Archive for January, 2010

Aligning Interests – Money Talks Loudly if You Listen

Independent Directors are appointed to serve shareholder interests. A big risk issue is setting executive compensation and ensuring that incentives are aligned with strategy. The more long term the better. Today I had a meeting with my Financial Advisor, Steve Weinberger, CFP at Heller Capital Resources. http://hellerfunds.com/new/hellerfunds/

I was very happy with the results considering the financial meltdown of 2008 and the trillions of dollars that evaporated in stock value. Mostly I was happy to reassess my risk appetite for 2010.

What came clear to me was how well things work when incentives are aligned. Steve’s firm manages my investments on a fee-basis. This mean he makes increased fees when my portfolio grows, not by individual transactions. This alignment with my interest is what builds my trust in his services.

The challenge Independent Directors have on their hands is to think alignment/misalignment from the incentives they create for executives. Easy to have unintended consequences from any decision but there is certainty that people will respond to incentives. So step back as you are putting your plans together and ask: “How does this align with the company’s interest and strategy long term”?

If you’re like me you’ll be willing to increase your risk appetite when you know that incentives and interest are in alignment. Here’s to a successful 2010 and seeing Steve grow my investments so both of us can make more money.

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