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#FASuccess Ep 399: Maintaining Company Culture More Virtually (When Scaling Past $3B AUM With 10 Office Locations), With Kelli Kiemle

August 20, 2024 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome everyone! Welcome to the 399th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Kelli Kiemle. Kelli is the Managing Director of Growth and Client Experience of Halbert Hargrove, an RIA based in Long Beach, California, that oversees $3.1 billion in assets under management for 750 client households.

What's unique about Kelli, though, is how she leads efforts at Halbert Hargrove to maintain the firm's 4 core values and build a strong culture, even and especially as their team has grown to 50 employees and, with ongoing expansion, is now situated across 10 offices in the western United States (which means even their in-person offices are 'remote' and 'virtual' relative to the leadership team in the firm's main office headquarters).

In this episode, we talk in-depth about how Kelli has worked to develop programs at Halbert Hargrove to maintain communication and strong relationships across the firm and its disparate offices, including by holding twice annual in-person meetings at Halbert Hargrove's headquarters both to discuss firm business and to provide opportunities for more informal social interaction amongst the firm's otherwise-dispersed staff, how Kelli uses weekly, company-wide all-hands meetings first thing every Monday morning to review key company metrics to increase accountability, and how Kelli established a mandatory, 2-year formal mentorship program for all new hires to help them get better acclimated to the firm's culture, and to have an outlet to whom they can ask question and seek advice as they grow into their role.

We also talk about how Kelli has created initiatives that help solidify Halbert Hargrove's core values of being fearless, constantly improving, having fun, and giving back, including by having employees share not only their "Gladiator Stories" of fearlessly going to bat for their clients, but also their "Goofs That Give Us Guidance" to reflect on mistakes that were made to align to their core value of constantly improving, how Kelli has aligned her firm's employee benefits with its core values as well, including by funding educational opportunities for employees, providing a match for employee charitable donations, and offering child care subsidies, and why Kelli finds that her firm's policy of offering what it calls unlimited 'responsible' vacation time doesn't lead to employees taking too much time off, but instead ironically still requires her to encourage staff to take more time off to avoid potential burnout.

And be certain to listen to the end, where Kelli shares how she has helped increase Halbert Hargrove's AUM over the $3 billion mark in part by leveraging a public relations firm as well as local search engine optimization to attract new prospects and lift their organic growth rate, how Kelli brought on a sales coach to help her firm's existing advisors get comfortable trying to close more clients (overcoming some initial skepticism about how a fiduciary firm could ever have "sales training"), and why Kelli decided against pursuing the advisor track at her own firm, instead carving out a role focused on growth and client experience that fit her strengths in creating and managing complex firm-wide workflows and juggling many tasks at once.

So, whether you're interested in learning about maintaining a strong firm culture when offices are spread across the country, aligning company benefits to match those core values, or using third-party marketing and sales coaching firms to drive client growth, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Kelli Kiemle.

Succeed At Succession Planning: A 4-Step Playbook For Firm Ownership Transition

August 19, 2024 07:04 am 0 Comments CATEGORY: Practice Management

Founding owners of financial advisory firms often spend much of their time focusing on the short-term aspects of running their business, from providing high-quality client service to pursuing client growth. Which means that longer-term projects, such as creating a succession plan to have in place for the firm when the owner retires, may tend to get put on the back burner. And while some founders might assume that finding a successor is similar to filling a job vacancy, in reality, succession planning involves long-term preparation – not just by the firm owner but also by the firm's successors – to provide a seamless transition of knowledge, skills, and culture to ensure that there is continuity of care for clients and the realization of value for owners.

As a starting point, the succession planning process can begin with creating a clear vision statement that addresses what the firm does, why it exists, what its goals are, and how to measure them, which allows the founder and their successor(s) to create a shared language for the future and a clear path forward. A good vision statement will contain several elements, including a concise summary of the firm’s core purpose, specific components that help clarify the overriding statement (e.g., how the firm defines a deeper level of service), measurable elements (e.g., metrics like revenue, profit, impact, clients, or team size), and a timeline for when the goals should be achieved.

Next, the founder and their successor(s) can work together to create a structured process to guide the operational transition between Generation 1 (G1) and Generation 2 (G2). Key components of this transition include client service oversight, sales oversight, strategy leadership, and financial management. And because discussing these topics can become emotionally charged, particularly when there are differing views, open dialogue between G1 and G2 is required to find alignment and create agreements that support an effective transition.

After creating a transition strategy, determining the value of the practice and the payment structure that G2 will take on is a crucial next step, because it's important for the value to fairly represent what the company would be worth to an outside buyer while recognizing that the purchase aligns with the founder's vision and continuity goals. Because there is no single 'right' price, structure, or financing mechanism for every firm, getting clear on G1's financial goals, G2's ability to finance the deal, and the value of the firm (perhaps with the assistance of an external valuation service) can help ensure that all parties are clear on what the succession will look like and whether it meets their financial needs and risk tolerance.

Finally, combining the founder's vision, strategy, and economics along with a decision-making process and cadenced schedule of succession check-ins (to foster regular and open communication between G1 and G2) into a written plan that can be updated over time will help ensure that all parties are on the same page when it comes to the structure and timeline of the succession.

Ultimately, the key point is that just as a financial plan helps ensure a client's near- and long-term goals are met, an effective succession plan can increase the chances that a founding firm owner will reap the financial benefits of selling their firm to the next generation and that their firm will continue to thrive in accordance with their vision for years to come!

Weekend Reading For Financial Planners (August 17-18)

August 16, 2024 02:00 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" - this week's edition kicks off with the news that the Securities and Exchange Commission (SEC) announced that a total of 26 broker-dealers, investment advisers, and dually-registered firms agreed to pay combined civil penalties of almost $400 million for failing to maintain and preserve required records for "off-channel" communications, signaling the regulator's interest in cracking down on text messages and other communications that are not properly archived by firms. Notably, this announcement included the first off-channel communication case brought by the SEC as a result of a referral from an RIA exam, which could lead examiners to focus on off-channel communications during regular RIA examinations.

Also in industry news this week:

Fidelity and Advyzon are teaming up to offer RIAs a combined custodial platform-AdvisorTech bundle aimed at smaller RIAs, though its unclear whether Fidelity will take on some of the smallest firms
A report indicates that RIA M&A grew in the first half of the year compared to the same period in 2023, with new firms joining the list of top acquirers and buyers looking to acquire larger firms

From there, we have several articles on retirement:

Why retirement is not just a one-time transition, but a series of opportunities to adjust one's priorities, both financial and personal, and how advisors can help clients navigate them
How one retiree found a sense of purpose (and why he sold his ego-boosting sports car) after a sudden, unexpected retirement
How sabbaticals during one's working years can serve as helpful 'previews' for how an individual wants to structure their retirement

We also have a number of articles on advisor marketing:

How a "zero-click" social media strategy can boost an advisor's visibility and credibility
Why some advisors are turning to in-person events amidst a surge of interest in digital marketing
How "marketing channel harmony" can help advisors increase the efficiency and effectiveness of their marketing messages

We wrap up with 3 final articles, all about fame:

The difference between fame and influence, and why the latter might be preferable for advisors and others
Why famous individuals are often scammed by those they trust the most, and how advisors can help clients of all types avoid some of these schemes
An exploration of the psychology of fame-seeking, and why those who prioritize it can experience more mental stress than those with more internally focused goals

Enjoy the 'light' reading!

Assessing Both Longevity AND Mortality Risk For More Effective Retirement Plans

August 14, 2024 07:04 am 0 Comments CATEGORY: Retirement Planning

A common concern many individuals have when contemplating retirement spending is that they may live longer than expected and thus risk outliving their money. This sentiment can lead advisors to build financial plans based on the conservative assumption that clients will live a very long time. Yet, while a longer plan will extend the longevity of the portfolio, it also relies on lower annual portfolio withdrawals. For couples, it becomes crucial to consider other income sources, such as Social Security benefits, annuities, and pensions, that may be reduced or eliminated when one spouse dies. The loss of these additional income streams by one spouse can create a significant mortality risk for the surviving spouse, potentially leaving them with less income than expected. Which means that plans that anticipate both members of a couple living to the same (very old) age might overlook the mortality risk of one spouse dying earlier than planned, which can significantly influence the surviving spouse’s sources of income and overall financial situation.

To manage these potential outcomes, advisors can use a more rigorous process to account for and manage both longevity and mortality risk. For example, advisors can calculate a client's spending capacity using expected mortality-adjusted cashflows to manage mortality risk. Rather than giving a plan 'credit' for all non-portfolio income that would be received if clients live to their projected date of death, advisors can instead average out the non-portfolio income that a couple would receive across a wide range of mortality assumptions based on statistical probabilities that treat death as variable and uncertain. Using a comprehensive approach to examine a client's mortality risks can be an opportunity for the advisor to highlight potential pain points and vulnerabilities and offer clients a strategy to plan for them.

In addition to examining the factors that shape mortality risk, advisors can also weigh several factors when assessing a client's longevity risk, from demographic trends (e.g., projecting life expectancy based on the client’s sex and affluence) to health and family history and even to the client's own tolerance for longevity risk. Advisors can establish a systematic process to adjust and optimize plans for longevity, customizing the plan length for clients beyond choosing arbitrary default age settings in their planning software packages.

Ultimately, the key point is that creating a plan based on how long a client will live is most effective when both mortality and longevity risk factors are considered. Actuarial science offers tools that can help advisors assess these considerations so that they can adjust mortality assumptions and longevity expectations as part of an ongoing process of monitoring and updating a plan. And by making these adjustments collaboratively and regularly, advisors can help clients develop a relevant and realistic strategy to manage their mortality and longevity risks as they journey into retirement!

#FASuccess Ep 398: Building A $2.5B AUM Advisory Enterprise Under The Umbrella Of A National CPA Firm, With Eric Wulff

August 13, 2024 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome everyone! Welcome to the 398th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Eric Wulff. Eric is the CEO of Marcum Wealth, an RIA based in Cleveland, Ohio, that oversees $2.5 billion in assets under management for approximately 2,700 client households.

What's unique about Eric, though, is how he has built Marcum Wealth into a multi-billion-dollar firm under the umbrella of a national accounting firm, in large part by cultivating mutually beneficial relationships with the firm's internal CPAs to get them comfortable providing referrals of their accounting clients to his financial planning business.

In this episode, we talk in-depth about Eric's process for generating internal referrals from the accounting firm's CPAs, which do not necessarily come automatically despite the affiliation between the accounting firm and his RIA, how Eric's firm takes a "give to get" approach with CPAs and their accounting clients to demonstrate the value it can offer both them and their clients (so that advisors in his firm are top of mind when accounting clients have questions on financial planning topics or face a life transition), and how Eric's firm's exit planning services in particular have been able to drive referrals by helping the accounting firm's CPAs maintain their long-term relationships with their business-owner clients as the owners plan to monetize their businesses, encouraging a continued relationship between that client and the financial advisor and CPA when they sell their company (and may no longer need traditional business accounting services anymore).

We also talk about how Eric has created a systematized planning process to create a common standard across its multiple advisor offices nationwide, how Eric's firm uses a centralized planning team to prepare financial plans in a consistent manner (and to allow its advisors to spend more time working directly with clients), and how Eric has found success presenting financial plans to prospects before they become clients, despite the unpaid work upfront that it takes to prepare and present them, as it shows the prospects specifically how Marcum Wealth can meet their planning needs and encourages them to start an ongoing planning relationship to implement the planning recommendations.

And be certain to listen to the end, where Eric discusses the key differences between CPA firms and RIAs, particularly the contrast between the goal of CPAs to maximize the efficiency of their billable hours and the more long-term client relationship-building done by financial advisors, how Eric approaches acquisitions, targeting younger or mid-career advisors who want to grow and develop their practice within the local office of the CPA firm (rather than approaching retiring firm owners for acquisition as they exit), and how Eric's firm not only survived the 2008 Great Financial Crisis, which occurred less than 2 years after he opened Marcum Wealth, but was able to use it as a growth engine for the firm as the Wall Street implosion led more consumers to begin showing a preference for the benefits of the RIA model for financial advice instead.

So, whether you're interested in learning about cultivating client referrals from CPA firms, leveraging a centralized planning team to give advisors more time to spend with clients, or systematizing the planning process to create consistent standards across multiple offices, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Eric Wulff.

The 5 Dysfunctions Of Client/Advisor Relationships: How Advisors Can (Re-)Build Trust And Spur Clients Into Action

August 12, 2024 07:02 am 0 Comments CATEGORY: Client Trust & Communication

In the modern era of financial advice, the advicer/client relationship is tightly centered on trust. And because of that foundation of trust, in an ideal advisor/client relationship, mistakes, disagreements, and concerns are surfaced quickly; action items are agreed and acted upon by everyone involved; and everyone feels aligned and accountable to their overall objectives.

The reality, however, can be a little more complicated – not only when it comes to getting clients to ask questions, give honest feedback, and raise (productive) disagreements; but also to get everyone truly aligned on (and excited about) action items and objectives. This can be frustrating for advisors: after all, clients are paying for advice, but if they never really seem 'bought into' that advice and don't act on recommendations, it can be hard for the advisor to feel like they've provided much value to the relationship.

In his book "The Five Dysfunctions Of A Team", Patrick Lencioni discusses similar issues that commonly occur among teams in the workplace. He posits that teams can suffer from a series of 5 "dysfunctions" which inhibits a team's ability to align on objectives, act on them, and actually track and discuss the results. Dysfunction in teams can be insidious – the vast majority of people in the workplace are well-intentioned and don't intentionally sow dysfunction. However, even well-meaning people can occasionally contribute to dysfunctional relationships, teams, and company cultures.

In the book, Lencioni gives insights into how dysfunction can be rooted out of a workplace – many of which can also be applied to the client/advisor relationship, where well-meaning clients and advisors can on occasion contribute to a dysfunctional relationship. As an example, a dysfunctional client/advisor relationship can look like one where the client doesn't bring forward their "true" issues to a meeting, or where they have reservations about an advisor's recommendations but feel hesitant to express them to the advisor. Then, because the client isn't "bought in" to the recommendations, they simply don't act on what the advisor recommends.

The good news is that dysfunction isn't necessarily permanent – in fact, it can be improved upon or even resolved entirely. For advisors looking to resolve dysfunction, the first action item often comes with a candid conversation with a client centered on how the client feels the relationship is going, ranging from their comfort with bringing important issues to meetings to their alignment with the advisor on action items. Once an advisor understands not only where they see dysfunction themselves, but also where their client sees it, they can begin the work of uprooting and resolving it. Depending on the situation, this can involve exercises to rebuild trust or working with clients to name how they experience and work through conflict.

Once dysfunction in relationships is worked through and relationships become more functional, an advisor/client relationship can enter a positive feedback loop: clients bring what matters most to meetings, advisors present recommendations, reservations and questions are resolved in-meeting, everyone is aligned on what their actions are and why they matter, and implementation and results are tracked and celebrated. This then incentivizes clients to continue to bring issues forward, and reinforces an advisor's value many times over.

Ultimately, the key point is that few people intend to add dysfunction to relationships – it's something that runs the risk of creeping into client/advisor dynamics often because of good intentions. But the good news is that with proactive and mindful conversations, the advisor and client can not only resolve dysfunction, but in fact create a stronger dynamic than existed previously, where clients and advisors are constantly working through the issues that matter most!