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Is The CFP Board Finally Ready To Enforce The Standards Its Public Awareness Campaign Promotes?

August 8, 2019 07:03 am 7 Comments CATEGORY: Planning Profession

On July 29, the Wall Street Journal published an article which reported that nearly 10% of the certificants included on the CFP Board’s “Let’s Make a Plan” website, which the CFP Board makes available to consumers to find a CFP professional, have material public disclosures listed on the FINRA BrokerCheck site (including several with felony charges!). Notably, though, exactly zero of those “red flag” disclosures are included on the CFP Board’s own website. Which raises the question: How effectively does the CFP Board ensure its own professional standards of conduct are really being upheld, especially as it trumpets a consumer public awareness campaign advocating that those with the CFP marks are the “Gold Standard” that consumers should look for?

In this episode of #OfficeHours with Michael Kitces, we discuss the main issues raised by the WSJ article (as well as the CFP Board’s response), how the CFP Board’s public awareness campaign has unwittingly amplified the issues, some potential challenges the CFP Board faces in addressing these challenges, and explore what it might take for the CFP Board to close the gap between what it promotes in its public awareness campaign and the standards its CFP professionals are actually meeting.

While the CFP Board promotes its “Let’s Make A Plan” site as the “go-to” resource for finding qualified financial planners, the WSJ report pointed out that they have failed to disclose important background details (which even FINRA discloses on its own BrokerCheck website) that would be relevant to a consumer seeking a trustworthy professional. To which the CFP Board was quick to respond, referencing limited staffing and budget resources (70 employees and a $30 million budget, compared to FINRA’s 3,000 employees and $1 billion budget) and non-profit status (meaning that they can only certify and set standards for its certificants, as opposed to a regulatory agency’s official authority to investigate allegations against advisors), as reasons that the WSJ shouldn’t necessarily hold their “Let’s Make A Plan” site to the same standard as a bona fide regulator like FINRA.

The CFP Board also maintained that it is not their policy to publish allegations of wrongdoing, especially if the CFP Board hasn’t investigated them itself, and will only publish disciplinary actions against prohibited activities fully investigated by the Board (as contrasted with FINRA, that sometimes will publish information about client complaints, even if there was no ultimate finding of wrongdoing). Yet historically, disciplinary action against a CFP certificant has been taken by the CFP Board only after another regulator has found them guilty. And ironically, other regulatory bodies generally have less stringent rules of conduct. Which means in essence, the CFP Board is claiming a higher standard of conduct, but often only taking enforcement action based on other regulators’ lower standards… raising the question of how exactly the CFP Board can ever ensure its CFP professionals actually will uphold its proclaimed higher standards?

Despite this, the CFP Board acknowledged it could do better, promptly established an independent task force to “strengthen and modernize enforcement”, and has pledged to begin checking third-party regulatory records (e.g., FINRA and the SEC) every time CFPs renew their certification, instead of conducting an initial one-time background check and relying on self-disclosure in subsequent years.

Still, though, the question remains of how can the CFP Board possibly enforce the higher standards they have been advocating for nearly the last decade with their $10 million annual awareness campaign, if the CFP Board doesn’t have the capacity or authority to fully investigate allegations made against CFP certificants?

Perhaps the most straightforward path is, to the extent that promotion of CFP Board’s higher standards and enforcement of those standards are inextricably linked, the CFP Board’s public awareness budget itself could be (partially) reallocated to support efforts to uphold and enforce CFP standards as well? Or alternatively, the CFP Board could also be more proactive about collecting information already available from third-party regulators, make it easier for fellow CFP professionals to identify peers who violate the Board’s Standards of Conduct, and devise an improved investigative process to actually be able to review complaints and disciplinary issues.

Ultimately, the key point is that the CFP Board needs a mechanism to enforce the high standards CFP professionals are required to follow and that the CFP Board is so proactively marketing to consumers through its own public awareness campaign. And the need for better enforcement mechanisms is especially critical with the new CFP Code of Ethics and Standards of Conduct going into effect in October, 2019, which will only increase the stakes further. Proactively reporting all disciplinary records and creating tools for consumers and CFPs to easily register complaints are simple steps, at least initially, towards improving oversight of financial advisors, until the new independent task force releases its recommendations for strengthening and modernizing enforcement of CFP standards.

Figuring Out The “Best” Healthcare Option For “Early” Retirees

August 7, 2019 07:11 am 18 Comments CATEGORY: Insurance

Given the skyrocketing cost of healthcare (as well as the increasing need for it as we age), it’s not too surprising that Baby Boomers’ biggest worry is how they’re going to afford their medical costs in retirement. Thankfully, however, Medicare (which is available to individuals who paid – or have spouses who have paid – Medicare taxes for at least 10 years and are at 65 years of age or older) is the de facto option for healthcare for retirees. And it’s actually quite affordable – at least relative to the underlying costs of care – due to the fact that Medicare taxes already cover between 77% and 99% of a Medicare recipient’s premiums (such that they only have to pay the net remaining premium out of pocket).

The caveat, however, is that, while the majority of individuals plan to retire at some point after they reach age 65, there is still a non-trivial number of individuals, whether by choice or by need, who retire before they are eligible for Medicare (or even Social Security, for that matter) and still need health insurance coverage (and can’t just simply be added to their still-working spouse’s employer-sponsored plan).

Fortunately, early retirees do have a few options as they consider the best way to obtain health coverage in early (pre-Medicare) retirement. For workers who retire from a company with greater than 20 employees, COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage allows newly-separated employees (or employees who work so few hours that they’re not eligible for their employer’s health plan) to continue their existing insurance coverage at the same (full-premium) cost (plus an administrative fee that is usually capped at a maximum of 2% of the premium). However, COBRA coverage generally lasts only 18 months, and thus can only (except under certain conditions) be used to bridge short gaps before Medicare eligibility begins. Another option for retirees looking to continue their coverage using the same health insurance provider is to “convert” the plan under the group to an individual plan… at least, as long as the plan allows for such a conversion. Again, though, this isn’t always an ideal alternative, as there’s no requirement that the terms (or cost) of such an individual policy are the same as their “old” group plan.

Meanwhile, retirees who (either due to eligibility or cost) decide that either COBRA coverage or a conversion policy isn't the right choice for them, may choose to simply purchase health insurance using their state-approved exchange created under the Affordable Care Act. However, while retirees can’t be denied coverage for a pre-existing medical condition, coverage can only be purchased during specific open enrollment periods, or within 60 days that the employer’s plan is terminated (which means time is of the essence after retiring to make a decision).

Ultimately, though, the key point is simply to realize that, while retirees may be understandably worried about their healthcare costs eating away at their life savings, the availability of Medicare ameliorates those concerns to a significant degree. However, for those who aren’t yet eligible for Medicare, the issue of securing health insurance to bridge the gap until they reach age 65 becomes less clear… particularly for those whose budgets aren’t exactly robust. Regardless, the good news is that there are options, with coverage that is guaranteed (at least if timely obtained). But the range of choices means it is necessary to conduct a thorough cost/benefit analysis when finding the best option between purchasing COBRA coverage, converting an existing group health plan to individual coverage, and/or purchasing insurance via a state-approved health insurance exchange.

#FASuccess Ep 136: Leveraging Risk Tolerance And Financial Planning Software Upfront To Deepen Conversations With Prospects, with Nina O’Neal

August 6, 2019 07:07 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 136th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Nina O’Neal. Nina is a partner with Archer Investment Management, a hybrid advisory firm based in Raleigh, NC that oversees nearly $90 million of assets under management for 165 clients.

What’s unique about Nina, though, is the authentic way that she juggles the realities of being an advisor, a firm owner, and a parent, going so far as to pioneer the advisor video series “The Juggle is Real” about the challenges of work-life balance as a financial advisor raising a family.

In this episode we talk in-depth about Nina’s own advisory firm, the unique way they use Riskalyze for risk tolerance assessments not just with existing clients, but as part of the prospecting process, how she also integrates the eMoney Advisor portal as a way to paint the picture with prospects of how their firm works with clients on an ongoing basis, and the unique client service commitment postcard that all clients receive after being on board for three months.

We also talk about how Nina’s advisory firm is structured, the way the firm decides to handle its mixture of fee-based advisory and commission-based brokerage business, how the firm structured its AUM fee to be an “all-in” AUM fee that captures the underlying costs of both trading and any separate account managers, why Nina’s firm doesn’t view the hybrid model as a waypoint to the independent RIA model and plans to remain a hybrid firm, and how, despite the number of naysayers about broker-dealers and their sometimes overbearing compliance culture, Nina actually chooses to stay with her broker-dealer, Triad, precisely because she actually appreciates the quality of their compliance support.

And be certain to listen to the end, where Nina talks about the real-world challenges of balancing the burdens of being a parent with the challenges of growing an advisory firm, why she decided to create her own advisor video series “The Juggle is Real”, and her latest endeavor in launching the new Female Advisor Network specifically as a community to help empower fellow female advisors in their own path of building an advisory business and balancing the rest of their lives in the process.

So whether you're interested in learning about how Nina uses Riskalyze to deepen her relationships with her clients, why she has no interest in letting go of her broker-dealer, or the advice that she has for young, female advisors, then we hope you enjoy this episode of the Financial Advisor Success podcast.

The Latest In Financial Advisor #FinTech (August 2019)

August 5, 2019 07:19 am 3 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the August 2019 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 announcement that Orion Advisor Services is acquiring newcomer financial planning software maker Advizr for a whopping $50M (on a revenue base of only $3M), and will almost immediately begin offering it for free to Orion users as a way to make the Orion client experience more financial planning centric… but in the process, creating potential client experience and workflow conflicts for actually-planning-centric advisory firms already using other third-party financial planning software tools.

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

Independent software goes wirehouse as Morgan Stanley selects Box to power its new Client Vault and Merrill Lynch cuts a deal with Envestnet Tamarac to replace its own proprietary portfolio performance reporting solution.
AdvicePay launches a new Fee Calculator tool for advisory firms to show and explain their pricing to clients, as Schwab’s Intelligent Portfolio Premium service quickly garners $1B in 3 months with its own financial-planning-for-a-monthly-subscription-fee offering.
Northern Trust Asset Management acquires robo-advisor-for-advisors Emotomy as standalone digital onboarding tools continue to struggle to find traction.
Salesforce rolls out a new “downmarket” version of Financial Services Cloud in an attempt to compete in the small-to-mid-sized RIA market

Read the analysis about these announcements in this month's column and a discussion of more trends in advisor technology, including Betterment rolling out an “Everyday” high-yield cash savings option for its investors but finding that it’s the Betterment For Advisors RIAs quickly becoming its biggest cash referrers, Ritholtz Wealth re-launches its LiftOff “robo” service for small clients and chooses to pay Betterment For Advisors 0.25%/year just to not use existing RIA custodians’ digital onboarding tools, “Techno-TAMPs” are on the rise as Ethic Investing raises a $13M Series A to provide advisor-customized centrally-managed SRI strategies, Plaid rolls out new student loan account aggregation capabilities that may finally bring more student loan planning tools to advisors, and Envestnet MoneyGuide partners with Jackson National to leverage its wholesalers to provide training on MoneyGuideElite’s new “Secure Income Modeling” tool designed to make it easier for RIAs to begin using annuities with their clients.

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 new column on financial advisor technology to be helpful! Please share your comments at the end and let me know what you think!

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

Weekend Reading for Financial Planners (August 3-4)

August 2, 2019 02:59 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the big investigative journalism report from the Wall Street Journal this week that the CFP Board's "Let's Make A Plan" website was including thousands of CFP brokers who had a history of disciplinary misconduct and/or other material disclosures on the FINRA website that were not communicated on the CFP Board's website... leading the CFP Board to immediately make changes to its site to link to BrokerCheck and IAPD, to increase its reviews of CFP professionals' disciplinary records during the renewal process, and to appoint a new Task Force chaired by former Texas Securities Commissioner Denise Voigt Crawford to "strengthen and modernize" CFP Board's enforcement.

Also in the news this week are several articles about the increasingly controversial 12b-1 fee, from a lawsuit from the SEC against Commonwealth Financial alleging that the firm received more than $100M in not-properly-disclosed 12b-1 fees as part of a revenue-sharing agreement with NFS (that may have directed investors towards higher-cost share classes that paid such 12b-1 fees to NFS and Commonwealth), and a look at how Vanguard itself competes by not paying 12b-1 fees to other platforms even as Vanguard's own brokerage and Personal Advisor Services solution may be collecting 12b-1 fees from other mutual funds in order to fund their own platform costs.

From there, we have a few articles on cash flow and budgeting issues, from a look at the recent Equifax settlement for $125 cash or up to 10 years of credit monitoring (and how to claim them, and why the credit monitoring may be a far better deal than the cash), to a takedown of why consumers should ignore Suze Orman's recent admonition that "wast[ing] money on coffee is like peeing $1M down the drain", and an interesting framework to help figure out when it is a good idea to "go cheap" and when it's better to still spend up for quality.

We also have a few articles on mergers and acquisitions in the advisor space, including the latest "Deal Book" report from M&A consultant David DeVoe that finds record highs in both the volume of RIAs selling and the valuations that advisory firm sellers are commanding in the marketplace, a breakdown of the common components of an advisory firm deal (from Deal Structure to Financing to Tax Treatment), and some "must-know" items to be mindful of when you receive an unsolicited inquiry to sell your advisory firm and now must suddenly decide whether to consider the buyer's offer.

We wrap up with three interesting articles, all around the theme of maintaining a productive office workspace: the first looks at the increasingly popular rise of "phone booths" (but without the phones) as a form of 'privacy pod' in open floor office plans; the second explores the research on how having multiple monitors really does make us more productive at work; and the last looks at how the physical layout of an office space matters not only for its visual and aesthetic appeal, but because it can impact the sound of the space, which in turn can impact everything from our productivity to even our mood in the office.

Enjoy the "light" reading!

Kitces & Carl Ep 13: The Better Way To Send Market (And Other) Commentary Emails To Clients

August 1, 2019 07:01 am 2 Comments CATEGORY: Client Trust & Communication Kitces & Carl Podcast

In our last episode, Kitces & Carl opened a proverbial can of worms by asking if financial advisors still, in this day and age, send out market commentary to their clients. And if so, what do they send? The general conclusion was that, yes, advisors still need to touch base with their clients, outside of their regular service cycle, using some sort of bulk communication tool or personalized report. Because doing so accomplishes several goals, including and especially that it demonstrates to clients that the person they trusted to manage their life savings is “paying attention.”

Regular communication, meanwhile, is especially important for those clients who are in the “Cone of Trust” (e.g., that stage of the relationship where a client has been with an advisor long enough to meet much less frequently and understands that the advisor will reach out if there’s a problem, and vice versa) because it helps ensure that the client actually stays in the Cone of Trust. Unfortunately, though, while our intrepid hosts were able to conclude that sending something is better than sending nothing (and especially better than anything that features a couple holding hands against a backdrop of a lighthouse on the beach), they ran out of time before they could answer the question: What should advisors be sending their clients?

So, in our (lucky) 13th episode, Michael Kitces and financial advisor communication expert Carl Richards sit down to discuss why it’s important to send regular commentary, provide a specific example of an easy and effective way to let clients know that you are thinking about them and their challenges, and why it matters so much that it ultimately comes from you (versus any number of white-labeled, off-the-shelf offerings).

In general, what advisors send out for regular communication generally fell into three buckets. Some use third-party commentary and other materials from a reputable source (some of which can be “white-labeled”), others question the value of even sending anything out at all (since the objective is for clients to not focus on and become concerned about short-term market gyrations), while still others insist no one should be sending content unless it was produced in-house (since the goal is for the advisor to establish their own expertise and authority).

For advisors who fall somewhere between the second and third camps, but whose skill set doesn’t include content creation, one effective strategy is to send out a collection of interesting articles (which may or may not have anything to do with money or “the market”), along with a short comment on why you found it useful. It provides a means of still connecting with clients (since ultimately, whether you connect frequently can be just as important as what you send to connect). And this way, when something noteworthy in the market does come along, your clients (or even prospects) are already accustomed to your cadence.

Ultimately, the key point is simply that it does matter that advisors send something to their clients and that they do so on a fairly predictable basis. Because if you are consistently communicating with clients, you can dictate the tone and focus of whatever it is you’re sending. Which means at the end of the day, what matters is that you do take some time, on a regular basis, to send something (preferably in your own words… even if it’s just a sentence or two about why you find a particular article useful). And when you do, you send a clear signal to your audience that you’re thinking about them… and about the responsibility you have as a steward of their life savings!

The 6 Types Of Itemized Deductions That Can Still Be Claimed After TCJA

July 31, 2019 07:03 am 1 Comment CATEGORY: Taxes

Touted as the most significant update to the Internal Revenue Code in decades, the Tax Cuts and Jobs Act of 2017 (TCJA) did indeed introduce several noteworthy changes, including the new 20% qualified business income owners of (some) pass-through entities, a (much) lower corporate tax rate, a (much) higher estate tax exemption, lower individual tax rates for the vast majority of taxpayers, and a slightly higher total standard deduction (which combined both the existing individual standard deduction and the per household personal exemption). Ironically, though, while the TCJA legislation largely accomplished its objective of simplifying the process of filing taxes, it did so largely by making it a lot harder for households to itemize deductions at all going forward!

As while the new standard deduction isn’t that much higher than the combined prior standard deduction and personal exemption, the threshold for itemizing deductions in the first place is significantly higher than it was before, simply because the personal exemption wasn’t part of the equation when calculating the prior deduction threshold. Moreover, the TCJA also either eliminated completely or curtailed many of the most popular itemized deductions that got people over the hurdle to itemize in the first place, including moving expenses, many miscellaneous itemized deductions, and unreimbursed employee expenses (to name just a few). The end result: the number of households eligible to itemize deductions at all is anticipated to fall from approximately 30% of US households to “only” 10%.

Regardless, despite the upheaval, itemizing deductions is still a viable strategy to reduce overall tax obligations, and there are still six core deductions available to taxpayers, including: medical expenses (to the extent that they exceed 10% of Adjusted Gross Income – up from 7.5% in 2018); taxes paid to other governmental entities (both state or local municipality taxes as well as foreign governments, but with a $10,000 maximum deduction limit… regardless of filing status!); at least some types of interest paid (for not only mortgage interest – up to a $750,000 principal limit – but for investment purposes as well); charitable giving (but with limits); casualty and theft losses (but, for individuals, only if they were attributable to a Federally declared disaster); and other (miscellaneous-but-not-subject-to-the-2%-of-AGI-floor) deductions (such as gambling losses and Ponzi scheme losses, among others).

It’s important, meanwhile, to note that most of the still-available itemized deductions simply don’t occur regularly, and there are even fewer large enough to get taxpayers close enough to the new standard deduction threshold to make itemizing “worth it” on a recurring basis. Those items include big mortgages (particularly when mortgage rates are still at historically low levels), large ongoing charitable deductions (even though the deduction amount will necessarily be much less than the amount given), big state and local tax deductions (at least for individuals, where the $10,000 SALT cap gets them close to a standard deduction that is “only” $12,000), high margin investing (since interest paid on investments is deductible… as long as the returns on the investments are taxable in the first place), big long-term care events (which, while undesirable, can require large ongoing medical expenses), and significant stretch-IRAs that are eligible for the Income in Respect of a Decedent (IRD) deduction (to the extent that the IRA was inherited from someone who actually had to pay Federal estate taxes).

While few households will be able to meet the standard deduction threshold every year using just those big-ticket items, though, it is feasible (and perhaps even much more likely) that taxpayers will be able to itemize on an intermittent basis, by combining a few (or several) additional deductions on top of other (lower-but-recurring) deductions. For instance, a taxpayer might combine ongoing mortgage interest, property taxes, and state income taxes with a large charitable contribution to push past the standard deduction threshold in order to take advantage of additional tax benefits.

Ultimately, the key point to realize is that the combination of a higher Standard Deduction threshold and the curtailment of itemized deductions, makes it much harder to itemize than it once was (if only because the new standard deduction provided a more substantive and generous tax benefit in the first place). Yet while fewer households are able to itemize each and every year, some may still be able to do so, either on an ongoing basis, or at least intermittently by stacking infrequent clusters of additional deductions on top of recurring items that typically aren’t large enough to matter from a tax planning perspective. Which is important, because at the margin it’s still valuable to identify and plan for the (few) years where itemized deductions will still be available, as those are the years when there’s the most tax benefit to stacking any other possible “add-on” deductions on top for more tax savings!

#FASuccess Ep 135: Developing The Systematized Business Development Playbooks To 10X Your Advisory Business, with Kathryn Brown

July 30, 2019 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 135th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Kathryn Brown. Kathryn is the co-founder of Morton Brown Family Wealth, an independent RIA in Allentown, Pennsylvania that oversees nearly 110 million of assets under her management for 85 affluent households. What's unique about Katie, though, is the way they position their firm for the potential for 10X growth in the coming years, systematizing everything from their business development to their financial planning processes and even hiring a Data Geek Chief of Staff as just their third hire to ensure the firm stays focused on the metrics that matter the most.

In this episode, we talk in-depth about the playbooks that Katie and her partner have developed for the firm, from a business development playbook that articulates exactly what the firm does to nurture a potential new clients in each stage from being a source name to a lead to a prospect and eventually onboarding as a client, to their client experience playbook that tracks a financial planning heat map where clients are between the planning and process phase, implementation phase, maintenance phase, update phase, and no plan phase. And the way the partners of the firm have surrender control of their own calendars to a team member whose job is to ensure that they keep their own time focused on where they need to spend the time to positively impact the business the most with each day of the week set with specific tasks to focus on that day.

We also talked about Katie's own path through the planning business from starting out in an administrative roles straight out of school, then moving into an operations role and then into a client-facing financial planning role before eventually forcing herself to learn business development and then eventually deciding that it was time to launch her own firm with a partner after nearly 15 years in the business, building on the foundation of skills and confidence that she had developed in each step along the way.

And be certain to listen to the end where Katie talks about the way she made the successful transition to breaking away from her prior firm. How keeping the split amicable made for an exponentially easier process of being able to use the negative consent letters instead of fully repaid to bring all her clients, the challenges she faced along the way with certain outsourcers that didn't always deliver, and how she persevered through the leap to independence despite learning that she had breast cancer and going through three surgeries while preparing for the transition to break away.

So whether you're interested in learning about why Kathryn hired a "data geek", the process she went through when learning how to build a business with intent, or how she's developed systematic processes for business development and the financial planning process, then we hope you enjoy this episode of the Financial Advisor Success podcast.

Networking Tactics To Develop Relationships With Local Small Business Owners

July 29, 2019 07:06 am 0 Comments CATEGORY: Marketing

For years, independent financial advisors (particularly those who offered holistic and comprehensive financial planning services) had a relatively easy time differentiating themselves from the vast majority of others in the industry by emphasizing the breadth and depth of their financial planning services (as contrasted with competitors that were still primarily in the investment or insurance product distribution business). However, in recent years, the asset management and product placement facets of the business have become increasingly commoditized, and an increasing number of advisors have also come to understand that the real value that they provide for their clients isn’t in the products themselves, but in the comprehensive advice that needed to implement those products (or not). Which, ironically, means more clients than ever actually get qualified financial planning advice… and it’s harder than ever for those who give quality advice to differentiate themselves from other advisors offering essentially identical services.

Which means that, moving forward, identifying and nurturing a clear and distinct niche will only become even more of an indispensable differentiator for advisors (and eventually, might become the only real differentiator!?). Yet, for many, the real challenge isn’t in choosing a niche, but in actually reaching potential clients in a particular target market… or at least enough of them to start building a practice around. And while few advisors are naturals when it comes to networking, the good news is that it is a skill that can be learned, and that there are several proactive steps that any advisor can take in order to connect with members of their niche, which are based on the same principles of any good networking strategy.

In this guest post, practice management consultant Teresa Riccobuono of Simply Organized uses small business owners as an example niche to offer actionable tactics and steps to start building a niche-focused network and provides specific examples of ways you can deepen and expand your own web of connections in the small business owner community.

Of course, the first key in networking is to recognize that it’s all about building a relationship that establishes you as the go-to expert in the community… not necessarily to try to get business from anyone/everyone upfront. Accordingly, strategies that build valuable goodwill for you and your practice through networking include: helping the small business owners in your network connect with other small business owners (e.g., by first making a list of all the business owners in your network, and finding ways that they might be able to work together or help each other), creating an “insider’s” directory of local businesses that your clients use and trust (which can help expand your reach by giving you a great reason for introducing yourself to business owners included in that directory but who are outside your network), and hosting events such as a speaker series or even a full-fledged multi-day expo featuring (local) businesses that provide goods and services to a common target market.

Ultimately, the key point is that an effective networking strategy is based on genuinely providing others value without expecting anything in return… which, over time, builds goodwill and (eventually) trust, to the extent that small business owners (or whatever target market you decide to serve) will naturally turn to you as a resource down the road when they encounter someone who might need your help. Or even to reach out to you when they need help themselves.

Weekend Reading for Financial Planners (July 27-28)

July 26, 2019 02:56 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with a number of big industry shake-ups, including the sudden news that TD Ameritrade CEO Tim Hockey is out (for what may have been a failure to pay enough attention to the company's RIA channel), and a management restructuring at Schwab that elevates its Schwab Advisor Services RIA division to report directly to CEO Walt Bettinger at the top of the organization, as the RIA channel continues its rise (and even the attention and resources it commands at historically-retail-oriented brokerage firms).

From there, we have several practice management articles this week, from the latest Schwab RIA Benchmarking Study that shows RIA growth remains solid (but not huge), averaging a 5.4%/year growth rate in clients over the past 5 years, the dynamics of what happens when an advisory firm decides to close its doors to new clients after growing to be "big enough" to satisfy the owner's needs, how equity-sharing is becoming increasingly common at large advisory firms as a way to attract, but especially retain talent, and a new Risk Alert from OCIE that advisory firms are not doing enough to run their own independent background and disciplinary checks on new hires (and thus failing to properly report disclosable events to prospects and clients).

We also have a few marketing articles, from why it may be better to help prospective clients conduct a "fee audit" of their current advisor (before trying to convince them of your own value for the fees you charge), how trademark law works when it comes to advisory firms and the names of their businesses, and how the targeted advertising capabilities of search engines and social media is making outbound paid advertising an increasingly lucrative channel for advisory firms to pursue for getting new clients.

We wrap up with three interesting articles, all around the theme of trying to make good decisions on the path to self-improvement: the first looks at the fascinating phenomenon that successful systems are often "complex to make [but] simple to break," which means at some point in the process of success (from business to investing), the focus shifts from building the complex system to work, to simply trying to make sure it doesn't die a simple death; the second looks at how to think about potentially complex decisions not as an all-or-none "it's right" or "it's not," but on a "confidence meter" scale from 0% to 100%, with a threshold for when a bet is at least "sure enough" to be worth making (while also recognizing that the threshold cannot be 100% because virtually no decision is entirely assured); and the explores how we often try to improve by making something bigger or better, but in practice some of the best improvements can come simply by reducing the leaks and fixing the tiny errors and mistakes that take away from compounding growth along the way.

Enjoy the "light" reading!