Nerd's Eye View blog

How Do I Tell My Client’s CPA Or Attorney That They’re Wrong?

November 29, 2018 01:13 pm 0 Comments CATEGORY: Client Trust & Communication

One of the most interesting aspects of being a financial advisor is the ability to gain insight into all sorts of different areas of clients’ lives. Far from the domains of “just” insurance and/or investments in the early stages of the industry, today, a true advisor helps define goals and aspirations, identify challenges, take advantage of opportunities, and optimize the accumulation and distribution of assets.

In fact, a favorite industry analogy is that a financial advisor acts as a sort of “quarterback” for their clients, giving impartial and helpful advice and acting as a trusted intermediary for a wide variety of relationships and interactions. And in order to provide the best advice and service to clients, advisors often gain, at the minimum, a working knowledge of a number of areas that fall outside the realm of traditional finance, including tax and legal issues.

Unfortunately, however, that disciplinary overlap has the potential to create interprofessional conflict, particularly when a client’s accountant or attorney might not be giving them the best advice possible, or worse, is simply wrong. Which in turn, raises the question: How do you, as a financial advisor, tell your client that their CPA or attorney is wrong?

In this week’s #OfficeHours with @MichaelKitces, my weekly broadcast via Periscope and guest hosted this week by Jeff Levine, we discuss potential pitfalls when addressing the issue of a client getting incorrect advice from another professional, specific steps to take in such a situation, and ways to ensure a positive outcome for everyone involved.

Because, even though you’re not trying to make anyone look bad, there are all sorts of problems that might arise if you don’t handle the situation properly, including: running into compliance issues by providing “legal or tax advice”; offending the accountant or attorney, because, after all, they’re the licensed experts in their respective field, not you; and, upsetting your client, since they might feel you’re calling into question the trust they’ve placed in their CPA or lawyer.

The question then is: How do you handle such a situation? Often it’s best to follow a three-step process, where the first step is to reach out to the professional in private and, while deferring to their expertise, indicate that there may be a misunderstanding or some miscommunication regarding the issue at hand. Next, refer to an outside source, preferably a thought leader, or notable expert in their field (i.e. a well-known attorney if you’re talking to an attorney, or a well-known CPA if you’re reaching out to a CPA – people tend to respond better from “advice” from their own profession) as the catalyst reaching out, and finally (and this is key), asking them for their thoughts, because (again) it’s important to defer to their expertise.

Because, ultimately, doing what’s best for the client sometimes require Solomonic tact, and ensuring that everyone involved saves face is the easiest way to do that. And, as an added bonus, you then might even have an opportunity to develop a new relationship with a center of influence after helping them navigate a potentially problematic situation.

End-Of-Year Contribution And Distribution Planning For Tax-Favored Accounts

November 28, 2018 07:37 am 0 Comments CATEGORY: Retirement Planning

Of the many ways that financial advisors try to provide demonstrable value-added services for their clients, one of the most effective is making the most efficient use possible of tax-advantaged savings accounts, for the hard-dollar tax savings it can create. And while it often takes consistent planning through the year to make the most of those accounts, the end of the year provides the opportunity to make a number of last-minute changes, not only in order optimize contributions and distributions, but potentially to avoid any unnecessary and preventable costs as well.

For those with the means to do so, the first, most obvious first step is to make sure that they’ve contributed as much as they can to any available qualified retirement plans through their employer(s), and even consider establishing (or changing) a separate employer retirement plan for any side businesses that the individual may own in order to take advantage of the (non-coordinated) employer limits for defined contribution plans, which in 2018, stands at up to $55,000 per non-related business (plus catch-up contributions!).

Meanwhile, those 70 1/2 or over have the opportunity to manage their tax exposure by making (up to) $100,000 in Qualified Charitable Contributions (QCDs) from pre-tax funds in their IRA, which counts towards their Required Minimum Distribution obligations as well (thus allowing them to minimize both their taxable income and their Adjusted Gross Income). Especially since QCDs have become even more valuable following the passage of the Tax Cuts and Jobs Act… as with the steep increase in the standard deduction, most taxpayers won’t itemize deductions in the future, and therefore taking RMDs and then donating to charities won’t provide any offsetting deduction on their tax return in the future (but donating from an IRA via a QCD is still a perfect pre-tax donation!).

Continuing in that same post-Tax-Cuts-and-Jobs-Act-landscape vein, year-end Roth conversions are now even more valuable from a planning perspective. Because, even though the overwhelming majority of taxpayers will have lower tax bills in 2018 than in 2017, the most impactful cuts for individuals are scheduled to expire in 2025, which means that they have a relatively limited window in which they can make Roth conversions at a lower rate than would otherwise be possible in the future. Yet going forward, taxpayers may increasingly need to wait until the end of the year to decide exactly how much to convert, as TCJA also eliminated Roth recharacterizations (making the Roth conversion itself a one-time irrevocable decision).

And, although much of the focus at the end of the year is on optimizing savings, advisors should also pay attention to any tax-favored funds individuals may have in a healthcare flexible savings account (FSA) that should be spent before the end of the year, given their inherent “use-it-or-lose-it” provision. And while some employers may give employees the option to carry over up to $500 on a year-to-year basis, or utilize a 2 1/2 month grace period the following year, the fact is that money inside an FSA needs to be spent… preferably in a way that doesn’t involve negative outcomes for the individual’s well-being.

Other planning options advisors have at their disposal for end-of-year tax planning include rolling over employer retirement plans to an IRA in anticipation of purchasing Qualified Longevity Annuity Contracts in 2019, and (when appropriate) utilizing Achieving a Better Life Experience (“ABLE” or 529A) accounts, which are accounts that allow for tax-deferred growth and distribution of funds used for ongoing disability expenses for those who were disabled prior to age 26.

But, ultimately, the key point is to recognize that year-end planning around tax-advantaged accounts is just another way that advisors can provide great service for their clients… with real tangible hard-dollar savings. And while some of these planning issues may be relatively straightforward, the fact is that optimizing the use of tax-advantaged accounts often requires a nuanced look and properly navigating what are sometimes complex rules and provisions.

#FASuccess Ep 100: Scaling A Financial Life Management Firm By Starting With Client Intentions Instead Of Goals with Joe Duran

November 27, 2018 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 100th episode of Financial Advisor Success Podcast!

This week's guest is Joe Duran. Joe is the founder and CEO of United Capital, a national independent RIA that oversees nearly $25 billion of assets under management. It's one of the largest independent wealth management firms in the country.

What's unique about Joe, though, is that he doesn't view his own advisory firm as being in the wealth management business but instead in the financial life management or FinLife business instead, where, as Joe puts it, the primary focus is to help clients live richly, not die richly.

In this episode, we talk in depth about United Capital's financial life management offering, why the firm starts by talking to clients not about their goals but about their values and their intentions instead. The unique tools that United Capital developed specifically to facilitate the values and priorities conversations with clients, and especially couples.

How United Capital standardized the value-add of their financial planning process even while allowing their advisors to choose from multiple financial planning software platforms. And why Joe believes it's not wise to force every client to go through a comprehensive financial plan up front even for firms that are otherwise very financial-planning-centric.

We also talked about the evolution of United Capital itself, why the secret to scaling an advisory business is moving beyond what Joe calls a cult of personality business centered around the founder/owner to a cult of company business, where both clients and talented employees want to work for the company itself. How United Capital began to charge standalone financial planning fees to reflect their financial planning value, but ultimately shifted back to charging AUM fees instead.

And why asking two simple questions, "Will this help us serve more people?" and, "How would we beat United Capital if we were making a competitor to ourselves?" has guided United Capital's evolution from being an RIA aggregator to a single advisory firm with a unified client experience to increasingly becoming an advisor technology platform company instead.

And be certain to listen to the end as Joe shares the advice he wishes he could go back and tell his younger self. That in the end, you have to keep focusing on the process of serving clients and not the results. Because you can't control the results, only your inputs. Even a steady focus on the right inputs has allowed United Capital to grow an advisory firm with more than $200 million of revenue in under 15 years. And so with that introduction, I hope you enjoyed this episode of the "Financial Advisor Success" podcast with Joe Duran.

Nerd’s Eye View 2018 Reader Survey – Your Input Is Requested!

November 26, 2018 07:03 am 0 Comments CATEGORY: Nerd's Eye View

Every year, we make new reinvestments back into Kitces.com and the Nerd’s Eye View blog to make it an ever-more-valuable resource for the financial advisor community, and especially all of you, our readers. Which we do first and foremost by asking you, every year, what you want to make this website even better for you!

Over the years, your reader feedback has shaped everything, from the visual design of the blog (from its original dense small font!) the comment system we use, to the expansion of our Members section to offer CFP and IMCA/IWI CE credits, and now CPE credits for accountants as well for Nerd's Eye View blog posts, the launch of the Financial Advisor Success podcast, and more, allowing us to be recognized in 2017 by Erdos & Morgan as the #1 digital media brand amongst financial advisors for influence, objectivity, credibility, and outright usefulness to an advisor’s daily work!

But I know there’s still more we can do. Which is why, every year, we conduct a feedback survey for all of you who read this blog, to get your thoughts and feedback about everything we currently offer, your perspective on some new ideas we're considering, and take in whatever other input you're willing to share (good or bad!) about what we could do to make this a more valuable site (and a better user experience) for you.

So regardless of what kind of reader you are: an advisor, an individual consumer who reads this blog for your own benefit, a related professional that works with financial advisors, or you're associated with a vendor who serves advisors... I hope you'll participate in this year's survey. It's only 12 questions, should take no more than a few minutes, and will remain open until the end of next week.

Thanks in advance for taking a few minutes to click through on the "Read More" link below to access our reader survey, and share your feedback! 🙂

Weekend Reading for Financial Planners (Nov 24-25)

November 23, 2018 02:01 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 round of public hearings in New Jersey regarding its coming 2019 proposal to issue a state-level fiduciary rule, as fiduciary advocates suggest that it may be necessary given the SEC's non-fiduciary "Regulation Best Interest" proposal, while the product distribution industry objects on the grounds that it will create an untenable regulatory burden between state and existing Federal regulations.

Also in the news this week was an indication from Congresswoman Maxine Waters, who will soon take over the powerful House Financial Services Committee (which oversees the SEC itself) as the Democrats take control of the House, and has already proposed changing the existing "Capital Markets, Securities, and Investment" subcommittee to instead become the "Investor Protection, Entrepreneurship, and Capital Markets" subcommittee with a particular focus on fiduciary and annuity issues (setting up for a new conflict over the SEC's proposed Regulation Best Interest rule in 2019?). And industry commentator Bob Veres shares his (very concerning) first take on the new OneFPA Network initiative, raising the question of whether FPA National's growth problem is really a result of "dysfunctional" chapters or because National hasn't figured out how to manage its own business model woes in the face of declining revenues from Journal advertisers and conference sponsors.

From there, we have a number of articles on advisor marketing and referrals, including: how to actually handle the conversation with a prospect you've been referred to in order to ensure they actually set a meeting to learn more about your services; how introverts can succeed in business development by creating and sticking to a clear and consistent process; how to stop using "filler words" (like Um, Uh, and Like) to sound more professional; why some advisors adopt a "by referrals only" growth strategy, the potential problems with doing so, and how to do it successfully (for those who really want to); and why it's important to remember that even prospects who don't turn into clients still might in the future (so be certain to be cordially helpful to all prospects you interact with!).

We wrap up with three interesting articles, all around the theme of personal change and improvement: the first looks at how despite a historical view that human traits are fixed (i.e., you're either "born with it," or you're not), in reality the plasticity of our brains means we can and do learn new skills and abilities and can even change our personalities (which means it's less about having the right traits or not, and more about how to cultivate them in yourself); the second is an interesting look at how adopting a more "analogy" processes around managing your tasks for the day can actually help you be more mindful (and ultimately more productive); and the last provides a powerful reminder that, while our brains can rewire themselves to break old habits and build new ones, it still requires a concerted and willful effort to do so... although the good news is that, because our brains can be re-wired into new habits, the change you're trying to accomplish does eventually get easier to maintain!

Enjoy the "light" reading!

End-Of-Year Medicare Planning Opportunities During The Open Enrollment Period

November 21, 2018 07:05 am 0 Comments CATEGORY: Insurance

The final weeks of the year are some of the busiest for financial advisors as they help their clients not only plan for the upcoming year but wrap up their planning for the current year before it ends. Often, that work is heavily geared towards end-of-year tax planning strategies, such as partial Roth conversions, tax loss (or gains) harvesting, and now deduction bunching under the Tax Cuts and Jobs Act. But the end of the year also offers advisors the opportunity to help clients over 65 potentially save money (or preserve access to key doctors) during the Medicare Open Enrollment Period, which runs each year from October 15 through December 7, by making changes to their coverage (which then take effect on January 1) that generally can’t happen during the other 44 weeks of the year.

The first key adjustment opportunity – and important annual review process – is to assess whether any changes need to be made to a Medicare enrollee’s Part D prescription drug plan, as providers do change formularies (the list of available favorably-priced drugs) from year to year, and failure to monitor the situation can lead to a spike in medical costs if key drugs are suddenly no longer covered.

For those who are over age 65 and don’t have a Part D prescription drug plan, the next option during the annual Open Enrollment Period is to add one. The caveat, however, is that, for individuals that did not sign up for Part D during their initial enrollment period (which is a six-month window spanning the three months prior to and after their 65th birthday) they will almost certainly have to pay an ongoing “late enrollment penalty” in addition to their regular premiums, unless they have “creditable coverage” from another prescription drug plan in retirement. Though for those who already face a late enrollment penalty, waiting further will just further increase the penalty from here!

In some cases, though, the key Medicare change opportunity is not just to switch Part D prescription drug plans, but to change the entire Medicare plan itself – from original Medicare to a Medicare Advantage (Part C) plan, or vice versa. Medicare Advantage plans are offered through various private insurance companies (rather than through the Federal Government) and are often lower cost than traditional Medicare (with often an even wider range of benefits, including not only Part B and Part D coverage but sometimes even dental and vision coverage as well). However, Medicare Advantage plans encourage (or really, require) individuals to utilize providers with whom the carriers have negotiated concessions and discounts (i.e., in the Advantage plan’s “network”)… which means it’s necessary to monitor the plans each year to ensure that the desired doctors are available, or otherwise switch plans to another that includes the desired doctors. And those who relocate may wish to switch altogether into (or out from) a Medicare Advantage plan, as the quality of network (and therefore popularity of the plans) varies tremendously from one geographic region to another.

Ultimately, though, the key point is simply to recognize that, while the last couple of months of the year are especially hectic, there are several opportunities for planners to add real value for their clients. And for older clients, it goes beyond just end-of-year tax planning, but also helping them perform an annual “check-up” on their Medicare coverage, which can end up saving them not only time and money, but can ensure that they continue to see the doctors they want to see (and take the prescription drugs they want/need to take) in the first place!

#FASuccess Ep 099: Finding Better Alignment Of Values And Belief Systems By Focusing On A Religious Niche with Rob West

November 20, 2018 07:09 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 99th episode of the Financial Advisor Success podcast!

This week's guest is Rob West. Rob is the president of Kingdom Advisors, a membership organization that supports financial advisors who want to serve Christians as their niche market segment.

What's unique about Kingdom Advisors, though, is that they've formed not only a community of 2,600 financial advisors from all the different industry channels all serving the niche segment of Christian clients, but they've also developed a training program and supporting CKA designation, short for Certified Kingdom Advisor, to be, as they put it, the gold standard for delivering biblically wise financial advice.

In this episode, we talk about what it really means to serve Christians as a niche segment. How you can even have a niche in a target market that's technically 67% of all Americans, according to the Pew Research Religious Landscape Study, the way that Kingdom Advisors integrates their faith and nearly 2,300 passages from the Bible about money and possessions into their financial planning conversations with clients, and why despite the traditional view that politics and religion should be forbidden subjects to discuss with clients, that the advisors with the CKA designation have actually been able to find success specifically because holding out as a Christian financial advisor helps to connect with clients who share similar values and belief systems.

We also talk about the evolution and growth of Kingdom Advisors itself as the industry has transitioned from its generalist roots to be increasingly focused on niches and specialization. How Kingdom Advisors as an organization focuses on four core pillars of advocacy for Christian financial advisors, that includes a radio show to more than 1,500 Christian radio stations to attract Christian consumers to advisors with the CKA designation, training with both the CKA designation itself and monthly virtual educational programs, community with more than 200 study groups and a 1,500-attendee annual conference, in an effort to become the recognized organization of distinction when it comes to biblically wise financial planning.

And be certain to listen to the end, where Rob reconciles the biblical concepts of stewardship and the industry's current debates about the fiduciary duty, and why in the long run Kingdom's focus is really simply on helping advisors discover how their work can be aligned with their own purpose and significance.

The Four M’s Of Finding “Limitless” Success As A Solo Advisor

November 19, 2018 07:03 am 0 Comments CATEGORY: Practice Management

The traditional view of business is that the best way to grow a better business is to implement better business methods, often gleaned from industry benchmarking studies that try to identify the “best practices” being used by leading firms. Yet while it certainly is important to implement effective business tactics, the reality is that especially in solo advisory firms, the business itself is often a reflection of the owner and his/her mindset. When the owner has a good day, the business has a good day. When the owner has a bad day, the business has a bad day. And any mindset limitations of the owner become mindset limitations of the business.

In this guest post, practice management consultant and coach Stephanie Bogan explores how the foundation of an advisor’s mindset ultimately defines his/her practice, and how changing your business methods isn’t nearly as powerful as changing your own mindset to improve the current state and health of the business, especially for those who want to pursue a highly leveraged “lifestyle” practice for themselves.

To break through to the next level, Bogan advocates focusing on what she calls the “Four M’s” of Mindset, then Mapping (towards real goals of the advisor), then Methods (which can’t change the direction of your business, but can multiply the results once you know where it’s heading), and finally building Momentum to accelerate progress in the direction that has been mapped out (and not succumbing to distractions of other ideas or business opportunities that don’t actually help achieve that focused goal).

The bottom line, though, is simply to understand that often the greatest challenge in achieving a more efficient “lifestyle” practice as a solo financial advisor, earning more dollars while spending less time in the business, isn’t about finding the “right” technology or the key best practice, but changing your mindset to shed the limiting beliefs that you “can’t” achieve the success you want in the first place!

Weekend Reading for Financial Planners (Nov 17-18)

November 16, 2018 02:51 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the fascinating news that #4 independent broker-dealer Commonwealth Financial is launching a standalone RIA services division, not just to service its sizable base of dual-registered advisors but a growing segment who have dropped their FINRA licenses altogether... but want to stay with the broker-dealer anyway for their non-broker-dealer RIA support services instead, as the brokerage industry increasingly reinvents itself for a more RIA-fiduciary-centric future!

Also in the news this week is the news that Interactive Brokers is scaling up its RIA services division (at least for RIAs that are still primarily in the business of actively managing client portfolios and want ultra-low trading costs), and the announcement that Edelman Financial Engines is launching a new RIA custody relationship with Trust Company of America now that the latter is part of E-Trade... to get access to a soon-to-be-launched (and likely-to-be-lucrative) E-Trade Advisor Network as E-Trade mimics the successful advisor networks of Schwab, Fidelity, and TD Ameritrade (at least, for the subset of advisors who can participate).

From there, we have a number of investment-related articles this week, including a look at how advisory firms are choosing their investments these days (hint: it's all about fees, performance, and brand trust), a Morningstar highlight of Vanguard's TIPS fund as CPI slowly but steadily starts to rise, and a look at how the growing number of firms beginning to automatically convert their C-shares to A-shares after 7-10 years may itself accelerate firms to transition to the advisory model to maintain their revenue (for which the end of the year is a good time to take a fresh look at the advisor's own book of clients still holding C-shares). Also in the discussion of investments this week is a look at the "good" that Wall Street does accomplish, how to handle the situation when a couple doesn't align on their risk tolerance, and why webinars can be a particularly effective method to reach (lots of) clients in times of market volatility.

We wrap up with three interesting articles, all around the theme of pricing model innovation amongst financial advisors: the first highlights a new Simon-Kucher study on advisory firm pricing models that finds it's not actually so difficult to serve Millennials profitably... it just requires not using the AUM model and shifting to a more direct fee-for-service model instead; the second looks at some of the caveats of shifting to a flat-fee model, and how to build in "stabilizers" to ensure that the advisor/client relationship doesn't get too out of whack; and the last is a fascinating exploring of the "Good-Better-Best" approach to pricing models, where businesses offer three tiers and empower consumers to choose which they want for themselves.

Enjoy the "light" reading!

3 Reasons Why The Financial Advisor Market Size Isn’t Actually Shrinking

November 15, 2018 02:10 pm 0 Comments CATEGORY: Technology & Advisor FinTech

With Cerulli Associates estimating that nearly 50% of all financial advisors are over the age of 55, the headcount of financial advisors is projected to shrink, potentially quite substantially, in the coming decade. Which can trigger more industry consolidation (mergers and acquisitions) and succession planning (as existing clients of advisors leaving the industry will need go somewhere else for advice), but also risks further slowing the amount of technology development and new businesses entering the marketplace to serve financial advisors (as many investors don’t want to fund businesses in a shrinking marketplace! Yet as it turns out, looking at the total number of “financial advisors” may actually be the wrong way to measure the trajectory of the financial advisor marketplace to begin with… and when viewed properly, the opportunities for serving (real) financial advisors is actually on the rise!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1 PM EST broadcast via Periscope, we discuss why it’s so difficult to estimate the number of existing financial advisors in the first place, why many of the predictions regarding the trajectory of the financial advisor headcount aren’t taking into account some key drivers, and why, ultimately, looking to the number of CFP certificants may offer the best perspective on the opportunities within the industry… and whether the number of people offering (real) financial advice is decreasing or actually increasing.

Cerulli Associates, who delivers some of the best industry research out there, estimates that there are just over 300,000 financial advisors - a surprisingly difficult number to estimate given the overlap of advisors across RIA, broker-dealer, and insurance channels. The caveat, though, is that fewer than half of them even state that they actually give financial planning advice… suggesting that the majority are “financial advisors” in name only but are still predominantly focused on the sale of insurance and investment products. This isn’t entirely surprising, though, given that there are only about 82,000 CFP certificants (and not all of those are practicing or, if they are, offering “real” financial planning)!

Nonetheless, the industry projection is that the advisor headcount “must” inevitably decline, given how many of the 300,000 financial advisors are over age 55. Yet the reality is that financial planning isn’t a career that you retire from simply because you’re eligible for Social Security and Medicare. Retirement as a concept was introduced during the industrial age when most people worked with their hands, and after a certain age, people weren’t able to meet the physical demands of their jobs anymore. However, providing financial advice is an intellectual, not manual, endeavor. And when you consider the fact that highly experienced financial planners on average make over $400k after 30 years of experience and that, by the time they reach 65, they’re not really working at the same pace that they did in their 30s, it just doesn’t make sense that a lot of folks would simply walk away from that sort of job until they had no other choice!

The other reason that the declining headcount may be overstated is that it’s based on the assumption that the industry won’t be able to attract enough new financial advisors. On the one hand, it’s easy to understand why Millennials are reluctant to join an industry that’s still seen as primarily sales-driven, but the projections don’t take into account the number of industry entrants who are career-changers. Because, the financial industry isn’t alone in dealing with the effects of automation, and the earnings potential as an advisor makes it an appealing option for those who are mid-career and looking for new opportunities… especially for attorneys and accountants, who are already in roles that oftentimes overlap with financial services, and are facing even more pressure from technology (e.g., TurboTax and LegalZoom) against their more-transactionally-oriented services.

Of course, some have suggested that it doesn’t matter how many financial advisors are coming into the industry or not because they just won’t be needed in the age of “robos” and automation. Yet the rise of technology and automation doesn’t always play out as expected. The introduction of ATMs in the 1970s resulted in an unexpected increase in the number of human bank tellers, rather than the decline that was predicted at the time, because the technology made banking so much more efficient it expanded the reach of advisors and increased human job opportunities (on top of all the ATMs!). Similarly, automation in the financial services industry has the potential not to make human advisors obsolete, but rather could spur potentially exponential growth in financial planning by allowing advisors to efficiently serve larger segments of the population… recognizing that the true number of households being served with real financial planning is at best only about 15% of all the households in the US. Simply put, there’s a huge opportunity out there to leverage technology and hire more human financial advisors serve the other 85% of the households that aren’t being served today. Not to mention that as technology puts more pressure on advisors to justify their fees in the first place, more and more advisors are starting to offer comprehensive financial planning, which is why (despite the lack of growth overall in the financial advisor headcount) a record number of people have been sitting for the CFP exam for the first time in recent years.

Ultimately, the key point is to recognize that overall industry trends about the “shrinking” headcount of financial advisors may be misunderstood. Despite projections that the industry will shrink in the coming years, there are plenty of good reasons to be optimistic about opportunities for financial advisors. The retirement wave will take much longer to materialize than first thought, and instead of being a threat to financial advisor jobs, technological efficiencies will help the industry expand into underserved markets and will end up increasing the demand for financial advice in the long run. Which helps to explain why the number of financial advisors is up over the past 5 years, despite the anticipated wave of retirees and the rise of the robo-advisor movement!

In the meantime, for those who really want to get a handle on the opportunities in the financial advice industry and the advisor marketplace, perhaps it’s time to stop looking at the number of people called “financial advisors” who are simply registered to legally sell insurance and investment products, and look to the number actually being trained to give and get paid for financial planning advice (through programs like CFP certification)… which shows that the market for financial advisors has never been bigger and stronger than it is today!