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#FASuccess Ep 112: Finding The Time To Get The Right People Into The Right Seat Of Your Advisory Firm, With Andrea Schlapia

February 19, 2019 07:13 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 112th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Andrea Schlapia. Andrea is the founder of Ironstone, a practice management coaching and consulting firm that works primarily with midsize advisory firms that are struggling with the actual business execution challenges of transitioning from a practice to a business.

What's unique about Andrea, though, is that she's built upon her own prior experience as a financial advisor and a practice management consultant to develop what she calls the Fundamental 4 pillars of practice management and has developed tools and strategies to support each of the domains across the four pillars.

In this episode, we talk in depth about Andrea's Fundamental 4 business framework of strategic planning, business development, operational effectiveness, and the human element, how most advisory firms have a natural strength in strategy and business development but may struggle with the operational effectiveness and human element, why Andrea advocates that, ultimately, a firm should take one development day per month where they close their doors to clients and solely work on the business instead of in the business, and why it's so important to find the time to be ultra-selective in how you hire and develop your team in the first place.

We also talked about Andrea's actual process for conducting interviews with prospective hires. Her four steps of phone screening, in-office interviews, a meeting over a meal, and what she calls an office simulation to really test a prospective hire's skills in a real-world business setting, the assessment tools, including PXT Select and Myers-Briggs, that Andrea uses to evaluate whether a candidate really has the capabilities and personality to be a good fit for the firm, and her approach to doing what she calls not performance evaluations, but performance feedback sessions with all team members on a quarterly basis.

And be certain to listen to the end, where why sometimes even A plus advisors with their clients may still only be C plus business owners, and how to lift your own business owner and implementation grade by steadily building up the time you're dedicating to developing your team and working on your own Fundamental 4.

So whether you're interested in the tools you can use in the interview and onboarding process to make sure you get the right people into the right role at your firm, how to carve out enough time to work on your business instead of in your business, or how to make sure run an intensive interview process efficiently, then we hope you enjoy this episode of the Financial Advisor Success podcast.

Why The Best Sales Training Approach Depends On Your Unique Sales Personality Style

February 18, 2019 07:04 am 0 Comments CATEGORY: Personal/Career Development

With the financial advice industry’s roots being primarily in product sales, revenues (and compensation) have traditionally been the result of a “numbers game” and derived exclusively from a broker’s ability to get in front of as many people as possible and convince some percentage of them that they should buy whatever it was that the broker was selling. In other words, selling was entirely an outward process of distributing products and was best-suited to those who had highly outgoing personalities.

However, as the industry’s value-proposition continues to transition away from products and towards a more consultative, service-driven approach, the truth is that success as a financial advisor isn’t as predicated on having a certain personality type. But, while advisors might not be selling products, per se, it doesn’t mean that they’re off the hook when it comes to developing those business development skills, since they still have to “sell” themselves and their services to prospects and (on an ongoing basis) clients. Unfortunately, though, most advisor sales training programs today still focus on the traditional extroverted salesperson ideal (or try to nurture an advisor’s inner-extrovert instead), rather than playing to the advisor’s natural strengths and augmenting their personal styles.

Accordingly, in this guest post, Amy Parvaneh (founder and CEO of Select Advisors Institute, a coaching firm that works with financial advisors) discusses why sales training programs should be designed around an advisors specific personality type, the three Consultative Sales Personalities her firm has identified, and specific strategies each of those personality types can employ to turn their unique challenges into business development advantages.

For instance, advisors with the Charmer personality type are the “traditional” extroverted ideal, have the uncanny ability to make a connection with just about anyone, and typically shine in the relationship management stage. However good they are at striking up conversations, though, Charmers usually need help moving prospective clients through the sales process and closing new business (rather than just engaging in endless chit-chat!), and can gain a lot by going through a more formalized sales training program. By contrast, Strategics are another subset of extroverts, but ones who typically set clear and measurable goals, which pairs well with their ability to get in front of prospects and bring in new business. Yet Strategics often focus so much on “what’s next” that they have difficulty developing deep ongoing relationships with clients after they come on board (which makes them pair especially well with Charmers who can take over from there). On the other hand, advisors with the Researcher personality type are very analytical and more introverted, and struggle the most with "traditional" extroverted sales strategies. Yet with their ability to dig into complex financial planning issues, be good listeners, and show genuine empathy towards clients, Researchers can often be quite effective at business development and sales as well, but must engage in strategies that leverage their expertise to bring prospects in to them (because they’re not wired effectively to go out and find the prospects themselves).

The bottom line is that, by tailoring your business development approach to your unique sales personality, not only will you be better equipped to find your ideal clients and convince them that it’s worth it for them to pay you for your financial planning services, but you’ll be able to more effectively communicate the value that you bring to the table on an ongoing basis.

Weekend Reading for Financial Planners (Feb 16-17)

February 15, 2019 02:36 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the announcement that both Schwab and Fidelity are further expanding their list of commission-free (i.e., No Transaction Fee or NTF) ETFs, further expanding their offerings from both BlackRock and State Street, along with a number of secondary ETF providers... but still with the notable absence of Vanguard's ETFs, as the battle of RIA custodians requiring back-end shelf space payments for access to NTF platforms continues to heat up (and raising the question of whether Vanguard may someday launch its own RIA custody platform with open access to all ETFs on a no-transaction-fee basis, to match its recent retail NTF ETF offering). Also in the news this week was the announcement that UBS is looking to launch its own internal independent channel, ostensibly to further stem the tide of brokers still moving independent even after the firm left the Broker Protocol.

From there, we have several articles on practice management, including: how industry benchmarking data shows that advisory fees are not declining (despite robo-advisor competition), but profit margins are beginning to suffer as advisory firms reinvest into providing more value-added services to justify their current fees in the face of competition; why it's important to focus on service to clients and not pursue industry recognition awards (and more generally, the danger of "vanity metrics" that can distract from an advisory firm's core focus); and how to think about segmenting services to clients in order to serve smaller clients profitably.

There are also a number of marketing articles this week, from some tips from marketing directors at large RIAs about what smaller RIAs could be implementing as well, to ways to show clients you're really "worth it" when trying to justify fees, why new clients toss the typical advisor's Welcome Packet in the trash (and how to make it better), and an interesting tactic of learning more about your ideal clients and what they really care about by simply trying to figure out what their favorite magazine would be (because niche magazines themselves have often already spent extensively on researching what's most important to their niche clientele).

We wrap up with three interesting articles, all around the theme of industry change and disruption: the first looks at Ken Fisher of Fisher Investments, which recently crossed the stunning threshold of $100B of assets under management, driven heavily by aggressive spending in marketing even as most advisory firms maintain there's no value to spending on marketing for clients; the second examines the big buzz at the recent Inside ETFs conference, that even as ETFs continue to disrupt the mutual fund industry, the next disruptor - of ETFs themselves - may have already appeared, in the form of technology-driven "Direct Indexing" that replaces the need for funds altogether; and the last similarly looks at how, even as Vanguard grows in its dominance amongst asset managers, changing competitive dynamics raise the question of whether Vanguard itself will have to restructure under new CEO Tim Buckley to stay ahead over the next 10 to 20 years.

And be certain to read to the end, where we include a video from advisor tech guru Bill Winterberg, highlighting some of the notable advisor FinTech trends on display in the VEO Village at the recent TD Ameritrade National LINC conference!

Enjoy the "light" reading!

Kitces & Carl Ep 02: How To Price Your Financial Planning Services

February 14, 2019 10:16 am 0 Comments CATEGORY: Kitces & Carl Podcast Practice Management

For most of the financial advice industry’s history, figuring out compensation has been relatively straightforward, as the commission rate that a broker received was set by the manufacturer of the products that were sold. And even as the industry moved more towards the investment management (AUM) model, compensation rates became a little less rigid, the standard fee of 1% of assets under management acted as a firm pricing anchor. However, with the shift in recent years to holistic, advice-centric approach – where advisors sell the value of their personal time and advice and can ask for any price they want – clear pricing standards have gone out the window.

In our second episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss the question of establishing a price for your financial planning services, why many advisors feel such anxiety over setting (and sticking to) their pricing model, the ways in which advisors can communicate their value to prospects and clients to justify their price, and why, many times, problems around pricing are really the result of our own inward confidence problems.

Because the reality is that advisors offering holistic planning are essentially rudderless when it comes to knowing how much to charge for their services. For the first time we, as advisors, have to convince our clients (and ourselves) that the intangible service that we provide is worth at least the price at which it makes sense to operate as a viable business. As while value in the past was defined by the products brokers had access to, now that “value piece” is far more esoteric and relies not only on our own knowledge and expertise, but (sometimes more importantly) in our ability to communicate effectively enough that it results in positive client outcomes!

And since consumers have access to far more information than they did in the past, the odds are that, at some point, a prospective client is going to push back on your price and wonder why they should pay you more than some other advisor with a seemingly similar “comprehensive financial planning” offering who charges less… or the inexpensive, automated service from the online robo-“advisor” with a substantial advertising budget. Fortunately, though, by focusing on a niche with unique challenges and by going deeper on issues that that virtually no one else is talking to them about, advisors can have an easier time communicating the value they bring to the table.

More generally, advisors who get questions about their fees might look at their own “lead nurturing” process. Because, if a prospect has opted to sit down with you in the first place, and after uncovering their desired future state, what’s holding them back, and how you can close that gap for them, they still don’t understand why you charge what you do… then the problem might not be with your pricing, but with how you present yourself to the public in the first place.

Ultimately, the key to the pricing conversation is that you, as an advisor, have a story that you believe in around the value that you provide, and can articulate that to clients and prospects. Because once we believe in ourselves and the value that we bring, then we can set a price… and be confident that we are worth what we say. In other words, if at the end of the day you’re concerned about your pricing, be mindful of whether it’s really a problem of whether your price is appropriate for the value you provide… or if you just need to get more confident in your own value proposition in the first place.

Qualifying A Rental Real Estate Enterprise As A “Business” For The 20% 199A QBI Pass-Through Deduction

February 13, 2019 07:07 am 5 Comments CATEGORY: Taxes

In a classic case of “the gift that keeps on giving,” the new IRC Section 199A included in the sweeping changes to the Internal Revenue Code introduced in the Tax Cuts and Jobs Act enacted by Congress in December 2017 has the potential to help certain business owners significantly reduce their annual tax bill with a 20% deduction against their “qualified” pass-through business income. With the caveat that when it comes to real estate, the new Qualified Business Income (QBI) deduction only applies against business income, and not against “mere” investments in real estate.

In other words, to qualify for the 20% QBI deduction as a rental real estate owner, a taxpayer must establish that they’re engaged in a “qualified trade or business” in the first place. Which, when it comes to rental real estate activity, isn’t always clear (especially since Congress didn’t fully define what constitutes “a business” for the purposes of the new IRC Section 199A in the first place)!

Fortunately for some, at the same time the IRS issues it’s first round of IRC Section 199A Final Regulations, it also released IRS Notice 2019-07, which provides a safe harbor for when a rental real estate enterprise will qualify as a business for purposes of the Section 199A deduction. Specifically, to qualify for the 20% QBI deduction on rental real estate, the taxpayer’s real estate must be directly owned by an individual or eligible pass-through entity (or through a disregarded entity), and their must also be at least 250 hours of total documented “rental services” activity performed in order to qualify.

Notably, though, this 250+ hour requirement carries its own quirks and nuances. Importantly, it’s not an overall requirement, but rather, the 250 hours of “rental services” must be performed for each enterprise, which again, potentially forces the taxpayer to make some important tradeoffs, since treating individual rental properties as separate enterprises has typically offered more flexibility for planning purposes but will now make it harder to qualify each separate property for the QBI deduction. Still, for purposes of counting those 250 hours, the IRS doesn’t require that the services (including such things as advertising, collection of rent, supervision of employees, operation and maintenance, etc.) be performed by the owner themselves, but instead can be performed by an agent, employee, or independent contractor.

Ultimately, individuals who don’t meet those safe harbor requirements still have the opportunity to “prove” that they have such a business (but they will bear the burden of backing up their claim (possibly in court) should the IRS stop in for a visit). Though shifting all rental activities to the lessor – e.g., via a triple-net lease – will unequivocally not qualify for the QBI deduction in the future, as it transitions the real estate purely into a passive investment holding!

Fortunately, for at least some rental real estate business owners, the safe harbor in the IRS Notice 2019-07 provides reasonable clarity about whether their rental enterprise(s) will qualify as a business. But significant complexity remains for some, especially those who own multiple rental real estate properties, and must make decisions that weigh maintaining them as separate enterprises, against the new burdens of ‘proving’ it is a rental real estate business without being able to meet the 250-hours-per-enterprise requirement.

#FASuccess Ep 111: Why The Right Advisory Fee To Charge Is The One That Not All Clients Say “Yes” To, With Jim Stackpool

February 12, 2019 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 111th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Jim Stackpool. Jim is the founder of Certainty Advice Group, a practice management consulting firm for financial advisors based in Australia. What's unique about Jim, though, is his particular focus on how to price and demonstrate the value proposition of what he calls non-product-based financial advice, which is increasingly relevant as fiduciary regulation continues to crop up both here in the U.S. and especially in Australia.

In this episode, we talk in depth about how to think about the true value of financial advice. How the expert value of the advisor themselves should be distinct from the products we implement, just as every surgeon uses a scalpel, but the value of the surgeon is not measured in scalpels, why the value of advice is not merely tied to a goals-based conversation but must tie to their real-world complexities, and why in the end we should focus more on the enduring value or what Jim calls the profound value of financial advice that can have material life-changing impacts for clients.

We also talk about how to know whether your advisory services are currently priced appropriately. Why it's actually a problem if you get too many people saying yes to your advisory fee pricing, how even on renewal you should consider raising advisory fees to elevate the business and the work it does with clients, even if you lose a few along the way, and why the AUM model does perhaps have it easier than other pricing models, since fees tend to naturally lift with the growth of the markets, but even under the AUM model, it's still necessary to be reinvesting into your own value proposition of clients or eventually, your fees will naturally drift so high that clients may no longer be willing to pay them.

And be certain to listen to the end, where Jim shares some perspective on the fiduciary regulation changes underway in Australia, where regulators have been even more aggressive in calling out the financial services industry's worst practices in what may culminate in a total breakup of Australia's wirehouse equivalents and a rapid explosion of the Australian independent advisor, akin to the IBD and RIA movements here in the U.S., which raises interesting questions about whether U.S. regulators may also someday become similarly aggressive towards the vertically integrated product distribution model here too.

So whether you're interested in what Australia's sweeping regulatory changes mean for their advice industry, ways in which advisory firms can provide more value to their clients, or how the industry might evolve in the coming decade, then we hope you enjoy this episode of the Financial Advisor Success podcast.

The New 1% Advisory Fee: 1% Of Income, Instead Of 1% Of Assets

February 11, 2019 07:06 am 1 Comment CATEGORY: Practice Management

The AUM model for financial advisors has experienced tremendous growth over the past 20 years, from the rise of the independent RIA to the broker-dealer shift to fee-based accounts. And despite the rise of critics questioning whether the AUM model is the most effective way to align what the client pays with the value being provided, the accelerating momentum of major firms transitioning to the model suggests that not only is the AUM model here to stay… but there may soon be too many financial advisors using the same AUM model to pursue the same relatively-few households who have sufficient liquid assets available to invest and who are actually willing to delegate them to an advisor in the first place. In fact, if the entire advisory community makes the AUM shift all at once, there may be no more than about 23 clients per advisor available!

Yet the reality is that the opportunity in the marketplace for financial advice goes far beyond just those who have at least $100,000 of investable assets available to roll over to an advisor to manage. In part, this is because some advisors are now shifting to an “Assets Under Advisement” (AUA) model that aims to charge clients not just a percentage of their managed portfolio, but a percentage of their entire net worth (on which the financial advisor is providing holistic financial advice), opening up a larger segment of Mass Affluent (and Millionaire) households who have the financial ability to pay for advice, but not the liquidity to access it by rolling over an investment account (e.g., because their assets are tied up in a 401(k) plan where they’re still working!).

However, the even-bigger opportunity to expand financial advice is not just to shift from charging a percentage of assets to a percentage of net worth, but instead to charge a percentage of income instead. Which opens up yet another swath of consumers – commonly known as the “HENRYs” (short for High Earner, Not Rich Yet) – who may not have substantial assets or net worth, but have more than enough income to pay for advice directly out of their income, whether on an hourly, monthly subscription, or annual retainer basis.

And while for high earners, the most straightforward approach may be to simply shift from charging 1% of assets to 1% of income, the reality is that just as AUM fees are typically tiered on a graduated fee schedule – with higher-percentage fees for smaller portfolios and lower fees for sizable accounts – a percentage-of-income fee could be tiered as well. In fact, at a 2%-of-income fee, even median-income households (earning approximately $60,000/year) become economically feasible to service with advice… for which even a 2%-of-income fee can often be recovered by providing good advice on the other 98%, at a cost that is little more than what such individuals would pay in commissions on even a modest IRA rollover into A-share mutual funds or via an insurance purchase. In other words, charging fee-for-service advice isn't just about the HENRYs, but a far wider range of Earners Wanting Advice Now (EWANs) who have the financial wherewithal to pay for it (as a percentage of the income they have, not the assets they don't!).

The key point, though, is simply to understand that, while the AUM model continues to be popular, and has a lot of benefits that make it easy for consumers to pay and highly scalable, it is naturally limited in market size to those who have liquid portfolios available to manage. While the rising shift to alternative fee-for-service models, particularly a percentage-of-income fee, opens up entirely new “blue oceans” of HENRY and EWAN consumers who are not served today by holistic financial advisors!

Weekend Reading for Financial Planners (Feb 9-10)

February 8, 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 news that state legislators are taking action yet again to fill the fiduciary void left by vacating the DoL fiduciary rule and the SEC's non-fiduciary Best Interest Regulation... this time, from Maryland, which has proposed a new fiduciary rule that would uniformly apply to RIAs, brokers, and insurance agents, and setting off the usual objections from industry product manufacturers that a state patchwork of fiduciary rules will create an unnecessarily high burden of regulatory complexity (albeit while the industry also continues to fight against fiduciary regulation at the Federal level, too!).

Also in the news this week is coverage of the recent TD Ameritrade LINC National conference where CEO Tim Hockey vowed not to compete with the RIAs on its platform (as the issue of RIA custodians with retail divisions competing against their own RIAs becomes an increasingly sensitive issue), a new diversity push at Edward Jones to steer retiring advisors' books of clients to advisors who are women and people of color that some are claiming goes "too far" by paying advisors more to hand off clients to minorities (and less to transition their clients to another white male), the news that within 2 weeks of Bogle's death Vanguard removed its claims of being an "at-cost" and "no-profit" provider (though it's unclear if the firm is really changing its strategy, or simply backing off claims that were causing it legal troubles about whether its pricing was an inappropriate tax dodge), and a look at Fidelity's expansion of its model portfolios as advisors increasingly outsource investment model design and implementation (which asset managers like Fidelity are using as an opportunity to increase their own assets by offering pre-built models that "happen" to predominantly use their own proprietary funds).

From there, we have several articles on advisor technology, from a discussion of whether presentations on advisor technology should be eligible for CFP CE credit, highlights from the T3 advisor technology conference, how the rise of Artificial Intelligence (AI) will likely play out with advisors in the coming years (think less "robots replace advisors" and more "software that combs through data to identify planning opportunities for advisors to discuss with their clients"), and a review of the ongoing technology initiatives at all the major RIA custodians as a veritable "technology arms race" gets underway as platforms compete for advisors' attention.

We wrap up with three interesting articles, all around the theme of the changing landscape of the financial services industry itself: the first looks at the recent Royal Commission report in Australia, a highly critical review of their conflicted financial advisor landscape, and the rather drastic changes that the regulators may now implement to ensure advisors are truly acting in the best interests of their clients and not merely as salespeople for their company's products; the second is a fascinating exploration of the evolution of the financial services industry over the past 130 years, which finds that, despite exponential growth in technology efficiencies, the financial services industry all-in takes the same 1.5% to 2% of assets to facilitate investment now as they did more than a century ago (albeit while providing more value-adds for the same aggregate fee); and the last which looks at research on the true value that clients get from planning for their future finances, and how financial advisors, in particular, appear to provide the most value and best outcomes for at least those planning-oriented clients.

Enjoy the "light" reading!

How The New QBI Deduction-Reduction Ruins The Value Of Pre-Tax Retirement Plans For Small Business Owners

February 6, 2019 07:03 am 5 Comments CATEGORY: Taxes

In December 2017, Congress passed “comprehensive tax reform” via the Tax Cuts and Jobs Act. The law was a once-in-a-generation, massive rewrite of the Tax Code, and gave birth to IRC Section 199A, which allows certain owners of pass-through businesses to receive a deduction for up to 20% of qualified business income.

While the new deduction will be a powerful way for many business owners to reduce their tax liability, it comes at a price… complexity. Many tax experts believe that “new” IRC Section 199A is among the most complicated aspects of the Tax Cuts and Jobs Act. And as evidence to support that claim, individuals can look no further than the IRS’s massive dump of Section 199A guidance on January 18, 2019. That trove of 199A guidance included 247 pages of Final Regulations and discussion, additional Proposed Regulations, IRS Notice 2019-07, and IRS Revenue Procedure 2019-11!

Critically, the introduction of the Section 199A deduction means that business owners must reevaluate their planning from the ground up, as even “obvious” decisions may need to be altered in light of the new rules. Case in point? Going forward, the Section 199A deduction will dramatically reduce the value of a tax-deductible retirement plan contributions.

This new “deduction-reduction problem” with pre-tax retirement contributions arises from the fact that the Section 199A deduction only applies to qualified business income, which is essentially the profits of a company. But when an S corporation makes an employer contribution to an employer-sponsored retirement plan, that contribution, itself, reduces corporate profits. Thus, there is less profit on which the 199A deduction can potentially apply. The sum of these moving parts is that, for some S corporation owners, a contribution to an employer-sponsored retirement plan will effectively result in a partial deduction, but still subject the entire contribution, plus all future earnings, to income tax upon distribution.

Prior to the issuance of the Final Regulations, it was widely assumed that this issue was only applicable to owners of entities taxed as S corporations, since contributions to retirement plans for sole proprietors and partners do not reduce business profits, but rather, are taken as personal above-the-line deductions on new Form Schedule 1 (formerly on the bottom of page 1 of Form 1040). The Final Regulations, however, make clear that sole proprietors and partners must also “back out” these amounts from business profits prior to the application of the 199A deduction. Thus, the “deduction-reduction problem” created by the Section 199A deduction will impact far more small business owners than previously thought.

In general, the primary reason a business owner should make contributions to a tax-deductible retirement plan (as opposed to a Roth-style plan) is that they believe that they are in a higher tax bracket today than they will be when they distribute those funds (along with their earnings) in the future. But when, in effect, you’re only getting a partial deduction for amounts contributed to a plan today, but still have to pay taxes on the “full boat” in the future, it changes the calculus quite a bit! Notably, for business owners who find themselves in this situation, their future tax rate must be even lower for the tax-deductible contribution today to make sense.

But just because a business owner isn’t getting the same bang-for-the-buck on a tax-deductible contribution doesn’t mean that they should throw in the tax-preferred-retirement-savings towel altogether! Instead, 401(k)s with a Roth-style option will simply become more valuable. And for those business owners looking to sock away more for retirement than the $19,000 maximum Roth 401(k) deferral ($25,000 if 50+ by year-end) for 2019, making after-tax contributions to the 401(k) plan (potentially to later convert under the “Mega-Back-Door Roth” strategy) can be an increasingly attractive option as well.

Of course, there is no -one-size-fits-all solution, and there are still plenty of business owners who will continue to benefit from tax-deductible contributions. Such business owners include those in Specified Service Businesses whose income is so high that the QBI deduction is phased out anyway (such as high-income financial advisors, doctors, lawyers, consultants, and accountants), those who believe that their future marginal tax rate will be significantly lower than the marginal tax rate they face today, and business owners who need to reduce their Adjusted Gross Income (AGI) to qualify for other deductions, credits, etc. (as the Section 199A deduction happens “below-the-line” and itself does not reduce AGI).

And of course, it’s important to recognize that tax-favored retirement accounts, in general, should not be abandoned altogether in light of the deduction-reduction impact of Section 199A. While the new deduction-reduction limitation definitely tilts the balance more towards Roth-style retirement accounts, the tax-deferred nature of all retirement accounts cannot be overlooked. Thus, even getting a partial deduction on a contribution today, while paying income tax on the full amount (plus earnings) in the future, will often be preferable than simply investing the same amounts in a taxable account where the entire contribution is implicitly taxed immediately (as an after-tax-dollars account) and then experienced further annual “tax drag” from interest, dividends, and capital gains.

Ultimately though, the most important thing for business owners and their advisors to realize is that the Section 199A deduction’s complexities go far beyond just the calculation of the deduction itself. Rather, there are ripple effects that make it necessary to take a fresh look at every element of a business owner’s overall tax plan, including which type of retirement plans will really provide the maximum benefit in the future!

#FASuccess Ep 110: Adapting The 4-Hour Work Week Into A Highly Profitable 4-Month Work Year Lifestyle Practice, with Micah Shilanski

February 5, 2019 07:15 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 110th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Micah Shilanski. Micah is a partner with Shilanski & Associates, an independent RIA in Anchorage, Alaska, where Micah personally oversees nearly $130 million of assets under management for almost 160 client households.

What's unique about Micah, though, is that over the past 8 years, he's transitioned from working 70-plus hour work weeks to refining his practice down to the point where he can service all 160 clients while being in the office for only 4 months of the year, an endeavor that he first started simply to get more efficient and better work/life balance, and then had to extend further out of necessity over the past several years to unfortunately support a sick child.

In this episode, we talk about how Micah manages his client workload of meeting processes to be able to sustain 160 clients while being in the office only 4 months of the year. How he boxed together a whopping six or seven client meetings a day for five-week surges in the spring and the fall, the way he handles meeting preparation and client notes in the midst of maintaining such an intensive client meeting schedule, how he sets a communication policy with clients during the onboarding process to set their expectations around his somewhat unusual schedule, and the way Micah overcame his own severe dyslexia to keep rigorous notes into CRM by using a combination of audio dictation tools and video emails to clients.

We also talk about how Micah has managed to not only maintain his practice but grow at 20% a year, despite only being in the office for 4 months, by focusing into a niche of helping federal employees with their retirement benefits. How he created his own niche website, plan-your-federal-retirement.com, to reach prospective clients, the seminar marketing strategy he uses to get even more clients into his niche, why he charges and can get a $500 initial consultation fee even for prospects that find him on the internet, and how by focusing into a niche, he's able to confidently charge above-average fees of $4,000 for an initial plan plus 1.75% of assets under management, because, as Micah emphasizes, there's nothing wrong with charging a premium fee when you genuinely offer specialized and premium service to a niche clientele who simply can't get the same expertise and experience anywhere else.

And be certain to listen to the end, where Micah shares the initial steps that any financial advisor can take to at least start to improve their own personal efficiency in the office, and how despite his time out of the office and the staff support he needs to make that happen, he's ultimately still been able to maintain his target of a nearly 70% EBOC take-home compensation from his $130 million AUM practice.