Part 1 of 3
Lesson #1 – The Myth about OPM and why this is a flawed concept.
I first heard the term OPM about 15 years ago while walking along a city sidewalk with a stockbroker friend. For those of you that may not already know this, OPM stands for “Other People’s Money”.
He stated, “I believe in OPM. With OPM I can leverage assets and create wealth faster than …..” and I forget the rest.
The comment stuck and left an indelible impression for months and years.
“If he believes in OPM” I thought, “Then it's my money he’s referring to!”
I later learned this concept is used by most sales people who earn commissions off of convincing others to complete a financial transaction. Real Estate Investors use OPM, Insurance Sales People (selling annuities, whole life contracts, etc.) use OPM and others that sell intangible services or financial products.
So to me, it was no longer “Other People’s” money. It was MY MONEY he was referring to!
Years later after visiting this same individual’s house and finding myself in a den of excessive consumerism and blatant consumption, where every single gadget and costly product available in almost every magazine prominently displayed as if they were stand-ins for trophies and awards throughout the house … I started to realize the only person getting wealthy using this financial advisor’s advice … was the financial advisor himself. Not me.
In fact many of the recommendations this firm’s representative had made were dead flops costing me tens of thousands.
So I hit the books. Many books.
I read books by Robert G. Allen on wealth, "Common Sense on Mutual Funds" by John C. Bogle (considered the grandfather of mutual funds and once head of Vangard Funds), "The New Buffetology" which elaborately explained Warren Buffet’s investing methods, “A Beautiful Mind" By Sylvia Nasar (the basis of the movie later), and my personal favorite: “The Millionaire Next Door”, by Thomas J. Stanley.
What I soon discovered was this: I was getting hosed big time.
I was being charged 5.75% (try getting that return on an investment let alone paying it just to be able to invest in a fund), for certain fund purchases plus enormous hidden fees I was not paying attention to. The company I was using had to later settle with the SEC (they tried to diminish the enormity of this by sweeping it under the rug as insignificant.)
This knowledge caused me to restructure my finances and terminate all but one “Full Service” broker (who were servicing themselves to my hard earned money). In roughly two years I was in a much better financial situation and no longer contributing to the excessive consumption of my full fee broker’s excessive life style.
But this turnaround also taught me a lesson I now use daily in recruiting.
I make certain that during every dialogue, conversation, and phone discussion the clients I work and service fully understand the extraordinary value I personally deliver when they use our recruiting service. Otherwise our fees, which can be in the ten to thirty-thousand dollar range, can look as if we as recruiters are exploiting OCM (Other Company’s Money.
While there is no direct comparison because our services are directed to companies and corporate entities, rather than specific individuals (although there is a benefit to both), it is very easy … especially if we do not articulate otherwise, to begin to see recruiters as vultures when you look at the fee alone outside of the context it was earned within.
Being as I personally was very annoyed at how my hard earned money was being wasted and treated with disrespect, and not to mention that most of the investment recommendations were made by the same Finance MBA’s that landed in the interview chair across my desk relying on me for their next job; I made it a vow to treat every company’s dollar with the greatest respect possible in my own recruiting practice.
I also let each manager know I will take care of every dollar as if its my own. I’m not talking about cutting fees or discounts, but verbalizing how the value you deliver is three times more than each individual dollar.
So why is OPM a flawed concept?
Because not everyone can earn a living on “other people’s” money. If we all followed this insane, self-servicing, ego-centric idealogy, we’d all be broke as there would be no one left creating or originating the wealth the OPM’ers are waiting to exploit!
Macro-Economically, this is flawed and a non-sustainable concept drummed up by gurus.
In the movie “A Beautiful Mind” the professor John Nash made a similar observation for which he won a Nobel Laureate prize.
I urge you to hop onto amazon.com and search these books I’ve listed. They are treasure troves of information that will put you in the driver’s seat next time you deal with your own financial advisor. You do NOT have to purchase them. In fact, all you need to do is read the detailed reader’s reviews listed under each title for a lively discussion on the various points these books make.
I don’t mean to pick on financial advisors, I’m sure not all of them are in business to rack up transactions just to build their own wealth (ahem, clearing throat). Some may actually have my interests at heart (if you know of such please get them in touch with me!)
But as long as weather forecasters don’t get fired for announcing a grossly incorrect forecast, and financial advisors get paid for the transaction, even while the investment they recommended dives days later … both of these lines of work can say pretty much what they want and continue to earn their income.
In my next Myth Busting article, I will provide an ACTUAL LIST of rock-solid benefits and value we recruiters bring to the process which you can share with your clientele.
This way, next time your client says “You’re getting *(&*^%! How MUCH for this hire?," you will be able to calmly and confidently point out what they’re actually paying for.
By the time you get half-way down my list, they will feel as if they’ve robbed you and beg you to not continue.
- Frank G. Risalvato, CPC
Frank has appeared on radio and TV business segments and has contributing articles and innovative methodologies to the recruiting profession since 1987. His specialty is on revealing fresh, new perspectives on recruiter training that few others ever discuss. Many of his concepts have been featured in NAPS, Inside NAPS, The Fordyce Letter, and more.
Call 973-300-1010 for more information and be the first to read his soon-to-be-released book “The Kentucky Fried Secret Recipe to Recruiting Millions®”
www.iresinc.com Email: email@example.com