Dear MF Global Board of Directors:

What were you thinking? Have you been asleep since 2008? Do you think that just because John Corzine has an impressive resume you should have given him carte blanche to leverage your firm like that? Did you ever consider  the more than 1,000 employees, and their families, that you have now negatively impacted? Where were the institutional and compliance controls that would have alerted you to the co-mingling of client asses with your own? Really?

(I waited a few weeks before I wrote this to cool down … But I  really haven’t!)

These are just a few of the questions that I would like to pose to both the Board and to John Corzine. While I don’t expect them to necessarily think about the rest of the industry before they plan their strategy, what they have effectively done is give all of us who work in the industry another black eye just at the worst possible time – while arguments over the proper level of regulation still abound and the “Wall Street” v. “Main Street” debate intensifies.

What is honestly surprising to me is that this entire affair hasn’t gotten more bad press – because it certainly is a poster child for those that want to regulate Wall Street more and accentuate the divisiveness that now permeates our country. I’m really not sure why this lack of outrage has been the case – especially when the story first broke. The past two weeks has been more explainable, as the scandal at Penn State has made all other stories pale in comparison.

But at some point this story will come back to more prominence. The reputation of John Corzine has probably been tarnished beyond repair; so has to some extent the reputation of Goldman Sachs, as the actions of its former employees always reflect back on the firm. But the saddest thing is that some in the industry have learned little from the events of the past few years – and now thousands of employees and customers are suffering. It is now reported that more than $1.2 billion is missing and may never be recovered.

What were you thinking?

For investment managers, winning a finals presentation is a balance between adapting to the past and being forward-looking, and between presenting general firm information and specifics as relates to this prospect. The top 10 are key points that should be addressed in the presentation – if the client has to ask about these issues, it’s probably too late!

(This list was prepared for a presentation made to the IMI Consultant’s Congress in Stamford, CT)

• Number 10: Explain any unusual fluctuations in AUM. Differentiate between markets losses  and client terminations, withdrawals and redemptions.
• Number 9: Describe any process adjustments that you made in reaction to the 2008 financial crisis and this year’s Euro-crises. Where these changes permanent or temporary?

There have been a lot of headlines lately about the announcements by the wirehouses that they plan to reduce their number of advisors over the next few years. Surprising? No. Necessary? Yes. Behind the headlines, however, there is perhaps another story.

A recent survey by Cerulli Associates Inc. shows that the warehouses’ share of retail assets under management fell from 49.7% in 2007 to 42.8% at the end of 2010. (The warehouses are today defined as Morgan Stanley Smith Barney LLC, Bank of America Merrill Lynch, Wells Fargo Advisors and UBS AG; the above numbers do not include Merrill Edge advisors or Wells Fargo’s Finet channel for independent advisors.) As an aside, the regional brokerages and independents are picking up this market share.

The number of advisors at these firms, during the same time period, declined from almost 57,000 to just under 51,000. Cerulli estimates that 20% of these advisors left by choice and the rest were terminated.

So what do we deduce from these numbers? For one, the warehouses are obviously focusing more on productivity than share numbers; in fact, during this same period of time, the average AUM per advisor increased to $94 million. It no longer makes sense to be the biggest – what makes sense is to the best and most productive. With costs rising – both platform as well as total compensation (health care anyone?) – fewer, more productive advisors, makes business sense.

The implication for advisors is that the human cost aside, this trend actually increases competition. It makes sense to extrapolate that the remaining advisors will be the cream of the crop – the weak links are getting stronger.

The industry is getting smaller – and that is probably a good thing. For the individual advisor, however, this change will make it more competitive, not less – as counter intuitive as that sounds. The public perception of advisors is still negative and the market environment is still tough – these numbers don’t do anything to change that.

Advisors must continue to strive to differentiate themselves and clearly articulate their value-added proposition. After all, there are still more than 50,000 at the wirehouses alone!

Regular readers of this blog will know that I am a very big fan of social media. The caveat, however, is that it must be social media done right. Last night, I witnessed social media gone bad, and it has lessons for everyone.

I was sitting with a friend who happens to be a fan of the Amtrak page on Facebook. The folks at Amtrak decided to try and be funny in an attempt to connect with their followers. They posted something like “How many Amtrak employees does it take to change a light bulb on a train?” I didn’t really understand the post actually – I think it was a combination at an attempt at humor and again trying to “bond” with their followers.

Well, it failed miserably. For everything good about Amtrak – and it can be a very convenient way to travel on the East Coast – lets just say that they have on-going customer service and service reliability issues. Not something to be made light of if you are one of the many who has been stuck on a train or at Penn Station!

My friend and I sat there amazed at the speed with which the scathing comments came pouring in from followers and “fans” of Amtrak. Perhaps the most memorable was one that answered the above question with something to the affect of “one to hold the bulb and a whole lot to turn the train,” an obviously reference to Amtrak’s lack of efficiency.

It was kind of scary to see the swift and negative reaction to this botched attempt at humor. Someone may – or should – have very well lost his or her job after that one.

The lesson here is that you must always know your audience in social media – because your reputation can be enhanced or ruined so quickly. Before posting anything to a blog, or LinkedIn, or Facebook or Twitter – ask yourself if the message is in keeping with your brand and if there are potential readers/fans/followers that you are going to offend (or even potentially offend). If you have any doubts – don’t press the button!

It takes a long time to develop an on-line reputation and reap the benefits of social media – and the effort is well worth it. But it only takes a nano-second to alienate those that had previously supported you. Think before you post!

Our Q4 newsletter is out and features the new White Paper “Thriving Amid Chaos.” While continuing to demonstrate leadership to your clients is important, you can simultaneously improve your business practices and weather the current economic and financial storm.

Thriving in today’s world relies on a two-pronged approach:

1) Inward-Looking: Control what you can – like how you manage your business – by looking at your 3Ps:

• People
• Planning
• Processes

2) Client-Facing: Communicate more effectively by honing your communications strategy and making sure that your messages are:

• Clear
• Consistent
• Convenient
• Compelling

Click here to read the entire White Paper. Click here to see the newsletter.

Have a great rest of the quarter – and start thriving despite the chaos.