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The Latest In Financial #AdvisorTech (August 2020)

August 3, 2020 07:05 am 2 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the August 2020 issue of the Latest News in Financial #AdvisorTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors!

This month's edition welcomes new co-author (and AdvisorTech guru) Craig Iskowitz, and kicks off with a look at the emergence of “AdvisorTech” as a financial technology software category unto itself. As the reality is that while “FinTech” has been on the venture capital and private equity map for nearly a decade now, the focus of FinTech continues to be payments, banking, blockchain, and a number of other applications that may be of great interest for the broader financial services world and their direct-to-consumer marketplace opportunities… but little relevance to financial advisors, with our unique (and uniquely fractured) business landscape, B2B (and B2B2C) provider needs, and specialized regulatory and integration needs. And as financial advisors increasingly shift away from the distribution of financial products and into the world of financial advice itself, “WealthTech” (and its investment-centric) focus is arguably still too narrow to capture the needs of the financial advisor ecosystem. And so, it’s time to recognize AdvisorTech as a category unto itself… a subset of the broader world of FinTech, but itself a label for the broader needs of financial advisors than WealthTech, AdviceTech, or RegTech alone can capture!

From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:

JD Power issues the results of their annual survey, finding that more than 90% of brokers deem their technology platforms as essential, but fewer than half find their broker-dealer’s own technology solutions to be “very valuable” in their businesses!
Envestnet integrates with FIX Flyer to expand individual bond trading capabilities for large RIAs
Refinitiv acquires Advisor Software to expand its rebalancing and portfolio management capabilities to compete for enterprise advisor platforms
With traditional industry conferences on hold, the AdvisorTech community self-organizes its own AdviceTech.LIVE virtual conference!

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including Knudge launching a live beta to help financial advisors support their clients to implement ongoing financial planning recommendations, MoneyGuide launches RIA Planning Analytics but may have missed the mark on supporting relationship-based ongoing financial planning, AdvicePay integrates with MoneyGuide as interest continues to grow in offering (and generating advisor revenue from) fee-for-service financial planning, Holistiplan launches new tax planning tools as advisors focus more on the risk of rising tax rates, and Smarsh launches a new archiving solution for Zoom meetings… and in the process, highlights how the more digital advisor communications become, the more compliance expects to capture, archive, and review everything advisors communicate to their clients.

And be certain to read to the end, where we have provided an update to our popular new “Financial AdvisorTech Solutions Map” as well!

I hope you're continuing to find this column on financial advisor technology to be helpful! Please share your comments at the end and let me know what you think!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!

Weekend Reading for Financial Planners (August 1-2)

July 31, 2020 02:57 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the latest on the HEALS Act, the proposed legislation from Senate Republicans that may become the 5th economic stimulus bill in response to the coronavirus pandemic but is currently still mired in debate, not only between Republicans and Democrats, but also within the Republican party, and raising questions of how quickly the trillion-dollar stimulus will actually get passed and what form it will end out taking.

Also in the news this week was an announcement by the Democrats of their official "Party Platform" should they take leadership in Washington, which for financial advisors includes a notable provision of lifting the standards for all financial advisors, effectively signaling that if the Democrats win in November, there may be a new movement in 2021 to replace Regulation Best Interest and/or the Department of Labor's proposed Reg-BI-coordinating changes and implement a more full-force fiduciary obligation for all investment advisers and broker-dealers.

From there, we have a number of articles about referral marketing, including the recognition that so few consumers are unhappy with their advisors that just waiting for prospects to ask an existing client "Do you know a good advisor?" (in the hopes of being referred by your client in the moment) probably isn't enough to drive referrals, how even great advisors fail to get referrals because they're not specific enough about the problems they solve, why advisors also often fail to get referrals because existing clients don't know who to watch for that would be appropriate to refer to their advisor (i.e., a lack of clear positioning in the marketplace), and how to increase referrals by (re-)focusing not on getting more referrals from everyone but just a few people who are most likely and interested to refer and may become 'power-referrers' for the advisor.

We also have several articles on insurance, including a look at how advisors and their clients are making health insurance decisions in the face of pandemic layoffs (including how to potentially 'game' the COBRA system with a newly-extended 120-day window to apply for coverage... but only if and when it's really needed?), how the pandemic may ironically be improving the financial health of long-term care insurers by sadly cutting claims short (but at least potentially stabilizing pricing in the process), and the rising concerns of how indexed universal life insurance is being illustrated (or potentially, over-illustrated) given the increased risk that returns for the coming decade will not be nearly as rosy as they were for the past 10 years.

We wrap up with three interesting articles, all around the theme of making slow but steady incremental improvements for ourselves: the first explores how the key to change is not about whether we engage in (new) activities every day or get the desired outcomes but whether we can honestly say we gave it our "best effort" (which creates the kind of 'focused practice' that ultimately leads to results); the second looks at the behaviors that best provide us resiliency in the face of the inevitable life setbacks that may come as we try to achieve our goals; and the last provides a powerful reminder that in the end, long-term success isn't just about going through the right routines but engaging in "practice" that helps us find and regain the focus we need to succeed (while recognizing that, as with any effort that requires practice, it will take time, and setbacks along the way and disruptions to the typical routine are normal and to be expected!).

Enjoy the 'light' reading!

Kitces & Carl Ep 39: Avoid Writer’s Block With Your Content Marketing By (Literally) Talking It Through

July 30, 2020 07:21 am 1 Comment CATEGORY: Kitces & Carl Podcast

Over the past several years, financial advisors have increasingly utilized digital channels as a part of their overall marketing strategies, as the more traditional tactics for generating new leads have become less effective (and especially in recent months amid the ongoing COVID pandemic). Of course, a key ingredient of digital marketing is content (whether it be a book, podcast, blog, video, or any number of content ‘artifacts’). For many financial advisors, however, content creation isn’t something that comes as naturally as, say, comparing decumulation strategies or analyzing Monte Carlo simulations, and it’s easy to hit a roadblock when staring at a blank screen.

In our 39th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards share some actionable steps that advisors can take to create content for digital marketing that can then be used to establish the advisor’s expertise with their existing (or prospective clients). Because the reality is that there are far more tools available for creating all sorts of content in a myriad of formats and packaging beyond simply typing out words one paragraph at a time into a long-form article.

As a starting point, it’s helpful to actively observe internal sticking points that may slow down the advisor’s capacity to create content, and then consciously turn them into ‘features’ instead. For instance, don’t have the capacity or desire to deal with the logistics of booking guests to have on a podcast? Decide instead to produce a short podcast without guests where the primary feature is the listener’s opportunity to hear from the advisor directly. Use the memo feature on your phone to remember stuff or take notes as someone who doesn’t like to write? Upload them to SoundCloud, and share them on social media or with a client newsletter as an audio recording that clients and prospects can listen to without needing to read it!

Another tried and true method for effective content creation is to simply keep track of the questions that clients already ask, and turning the answers into something (appropriately anonymized for the particulars of the situation) to share out with the broader base of clients and prospects. And (importantly) it doesn’t have to start as something that is written down. Instead, it can start as a spoken response, that is then transcribed and edited using any number of tools, or even produced as a podcast... or both! In fact, there are several services where freelance creatives are available to take raw content (the advisor’s expertise answering common client questions) and turn it into polished material, that can then be repurposed and distributed on different platforms.

Because the simple fact is that, for advisors who have decided that they have expertise that they feel would help a broader audience or a perspective on an issue that they want to share, there are a few relatively simple steps to take – track notable ideas and observations, block out just a little time each week to review those notes, record observations, and send that basic commentary along to a freelancer – to start regularly creating content. Because, after all, while many advisors get writer’s block, few get talker’s block!

Successor Beneficiary RMD Rules After The Death Of The Original Inherited Retirement Account’s Primary Beneficiary

July 29, 2020 07:33 am 11 Comments CATEGORY: Retirement Planning

In December of 2019, Congress passed the Setting Every Community Up For Retirement Enhancement (SECURE) Act, introducing substantial updates to the laws governing retirement accounts. Changes to post-death distribution rules resulted in the death of the ‘stretch’ provision for certain (most) non-spouse Designated Beneficiaries of inherited retirement accounts and introduced a new “10-Year Rule” for account distributions, which have important implications, not just for the Designated Beneficiaries of those retirement accounts, but also for their Successor Beneficiaries as well.

Prior to the passage of the SECURE Act, Designated Beneficiaries of retirement accounts were allowed to ‘stretch’ Required Minimum Distributions (RMDs) from the account over their own life expectancies. However, the SECURE Act eliminated the stretch option for most non-spouse Designated Beneficiaries, and instead, requires the account to be emptied by the end of the 10^th year following the year of the original owner’s death. The SECURE Act, however, also created a new category of beneficiaries – Eligible Designated Beneficiaries – that is still permitted to use the ‘stretch’ provision.

Any of these beneficiaries, of course, could, themselves, die prior to emptying their inherited retirement accounts, leaving the balance to a Successor Beneficiary. Accordingly, there are now three potential scenarios for Successor Beneficiaries of inherited retirement accounts: 1) Successor Beneficiaries of post-SECURE-Act-Eligible Designated Beneficiaries, 2) Successor Beneficiaries of pre-SECURE Act Designated Beneficiaries, and 3) Successor Beneficiaries of post-SECURE Act Non-Eligible Designated Beneficiaries.

In scenarios 1) and 2), Successor Beneficiaries will generally be subject to the full 10-Year Rule. One exception to this is if the post-SECURE Act Eligible Designated Beneficiary (or pre-SECURE Act Designated Beneficiary) is the surviving spouse of the original account owner and dies before the decedent would have been required to begin taking RMDs. In such cases, upon death, they are no longer be considered a “Designated Beneficiary” of the account, but instead, are treated as if they had been the original account owner. Thus, the Successor Beneficiary wouldn’t be treated as a Successor Beneficiary and would not be automatically subject to the 10-Year Rule (i.e., if they were able to qualify as an Eligible Designated Beneficiary, they could qualify to take advantage of the ‘stretch’ provision).

For scenario 3, Successor Beneficiaries who inherit from post-SECURE Act Non-Eligible Designated Beneficiaries are, like other Successor Beneficiaries, subject to the 10-Year Rule; however, unlike other Success Beneficiaries, they will not have their ‘own’ 10-Year timeframe. Instead, their distribution period is a continuation of the 10-Year period that started when the Successor Beneficiary inherited the account.

Although the SECURE Act may negatively impact some Successor Beneficiaries by limiting the time they are allowed to prolong their Required Minimum Distributions, some Successor Beneficiaries may actually be able to benefit from the Act’s changes. In some instances, the number of years a Successor Beneficiary may have to empty their inherited retirement account may be extended, while in other instances, they may simply have a similar amount of time, but more flexibility than was previously allowed prior to the passage of the SECURE Act.

For example, for a Designated Beneficiary who ‘stretched’ RMDs and lives for a long time yet still dies with a substantial account balance, their Successor Beneficiary may have been left with only a few short years to distribute the remaining assets had it been under pre-SECURE Act rules (as they would have been required to use the original beneficiary’s remaining Single Life Expectancy). However, the 10-Year Rule of the SECURE Act now allows these Successor Beneficiaries up to 10 full years to distribute their accounts.

Ultimately, the key point is that while most of the attention on the SECURE Act’s impact on retirement account rules has focused on Primary Beneficiaries, the reality is that Successor Beneficiaries are impacted by the SECURE Act changes as well. While Successor Beneficiaries who inherit accounts from beneficiaries taking RMDs using the ‘stretch’ provision will get the 10-Year Rule (from scratch), some Successor Beneficiaries (i.e., post-SECURE Act beneficiaries of Non-Eligible Designated Beneficiaries) will ‘only’ be able to step into the initial beneficiary’s shoes, and will have to empty the balance of the IRA by the end of the 10-year period established by the original 10-year rule (i.e., the Non-Eligible Designated Beneficiary’s 10-year window). For both the original account beneficiary and their own named Successor Beneficiaries, the SECURE Act has created changes and potential opportunities that impact them both.

#FASuccess Ep 187: Adopting Alternative Fee Models To Expand Your Clientele And Change The Complexion Of Wealth, with Emlen Miles-Mattingly

July 28, 2020 07:03 am 3 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 187th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Emlen Miles-Mattingly. Emlen is the founder of Gen Next Wealth, an independent RIA based in Madera, California, that provides wealth management for 70 client households. What's unique about Emlen, though, is the way he's decided to focus his advisory firm on working with underserved communities of color, as an advisor of color himself, and in the process is moving his advisory firm business model away from assets under management and toward a monthly subscription model that allows him to expand who he serves, all in pursuit of Emlen's goal to change the complexion of wealth.

In this episode, we talk in-depth about how Emlen structures his monthly subscription business model. How he started out charging $100 a month but quickly raised it to $300 a month, how he developed bronze, silver, and gold tiers that all provide a baseline of advice but vary in the depth of their tax, insurance, and estate implementation support, why Emlen decided to include filing annual tax returns for clients in his ongoing advice fee but then outsourced the tax preparation work itself, and how the change in business model is now accelerating his growth path.

We also talk about Emlen's actual financial planning process itself. The key question he asks at the beginning of every introductory meeting to support his sales process, the technology he uses to automate his new client onboarding process, and the outsourcing provider he hired to help build it, why his initial planning process starts not with retirement projections but analysis of the client's monthly household cash flow and budget, and the ongoing client service calendar that Emlen is developing to support clients year-round and earn the ongoing monthly fees he charges.

And be certain to listen to the end, where Emlen shares the real-world challenges of trying to succeed as an advisor of color serving communities of color. The ups and downs of trying to build your career in the early years and find the personal confidence to charge what you're really worth, and the importance of finding a support network of advisor peers to get through the inevitable ups and downs of building your firm, and in particular, where to look as an advisor of color.

Developing Employee Career Tracks As An Alternative To Performance Reviews For Better Team Improvement

July 27, 2020 07:06 am 1 Comment CATEGORY: Practice Management

In the early days of the financial advice industry, an advisor’s career track was relatively straightforward. Either they met their insurance policy or investment product sales quota to qualify their contract, or they found some other way to make a living. However, amid the ongoing shift towards the recurring revenue AUM model, and the concomitant rising need for ongoing client advice and servicing, various new roles within firms began to emerge, including client service associates, paraplanners, and (not-responsible-for-business-development) lead advisors.

Along the way, advisory firms generally followed a traditional “performance review” model for determining why and when this new crop of employee advisor roles would progress (or not) on to the next level. Yet in practice, most of corporate America has shifted away from this traditional performance review approach, and towards leadership-based programs to develop and retain talent… while many advisory firms remain mired in the now-outdated management-heavy performance model.

In this guest post, Angie Herbers – Chief Executive and Senior Consultant at Herbers & Company, an independent management and growth consultancy for financial advisory firms – explains why advisory firms still favor the performance model (they’re in the advice business after all, and tend to tell employees what they should be doing instead of providing training, development, and leadership), and how those firms can instead create a stronger culture and ensure that employees are collectively striving towards the same end-goal with a different approach to employee management.

The key distinction is that there is a fine line between telling an employee what they should be doing (and how), and influencing them to go in a direction that helps advance everyone involved. And a first step towards aligning expectations with a more influencing-oriented approach is by developing well-defined career tracks that show (rather than tell) firm employees the path that’s ahead of them… so they know where they’re expected to go (and can see what it takes to get there)!

In the process, though, it’s key to avoid creating a one-size-fits-all, linear path that ignores employees’ strengths and training. Instead, advisory firm owners should recognize at least four baseline career tracks that emerge in a prototypical independent advisory firm. Each track may cater to a particular employee’s strengths and goals, including Financial Planning (for big-picture, strategic thinkers), Advisory (for relationship-driven individuals that like to make things happen), Investment Management (for aspiring CFAs who like research), and Client Services And Operations (for organizers who love to serve others).

Ultimately, implementing a variety of career tracks will provide employees clear paths to travel along as they progress through the firm (and give managers a roadmap they can use to proactively lead their teams rather than reactively telling them how to improve their performance). But first, the leadership team must also have the right mindset, expectations, and plan in place. Once that’s done, and career tracks are established, advisory firms can foster continuous communication and develop talent far more efficiently, by showing them where they can go and letting them step up to the desired challenge and opportunity.

Weekend Reading for Financial Planners (July 25-26)

July 24, 2020 03:00 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the latest on the prospective fifth round of economic stimulus in response to the coronavirus pandemic, with a formal legislative proposal delayed until next week, but the details starting to take shape, including another round of stimulus checks (similar to the March stimulus), and an extension for unemployment benefits (but likely at a lower level than the prior), while a proposed payroll tax cut through the end of the year appears to be off the table... with more details anticipated early next week as Congress aims to pass something by the end of next week (July 31st, when Congress goes back out on its August recess, and the current additional unemployment benefits would otherwise expire).

From there, we have a number of articles about the growing focus on business continuity for financial advisors, from a recent NASAA study raising the question of whether succession plans may need to become mandatory at some point as advisors age (and cognitive impairment and diminished mental capacity becomes a risk not just for clients, but for older advisors themselves), the rise of business continuity planning as a top concern for advisory firms themselves (in light of the pandemic), and the rise of "Sell And Stay" transactions where advisory firms choose to sell and harvest the economic value of their businesses, but then remain as employees with the acquirer for several years thereafter (decoupling the decision of when to sell and no longer have responsibility for business continuity, from the actual decision to exit the business and retire altogether).

We also have several articles on cash flow and budgeting, including a look at the "Values-Based" approach to budgeting, how the biggest driver of "super savers" is not scrimping on avocado toast and lattes but driven primarily by decisions about housing and automobiles, how the pandemics curtailment of travel may force major changes in 'premium' credit cards that offer no-longer-as-valued travel rewards, why having a "finhobby" to take your mind off financial stresses can help to come up with financial solutions, and why a growth mindset really can help one "think" their way to financial success.

We wrap up with three interesting articles, all around the theme of navigating one's own career to success: the first explores how, despite the growing focus in modern society on the value of entrepreneurship, we may be underrating the value (and economic wealth-building potential) of the "traditional" career; the second explores the rise of coaching as a way to better navigate one's career transitions (whether within their firm or when looking to make a change) to get the guidance needed to really find an ideal role and path for the future; and the last explores the "canvas strategy" for career-building, where the focus is simply on doing the work that has positive impact regardless of who gets the credit... recognizing that in the long run, deferring credit for one's success often just builds compounding interest that makes it even more rewarding (and in the meantime, helping others along the way of your career just makes you indispensable in your current job, which isn't a bad place to be in the current economic environment!).

Enjoy the 'light' reading!

50 Portfolio Management Software Solutions For Advisors Can’t All Survive

July 23, 2020 07:18 am 13 Comments CATEGORY: Technology & Advisor FinTech

The total addressable marketplace for financial advisor technology is limited, with a ‘mere’ few hundred thousand financial advisors (as contrasted with millions upon millions of potential users with direct-to-consumer software). And while at advisor (and especially enterprise) prices, that is still a healthy marketplace for software, it is further limited by the fact that not all advisory firms do the same thing, and the addressable market for any particular software solution may be even more limited (and is further complicated by the fact that overlapping advisor licenses made it difficult to count the exact market opportunity in the first place!). A matter that is both simplified, but also further limited, by the ongoing trend towards industry consolidation, that is splitting the market between a few behemoth wealth management firms (meaning larger but fewer enterprise opportunities), and a flood of small firms (who aren’t necessarily in the market for sophisticated, complex FinTech offerings, and can be expensive and challenging to reach from a software distribution perspective).

Yet despite the limitations in market opportunity, certain categories in the FinTech landscape – in particular, portfolio management systems – continue to grow each year, as more and more competing vendors vie to provide complete end-to-end solutions for (a not necessarily growing number of) advisory firms. And while this trend is certainly a natural stage in any maturing market, the presence of so many portfolio management systems that aim to support almost every step of the investment management process is resulting in an overwhelming array of choices for advisors… none of which are able to really differentiate themselves beyond a variety of increasingly bloated and often cumbersome user experiences. Especially when advisory firms can simply use the growing breadth of API integrations to cobble together their own “best-of-breed” solution anyway.

On the other hand, for many firms, a less-than-perfect all-in-one solution can still be preferable to cobbling together a smorgasbord of what may be “best-of-breed” solutions to address each stage of the portfolio management process, which in practice almost never results in the desired seamless workflow that really passes along relevant data and tasks through the various steps. Instead, firms – especially enterprises – do seem to be shifting towards all-in-one offerings, opting for the “one throat to choke” solution that (at the very least) makes it easier for them to figure out who to blame when something breaks, and leaving one vendor accountable instead of leaving it up to the advisor to manage whatever problems that may arise.

Still, though, the problem remains that more and more competition amongst both best-of-breed and all-in-one portfolio management solutions has left us with a landscape that is crowded with a whopping 50 portfolio management systems for advisory firms to choose from. And with a limited number of opportunities for vendors to target (especially as various custodians develop their own in-house portfolio solutions, such as Schwab’s Portfolio Connect and Fidelity’s WealthScape), conditions are ripe for smaller vendors to either team up, or look for potential buyers, rather than getting squeezed out of business. The current crisis created by the pandemic and the resulting economic downturn will likely only accelerate this process.

Which, at the end of the day, could result in a smaller playing field of portfolio management systems for advisors, and a higher hurdle for any new offerings that will have an even harder time trying to differentiate themselves. Because in the end, advisor choice is good… but do we really need 50 different portfolio management systems today?

Navigating Income Harvesting Strategies: Harvesting (0%) Capital Gains Vs Partial Roth Conversions

July 22, 2020 07:01 am 18 Comments CATEGORY: Retirement Planning

For many high-income clients, financial advisors recommend deferring income as a strategy to mitigate taxes, especially when the client is in a high tax bracket and expects to be in a lower tax bracket in the future as income levels decline (e.g., after retirement). However, in the opposite circumstance, when current taxable income is lower than anticipated future income (e.g., because the client is building substantial wealth), it can be beneficial instead to harvest income instead, take advantage of the taxpayer’s lower tax bracket, and limit the amount of income deferred into the future which would presumably be taxed at a higher rate anyway (as the more income that is deferred to the future, the greater the risk of bumping up the taxpayer into an even higher tax bracket as a result!). But how does the financial advisor choose the best strategy when it comes to avoiding too much tax deferral and harvesting income instead, especially when there are opportunities to harvest both ordinary income (e.g., Roth conversions) and also capital gains (at their own preferential rates and tax bracket thresholds)?

Advisors choosing between these methods – and whether to harvest ordinary or capital gains income – should consider the tax rate brackets associated with each income type to assess how to most effectively minimize overall tax liability (both now and in the future), as well as the “Capital Gains Bump Zone” – where the marginal tax rate on ordinary income can be driven substantially higher by indirectly driving capital gains (along with income generated from qualified dividends) into higher capital gains brackets as well. Because capital gains may be harvested at 0% for those in the bottom two tax brackets… but only if other ordinary income doesn’t ‘crowd out’ those lower tax brackets first!

Accordingly, financial advisors can design optimal income harvesting strategies for their clients by considering when it’s better to harvest ordinary income at its brackets, versus capital gains at those brackets, depending on the relative outlook for each in the future. For instance, those in the 0% ordinary income tax bracket can benefit more from harvesting additional ordinary income (versus capital gains) at 0%, as the jump to the next ordinary income tax bracket (once income turns from negative to positive) is significant. However, for clients in the 10% or 12% ordinary tax bracket (but still in the 0% capital gains tax bracket), it’s often better to harvest capital gains income (versus ordinary income) to reduce the impact of future capital gains income taxed at the 15% capital gains rate (and thus minimizing a 15% increase in capital gain taxation from 0%, compared to a 10% increase, from 12% to 22%, in ordinary income tax). In other words, the choice to harvest either ordinary or capital gains income will largely depend on how that additional harvested income will impact future income tax rates (for that particular type of income, given that individual’s own income growth trajectory).

However, the changes in ordinary and capital gains tax brackets as income itself rises (if only through the impact of deferring that income in the first place) are not the only factors to consider when deciding whether to harvest income, though, as there are other mitigating factors that will impact a taxpayer’s overall tax liability. These include the taxation of Social Security benefits, which phases in as income levels rise (such that harvesting income can actually trigger taxation of these benefits); Medicare Part B and Part D Premium Surcharges, which increase with higher income levels; and the Net Investment Income Tax (NIIT), which increases part of the 15% and the entire 20% capital gains tax brackets by 3.8% and applies not just to capital gains income but also to interest and dividend income as well (except for IRA withdrawals, including those carried out for Roth conversions, which are not subject to NIIT). Financial advisors should also consider the impact of state income taxes (especially if the client is planning to relocate to a different state in the future), and charitable contributions, as well as the step-up in basis of inherited assets received by beneficiaries, and even the beneficiaries’ own tax rates.

Ultimately, the key point is that financial advisors whose clients have lower tax rates today should be wary about deferring income at those low rates – often causing higher rates in the future – and instead can soften the impact of higher future tax rates by strategically harvesting ordinary and/or capital gain income today (with their separate tax bracket structures). However, there are several mitigating factors (such as Social Security, Medicare premiums, and the Net Investment Income Tax) that need to be considered when designing a suitable strategy for the client, and because of the unique tax rates (and bracket structures, and strategies) of ordinary income versus capital gains, it’s often necessary to navigate from year to year which is actually the ‘optimal’ strategy to pursue!

#FASuccess Ep 186: Cost-Effective Seminar Marketing By Leveraging Facebook Digital Ads To Fill Local Events, with Samantha Bezar

July 21, 2020 07:05 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 186th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Samantha Bezar. Samantha is the director of digital marketing for Thrive Financial Services, a hybrid RIA and insurance agency near Philadelphia generating more than $6 million of annual revenue while serving nearly 500 clients. What's unique about Samantha, though, is the way she's built a scalable marketing solution for the firm, with a combination of digital marketing and in-person events that have lifted the revenue of the firm from a few hundred thousand dollars to more than $6 million of revenue in under 3 years.

In this episode, we talk in-depth about Thrive's seminar marketing approach, why they've chosen to do education-only events and not dinner seminars, the way they initially drew participants by relying on buying third-party mailing lists but dropped their cost of client acquisition by more than half by doing their own Facebook digital marketing to fill in-person seminar events, the exact process that Thrive goes through to target their ideal prospects on Facebook, engage them to register for the seminar and confirm they actually attend, and the metrics of how a $3,000 marketing spend can turn into tens of thousands of dollars of new revenue, which just gives Thrive more money to reinvest into their marketing process to further accelerate their growth.

We also talk about how Thrive transitioned to webinar events in the face of the coronavirus pandemic, why the company still chooses to do its webinars as an in-person live stream and not just a recorded webinar or voice-over PowerPoint approach, the tools and technology that Thrive uses to deliver its webinars and handle its online registration process, and how Samantha determined that text messaging can actually be a highly effective marketing tool to ensure prospects follow through.

And be certain to listen to the end, where Samantha shares her own journey of learning digital marketing in the advisory world without a background as a financial advisor, the importance of viewing all marketing as experiments where it's okay to try something out and fail because that's the only way you find out a new approach that works, and why Samantha sees marketing automation software tools as the key to executing scalable marketing for an advisory firm in the future.