of global mobility specialists.