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#FASuccess Ep 163: Building A Fast-Growth Practice Without Prospecting By Working Under A Credit Union, with Michael Gennawey

February 11, 2020 07:03 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 163rd episode of Financial Advisor Success Podcast!

My guest on today's podcast is Michael Gennawey. Michael is a financial advisor and program manager for SoCal Wealth Management, a hybrid advisory firm in Southern California that oversees $260 million of assets under management for nearly 1,800 clients.

What's unique about Michael, though, is the way he's been able to build SoCal Wealth Management under the umbrella of the Credit Union of Southern California, which itself has nearly $1.6 billion of credit union assets serving almost 120,000 members across 18 branch locations and feeds a continuous flow of prospect referrals to Michael's advisory firm, with the caveat that as part of the credit union, they have to take every client that is referred to them.

In this episode, we talk in-depth about the unique structure of credit unions as customers or, rather, member-owned financial institutions, and how the member-centric culture of credit unions can be so complementary to the client-centric culture of advisory firms. The way that Credit Union of Southern California structures its referral program and trains its Member Service Officers across branches to identify members with client needs and steer them towards SoCal Wealth Management at a pace of nearly three new clients per week, and the way SoCal Wealth structures its offering on the LPL platform to keep it efficient enough to run this kind of high-volume client business.

We also talk about the way that Michael's firm uses an internal team member supporting the financial advisors to both set initial appointments with referrals but also to help screen them to ensure they're a fit for the firm in the first place, SoCal Wealth's financial planning process and their two-meeting approach that delivers the plan interactively with MoneyGuidePro, not only to engage clients but to save significant time in the plan preparation process, and the way that Michael's firm segments clients for ongoing services, given the incredible range of who the credit union refers to them, from multimillionaires to those opening their first IRA.

And be certain to listen to the end, where Michael shares how to figure out which credit unions have the right client-centric culture and which are just offering wealth management as a product-based profit center, the typical payouts that advisors receive in a credit union environment in exchange for having to do little or no business development, and the unique structure that SoCal Wealth has built for its advisors where clients that are referred through the credit union must stay behind, but advisors can still have their own personal clients that the advisor can take with them if they leave in the future.

The Most Efficient Financial Advisor Marketing Strategies And The True Cost To Acquire A Client

February 10, 2020 07:03 am 21 Comments CATEGORY: Marketing

For more than 20 years, industry benchmarking studies have helped financial advisors understand how to manage the profitability of their businesses, and ensure that the costs to service clients are in line with the fees they’re being charged. However, remarkably little research has been done into the costs that must be incurred to actually obtain those clients in the first place and the cost-effectiveness of various client acquisition strategies that financial advisors use.

And it turns out those client acquisition costs are substantial! In our recently released Kitces Research report of more than 800 financial advisors who participated in a survey, the average total cost for a financial advisor to acquire a new client is $3,119 per client. Notably, though, a significant portion of that cost is the ‘time cost’ of the financial advisor themselves (an average of $2,600 worth of time spent, or 83% of the total cost of client acquisition), while only $519 is typically spent on hard-dollar marketing costs themselves. Which suggests that while early-on it may be cost-effective for advisory firms often to substitute advisor time for firm dollars when it comes to marketing efforts, especially for those who don’t have a lot of money to invest into growing their business in those initial years, that advisory firms may be overly reliant on an advisor’s (less-and-less-cost-effective) time to grow the business, rather than allocating marketing dollars to grow the business in a more scalable way.

The significant upfront cost to acquire a client is especially salient for financial advisors with recurring revenue models, as the cost to acquire a client may often be equal to or more than the entire revenue generated by the client in the first year – and the equivalent of several years’ worth of profits – which results in a “J-Curve” of client profitability (where aggregate profitability of a new client is negative in the early years and only turns positive over time). Which is important, as overzealous marketing efforts can cause a steep negative J-Curve dip, which in turn can cause the firm to overextend its growth capacity and ‘grow broke’ even if otherwise on a long-term path to profitability. Though on the other hand, the depth of the J-curve of advisor profitability, when coupled with firms that often have 20-30+ year-average client retention (at 95% to 97% annual retention rates), suggests that most advisory firms may be grossly underspending on marketing relative to the astonishing lifetime client value of an individual new client.

To maximize marketing spending – and minimize Client Acquisition Costs (CACs) – our Kitces Research Report identified the most cost-effective (measured by the actual CAC) and cost-efficient (measured by the revenue generated from the client relative to CAC) marketing strategies in use by the financial advisors surveyed, which included both ‘traditional’ methods (e.g., client referrals, networking, and Centers of Influence), but also underappreciated alternatives (albeit with more upfront cost) including SEO, writing a book, webinars, marketing lists, and paid third-party website listings. Interestingly, the most cost-effective strategies differed for firms with the highest marketing efficiency (books, direct mail, paid web listings, marketing lists, and SEO) versus the most efficient strategies for firms not as ‘marketing-inclined’ as others (paid advertising, paid solicitors, seminars, and general networking).

Examining marketing strategy efficiency relative to advisor adoption rate also reveals that some of the most commonly used strategies are actually among the least efficient (e.g., social media, blogging, and client appreciation events), whereas some of the lesser-used are still very efficient (e.g., marketing lists, radio, solicitors, online ads, and paid websites). This suggests an inherent inefficiency when it comes to marketing strategies chosen by financial advisors. The biggest driver behind this inefficiency appears to be the strong advisor preference for strategies that rely on the advisor’s time (versus hard dollars invested in the strategy), and an overweighting on strategies that produce a high quality of leads over those that produce a scalable quantity of leads or are actually the most cost-effective (which may help to explain why larger firms are outgrowing smaller ones, as they are able to accommodate scalable hard-dollar marketing strategies that smaller advisors might not otherwise be able to afford or be willing to invest into).

Ultimately, though, the key point is that while there is a wide range of marketing options available for advisors, effectiveness and efficiency are important criteria that need to be considered to ensure that resulting growth is sustainable, as initial costs may be recouped only after a client has generated revenue for the firm over several years. In fact, with an average CAC of $3,119, this Kitces Research Report suggests that perhaps the primary reason that advisory firms struggle to serve mass affluent clientele and the broader population is not because it is cost-ineffective to service them, but that it’s too cost-ineffective to market and gain a scalable number of them as clients in the first place! Though on the other hand, with recent reports suggesting robo-advisors have ‘just’ an average acquisition cost of $500 - $1,000, it seems clear that an opportunity exists for advisors to reduce the overall cost of their marketing efforts (and/or for third-party providers to scale their own lead generation services for advisors)… which may both improve the profitability of advisory firms, and allow them to grow more scalably and reach a wider range of clientele.

Weekend Reading for Financial Planners (Feb 8-9)

February 7, 2020 02:58 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the industry news that TD Ameritrade's RIA custody business is continuing with business as usual despite the looming Schwab merger, in what appears to be a combination of both a legal obligation to do so until the deal is finalizing... and a growing possibility (which markets are now handicapping at 30%) that the Department Of Justice may intervene and prevent at least the RIA portion of the merger from going through (e.g., by requiring the RIA business to be spun off if the TD Ameritrade retail business is acquired).

In the meantime, though, the advisor industry is also still adjusting to the potential of the merger, from firms preparing for the possibility that TD Ameritrade's VEO platform may not survive the merger if it does go through (necessitating a substantial restructuring of advisor technology for many firms), and musings about whether the loss of TD Ameritrade's open architecture platform may hinder the emergence of new advisor technology solutions (that in the past decade often built first to TD Ameritrade to go to market) or simply spawn a competing platform to become more open architecture to fill the void and take on VEO's open-architecture mantle.

From there, we have several other articles of notable industry news this week, including an SEC Investor Alert that fraudsters are engaging in pump-and-dump schemes around the coronavirus (have you warned your clients?), Vanguard is making a somewhat-surprising-but-sort-of-not push into offering a private equity fund (but potentially only for institutions using Vanguard and consumers who engage a Vanguard Personal Advisor directly), and a prediction from Cerulli that the dam of advisor retirements is about to break with outright declines in advisor headcount in the coming years that could culminate in nearly 1/3rd of all today's financial advisors retiring in the decade of the 2020s.

We also have a few articles on marketing, including a look at how firms that pay for online lead generation platforms are finding ways to make it work (based on their geography and by hiring business development associates), the challenges in finding and paying for the 'right' marketing software or service providers for financial advisors, and how Schwab is upping the ante on paying outright cash to attract new investor accounts (primarily to compete against other brokerage firms engaging in similar practices, but at the risk of catching financial advisors in the crossfire?).

We wrap up with three interesting articles, all around the theme of the (real) value of a financial advisor in the future: the first explores the ways that financial advisors can provide value beyond just highlighting their type of compensation; the second examines the lost art of being a better listener to help clients on their own journey; and the last explores the unique challenges that arise as financial advisors increasingly shift away from simply being "the experts" and instead try to become a Knowledgeable Guide to help clients feel heard, understood, and supported on their own journeys instead.

Enjoy the 'light' reading!

The Fredo Effect – Mitigating Toxic Relationships In A Family Business

February 5, 2020 07:03 am 0 Comments CATEGORY: Client Trust & Communication

In the movie The Godfather, Michael Corleone, the youngest of three sons, is chosen as successor of the New York mafia family throne, after his eldest brother is slain and over his older brother Fredo. While tradition generally designates the eldest child as successor in most family businesses, Fredo Corleone, less intelligent and weaker in character than his younger brother Michael, is superseded by Michael. The incendiary family dynamics that ensue, sparked by Fredo’s anger and resentment toward his own family, end with betrayal and in the tragic demise of Fredo himself.

In real-life family businesses, similar dynamics (though typically not as grave) can arise in which children may get overlooked for leadership positions or roles of successorship because of their lack of experience or skill. And yet, business-owner parents often feel obligated to ’take care of’ their children, and sometimes end up giving them inconsequential roles in the business because they want them to at least still be involved (which can sometimes also include a disparately high level of compensation because they want to provide what they can for their child). Alternatively, children can at other times be given roles that they are outright ill-equipped to handle (i.e., nepotism), which can result in bad decisions that cause harm to the company itself.

Thus, while these business-owner parents may only have the best intentions for their children, the behaviors and family dynamics that result can be counterproductive, arising in circumstances that can ultimately hurt the family business. This situation is called the “Fredo Effect”, and refers to the damage that results from the dysfunctional interactions between parents and children in the context of a family business.

The primary cause of the Fredo Effect often boils down to “role ambiguity”, in which parents have difficulty separating their role as business owner from that of parent. The child, too, can have role ambiguity challenges, as they often have unclear guidance about their role in the business, complicated by (often unfair) overcompensation they might receive, and may thus struggle to understand what specifically is expected of them.

Not only are parents and children affected by the Fredo Effect, but other employees and family members involved in the business are also impacted. Seeing a child-employee get compensated and otherwise rewarded for a job-not-well-done can be demoralizing to workers who are diligent and dedicated to their jobs, but who get none of the recognition or benefits that “Fredo” gets. Over time and left uncorrected, the situation can lead to severe erosion of employee morale and working conditions.

The most effective way to mitigate (and potentially prevent altogether) the Fredo Effect is to ensure that formal, well-written job descriptions are in place, which clearly define the standards and expectations for each role in the company. Establishing a “family council” can also provide a forum to facilitate open communication between family members, which can help them work through role ambiguity challenges by identifying (and delineating between) personal and business concerns, and talking them through with family members.

Financial advisors can help their clients by offering services to assist them implement these solutions. For example, an advisor can assist their family-business-owner clients in reviewing job descriptions to ensure that they clearly define the role, requirements, and expectations for each job; that a sensible reporting structure is in place; and that growth and development opportunities exist for all current employees. Advisors can also participate as an objective expert in family council meetings (and also facilitate the participation of other subject-matter experts as needed). And finally, advisors can help family-business-owner clients establish their own support system with each other, by coordinating introductions and hosting instructional events around issues relating to the Fredo Effect.

Ultimately, the key point is that many family-business owners struggle with role ambiguity issues when it comes to their children. The children, too, face role ambiguity challenges that can lead to dysfunctional behaviors, which can be potentially harmful for the business itself. Financial advisors with family-business-owner clients are in a unique position to serve as an objective third-party expert to help the family mitigate the effects of Fredo, and ideally prevent them from arising at all in the first place.

#FASuccess Ep 162: Efficiently Expanding In-Depth Financial Planning Services To Move Beyond The AUM-Only Model, With Tim Bickmore

February 4, 2020 07:01 am 4 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 162nd episode of Financial Advisor Success Podcast!

My guest on today's podcast is Tim Bickmore. Tim is the co-founder and the director of financial planning for LBW Wealth Management, an independent RIA based in Madison, Wisconsin, that oversees more than $50 million of assets under management for 230 client households.

What's unique about Tim, though, is that despite having rapid success and growing their advisory firm to over $50 million in just the past 5 years, they're concerned that what has gotten them here won't get them there – to the growth that comes next, particularly as the firm is focusing more and more on offering comprehensive financial planning advice and trying to manage the additional time and productivity limitations that come with a deeper financial planning process. Leading Tim not only to share his story of business success in getting to this point but also to ask for advice about what they should be doing to grow profitably from here.

In this episode, we talk in-depth about the evolution of Tim's advisory firm, from their initial five years of building around the AUM model, their decision to shift to a blended model with a base monthly subscription fee for financial planning advice alongside a reduced AUM fee for investment management. The way their new business models, helping them both to ensure profitability for new clients regardless of their assets, while also opening up new markets for non-AUM young professionals and business owners in their 20s, 30s, and 40s. And the real-world challenges and how to position a change in your fees and focus of the firm with all your existing clients who may now face a significant fee increase.

We also talk in-depth about LBW's financial planning process for younger clientele in their 20s, 30s, and 40s; the reason the firm left MoneyGuidePro for eMoney Advisor as a better platform to give advice to next-generation clients; the increasingly cash-flow-based approach that LBW has taken, focusing not on long-term cash flow planning and retirement projections but categorizing and reflecting on the client's short-term household cash flow instead; how Tim is implementing a more “Agile Financial Planning” approach in his advisory firm; and how the reality is that even a highly-efficient and profitable advisory firm will still find it less profitable to scale financial planning for the second or third hundred clients than it is for the first 100.

And be certain to listen to the end where Tim shares the unexpected surprises that hit him as a business owner running a financial planning business. How even though they were challenging, he still believes that they were necessary to go through as part of the learning process to build a business, and why in the end it's all been worthwhile to him, not simply because he's been able to grow a valuable business, but because in the end, financial planning itself is first and foremost psychologically rewarding to us in the opportunity to meet new people from so many different walks of life and help them.

The Latest In Financial Advisor #FinTech (February 2020)

February 3, 2020 07:02 am 0 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the February 2020 issue of the Latest News in Financial Advisor #FinTech – 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 and wealth management!

This month's edition kicks off with the big announcement that Visa is acquiring Plaid for a whopping $5.3B (barely a year after Plaid itself acquired Quovo, a popular account aggregation solution for financial advisors), in a move that will help cement account aggregation as a standard fixture in the financial services landscape, and likely help to standardize (and reduce the frequency of breakages) account aggregation data gathering… though for the price that Visa paid to acquire Plaid, it doesn’t appear likely that serving financial advisors will be a priority, raising questions about what Visa’s commitment will be to Quovo in the long term and leaving the door open for Yodlee’s continued growth in the advisor community.

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

Invesco’s Jemstep announces a major deal with Citigroup to power its new Citi Wealth Builder robo platform… to be funded exclusively with Invesco model portfolios comprised of Invesco ETFs
Fidelity and Schwab announce a series of new enhancements to their own digital onboarding solutions and a long-term pledge to eliminate account application forms altogether
WisdomTree announces that it intends to sell its robo-for-advisors platform AdvisorEngine for a significant loss that amounts to little more than what it originally paid for Junxure, raising questions of where Junxure itself will land when WisdomTree puts the company up for sale
TA Associates announces that it is putting Orion Advisor Solutions up for sale for nearly $2B, in what may become the biggest yet private equity sale of an RIA technology solution

Read the analysis about these announcements in this month's column and a discussion of more trends in advisor technology, including the growing intertwining between risk tolerance assessment tools and rebalancing software, Act Analytics launching a new ESG research platform for advisors looking to more easily analyze and then customize ESG portfolios for individual clients, Whealthcare’s founder splitting off from the company despite recent industry awards as advisor growth appears to have been lagging, and a growing level of integrations and adoption of cash management solutions for financial advisors as the pressure grows for advisors to show value for clients beyond just the portfolio itself.

And be certain to read to the end, where we have provided an update to our popular new “Financial Advisor FinTech 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 (Feb 1-2)

January 31, 2020 02:51 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the industry news that TD Ameritrade anticipates most advisory accounts will not need to be re-papered in its prospective merger with Schwab... even as the merger itself is now potentially delayed while the Department of Justice begins an anti-trust inquiry as to whether the Schwabitrade merger would lead to an unduly anti-competitive environment (particularly with respect to RIA custody).

Also in the news this week is a planned push from E*Trade Advisor Services to significantly ramp up both its technology and marketing spending in the hopes of capturing a share of however many advisors decide they're displeased with the Schwabitrade merger and begin to look for alternatives, and Fidelity's announcement of new refinements to its onboarding process that cuts the amount of information advisors have to fill out by 40% and reduces the account application paperwork from 9 pages down to just 2!

From there, we have several additional items of noteworthy news this week, including a coming series of changes to the FICO credit scoring system that may boost the credit scores of those with already-good credit but potentially reduce credit scores for those who are already struggling to pay their loans on time (in a deliberate effort to better separate 'good' credit risks from 'bad' for lenders increasingly concerned about the long-in-the-tooth economic expansion), IRS guidance for brokerage firms that unwittingly sent out the 'standard' first-RMD notices to those turning age 70 1/2 this year who in light of the SECURE Act won't actually need to begin their RMDs this year, and a look at the new CFP Board Standards of Conduct that recently took effect (and that the CFP Board will begin to enforce in June).

We also have a few articles on planning for aging clients, from a look at the rising frequency of older couples who are "living apart together" by remaining in ongoing committed relationships where they deliberately do not get married nor move in to live with each other, the ongoing shift in consumer preference to die at home and not in a hospital (as last year, deaths from natural causes were more likely to occur in the home than in a hospital, for the first time in more than 50 years!), and the importance of finding a "new normal" after a major health event occurs, rather than trying to regain one's prior lifestyle that simply may no longer be feasible (and make us unduly unhappy to even try).

We wrap up with three interesting articles, all around the challenging theme of fraud, financial abuse, and bad advisor recommendations: the first explores why and how athletes are disproportionately targeted by swindlers and defrauded (and the rise of lawyers and forensic accountants who specialize in unraveling such scenarios); the second examines the ways that spousal financial abuse are transforming in the technology era (where it's easier to hide assets with cryptocurrencies and surveil a spouse with computers and GPS tracking, but also easier to spot and recover paper trails for assets that have been hidden); and the last looks at a new study that finds, when faced with conflicted compensation while making a recommendation, we may be more likely to try to rationalize after-the-fact why the higher-compensation recommendation may have been good, than de-bias ourselves by being aware of the potential conflict in the first place... suggesting that in the future, regulators may try to limit advisors' own access to information about how some recommendations may benefit themselves or their companies more than others (as when people aren't aware of the conflicts until after the fact, they still give objective recommendations), or increasingly try to focus instead on levelizing advisor compensation (so advisors can still be well-compensated for their work, just not differently compensated for various recommendations).

Enjoy the 'light' reading!

Kitces & Carl Ep 26: Talking Clients Out Of The Bunker Portfolio

January 30, 2020 07:27 am 4 Comments CATEGORY: Kitces & Carl Podcast

Clients often worry about how “the market” may be doing at any given time, which is understandable given the assets they may have invested there. However, there are times when some clients (particularly those who experienced the worst of the financial crisis a little over a decade ago) completely lose faith in the entire economic system altogether and want to abandon their financial plan to go all-in with a ‘bunker portfolio’, investing solely and entirely into select assets (like gold) that they feel will ‘save them’ from the risk of an overall failure of the entire economic system.

The fear that stokes the bunker portfolio goes beyond the typical concern over bear markets or periodic market volatility – it is based on a deeper fear and doubt about the entire foundation of the economic system. And for financial advisors working with such clients, the challenge is in helping them understand that, despite inevitable economic cycles, shifting their portfolio to ‘bet’ on a complete collapse of the entire economic structure is itself a low-odds, high-risk bet, such that even with the potential risk, the best course of action is generally still to stick to their financial plan and stay the course instead.

In our 26th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards discuss how to communicate with clients with extreme distrust of the economic system as a whole, as contrasted with temporary concerns over market volatility (in which case a different conversation around market timing needs to be considered), and present strategies to help those clients from making fear-based decisions.

The first step in talking clients out of the bunker portfolio is for advisors to confirm that clients appreciate the fundamental principles around risk and return and that for more than a century, equities have fared better than fixed income, and fixed income has outperformed cash.

Even so, clients may still feel beholden to escape-hatch strategies to avoid market catastrophe. In these situations, advisors can help them understand the value of diversification by framing hypothetical out-of-market portfolios as risk-based ‘bets’ themselves, considering whether the portfolio the client is proposing would stand the test of time. And by examining the data, the advisor can simply ask (and assess) how often (if at all) the proposed portfolio would have made sense and actually been an appropriate choice. Often, this is enough to convince the client of the merits of their original plan and to stay the course.

For some clients, however, no amount of reason will persuade them that the economic system is not actually about to fail. And while an advisor’s primary role is to help clients meet their goals and to clearly understand the impact of their decisions, the advisor must also consider the overall happiness or dissatisfaction the client may experience as they follow their recommended plan in achieving their goals. Because if the client doesn’t fully agree with their advisor’s recommendation, and becomes so stressed about going along with the plan anyway, the advisor’s plan becomes exactly that – the advisor’s plan, and not the client’s plan. On the other hand, the strategy that the client does want to pursue, in opposition to their advisor’s recommendations, may not be one that the advisor, in good faith as a fiduciary of the client, can stand behind. Accordingly, in such circumstances, the advisor may simply need to acknowledge that the best course of action would be to terminate the relationship.

Ultimately, though, the key point is simply that clients who have completely lost faith in the economy need to be on the same page with their advisor around assumptions and principles of the market for the client-advisor relationship to continue on a healthy path. Because, unless the client is in agreement with the basic assumptions on which their financial plan has been built, it may not be possible to talk them through their fear-based decisions at all.

Distinguishing Financial Stress From Anxiety And Client Communication Strategies To Help

January 29, 2020 07:04 am 0 Comments CATEGORY: Client Trust & Communication

In today’s digital-age culture where nearly all sources of news and media are instantly accessible and information overload is a normal state of being, it is not surprising that stress and anxiety are very commonly experienced in our fast-paced society. And in fact, stress and anxiety about specific financial problems are what most often drive people to seek the help of an advisor in the first place! Which, in turn, means that advisors should have some strategies in their toolbelts to effectively help clients (prospective or otherwise) who might be stressed and anxious. Accordingly, the first step is understanding that, while the terms “stress” and “anxiety” are often used interchangeably, the reality is that they are two very different things, indeed, and require different approaches.

While stress is the result of external stimuli perceived to pose some level of threat (with a corresponding response to the threat that may involve uncertainty about one’s own ability to deal with the issue at hand), anxiety results from internal forces arising from unhealthy attitudes towards a particular idea or concept. Thus, while stress can be eliminated when the external stimuli are removed, the same is not necessarily true for anxiety. While an external stimulus might serve to trigger anxiety, removing it may have no effect on the anxiety since it is the internalized idea that causes the anxiety (versus the actual external trigger).

A recent study released by the FINRA Foundation examined specific differences between individuals reporting financial stress and financial anxiety and found that 44% of all respondents reported experiencing financial stress. Other results provided by the study showed stress levels varied by sex, income level, age group, healthcare concerns, presence of dependents, and retirement status. More detail on these differences can be found in the following figures.

Interestingly, financial anxiety is consistently higher than financial stress across a variety of demographic groups, roughly 10 percent higher. This might be justified by the very definitions of stress and anxiety, whereas stress can be addressed by removing the stimuli acting as the stressor, anxiety will linger as psychological damage even in the absence of whatever stressor might be the initial root of the anxiety.

And while stress and anxiety may appear very similar, the underlying causes are distinct and communication styles to deal with each condition should be adjusted accordingly. For instance, advisors who have clients experiencing stress can most effectively help them by reframing the stressful issue positively (such as by reminding how they’ve successfully overcome similar challenges in the past), focusing on the problem (discussing the specific problem and plan of attack), and making to-do lists for the client. On the other hand, clients with anxiety may be overwhelmed by these strategies. Accordingly, advisors can use a different set of techniques, such as providing a safe place to have conversations about money issues, offering guidance as a teacher and supporter, and recognizing and acknowledging growth and progress. And while stress and anxiety may appear to have similar symptoms on the surface, simple assessment tools can help the advisor assess whether their clients are experiencing stress or anxiety so that communication strategies can be adapted accordingly.

Ultimately, the key point is that while stress and anxiety affect many individuals, financial advisors can best help their clients by having mechanisms in place to help them identify any stress and anxiety they may be experiencing. Additionally, taking care of themselves and managing their own stress and anxiety issues is something else advisors must do; otherwise they run the risk of unintentionally transferring their own emotions onto the client.

#FASuccess Ep 161: Cultivating The Right Firm Culture With A Reality-Based Leadership Approach, with Tessa Felix

January 28, 2020 07:03 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 161st episode of Financial Advisor Success Podcast!

My guest on today's podcast is Tessa Felix. Tessa is the HR and operations lead for PWL Capital, an advisory firm based in Montreal and Ottawa that oversees nearly $3.6 billion in assets under management.

What's unique about Tessa, though, is her particular focus on developing the culture of her advisory firm, and the systems and structure that she's put in place to help hold everyone on the team accountable for their work, in addition to making the firm an enjoyable environment to work in.

In this episode, we talk in-depth about the Reality-Based Leadership system that Tessa has incorporated into her management approach in the firm. Why the emotional expense of employee drama is such an important cost to manage and save for the firm; Tessa's routine of weekly team meetings, internal team podcasts, and monthly one-on-ones that she uses to maintain the culture of the firm; and why in the end, culture is not just about creating a fun workplace, but about the actions and behaviors that are expressed in the workplace.

We also talk about Tessa's own career journey. From joining her advisory firm in an operations role, earning her advisor licenses to shift into a client-facing advisory role, deciding that she actually enjoys the work of managing people and building culture more than working directly with clients and shifting back into an internal operations role, the way she navigated the challenging transition from being a peer of her co-workers to their manager instead, and how she ultimately became not just the HR and operations lead, but the culture lead for her advisory firm as well.

And be certain to listen to the end, where Tessa shares some of the key books that have influenced her journey of learning how to develop and manage people and culture, the software tool she uses to help manage internal team meetings and employee engagement, and the importance of both cultivating a growth mindset in employees and having a growth mindset as a firm where culture itself will always be fluid and evolving.

And so with that introduction, I hope you enjoy this episode of the "Financial Advisor Success" podcast with Tessa Felix.