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Email Prospecting: 4 Tips to Make the Most of 2.7 Seconds

email-on-ipadOne of the biggest challenges for advisers when prospecting is to secure that initial meeting. Often the preliminary outreach to a prospect may take place via email and in that case getting a positive response—or a response at all—can be an arduous mission to accomplish.

According to The Radicati Group, a technology research firm, 1.9 billion non-spam emails are sent every day. To stand a chance to be acknowledged, email messages must be smartly crafted to grab recipients’ attention and motivate them to respond. Other consumer studies also revealed that it takes only 2.7 seconds for an average person to decide if they want to read, delete or reply to an email. This is in part courtesy of our increased use of handheld devices, which currently represent a preponderant portion of all email interactions.

A couple of industry statistics will help you gauge the impressive growth and usage of email on mobile devices:

  • 53 percent of total email opens occurred on a mobile phone or tablet in Q3 2014, from 48 percent in Q2 2014.
    (Experian, “Quarterly email benchmark report,” Q3 2014)
  • Mobile email opens up 180 percent in three years, from 15 percent, Q1 2011 to 42 percent in Q1 2014.
    (Campaign Monitor, “Email interaction across mobile and desktop, Q1 2014)

What are some of the key factors that prompt prospects to delete emails? Key culprits traditionally include convoluted language, use of industry jargon and failure to make a strong case for value—are you worth your prospect’s time? Will you be for her or him a valuable source?

Ultimately, it is not the service or product that you are pitching that will prompt your prospects to take action. Rather, your capacity to convince them that you understand their challenges and that you can help them achieve their goals will be the deciding factor. This is what will persuade them that getting additional information or requesting to meet with you will be a good investment of their time.

Here are some of the crucial factors you must bear in mind when crafting an email:

  1. Grabbing Subject Line: Use concise language. Do not exceed 50 characters. Be clear, consistent, use action words to inspire and, when possible, consider adding the recipient’s first name
    Length: The statistics above make a compelling case for prospects reading emails on mobile devices. Consequently, keep your emails short—preferably under 100 words
  2. Personalize: According to HubSpot Science of Email research, personalizing an email increase click through rates by 14 percent. So, conduct some specific research that can help address the recipient’s challenges and openly quote it in the text.
  3. Credibility: Do not shy away from name-dropping. If the prospect was referred to you by a third party, mentioning that individual’s name may significantly increase the odds of a response
    Value: The first couple of sentences should unequivocally state what you are offering and why it is valuable. To accomplish this goal, clearly state your value proposition. Also, go the extra mile by sharing any educational material you may have on the topic and clearly enunciate to the reader the benefits she will derive from reading such material.
  4. Closing: In closing your email, remember that your goal is to establish an ongoing conversation. Include a call-to-action and word it in a personal and engaging manner, be it a meeting request or a telephone call.

Claudio PannunzioClaudio O. Pannunzio
President and Founder
i-Impact Group
Greenwich, Conn.

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Follow Up: Totalization Agreements and the Windfall Elimination Provision

As planners, you may come across clients who have worked outside the U.S. In those cases, you need to be aware of how the Windfall Elimination Provision (WEP) may impact workers who receive retirement benefits from both foreign governments and Social Security.

The chance that you are going to encounter clients who have worked abroad may be higher than you think. CNBC recently reported that while the American expatriate population is not formally tracked, there are approximately 7 million Americans working in more than 100 countries. Additionally, this situation may also apply to immigrants and foreign workers who have U.S. earnings. In all of these cases, those who have earned income abroad may come across unique challenges when estimating their Social Security retirement benefits (SSRB).

The Journal of Financial Planning published in its April 2015 issue a peer-reviewed contribution titled “Retirement Planning for Workers Impacted by the Windfall Elimination Provision.” This article explained how workers who have earned a mix of retirement benefits from employment covered by Social Security and from work outside of the Social Security system may face additional complications when estimating their retirement income. The primary author has written this addendum to further address the interaction of the WEP, SSRB, and retirement benefits from foreign governments.

Financial advisers should know that in most cases, the Windfall Elimination Provision (WEP) applies to workers who receive a pension from a foreign government in addition to their U.S. Social Security retirement benefits (SSRB). Even if the worker’s earnings were covered by a bilateral Social Security agreement, which are more commonly referred to as “totalization agreements,” the WEP can still reduce the worker’s SSRB. This situation impacts U.S. workers who are employed outside the U.S. as well as foreign workers employed inside the United States.

Totalization agreements were first put in force in 1978 and currently the U.S. has agreements with 25 countries. The goal of these agreements is to eliminate dual taxation for government-funded retirement programs and to help ensure that workers have enough credits to earn benefits from at least one of those programs. Such factors as which country, the specifics of the agreement, and the length of the employment, will determine which country controls the retirement taxes and benefits.

The key conditions to remember is that the WEP applies when a worker has enough credits to qualify for SSRB and the worker also receives retirement benefits from employment outside the U.S. Social Security system. Both the Social Security Administration and the Internal Revenue Service provide information about this topic on their respective Web sites, and the following link was the main reference for this update. This source includes an overview of Totalization agreements as well as some detail for each agreement with the 25 countries.

For more information, visit the U.S. International Social Security Agreements page, and read more at CNBC.

LauraCooganLaura L. Coogan, Ph.D.
Assistant Professor
Nicholls State University
Thibodaux, LA

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Diamonds and Your Social Presence are Forever

The internet was once regarded as an “other” space that existed beyond the reaches of “the real world.” What happened on the Internet wasn’t to be taken seriously–it wasn’t real. This rather strange concept of the Internet is now changing, due in large part to the rise of social media.

While some continue to miss the Tweet, there is a growing consensus that what is said or done online has a direct and measurable impact on the physical, tangible world.

And all of this mass communicating we’re doing, every think-piece, Tweet, status update, and picture we post, is being cataloged–it’s been said that history is now recorded faster than it’s actually taking place. The Internet is one large encyclopedia of the human experience, and unlike the hardcover collection on our shelves in the basement, it cannot be destroyed by flood nor fire.

Diamonds and your social presence are forever.

In other words, navigating an online presence is hard, and two social media sites in particular get people into the most trouble.

On Facebook, keeping your personal and professional self separated is a must. For many of us, even before we considered our future careers, Facebook was around to make sure we wouldn’t have one. Depending on how long you’ve been active on the site, Facebook tends to be a place of old college buddies, new babies of those old college buddies, and beer. Probably of you consuming it. With your old college buddies.

Instead of mixing business and pleasure on your profile, create a business page for your firm. This way you can guarantee that what you post is professional and in keeping with your business brand. Most of your clients aren’t interested in seeing you in your college glory days. In that same vein, restrict access to your profile to only include friends–they’re less likely to tattle on you if you make a blunder.

Twitter’s an odd bird. If you’re a professional, it likes a mix of business speak; unrelated yet interesting articles from around the web; and the odd pithy personal update. Unless you have something akin to an obsession with declaring the veracity of unicorns, it’s not imperative to maintain a personal Twitter account as well as a professional one. If you do have said passion, create a cleverly disguised pseudonym and Tweet to your heart’s content–just remember which account you’re logged into.

While the readership of Twitter is generally accepting of a variety of posts, the deceptively open and on-the-fly nature of it makes it prime real estate for gaffs. You may be Tweeting from the comfort of your own home, but your Tweet is out roaming the world. And once it’s out, it’s almost impossible to stuff that bird back in the cage.

The big takeaway?
While it’s true there’s a potential landmine waiting to explode with every social media post, it’s also true that how we conduct ourselves online shouldn’t be any different than how we conduct ourselves in person. Unless what you have to say qualifies for the Whistleblower Protection Act, if you wouldn’t say it out loud, don’t say it online.

Absolutely speak to your audience, but also give thought to the possible reaction outside of it. And before you wade into whichever moral issue is up for debate, do a quick cost-benefit analysis to determine whether your opinion is worth the potential loss.

Oh, and don’t forget to have fun!

Kellie GibsonKellie Gibson
Marketing Writer
Advisor Websites

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A Client Base for High Valuation

Wealth management professionals face a key business constraint in the limited number of advice-giving hours in a day. Since revenues are ultimately tied to the value of each advice hour, at capacity, an adviser’s growth options are limited.

The competitive market eliminates the option of raising fees. Another alternative is to increase the productivity of each hour with two oft-cited tactics: 1) gaining productivity through technology; and 2) replacing low-AUM clients with high-AUM clients. Certainly, expanding to the emerging affluent segment would be counterproductive to a one-to-one client service model, but what if a scaled service model were used?

Culling Based on AUM Fails a Growth Strategy
An advice hour spent with a high-AUM client will produce more revenue than one with a low-AUM client. In a one-to-one relationship model, culling low-AUM clients improves efficiency per hour, but there are three critical pitfalls to this approach for an advisory firm interested in a larger market footprint and a higher firm valuation.

1. It’s hard to win high-AUM clients. The higher a prospective client’s AUM, the more intense the competition and there can be only one winner. When an adviser loses to the competition, those hours spent in marketing represent an opportunity cost.

2. Withdrawals and wealth transfers. The largest segment of the high-AUM market is made up of people in or near retirement. As the years pass, a high net worth client’s AUM will be flat or declining through withdrawals and/or wealth transfers.

3. A firm’s valuation has a forward view of AUM. P&L performance is an important input to a firm’s valuation, but this only shows current-year metrics. Most important to an acquirer is the future AUM profile. A client base made up of high-AUM retiree clients will be much less attractive than a client base with a significant portion of clients in their wealth-accumulation phase.

The Emerging Affluent Segment’s Appeal
The emerging affluent client (AUM between $100,000 and $250,000 and under 45 years of age) will grow to high-value AUM over time through career advancements and wealth transfers. Since there are tens of millions more in this segment today than those with AUM greater than $1,000,000, there’s a large prospect pool in every local market. These are important factors in valuing future AUM.

The tactical issue is developing an advice and investment package, combined with volume service techniques, allowing an adviser’s advice-giving hours to be efficiently utilized. Should an adviser institute such a solution (and in parallel with the adviser’s high-AUM client base), future AUM grows exponentially as does the firm’s valuation.

Keeping Advice as the Key Differentiator
The emerging affluent have common planning needs such as budgeting, education, retirement, tax management, and portfolio design. Indeed, the concepts within each planning category hold tight individual to individual, with the differences only on the demographic margins—like the number of children, income, budget priorities, etc.

People with common needs benefit from a common solution; manufacturers apply this principle in designing products and producing in volume.

An adviser developing a broadly applied investment solution for the emerging affluent’s need inventory is in keeping with this segment’s wide acceptance of portfolio models such as target date funds for retirement. The key difference is the adviser builds the solution for mass consumption with his or her own advice/counsel/wisdom—the adviser’s primary differentiating force—instead of licensing a vendor’s off-the-shelf assembly and relegating the solution to a commodity (i.e. other advisers with the same vendor package would be indistinguishable).

Technology for Mass Personalization
Technology paves the road to upholding a differentiated advisory service while also serving volumes of emerging affluent clients simultaneously.

  • A proprietary “robo-adviser” instilled with the adviser’s own planning, portfolio, and investment advice that delivers the tactical solution to clients’ needs.
  • Scaled communications like CRM, a portal, email, and social media that provide the service and support component necessary to keep the relationship on track.
  • Periodic group meetings activate adviser-to-client relationships.

The hand-in-glove fit here is the emerging affluent are highly accustomed to, if not preferring, these technology-based interactions.

Right-Sizing Processes to AUM Segments
Using scaled service delivery methods generates important operational leverage. The block of hours used to develop the advice and service package is distributed across many clients wherein each new client in the group further improves the profit margin of those hours. This strategic profile adds measurably to the firm’s year-over-year profits, but also its valuation, which is a winning mix by all accounts.

Kirk LouryKirk Loury
Wealth Planning Consulting, Inc.
Princeton Junction, New Jersey

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The Main Weakness of Robo-Advisers and How You Can Capitalize On It

Risk management used to be an exclusive province of hedge fund quants. Due to tremendous increases in the computing power, the risk management toolkit is now utilized not only by advisers, but by many retail investors through “robo-advisers” like Wealthfront. Wealthfront brought the Markowitz optimization algorithm to the masses and in many ways the company is a symbol of the democratization of risk management that’s now going on.

However, in order to make risk tools useful for wealth management, they have to be adapted for the purpose. Most such tools that are used by financial advisers or by retail investors through companies like Wealthfront focus on subjective risk tolerance as the metric that sets the appropriate risk level for the portfolio. That makes sense for hedge funds, because they are targeting a risk level and an absolute return, but don’t have any specific investment goals. However, clients of robo and human financial advisers have crucial investment goals and risk tolerance is simply not enough to arrive at a suitable portfolio for them.

Let’s use Wealthfront’s questionnaire as an example. I absolutely do not mean to pick on Wealthfront here; rather I am using them as an example as one of the leaders in the industry. Here are the questions that Wealthfront asks:

  1. What is your current age?
  2. What is your annual after-tax income?
  3. What are your savings?
  4. When deciding to invest, do you care more about maximizing gains or minimizing losses?
  5. If your portfolio lost 10 percent of your market value, what would you do?
    • The options are Sell All/Sell Some/Keep Some/Buy More

And after this, Wealthfront will recommend a portfolio based on your answers. My risk tolerance according to all tests I have ever had is around the median (it is 6.5 out of 10 in Wealthfront). My portfolio looked like this:

  • 20% – Vanguard VTI (US Stocks)
  • 17% – Vanguard VEA (Foreign Stocks)
  • 13% – Vanguard VWO (Emerging Markets)
  • 15% – Vanguard VIG (Dividend Stocks)
  • 12% – Vanguard VNQ (Real Estate)
  • 15% – iShares LQO (Corporate Bonds)
  • 8%- iShares EMB (Emerging Market Bonds)

Now this portfolio contains some very risky assets like 38 percent of combination of foreign and emerging stocks and bonds. Real estate stocks at 12 percent are almost as volatile as the emerging markets stocks. Let’s run this portfolio through series of stress tests and compare it to S&P 500.

Below are the results in a bar chart. My Wealthfront recommended portfolio is on the left and the S&P 500 SPDR is on the right. Note, that despite my having roughly median (or slightly above median) risk tolerance, the portfolio that I end up with is virtually identical to S&P 500 in its risk profile. The biggest loss for both portfolios is in the Federal Reserve Dodd Frank 2015 Severe Scenario (marked as “A” on the chart), with Wealthfront-recommended portfolio losing 46.4 percent and SPY losing 48.8 percent (virtually identical estimates of an uncertain future event). A 2008-like stock and credit collapse (marked as “B” on the chart) is also similar with Wealthfront suggested portfolio actually losing more at 38.3 percent vs. 36.7 percent for the SPY. In a Euro meltdown (marked as “C” on the chart) again the portfolios are virtually identical.


Source: http://www.rixtrema.com, a risk modeling and consulting firm which helps advisers link portfolio crash-testing directly to financial planning.

This portfolio is clearly too risky for the risk tolerance of 6.5 out of 10, which Wealthfront assigned to me. Because if 6.5 is the level of risk for S&P 500, then what is 10? I am perplexed by complete absence of U.S. Treasuries which provide such an effective risk hedge due to negative correlation with stocks in the extreme periods.

But there are more issues beyond riskiness and here is where we are getting into an area where I believe current robo-advisers are really lacking. Let’s suppose for a second that this portfolio did suit my risk tolerance.

The key point is that none of this addresses my investment goals, namely why I am investing my money. Let’s do a simple illustration of the performance of the portfolio over the investing horizon. Let’s assume that I have $200,000 to invest, a horizon of 30 years, and I would like to withdraw $40,000 per year in nominal terms starting in year 15. I can also save $15,000 and add it to the portfolio every year between now and year 14. As you can see from the chart above the long-term return of the Wealthfront portfolio which we are going to use for this illustration is 8.5 percent annually (marked as “D” on the chart).

We will see how this portfolio will grow if it grows at the long-term return rate. We add $15,000 per year in years one through 14 and we withdraw $40,000 per year in years 15 through 30. Because risk happens, we will also assume two crashes for this portfolio, one in year 1 and one in year 15. The crash will be equal to the average of the worst three stress test losses (“A” through “C” on the chart), so for the Wealthfront suggested portfolio on the left that number is equal to: (46.4+38.3+22.3)/3=35.7%.

The outcome of this scenario is illustrated below. Under those assumptions the Wealthfront suggested portfolio ends up with more than $366,000 at the end of the 30-year horizon (marked as “E” on the chart below). Note that it is not a prediction, but an illustration using some conservative (two major crashes) assumptions.

However, do I really need to take all that risk to achieve my goals? We don’t know because Wealthfront does not take into account my goals, only subjective risk tolerances. What if I sold all of the risky REIT and Emerging Market holdings and bought a Lehman Aggregate ETF (AGG). Clearly, my portfolio would become a lot safer. Let’s look at the crash test to confirm this. The new safer portfolio is shown in blue bars below. It loses only $60,000 in the Fed Dodd-Frank Severe Scenario (a 1/3 loss reduction, marked as “F” on the chart below) and ~$47.5,000 vs. $76,000-plus in the stock and credit collapse (marked as “G” on the chart below).

OK, we’ve reduced the risks to something that I think I can tolerate better, but the key question is: how does it help with my investment goals?

Looking at our projection illustration we can see that the safer portfolio with a blue line ends up with approximately $270,000 (marked as “H” on the chart below). But I am still left with a surplus and I am taking much less risk to get there. So, here is the peril of risk tolerance approaches. Even if they are accurate and academically verifiable, as is the case with the Finametrica questionnaires, there is still something missing. Just because I can tolerate the risk it doesn’t mean that I should take it given my objectives.

And therein lies the opening for financial advisers to out compete robos and many of their peers. Create a framework that addresses both the subjective risk tolerance and the objective capacity to take risks and you will be giving people something unique. As long as we are all in a multi-year bull market, methodologies that assign very risky portfolios based on a questionnaire may do very well. However, when inevitable volatility hits, investors will need to know why it is that they are tolerating risks. And if they don’t see the connection between risk and retirement goals, they might give up on a portfolio at exactly the wrong time—like at the bottom of the market—and that will ruin their chances of reaching the goals that they do have. Advisers who make this connection for clients and explain to them why exactly they are or are not taking certain risks will do very well in the long run.

We have used this approach to show a major weakness in the current robo-advisory offerings. We are certain that in due time robo-advisers will turn into robo-planners and will correct this deficiency. But in the years that it will take them to do that, this approach will help advisers connect risk to clients goals, dreams, and fears and out compete robo and human competition.
Daniel SatchkovDaniel Satchkov, CFA
New York, NY


Editor’s note: To read more about robo-advisers, their shortcomings and their good aspects, check out the Journal of Financial Planning’s archives. Some we recommend are:

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The Empathetic Adviser

HighlyEffectiveIt never ceases to amaze me that after 20-plus years in the financial services industry, both as an adviser and as a coach, there is still so much that I learn as I work with individuals on better ways to increase their overall communication skills. A recent example of this would be when one of my adviser clients, who had recently played the role of a prospect during our 10-minute role play session, said afterwards, “I felt the most connected when I knew the adviser was listening.”

This brief statement was followed by a lengthy dialogue with others in the group about the value of listening. Another adviser suggested that we take a page out of Stephen R. Covey’s book The 7 Habits of Highly Effective People in which he describes the four developmental stages of empathetic listening.

The following is an interpretive summary of each of those stages and an example of how it could be utilized when prospects state, “I’ve had it with advisers. They all promise great returns but never deliver.”

These stages are not consecutive but independent possibilities when having a conversation and should be scattered throughout your dialogue.

Stage No. 1: Mimic Content
In this stage you as the listener are merely repeating what you have heard. It is the most basic of all listening skills although be careful as this method can seem a little insulting if used too often during the same discussion. However, it does force you to listen so that you can repeat what has been said. Example: “So, you’ve had it with advisers, they promise great returns but never deliver?”

Stage No. 2: Rephrasing Content
In this stage you as the listener merely put the content you have heard from the prospect into your own words. Example: “With your experiences, you don’t believe what advisers have to say anymore?”

Stage No. 3: Reflecting Feelings
In this stage you as the listener interpret what you believe the other person is feeling. It is much more effective because you are focusing on both what is being said as well as the way you believe the speaker feels about what they are saying. Example: “That sounds extremely frustrating.”

Stage No. 4: Reflecting Feelings and Rephrasing Content
In this stage you as the listener combine stage No. 2 and No. 3 to make an authentic connection so that the speaker is feeling understood. Example: “It sounds like you are really wary of all advisers because many of them have over-promised and under-performed?”

After spending five group coaching sessions with one of my teams, I created the4 Levels of Empathetic Listening Exercise,” an exercise where we role play using a combination of the stages previously discussed. I have found that each adviser is making a much better connection with their prospects because they have increased not only their listening skills, but also their ability to gain trust leading them towards becoming a much more empathetic adviser in the eyes of their prospects.

If you read this article and are interested in hearing our audio the “4 Levels of Empathetic Listening Exercise,” email Melissa Denham, Director of Client Servicing at melissa@advisorsolutionsinc.com or to schedule a free complimentary consultation. To discuss this article in more detail, email me at dan@advisorsolutionsinc.com.

Dan FinleyDaniel C. Finley
Advisor Solutions
St. Paul, Minn.

Editor’s Note: FPA’s webinars are a great source of educational content, in addition to our Practice Management Blog, to help build and nurture client relationships. Click on the following related webinar titles to learn more:

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Tapping Technology for Review Meetings

Many advisers have replaced at least some in-person review meetings with technology-supported meetings (e.g. via Skype) This practice is becoming more popular for several reasons:

  • Clients want to save time or may prefer the comfort of their own home or office instead of driving to the adviser’s office.
  • Advisers may prefer the efficiency of review meetings aided by technology.
  • People in general are more technologically savvy and comfortable with the notion of technology-supported meetings.

On the other hand, it is unlikely that one would use a technology-supported meeting as a vehicle for developing or strengthening a client relationship.

Pros and Cons
Advisers who conduct technology-based review meetings report that these meetings set up win/win scenarios—they’re more efficient for the adviser and more convenient for the clients. Typically, there is less chitchat and a tendency to get down to business sooner, so review meetings end in half the time that in-person reviews take. Still, there are some differences and possible downsides to be aware of:

  • Less chitchat may be efficient, but it can rob the adviser of tidbits of information that enhance the client relationship or provide cues about a client’s understanding of, or comfort with, his or her financial status.
  • Most likely, the adviser’s staff isn’t involved in technology-supported meetings, resulting in less input for the adviser. In addition, some staff may miss having the opportunity to interact with clients, an experience that gives purpose to mundane tasks such as filling out paperwork.
  • Both clients and advisers need to assume the added responsibility of ensuring that personal information passes only via secure lines.
  • Although advisers may have trained both spouses to participate in in-person client meetings, it may be easier to tap only one spouse or partner when the move is made to technology-aided meetings, which could open the door to some miscommunication.

Change Happens
This isn’t the first major transition in client meetings. Many tenured advisers remember transitioning from appointments in their clients’ homes to meetings in their own offices. That shift happened approximately a decade ago, and no harm was done. Nevertheless, advisers may want to keep these tips in mind as this change unrolls.

  • Be sure that both spouses are involved in at least some technology-aided review meetings.
  • Prepare clients for the importance of cyber security. 
  • Practice video technology before using it. For example, depending on camera placement, looking directly into a client’s eyes on the screen can appear as if the adviser is looking elsewhere. Looking into the camera, however, though not intuitive, comes across as looking directly at the client.
  • Consider adding staff to some technology-aided meetings, depending on your staff’s relationship with a client.
  • Offer in-person meetings as an option. Even if clients don’t want to take advantage of this offer, giving them the opportunity for in-person interaction is advised.

Financial planners are relationship people. Efficiency is wonderful. But efficiency that takes precedence over relationships is dangerous.

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.


Editor’s note: Read an article in the May 2015 issue of the Journal of Financial Planning that focuses on how to prevent identity theft here. Also, listen to an FPA webinar titled “Leveraging Cloud Technology to Overcome Cybersecurity & Compliance Risk” here. Another helpful webinar, titled “Mobile Security: Defending the Devices that Power Client Productivity” can be found here.


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