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Weekend Reading For Financial Planners (January 25–26)

January 24, 2025 02:00 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that while overall financial advisor headcount remains relatively flat, the RIA channel continues to gain share in terms of both headcount (as brokers break away to start their own independent firms and aspiring advisors seek positions that don't rely on an 'eat what you kill' approach) and assets managed (as consumers might be attracted to the differentiated service proposition they can experience working with an RIA that has an incentive to reinvest into service and the client relationship to retain the client and their ongoing fees). Nonetheless, given the scale and brand awareness of the wirehouses, and as their own use of fee-based models increases (as opposed to primarily relying on commissions from selling products), competition for clients (and advisors) will likely remain stiff going forward, even amidst the favorable trends for RIAs

Also in industry news this week:

A recent survey indicates that trust is the most important factor for clients when choosing an advisor (and the factor most likely to drive them to a different advisor), with an advisor's ability to understand their financial health and goals being a primary way to build this trust (providing an opportunity for human advisors to differentiate themselves from less personal tech-only advice options)
RIAs appear to be focused on identifying sub-optimal investments and tax savings opportunities as they seek to provide ongoing value to their clients, according to a recent study

From there, we have several articles on investment planning:

ETF issuers are unveiling increasingly complex ETF products, potentially enticing clients and presenting a challenge to advisors to fully evaluate their pros and cons
New products and reduced costs have made alternative investments easier to access in recent years, providing advisors with a potential differentiator for their service offering
While covered-call ETFs might appear attractive to many investors, an analysis indicates that alternate approaches (perhaps as simple as a global 60/40 asset allocation) could provide similar risk management benefits while achieving greater returns

We also have a number of articles on practice management:

One firm's step-by-step guide to how it made a recent hire, from creating clear, informative job posting to efficiently narrowing down the field of candidates
Perks financial advisory firms are using to attract and retain talent, from supplemental "family leave" days to time off for pro bono service
Four common mistakes advisory firms make when it comes to employee compensation and how to design compensation models that reflect employees' true priorities

We wrap up with three final articles, all about the intersection of money and purpose:

How money can (and cannot) facilitate a sense of purpose and meaning for advisors and their clients alike
Why the ability to say "no" to opportunities that arise can be a superpower that allows one to focus on what is most meaningful to them
How identifying a "deeper yes" can help advisors and their clients make tough decisions when it comes to budgeting their time and money

Enjoy the 'light' reading!

Kitces & Carl Ep 156: How Are You Getting Value Out Of ChatGPT As A Financial Advisor?

January 23, 2025 07:02 am 0 Comments CATEGORY: Kitces & Carl Podcast

Kitces & Carl Ep How Are You Getting Value Out Of ChatGPT As A Financial Advisor

Since the emergence of Artificial Intelligence (AI) in the mainstream technological landscape, conversations about which areas of the financial planning industry would be most likely impacted by AI have proliferated. These discussions have ranged from questioning whether everyone would be out of a job in five years to wondering if anything of substance would change at all. However, as the public’s understanding of AI has developed, the common consensus has largely shifted to the understanding that while processes may change, the expertise and human connection offered by specialists like financial advisors will be hard to replace. In fact, AI currently seems most likely to develop into a tool that advisors can use in many parts of practice. Which, in turn, poses the question – where can AI be most effectively used as a way for advisors to leverage their time and creativity?

In the 156th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how they use AI tools such as ChatGPT to expedite their creative and strategic processes – and how to ‘ask’ ChatGPT better questions to get more effective and relevant answers.

Perhaps one of the most impressive capabilities of programs like ChatGPT lies in their ability to serve as brainstorming partners. To use them effectively, it can be helpful to assign ChatGPT a role (e.g., “You are my executive producer” or “You are a marketing director”) and define a clear objective. Providing sample documents or links to sources for tone or substance may be helpful. For example, advisors can attach their typical “first prospect meeting” agenda, give ChatGPT the role of business development coach, and ask for feedback and what to do differently.

That being said, a common frustration when using ChatGPT or similar programs for brainstorming is that the first responses may not be exactly what is hoped for. Rather than expecting a perfect ‘call and response’, the process can be approached more as an iterative dialogue. Sharing initial thoughts, providing feedback, and curating further – such as asking variations of “I really like [this idea]; can you tell me more about it for an audience of [specific type of client]…?” – can guide ChatGPT toward more tailored results. The advisor and AI can then collaborate further to create a stronger and more relevant offering. Additionally, many AI programs now ‘remember’ what was asked of them across sessions, making it easier to build on previous conversations and reach increasingly insightful responses over time!

The key point is that with some patience and guidance, ChatGPT can be a powerful tool for enhancing many aspects of an advisory firm’s operations. Whether it’s used to help with marketing, drafting email responses, summarizing content, reviewing data analyses, or even providing feedback on client surveys, the potential applications are vast. Ultimately, the only true limitation of AI’s potential is ‘just’ a question of imagination!

Five “Self-Persuasion” Questions To Connect With Prospects Who Say They’re Interested… But Aren’t Moving Forward

January 22, 2025 07:01 am 0 Comments CATEGORY: Client Trust & Communication

Financial advisors often engage with a variety of prospects, each with unique needs and motivations. Some prospects approach an advisor with an immediate 'problem to be solved', such as a fast-approaching retirement date. These situations often narrow the focus of the prospecting conversation, giving the advisor a clear opportunity to affirm their value (e.g., "I help clients in retirement by doing X, Y, and Z."). However, not all prospects have immediate financial concerns. While these individuals may genuinely be interested in financial advice, they might also feel ambivalent about the timing, relevance, or ultimate value of working with an advisor. This creates a unique challenge: How can advisors guide ambivalent prospects toward making a decision without coming across as too pushy?

The first step is to recognize what these types of prospects may be seeking. Rather than immediate solutions, they are often looking for reassurance that they are 'on track' and a collaborative relationship that empowers them to feel confident about their financial future. For these clients, connection and understanding are often more important than problem-solving, and advisors who focus too quickly on identifying potential future issues risk alienating these prospects. Instead, acknowledging their ambivalence as a natural part of the decision-making process can help create space for them to discover the value of financial planning on their own.

One effective way to facilitate this self-discovery is through self-persuasion questions. These questions invite prospects to explore and articulate their own reasons for taking action, guiding them gently through the decision-making process. For instance, asking a prospect what benefits – whether financial, relational, or emotional – they see in developing and implementing a financial plan can prompt them to reflect on the deeper reasons that brought them to an advisor in the first place. When prospects identify their own motivations for valuing financial advice, they internalize its importance far more effectively than if an advisor simply explained why they 'should' value it.

Self-persuasion questions can be integrated throughout the prospecting process, from the initial consultation to the assessment of a prospect's readiness to commit. This approach provides a subtle yet effective way to affirm an advisor's value while maintaining a collaborative, pressure-free dynamic. To that end, tone and delivery are crucial for these conversations: A warm, empathetic approach ensures the questions remain open-ended and non-confrontational, encouraging genuine engagement.

The key point is that self-persuasion questions are powerful tools for connecting with prospects who don't have an immediate pain point to be addressed. By encouraging prospects to articulate their own reasons for seeking financial advice, advisors can help them recognize its value and build the confidence needed to take action!

#FASuccess Ep 421: Integrating Tax Preparation Without Hiring In-House CPAs To Bring More Tax-Focused Value, With Daniel Friedman

January 21, 2025 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Daniel Friedman Podcast Featured Image FAS

Welcome everyone! Welcome to the 421st episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Daniel Friedman. Daniel is the CEO of WMGNA, a hybrid advisory firm based in Farmington, Connecticut, that oversees approximately $270 million in assets under management for 200 client households.

What's unique about Daniel, though, is how his firm has expanded its tax focus to include "in-house" tax return preparation for its clients as a one-stop shop, but actually outsources the tax preparation work itself to trusted CPAs that he pays out of his own revenue (rather than bringing this service fully in-house) so that he can focus his staff and team time more fully on the tax planning analyses and strategies that make up the core of his firm's value proposition to clients.

In this episode, we talk in-depth about why Daniel decided to outsource tax return preparation (rather than hire someone to do it in-house) to be able to access the expertise of the CPAs his firm uses (particularly for clients with complicated equity compensation plans), how Daniel views these CPA relationships as mutually beneficial from a financial perspective (not for the purposes of generating cross-referrals, but simply because his firm can negotiate bulk discounts on tax return preparation on behalf of his client while the CPA firms get the efficiency of just being able to bill Daniel's firm once directly), and how Daniel positions this Strategic Professional arrangement as a value-add for clients (as they can benefit from independent perspectives on tax planning strategies and the preparation of their tax returns).

We also talk about how Daniel has used a subscription-based model for financial planning fees for 30 years (now setting the monthly subscription fee based on each client's unique needs, including the complexity of their tax situation), why Daniel finds that the vast majority of clients also decide to have his firm manage their assets (paying a separate AUM fee for the service that is priced based on all-in investment costs plus a profit margin for his firm) that has grown to the point that AUM fees far surpass his still-core subscription fees, and how Daniel's firm has successfully implemented a money-back guarantee for its subscription-based planning service to give prospective clients confidence to try out the value his firm offers (with only 2 clients in 30 years having actually ever asked for a refund!).

And be certain to listen to the end, where Daniel shares why his firm uses the term "restylement" rather than "retirement" to reflect that they are helping clients restyle themselves for the next stage of their lives (not the end of their lives), how Daniel has benefited from having a "director of first impressions" on staff whose job is to both make a good first impression on prospective clients who come to the firm and to send cards and gifts to commemorate client milestones, and how Daniel found that while success did not come as quickly as he would have liked in the first several years after starting his firm, his persistence in providing high level of service to his clients has paid off over time in the form of a thriving business today as client relationships compounded over time.

So, whether you're interested in offering in-house tax planning services while outsourcing the actual preparation of tax returns, using a combination of subscription and AUM fees to serve clients, or how to navigate the first difficult years of firm ownership, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Daniel Friedman.

22 Top Financial Advisor Podcasts To Listen To In 2025

January 20, 2025 07:01 am 0 Comments CATEGORY: Personal/Career Development

There is no shortage of written content available for financial advisors to enhance their technical skills, grow in their careers, and run more successful planning practices, from books to research studies to long-form written content. Of course, given the demands of their busy schedules , finding time to dig into this content can be a challenging endeavor.

Luckily, alongside the increasing popularity of podcasts on a seemingly infinite range of topics, there is a growing ecosystem of podcasts aimed at financial advisors, covering everything from practice management and career development to technical topics, such as investment, tax, and estate planning. Which gives advisors the opportunity to gain new ideas to improve their businesses (and careers) as well as stay on top of emerging planning opportunities while commuting, working out at the gym, or walking the dog.

Nonetheless, given the hundreds of available podcasts targeted to financial advisors, finding the 'best' ones for an advisor's specific needs can be a challenge. With this in mind, we have compiled a list of "Top Financial Advisor Podcasts", with a particular focus on how advisors can find the 'right' podcasts that fit their interests and business needs, whether they are aspiring financial planners or managing large enterprises. The podcasts are organized by category (e.g., practice management, behavioral finance), with each podcast capsule including a description of the type of advisor for whom the podcast is best suited.

Notably, this list highlights podcasts that we believe (based on our own listening!) offer a high signal-to-noise ratio and are tailored to the needs of those who are a part of (or hope to join) the financial advicer community (i.e., those who are in the business of selling their financial advice as opposed to financial products). Further, because choosing 'top' podcasts is inherently subjective (e.g., a financial advisor might find that they 'click' with the style of one podcast host over another covering a similar topic), we list a number of additional podcasts that are also worth checking out in each category for advisors who want to go deeper on a given topic.

With that introduction, we hope you enjoy our list of the 22 'top' podcasts for financial advisors!

Weekend Reading For Financial Planners (January 18–19)

January 17, 2025 02:00 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that at a time when brokerage firms' cash sweep programs come under increased scrutiny (and as the Federal Reserve has cut interest rates), Charles Schwab (the largest RIA custodian) continues to slash sweep rates for client cash (down to 0.05%), well below the rates available on other cash-like products, leaving advisors on the platform with the task of determining whether to move (at least some) client cash to higher-paying offerings (whether from Schwab or using emerging cash management platforms) to help clients earn more on their cash holdings and to ensure they are fulfilling their fiduciary responsibilities.

Also in industry news this week:

A recent survey indicates that members of Generation X are struggling more with retirement planning compared to older Baby Boomers and younger Millennials, potentially offering opportunities for financial advisors to help Gen Xers create a plan to 'catch up' when it comes to both their retirement savings and their financial confidence
According to a recent study, 37% of financial advisors are planning to retire within the next decade, opening up potential opportunities for the 48% of advisors who indicated interest in acquiring a practice

From there, we have several articles on retirement planning:

Research into a variety of flexible retirement income strategies demonstrates the tradeoffs between current safe withdrawal rates, cash flow volatility, lifetime spending, and legacy interests
An analysis suggests that those taking Social Security benefits early to invest them have a high breakeven rate to clear compared to those who delay benefits until Full Retirement Age or beyond
Why taking a systematized approach to determining a client's retirement income style preferences can help advisors offer a more personalized client experience

We also have a number of articles on advisor marketing:

How relatively smaller RIAs are pursuing organic growth at a time when M&A activity is receiving significant attention, from expanding the platforms (and audiences) they reach to refining their service models
Eight tips to help advisors get more "earned media" opportunities and demonstrate their expertise and credibility to prospective clients
Best practices for client events, including creating a sense of community and offering opportunities to gather feedback and preferences from clients

We wrap up with three final articles, all about managing stress:

How to keep up with the news without getting overly stressed, from deciding how deep to go into particular issues to setting time boundaries for news consumption
How regular self-reflection can help identify potential stressors and begin the process of moving past them
Why separating one's thoughts from one's sense of self can help avoid the stress that can arise from 'overthinking'

Enjoy the 'light' reading!