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The Latest In Financial #AdvisorTech (October 2020)

October 5, 2020 07:02 am 2 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the October 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 continues with new co-author (and AdvisorTech guru) Craig Iskowitz, along with guest contributor Kyle Van Pelt, and kicks off with the launch of eMoney Advisor’s next-generation planning tool “Project Avocado”… which as it turns out, has been pivoted into an app now dubbed “Incentive” to provide financial wellness in the 401(k) channel instead, a boon to advisors looking to compete with the growth of 401(k) providers increasingly offering financial advice to 401(k) participants (before independent advisors ever have a chance at capturing the future IRA rollover), but also a potential competitor as Fidelity signals it may begin to use eMoney’s Incentive itself as a ‘direct-to-consumer’ solution with its own 401(k) plan participants to provide them in-house Fidelity advice before they ever retire out of a Fidelity 401(k) plan to an independent advisor.

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

Facet Wealth follows the path of LearnVest as it raises a $25M Series B to pivot into the employee financial wellness channel
NextCapital raises a $30M Series D as it expands its white-labeled digital advice solution for 401(k) providers
Mega-RIA Wealth Enhancement Group grows impatient with financial planning software and builds its own “Next Best Action” solution
Pershing expands its biometric multi-factor authentication to desktop NetX360 as a passwordless future looms large

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including Envestnet’s Tamarac launching an integration with Flourish as off-platform cash becomes a hot asset class, Edward Jones builds a new matchmaking tool for consumers to differentiate amongst a sea of (its own) similar advisors, Fidelity expands its Integration XChange API capabilities as even single-custodial advisors are increasingly seeking multi-technology-vendors, YCharts expands into SMA analytics, and Executor Assist launches as a somewhat ‘low-tech’ way to compete with other high-tech estate planning tools for financial advisors.

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 (October 3-4)

October 2, 2020 02:49 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the announcement that the CFP Board is 'updating and modernizing' its governance structure as an organization, including a revision to its Board terms, and more significantly, an expansion of the Board's role in both enterprise risk management (after the CFP Board's recent PR woes with Wall Street Journal exposes) and enforcement of the new Code and Standards (a further signal the CFP Board intends to further its enforcement efforts of its new standards in the years to come, and perhaps finally begin to clean up its own bad apples?).

Also in the news this week is the announcement that the "Schwabitrade" merger has received its final clearance (from the Federal Reserve, given the sheer size of its affiliated-bank business) with the deal anticipated to close in the coming week (but will still take until as late as 2023 to actually complete the merger integration process), and the revelation that, while most RIAs have been in "wait-and-see" mode about the outcome of the merger, that mega-RIA Edelman Financial has already begun an RFP process to solicit competing RIA custodians to bid for its $30B AUM business (for which the rumored leading contender is lesser-known-but-more-tech-savvy Apex Clearing).

From there, we have several articles on recent regulatory issues for advisors, including the rise of "credential stuffing" where hackers don't try to brute force their way through advisors' passwords but instead find already-exposed passwords from other website hacks and try to use them on the advisor's business websites (which makes it all the more important to regularly change passwords, use different passwords for different websites, and/or enable multi-factor authentication so a compromised password alone is no longer enough for hackers to get through), how the rise of fee-based annuities and advisors extracting AUM fees to manage them may now be permitted by the IRS for tax purposes but could still require an additional (and often not obtained) insurance consultant's license from the state, and why advisors who are managing clients' 529 college savings accounts need to be certain to check the right boxes (literally, on Form ADV) but in most cases still should not be claiming their clients' 529 plans as part of their "Assets Under Management" for regulatory reporting purposes.

We've also included a number of articles on the theme of how advisory firms name and market themselves, including a small study that analyzed how often RIAs today are still marketing with the "fiduciary" label now that Regulation Best Interest has obscured the difference between fiduciary RIAs and broker-dealers (answer: less than 1/3rd of RIAs studied even note that they're fiduciaries on their homepage now), a second that looks at how advisory firms are overwhelmingly using 'generic' names (e.g., "Capital Management", "Wealth Management", "Partners", etc.) and may be amplifying their differentiation challenges, and some tips for advisory firms that are looking to establish a new firm name (either for the first time or as a name change) about what to consider.

We wrap up with three interesting articles, all around the theme of financial planning's pathway to finally becoming a bona fide recognized profession: the first explores what are the 'traditional' hallmarks of a distinct profession; the second examines whether the industry currently has the right regulatory and oversight structure to become a profession; and the last explores the CFP Board's recent efforts to begin developing a "roadmap to profession" for financial planning, and why it may still take a long time to truly achieve recognized "profession" status (and what we collectively must do to get there!).

Enjoy the 'light' reading!

The Biden Tax Plan: Proposed Changes And Year-End Planning Opportunities

September 30, 2020 07:02 am 34 Comments CATEGORY: Taxes

When President Donald Trump oversaw the passing of the Tax Cuts and Jobs Act (TCJA) in 2017, substantive tax reforms were made with the intention of promoting economic growth that affected corporations, small businesses, and individuals. With the upcoming election in November, though, former Vice President and Democratic presidential nominee Joe Biden has proposed a tax plan that challenges several aspects of the current system in an effort to increase Federal tax revenues and address income/wealth inequality.

One of the key features of Joe Biden’s proposed plan is for ordinary income brackets to be adjusted for individuals with annual incomes over $400,000 (although whether this threshold applies to individuals or joint filers remains unclear), increasing the top tax bracket to the pre-TCJA rate of 39.6%. The income brackets for those with annual income levels under $400,000 will remain unaffected.

Biden’s plan also includes the elimination of the Qualified Business Income (QBI) tax deduction for pass-through business owners (e.g., partnerships, LLCs, S corporations, and sole proprietors) whose individual annual income is $400,000 or more, in effect, potentially increasing the tax bracket for high earners by 10% (from 29.6% for those eligible for the QBI deduction to the proposed highest rate of 39.6%). The plan would also cap the value of the rate at which itemized deductions can be taken to 28%, which affects those in the tax brackets above 28%, as their rate to determine itemized deductions would be reduced from their income tax bracket.

Another feature of Biden’s tax plan is a flat retirement contribution credit, as determined by a specific percentage (currently anticipated to be 26%) of the contribution amount to replace deductions of those retirement account contributions. This would, in effect, lower the tax burden for taxpayers in tax brackets under the proposed set rate (incentivizing taxpayers in lower tax brackets to contribute to tax-deferred retirement accounts), while increasing it for taxpayers in brackets over the proposed rate. Financial advisors who want to prepare for an expected Biden victory might consider accelerating income and deductions into 2020 for high-income earners because, for this group, income tax rates may be higher and deductions not as favorable if the passage of Biden’s tax plan does come to fruition. Accordingly, year-end Roth conversions may be a good strategy for some high-income earners to forgo the 26% credit in the present for the benefit of tax-free distributions in the future.

Enhancements to personal income tax credits made by the proposal include a higher Child Tax Credit (increased from $2,000 for children under 17 to $3,600 for children under 6 and $3,000 for all other children under 17), Child and Dependent Care Credit (from $3,000 to $8,000 for one child, and from $6,000 to $16,000 for two or more). The First-time Homebuyer Credit would be reintroduced as a refundable and advanceable credit of up to $15,000, and a brand-new proposed Caregiver Credit would provide $5,000 for informal long-term caregivers.

Long-term capital gains and qualified dividend tax rates would increase to ordinary income tax rates for income over $1 million under the proposed Biden plan (with the 3.8% surtax on net investment income to remain in place), and 1031 Exchanges would be eliminated for taxpayers with annual income over $400,000. Some strategies to mitigate the impact of these proposed changes would be to target lower annual capital gains realized, use municipal bonds for their (largely) tax-free character, reduce investments in the portfolio that produce dividends, take advantage of the tax deferral of investment-only variable annuities (for accredited investors, Private Placement annuities can also be a useful option), and use installment sales to regulate annual income levels, keeping them under $1 million as much as possible.

Additionally, Biden’s tax plan proposes to eliminate the step-up in basis rules that currently apply to inherited assets (that are not considered Income In Respect of a Decedent), which would impact both higher- and lower-earners potentially facing a significant and problematic tax bill on inherited assets. Thus, life insurance could see renewed potential as a tool to provide liquidity and/or mitigate the burden of a high tax liability resulting from the inheritance. Alternately, a more structured sale or gifting strategy throughout the owner’s lifetime can be a good way to mitigate taxes for the beneficiary should Biden’s plan pass.

A final key feature of the proposed tax plan would be a 50% reduction of the exclusion amount for estate and gift taxes, from $11.58 million to the pre-TCJA amount of $5.79 million. To be cautious, advisors may want to encourage their clients to use as much of their exemption in 2020 in case Biden is elected to office and his tax plan is approved. Other strategies that can be considered to deal with a smaller exemption in the long-term can potentially include the use of Grantor Retained Annuity Trusts (GRATs), Charitable Lead Annuity Trusts (CLATs), and sales to Intentionally Defective Grantor Trusts (IDGTs).

Ultimately, the key point is that even though there is much that can be planned for at this stage prior to the election – regardless of who wins the race – the most important thing for advisors to do in the present moment is to educate themselves (and their clients) about the impact that each candidate’s position will have on them, and to help them plan accordingly as election results come in!

#FASuccess Ep 196: Partnering With A Center Of Influence To Rapidly Grow In A Focused Niche, With Daniel Hannoush

September 29, 2020 07:05 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 196th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Daniel Hannoush. Daniel is the co-founder of One & Done Financial, a virtual independent RIA that oversees nearly 70 million of assets under management for almost 350 client households. What's unique about Daniel though, is his firm's niche focus on Chick-fil-A operators, and how by partnering with a key center of influence in the Chick-fil-A community, Daniel's firm has been able to consistently add five to ten new clients per month to get them to those 350 client households in barely four years since launching.

In this episode, we talk in-depth about Daniel's path to the Chick-fil-A niche, how he started out, like so many advisors, as a generalist serving anyone and everyone he could meet, the way a fateful introduction by a recruiter to another advisor seeking to build a business with similar values led to Daniel meeting his business partner, the way they formed an advisory firm partnership with the delineation of roles where Daniel would focus on building the business internally, while his partner used his existing Chick-fil-A relationships to grow the clientele, and why when you find traction in a niche, it's so crucial to take the time to build the internal systems and processes, because as Daniel puts it, if your visibility exceeds your ability, it destroys your credibility.

We also talk about how Daniel's firm is actually building in the Chick-fil-A niche, how they separate out the advice services that One & Done provides from the home office support that Chick-fil-A itself gives its franchise operators, the unique modular approach to financial planning their firm takes, why services are split into monthly financial planning fees, investment management for standalone portfolios, and a separate retirement planning service offering with its own pricing structure, and how Chick-fil-A's robust business model and their own franchise vetting process effectively ensures that virtually every Chick-fil-A operator will be a good fit for Daniel's advisory firm.

And be sure to listen to the end, where Daniel shares why they've decided to build their fast-growing advisory firm entirely virtually, the reason they decided to invest heavily into Salesforce as their CRM system, and the power of not being everything to everyone, and finding the one thing you can be the best at, and using that as the core to grow and scale your advisory business.

So whether you’re interested in learning about the journey that led Daniel to finding his Chick-fil-A niche, how his modular financial planning system works, or why he built a virtual firm, then we hope you enjoy this episode of the Financial Advisor Success podcast.
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Better Advisor Marketing Without Relying On More Tactics Or More Rainmakers: Optimizing Like An Engineer With The ART Method

September 28, 2020 07:03 am 1 Comment CATEGORY: Marketing

When it comes to marketing strategies for financial advisors who want to grow their firms, there are generally two commonly used approaches. Optimistic “glass-half-full” strategists often decide to invest in a(n ever-widening) variety of marketing tactics in the hopes of attracting more and more new clients, whereas more Pessimistic “glass-half-empty” strategists may often feel that suboptimal business development efforts hold them back from potential growth and will spend their marketing resources on hiring, training, and restructuring their teams to correct the problem with more and better rainmaker advisors. However, these approaches are not generally the most logical way to grow firms, as adding new marketing tactics can be expensive and doesn’t always equate to more clients, and relying on the efficacy of rainmaker advisors is risky (as finding and keeping great rainmaker talent is often very difficult).

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 how a more efficient approach to marketing for growth is to view the process as an “Engineer”, where the firm focuses on one marketing tool proven to work in the past, hones that specific tactic, and then maintains and continuously optimizes the process that supports that tactic over the long run. For Engineer strategists, the advisor marketing process can be broken down into three “ART” phases: Audit, Run, and Tune.

In the Audit phase, advisors and their firms evaluate their current inventory of marketing tools and identify the characteristics of the firm’s typical (and hopefully ideal) client – in a photographic ‘client picture board’. Pictures are important to illustrate the advisor’s ideal client, because the exercise can only be successful if the advisor has a deep enough understanding of their clientele to find the ‘right’ pictures to begin with. Thus, the Audit stage is instrumental in helping advisors to picture their clients clearly, which in turn clarifies how best to connect and speak to those prospects and turn them into the new clients they most want to attract.

In the Run phase, the firm identifies one marketing tactic that will serve to connect (and to keep connecting) with the target client identified and ‘pictured’ in the Audit phase. The focus is on establishing a meaningful rapport with the particular type of target prospects pursuing one specific channel where the firm can best reach out to their audience (e.g., podcasting on a topic that the firm’s clients would be particularly interested in). Which, notably, means that this is not the stage to update the firm’s design elements such as the website or logo. Instead, the important point in the Run phase is simply to focus on one strategy, and prepare to refine that one strategy to be even better… not to layer multiple marketing tactics that spread the firm’s attention too thinly to Tune any one in particular.

In turn, in the Tune phase, advisors review their now-primary marketing strategy, and assess what is working (and what isn’t) by gathering key data to make relevant adjustments along the way. Specifically, lead flow data measuring how many people (who weren’t referred by an existing client) actually contacted the firm to schedule an appointment, is the key statistic that can give insight about how effective the marketing strategy is at connecting with its target audience. Tuning a strategy is often simply a matter of expanding the scope of expertise offered through the strategy (e.g., for a strategy that relies on podcasting, perhaps the scope of topics can include stock options instead of just estate planning), as well as improving how the strategy connects to its target people in a sustainable and consistent manner.

Ultimately, the key point is that advisors who want to grow their firms through marketing efforts don’t need to invest in an array of marketing tactics, nor do they need to restructure their teams to rely on a rainmaker to do it for them. Rather, the more efficient way to successfully market an advisory firm is to focus on the ART of the marketing process – Auditing the firm’s existing marketing efforts to identify and hone one effective tactic to use, Running the marketing strategy identified over a long period of time, and continually Tuning the process to become a successful and sustainable strategy. Going deeper into one specific, carefully chosen strategy, and optimizing it, before choosing to add new marketing tactics into the mix, will likely prove to be a much more effective and efficient process in growing the advisor’s firm… and will serve to connect more meaningfully with its clients!

Weekend Reading for Financial Planners (September 26-27)

September 25, 2020 02:56 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with a striking new study from state regulators finding that broker-dealers are drastically more likely to recommend 'complex' investment products than RIAs (from being 2X more likely to use leveraged and inverse ETFs, to 8X more likely to recommend variable annuities, and 9X more likely to use non-traded REITs), raising questions of whether or how the newly implemented Regulation Best Interest will actually change such tendencies or not (which NASAA is preparing to measure with a follow-up study in early 2021).

Also in the news this week is news that FINRA is preparing new Regulation Best Interest guidance as initial broker-dealer exams reveal where firms are doing well and where they're still struggling to implement, and a new industry study that finds the Department of Labor's 2015 fiduciary rule really was reducing the cost of annuity products for consumers while not limiting access to financial advice for small investors (at least for the limited time window it was in effect before the product manufacturing and distribution companies successfully sued to have it vacated anyway).

From there, we have several articles on the ongoing rise of new lower-cost annuity solutions, including a fresh look at how Single Premium Immediate Annuities compare to bonds in today's low-interest-rate environment, when it pays to wait to buy an annuity to avoid 'locking in' today's low interest rates (and how far and fast rates must rise to actually benefit), and how a new wave of no-commission annuities are being developed by annuity companies after a major new Private Letter Ruling last year that allows RIAs to bill their AUM fees from the products directly (but are still struggling with the technology integrations necessary for RIAs to execute annuities in their client portfolios at scale).

We've also included a number of client communication articles this week, from a reminder that helping panicking clients starts with first acknowledging that it's normal to panic during turbulent times (rather than telling clients to 'calm down'), to a look at how Financial Therapy is gaining more and more attention as a complement to (and facilitator for implementing) financial advice in the pandemic environment, and a look at how clients will rarely change their behavior until their advisor understands and helps them to change their own financial stories first.

We wrap up with three interesting articles, all around the theme of how to maintain a cohesive work environment in the midst of what is now becoming a long-term work-from-home world: the first looks at how introducing a "virtual commute" can help us to more effectively transition from our home life to our work life (and back again); the second looks at the techniques that companies are implementing to maintain their office cultures in an online/virtual world (from internal video podcasts to virtual team-building exercises); and the last looks at how technology tools themselves are being reshaped in how they are used to maintain a strong office culture in a world where it's unclear when we'll be returning to our offices (or if we ever will for at least some firms!?).

Enjoy the 'light' reading!

Kitces & Carl Ep 43: Discussing Financial Advice Fees And Value To Help Clients Better Understand The Benefits Of Financial Planning

September 24, 2020 07:08 am 2 Comments CATEGORY: Kitces & Carl Podcast

In the early days of financial planning when an advisor’s primary function was to provide access to capital markets, fees that clients paid were baked into the cost of the product they were buying. With the advent of planning as a service, however, fee transparency became an important feature for clients. Accordingly, charging an explicit fee for financial planning is a relatively new phenomenon, and as a result many financial planners struggle not only with when and how to communicate the fee itself and the value they provide, but with the fear that they will scare away prospective clients in the process.

In our 43rd episode of Kitces and Carl, Michael Kitces and client communication expert Carl Richards discuss the merits of two opposing philosophies around when to discuss fees with prospective clients and strategies to help clients understand the value of the services an advisor provides.

One approach, for some advisors, is to first create context around the services they provide before discussing fees, leaving it until the end of the second meeting after gaining (and demonstrating) a clear understanding of a prospective client’s situation and presenting a rough plan about how they will align the use of the client’s capital with what they state is important to them. By doing so, the advisor can give the prospective client the experience of what it will be like working together.

Another approach, meanwhile, is to state their fees directly on their website, so prospective clients can either filter themselves out of the process even before it begins (because, for some people, one of the main determinants of whether or not they will hire an advisor is if they can afford it in the first place) or at the very least come into a first meeting with a clear understanding of what they will be paying. Moreover, in an environment where advisors market on being transparent around their fees, waiting until the end of the second meeting to discuss fees is the opposite of clear and transparent.

Regardless of the approach, the important thing is for the advisor to be confident that they will deliver value for the fee that they charge. Because a fee will only ever be questionable in the absence of value. And explaining that value simply boils down to gaining an understanding of what a prospective client may be comparing the fee to (e.g., did they have a negative experience with a previous planner or think that they weren’t even paying a fee at all?) and figuring out where their “cost anchor” may be (e.g., do they view the fee as an expense that is anchored to their annual cashflow versus an investment that is allocated from their entire balance sheet?).

Ultimately, the key to discussing fees is first solving for when to discuss fees, and being able to do so confidently. After that, the value part of the equation hinges on understanding what clients might be comparing the process to and ensuring that they view financial planning as an investment in themselves and their future. Because when you can relate the fees to their lives, align it with their pricing scale, and address the problems that they're trying to solve that brought them in the first place, the whole nature of the fee/value conversation becomes much more collaborative!

Fostering Healthier Advisor-Client Relationships By Mitigating Transference And Counter-Transference

September 23, 2020 07:04 am 1 Comment CATEGORY: Client Trust & Communication

When it comes to connecting with strangers in a new relationship, our minds often jump to associating them with a friend or family member who we know well (“you remind me of so-and-so!”)… something we do without even realizing it. The tendency to do this is part of our brain’s natural shortcuts to making sense of the world; if we can associate someone new as being ‘similar’ to someone we already know, it becomes easier to figure out how to interact with and relate to them. Yet while this is often helpful and poses no problems, in some cases our tendency to substitute in another existing relationship can be counterproductive, blinding us to really taking the time to understand the person in front of us, or even causing adverse reactions when it turns out the person we’re actually relating to is not like the one our brains are associating them with! And this is especially relevant for financial advisors and their clients, where failing to really understand the person in front of us can impair the relationship between the advisor and client, and undermine the open lines of communication that are so important to ensure that the advisor is able to obtain the information needed to provide the necessary advice (and deliver it in a way that the client will actually implement it!).

Drawing from the world of therapy and mental health, this phenomenon of a patient projecting the values and characteristics of someone with whom they are very familiar onto the professional they have engaged, but don’t yet know very well, is referred to as “transference”. Similarly, the professional projecting values of someone else onto their patient is referred to as “counter-transference.” For example, a therapist may remind a new patient of the patient’s own brother. If the patient has had a supportive and caring relationship with their brother, they may immediately feel an unfounded trust for their new therapist, based on how the patient feels about the brother. Alternately, if a patient reminds their therapist of an intensely disliked relative with whom they are always fighting, they may experience counter-transference issues and may find it difficult to empathize with compassion toward their patient. And, like therapists and their patients, financial advisors and their clients are just as prone to engaging in transference and counter-transference behaviors during their relationship.

For instance, when difficult relationships (not with the advisor) in a client’s life remind the client of their advisor, unhealthy transference tendencies can cause the client to have trouble communicating openly with their advisor about important financial affairs, or make them unwilling to accept the advisor’s advice. Similarly, problems can arise for advisors if a client were to remind them subconsciously of a person with whom the advisor has an unhealthy relationship, such as the advisor who struggles to give hard advice to an elderly client that reminds them of their own mother. This difficulty to communicate becomes problematic, not only because it can prevent information crucial to the financial planning engagement from being shared, but can also eventually lead to feelings of frustration and burnout – for both advisor and client.

To address the situation and prevent counter-transference-based tendencies from harming relationships with clients, advisors can use various techniques to practice awareness of any counter-transference behaviors they may be impacted by. As a first step, advisors can identify any of their own personal triggers that may be impacting their client relationships. Recognizing and understanding the differences between the client and the other person being mentally associated with the client, who may be the actual cause of the advisor’s personal triggers, can be helpful for the advisor to see the client clearly as the unique individual that they are. A self-analysis tool that can be helpful for the advisor to work through counter-transference issues is the Money Script Inventory, which helps to identify subconscious beliefs about money (which can itself be a springboard for further investigation into the actual causes of those beliefs, which can often provide clues to identify counter-transference causes). Another technique is for the advisor to assess their own money history by reflecting on their own personal relationship with money and the challenges they have faced around money.

While self-analysis can be sufficient for some advisors to work through counter-transference issues, others may prefer the support and guidance of a mental health professional themselves. Therapists understand and know how to help their patients work through transference issues, and are themselves trained to work through their own counter-transference habits.

Ultimately, the key point is that advisors have access to tools that can help them recognize their own counter-transference tendencies, which can help them maintain healthy relationships with their clients, and that are key to open communication and good financial planning!

#FASuccess Ep 195: Own Your Future By Continuously Reinvesting In Yourself To Build The Advisory Career You Want, With Echo Huang

September 22, 2020 07:05 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 195th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Echo Huang. Echo is the founder of Echo Wealth Management, an independent RIA based in Minneapolis that oversees nearly $120 million of assets under management for 76 client households. What's unique about Echo, though, is the way she's built a niche serving corporate executives and has managed to grow the firm almost entirely by word of mouth by building her reputation within her niche.

In this episode, we talk in-depth about how Echo built her career starting out in the industry from scratch as an immigrant to the U.S. with just $800 in her pocket. How she started studying finance as an undergraduate, then decided that it would help her career to get a CPA license, so she joined a public accounting firm to get the requisite two years of audit experience. Then, transitioned to the personal financial planning division of a regional accounting firm and earned her CFP certification to build her professional credibility and help overcome the fact that she looked young when sitting across from older clients. Why Echo ultimately went out on her own at a cost of losing two-thirds of her AUM to rebuild the vision of the advisory firm she wanted to build. And why, as an already successful advisor in her 40s, she still decided to go back and get her CFA certification on top of juggling the challenges of growing the business and being a parent to her daughter Nina.

We also talk about how Echo actually built her independent advisory firm to serve the clients she wanted to serve. Why she chose TD Ameritrade as her custodian. The reason she selected Salesforce as her CRM of choice despite Redtail and Wealthbox being more popular for solo advisors. Why eMoney Advisor became the hub of her financial planning services for clients. And how Echo structures her fees for clients with an AUM fee that starts at 1% on their first $1 million for portfolio management. And a separate fee of up to $5,000 for the first years' financial planning.

And be certain to listen to the end, where Echo shares the unique challenges of being what she terms a triple minority of being Asian, female, and a new immigrant coming into the financial planning profession. The unique way that Echo views career and business risk to have made some of the key transitions she's made to advance her career. And why she views the key to success as building the confidence to believe in yourself, and your own advisor value. And getting the education, study group peer support, and whatever else it takes to build that confidence in yourself.

So whether you’re interested in learning about the journey that led Echo to starting her own firm, how she created her niche working with Fortune 500 executives, or how she built her tech stack from scratch, then we hope you enjoy this episode of the Financial Advisor Success podcast.

Adapting Advisory Teams To A Hybrid Office/Home Workplace: Leadership, Culture, And Infrastructure For The New RIA Workplace

September 21, 2020 07:06 am 1 Comment CATEGORY: Practice Management

Financial planning advisory firms have traditionally operated as brick-and-mortar establishments, with clients coming to the office to meet with their advisors in person, and where all employees would generally be available on-site every day during normal business hours. However, with the onset of the COVID-19 pandemic, ‘business as usual’ took a dramatic shift to a more ‘virtual’ reality. Businesses around the world were required to shift gears to comply with social distancing requirements to mitigate the impact of the spreading disease. For financial advisors in particular, this meant quickly developing a strategy to implement processes that would accommodate virtual meetings with clients, as well as work-from-home systems in place for employees to continue servicing clients and to maintain everyday business operations. With no immediate end in sight of the current pandemic condition being resolved, however, business owners are now looking to create more permanent workplace solutions that will accommodate social distancing practices.

Sustaining a successful future advisory firm model will require several changes to leadership strategies, including a shift in focus from a ‘presence-based’ management style, in which the key metric to assessing employee productivity is by the very fact that they show up for work in the office, to more of an ‘output-based’ management style, in which productivity is measured more by attainment of company goals and the deliverables required of employees to achieve those goals. Critical to this shift in management style is a clearly communicated career progression strategy, to convey to employees the importance of their role in the organization and how those roles are designed to meet company goals. Another leadership strategy to adapt a successful future model is the cultivation of ‘Team-Based’ (versus ‘Boss-Based’) accountability systems, in which team members themselves have more freedom and autonomy in conducting work as a means to manage their own accountability, instead of relying on bosses to guide the direction of individual workloads. Finally, allowing employees to choose between working environments (e.g., virtually or onsite with other team members) can enhance employee satisfaction and help them work more effectively.

Also important in cultivating a sustainable future advisory firm is the creation of a cohesive culture that includes all employees – including those team members who work remotely. Open and frequent communication is important in reminding employees about the core values and company goals of their organization. It is also important for management to ensure that employees know that they are valued members of the company, intentionally reminding them of this from time to time, allowing for flexible work hours to accommodate personal priorities, supporting employees in setting up comfortable and functional work environments (whether at home or in the office), and finding team-building activities to engage employees while at the same time emphasizing that the workplace can be considered a source of personal support.

Finally, infrastructure must be thoughtfully designed to support firm growth. Functional technology systems are a crucial infrastructure component and are essential for good communication across the organization, especially when employees are working remotely in different locations. Being able to assess all processes and identify the specific steps that employees are working on through the use of a well-designed workflow task management platform can help all team members to determine whether their workloads are being managed effectively (and to tweak processes as needed), and additional channels of communication (e.g., instant messaging applications) can help minimize email inbox overload. Team structures may need to be reassessed as well, such as limiting the number of a manager’s direct reports so that sufficient resources are available to support employees.

Ultimately, the key point is that as financial advisory firms evolve their organizations to accommodate a more remotely based workforce, there are many decisions for enhancing their success. Critical to this process is for firms to self-assess the needs of their individual employees, to decide how best to reshape the practices followed by leadership and management, and to maintain their culture regardless of where employees may be situated.