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Weekend Reading for Financial Planners (Apr 24-25)

April 23, 2021 02:59 pm 3 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the industry news that Morgan Stanley is selling off the E*Trade Advisor Services platform to Axos Financial, a retail-focused online-bank-plus-robo-advisor that is looking to pivot into the business of RIA custody and use E*Trade's RIA custody unit (and its $13B of RIA assets) to immediately gain some economies of scale to compete in the RIA custody business.

In addition, there are several notable industry studies hitting the news this week, including:

EY reports that affluent clients want more "digital services", not in lieu of a financial advisor, but offered by their financial advisor (and are even willing to pay more to get them!?)
Spectrem Group highlights the services that clients want from a financial advisor to earn their fees, and finds that "only" 2/3rds even want investment management, which is now almost tied with the number who want financial planning (but not necessarily investment management paired with it!)

From there, we have several interesting articles on investments:

How establishing "financial habits" can be the best way to overcome the tension between what we "want" (in the short-term) and what we know we "should" do (but may struggle to do) in the long term
The five "superpowers" of being a good investor, including Restraint, Curiosity, Creativity, Patience, and Courage
A look at William Bernstein's new book "The Delusion Of Crowds" and why we have a tendency to invest with the herd (even if sometimes doing so leads us straight into a bubble!?)

We've also included a number of practice management articles on the theme of culture:

How independent firms by and large score well on culture (82% of advisors are proud of their firm's culture) but wirehouse firms are struggling tremendously on culture (with only 43% proud of their firms, and providing a key indicator of why the breakaway broker trend continues?)
Why it's better to hire for "culture-add" than just "culture-fit" alone
Tips for advisory firms to create a more data-driven culture where decisions are made on all available data (which must start with the firm's leadership itself)

We wrap up with three final articles, all around the theme of productivity and focus:

How a sense of "overwhelm" often isn't a result of being short on time, but doing work that is misaligned from our needs and values
How offering "Office Hours" to connect with other professionals can expedite networking in a time-efficient manner
How to find your own personal focus and decrease distraction with a personal Kanban system

Enjoy the 'light' reading!

Kitces & Carl Ep 58: Getting Mentally Unstuck From Thinking About Clients “Too Much”

April 22, 2021 07:03 am 0 Comments CATEGORY: Kitces & Carl Podcast

Over the past couple of decades, the financial advice industry has evolved from being based primarily on one-off transactions with dozens or often one or several hundred individuals that an advisor may interact with (often only once every few years), to being focused on providing ongoing advice for a tighter group of clients that the advisor meets with several times each year. One of the greatest features that has emerged as part of that evolution (and attracts people into the profession itself) is the depth of ongoing relationships that advisors develop with the clients they serve. The feeling of playing a key role in helping families reach their financial goals provides a high level of both personal and professional satisfaction, and can become deeply gratifying personally as those relationships last for several decades (and across multiple generations). Sometimes, however, advisors can become so attached to their clients that it becomes difficult to separate a client’s stress from their own… which can eventually take its toll on the advisor’s own health.

In our 58th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards discuss some of the things that advisors can do to stop thinking (and worrying) about their clients quite so much, strategies to regain some mental health balance in their lives, and ways create (and maintain) some separation from work outside of regular office hours.

As a starting point, some initial steps advisors can take in order to stop thinking and worrying so much about whatever may be stuck in their heads is by simply writing it down! Whether doing it digitally (with a dedicated note-taking app like Evernote) or by going ‘old-school’ with a pen and paper, the physical act of just typing (or writing) out the client issue on the advisor’s mind can often have a purging effect, as it gives advisors a way to get whatever it is that they’re stuck on out of their heads and into a place where they know they’ll be able to go back to it… with the caveat being that they have to make reviewing those notes (at an appropriate time) part of their routine (but at the same time, can let go of the issue for the immediate time being!).

From there, advisors can become proactive about making small changes to their routines and habits around sleep, exercise, and diet, to preserve their own mental health. Incremental steps, like going for a mid-day stroll, doing anything that doesn’t involve a screen before going to bed, and turning off notifications from work-related apps after a specific time, can go a long way. Or, in other words, taking those incremental steps can help advisors put “air in their shocks”, which can help them build up the resilience they need to better react to and manage stressful situations as they do inevitably arise.

Ultimately, the key point is that financial advice is, at its core, a helping profession, and as such, attracts people who want to have a positive impact on other people’s lives. However, it's crucial for advisors to realize that they are also important, and if they don’t protect their own physical and mental health, they simply won’t be able to help their clients. By focusing on getting some exercise, eating healthier, getting better sleep, and jotting down whatever it is that’s stuck in their heads, advisors can be proactive about making sure that they’re able to serve their clients to the best of their ability!

Helping Clients To Stop “Thinking About It” (Contemplation) And Start “Planning It” (Preparation)

April 21, 2021 07:08 am 1 Comment CATEGORY: Client Trust & Communication

Financial advisors may often work with clients struggling to implement changes recommended by their financial plans. For many of these clients, moving forward can be difficult for a number of reasons. Fortunately, the Transtheoretical Model (TTM) of change is a research-based framework that gives advisors strategies to use with their clients who may be resistant to change. While the first stage of TTM is Pre-Contemplation, where clients may not yet have the awareness that change is important to their plan, the second stage of the TTM of change is known as the Contemplation stage. In this stage, clients have acknowledged the need for change and are beginning to think about the action needed to implement change. Perhaps more importantly, they begin to consider their own ability to carry out that action and what the action actually entails behaviorally (e.g., saving more) and emotionally (e.g., cutting down on buying new shoes, ordering coffee, and planning expensive vacations).

Like the other stages of TTM, the Contemplation stage has specific hallmarks. For instance, clients in this stage tend to display behavior characterized by what are known as the “two D’s”, Doubt and Delay. Clients may get stuck in this stage because they Doubt they have the requisite ability or knowledge to implement change (e.g., they may think that they can’t understand finances or that they don’t know enough to actually tackle the actions required), which can end their progress moving forward. Clients in this stage may also tend to Delay their progress. While Delay can sometimes be attributed to Doubts, fear of the future is another common reason for clients to Delay. Those who are stuck in the Contemplation stage must resolve their issues with Doubt and Delay before they can successfully move on to the next stage of change.

Financial advisors seeking ways to work with clients stuck in the Contemplation stage may find that worksheet tools, adapted from original research by James and Janice Prochaska, can be a useful way to help clients overcome resistance and gradually move through the next stages of change to accomplish their desired goals. These worksheets focus on reducing the negative ‘cons’ that clients have associated with the change and that hold them back from moving forward. They also aim to emotionally activate the clients by helping them understand how the impact of their actions affects others around them. These tools offer an easier, systematic process, so there is less guesswork for the advisor when trying to figure out how best to help clients move forward into the Preparation stage.

Ultimately, the key point is that there is a systematic process of implementing change, and by applying the research that's based on TTM, advisors can better understand what specific issues their clients may be struggling with and help them overcome these barriers. Additionally, with the aid of TTM worksheet tools designed for use with financial planning clients, advisors can more easily facilitate client discussions exploring goals and challenges, and encourage their clients to move through the stages of change with greater ease and self-awareness!

#FASuccess Ep 225: Generating A Positive Marketing ROI With Direct Mail Seminar Events, With Matt Gulbransen

April 20, 2021 07:06 am 3 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 225th episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Matt Gulbransen. Matt is the President of Pine Grove Financial Group, an RIA in Minnesota that manages over $550 million for about 325 families.

What’s unique about Matt, though, is that despite the widely held belief that direct mail and educational seminars have gone the way of the dinosaur, he has continued over the past decade to see positive marketing results from using direct mail to fill seats at in-person seminar events geared towards educating people about planning for the plethora of life transitions they face as they approach retirement… and then convincing them to work with him to navigate those retirement transitions.

In this episode, we talk in-depth about the ROI that can still be generated from a marketing funnel built around direct mail seminars, Matt’s key realization around why fear-based marketing will only get you so far and doesn’t ultimately help clients move forward to do business, the reason Matt started to charge an upfront planning fee for new clients as he gained traction with his seminars as a means of demonstrating that the work he and his team was doing had value, how Matt has adapted his process in a world where in-person events haven’t happened for a year, and why Matt feels that pre-retirees and retirees are still an attractive target market despite the level of competition in the niche.

We also talk about the way Matt has been able to leverage a relatively lean (at least by industry standards) team of nine people to service $550M of AUM by building out workflows and integrations within their tech stack in order to become ultra-efficient at their most common tasks, why the firm’s desire to focus on tax-savvy household-level allocations led Matt to choose 55IP as their core portfolio management software instead of more popular alternatives, and the various other technology tools that Matt’s firm has implemented to support “tax alpha” as a key value-add they bring to their clients (especially given that Matt and his clients live in a high-tax state).

And be sure to listen to the end, where Matt shares the challenges of starting his career as a young advisor at a wirehouse, how the challenges of prospecting led Matt to shift to the bank channel that had a more captive audience of prospects that could be referred to him, how it was Matt’s initial success with seminar marketing and the realization that he could grow an advisory firm without having a big-name brand behind him that eventually led him to launch his RIA, and how Matt has started to further scale the efficiencies he’s already built in his practice by bringing on outside advisor teams who are able to bolt on seamlessly to his system.

So whether you’re interested in learning how direct mail is still a viable means of attracting qualified prospects, how advisors can still use seminars to demonstrate the value of financial planning, or how Matt has been able to manage a relatively lean team with workflows and automations, then we hope you enjoy this episode of the Financial Advisor Success podcast with Matt Gulbransen.

Announcing The Kitces Digital Marketing Summit To Highlight Real Advisor Marketing Success

April 19, 2021 07:01 am 6 Comments CATEGORY: Nerd's Eye View

While the shift to digital tools and platforms has been underway for more than a decade, from the growth of blogging and social media to the rise of the robo-advisor, the coronavirus pandemic of 2020 will likely forever mark a turning point that rapidly accelerated the digital shift for financial advisors. Yet while the forced digitization of the financial advice business has been most noticeable of the realm of digital paperwork (i.e., eSignature adoption) and meetings themselves (e.g., Zoom and the like), it is the marketing and growth of financial advisory firms where the digital shift has been most disruptive to the advisor status quo.

After all, as the latest Kitces Research on advisor marketing has previously shown, even before the pandemic it was a category of “digital” marketing in particular that showed the greatest disparity of “haves” and “have-nots”, of a select few firms that were having outsized marketing success while the remainder were struggling greatly. And even within the digital marketing strategies, some, like SEO and paid social media advertising, are showing far more success on average than others like blogging and social media. Which only raises even more questions in the current pandemic environment about what digital marketing strategies are really worth pursuing (or not).

In this context, we’re excited to announce the launch of the first Kitces Digital Marketing Summit – a virtual conference focused not on Telling financial advisors what they “should” be doing, but instead to simply Show what real advisory firms are actually doing that works in the realm of digital marketing. From SEO to paid social media advertising, to blogging and email marketing, online scheduling, and CRM systems to manage the sales process of turning prospects into clients in a digital world), this Kitces Summit will showcase what really works across the top, middle, and bottom of the digital marketing funnel. No sponsors. No vendors. Just advisors providing a behind-the-scenes look for other advisors about what they’re doing that’s driving real results. (Though we will provide some curated and crowdsourced recommendations at the end of potential vendors that advisors might use if they see something they do want to implement!)

This “Show, Don’t Tell”-styled Kitces Digital Marketing Summit will run for “just” an action-packed 4 hours on the afternoon of Thursday May 13^th from noon to 4 PM EST (replays/recordings will be available for those who cannot attend live). So if you’re still curious about what it really takes to do digital marketing successfully, and want to actually see what success looks like, I hope you’ll check out our new Kitces Digital Marketing Summit, and “See What’s Possible!”

Weekend Reading for Financial Planners (Apr 17-18)

April 16, 2021 02:57 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 Gary Gensler, known for his aggressive enforcement at the CFTC a decade ago, has officially been confirmed by the Senate as the next SEC Commissioner... setting the stage for what may be a significant uptick in the enforcement of Regulation Best Interest amongst broker-dealers as the world of brokerage and investment advice continues to converge.

In addition, there are several other notable regulatory news items this week, including:

Robinhood sues the state of Massachusetts to overturn its state fiduciary rule, claiming that Massachusetts' recent enforcement actions against Robinhood's trading practices aren't valid because the firm is "just" a self-directed brokerage firm and not providing retail advice
The Department of Labor issues a new FAQ on the recently updated ERISA fiduciary rules signaling more aggressive enforcement of its fiduciary framework on brokers that recommend IRA rollovers

From there, we have several interesting consumer and advisor studies:

How generational preferences for financial advice are increasingly gapping apart according to J.D. Power, with 52% of those under 40 preferring an advisor committed to ESG and 73% preferring to pay for advice on a monthly subscription basis (compared to only 24% and 34%, respectively, of those over age 40)
Unlike prior bear market cycles, the majority of investors who made portfolio changes became more aggressive in 2020 (not more conservative)
A new consumer survey from Cerulli finds that 44% of consumers would prefer to invest according to their ESG preferences, while 'only' 14% of advisors indicate their clients have a moderate preference for doing so

We've also included a number of articles on investment trends:

Steps that advisors can begin to take to implement an ESG investment approach with their clients (on more than just a one-off accommodation basis)
What to do if parents accumulate "too much" money in their 529 college savings plan
Real-world results of a firm that implemented Direct Indexing in 2020 and got to see first-hand how much additional tax-loss harvesting can occur in volatile markets

We wrap up with three final articles, all around the theme of adapting ourselves for greater success:

Why it's important to have "strong opinions, weakly held" by being confident in what we know but also very open to new information that could change our recommendation
How "feedback" is crucial to making long-term improvements beyond just trying to research for ourselves what we "should" do
Why the long-term key to success in growing a business is all about staying as close as possible to the end client, and not allowing your team or various intermediaries to put too much distance between the advisor and their end clients

Enjoy the 'light' reading!