Articles About Financial Advisor Personal/Career Development

It's Memorial Day once again, which means we're well past tax season, and the busy spring season of industry conferences is coming to an end... and it's time for the annual summer slowdown for most advisory firms, as clients begin to go on summer vacations and it's harder to schedule them for meetings, and as advisors we have some time for ourselves to relax with family... and catch up on some good books.

As an avid reader myself, I'm always eager to hear suggestions from others of great books to read, whether it's something new that's just come out, or an "old classic" that I should go back and read (again or for the first time!). And so, in the spirit of sharing, a few years ago I launched my list of "Recommended (Book) Reading for Financial Advisors", and it was so well received that in 2013 I also started sharing my annual "Summer Reading List" for financial advisors of the best books I'd read in the preceding year. It quickly became a perennial favorite on Nerd's Eye View, and so I've updated it every year, with a new list of books in 2014, another in 2015, and a fresh round of recommended books for financial planners in 2016.

Continuing the annual series, I'm now excited to share my latest 2017 Summer Reading list for financial advisors, with suggestions on books about everything from how to minimize burnout and more fully (re-)engage with your advisory firm, and how the principles of computer algorithms can help you gain personal efficiency and better productivity in your daily life, to building an "enduring" advisory firm that lasts beyond its founder to the next generation of advisors (and how to serve the next generation of clients that will be necessary to perpetuate the firm), practice management books on everything about how to properly value and/or think about selling your firm and how to actually run your business like a business that is scaling up in size, to why humans will likely remain relevant (including and especially with the rise of computers and robots) and what it will take for financial planning to finally, truly become a profession in the 21st century.

So as we head into the summer season, I hope that you find this suggested summer reading list of books for financial planners to be helpful… and please do share your own suggestions in the comments at the end of the article about the best books you've read over the past year as well!

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For parents these days, there's a huge focus these days on not just getting kids into college, but getting them into the "right" college. And whether it's realistic or not, many people by default want to plan for their kids getting into recognized Ivy League schools like Harvard, Yale, or Stanford, in the hopes that studying at a "top school" will help their kids' future career prospects. Accordingly, it's perhaps no great surprise that more and more people who are looking to study for their CFP certification are also asking the question of what the "best" or "top ranked" CFP programs are, and whether it matters where you go to get your CFP. Particularly in light of the fact that some of the largest CFP education programs are completely unknown outside of our industry.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, I discuss why for most people, it doesn't really matter if you get your CFP certification from a "top ranked" CFP program or not, and what criteria you should really focus on instead when getting your CFP education.

First and foremost, the primary reason that it doesn't matter where you get your CFP education is that most clients really don't care what school you went to school. They just rarely ask. And even when it does happen, it's not difficult to explain the credentials of an industry -specific educational institution like the American College or the College for Financial Planning - and then move on. Because ultimately, if of getting your CFP marks gives you expertise and confidence that you communicate accordingly, that is the primary benefit of CFP certification! Not getting the "right" institution at the top of your degree.

That being said, tt is worth noting that there are some situations where the school you get your CFP from may matter, at least a little. The first is when you are trying to get a financial planning job. Not a position where you need to go and get clients, but an internal position at a financial planning firm. Because when a firm is hiring someone, they have very little to look at... and as a result, having a school like Texas Tech or Virginia Tech on your resume – since these are schools known to have reputable CFP programs – can at least cast a positive "halo effect" on you. But don't count on that getting you the job. It might help you get an interview and tilt the scales in your favor a bit, but it ultimately comes down to what you learned in your CFP program. And that means if you ultimately want to land a job, focus on picking the program that allows you to learn the material best, because that is what will get you past an interview to an actual financial planning job!

The other time you may want to consider where you get your CFP is if you plan to go into academia. Although even in academia, it still isn't about where you get your six CFP education courses per se, but where you get a masters degree or a Ph.D. could truly matter. In this case, you aren't trying to win over consumers or persuade an employer to hire you, but in academia, school rankings simply matter more. Many schools like to have a good "academic pedigree" for their professors. Yet, even within academia, it's going to matter what type of job you ultimately want. If you want to help start a new CFP program or primarily teach undergraduates, then where you get your degree won't matter as much. If you want a tenure-track research position at an R1 research university or business school, then where you get your degree will be more important, even if it doesn't matter so much where you took your CFP courses.

The bottom line is, for most people getting their CFP certification – especially those who are just wanting to get a job or build an advisory firm getting clients – don't stress about where you get your CFP education. Instead, stress about finding a program where you can do well, and actually learn the content! Because, in the end, the biggest determinant of your success will be how well you actually learn the material and can confidently use it. Ultimately, this comes down to educational fit – not academic pedigree!

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Finding your first good job as a financial planner can be tough. Not only because it's challenging just to find a job at all, but because it's not always clear up front which firms really do financial planning or not, and which jobs will be real financial planning jobs versus just a sales job. In many cases, the only way to find out is to take the job that's available, make the best of it, and hope it turns into a good long-term career path. Except when it turns out it's really not a good match at all... and then suddenly the challenge is figuring out whether it's time to leave, and whether having a short-term job stint on your resume will hurt your future career chances even more! So what should you do?

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, I discuss how to know it's time to leave your advisory firm to find another opportunity - based on whether the firm was a bit fit philosophically, or just not a good long-term growth opportunity - and best way to handle the situation if you find yourself in it.

First and foremost, though, remember that the best way to fix a problematic situation is not to make a change at all, but try to change the firm from within, rather than just running away from the problem. If you are worried about the investment or planning philosophy, or want to know if there's a better long-term career opportunity, then ask - broach the conversation with the firm owner. But it's important to be tactful in how you do this. If you are critical of your boss or the firm owner, they will likely just defend themselves, because that's human nature. Instead, come up with an actual solution, and offer it by having a "what if" conversation rather than a confrontational "why" conversation. If you come to the table with a proactive solution, most firm owners will actually be happy to work with you, adopt a solution, and get the firm in a better position than it was before!

Similarly, when it comes to career opportunities, if you want a career path, you may need to ask for it! I'm always amazed at how often people complain about having a lack of a career track, when they've never raised the conversation themselves! And realize that for most smaller advisory firms (which is most firms), this may be the first time they've taken someone through a career track, so the reality is they literally don't know what their career path is. Don't just sit back and expect that a perfect career track is going to be waiting for you, but instead, initiate the conversation ask about your opportunities with the firm as it continues to grow! The emphasis on continued growth is important, because both you and the owner want to be in a position of sharing a growing pie, rather than fighting over bigger pieces of a pie that isn't growing. If you find yourself in the latter position - in a firm that just isn't growing at all - the odds of a career track emerging are almost nil.

However, after having the tough conversations, the reality is you may decide that it really is time to leave. Perhaps something unethical is going on and you need to get out immediately. Or maybe the pie just isn't growing and that isn't going to change, so there's simply going to be nothing to share in the future. If that's the case, then what you should do next depends on the situation you are in. If you're really uncomfortable with how the firm operates and they truly aren't doing right by its clients, then get out right away. Life's too short for not doing right by your clients. But if it is "just" a lack of future growth, then realize that you can take your time and make a smart transition. Get your CFP experience (or finish the coursework if necessary!), save up some money for the transition, and take your time to truly do your due diligence on the next firm you work for. If you're checking the job boards and networking through industry associations, you may have a better chance of finding a good fit.

But in either case, understand that ultimately you don't have to worry about being labeled a "job-hopper" – or at least if it only happens one or two times. Just be straightforward about your prior situation, and take ownership for not doing your proper due diligence the first time around. Most advisors will understand that this happens, and will appreciate the attention you are paying this time. But whatever you do, don't make the transition without learning from it! If you go through too many entry-level positions without figuring this out, then ultimately, you may have good reason to worry about being labeled a job-hopper!

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Time management is crucial, as we're all limited by the same 24 hours in a day and 168 hours in a week. The challenge, however, is that even knowing time management is important, sometimes you don't even realize there's a problem until it's too late. Like the analogy of the boiled frog, that will just sit in a pot of cool water that heats gradually until it boils itself to death (never realizing the growing threat), the slow and steady accumulation of clients can mean that we overburden ourselves too slowly to realize we need to something about it, until by the end we're buried and it feels like there isn't even enough time to fix the problem!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, I share my number one tip for getting "unstuck" in the New Year if you've hit the wall: create a "Stop Doing" list!

As contrasted with a "To-Do" list of things that must be done, a "Stop-Doing" list tells us things we should not be getting done. Or at least, not be personally doing anymore. In other words, it's about making a commitment to creating free time by literally not doing as much as you have in the past.

So how do you figure out what goes onto a Stop-Doing list? The easiest way it to simply list out all of the tasks you do routinely and repeatedly... and then figure out how to stop doing them and instead delegate them to someone else.

Unfortunately, delegation itself is hard. But an easy way to delegate repetitive tasks in particular is through the use of screencasting software. You simply need to identify a task you complete repeatedly, record yourself doing it while talking through each of the steps, and then give someone else the video to use as a guide! It's a way to train on how to do a delegated task, in no more time than it takes to just do it anyway (but you'll never have to do it again!).

For the tasks that are less repetitive and require more expertise, you can look to hire outside professionals to free up more of your time. Because the reality is that you can't be the best at everything in a business. Focus on the most important revenue-generating (e.g., client-facing) responsibilities, and let go of the rest. Fortunately for advisors, a whole range of services providers are cropping up that specialize in allowing advisors to outsource certain business activities.

The bottom line, though, is that good time management is about saying "No". Whether that means saying "No" to repetitive tasks you can delegate, or "No" to less value-adding responsibilities you can outsource (or just let go of altogether), creating a "Stop-Doing" list for 2017 may be one of the most effective ways to gain control over your schedule again!

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Financial planning is an intangible service that is hard for most consumers to evaluate (at least, until they've actually been through it). And because of the uncertainty about whether the advisor will provide good financial planning value, perceived trust plays an important role in choosing a financial advisor. Yet, most advisors have few credible ways to convey trustworthiness, particularly when getting started - and as a result, will often choose to work for a large well-established firm, in the hopes of leveraging the big brand of a large firm to increase their perceived trustworthiness and ultimately win more clients.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we explore whether it's really necessary to have a big firm brand in order to succeed as a new financial advisor, and whether choosing to affiliate with a well-established national firm is really still the asset it once was.

Because while it's true that a well-known national financial services brand can lend credibility to advisors - especially for new advisors - and help them build trust with their clients, as we've seen following the most recent financial crisis, a firm's brand may become a liability as well. This is particularly concerning given that changes to a large firm's brand are almost always out of an advisor's control, even though the advisor's business may suffer the consequences.

Fortunately, the reality is that for most advisors, the importance of a firm's brand will diminish with time. While clients may initially rely it as the basis for their trust, after gaining experience working with an advisor, client trust begins to shift from the firm to the specific advisor they are actually working with. This shift helps to explain why most advisors still retained most clients (even if they worked at a large firm whose reputation was sullied by the financial crisis), and similar is why most advisors who go independent (to a firm without a known consumer brand) still end out retaining most of their clients.

Fortunately for advisors who may have no desire to work for a big firm, there are other methods for developing trustworthiness as well. Having an effective website, and maintaining professional appearance and conduct, really matter when clients don't have many other indicators of trust to rely upon. And independent advisors can and often do leverage the brands of their RIA custodians - most of which are national consumer brands as well. But ultimately, the "fastest" way to build a trusted brand is still through the development of a niche. Because the reality is that most individual independent advisors will never have the potential to become a nationally known consumer brand... but it is possible to become the known, liked, and trusted expert in a particular niche community in just a few years, which is more than enough for one advisor to build a successful practice!

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The compounding growth of computing power suggests it’s only a matter of time before computers have the same “brainpower” as a human being. In fact, if Moore’s Law – that computing power doubles every 18-24 months – continues to hold, the crossover point where computers are smarter than humans might not even be all that far away. Which has troubling implications for a wide range of knowledge-based professions, from doctors, to lawyers, to financial planners who might someday be replaced by a “robo-planner” instead.

Yet research shows that our brains are hard-wired to process information differently when received from human beings rather than computers. We evolved as social animals – a trait that was vital to our survival in the early years – which means even if a robo-planner could deliver the same advice as a human, we might be less likely to take it.

In turn, this implies that the key trait for financial planners in the future will be the one skill that our brains are not programmed to receive from a computer: empathy. Because we need to feel that we are heard and understood before we’re willing to take someone’s advice about how to change our behavior, and those feelings of connectedness are an exclusively human-to-human domain.

Unfortunately, though, in today’s environment, there’s remarkably little in the way of “empathy training” for financial planners. But the good news is that empathy training is possible, and is actually on the rise in a number of other professions, from medicine to law and even to the military and the police. Which suggests it may only be a matter of time until it’s more readily available for financial advisors as well.

Still, though, with the onward marching of computing power, our transition from being “knowledge workers” to “relationship workers” may be here sooner than we realize. The good news is that means “robo-planning” will not be the end of human financial planners. But it remains to be seen whether or how many of us will be ready if and when the moment of change comes?

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With over 75,000 CFP certificants, having an advanced designation is not the differentiator it once was in the marketplace. Instead, the successful growth of CFP certification, along with rising consumer awareness of the CFP marks, is turning the CFP into a minimum standard to be recognized as a professional, and those who really want to differentiate must pursue even most "post-CFP" certification instead.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we explore whether getting a PhD in personal financial planning is a good way to differentiate as an advanced practitioner... or rather, why a financial planning PhD is probably a bad idea for even sophisticated financial advisors.

Because the reality is that a financial planning PhD is really not just the ultimate advanced designation in financial planning. It's really a research degree, with content that teaches students how to actually do real research, applying proper research methods and conducting the appropriate statistical analyses. A financial planning PhD doesn't actually teach much at all about how to do financial planning; in fact, most of the PhD programs will expect candidates to have already learned that before applying (and/or may have to take "pre-doctoral" courses just to get the requisite education first).

Instead, the real purpose of getting a PhD in financial planning is to teach financial planning (at a higher education institution), or to do real research in financial planning. The good news is that there are a growing number of opportunities in both - in fact, the whole purpose of the origin $2,000,000 seed grant that the CFP Board made to Texas Tech's personal financial planning PhD program in 2000 was specifically to help create financial planning PhDs who could go create and teach in other financial planning PhD programs (which is exactly what happened). And there is certainly no shortage of applied financial planning research opportunities.

But the bottom line is simply to recognize that practitioners who want "advanced" financial planning designations should seek out post-CFP designation programs, or perhaps a Master's in Financial Planning. But a PhD is not just a more advanced designation; it's really a teaching and research degree, and is best suited for those who really want to teach and do research, either in lieu of becoming a financial planning practitioner, or perhaps as a second career for those practitioners who are ready for a fresh new challenge!

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In the past, learning to be a financial planner was something that you only did after spending years successfully selling financial services products. If you couldn't "pay your dues" by doing the marketing and business development to get enough clients in the first place, you didn't get to go take CFP classes and become a financial planner. You lost your job by failing to validate your (sales) contract.

In today's environment, the tables have turned. Now, increasingly, new financial advisors arrive having already completed their financial planning education and passed the CFP exam. And not surprisingly, they're looking for jobs where they can implement that financial planning knowledge with clients. Only to be told that they, too, must still spend time "paying their dues" in a back-office job before they get the opportunity to work directly with clients.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we dig into the whole concept of "paying your dues", and why it actually is still relevant for financial planners today, even for those who studying financial planning before seeking out their first job.

Because the reality is that doing financial planning well is more than just having the technical financial planning knowledge. It's also about having the skills to communicate with and interact clients - to show empathy - and find and bring on new clients as well. And if you don't understand the inner operations of how the advisory firm works in the first place, you will also struggle to be successful as an advisor, as the reality is that a successful advisory career still means successfully working within, or creating, a business that serves clients, not just sitting across from the clients in meetings.

And in this context, "paying your dues" is no longer just about doing busy work for the sake of busy work, but actually learning what it takes to be a successful financial advisor, and practicing those skills (which takes time, even for the best of us). Just as Michael Phelps trained 6 hours a day for 6 days a week throughout his career - not to pay his dues but because that's what training is - so too should new financial advisors be prepared to put in the time. Not because they're paying dues, but because that's how you really practice and develop and ultimately master your skills as a professional!

Accordingly, new financial advisors should embrace the opportunity for any kind of real job in an advisory firm, even if it's not client-facing. Because anything, from helping with trading to doing operations paperwork, is relevant knowledge when you're getting started and have so much to learn and experience.

Of course, once a skill is mastered, it's time to find a new opportunity - which means moving up in the current firm, or finding a new job at a new firm if necessary. Failing to do so can turn a learning experience into a dead-end career track. But ultimately, that still doesn't mean it's bad to "pay your dues" - it's simply an acknowledge that once you've taken a few years to learn the tasks, do what it takes to move forward and continue to advance your career to the next stage!

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Even as the total number of financial advisors is in decline since 2000, the number of CFP certificants has been on the rise, driven by both the rising demand from consumers for financial planning advice, and a need and desire for financial advisors to differentiate themselves by providing financial planning services.

And according to a recent study by Aite Group, it turns out that getting the CFP marks really are good for business, with the average solo CFP certificant generating 40% more revenue, the average experienced solo CFP certificant generating 80% more revenue, and financial advisor teams generating 44% more revenue when they include at least 1 CFP professional. In turn, this results in the average CFP professional generating 14% to 33% more income than non-CFP advisors, even after controlling for years of experience.

Notably, though, the study also finds that while CFP certification is associated with higher income, it’s not necessarily because advisors get new clients simply by showing off their CFP marks. Instead, the positive impact derives primarily from enhanced credibility, improved technical expertise and knowledge (which also leads to better self-confidence as an advisor), and greater client satisfaction with the advisor’s (more comprehensive financial planning) services.

And given that some of the fastest-growing channels for CFP certification are now employee advisor roles at either independent RIAs or “online” brokerage/investment firms with retail advisors (i.e., Schwab, Fidelity, and TD Ameritrade, and now Vanguard), it appears that obtaining the CFP marks are increasingly becoming a key step to climbing the employee ladder as a financial advisor as well.

To say the least, though, with the potential for a 14% to 33% increase in lifetime earnings, at this point the CFP marks continue to more-than-sufficiently-justify the $3,000 - $10,000 required investment into a CFP educational program to obtain the certification!

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