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Weekend Reading for Financial Planners (Apr 4-5)

April 3, 2020 02:57 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, even as the country is still absorbing the outcomes of last week's $2 trillion CARES Act stimulus, President Trump has begun to advocate for another $2 trillion round of stimulus, this time focused on major infrastructure spending that both Democrats and Republicans have acknowledged is long overdue, but raising the question of whether the parties can come together to pass such bipartisan legislation on the heels of what has already been the largest economic stimulus legislation in history.

Also in the news this week is a flurry of focus on the new Paycheck Protection Program (PPP) under the CARES Act as it opens its application process today with the potential for small businesses (including advisory firms) to receive up to $10M in tax-free forgivable loans to support their employees (but on a first-come first-served basis and the risk that the $350B allocation will have more demand than dollars to allocate), and the news from the SEC that, despite economic turmoil and business disruptions, it is sticking with its June 30th effective date for Regulation Best Interest (Reg BI).

From there, we have a number of articles about how advisors are managing the current investment environment, including a discussion of how rebalancing software has found its moment to shine amidst the pressure for rapid rebalancing trades where taking days, or even just hours, to queue up trades can result in a material difference in price, and how market turmoil is leading to an uptick of interest in third-party models and even entire TAMP platforms, as small-to-mid-sized advisory firms realize the time challenges of doing both a burst of reallocating portfolios and reassuring clients at the same time.

We also have a few articles on the current work-from-home environment, including tips about how to avoid "Zoom bombing" (where hackers can interrupt your Zoom meeting with offensive material!), tips on how to improve your webcam setup to be a little more visually flattering, and some additional suggestions on how to remain productive when (suddenly) transitioning to a new work-from-home environment.

We wrap up with three interesting articles, all around the theme of leadership in these challenging times: the first explores the importance of developing team members to have their own autonomy to take risks and make decisions (especially in a bear market when there's too much to be done for the firm owner to make all the decisions); the second explores how fear in the midst of business risks can unwittingly cause advisory firm owners to clamp down at the exact moment it's crucial to empower employees more; and the last provides some helpful tips about how to be an effective leader in times of crisis... including recognizing that even if your advisory firm is not in trouble, employees don't necessarily know that, and still need enhanced communication from the leadership, if only to give them confidence that the firm really will be OK!

Enjoy the 'light' reading!

Quickly Maximizing Paycheck Protection Program’s (PPP) Forgivable Loan Opportunity For Financial Advisors

April 2, 2020 11:19 am 28 Comments CATEGORY: Practice Management

Last week, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion emergency fiscal stimulus package with the aim of mitigating the economic damage created by the Coronavirus pandemic by introducing a wide range of provisions for individuals, businesses, healthcare entities, and state and local governments to meet short-term cashflow demands. For financial advisors with clients who are small business owners (including self-employed individuals and independent contractors), or for financial advisors who are business owners themselves, one of the most compelling provisions of the Act is the Paycheck Protection Program, which authorizes up to $349 billion in forgivable loans, allowing small businesses to pay their employees during the crisis.

Small business owners who have 500 or fewer employees (with limited exceptions), including self-employed individuals, may be able to benefit from the program and can request loans for up to 2.5 times the average monthly payroll expense over the previous year (with total loan amount capped at $10M). Applicants must make a good-faith certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19.

For small businesses and sole proprietorships, applications will be accepted beginning on April 3, 2020, and for independent contractors and self-employed individuals, applications will be accepted beginning on April 10, 2020. Loans will have a maturity period of 2 years and a fixed interest rate of 0.50%. Notably, any amounts spent on certain items during the first 8 weeks after the loan is made may be eligible for forgiveness. As an added benefit, amounts that are forgiven will even be excluded from taxable income for the year! Expenses that will be eligible for forgiveness include:

Payroll costs, including benefits, which include:
- Wages and other compensation capped at $100K per employee;
- Vacation, parental, family, medical, and sick leave benefits; and
- State/local tax on compensation.
Rent pursuant to a lease in force before February 15, 2020;
Utilities which began before February 15, 2020; and
Interest on mortgage obligations incurred before February 15, 2020.

In order to qualify for forgiveness of these expenses, the business must maintain the same number of employees in the eight weeks following the date of loan origination that it had from either February 15, 2019, through June 30, 2019, or from January 1, 2020, through February 29, 2020. However, business owners have the opportunity to restore employment and salary levels until June 30, 2020, for any changes that occurred between February 15, 2020, and April 26, 2020. Additionally, compensation for employees who receive less than $100,000 annually cannot be reduced by more than 25% relative to the most recent quarter. To the extent these requirements are not met, the amount eligible for forgiveness will be reduced.

While loan payments will be deferred for a period of six months, interest on outstanding amounts will accrue during this time. Loans are provided by lenders approved by the SBA and will be guaranteed by the SBA.

Of particular importance is the first-come, first-serve nature of the Paycheck Protection Program. Ultimately, this means that applying soon, as early as tomorrow, April 3, 2020, may give a business the best chance to receive a loan that may ultimately be forgiven.

Thankfully, the Paycheck Protection Program loan application is a fairly straightforward 4-page document that is already available online. Institutions that will be able to accept the applications and originate these loans on behalf of the SBA include SBA-approved lenders, Federally insured banks and credit unions, and other lenders that who are specially approved by the SBA to offer Paycheck Protection Loans.

Advisors should also consider how Paycheck Protection Program loans may impact other benefits available via the CARES Act. Notably, acceptance of such a loan makes a business ineligible for the Employee Retention Credit (of up to 50% of up to $10,000 of wages per employee), while forgiveness of such a loan makes a business ineligible for the deferral of payroll taxes (through the end of 2020) that would otherwise be allowed.

Ultimately, the key point is that the Paycheck Protection Program offers advisors and other small business owners an incredible opportunity of relief from the crisis at hand, and financial advisors can play a key role in helping their clients navigate the process of applying for and managing the use of loan proceeds.

Why More Emotion – Not Less – May Be Needed To Make More Rational Financial Decisions

April 1, 2020 07:47 am 1 Comment CATEGORY: Client Trust & Communication

With the recent market turmoil driven by the coronavirus pandemic, people around the world are understandably worried not only about the safety of their loved ones but also about the status of their life savings. In turn, financial advisors are working hard to help their clients think about (sometimes substantive) mid-course corrections to their plans but, at the same time, avoid panicked emotional reactions that could have even more detrimental effect down the road, and instead try to remain rational about their portfolio decisions. Yet the irony is that, in some circumstances, the process of becoming more emotional may actually play a crucial role in helping us address our irrational beliefs, and therefore the path to more rational decision-making may actually demand that we get more emotional first!

Research has found that emotions can play an important role in influencing decision-making by helping us form predictive models of the world that we are navigating. Our “emotional brains” can associate certain emotions with past memories and experiences that become encoded in our long-term memory (a process referred to as memory “consolidation”). Often this works well (e.g., don’t be mean to my friend, because then they won’t be my friend, and then I’ll be sad), but sometimes our emotional learnings can be triggered even when it is inappropriate for a given context, and this can lead to harmful rather than helpful behavior (e.g., don’t be assertive, because assertive people are rude, and people won’t like me if I’m rude).

In their book, Unlocking the Emotional Brain (UtEB), psychotherapists Bruce Ecker, Robin Ticic, and Laurel Hulley present a model of how emotional learning helps us navigate the world, and, importantly, how we can go about updating our emotional learning when it is leading us astray. According to the authors, we must engage in a process of memory “reconsolidation” in order to modify our emotional beliefs. The key to successful memory reconsolidation is to hold an emotional learning that is harming our decision-making in our consciousness—which involves getting into an emotionally activated state that really brings this emotional experience to the forefront of our mind—while holding some other experiential memory that contradicts the harmful emotional learning in our consciousness simultaneously. While our minds will generally be highly resistant to rationalizing away an emotional learning, the juxtaposition of two experiential memories in our consciousness simultaneously allows us to “unlock” a memory (i.e., deconsolidate a memory) and then change and “re-lock” that memory (i.e., reconsolidate) with some improved predictive model of the world (e.g., assertiveness isn’t always rude; perhaps we should be more assertive in the workplace than we are at a dinner party).

This idea has a lot of overlap with concepts such as Brad Klontz’s “money scripts” (i.e., beliefs about money which are so strong that we just act them out unconsciously). For instance, suppose John believes all rich people are evil (a money script) because some rich landlord wronged his family as a child. While there may be some logical basis for John’s belief in a very narrow context (e.g., perhaps his landlord truly did commit an evil act against his family), he’s currently overgeneralizing and that can be harmful. A key insight of UtEB is that we can’t just point this fact out to John and expect that the emotional learning will go away. Rather, we need to help him both unlock and modify this emotional learning by holding two contradictory experiential memories in his consciousness at the same time. The authors argue that, intentionally or not, many forms of therapy actually facilitate this type of juxtaposition which enables us to change our beliefs.

Similarly, in the current environment of turbulent markets, it may be important to acknowledge that we cannot simply rationalize clients away from their emotional beliefs. If a client is engaging in emotionally-driven investing, that investing may be rooted in some past emotional learning. Logic alone is not necessarily going to be enough to convince clients to stay the course. Rather, advisors may need to be able to help clients reconsolidate their emotional memories, which may require getting more emotional first before clients can update their predictive models of the world to incorporate the wisdom of not jumping ship. This insight may also be useful when we encounter passive non-compliance (e.g., a client who agrees to take action during a meeting, yet fails to ever do so), as passive non-compliance might stem from a client’s ongoing (but perhaps unspoken) struggle with and emotional belief.

Ultimately, the key point is that sometimes more emotion, not less, is first needed to help clients make better financial decisions. Advisors can assist in this process by engaging clients in conversations and exercises which may help both identify the root cause of some problematic behavior (e.g., an emotional learning underlying a money script) as well as lived experiences which contradict this emotional learning and therefore can be used to facilitate a process of updating our predictive models of the world to better align with reality. Advisors who learn to do this well can reap the rewards of truly helping their clients improve their financial decision-making!

#FASuccess Ep 170: Eschewing The Industry’s ‘Growth Imperative’ And Crafting Your Advisory Business With Intention Instead, with Patrick Tucker

March 31, 2020 07:01 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 170th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Patrick Tucker. Patrick is the founder of True Measure Wealth Management, an independent RIA based in Omaha, Nebraska, that oversees nearly $150 million of assets under management for 89 client families. What's unique about Patrick, though, is his background in business operations and financial management, from having started his career at UPS, and how he's translated those business management skills to run his own advisory firm. Not necessarily to grow and scale the largest business he can, but to very intentionally craft an advisory firm to achieve his own personal goals instead.

In this episode, we talk about how Patrick built his very intentionally designed advisory firm. The two niches he forms with executives from transportation companies and small local business entrepreneurs like himself, how he splits his advisory fee structure between AUM fees for clients with portfolios he can manage and three tiers of flat planning fees from $8,000 to $16,000 a year for the clients in this niche who may have significant wealth but not in a liquid form to manage. The key business metrics that Patrick focuses on to ensure he's spending his time and the business resources properly, and the three P's – personality, participation, and profitability – that Patrick uses to evaluate each prospective client to decide if he wants to work with them in the first place.

We also talk about Patrick's journey through the advisory business, why he decided to transition from the independent broker-dealer environment to the RIA channel, how he was ultimately able to nearly triple his business in the first two years after he dropped his affiliation with FINRA to go fee-only, why Patrick chooses to use contractors and outsourcers and to keep his internal team very lean, and how Patrick does regular process reviews internally with his staff member to evaluate whether they're really doing the right thing for clients and whether those things are really being done in the most efficient manner possible.

And be certain to listen to the end, where Patrick shares how he overcame the growth imperative pressure that the industry tends to put on all of us as advisors that we have to grow, grow, grow; even if we don't really want or need to grow anymore for our own personal goals. The way Patrick's own path changed by getting involved with Strategic Coach, and why he ultimately decided to launch his own coaching business for advisors to teach them how to craft their own intentionally designed businesses to serve their own goals as Patrick did with his own firm.

Crafting A Communications Matrix To Refine Client Investment Communications For Stronger Relationships

March 30, 2020 07:06 am 3 Comments CATEGORY: Client Trust & Communication

Building strong client relationships is a high priority for all financial advisors, and one of the most effective tools for establishing and strengthening relationships is good communication skills. Yet, for many financial advisors, actively designing a good communication strategy to put to use with clients is not always an obvious exercise topping their task lists. The importance of this should not be overlooked, though, as a recent YCharts survey found that a majority of financial planning clients felt their advisor contacted them infrequently or very infrequently.

In this guest post, Sean Brown – CEO and President of investment research platform YCharts – shares the results of the recent YCharts Advisor-Client Communication Report, surveying over 650 financial planning clients about the frequency of advisor communication they receive, how they prefer to receive it, and the impact that communication has on whether or not to choose to stay with their financial advisors. In addition to the majority of clients indicating they had infrequent contact from their advisors, a majority of clients, especially those under 50, also expressed that they preferred to receive information from their advisors regarding their portfolio holdings, and 85% of clients said that their advisors’ communication style and frequency mattered when deciding whether to retain their services or to refer the advisor to a family member or friend.

Accordingly, creating a communication strategy can be a helpful way to stay in touch with clients on a regular basis. A 2x2 Advisor-Client Communication Framework can organize communication efforts by cadence (scheduled and ad hoc) and by audience (narrowcast and broadcast), resulting in four ‘quadrants’ of communication style, each with a purpose that can apply to unique situations. These quadrants consist of “Broadcast/Scheduled” communication efforts that occur at regular intervals distributed to many (or all) clients (e.g., quarterly market perspectives), “Broadcast/Ad Hoc” communication initiated due to firm or market events and broadly distributed to clients (e.g., announcements regarding changes in firm personnel, or the firm’s response to recent market events), “Narrowcast/Scheduled” communication that is more individualized and used for key accounts (e.g., monthly portfolio updates), and “Narrowcast/Ad Hoc” communication that is used primarily at important times in the advisor-client relationship (e.g., responses to client inquiries, notice of an asset allocation shift prior to a client’s retirement).

This structure can help advisors identify what they may already be using on a regular basis, and other potentially useful practices they may not yet have leveraged. Furthermore, clients can be segmented into the framework by considering different factors such as their impact on the practice, portfolio strategy, life stage, and relationship status (e.g., new clients, clients at risk of moving elsewhere, etc.).

Ultimately, the key point is that an effective communication strategy can be helpful for financial advisors to stay connected with their clients on a regular basis. By assessing different communication strategies to use for their own unique client segments, advisors can strengthen relationships and, at the same time, add value to the lives of their clients.

Analyzing The CARES Act: From Rebate Checks To Small Business Relief For The Coronavirus Pandemic

March 27, 2020 12:56 pm 101 Comments CATEGORY: Taxes

In response to the unfolding COVID-19 global pandemic (as the US this week surpassed China as the country with the most confirmed cases in the world), the US Senate has passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion emergency fiscal stimulus package, in order to help ease the effects of the resulting economic damage. While the House has yet to vote on the bill, it is anticipated to be approved and signed into law by President Trump shortly thereafter and includes a wide range of provisions for both loans and outright rebate payments or tax credits aimed at helping individuals, businesses, healthcare entities, and state and local governments meet short-term cashflow demands.

In the context of financial advisors and the clients they serve, the most notable provision in the bill is the direct payments to taxpayers. Specifically, individuals who had up to $75,000 in adjusted gross income in 2019 will receive a one-time payment of $1,200, while married couples with AGI up to $150,000 will get $2,400. Additionally, taxpayers will receive an additional $500 for each qualified child, while individuals and families with income above their respective thresholds will see their relief payments reduced by $50 for every $1,000 in AGI. Notably, while individuals must have a work-eligible Social Security number (and not be claimed as a dependent), they do not have to have had reportable income in 2019 and can also be eligible for other income-benefit programs as well.

From the retirement planning perspective, notable provisions of the CARES Act include the elimination of the 10% early withdrawal penalty on distributions from retirement accounts for so-called “Coronavirus-Related Distributions” (with the option to spread income taxation over three years, and the ability to recontribute back to those same accounts to make up in the future), the suspension of required minimum distributions (RMDs) in 2020 for a wide variety of retirement account (for both account owners as well as beneficiaries) as well as the ability to return current-year distributions, an increase of $600 per week for unemployment benefits for up to four months as well as an expansion of benefits for those who would otherwise not normally qualify (like self-employed individuals and independent contractors), and the deferral of Federal student loan payments through September 30, 2020.

With respect to small businesses that have been impacted by COVID-19, certain small businesses with up to 500 employees will be able to take out loans (up to $10M depending on payroll costs and other factors), which will be eligible for forgiveness if used to cover payroll and other expenses (like rent and utilities), along with other ‘employee retention’ tax credit opportunities. Other benefits for businesses include a delay in the employer’s portion of Social Security payroll tax until January 1, 2021 (with half of the deferred amounts due at the end of 2021, and the other half due at the end of 2022), and more flexible Net Operating Loss rules to obtain immediate refunds, among others.

Beyond benefits for individuals and businesses, the CARES Act provides for $454 billion in emergency lending, not only to states and municipalities, but to airlines and other businesses critical to US national security, and another $150 billion allocated proportionally to state and local governments to offset amounts used to respond to the pandemic.

Ultimately, the key point is that the CARES Act is a historic emergency relief program for Americans and provides much-needed assistance for those affected by the pandemic and the resulting economic damage. And with changes in tax laws come planning opportunities for clients. However, the CARES Act is not without its caveats. As while relief payments to individuals and families are based on 2019 AGI levels, there will be countless Americans currently experiencing sudden financial hardship and unemployment who are seeing significant declines in income, but sadly, will not qualify for relief checks. Similarly, small business relief provisions – for both clients of financial advisors, and potentially financial advisors in their own businesses – do have very specific requirements to qualify (in an effort to ensure the dollars go where needed most, but inevitably meaning that some that are close to ‘the line’ must engage in planning to actually qualify). At the very least, though, the CARES Act will be a dominant conversation for financial advisors and their clients in the months to come as Americans (and the world) continue to cope with the current COVID-19 crisis.

Kitces & Carl Ep 31: Maintaining Personal Advisor Wellness In Times Of Market Stress

March 26, 2020 07:04 am 2 Comments CATEGORY: Kitces & Carl Podcast

In the midst of the global coronavirus pandemic, people around the world are experiencing tremendous stress and anxiety, and financial advisors are fielding worried calls and emails from clients who need to be calmed. Yet the reality is that financial advisors aren’t immune, and are also dealing with exceptionally high levels of stress, both in being on the receiving end of clients seeking reassurance or looking to vent, and facing their own business stress in these times of extreme uncertainty. And in dealing with these prolonged periods of stress, financial advisors, as with other professionals in high-stress environments, face the crucial challenge of taking care of their own health and mental well-being to avoid burnout.

In our 31st episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards talk about the stress that many advisors face today (especially as many of their clients look to them as “release valves” for their own anxiety), and share some wellness tips that advisors can use to manage these high stress levels.

The first step in managing stress is to simply acknowledge that the stress exists, that the conditions contributing to the stress are often a challenging part of our job that must be dealt with, and that measures need to be actively taken to mitigate the impact of that stress on ourselves.

Some simple strategies that can help to reduce stress include basic breathwork exercises (such as taking a short break to take 10 deep breaths every 90 minutes during the day), regular exercise (taking a walk around the block), a good night’s sleep, finding healthy snacks (like no-butter popcorn or dark chocolate), and even just keeping a full glass of water within reach at all times to help stay hydrated. Because in times when everything feels out of control, having simple actions to remind us that there are things that we do still have the ability to control can be both mentally reassuring and emotionally comforting.

And even though each of these small ‘micro-actions’, by themselves, may not feel beneficial to or impactful on our health, doing them repeatedly, over time, can be effective ways to stay healthy. Because not only will they help us create healthy habits in the long run and experience a greater sense of control in our lives, but making conscious choices that promote good health (e.g., walking, drinking water, getting a good night’s rest, deep breathing) can also help us avoid unconscious choices that are unhealthy or just serve to stress us out even more (e.g., stress eating, binge-watching or listening to alarming news all day, checking email and social media instead of going to bed at a sensible hour).

Ultimately, the key point is that as many financial advisors are currently facing high levels of ongoing stress, it is critical for them to maintain their own physical and mental health. By taking simple steps, advisors can protect their own health and mental well-being… while making sure that they’re able to continue to provide great service for their clients!

Ten Planning Conversations To Help Clients Now During the COVID-19 Pandemic

March 25, 2020 12:04 pm 7 Comments CATEGORY: Client Trust & Communication

With a market decline of nearly 30% in just a few weeks as the coronavirus pandemic expands and amidst eye-popping daily market volatility, most financial advisors today are simply trying to help clients to remain calm, stay the course, and not engage in panic-selling. As while it’s relatively ‘easy’ to keep clients focused on the long-term and to stick to their established plans when their retirement accounts are marching steadily higher, it’s a different story when a major disruption occurs. Yet, in practice, following the advice to “do nothing” in the face of historic volatility is challenging, as it’s human nature to want to do something – whether to fight or flee – in the face of a dangerous threat.

However, just because advisors may be guiding clients to “do nothing” when it comes to selling out of their portfolio, it doesn’t mean that nothing can be done. Instead, recent market volatility does present a number of other financial and tax planning opportunities, from the more ‘obvious’ topics, like rebalancing and tax-loss harvesting, to other potentially necessary adjustments, and even opportunities, that might not be readily apparent mid-crisis.

As a starting point, advisors should re-run clients’ retirement projections, which could mean communicating some not-so-pleasant news (such as having to adjust the plans they’ve made for their retirements and/or even their current lifestyle). But knowing whether their path has changed (or in some cases, not!), and by how much the plan will need to be adjusted (often far less than what clients fear) will go a long way towards mitigating their current stress levels.

Advisors can also help clients effectively adjust their budgets as needed. While many have likely already changed some of their spending habits (if only because they are constrained by social distancing from many of their usual activities), some will need to make longer-term adjustments. And while severe (but shorter-term) spending restrictions might seem like the immediate 'best' option to follow, oftentimes smaller (but permanent) cuts can be far easier to adapt to (and can actually be more effective in the long run!).

From another budgeting perspective, making contingency plans for next-in-line sources of cash, should a client deplete their emergency fund, is an important step. While such an event may not seem very likely at the moment, game planning for such an event can at least provide peace of mind, especially since some of those options (such as using a home as a source of funds) take time to secure.

Other potential planning opportunities include reducing loan payments to lenders making special accommodations for those affected by COVID-19, using the once-in-a-lifetime option to transfer funds out of an IRA and into an HSA, fixing “asset-location” problems that have (up to this point) been impractical from a tax perspective, and reviewing (and maybe revising) healthcare proxies, living wills, and advance directives to account for current travel restrictions and the healthcare implications, should a client contract COVID-19.

Ultimately, the key point is that financial advisors are uniquely positioned to help clients – almost all of whom are under an unusually high amount of stress at the moment – by making mid-course adjustments to their plans, staying focused on the bigger picture, creating contingency plans, and generally providing them with some peace of mind in these highly uncertain times. And more generally, doing something – with respect to the financial plan – can help clients feel like they are more in control (even as advisors guide clients not to panic-sell from their portfolios). As with everything, this too shall pass, but the important thing is for clients to take steps to control those things that are in their power to control.

#FASuccess Ep 169: Combatting Advisory Fee Compression By Unbundling Investment Management And Financial Planning Fees With Alexandra Levi

March 24, 2020 07:07 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 169th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Alexandra Levi. Alex is the Founder and Managing Partner of Element Financial Group, a hybrid RIA with the Commonwealth platform that oversees nearly $430 million of assets under advisement for 170 clients. What's unique about Alex, though, is that, with a firm providing both investment management and financial planning services, she, in fact, has been able to grow her revenue to be almost fifty-fifty between the two with a $4,000 to $11,000 a year annual retainer fee for financial planning. And that she did so specifically as a strategy to combat the risk of fee compression by more clearly and separately articulating the value and the price of each service.

In this episode, we talk in-depth about Alex's approach to financial planning and how she prices it with her clients. The way she does a demo of the eMoney advisor’s dashboard in her prospect meetings with potential clients to show them the way she'll keep their lives organized on an ongoing basis. The way Alex shortened the upfront financial planning process with clients to just two meetings but then conducts ongoing quarterly meetings with all clients in recognition that financial planning is much more about the ongoing planning process than the upfront plan itself.

And how, thanks to technology, Alex's quarterly meetings with her clients have increasingly become virtual while leveraging video conferencing software, but how the reduction in physical in-person meetings hasn't impeded her retention rate that remains in the high 90% range for her multi-thousand dollar a year annual retainer fee.

We also talk about Alex's journey through the advisory business itself. Why she chose to start out her career working for a major mutual life insurance firm instead of a wirehouse. The reason she ultimately decided to make a pivot to the independent broker-dealer channel for back-office compliance and other infrastructure that a broker-dealer can provide. Why she hired an independent recruiter to help her find the right BD to work with. About the partnership she almost entered into with another advisory firm for support but had to bail out of at the last minute. And the way she eventually found her ideal business partner, so she didn't have to be a lone wolf responsible for everything and not feel so alone in building her now jointly-owned advisory business.

And be certain to listen to the end, where Alex shares her perspective on why she thinks time in the business is such a major determinant of success. Why it's so crucial to be proactive about networking early – and always – in an advisory career. And why she views the entrepreneurial opportunity of owning and building your own advisory business to be especially appealing for women who want to control the direction and duration of their careers.

Pivoting Quickly To A “Work From Home” Model: What Advisory Firms Need To Know

March 23, 2020 07:01 am 2 Comments CATEGORY: Practice Management

With the coronavirus pandemic triggering widespread quarantines and social distancing, many advisory firms are implementing measures to set up their operations as a Work-From-Home (WFH) environment. While this allows everyone in the business to do their part preventing the spread of disease, it also poses challenges for these firms of simply staying operational and providing seamless customer service.

In this guest post from Matt Sonnen, CEO of PFI Advisors (a consulting firm that helps financial advisors build more impactful and profitable enterprises), Matt explains that in times of crisis such as the one we are currently facing, firms that switch to a WFH model have important decisions to make as they transition their employees and infrastructure to a new and unfamiliar way of doing business. For financial advisors, in particular, compliance plays a big role when implementing new technology solutions; specifically, firms need to ensure that client data remains safe and uncompromised (whether that be accomplished through a Virtual Private Network (VPN) or secure internet connections), and that all employees understand and follow safe cybersecurity guidelines.

From a Human Resources perspective, firms may need to provide employees who work from home with more flexible hours, as it can be challenging for some to balance personal and work responsibilities in a home setting (e.g., children or other dependents also staying home who may distract parents from working during normal business hours). Yet, at the same time, it is also very important for advisors to practice good leadership skills by communicating clear and specific expectations for all team members, making sure that everyone knows (or can quickly learn) how to function smoothly as a WFH team.

For financial advisors, business infrastructure considerations include not only the standard business tools such as computers, phone systems, and communication protocols, but also some RIA-specific requirements, such as custodial interactions; processes around performance reporting, trading, and rebalancing; and CRM and financial planning tools.

Ultimately, the key point is that, even though there are many considerations to make when transitioning to a WFH model, the flexibility granted to employees and technology tools available can make it a very practical move allowing for firms to continue operations and to provide excellent client service with minimal downtime. In these times when social distancing is crucial to mitigate the impact of coronavirus, the WFH model not only provides employees with the autonomy to continue working as a team while helping them to stay healthy, it also provides the firm with a good opportunity to ‘test’ the soundness of their business continuity plan and to identify ways to improve upon business operations once things begin to recover and go back to normal.