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#FA Success Ep 283: Using Mergers And Integrations As A Pathway For Talent (Not Just Client) Acquisition, With Seth Streeter

May 31, 2022 07:04 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Seth Streeter Podcast Featured Image FAS

Welcome back to the 283rd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Seth Streeter. Seth is the founder and CIO of Mission Wealth, an independent RIA based in Santa Barbara, California that oversees nearly $5 billion in assets under management for over 2,000 client households.

What's unique about Seth, though, is how he and Mission Wealth have been growing through mergers, but not just for the purpose of acquiring assets, and instead with a ‘mergers & integrations’ approach to essentially hire-by-acquisition (or acqui-hire) financial advisors and their team members to get the additional staff to scale Mission’s own ongoing growth engine.

In this episode, we talk in-depth about how Seth and his firm leverage what they refer to as an “M&I” (short for Mergers and Integrations) approach to ‘acquihire’ top talent (especially advisors with an entrepreneurial mindset) to scale up their advice teams and other key roles in the firm; how Seth and his firm attract that entrepreneurial talent into an employee role by offering diamond teams, dedicated departments, internal succession plans, and most importantly partnership equity opportunities; and how Seth and his firm also leverage multiple channels of growth to provide clients to their expanding base of advisors, including the use of custodial referrals, Centers of Influence, and digital marketing to maintain their organic growth momentum.

We also talk about how, while assessing his own happiness and fulfillment, Seth created an 11-dimension happiness framework that guides the firm’s Inspired Living Coaching Services to provide more holistic wealth discussions for clients of the firm; how Seth and his firm developed three key programs within their Inspired Living framework, including Inspired Talks with inspirational speakers, Wisdom Shares with virtual Zoom groups, and Conversation Circles about life goals; and the way Seth’s firm has segmented its clients into four tiers – Emerging for under $1M, Integrated up to $5M, Private Client up to $20M, and Family Office for households with over $20M – and varies the services that it offers to each.

And be certain to listen to the end, where Seth shares how the humbling experience of consecutive life challenges of his own divorce, health, and financial issues, and separating from his former accounting firm, all helped him grow and gain his own sense of resiliency; why Seth believes that forming referral partnerships (from ‘traditional’ Centers Of Influence like attorneys and accountants to non-traditional options like P&C insurance agents, bill-paying services, and even life coaches and fitness trainers) are the key for advisors to grow, and how Seth’s own journey as a CEO was transformed when he transitioned away from being the ‘buttoned-up’ financial professional that he thought he was supposed to be early on in his career and now just shows his own authenticity and lets himself be more vulnerable.

So whether you’re interested in learning about how Seth leverages not only assets, but also mergers and acquisitions to acquire top talent, how Seth’s programs give his clients a deeper, more holistic approach to their wealth, or how Seth connects with traditional and non-traditional referral options to allow his advisors to spend more time on client relationships rather than prospecting, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Seth Streeter.

Choosing The ‘Best’ Path To Meet The Experience Requirement For CFP Certification

May 30, 2022 07:02 am 1 Comment CATEGORY: Personal/Career Development

Many aspiring and current financial advisors pursue the Certified Financial Planner (CFP) certification for its career-enhancing benefits and the credibility it provides to prospects and clients. Because the CFP mark demonstrates to consumers that an advisor has a baseline of competence and ethical behavior, obtaining CFP certification entails a rigorous process to help ensure that only qualified individuals can hold themselves out as CFP professionals. In addition to Education, Exam, and Ethics requirements, aspiring CFP professionals must also complete an Experience requirement, which helps prepare them to provide personal financial planning services to clients. This requirement can be fulfilled using 1 of 2 pathways: the 6,000-hour Standard Pathway or the 4,000-hour Apprenticeship Pathway.

The more flexible option for candidates to complete the Experience requirement is the Standard Pathway, which involves a 2-part requirement: 1) the candidate’s experience must fall within 1 or more of the 7 primary elements of the personal financial planning process. and 2) it must involve at least 1 or more of 5 specified types of experience (e.g., personal delivery to individual clients or direct or indirect support of individual clients).

While it takes fewer hours to complete, the Apprenticeship Pathway has much more stringent experience requirements: qualifying experience must include all 7 of the elements of the personal financial planning process, all the hours must be delivered by personally engaging with individual clients, and all hours must be completed under the direct supervision of a CFP professional who will verify and attest to the candidate’s experience.

Given that aspiring CFP professionals come from varied backgrounds, there are a wide range of opportunities available for candidates to fulfill the Experience requirement (particularly using the Standard Pathway). For example, those with previous experience related to financial planning can report this experience if it was gained within 10 years prior to passing the CFP exam. For those without enough previous experience to fulfill the requirement, working in a full-time position (whether at an established firm or by starting one’s own firm) is the fastest way to complete sufficient hours for the requirement. And those who are unable to commit to a full-time position can seek out other opportunities, such as a part-time (virtual) paraplanner position or pro bono planning, that can not only expose the aspiring planner to a range of experiences, but also give them a head start on experience hours if they decide later to move into a full-time position.

Ultimately, the key point is that there are many ways to fulfill the Experience requirement for CFP certification and the best way to do so will depend on a given individual’s previous experience, career aspirations, and current employment status. By creating a plan that not only fulfills the requirement, but also develops the range of skills needed to be a successful planner, an aspiring CFP professional can start their career on a more solid footing and develop the needed skills to better serve their future clients!

Weekend Reading For Financial Planners (May 28-29)

May 27, 2022 02:04 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 an advisory firm owner has filed a lawsuit against his former employer (RIA giant Creative Planning), alleging that the firm coordinated with several of the largest RIA custodians to limit his access to their custodial platforms for his new firm, and that their lucrative retail client referral programs are similarly being coordinated amongst a subset of (primarily large) firms that are willing to put their clients into products that generate the custodians more revenue. While the allegations have yet to be adjudicated (and the defendants vigorously deny the claims), the situation highlights both the often complicated and messy divorces that occur when an advisor leaves to start their own firm, and casts a new light on questions of how RIA custodians actually decide when to allow an advisor breaking away from an RIA to start their own on the platform, and the terms under which firms get access to the custodians’ client referral programs.

Also in industry news this week:

Debate is expected to begin soon on a bill that would extend the solvency of the Social Security trust fund by subjecting wages over $400,000 to the payroll tax
A recent study shows that while most advisor social media posts are educational or branding-related, the posts that actually generate the most engagement are those in which the advisor takes a personal stance or shares more of their personal lifestyle

From there, we have several articles on the current state of financial markets:

The four different types of bear markets and how recessions often drive the length and depth of stock market downturns
Why implementing an investment plan can often introduce absolute and relative risks that can draw clients' attention away from their long-term goals
Why putting the current market drawdown into historical perspective can help clients understand that downturns are normal and to be expected

We also have a number of articles on the competition for advisor talent:

How Fidelity’s hiring spree reflects a turn toward human-provided advice and could make the hiring environment more challenging for RIAs looking to hire their own talent
Ally Invest is the latest brokerage firm to begin offering human-provided advice, bringing in advisors and attracting clients with moderate levels of assets
Why advisory firm executives attending the recent DeVoe Elevate conference appeared to be more concerned with simply attracting and retaining talent than striking new deals

We wrap up with three final articles, all about recent changes to the workplace:

How companies can generate innovative ideas while working in a virtual environment
How firms have changed the design of their conference rooms during the pandemic to create more comfortable and functional spaces
How company team retreats have changed during the pandemic and why both in-person and virtual options are viable

Enjoy the ‘light’ reading!

How A Free Financial Plan Retains More Perceived Value Than An Average Priced One

May 25, 2022 07:05 am 3 Comments CATEGORY: Financial Psychology

Whether it is a free sample in the grocery store (where the store hopes the sample convinces the shopper to purchase the item), or ‘Freemium’ software (where the developer hopes that consumers using a more basic version of their software will lead them to purchase an enhanced version), consumers are used to being offered free goods as part a company’s marketing process. But offering free financial plans remains controversial in the financial advisory community. Even if some prospects could become clients as a result of receiving the free plan, some advisors ask, might offering plans for free reduce the perceived value of financial planning in consumers’ minds?

A research study conducted by Kitces.com Lead Researcher Derek Tharp suggests that offering an initial financial plan for free doesn’t reduce the value of the plan in consumers’ minds. Furthermore, not only may it be the case that free financial plans don’t diminish the perceived value of financial plan, but offering paid one-time plans at typical fees charged by advisors could actually decrease the perceived value of ongoing planning relative to offering free initial plans! In an experimental study, participants were given a scenario in which they received a $1 million windfall inheritance and were seeking out an advisor to help them manage it. The participants were divided into four treatment groups based on the cost of their initial financial plan: either free, $1,000, $2,000, or $3,000. They were told that the advisor’s planning strategies would save them more than $500,000 in taxes during the next 30 years, and were then asked what they thought a reasonable annual fee would be to pay for ongoing services from the advisor.

While some observers might expect that participants in the experiment who were told the initial plan was free would pay less for ongoing services, those who were told they would receive a free plan suggested the highest price of all treatment groups! One possible explanation for this effect is that the price of the initial standalone plan set expectations for the participants of the value of ongoing services. In the case of the experiment, those who were assigned a non-free price for the initial plans perhaps used their respective prices as ‘anchors’ when estimating the value of ongoing planning, using those prices as reference points when considering what ongoing fees would be reasonable, whereas those who were to be given the free plan did not have any such reference points to work from (and perhaps were compelled to focus more on other details, such as the given amount of projected tax savings).

Ultimately, the key point is that goods or services that are ‘free’ are not necessarily perceived as having lesser value; on the contrary, research suggests that clients might be more willing to accept higher annual fees if they are provided with a free initial plan rather than one with a price significantly less than the advisor’s ongoing fees. Which means that advisors may want to consider either increasing their fees for initial plans (raising client expectations of the cost of ongoing planning), or using a model with a free initial plan that helps the client better understand the value of the advisor’s services and, at the same time, avoids an ‘anchor’ price that weighs down their expectations of the advisor’s fees!

#FA Success Ep 282: From Executive Assistant To COO Scaling A $4B Advisory Firm, With Allison Felix

May 24, 2022 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Allison Felix Podcast Featured Image FAS

Welcome back to the 282nd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Allison Felix. Allison is a managing partner and COO for Cassaday & Company, a hybrid advisory firm based in McLean, Virginia, that oversees more than $4 billion in assets for nearly 2,500 client households.

What's unique about Allison, though, is how she built and then leveraged her extensive knowledge of her firm and its operations to make the journey from an executive assistant all the way to COO, helping the firm scale to 3X its size over the past decade alone, from 25 employees to 75 and on its path to over $4 billion in AUM.

In this episode, we talk in-depth about how losing a key player in the firm’s succession plan led to a restructuring and Allison being chosen as the firm’s first COO, how Cassaday & Company developed its unique compensation structure that combines a low base salary with a percentage of the firm's top-line revenue for every employee to motivate all of them to reinvest in the success of the firm, and how Allison’s firm has propelled its growth with almost weekly seminars that were honed by hiring coaches to give constructive criticism and even recording the seminars to have all team members give critical feedback for improvement.

We also talk about how Allison applies the knowledge she gained through her years as an executive assistant (where she was not only responsible for bringing the CEO coffee but more importantly learned to wear multiple hats from HR and operations to billing) to better herself as a COO, why Allison’s firm has been expanding its service offerings to include estate planning, tax planning, and a life coach, to create a higher-touch service for the firm’s clients, and why and how last year Cassaday & Company ultimately decided to partner with Focus Financial to facilitate their firm’s succession plan (after the firm became too big for internal successors to buy it out) while still allowing all the key team members to continue in their current roles serving clients.

And be certain to listen to the end, where Allison shares how even though she has worked hard to scale and grow her firm, she is still surprised at its rapid growth despite challenges in recent years due to COVID, why Allison believes it’s important for future generations (especially young women) to understand the wealth of opportunities in financial planning as there is more to the industry than just talking numbers with clients, and why Allison feels stepping into the role of COO was pivotal, not only to help reinforce the confidence she had in herself, but to create representation for women at her firm and in the financial industry.

So whether you’re interested in learning about how Allison leveraged her years of operations experience in her transition into her firm’s COO, how Allison developed and outlined Cassaday & Company’s unique compensation structure, or why Allison felt it was important to partner with Focus Financial to ensure the future of her firm is secure, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Allison Felix.

The 3 Domains Of Financial Advisor Value: Why Human Advisors Continue To Thrive Amid Competition From Robos

May 23, 2022 07:01 am 0 Comments CATEGORY: Practice Management

The arrival of robo-advisors into the financial technology landscape more than a decade ago led many to believe that the combination of (relatively) low fees and digital presence offered by robos would entice many consumers to eschew human advisors and turn to these automated tools. However, since the introduction of robo-advisor technology, client behavior has suggested that these original predictions of robo dominance and the downfall of human advisors have not been borne out.

A new 2022 Vanguard Group report by Paulo Costa and Jane Henshaw helps explain why this turned out to be the case. By surveying households (with at least $100,000 in investable assets) that use human advisors, robo-advisors, or both, the authors found that clients of human advisors were not only more satisfied with the overall service they receive compared to clients of robo-advisors, but also that these clients perceive their human advisors to offer more value in three specific dimensions: portfolio value (i.e., optimal portfolio construction and client risk-taking), financial value (i.e., attainment of financial goals), and emotional value (i.e., financial peace of mind).

While clients of human advisors reported more perceived value from their advisors than did clients of robo-advisors in these areas, the Vanguard study also found that clients do have a preference for human advisors and digital tools to handle different aspects of financial advising. For example, the highest-ranked functions where clients preferred human advisors included feeling understood, having a connection/relationship, working in their best interests, and being empathetic to the client’s needs. On the other end of the spectrum, the areas where clients preferred digital tools included simplifying their portfolio for organized, cohesive management; diversifying their investments; managing capital gains and taxes effectively; and preventing details from being overlooked. Notably, these results were similar across client demographics, including age, wealth, and whether they currently use a human or robo-advisor.

These results suggest that human advisors who recognize and focus on the areas that clients want an actual person to handle – while potentially outsourcing other tasks that clients prefer to be handled through digital tools – could help strengthen their relationships with current clients (by allowing them to focus on the specific areas that involve connecting with clients) and promote firm growth into the future (by freeing up their time to work on business development). In fact, the study found that clients of robo-advisors are quite willing to work with a human advisor in the future, with 88% of these respondents saying they would be willing to do so (while only 4% of clients of human advisors said they would switch to a robo-advisor if they had to leave their current advisor).

Ultimately, the key point is that the Vanguard study shows not only that consumers continue to seek out human advisors, but also that those who do become clients feel that they receive high levels of service. Further, the results suggest that human advisors who focus on the areas where human support is most valued (including active listening and understanding their goals) while leveraging digital tools for other tasks are likely to attract more clients, including those who may currently be using a robo-advisor!