Nerd's Eye View blog

The Latest In Financial Advisor #FinTech (July 2019)

July 1, 2019 07:06 am 2 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the July 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 Fidelity is launching a new Managed Account XChange (FMAX), in what appears to be a shift in the Fidelity business model to capture the ongoing advisor shift from internal portfolio construction to outsourced third-party managers and models, and also a re-positioning of Fidelity itself to compete more directly with Envestnet’s own manager marketplace in the future.

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

Envestnet putting its own Insurance Exchange into full production, with the potential to finally catalyze growth of fee-based annuities in the RIA channel
Plaid announcing a new Investments API on the back of its Quovo acquisition, that may put even more investment-related tools directly in the hands of consumers through various financial apps
Canadian FinTech Equisoft acquires Grendel CRM to potentially push into US broker-dealer and insurance enterprises
LifeYield rolls out a new “Income Advantage” tool to assist advisors in figuring out exactly which investment retirees can sell to raise spending cash in a tax-sensitive manner
Two new advisor matchmaking platforms – Harness Wealth, and MyPerfectFinancialAdvisor – launch as demand continues for outsourced lead generation for financial advisors

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including Tamarac rolling out digital onboarding tools to overlay Schwab and TD Ameritrade, Advisor Group launches an internal financial planning payment processing tool called “eQuipt for Financial Planning” as broker-dealers increasingly pivot into fee-for-service financial planning advice, Personal Capital launches its own high-yield cash offering as Wealthfront raises their cash yields to an industry-leading 2.57%, and XY Planning Network announces the finalists for its 4^th annual FinTech competition for advisor technology to support the delivery of financial planning to the next generation of 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 (June 29-30)

June 28, 2019 02:54 pm 2 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the buzz that, once again, the White House is considering an Executive Order that would index cost basis of investments to inflation, effectively eliminating capital gains on the inflation portion of growth and taxing only real dollar returns instead... at least, unless the plan succumbs to a legal challenge.

Also in the news this week was the House of Representatives passing a spending bill that includes a prohibition on the SEC from using any of its money to actually implement and enforce Regulation Best Interest (in what appears to be a delay tactic by the Democrats hoping that they can take control in the 2020 election and unwind Reg BI thereafter, but one that may not get through the Republican-controlled Senate anyway), and the announcement that former DFA co-CEO Eduardo Repetto is launching a new asset manager called Avanatis that will make an alternative version of DFA-style factor-based funds in an ETF form and without being tied directly to an index (allowing the ETFs to respond even more quickly to shifting factor data than just waiting for changes to the underlying indexes themselves).

From there, we have several articles on aging and retiring, including one that explores how financial literacy tends to decline (by an average of 1.5%/year) in our later years but financial confidence does not decline (leading to a growing gap between what we believe we can do, and what we're actually capable of, that may help to explain the rise of financial abuse and exploitation of seniors), a new crop of "apps" that are emerging to help protect the elderly from such financial abuse and exploitation, and a(nother) wave of financial apps emerging to help adult children more easily manage their parents' finances (especially from afar when their parents aren't geographically local).

We also have a few articles on cash flow and budgeting, from one that provides some good starting steps to get clients onto a budget (first hint: don't call it a budget, but a "spending plan," because that has fewer negative connotations!), to another that looks at the rise of apps that help children track their own chores and allowance and begin to learn (digitally-based) financial management for themselves, and a few tools that are emerging to help people get control of the ever-growing number of (sometimes no longer useful at all) subscription fees as seemingly every business converts to an "as a Service" monthly or annual subscription fee.

We wrap up with three interesting articles, all around the theme of finding what we love to do (and have a passion for): the first looks at the growing body of research around "finding your passion" (and how in practice, not having a passion doesn't necessarily cause significant unhappiness, and that it's having a passion not pursued that is more problematic); the second explores how there isn't always a connection between your passion and what makes money, but when it comes to financial advisors in particular, there often is a lot of overlap (at least, as long as the advisor adjusts their firm over time to best align with their own skills and strengths); and the last is a fascinating discussion of how, in the end, it's the setbacks we face that really help us identify our passions and what we enjoy... because setbacks that we feel compelled to push through are a sign that we've found a pursuit we really believe in, while setbacks that make us want to do something else might actually be the best clue of all that it really is time to try something different (that we may ultimately enjoy more)?

Enjoy the "light" reading!

Could MoneyGuidePro Become Free As Envestnet Scales Its Insurance/Annuity Exchange?

June 27, 2019 07:01 am 5 Comments CATEGORY: Insurance

On March 1, 2019, Envestnet, announced that they were partnering with Fiduciary Exchange (a company which integrates “brokerage, insurance, and advisory ecosystems”) to launch their new Envestnet Insurance Exchange, thereby providing a platform for RIAs to purchase fee-based insurance and annuity products directly from carriers on behalf of their clients, instead of through a commission-based insurance agent.

In and of itself, this is good news for the RIA community; as insurance companies are starting to bring no-commission, fee-based insurance and annuity products to market, RIAs will have a marketplace to shop for them, saving clients the cost of the otherwise-applicable commission (since the RIA is already being paid directly by the client in the first place).

Except, given other recent Envestnet acquisitions and initiatives, their Insurance Exchange could end out being a much bigger deal than much of the industry currently appreciates. To the point that someday, Envestnet might even make their other software – including the recently acquired MoneyGuidePro – free to advisors, just to further expand their Envestnet Insurance Exchange (and other investment marketplaces).

In this episode of #OfficeHours with Michael Kitces, we discuss how comprehensive financial planning actually has its roots in product sales, the real opportunity Envestnet likely saw when it purchased MoneyGuidePro, and why integrating it with its Insurance Exchange could eventually make MoneyGuidePro free and become the most disruptive shift to hit Advisor FinTech in years.

Over 30 years ago, comprehensive financial planning originated as a means to an end, where a financial product salesperson would use a plan to help a prospect define their goals, and then show how various products (that the salesperson earned a commission to sell and implement) would allow the client to achieve those goals. And even though the landscape has changed dramatically since then, financial plans are still often a means to an end even for advisors who don’t sell “products,” per se, since they’re still trying to “sell” the need for clients to save and invest… with them.

Yet the strange mystery is why those increasingly popular financial planning tools haven’t actually illustrated what happens, in the planning software itself, when various different products are added into the plan. The software illustrates a need, but then it’s necessary to provide a separate product illustration, which is completely independent of the plan that was supposed to validate the need!

The gap between financial planning software projections and product-specific illustrations began to close a couple of years ago, though, when MoneyGuidePro rolled out a partnership with Covr that gave them the ability to illustrate life insurance products (and even apply for those products) all within the confines of MoneyGuidePro itself.

It’s not a big leap, then, to understand why Envestnet decided to pay a half-billion dollars last year for MoneyGuidePro… not because they were merely champing at the bit to get into the financial planning software business, but because Envestnet wanted a platform that was primed for deeper insurance and annuity integrations. And if that’s the case, and Envestnet can effectively leverage MoneyGuidePro to support its Insurance Exchange, the next question becomes… could Envestnet turn around and make the software that it paid a half-billion dollars for, free?

Which isn’t such a crazy proposition when we consider that, given the dollar volume of just variable annuities alone, Envestnet will only need to capture a minuscule slice of that market share in order generate the same revenue that all the RIAs and broker-dealers are paying annually in MoneyGuidePro subscription fees… even if Envestnet is “only” paid 25 basis points from the annuity companies on their platform. And if MoneyGuidePro is free, then it won’t take much convincing for advisors to make the switch away from other financial planning software providers, and potentially save themselves thousands of dollars a year… while further growing Envestnet’s Insurance Exchange opportunities.

Ultimately, the key point is to realize that the free-to-use software model has become the standard in recent years (think Facebook, Google, etc.), and is even gaining traction even within the financial services industry (think RIA custodian technology from Schwab, Fidelity, and TD Ameritrade). And in a world where most advisors are still writing checks each year for their various software tools, Envestnet’s acquisition of MoneyGuidePro and introduction of its Insurance Exchange could be enormously disruptive to the current FinTech landscape. Of course, it remains to be seen whether Envestnet’s Insurance Exchange really gains acceptance in the advisor community… but FinTech competitors, in particular, should be figuring out now how they’re going to respond if it does!

Advisor’s Guide To The SEC’s Final Regulation Best Interest And Form CRS

June 26, 2019 07:07 am 2 Comments CATEGORY: Regulation & Compliance

On June 5^th of 2019, the SEC issued its final version of Regulation Best Interest, which will require brokers and their broker-dealers to act in their clients’ best interests when making an investment recommendation, by meeting four core obligations: Disclosure (providing certain prescribed disclosure before or at the time of recommendation, about the recommendation and the relationship between the retail customer and the broker-dealer); Care (exercising reasonable diligence, care, and skill in making the recommendation); Conflicts of Interest (establishing, maintaining, and enforcing policies and procedures reasonably designed to address conflicts of interest); and Compliance (establishing, maintaining, and enforcing policies and procedures reasonably designed to achieve compliance with Regulation Best Interest).

In addition to Regulation Best Interest itself, the SEC is also implementing a newly required “Form CRS” (Customer/Client Relationship Summary) that both broker-dealers and RIAs will be obligated to provide their prospects, to further explain the nature of their services and relationship, their fees and costs, and their standard of conduct and conflicts of interest. Which will provide both new light on the business practices of broker-dealers – by requiring them to disclose upfront if they are using proprietary products, or receiving revenue-sharing or other behind-the-scenes payments – but also require new disclosures of RIAs (e.g., to state upfront their asset/account minimums, and to disclose how their own advisors are compensated and any advisor-level conflicts of interest that may be present as a result).

As a part of its Regulation Best Interest and Form CRS rulemaking, the SEC also issued updated interpretations of an RIA’s fiduciary obligations (a Duty of Care to provide best-interests advice, seek best execution, and provide ongoing monitoring when agreed upon, along with a Duty of Loyalty to act in the clients’ best interests) and the RIA’s requirement to avoid or at least disclose any attendant conflicts of interest, along with an updated (re-)interpretation of the solely incidental exemption for broker-dealers providing advice (that such advice will not trigger RIA status at a broker-dealer if the advice is offered “in connection with and [is] reasonably related to the brokerage services provided to an account.”

Ultimately, while Regulation Best Interest did not impose a full fiduciary duty on broker-dealers, it does materially lift the standard of conduct that applies to them, requiring greater disclosures from broker-dealers of their business practices, a requirement for broker-dealers to take active steps to mitigate the conflicts of interest their incentives create for brokers, and an outright ban on certain sales contests, quotas, and similar (and especially problematic) incentives.

For RIAs themselves, the new Regulation Best Interest rules have limited impact (as the new standards are specifically for broker-dealers), and, in practice, Form CRS will likely be easy to comply with (becoming a new Part 3 to Form ADV, drawing primarily from information already provided in the Part 2A brochure, and delivered alongside the RIA’s existing ADV requirements). Which means, in practice, the largest impact to RIAs may not be Regulation Best Interest itself, but simply the difficulty for RIAs to differentiate themselves in a world where broker-dealers can legitimately state that they, too, have a “best interests” standard when providing recommendations to their clients.

In the end, though, it seems that no rule related to the standards of conduct for broker-dealers and RIAs is “final” until it survives the seemingly inevitable court challenges that tend to emerge. Though given that the broker-dealer community itself has largely been supportive of Reg BI – if only because it wasn’t even worse and more burdensome for them – it remains to be seen who might even challenge the SEC’s Regulation Best Interest and supporting rules in the first place.

Without a challenge, the new rules of Regulation Best Interest and Form CRS themselves are set to take effect on June 30^th of 2020 (providing a 1-year transition period). Though the ripple effects are likely to continue for years to come.

#FASuccess Ep 130: From Cold-Calling To Cold-Knocking And Growing An Advisory Firm Through Two Maternity Leaves, with Ashley Micciche

June 25, 2019 07:11 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 130th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Ashley Micciche. Ashley is a partner and the CEO of True North Retirement Advisors, an independent RIA near Portland, Oregon that oversees nearly $200 million of assets under management for nearly 300 clients and small business retirement plans.

What's unique about Ashley, though, is the way that she's managed to grow her practice and her credibility despite the challenge of starting out as a 22-year-old, and the way that she's been able to both grow a family practice jointly with her father and also grow her own family and take 2 maternity leaves along the way, in a world where so many financial advisors still struggle to find time to grow and sustain a practice while also starting a family.

In this episode, we talk in depth about how Ashley built her career in the early years. The way she started out cold calling for two years with a traditional regional brokerage firm and then ironically found it more successful to start cold knocking small business owners for their retirement plan business instead, the way she took advantage of an opportunity to get published in her local business journal, not to get new prospects directly, but to use reprints of the article to get credibility with her current prospecting efforts, and the successful way she figured out how to open the conversation with small business owners to quickly get their interest for a follow-up meeting.

We also talk about how Ashley tried to find the balance between growing her practice and taking time off for maternity leave as an independent advisor. Why developing a recurring revenue stream was so crucial to create the personal financial stability to be able to take maternity leave, the arrangement she made with her father to be the backup advisor or cover with her clients if an urgent issue did crop up, and the way she communicated the news to clients that the baby was coming and that she was going to take time off, and the one thing that she'd do differently in the future, returning to work more gradually over time rather than going from months of being all out with maternity leave to suddenly being all back in when it was time.

And be certain to listen to the end, where Ashley talks about both the benefits and challenges of going independent as an RIA. From the flexibility to be able to do more with small business owners than she could at her prior broker-dealer, and the stress that came in realizing that as an independent, she has to make decisions about absolutely everything, right down to which kind of business printer they're going to use in the office and whether to buy or lease it.

Announcing The Kitces & Carl Podcast And New Kitces Team Members & Initiatives

June 24, 2019 07:07 am 2 Comments CATEGORY: Nerd's Eye View

The ongoing growth of the Nerd’s Eye View blog has made it possible for us to reinvest more and more into the overall Kitces platform, from the expansion into offering CE credits for CFP, IMCA/IWI, and CPAs, to the launch of the Financial Advisor Success podcast, and more. And as the platform continues to grow, we continue to reinvest more, into both the content and solutions we offer via Kitces.com itself, and the team that supports it. Which this month includes a number of exciting new announcements!

First and foremost, based on your feedback and requests, our popular Kitces & Carl video segments are now being made available as a standalone podcast: Kitces & Carl – Real Talk For Real Financial Advisors. Launching today, the podcast is now available directly on Apple Podcasts, Google Play, and Stitcher, starting with all the prior episodes we’ve already recorded in video format since the beginning of the year (which will be released at 1 per day for the next two weeks), and continuing with new episodes to be released every other week going forward (starting a week from Thursday). We hope you enjoy the content in a convenient audio format!

In addition, we’re excited to announce several new Kitces team members. Jim Koford joined us last fall as an Associate Editor, and is responsible for ensuring that all of our articles post properly and go out via the various email, social media, and RSS channels. And Brian Boyer is joining us as a new Director of Platform, responsible for both re-building the back-end of our Kitces platform as we prepare for the next stage of growth, and making site improvements for all of you – the readers – to make the Nerd’s Eye View and our Members Section easier to read, navigate, and use.

Through the second half of the year and into 2020, we’ll be working on a number of additional new features and enhancements as well, from adjustments to our search functionality and site/category navigation (to make it easier to find articles we’ve already written), more options about how you receive your Nerd’s Eye View blog emails, more audio content options, and overall improvements to the usability and navigation of the Members Section webinars and CE content. For those who are interested in having an even-more-involved role as a “beta tester” for new features rolling out in the future, you can submit your interest to [email protected], and we’ll be in touch as we begin work on some exciting new site features for 2020!

Notwithstanding the incredible growth we’ve already had with the Nerd’s Eye View over the past 11 years, I’m more excited and energized than ever to build the platform further and provide even more to the advisor community. So stay tuned for more announcements, more opportunities for feedback… and if you want to be a part of the Kitces team, more Career Opportunities as we continue to hire in the year(s) to come! ?

Weekend Reading for Financial Planners (June 22-23)

June 21, 2019 02:48 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with some clarity around the big industry buzz around the question of whether RIAs will still be permitted to call themselves "fiduciary" after Regulation Best Interest and the new Form CRS take effect (short answer: yes, RIAs can still call themselves fiduciaries, including in Form CRS, as the SEC merely removed the word "fiduciary" from its own prescribed templated language).

Also in the news this week are several other developments on the fiduciary front, including an announcement that now Massachusetts is looking at adopting its own state fiduciary rule (after the SEC failed to adopt a fiduciary standard in Regulation Best Interest), New Jersey's fiduciary proposal continues to progress (but the comment period is being extended after strong industry pushback), and professor Ron Rhoades raises the question of whether the industry's organized fight against all forms of fiduciary, from state regulators to the CFP Board, could itself constitute a violation of the Sherman Antitrust Act (particularly with respect to a potential broker-dealer boycott against the CFP Board, which itself is a private organization).

From there, we have several articles on advisory firm practice management, including a study showing that the majority of RIAs either don't have asset/account minimums or don't enforce the minimums they do have (which raises significant efficiency and productivity concerns as firms grow), the issues with RIAs (or any advisory firm) requiring clients to sign mandatory arbitration clauses, tips for conducting an effective summer offsite meeting with employees, how to deal with (and what really constitutes) a "toxic" team member, and why one advisory firm decided early on to break the usual pattern of hiring lead advisors, admin support, and junior advisors, and instead hired a "data geek" to help the whole firm run more efficiently (and figure out where to focus its resources).

We wrap up with three interesting articles, all around the theme of our own time and capacity constraints with clients: the first looks at the research on why it may actually be better to make yourself (as a business owner) a little more "scarce" (recognizing that, in practice, when prospective clients perceive you to be less available and in high demand, it can actually make them want to work with you more, as we tend to want what we can't have!); the second looks at the importance of creating some additional slack in your schedule and business (or what may seem short-term efficient can become long-term unstable); and the long-term value of saying "no" more often to ensure that you focus and prioritize the activities and projects that have the most positive impact on your business (with tips on how to actually say "no" more effectively and without offending).

Enjoy the "light" reading!

Kitces & Carl Ep 10: Transitioning Long-Standing Clients To Create Room To Grow

June 20, 2019 07:07 am 4 Comments CATEGORY: Client Trust & Communication Kitces & Carl Podcast

The perennial problem facing financial advisors throughout their careers (and especially at the beginning) is simply getting in front of prospective clients… and then convincing them to actually hire you and pay for your great advice. However, for those advisors who eventually reach the point where their business is sustainable, and have clients who understand the value that a “real” financial advisor brings to the table, the problem can easily morph from not having enough clients to keep the lights on… to having too many clients to be able to serve effectively (and no remaining capacity to add more and grow further).

Because the reality is that we can only do so much before our calendars (and our brains) reach their limits. It’s at that point where the most obvious answer is to start hiring some team members to help. But that solution can create all sorts of new challenges, and there are plenty of advisors aren’t interested in all the other stuff that comes along with hiring and managing employees… and find that they’re stuck as a result. They don’t have room for more clients, and they’re not interested in hiring and managing employees to create more capacity. And so the question then becomes: how can you, as a financial advisor, create room in your practice to be able to start growing again, especially if you do not want to increase your staff headcount (and management responsibilities) in the process?

In our tenth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication expert Carl Richards sit down to discuss some reasons you may need to start transitioning long-standing clients (some of whom may have given you a shot early on when no one else would, but consequently pay you far less than what it takes to service them) to make room so you can help others, some practical steps for communicating such a transition to those clients, and why arguably it’s your duty to do so… in order to ensure that all of your clients are getting the level of service they deserve.

As a starting point, it’s important to recognize that creating more capacity in your firm by transitioning away some long-standing clients isn’t about just booting those clients to the curb for the sole purpose of finding other, more profitable clients. But the reality is that the clients who you’ve “outgrown” would probably be better served somewhere else anyway. Or put more simply, your “C” clients are almost always someone else’s “A” clients. Which means transitioning them can be win-win-win for you (creating capacity), for the client (receiving better service as an A client), and for the other advisor (who may be thrilled to grow with the clients that aren’t a good fit for you anyway now!).

That still doesn’t solve the problem, though, of communicating this to your clients, some of whom might well have their feelings hurt by your decision. Practical ways of effecting this transition include: raising your minimum fees (in order to serve your clients well, and do all the things you do for them through the year) and letting the client decide for themselves if they value your (higher-fee) advice enough to continue on as your client, sitting down and simply telling them that you’re changing the direction of the firm and (with their blessing) would like to facilitate their transition to another advisor who’ll be a great fit for them, or simply telling them that you’ve been examining all of the relationships in your practice and feel that you’re simply not a good fit for them at this point in their lives.

Because at the end of the day, you are running an advisory business, and that’s nothing to be ashamed of. Taking on the responsibility of advising clients on the best way for them to manage, grow, and use their life savings is the very mission of that business, and ultimately you have to ensure that the direction of your practice is aligned with what your clients need… and if it’s not, it’s your job to tell them.

Unique Planning Challenges Of Directly Owning Real Estate Inside An IRA

June 19, 2019 07:04 am 11 Comments CATEGORY: Taxes

At the end of 2018, Americans had nearly $9 trillion in IRAs. Most of that money was (and continues to be) invested in “traditional” types of investments, such as stocks, bonds, mutual funds, ETFs, and annuities. But for those investors who wish to look elsewhere for returns, IRAs can provide a substantial amount of flexibility.

One investment option that is particularly popular when it comes to non-traditional IRA assets is direct-owned real estate. Direct-owned real estate refers to properties in which an owner (or a company controlled by that owner) has direct title to the property. But while the allure of non-traditional, non-stock-market-based investments like direct real estate can be an attractive proposition for many investors – especially in times of increased market volatility – such investments can also create unique planning challenges not normally associated with traditional investments.

Notably, though, direct-owned IRA real estate increases the likelihood of running afoul of the prohibited transaction rules. IRA owners, for instance, are prohibited from personally using their IRA-owned real estate, or performing even the smallest of repairs on the property themselves. Purchasing or leasing such properties personally is also off-limits, even when such arrangements are done as an “arms-length” transaction at a fair market value/rate.

But the list of potential challenges doesn’t stop there. Cashflow problems are also more prevalent when low-liquidity assets like direct-owned real estate are purchased within an IRA. The IRA, for instance, must have enough cash on hand to cover all of its “investment” expenses, including repairs and maintenance, taxes, and even the purchase of a property in the first place. And while an IRA can secure financing in the form of a non-recourse loan (i.e., a mortgage), such loans tend to limit the amount of capital that can be borrowed and can lead to Unrelated Debt Financed Income, which can complicate things even further by creating an income tax bill that must be paid by an investor’s IRA! All while other tax benefits normally associated with real estate, such as depreciation and the 20% pass-through deduction, are forgone (since the investment is owned in the tax-deferred IRA “shell”).

Real estate is also more difficult to value than assets that are frequently traded across an exchange or other platform. Which is unfortunate, because formal valuations of direct-owned IRA real estate are often required in the event an IRA owner takes a distribution, including (and especially when) there is a Roth conversion or a Required Minimum Distribution (RMD) obligation, adding an additional cost layer for otherwise-basic tax reporting.

Despite these risks, however, some investors still view these alternative/non-traditional IRA investments as their best avenue to grow their retirement savings... and do so with their IRAs if only because that’s where the available dollars are to invest in the first place. For such persons, a thorough understanding of these technical and tax compliance challenges is critical.

#FASuccess Ep 129: Building The Lifestyle Practice Of Your Dreams By Selling Your Firm And Starting Over, with Donna Skeels Cygan

June 18, 2019 07:06 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 129th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Donna Skeels Cygan. Donna is the founder of Sage Future Financial, an independent RIA in Albuquerque, New Mexico that oversees nearly $90 million of assets for about 40 client households.

What's unique about Donna, though, is the way that she successfully built her first advisory firm to over $100 million of AUM with 5 full-time staff members, and then found herself so mired in the time it took to run the practice and serve her clients that she sold it and came back 3 years later to start over again, building a much more deliberately crafted structure that's intended to only ever have 40 affluent clients.

In this episode, we talk in depth about Donna's journey of building both her first and second advisory firm. The way that years of continued growth allowed her to hire more team members but frustratingly never got to the point where she was able to free up her time to spend more of it with her family, why she ultimately decided that the only way to relieve the burden of the firm was to sell it, the reason that Donna ended out coming back to start a second advisory firm after all, and how her current structure with just 42 clients paying an average of nearly $18,000 a year in fees allows her to run so efficiently as a solo advisor that she finally has the work-life balance she wanted, needs only 2 part-time assistants for support, and is able to drive nearly 80% of the firm's revenue to the bottom line.

We also talk about Donna's actual process in serving clients. The way she arranges two meetings a year with clients that include a biannual rotation of ongoing planning topics, the structured agenda she uses for each client meeting that includes new and pending issues, financial planning topics and an investment review, the way she leverages her virtual assistant to maximize her time in meeting with clients, and the software she uses to run her advisory firm.

And be certain to listen to the end, where Donna talks about why despite the ongoing buzz in the industry about the need to consolidate and grow to gain economies of scale, she has no concerns about her ability to remain competitive as a standalone solo advisor, and actually feels even better than ever about having sold her larger advisory firm and started over with the goal of building a smaller but far more profitable one instead.

So whether you're interested in what being intentional about starting over and building a new lifestyle practice looks like, how she manages to run such high margins while serving 42 clients, and the services she provides for her clients, then we hope you enjoy this episode of the Financial Advisor Success podcast.