Nerd's Eye View blog

Weekend Reading for Financial Planners (Mar 30-31)

March 29, 2019 02:53 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the big news that Charles Schwab is launching a new financial-planning-for-a-monthly-subscription-fee solution as a new "Premium" version of its Schwab Intelligent Portfolios solution, providing full access to a CFP professional for ongoing financial planning advice, and accelerating consumer awareness of the new and increasingly popular financial advisor business model (particularly for 'next generation' clients who are willing to pay for financial advice but don't have investment accounts large enough to merit a financially viable AUM relationship).

Also in the news this week was an announcement that FINRA is considering whether to modify or even just consolidate its suitability rule once Regulation Best Interest comes out, noting the similarity and overlap between the two... and ironically showing, by FINRA's willingness to consolidate the suitability rule into Regulation Best Interest, that Reg BI apparently really isn't a material improvement or change to broker-dealer standards in the first place (or it would be deemed 'too disruptive' to the industry to even try to consolidate the standards!).

From there, we have a number of articles around practice management, and specifically how to attract and retain top talent, including one article looking at the rise of "student loan repayment" as a popular new employee benefits to attract young talent, a second highlighting that more flexible paid time off (or flex time in general) is also an increasingly popular perk, best practices in how to structure interviews for prospective hires, and a fascinating look at how digital-media-savvy Ritholtz Wealth Management has been able to leverage its blog and social media presence to attract good advisors to the firm.

There are also several investment-related articles, from a look at the potential recessionary implications of the recent inversion of the yield curve (from the researcher who first pioneered the study showing how inverted yield curves can foreshadow recessions), to a new BlackRock study suggesting that there might not actually be an "illiquidity premium" after all (but that there is a premium for complexity and more challenging due diligence and governance in private markets that also often happen to be illiquid), and a discussion of how structured products are once again making a resurgence, not to the levels they peaked at in 2007, but driven this time not only by investors who may be nervous about markets and want more downside protection, but also a number of new technology platforms that are trying to make it easier for advisors to shop more efficiently for structure note solutions in the first place.

We wrap up with three interesting articles, all around the theme of how to be more efficient and effective when running meetings: the first looks at some of the scientific research studies on how to run better meetings (along with a study that shows the leader of the meeting is not actually very good at judging the quality of their own meeting!); the second provides some tips about how to carve out or break up meetings that may have gotten "too big" (as invitee lists tend to expand over time!); and the third provides a series of detailed tips on how to not just make meetings more efficient, but to literally make them more effective, from how the meeting itself is run to be inclusive of all participants, to more carefully considering the invitee-list to the meeting, and simply being especially cognizant of why the meeting is being called, its ultimate purpose, and whether it really needs to happen in the first place (or if another medium, from email to company intranet, would be better to accomplish the same meeting goal).

Enjoy the "light" reading!

Kitces & Carl Ep 04: Does Social Media Really Matter For Financial Advisors

March 28, 2019 07:07 am 0 Comments CATEGORY: Kitces & Carl Podcast Marketing

Despite the recent public scrutiny of various social media platforms, the number of active users on mediums like Twitter, Facebook, LinkedIn, and Instagram continues to grow exponentially, making social media an increasingly attractive channel for financial advisors to not only reach prospective clients and centers of influence, but to nurture relationships with existing clients as well. Yet, it’s also incredibly easy to spend a lot of time (and potentially money) on social media, only to find that your efforts have been for naught, leading many to wonder if social media really matters for financial advisors at all.

In our fourth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss the question of the extent to which financial advisors should or “have to” participate in social media (or not), why it might be a worthwhile endeavor if done correctly, some ideas that advisors can use immediately to get more out of their social media efforts, and why, ultimately, using social media successfully is ultimately about a series of “micro interactions” to better connect with other individuals.

The first question to consider is whether or not it’s absolutely essential for financial advisors to build a social media presence to begin with. As while there are numerous stories of advisors landing multi-million-dollar clients solely through social media, the reality is that the only non-negotiable virtual presence that every advisor must have is a modern, professional-looking website (not a social media account). Because, in a world where consumers are far savvier and more informed than they’ve ever been, the one thing you can count on is that a prospective client will have done their due diligence on you before they decide to book that first meeting, and there’s no better way to throw ice water on a warm prospect than an outdated website… or one that prominently features a sailboat, lighthouse, or long, winding road tapering off towards the horizon, that doesn’t really connect with prospects today.

Beyond that, though, for financial advisors, the task of getting in front of prospective clients has always been primarily a social endeavor, and at its core, social media is an avenue for humans to communicate and interact with each other. Which means that social media can not only augment and amplify how you present yourself to the public, but it can be a particularly effective means of connecting with others… especially if you have yet to crack the code of networking events or other organized social activities. In other words, whether face-to-face or through “the interwebs”, authentic communication is the best pathway for developing relationships, and social media is simply one of many channels to do so.

And when it comes to social media, a side benefit is that even those you’re not interacting with can see how you communicate with others, and can form their own opinions about you and decide whether or not they want to learn more about you and your services. Because one of the most powerful aspects of developing a social media presence is that it allows you to reach a much larger audience than would be possible by concentrating solely on in-person events. Moreover, social media can also open avenues of access to centers of influence and other people in your target market that you might not have access to otherwise.

Ultimately, though, the key point is to recognize that developing a quality social media presence takes time. There are no overnight successes, and you won’t miraculously have a line of people who want to hire you banging on your door because you sent out a tweet or few, but (as is the case when helping clients build their own solid financial foundations) small actions taken repeatedly can still lead to massive changes. Or stated more simply: repeated authentic interactions compound over time, whether in-person or via social media. In other words, regardless of the way in which you make it happen, in the end, communicating authentically with others is the most reliable and effective way for any financial advisor to build a successful practice. Social media just happens to be a particularly efficient channel to do so. At least for some advisors.

Financial Planning Research Highlights From The 2019 CFP Board Academic Research Colloquium

March 27, 2019 07:02 am 0 Comments CATEGORY: Planning Profession

From February 19th through February 21st, the CFP Board’s Center for Financial Planning hosted their third annual Academic Research Colloquium (ARC) for Financial Planning and Related Disciplines in Arlington, VA. This year's event saw a 20% increase in attendance, bringing together roughly 230 attendees, of which about 35 were practitioners, to share and discuss research relevant to the financial planning profession, as a part of the CFP Board Center’s longer-term goal of establishing itself as the “academic home” for the financial planning profession.

In this post, Derek Tharp – lead researcher at Kitces.com, and an assistant professor of finance at the University of Southern Maine – provides a recap of the 2019 CFP Academic Research Colloquium, and highlights a few particular research studies with relevant takeaways for financial planning practitioners.

The 2019 CFP Academic Research Colloquium again had a strong showing from CFP Board-Registered Ph.D. programs, with scholars from Missouri, Texas Tech, Georgia, and Kansas State producing nearly 32% of all research (when weighted by type of presentation and authorship rank). Additionally, Ohio State, Alabama, and the College for Financial Planning contributed another 13% of total research. Despite the concentration among top programs, the ARC remains an academically diverse event, drawing in scholars from a total of 69 institutions, including Harvard, Wharton, and Stanford.

The colloquium featured a wide breadth of topics. Some particularly relevant themes for financial planning practitioners included a number of studies on financial psychology of both clients and practitioners, including measuring brain activity during financial conversations to determine whether planning or emotional areas of the brain were activated during financial conversations, examining the tools that do (and do not) work for measuring risk-taking behavior, assessing perceptions of success and satisfaction among female advisors, and identifying gaps between perceptions of both financial planning graduates and employers regarding student preparedness for a career in financial planning. In addition, there was research on the impact advisors may have on clients- both good and bad - including differences in financial decision-making among households that use a financial planner versus a transactional advisor, the use of municipal bonds among advisor-assisted investors, and the characteristics of those who report being victims of investment fraud.

Overall, the third Academic Research Colloquium again brought together a strong mix of academics and practitioners to present and discuss financial planning research. However, some considerable challenges and opportunities going forward include continuing to develop Financial Planning Review into a high-impact journal, dealing with (potentially) declining institutional and sponsorship support, and the Center’s general push to continue to establish the ARC as the “academic home” of financial planning. Only time will tell if the Center for Financial Planning will be successful in their pursuit, but the ARC continues to be a conference worthy of attending for both academics and practitioners who wish to engage in academic research.

#FASuccess Ep 117: Forming A Specialized Advice Process To Add Real Value In Serving Small Business Owners, with Josh Patrick

March 26, 2019 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 117th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Josh Patrick. Josh is the founder of Stage 2 Planning, an independent RIA in Burlington, Vermont that specializes in working with small business owners.

What's unique about Josh, though, is the way he's been able to leverage his own personal experiences as a small business owner, before transitioning into financial planning as a second career, to create a deeply specialized advice process for small business owners and command retainer fees in excess of $50,000 a year from his clients.

In this episode, we talk in depth about exactly what Josh does to earn monthly retainer fees of $4,000 to $5,000 per month from small business owners, the 5 core areas that he advises them on, including setting clear values and culture, becoming operationally irrelevant in your business, learning how to really delegate effectively, how to set up effective business systems, and how to divide up the profit of the business into cash flows for lifestyle, emergency funds, business growth, and a retirement plan, and the way he's made his expertise known through a combination of blogging, podcasting, and public speaking to create a steady flow of small business owners who seek him out and are willing to pay his fees for the value they perceive.

We also talk about how many of these same business management principles map onto the business of being a financial advisor as well, where most financial advisors hit the ceiling themselves by failing to apply Josh's 5 principles of effective business, Josh's strategy for advisors to differentiate their firms while not making the firm too reliant on any one key employee or advisor, how advisors can create a guarantee that reduces a prospect's fear of signing on but without running afoul of regulators, and how most experienced advisors could apply a version of the 80/20 rule to their own practices to make themselves significantly more financially successful while simultaneously lessening the demands of the business on themselves.

And be certain to listen to the end, where Josh talks about the biggest challenge that he sees most financial advisors struggle with, the inability to delegate key tasks in client relationships, and how to overcome it by recognizing that in the end, even if team members make mistakes, there's still crucial learning opportunities, especially since the truth is that in the end, clients will rarely actually leave over a single mistake anyway, and whether they do or not is primarily a result of how the firm handles the mistake, not the mere fact that it happened in the first place.

What I Learned Over 10 Years Of Recruiting The Next Generation Of Financial Advisor Talent

March 25, 2019 07:04 am 0 Comments CATEGORY: Personal/Career Development

As advisory firms grow and accumulate clients, they inevitably reach the point where it’s necessary to either stop growing, or start hiring staff members to expand the capacity of the firm. Initially, the first hire or two is usually administrative support staff, who are responsible for completely relatively well-defined, standardized, and repeatable tasks – key tasks for a financial advisor to delegate, but ones that are relatively straightforward to train on, and even re-train in the event of staff turnover.

However, when it comes to the next stage – hiring associate advisors and paraplanners who may someday take over client relationships (or even the entire firm) – the process of training and even hiring itself is far more difficult. Not only because the stakes are higher – as it’s more costly to the firm to have a financial advisor turn over, especially once they’ve begun to develop direct relationships with clients – but also because the development curve of a financial advisor is so long (taking years or even a decade to fully develop), that it’s difficult to be certain who will end out being a good advisor in the first place.

In the guest post, New Planner Recruiting co-founder Caleb Brown shares his perspective on what it takes to find, attract, and retain top next generation advisor talent, based on his own experience on the front of lines of recruiting young talent for the past 10 years. From what really is most predictive of candidate success (the effort they put into getting the job in the first place, and their “why” for becoming a financial planner), to the reasons that certain firms have more trouble than others in attracting and retaining talent to begin with (the unfortunate reality: your firm may not really be as "great" of a career opportunity as you think, relative to the other options available for top talent!).

The good news, though, is that the rise of financial planning in undergraduate degree programs means that today’s rising talent is, truly, the best trained and capable young talent the profession has ever produced. Which doesn’t mean every hire will be perfect, or even that everyone will work out (for any number of other life transitions that happen to people in their 20s and 30s), but for those who are willing to put in the time and effort, the rewards of hiring next-generation talent have never been better!

Weekend Reading for Financial Planners (Mar 23-24)

March 22, 2019 05:31 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the latest release of FINRA's 2019 budget, which once again shows flat revenue as broker-dealers struggle with stagnating growth and a decline in the number of people taking licensing exams to become brokers, forcing FINRA to rely on as much as $185.8M of its reserves this year just to meet its operating and capital expenses... and raising the question of whether FINRA will eventually be forced to restructure, or substantially increase member fees to broker-dealers... which in turn may only further accelerate the broker-dealer decline as regulatory costs rise.

From there, we have a number of articles around household cash-flow planning, including a fascinating new job-skills training program that focuses on those with problem-solving and perseverance skills and has lifted low-income individuals from an average of $18,000 to $85,000 of income, some tips to keep "lifestyle inflation" in check as income grows, the dynamics of trying to transfer not just financial assets but instill financial and other values for the children of affluent households, and how it's increasingly necessary to look not just at a household's own budget and cash flow but also to ask about their potential obligations for other family members (from children who may need to support elderly parents, or parents who may need to support adult children).

There are also several marketing-related articles this week, from tips to quickly and easily adapt "generic" marketing content into something more customized (and more likely to be effective) for clients, "growth hacks" that can accelerate a firm's marketing success, how the techniques of a hostage negotiator (who must build rapport quickly in high-stakes situations) can inform the way we try to introduces ourselves and connect to prospects, and tips on how to respond to the infamous conversation-ender where you introduce yourself as a financial advisor and someone quickly responds, "I already have a financial advisor!"

We wrap up with three interesting articles, all around the theme of how we spend our time and focus our attention: the first explores the benefits of doing a "time audit" to better understand how you really spend your time (and whether it's truly on the important tasks, including not just the urgent but also the long-term important ones); the second looks at how scheduling free-time and leisure activities actually reduces their enjoyment (because then it's just another scheduled task/chore to do!), and why "rough scheduling" with flexibility timing is better; and the last provides a fascinating look at the importance of being cognizant of and deliberate in what you really "measure" in your life (and how that impacts the way you focus your time and effort).

Enjoy the "light" reading!

How FPA Could Constructively Address Its Financial Accounting Concerns

March 21, 2019 09:30 am 0 Comments CATEGORY: Planning Profession

Last week, this Nerd's Eye View blog highlighted a series of discrepancies between the published Audited Financial Statements of the Financial Planning Association (FPA), and an alternative version of FPA's finances that were presented to chapter leaders in its recent "Overview of National Finances" webinar. With a gap of nearly $8M between what FPA's Audited Financials reported in the past, and what the FPA was currently reporting, the discrepancy raised concerns about both where the "missing" dollars actually were, as well as why the FPA would be reporting financials to members that differed from the organization's already-published Audited Financial Statements.

In a response to members, the FPA has clarified that (as predicted in the prior blog post itself) the financial reporting gap can be largely explained by a change in FPA's method of accounting with respect to how the chapter portion of annual dues are collected and remitted to chapters, which led to a previously undisclosed and unpublished restatement of FPA's financials for 2007 to 2012. Such that, fortunately, it appears there is no "missing" money.

However, rather than following up by proposing changes to adjust FPA's financial and audit controls to ensure that, in the future, members do have access to all relevant financial information about FPA's financial health, the FPA leadership chose instead to personally attack this blog, questioning the accuracy of our numbers (even though all the numbers were quoted directly from FPA's own Audited Financial Statements!) and our integrity for not "fact-checking" those Audited Financial Statements. Apparently forgetting that the organization's Audited Financial Statements are supposed to be the factually accurate statement of record in the first place, such that "fact-checking" them should never be necessary, and that it is not a best practice - nor consistent with FPA's own Information and Transparency Policy for members - to keep a second, unpublished, undisclosed set of restated books for prior financial years. Even if those books are otherwise financially accurate.

The FPA also objected to the fact that our prior article pointed out how non-standard and non-transparent financial reporting practices can also lead to, or be associated, with fraud, and in turn interpreted the article as an accusation of fraud. Yet the reality is that the article was not an accusation of fraud - thus why it correctly posited an alternative explanation about the financial discrepancy in the first place - but nonetheless, engaging in non-standard and non-transparent financial reporting is a fraud risk for the organization. Which is why it is standard practice (and indeed, part of FPA's own Information and Transparency Policy) to procure and publish Audited Financial Statements to members to begin with. In other words, pointing out that poor accounting practices can lead to fraud isn't an accusation of fraud; it's an explanation of why adopting best practices in accounting standards is so important to maintain the financial integrity of the organization in the first place. The entire foundation of an organization having its own financial statements audited is to trust... but also verify.

Accordingly, in today's blog post, we have published a "hypothetical" response - that I would have hoped to see from the FPA leadership to acknowledge the changes that it still needs to make with respect to its financial and audit oversight controls to ensure better financial transparency to members - along with the FPA's actual response to our previous article (for those FPA members who wish to understand the finer details). Because in the end, I am still first and foremost a dues-paying member of the FPA, and the only reason I take the time to raise concerns about the organization is that I believe it's crucial for the profession for the FPA to succeed as an organization. Which starts with being financially transparent and accountable to its members in the first place, in accordance with accounting and audit best practices, and FPA's own Core Value of Stewardship.

Tax Rules And Strategies For Claiming 2018 Cryptocurrency Loss Deductions

March 20, 2019 07:03 am 235 Comments CATEGORY: Taxes

On October 31, 2008, the person (or persons) going by the name of Satoshi Nakamoto first posted the paper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System.” Within months, the first Bitcoin had been “mined” setting off a technological and cultural revolution. And over the next decade, Bitcoin and other cryptocurrencies would see a dramatic rise in distribution and price, culminating in an epic 2017 that saw the value of many cryptocurrencies grow by more than 1,000%!

Unfortunately, just as public infatuation with cryptocurrencies seemed to reach a peak, so did its price, leading to a disastrous 2018. During the year, many cryptocurrencies lost upwards of 80% of their value, leaving investors with sizeable losses, and questions about what to do, if anything, to make the most of their losses (at least from a tax perspective).

Fortunately, to that end, back in 2014 the IRS released IRS Notice 2014-21, providing its first substantive guidance on the taxation of Bitcoin and cryptocurrency transactions. Notably, the IRS determined that cryptocurrencies are “property” for Federal tax purposes, and not currency. Thus, the sale of cryptocurrency results in capital gains and losses, rather than ordinary income.

In general, the basis of a taxpayer’s cryptocurrency is the price paid to acquire the currency (in U.S. dollars) from its previous owner, typically via an exchange. In other words, the basis of an investment is what you paid to acquire it. In the context of cryptocurrency that is mined, though, there is no “purchase” transaction in the first place. Instead, the act of mining itself is treated as an income-producing activity, such that the fair market value of the cryptocurrency is included in gross income when it is mined. In turn, that fair market value becomes the miner’s cost basis in the cryptocurrency property going forward.

For taxpayers who liquidated cryptocurrency positions at a loss in 2018, the “planning” options are unfortunately somewhat limited. At this point, the best that can be done is to use any 2018 cryptocurrency losses to offset other 2018 capital gains and up to $3,000 of ordinary income. Any additional (cryptocurrency and other capital) losses must be carried forward for use in future years.

Taxpayers who currently hold cryptocurrency positions with unrealized losses can still choose to liquidate those positions in 2019 and use those losses to offset other portfolio gains (e.g., enabling investors to minimize the impacts of rebalancing out of other investment positions that have accrued substantial capital gains).

Unfortunately, though, harvesting cryptocurrency capital losses may be easier said than done, particularly for long-term cryptocurrency investors whose early purchases have accumulated in value, as FIFO tax treatment for multiple lots of cryptocurrency is likely required. On the other hand, because cryptocurrency is “property” but not (at least at this point) treated as an investment security, it appears the Wash Sale Rule does not apply to sales of cryptocurrency. Thus, positions with losses can be sold in order to be able to use the loss for planning today (or to “bank” the loss for future use), and still repurchased shortly thereafter (for those who want to continue to HODL), enabling the investor to continue to participate in future appreciation (at least if they’re still optimistic about cryptocurrency investment potential in the first place).

Finally, it’s worth noting that the digital nature of cryptocurrency makes it more susceptible to theft-by-hack (or other means), while its ethereal nature makes it more likely to be truly lost (via lost keys or cold-storage hardware) than other assets. Which is important because unfortunately, such losses would be treated as casualty losses which, after the Tax Cuts and Jobs Act, are generally no longer deductible at all!

Many crypto-advocates believe its long-term growth potential and viability as an asset class remains strong. Nevertheless, many investors first entered into the crypto-game in 2017 – when interest in the asset class grew exponentially due to its dramatic rise in price – and are now left trying to make the most of their losses.

#FASuccess Ep 116: Building A Consumer Media And Author Presence To Gain Credibility As A “Small” Independent Advisor, With Harold Evensky

March 19, 2019 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 116th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Harold Evensky. Harold is the co-founder and chairman of Evensky & Katz / Foldes Financial, an independent RIA in South Florida that oversees nearly $1.5 billion in assets under management.

What's unique about Harold, though, is that he was one of the early pioneers to financial planning under the RIA model all the way back in the 1980s, and taking a holistic goals-based wealth management approach to portfolio design in the 1990s, having literally written the book on it 22 years ago in 1997.

In this episode, we talk in depth about what it was like to start an RIA in the early days of the independent advisor movement before platforms like Schwab Advisor Services even existed. The way Harold hustled with seminar marketing up to six nights a week in the early days just to get clients and survive, how Harold engaged early on with the media as a means to establish credibility for the firm in its efforts to compete against mega-wirehouses of the time, and how becoming fee-only in the early 1990s helped the firm to differentiate itself, because back then, being a fee-only fiduciary actually was a niche.

We also talk about how the firm grew and evolved over time. What it was like to transition from an advisory practice to a business, how Harold thought through the process of introducing next-generation partners and beginning to relinquish control of the firm, the way Evensky and Katz instituted a formal management committee to separate management and ownership of the firm as the number of partners proliferated, and how the firm made an all-in bet on the shift from AUM fees to retainer fees, and then unwound the entire change and went back to charging AUM fees for wealth management less than three years later.

And be certain to listen to the end, where Harold talks about the evolution of the financial planning profession. The CFP Lite controversy of the 1990s, whether the CFP Board and FPA have lived up to their expectations, and what it will really take for financial planning to truly be recognized as a profession by the public.

So whether you're interested in hearing about what it was like breaking away from the brokerage world when an AUM structure was still a novel idea, how the financial planning profession has evolved over the past few decades, and where it may be headed, then we how you enjoy this episode of the Financial Advisor Success podcast.

How Do Financial Advisors Actually Spend Their Time And The Limitations Of Productivity?

March 18, 2019 07:03 am 10 Comments CATEGORY: Practice Management

Financial advice, like so many forms of advice, is a uniquely human endeavor. While the internet has a virtually unlimited depth of raw information to access and apply to one’s self, the opportunity to get perspective on your situation from someone else, who can read between the lines and help you recognize what you may not even understand about yourself, requires another human being (ideally one who has a little more expertise than you to help with such realizations). Which, along with the human-to-human accountability that is hard-wired into our brains as herd animals, is what helps financial advisors withstand the threat of robots.

Yet notwithstanding the fact that financial advisors are paid to give advice to their clients in meetings with clients, the latest Kitces Research study reveals that the typical financial advisor spends no more than about 50% on direct client activity-related tasks, and barely 20% of their time actually meeting with clients! In fact, the typical financial advisor spends as much time searching for the next new client (i.e., prospecting and marketing for business development) as he/she does meeting with all their existing clients from week to week. A phenomenon that has only recently begun to shift with the rise of the recurring-revenue fee-based model, that puts less emphasis on continuous business development for new clients relative to the ongoing servicing (and retention) of existing clients.

Still, the fact that so much of an advisor’s time is not spent directly on client activities, and that even the majority of client-related tasks are more “back office” in nature (e.g., client servicing, meeting preparation, and doing various analyses) suggests that there is room for a significant increase in advisor efficiency, either through delegation to staff, better technology, or both.

And fortunately, the data reveals that advisors who delegate to support staff are able to generate significantly more revenue and generate a higher income… except as it turns out, this is largely accomplished by providing more time and more services to clients in the aggregate (between the advisor and his/her support staff), which allows the advisor to move “upmarket” and attract more affluent clients (who each pay a greater fee). Similarly, the rising use of more capable financial planning software amongst advisors doesn’t appear to be generating any time savings efficiencies and instead is being leveraged by financial advisors to go deeper with clients and do more in their financial plans (rather than simply doing the plans faster).

All of which raises the question of whether the limitation on a financial advisor’s time and client-facing activities is really a matter of technology and staff efficiency in the first place or a more “human” limitation on how many relationships any one person – or any one advisor – can manage in the first place. As thus far, the inexorable rise of technology continues to not lead financial advisors to service more clients, but instead to provide more and deeper services to their clients. Which suggests, in the extreme, that ongoing technology efficiencies may not increase advisor productivity, and instead will simply bring down the cost of financial advice and make it more accessible… which in turn will only further exacerbate the existing talent shortage of financial advisors in the coming decade?