Joseph Grano, Vietnam War Veteran, former Green Beret Special Forces officer and former CEO of UBS PaineWebber, is the consummate optimist. When his doctors told him that the injuries he sustained in Vietnam meant he would need braces on both legs, would develop a crippling arthritis, and would never be able to lift anything heavier than a milk bottle with his left arm, he refused to believe it. He walked when they told him he couldn't, and nursed himself back to health with his own harrowing physical therapy regimen. This exemplifies Grano's attitude towards all things. He says it's his optimism and faith in himself that allowed him to become a decorated leader in Vietnam, and later, to rise to the top in the brokerage business, despite his physical disability and lack of a college education. “I have always informed my employees that you cannot espouse greatness externally unless you believe it internally,” he writes in his recent book, You Can't Predict A Hero, published by Jossey Bass, a Wiley imprint, this summer.

The book recounts his experience in Vietnam, his beginnings in the brokerage business, and later, his efforts to turn the faltering PaineWebber around. It includes numerous accounts of optimism, discipline, perseverance and, yes, heroism. But the story of how he got his start as a stockbroker in 1972 is particularly relevant for financial advisors struggling with today's volatile and uncertain environment. With the market in the toilet, and having just returned from Vietnam with multiple injuries, Grano managed to surpass his peers and many of his superiors to become a top broker at the firm. In the excerpt below, he details the obstacles he faced and the strategies he chose to quickly become a success in the business.

Excerpt:

I became a stockbroker in 1972. To put it mildly, the stock market wasn't doing very well. That year marked the beginning of a secular bear market that lasted approximately ten years. This was not a bubble bursting, like the 1987 crash, when the market experienced a precipitous decline and subsequently recovered. Being in the market in 1972 was like going through slow, consistent water torture. For my first two years in the business, the market declined 48 percent. Over the ensuing ten years, the market remained in the throes of a bear market.

My naiveté about the market condition was a blessing since it helped me approach my position as a new stockbroker with my positive attitude intact. Since I hadn't experienced the previous bull market, I had no memory of what had been, or what could have been. All I knew was how the market was right then.

Besides the power of optimism, launching my stockbroker career at a time when the market was in a long-term down cycle taught me another good lesson: crisis really does equal opportunity — at least for those with an optimistic approach. In tough times, when everyone around you tends to hide from their clients, a fabulous opportunity arises for those who are willing to engage clients when they need you most.

Think about it. Why would a client leave his or her current broker in good times when that broker is doing well for the client? The answer is that they most likely wouldn't. It's when clients are unhappy with their results or when they're not being serviced appropriately that they're open to a new relationship. Many of my fellow brokers shied away from client contact because they didn't know what to advise in a market they'd never experienced before. Other brokers left the business because of the pressure. A window of opportunity opened for me because I had no such insecurities and was able to thrive under pressure. I became a refreshing alternative for clients who felt abandoned by their brokers.

There's an obvious lesson here for those in a service business in today's recessionary economy. Long and deep recessions are a time when many businesses fail and many fortunes are lost. But they're also a time when new businesses can gain market share and become successful and new fortunes can be made.

During my New York training, I developed a plan for building my business once I received my license. I evaluated what knowledge I would need to provide added value to wealthy investors. How could I differentiate myself? Most wealthy investors already had a stockbroker or two and, other than their being dissatisfied with their current advisor, what would motivate them to switch to me?

I began with a prospecting plan. I wasn't then, and am not now, an advocate of cold calling. The thousands of financial advisors who enter the business every year all gravitate to the same doctors, lawyers, and corporate presidents. These people are inundated with cold calls because they are readily identifiable and accessible. My strategy was to service the affluent who were underserviced or, at a minimum, harder to find. At that time there were over 1 million millionaires in the United States, and most weren't doctors, lawyers, or corporate presidents. Studies of wealthy people revealed that 75 percent of all financial assets were in the hands of people fifty years of age and older. I needed to find where, if anywhere, they were concentrated. Was it the country club? Affluent senior housing?

I honed in on two targets. The first was the sole proprietor: the dry cleaner, the gas station owner, the owner of a private manufacturing business, and any other successful entrepreneur. I thought my upbringing, military career, and personality would help me make a connection with these potential clients. I thought, at the time, that I'd more easily relate to them than the doctors, lawyers, and corporate executives.

The second target was a common residential location. The owner of the gas station with grease under his fingernails may not want to be a member of a country club, but he invariably lives in a nice home. So my prospecting strategy assumed that birds of a feather flocked together. I prospected streets with expensive homes. Sure, the doctor and lawyer probably lived on the same street, but I was really after their next-door neighbor: the entrepreneur who owned a number of hardware stores or a successful contracting business.

I gathered census data by occupation and street address. When I found several affluent occupations living on a particular street, I concluded the birds were flocking and created a mailing list of every household on the street.

I supplemented this direct mail strategy with a series of forums and seminars. I invited affluent individuals to a seminar discussing, for instance, changes in the tax law, or perhaps how to bequeath a larger percentage of their assets to their loved ones net of estate taxes. I gave these forums on Saturdays — one session in the morning and one in the afternoon — to accommodate both the shoppers and the golfers. I presented at a location convenient to my prospects, say a clubhouse or a rented conference room in their community. I knew I needed to go to them rather than expecting them to come to my office. My goal was to send out three hundred pieces of direct mail a week, have a seminar or forum once a quarter, and open one new account a day — all extremely optimistic targets.

[…]

My optimism, a good strategy, and lots of hard work helped me achieve my goal. At the end of my first year as a broker, I led my office in new account openings. Despite my early success, I was called into the sales manager's office. He proceeded to tell me that I should focus on prospecting unions. I asked him why. And he answered, “Because they come from under the same rock you do.” I did not lose my temper, but he chose to quit the firm when I became his boss three years later.

Along with my prospecting plan, I developed a line of products and services that would best serve the affluent, entrepreneurial clients I was pursuing. By being knowledgeable in relevant products and services, I could differentiate myself from the sea of stockbrokers. I wanted to be known as a specialist in the areas most important to wealthy people. I confidently came up with my own definition on what it meant to be a specialist: no one else in my office knew more about the product or service than I did. There were more than two hundred products in the brokerage business, and no one can be a specialist in that many. I decided to acquire expertise in five product groups and approximately five products in each group that were germane to wealthy individuals. I concluded that specialization in twenty-five products was achievable, and that if I selected them judiciously, I'd have no competition within the community.

My five product groups were tax-related products, retirement plans, insurance, asset management, and stocks and bonds. I thought of my selections as the fingers on one's hand. If I was discussing with a prospect the tax minimization benefits of a municipal bond, a bond swap, an installment sale, a charitable remainder trust, or an estate plan, then more likely than not, the prospect was somewhere in the private sector as a sole proprietor or a corporate professional. That being the case, the prospect might then need a product from my second finger or group: a retirement plan, for example. Then, moving to my third finger, most affluent investors are underinsured, or need tax deferrals available within insurance annuity programs, or perhaps an affordable second-to-die policy to mitigate prospective estate taxes.

My fourth finger or group dealt with asset management. A financial advisor cannot effectively follow a stock in China or Brazil. But as globalization continues as a reality, a larger and larger percentage of asset allocation models will commit to a global tranche. (A tranche is one of a number of securities that are offered as a package.) A mutual fund, an asset manager, a hedge fund, funds of funds, and even private equity have a place in an affluent investor's portfolio. My role was to prescreen and delegate to these entities a portion of my clients' assets to manage and subsequently monitor their performance. My fifth group was stocks and bonds. By virtue of my title, I had to specialize in these two products.

Besides, if a wealthy person was investing in a tax-related product, needed a retirement plan, was looking at supplementing his or her insurance policies, or was going to engage an asset manager, he or she invariably owned stocks and bonds. Therefore, every affluent client could possibly need all five product groups and potentially buy five products.

[…]

Clients, whenever surveyed, are consistent in complaining that financial advisors are quick to advise what and when to buy but never call about what and when to sell. The biggest secret of humankind is when to sell. Too often a purchased security is allowed to fall into the depths of hell before the client is told to get out of that position. Too often an appreciated stock is sold prematurely because it's easier to say to a client, “We made money; let's get out of Dodge.” I always followed the adage that if a stock is not good enough to buy, then it is not good enough to hold. If a stock I recommended went up and I was still willing to buy more, I left it alone and let the gains run. If it was no longer a buy because the price was too high, I sold it and took my gains. If a stock went down and I still liked it, I bought more. If I didn't like the way the stock was acting and I wasn't willing to buy more, I sold it, took my losses, and looked for the next opportunity. If I sold a stock, I immediately replaced it with a new one to bring my “inventory” back up to eight.

[…]

Rather than do a disservice to small and/or inactive accounts, I culled my book each year. I passed the accounts I gave up to a young eager broker who I knew would service them diligently. When some of those accounts grew and turned out to be big, I didn't have any regret. I was just happy things worked for both the client and the younger broker. I needed to stay focused on my key clients and their related accounts, regardless of size, and also continue to seek out new key client relationships. I believed that the sooner I moved from a shotgun approach to a rifle approach, the sooner my production would grow exponentially. And that's what happened.

By my third full year as a financial advisor I was the biggest producer in my office, in the city of New Haven, and in the state of Connecticut. I was in the top twenty producers in the entire country. I ultimately led the firm in opening new accounts by averaging thirty-six per month. My optimism had once again been rewarded.

This brief period was one of the most important in my life, as it shaped me physically, mentally, and put me on the path to the career that would define the next forty years of my life. I managed to recover far more quickly and more fully from my combat wounds than anyone expected and become a successful stockbroker during a secular bear market. Both achievements defied the odds. I learned firsthand how crucial it is to exercise the awesome power of the mind and to never underestimate the power of a positive attitude. At any number of points, my life could have taken a very different turn.