Nerd's Eye View blog

How To Profitably Price Fee-For-Service Financial Planning

May 21, 2018 07:01 am 1 Comment CATEGORY: Practice Management

A considerable challenge for financial advisors providing standalone fee-for-service financial planning advice is figuring out the "right" price that is both profitable to the advisor, and attractive to consumers. Notably, this is a challenge that largely did not apply to past generations of advisors, who typically either just sold products with commissions (that were determined by product manufacturers and not chosen by the advisor anyway), or charged an AUM fee (in which there was strong convergence on the 1% price point for all advisors). As a result, fee-for-service advisors who are aiming to reach clients through a different compensation model have both an opportunity to expand service into previously unserved markets (particularly those prospective clients who cannot be reached through traditional advisor business models like commissions or AUM), but also a challenge in needing to take more responsibility for determining how to price their services in the first place.

In this guest post, Alan Moore of XY Planning Network and AdvicePay, shares his thoughts on how to profitably price a fee-for-service financial planning offering, including the options for calculating financial planning fees (e.g., flat fee, hourly, project-based, percentage of net worth and income), the structure of paying advice fees (e.g., one-time fees, ongoing fees, or a combination), setting the right advice fee frequency (e.g., monthly, quarterly, semi-annual, annual), how to integrate some combination of fee-for-service and AUM fees (for firms that are looking to transition from an existing AUM model), how to make sure your fees are both profitable for the advisor and reasonable for your (niche) clientele!

Ultimately, though, the key point is to acknowledge that like the massive shift from commissions to AUM over the past few decades – which allowed advisors to serve clients in a fundamentally different way and reduced certain conflicts of interest – the opportunity to provide fee-for-service financial planning allows advisors to continue to evolve their business models, profitably serving an ever-increasing range of clients with fewer conflicts of interest. Yet the freedom and flexibility of the fee-for-service model does present new challenges in setting an advisory firm's fees in the first place... even as advisors with a fee-for-service financial planning model are poised for success in serving the next generation of clients (who are eager to receive real financial advice, but want to pay for it directly!)!

Weekend Reading for Financial Planners (May 19-20)

May 18, 2018 02:58 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 the DoL fiduciary rule still isn't quite dead yet, with the attorney generals of three states now appealing to the full group of 5th Circuit judges to (re-)consider their request to take up the defense of the DoL fiduciary rule after the Department of Justice declined to defend it themselves, suggesting that it's inappropriate that the judges who vacated the fiduciary rule itself should also be allowed to determine alone whether the states should be allowed to appeal their ruling.

Also in the news this week were some notable statements from the SEC's enforcement division that its recent Share Class Selection Disclosure (SCSD) Initiative may be part of a broader enforcement policy shift where the SEC will try to use amnesty programs to encourage more advisory firms to step forward and fix widespread abuses (while the SEC focuses its resources on higher-stakes enforcement issues with less of a "broken-windows" approach to their firm exams), and an interesting survey finding that affluent clients are increasingly looking to their financial advisors to be tax experts (in addition to investment experts).

From there, we have several articles on building relationships with clients and colleagues, including one that explores why most networking meetings are useless (hint: if you really want to build new relationships, you need to engage in an activity with someone you don't know, not just casual conversation), another looking at the kinds of (often unwitting) behaviors that advisors engage in with prospects that may prevent them from becoming clients, and the issues to consider when trying whether to spend more time socializing with clients outside of a professional setting (or not).

We also have a few retirement-related articles, from a look at why the uncertainties of retirement mean Monte Carlo analysis is especially appropriate to evaluate and craft potential retirement recommendations (because it implicitly explores a very wide range of "What-If" scenarios), to how to handle new retirees who excitedly retire early only to discover that retirement is a "total bore" for them, and a look at how the decisions of where retirees live is starting to reshape how cities develop, as retirees increasingly are not just moving to warmer climates to retire but instead are simply seeking out more distant suburbs and/or lower cost metropolitan areas.

We wrap up with three interesting articles, all around the theme of the financial advisory industry's struggles with diversity: the first is a look at a recent CFP Board research study on the factors that are limiting racial diversity of financial advisors; the second is a study showing that financial advisors have the worst rate of sexual harassment (as compared to other industries); and the last shows that financial advisors also have the largest gender pay gap of any occupation, even after controlling for advisor productivity and years of experience, suggesting that the profession is still far less of a true meritocracy than is commonly believed... and that for all of these issues, there is a need for a broader change in the culture of financial services, beyond just building better "awareness" and "sensitivity training" programs.

Enjoy the "light" reading!

Why The LearnVest Acquisition Is Actually A Success For Northwestern Mutual

May 17, 2018 02:02 pm 1 Comment CATEGORY: Industry News

In the two weeks since Northwestern Mutual announced that it was "shutting down" its 2015 acquisition of the LearnVest financial planning business and relaunching the LearnVest brand as an education-only content platform later this year, the industry has been immersed in “post-mortem autopsy” analyses of what happened and how Northwestern Mutual got to the point that they’re closing a business line that they bought just 3 years ago for a whopping $250 million dollars. However, the truth is that Northwestern Mutual acquisition of LearnVest was likely never about the LearnVest business model in the first place, and that by integrating LearnVest technology into Northwestern Mutual, the acquisition not only hasn't been a failure, and in fact may still be just getting started!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we discuss why Northwestern Mutual's decision to shut down the LearnVest planning business is not a sign of failure, why the acquisition was likely never about Alexa Von Tobel's "$19 per month financial planning service" in the first place, and where the real value of LearnVest was for Northwestern Mutual instead.

To better understand what was really going on in the LearnVest deal, it’s important to recognize that there were really three separate assets associated with LearnVest, all under one umbrella... The first was the LearnVest financial planning business, which at the time had about 10,000 “premium” clients paying $19/month for financial planning advice, as well as another 25,000 clients who were workers enrolled in the “LearnVest@Work” financial wellness program that they had just launched. The second asset of LearnVest was their content platform, targeted primarily at women and younger investors, that had hundreds of thousands of unique monthly visitors, and was supported by the media exposure of their CEO Alexa Von Tobel herself. The third asset of LearnVest was their Personal Financial Management portal, and the financial planning software they built on the back end, which at the time of acquisition reportedly had a whopping 1.5 million registered users (i.e., retail consumers).

The reason this matters is that much of the criticism of at the time of Northwestern Mutual's acquisition was solely focused on the LearnVest's financial planning business, with commentators asking how a business could be worth 50 to 100 times their revenue while not growing all that much. But the reality is that the real value of LearnVest was not their planning business, it was their planning software and the 1.5 million users that Northwestern Mutual could cross-sell their products to! After all, by some industry measures, 1.5 million leads alone could be worth close to $250M (at least if they're qualified), and Fidelity's purchase of eMoney for $250 million makes it clear the substantial strategic value of financial planning and PFM software for a large brand. Add a strong LearnVest consumer brand on top, and arguably Northwestern Mutual may have gotten a deal for LearnVest... even ignoring the actual LearnVest financial planning business altogether!

And this is why it’s so misguided to suggest that Northwestern Mutual didn’t get, or isn’t going to get, its value out of the LearnVest deal just because the LearnVest planning business is shutting down. Because it wasn’t about the LearnVest $2M/year business model in the first place, it was about Northwestern Mutual's $30B/year business model - manufacturing insurance products - and how the LearnVest’s platform and planning software could better power that Northwestern Mutual model. In fact, one of the “little noted” details about the news that “Northwestern Mutual was ‘shutting down’ LearnVest” is that the actual staffing of LearnVest in New York City is up, from 150 employees when they were bought, to almost 450 employees now. That’s not an acquisition that’s failing. That’s an acquisition that’s becoming a major part of the entire national Northwestern Mutual enterprise!

The bottom line, though, is just to recognize that the Northwestern Mutual acquisition wasn’t really about the acquisition of a financial planning business. It was a technology acquisition of financial planning and PFM software platform, for which LearnVest's cash-flow-and-budgeting-centric focus was an especially good fit for Northwestern Mutual (in a world where insurance agents have always gone the deepest on cash flow planning). And from the perspective of using LearnVest financial planning and PFM technology - plus 1.5 million leads, and a strong consumer brand to generate more Northwestern Mutual Prospects over time - there's still ample room for Northwestern Mutual to gain a positive ROI on its LearnVest acquisition... and their LearnVest hiring suggests that may already be happening!

How “Ownership” Of A Client Relationship Influences Financial Advisor Behavior

May 16, 2018 07:01 am 0 Comments CATEGORY: Human Capital

Economists have long studied the importance of property rights in a wide range of settings. From collectively avoiding circumstances that may lead to an inefficient use of resources (e.g., the "tragedy of the commons"), to simply understanding what conditions best promote the development of a wealthy and prosperous society, property rights are an important economic concept that can be applied in many contexts. Of interest to financial advisors, a recent study by Chris Clifford and William Gerken examined whether and how who "owns" a client relationship in a financial advisory firm - the firm, or the advisor themselves - influences that financial advisor in the future, based on the behavior of financial advisors at firms that joined the Broker Protocol (versus those that did not).

In this guest post, Dr. Derek Tharp – a Kitces.com Researcher, and a recent Ph.D. graduate from the financial planning program at Kansas State University – takes a deep dive into this recent Broker Protocol study, examining how "ownership" of a client relationship in a financial advisory firm impacts not just the success of the firm, but whether and how much the advisor reinvests into themselves, consumer well-being and advisor misconduct rates, and even the development of the advisory industry as a whole!

The development of the Broker Protocol was significant because it, for the first time, formalized exactly what information brokers can (and cannot!) take with them when changing from one firm to another, which not only helped provide a pathway for brokers to change firms without getting sued, but effectively shifted the "ownership rights" of the client relationship from the firm to the advisor (who can now take the information and relationship with them when switching to a new firm). Accordingly, Clifford and Gerkin utilized publicly available data on broker-dealers in conjunction with their timing of joining the Broker Protocol to evaluate how broker behavior changed before and after being given greater ownership over the client relationship. The astounding results: giving a greater level of ownership in the client relationship to the broker resulted in less broker misconduct, more broker investment in their general human capital, and an increase in firm revenue, client assets, and the number of client accounts (even though brokers did invest less into firm-specific human capital along the way).

Notably, the dynamics which led to the creation of Broker Protocol among broker-dealers largely exist within RIAs as well. Restrictive covenants commonly found at RIAs (such as non-solicits, or, less commonly, non-competes), can influence the level of advisor "ownership" over client relationships. Of course, both firms and advisors can have good reasons to accept such agreements (e.g., firms may be hesitant to give inexperienced advisors opportunities to work with clients if they could just "steal" clients without recourse), but it's important to understand and carefully consider the implications of such arrangements. As ultimately these arrangements impact factors such as the level of advisor talent across the entire industry (as advisors are more inclined to invest in their own human capital when they have greater ownership of client relationships), firm success (as a more talented workforce can be a net improvement for firms, even if employee turnover is higher), consumer well-being (as policies which restrict advisor mobility keep talented advisors "trapped" in lower-quality firms, which ultimately leads to lower service for consumers), and even industry regulatory and ethical concerns (as consumers themselves may not be aware that restrictive covenants may influence their ability to work with their trusted advisor, and consumers may not consent to such arrangements if they were disclosed).

Ultimately, there are steps that firms can take to reduce the harmful elements of restrictive covenants... from adopting an RIA equivalent to Broker Protocol, to regulatory intervention to restrict certain practices, and even pre-arranged terms for buying an advisor's client base if they wish to a leave a firm... but the key point is to acknowledge that advisor ownership of client relationships does influence advisor behavior in important ways, and that while it may be scary for a firm to vest more ownership in the client relationship to their advisors, the data shows that doing so is on average a benefit to both the advisor and their firm, as well as the consumer, and the industry as a whole!

#FASuccess Ep 072: The Financial Mechanics Of Buying Into An Advisory Firm And RIA Valuation Trends with David DeVoe

May 15, 2018 07:01 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome, everyone! Welcome to the 72nd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is David DeVoe. Dave is the founder of DeVoe and Company, a practice management consulting firm for RIAs with a focus on business valuations, succession planning, and facilitating mergers and acquisitions of advisory firms.

What's unique about Dave, though, is the deep history that he has in consulting on and tracking trends in advisory firm mergers and acquisitions, and the valuation of advisory firms, both previously at Charles Schwab where he led Schwab Advisor Services' Mergers and Acquisitions program, and now as an independent consultant who runs one of the industry's leading "Deal Book" tracking studies on financial advisor M&A activity.

In this episode, we talk in depth about current trends in the valuation of advisory firms, the flaws in the traditional "2X revenue" valuation estimate for a firm (and why it can actually vary as low as just 1 times revenue or as high as nearly 3X), why focusing on profits and a multiple of free cash flow leads to better valuations than looking at revenue alone, the Growth, Profitability, and Risk factors that impact the valuation multiple for an advisory firm, and how in the end an advisory firm is still, like any business, priced based on the present value of future cash flows, and thus why Dave's firm takes a discounted cash flow model approach to providing accurate advisory firm valuations.

We also talk about the mechanics of advisory firm deals from the buyer's perspective, why deals were historically transacted primarily with seller financing, how the rise of third-party bank financing is changing the actual terms and even the valuation of a firm, and why arguably the most important factor in determining the affordability of a purchase is not actually the price of the firm, or the interest rate charged on the note, but the number of years over which the payments are financed that determines whether the buyer has some skin in the game, or if the profits of the firm can actually fully finance the purchase with no ongoing out of pocket cash.

And be certain to listen to the end, where Dave shares his perspective on the buyer and seller trends in the industry, why he sees it as both a "buyer's market" and a "seller's market" right now, and why he thinks the greatest risk to valuations is the danger that too many firms try to sell at once... not because there isn't enough capital to fund all the purchases, but simply because there are still too few buyers for them all to be able to collectively handle the operational challenges of implementing so many mergers and acquisitions at once!

So whether you are interested in learning how to best value your own firm, what you should consider when deciding to purchase into or acquire another firm, or are simply interested in the general market dynamics in a continually evolving market for mergers and acquisitions of advisory firms, I hope you enjoy this episode of the Financial Advisor Success podcast!

11 Action Steps To Design An Extraordinary Client Experience

May 14, 2018 07:01 am 1 Comment CATEGORY: Practice Management

As financial advisors - like any business owner - we want our clients to have a "great experience" when they do business with us, providing a high level of service and proactive communication. Yet the challenge is that what constitutes the "right" level of communication and engagement with clients will itself vary by the client, making it difficult to standardize "good service" across the entire firm. And ultimately, it's hard to differentiate on good service anyway, as virtually all advisory firms like to pride themselves on providing "good service" to their clients. Which means if we truly want to provide an extraordinary service to our clients, we must go beyond just great service and think much deeper about what an extraordinary "client experience" truly is.

In this guest post, Julie Littlechild of Absolute Engagement (a firm that helps advisors craft a client experience that makes them attractive to the right clients) shares her 11 action steps that advisory firms can take to design their own extraordinary client experience, recognizing that the key to a create experience starts with clearly understanding who the firm is trying to serve (and not trying to serve) in the first place, and then crafting a plan to execute the plan profitably. Though ideally, it's not just about segmenting clients, creating a service matrix for the firm to follow, and assessing capacity and profitability, but also better defining what your target clientele or niche is in the first place, and then working with them to co-create the client experience and map out the client journey, along with the supporting client communications plan and necessary business infrastructure.

Ultimately, though, the key point is simply to acknowledge that what we tend to think of as delivering great service in an advisory business is simply too narrow when it comes to really defining experiences, and great service alone isn't the differentiator it once was. A broader and more holistic client experience really can differentiate a firm, but only if the firm clearly understands who it wants to serve, so it can create an extraordinary client experience for that particular target clientele. Because in the end, it's not about finding the one particular tactic that is going make the difference, but instead, the building of a strong foundation that supports a specific target clientele and is consistent with the client's journey that truly makes a client's experience extraordinary!

Weekend Reading for Financial Planners (May 12-13)

May 11, 2018 02:54 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the interesting announcement that SEC Commissioner Piwowar will be retiring in early July, a month before the public comment period closes for the new SEC advice rule, and raising the question of whether the SEC may end up deadlocked by the time the comments are in and it's actually time to deliberate on a final version of the proposed rule!

Also in the news this week was the announcement that Connecticut has passed a law that would allow its municipalities to create charitable entities to fund public services as a way to work around the new cap on the State And Local Tax deduction (and raising the question of when/whether the IRS and Treasury will challenge the strategy, and if it will ultimately end up in front of the Supreme Court), and the news that a new requirement for bond markup and markdown disclosures will take effect next week, in a move that could put new pressure on size of those trading commissions (or not, since the new disclosures only have to be communicated view printed transaction confirmations that not all investors read anyway!).

From there, we have several articles on industry shifts in advisory fees, including a fascinating overview of the various new advisory fee models that are emerging beyond (just) AUM, to the fact that a segment of financial advisors not only aren't experiencing fee compression but are actually raising their fees, and advice for firms that are struggling with fee pressures about what to do next (hint: it's all about giving deeper advice and differentiating beyond increasingly commoditized portfolio solutions alone).

We also have a few practice management articles, from tips about how smaller and solo advisory firms can (legitimately) make themselves look more credible in the eyes of prospects, to the benefits of trying to write a book as a financial advisor, and the value of engaging in PR strategies by doing media interviews to expand the visibility and presence of the advisory firm.

We wrap up with three interesting articles, all around the theme of advisor introspection and overcoming challenges: the first is a look back by an advisor who launched her own solo advisory firm 2 years ago, about what it really took to succeed (hint: it's more about the ability to adapt to challenges than to predict them in advance, and don't underestimate the importance and value of having a supportive community around you!); the second provides some tips to pass the CFP exam from someone who unfortunately failed her first attempt (in part by possibly over-focusing on her weak areas, and unwittingly scoring low in an area she thought was her natural strength!); and the last is a good reminder that if we as financial advisors really believe the primary value of advice is not just the information and expertise, but the benefit of having an objective third-party advisor who can view the situation with emotional detachment... that arguably most of us as financial advisors should have our own advisors too (because it's not just about the informational expertise we already have!), with the added benefit that if you really want perspective on how to improve your financial planning process with clients, you should try going through the process yourself, too!

And be certain to check out the video at the end – a fascinating look at how Will Smith's journey into becoming the "Fresh Prince of Bel Air" was driven by the failure to hire a financial advisor and make responsible financial and tax planning decisions after his first album went triple platinum, leading him to seek out new job opportunities because he was broke!

Enjoy the "light" reading!

The Advisory Firm Jobs That Robots Really Do Threaten

May 10, 2018 02:42 pm 0 Comments CATEGORY: Planning Profession

The early fear around "robo-advisors" was that technology could replace what human financial advisors do, at a fraction of the cost, and that their low-cost solution would attract consumers in a competitive marketplace. Yet in practice, robo-advisors have failed to capture even 0.1% market share of consumer investable assets, in what appears to be more of a niche solution for a subset of tech-savvy self-directed investors, than a mainstream competitor. Nonetheless, the failure of robo-advisors to disrupt human advisors doesn't mean that the broader the rise of technology won’t reshape the nature of our advisory firms. Because while our jobs as financial advisors aren’t necessarily threatened by technology, there are other jobs in advisory firms that are increasingly being threatened by technology.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we explore the changing nature of advisory industry jobs due to technology, and specifically why it is the back office (i.e., non-client facing) jobs that really are threatened by emerging "robo" and other advisor technology!

The key distinction is that there are really multiple types of jobs in advisory firms, which broader fall into two categories: “front office” jobs, and “back office” jobs. Front office jobs in advisory firms are the client-facing jobs (e.g., advisors themselves, as well as front-of-office staff like a receptionist). Back office jobs, by contrast, are… the ones that are not front office (i.e., not client facing) - the operations and administrative jobs in the firm (e.g., portfolio trading, account opening, transfers, insurance and annuity applications, etc.). Some people will add in a third category as well, called the “middle office”, which are the jobs that hold the firm together as a business (e.g., executives, managers, researchers, compliance & oversight). The fundamental point, though, remains simply that there’s a range of “advisory firm jobs”, from the front office client-facing stuff, to the back-office administrative and operations jobs, and the middle office jobs that hold it all together.

The reason this matters is that the real threat of robo-advisors (or technology more generally), is not to front-office advisor jobs, but towards the back office and more administrative jobs. Because while back office jobs are absolutely crucial – they’re the actual “doing” jobs that get key tasks done, repeatedly, day after day and week after week, client by client… it’s the very fact that they’re often repetitive tasks that make them prone to being replaced by technology. Consider the process of actually implementing a portfolio... At one point in time, this was a highly manual process (manually type holdings into a spreadsheet, pull up fund reports, do some research on alternatives, calculate tax implications, manually type in all trades, etc.), but with modern rebalancing software, one trader can handle this process for a thousand clients simultaneously in just an hour or two. Which means, for a sizable advisory firm, the clients of a dozen advisors might have historically required a dozen staff members just to do the trading... and now it's just one person with some software to get it done. And as technology continues to march on (in ever-new categories like robo-onboarding, online scheduling, etc.), back office jobs will increasingly be at risk. Ultimately, this is good for advisory firms, are it allows the firm and its advisors to focus more on working with clients and less on administrative tasks. But it is a threat to those back office jobs.

Which means it's important for people currently working in back office roles in advisory firms to think about what this means for them in the long run, and which of two paths they want to pursue next. The first option is to try and move up on the administrative side of the organization, shifting from more a back office oriented position to a middle office position. The caveat to this approach is that not everyone in an organization will ultimately be able to make this transition, as there are more admin jobs than manager jobs (e.g., 6 staff reporting to 1 manager means only one can move up!). The second option is to try and move into a front office role (i.e., go down the road of becoming an advisor), starting by enrolling in a program like the College for Financial Planning's old "Registered Paraplanner" program (now rebranded as the "Financial Paraplanner Qualified Professional" (FPFQ) program), with the ultimate plan of pursuing CFP marks as well.

The bottom line, though, is to recognize that the rise of technology isn’t a threat to financial advisors, because the technology doesn’t do what financial advisors do. But the operational efficiencies technology can create will begin to threaten the back office administrative jobs that complete those tasks today... which may ultimately make the firm more efficient, but means it's important for those currently in such jobs to reinvest into themselves to thrive in the future!

Proactive Section 199A Deduction Strategies For Small Business Owners

May 9, 2018 07:01 am 0 Comments CATEGORY: Taxes

The Tax Cuts and Jobs Act brought the biggest changes to both individual and corporate taxes that we've seen in the past 30 years. Included in those changes was IRC Section 199A, which is a new section of the tax code that introduces a 20% deduction on qualified business income (QBI) for the owners of various pass-through business entities (which include S corporations, limited liability companies, partnerships, and sole proprietorships). Fortunately, the QBI deduction will provide big tax breaks for many business-owning clients, but unfortunately, the new deduction is highly complicated, and it may take some time before the IRS can even provide more meaningful guidance on how it will be applied. However, the reality is that the planning opportunities created by IRC Section 199A are tremendous, and practitioners are already eagerly exploring how they can help clients reduce their tax burden through creative strategies around the QBI deduction.

In this guest post, Jeffrey Levine of BluePrint Wealth Alliance shares some of his own QBI deduction strategies and considerations after the TCJA. Broadly speaking, most strategies QBI deduction strategies can be broken into the three buckets, including income reduction strategies to stay below the income threshold where the specified service business or wage-and-property tests kick in, "income alchemy" strategies for transforming income from a specified service business into non-specified service business income, and other business strategies – such as hiring more W-2 employees – which are focused on favorably characterizing business income.

Notably, within each bucket are a wide range of tactics. Business owners who could benefit from income reduction strategies can consider ideas such as planning around retirement contributions, transferring portions of ownership to various non-grantor trusts, and revisiting filing separately as a married couple. Business owners who could benefit from "income alchemy" strategies can consider spinning-off certain assets and leasing them back, creating employee leasing companies, and even avoiding marketing language that makes strong claims about a business owner's skill. And business owners who could benefit from favorably characterizing business income may want to reduce or eliminate guaranteed payments to partners, change profit-eligible-only S corporations to partnerships, or switch from a salaried employee to an independent contractor.

Ultimately, the key point is to acknowledge that IRC Section 199A creates a tremendous number of planning opportunities after the TCJA. New strategies with QBI deduction implications will certainly continue to be developed with time and further guidance from the IRS, but even in the present, financial planners already have enough reason to reach out to business-owning clients and help them reduce their tax liabilities!

#FASuccess Ep 071: Appointing A Chief Planning Officer To Ensure Firm-Wide Consistency In Financial Planning Advice with Peggy Ruhlin

May 8, 2018 07:01 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome, everyone! Welcome to the 71st episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Peggy Ruhlin. Peggy is a partner and the CEO of Budros, Ruhlin, and Roe, a wealth management firm in Columbus, Ohio that oversees nearly $2.5 billion of assets under management for nearly 700 affluent clients.

What's unique about Peggy and her firm, though, is the way that they have focused on systematizing the financial planning recommendations they make within the firm, to ensure that every client in the firm truly receives consistent advice and a consistent planning experience across the firm's five planning teams.

In this episode, we discuss in depth the firm's approach to making their financial planning more consistent, including regular "collaborative studies" meetings one Monday a month, peer-to-peer presentations on a quarterly basis to review unique planning cases, a bi-weekly financial planning committee meeting to discuss what the firm's standard recommendations will be on various planning issues, creating a "Wealth Management Resource" library to catalog them, and appointing a "Chief Planning Officer" to be responsible for it all, just as the firm has a Chief Investment Officer to do the same in standardizing the firm's investment process!

We also talk about the evolution of how Budros, Ruhlin, and Roe has done business with clients over the past 30 years that Peggy has been there, from starting out as a financial-planning-only firm back in the 1980s (when it was not very common to do so!), the combination of net worth and income fees they used in their early years, why the firm ultimately shifted to add in investment management services and adopt the AUM model, and how they currently offer clients a choice between investment management only for a percentage of assets under management, or a comprehensive wealth management relationship for a percentage of their total net worth under advisement.

And be certain to listen to the end, where Peggy shares her own career path, from starting out as a CPA who decided to earn her CFP marks to make a shift from historically-focused accounting and tax compliance to forward-looking financial planning, why she's been an active volunteer over the years with organizations from the IAFP to the Foundation for Financial Planning and now the CFP Board's Board of Directors, and why she says that volunteering in professional organizations in her early years was more instrumental than anything else she did to advance her own career!

So whether you are interested in learning how a Chief Planning Officer can help ensure firm-wide consistency in financial planning, why a firm which set out to be financial planning only added in investment management services as well, or how volunteering in professional organizations can advance your career, I hope you enjoy this episode of the Financial Advisor Success podcast!