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#FASuccess Ep 185: Becoming A Financial Coach As An Alternative To The Traditional Financial Advisor Business Model, with Christine Teh

July 14, 2020 07:06 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 185th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Christine Teh. Christine is the founder of Teh Financial Coaching, which provides tax consulting and financial coaching services to high-income individuals and couples still struggling with money in the San Francisco Bay Area. What's unique about Christine, though, is the way that she is building a successful financial coaching practice by not only systematizing her coaching packages for clients but also systematizing her marketing process via LinkedIn to scale her reach to be able to get a high enough volume of clients to make the coaching business work.

In this episode, we talk in-depth about how Christine structures her financial coaching services for clients, why the focus of her work is on short-term cash-flow tracking for clients and not necessarily their long-term retirement plans, the reason she insists that clients track their spending manually in a spreadsheet and not use online tools like mint.com, the four- and eight-week financial coaching packages that Christine created for clients to be more scalable than hourly coaching and that also helps her find better-fit clients, why Christine's philosophy is to teach her clients to fish, and how she tries to graduate them to become self-sustaining and not to remain her long-term clients.

We also talk about how Christine markets her services given the reality that she may need to find 1,000 to 2,000 clients to work with in the coming decades to achieve her own business goals, why she chose LinkedIn as her social media platform of choice to build her personal brand and market herself, the daily LinkedIn routine that Christine goes through to maintain her marketing presence, and the tools that Christine is now using to add live streaming to her weekly LinkedIn marketing routine.

And be certain to listen to the end, where Christine shares how she made the transition and took the leap from quitting her stable corporate job for the entrepreneurial path of becoming a financial coach, why she chose financial coaching and not the traditional RIA business model as her approach to working with clients, and the mindset shift that she had to go through in order to start building a successful financial coaching business.

Implementing Client Meeting Surges To Boost Advisor Productivity And Systematize Client Value

July 13, 2020 07:03 am 12 Comments CATEGORY: Practice Management

The typical financial advisor meets with clients year-round, both because clients vary as to when they want and feel the need to see their advisor, and simply to ‘even out’ the workload involved in preparing materials for and actually spending time seeing clients during those meetings. The end result is that, according to the latest Kitces Research study, the average advisor spends nearly 27 hours per week on client service, which includes meeting preparation, planning, and the meeting itself. However, adopting an alternative client meeting strategy – the ‘surge’ method – can dramatically boost advisor productivity, systematizing the client review meeting in a manner that delivers the same level of quality service (if not better) to their clients, while freeing up as many as several months of the year to focus on other aspects of their businesses (or personal lives!)!

In this guest post, practice management consultant and coach Stephanie Bogan explores the client meeting surge approach, which involves developing a highly systematized method to conduct client meetings by separating the ‘factory work’ (e.g., the rote tasks and routines, such as preparing forms, confirming appointments, updating client information, etc.) from the ‘focus work’ (e.g., the intellectual work such as detailed financial planning analyses that rely on the advisor’s knowledge and understanding of their client’s situation). The meeting process itself is organized into four steps: 1) scheduling meetings (where a typical surge schedule would accommodate 3 client meetings per day, 3 days a week – generally Tuesday through Thursday, typically scheduled over 4- to 8-week periods, and only during set months of the year); 2) preparing the client deliverables, giving the advisor an opportunity to review client files in advance of the meeting (typically, Mondays are set aside for advisors to review client meeting files); 3) the actual meetings themselves; and 4) following up with the clients, providing them meeting summaries and (automated) personal check-ins at regular intervals after the meeting such as every 30-, 60-, and/or 90-days afterward (usually tasks that are completed on Fridays during surge weeks).

While the main concern of the surge approach is that it might seem to compromise the advisor’s ability to provide specialized, tailored attention to each client, in reality, the process of systematizing the ‘factory work’ actually enhances the meeting experience by creating more time for the advisor’s ‘focus work’ that needs thoughtful discussion and analysis, empowering the advisor to delve more deeply into these topics with the client during their meeting. Not only does this afford the advisor the opportunity to closely examine complex issues facing their clients, but it also helps them more easily identify other potential problems that might go unnoticed without the ability for a deeper analysis, and at the same time, even strengthens the relationship with the client.

Ultimately, the key point is that the meeting surge process can offer financial advisors more flexibility to balance their client meetings with other aspects of their businesses by systematizing and streamlining the client meeting process, freeing up more time throughout the year. And while the meeting surge process may involve a dramatic mindset shift for advisors in considering how business is actually done in their firms, the systematized approach can increase meeting efficiency and give the advisor the opportunity to focus more on complex planning issues, which not only enhances the meeting experience itself but also increases the actual value delivered to the client, all over a few months during the year. Which frees up the remaining off-meeting-surge months of the year for the advisor to consider other important issues, like how to grow their business and enhance their service offering even more!

Weekend Reading for Financial Planners (July 11-12)

July 10, 2020 02:56 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 Small Business Administration has released data on all Paycheck Protection Program (PPP) loans above $150,000, which includes more than 1,000 independent advisory firms and related industry service providers, raising the question of whether advisory firms are being hypocritical advising clients on their finances while needing to rely upon PPP for their own, or simply humanizing the reality that particularly mid-sized scaling advisory firms are still businesses with staff and overhead that face economic business cycles that can include layoffs in difficult times (which PPP loans were specifically intended to prevent).

Also in the news this week are requests from advocacy groups to the Department of Labor to extend its rather-narrow 30-day Public Comment period regarding the potential for ERISA fiduciaries to begin to receive commissions and other revenue-sharing agreements, and a Model Rule proposal from NASAA for more consistent requirements of state-registered investment advisers on their policies and procedures for everything from their code of ethics and proxy voting to handling material nonpublic information and business continuity and succession.

From there, we have a number of additional industry research studies out lately, including Cerulli research that finds the overwhelming majority of the mass affluent still rely on human advisors (and not robo-advisors) and that most clients are still very satisfied with their advisors (so satisfied, in fact, that it may soon become increasingly difficult to find new clients who aren't already attached to another advisor!), a J.D. Power study that finds the majority of advisors at broker-dealers aren't satisfied with their platform's technology tools (despite 92% acknowledging that technology is crucial to their choice of platform), and a LIMRA study finding that almost 3/4ths of advisory firms have shifted their marketing focus to expand relationships with existing clients as prospecting has become more difficult in the world of pandemic social distancing.

We also have a few marketing-related articles this week, including a look at the kinds of online/digital marketing strategies advisors are testing in the face of the pandemic, guidance on how to create an effective sales process that can be tracked and improved over time, and the core outcomes to focus on whenever conducting a client meeting (hint: the #1 key simply boils down to answering the client question: am I going to be OK?).

We wrap up with three interesting articles, all around the theme of managing ongoing stress: the first examines the concept of "goal diversification" as a way for us to break a cycle of stress and burnout by finding new ways to have some 'small wins' that give us more positive feelings of progress; the second is a powerful reminder that in the age of the 'always connected, always be productive' mindset, sometimes it's incredibly powerful and rejuvenating to make a proactive decision to be deliberately unproductive for a little while; and the last explores recent research findings that the greatest adverse effects of stress actually derive from our mindset about stress, that the more harmful we believe stress will be the more harmful it turns out to be, and that by Acknowledging and Owning the stress, we can try to Use it, changing our mindset about stress that takes us down a (literally) healthier path.

Enjoy the 'light' reading!

How Rising ETF Investing By RIAs Triggers The SEC’s 13F Reporting Requirements

July 8, 2020 07:06 am 1 Comment CATEGORY: Regulation & Compliance

Amidst the economic expansion that came in the wake of World War II and in response to the rise of institutional trading by bank trust departments, insurance companies, investment companies, and registered investment advisers, Congress directed the SEC to conduct a study in 1968 to better understand the nature of institutional investor activity in the interest of maintaining healthy competition in the financial marketplace. The end result – the Institutional Investor Study Report of 1971 – revealed a lack of information available for investors regarding institutional investor activities and the impact their trading may have been having on the broader markets.

In response, Congress amended the Securities Exchange Act of 1934 by adding Section 240.13f-1, known as Rule 13f-1 (and the supporting Form 13F), mandating that institutional investment managers disclose and report on a quarterly basis their equity holdings of certain “13(f) securities” as identified by the SEC. 13(f) securities consist mainly of equities that trade on a national securities exchange (including not only traditional stocks, but also certain equity options and warrants, closed-end investment company shares, and importantly in today’s world, ETFs).

The 13(f) reporting requirement applies to all institutional investment managers that manage at least $100M in those 13(f) securities, where the definition of an “institutional investment manager” pertains to banks, insurance companies, broker-dealers, corporations, and pension funds that manage their own portfolios, as well as discretionary investment managers – in other words, registered investment advisers (i.e., RIAs) – who invest on behalf of others.

Consequently, registered investment advisers who exercise discretionary authority over $100M or more of 13(f) securities as of the last trading day of the month – by holding, for instance, a broad portfolio of ETFs for their clients, or simply by trading stocks directly, or using a growing number of direct indexing solutions – are required to file four consecutive quarterly Form 13F reports. In fact, given the substantial rise in popularity of ETFs amongst RIAs, a large swath of SEC-registered investment advisers (i.e., those holding ETFs at or above the $100M threshold) are now becoming “institutional investment managers” subject to the 13F reporting requirements… which has only been compounded by the fact that the $100M threshold has not been updated in decades even as the RIA industry grows. The first Form 13F filing deadline is 45 days after the last day of the calendar year in which they first crossed the $100M threshold (of holding 13(f) securities).

The Form 13F filing information required by the SEC is prepared in an XML table format that is uploaded directly to the SEC EDGAR database. RIAs who are required to file Form 13F but who do not share discretionary management responsibility with any other independent investment adviser are required to complete a 13F Holdings Report, while reporting advisers who are in a co-advisory or sub-advisory relationship (e.g., those who use third-party TAMP providers or sub-advisers but otherwise meet the filing requirements) are required to complete a 13F Combination Report or a 13F Notice, respectively.

The SEC website has extensive guidance on the submission process, though, given the time-consuming nature of completing and submitting all of the requested information, some advisors may prefer to delegate the responsibility to a third-party service provider. And in fact, the growth of the use of ETFs by RIAs – and the associated 13F filing requirements they create – is rapidly creating a cottage industry of 13F filing solutions in the form of both technology tools (e.g., portfolio management platforms offering built-in 13F analysis tools to facilitate RIAs that are self-filing 13F), and service providers to help those RIA that prefer to outsource their required 13F filings instead.

Registered investment advisers who may have missed their Form 13F filing deadline (e.g., because they didn’t know the 13F rules applied to their ETF investing activities!) should simply file their reports as soon as possible, as while the SEC does not grant extensions, they do encourage advisors to submit their Form 13F as soon as they can.

Ultimately, the key point is simply that with more and more RIAs offering discretionary management services that include managing portfolios comprised of ETFs (which are 13(f) securities) instead of mutual funds (which were not), many firms have a new reporting obligation as an “institutional investor” that they may not have realized they have. Fortunately, the growth in technology tools and service providers to support the process make it more manageable to complete than it was in the past. But 13F reporting is still a non-trivial compliance burden that RIAs must be prepared to manage… and, potentially, to catch up on with the SEC if they’re just now realizing they haven’t been in compliance with their 13F reporting obligations all along!

#FASuccess Ep 184: Building A Premium Financial Planning Experience To Sustain A Premium Advisory Fee, with Reese Harper

July 7, 2020 07:10 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 184th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Reese Harper. Reese is the founder and CEO of Dentist Advisors, an independent RIA based in Salt Lake City, Utah, that oversees nearly $250 million of assets under management for more than 350 clients. What’s unique about Reese, though, is that his advisory firm doesn’t just have a deep niche in serving dentists, as the name of the firm implies, but that Reese has developed his own unique monthly financial planning process for serving clients and raised capital from outside investors to develop his own technology tools to implement it.

In this podcast, we talk in-depth about the Elements financial planning process that Reese has created; how he boils down the client’s financial planning situation into 12 key metrics to track, including their savings rate, their insurance coverage rate, and their personal burn rate; the systematized series of 12 monthly deliverables that Dentist Advisors produces for all of its clients each month, 1 for each of the 12 financial planning elements; the combination of Salesforce and Conga that Reese’s firm has implemented to increasingly automate the production of their client deliverables; and why Reese thinks the future of financial planning is all about working with clients through an ongoing series of micro-interactions around their financial planning needs.

We also talk about the business of Dentist Advisors itself, how Reese has been able to power the growth of the business with a successful podcast focused into his niche, the combination of AUM fees starting at 1.5% plus monthly subscription fees running from $200 to $700 a month that he charges for his comprehensive service, the ways the firm justifies its fees beyond the portfolio and even traditional financial planning with a focus on helping dentists lift their personal income and the value of their dental practices, and why Reese sees his firm’s approach of charging a premium price for a premium service as sustainable in this modern era of robo-advisors and fee compression.

And be certain to listen to the end, where Reese shares why he ultimately decided to raise capital by selling a portion of his advisory firm to outside investors, even though they were already growing successfully, the valuation and terms they were able to get by showing a strong business plan with a high growth rate, the challenges in growing an advisory firm quickly where clients are long-term profitable but short-term expensive to find and onboard, and why Reese isn’t concerned about the fact that with the second recent round of investor capital to accelerate their growth further, he has diluted his own founder ownership below controlling 50% majority.

The Latest In Financial Advisor #FinTech (July 2020)

July 6, 2020 07:20 am 1 Comment CATEGORY: Technology & Advisor FinTech

Welcome to the July 2020 issue of the Latest News in Financial Advisor #FinTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors and wealth management!

This month's edition, with contributions from special AdvisorTech consulting guests Craig Iskowitz and Kyle Van Pelt, kicks off with the news that Orion Advisor Solutions has acquired Brinker Capital for $600M to form a combined $40B TAMP, as Orion increasingly positions itself as a competitor to Envestnet with a similar portfolio-management-turned-advisor-workstation solution that in turn is becoming a distribution channel for Orion’s model marketplace and platform TAMP offering. The deal was driven by private equity firm Genstar Capital, which similarly had previously acquired the AssetMark TAMP platform in 2013 for $413M and sold it just 3 years later for $780M, though notably in this case it appears to be less about simply growing Brinker as a TAMP and more about expanding Brinker’s reach through the adoption of Orion in broker-dealer channels. The only question is whether or how many broker-dealers are actually willing and interested in changing their portfolio management and advisor desktop solution?

From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:

Empower acquires Personal Capital in a deal reminiscent of Edelman Financial Engines that similarly positions Empower to end the advisor rollover bonanza by capturing plan participants with in-plan advice long before they ever retire
Venture capital firms make big investments into Origin and BrightSide as financial planning also increasingly heats up as an employee financial wellness benefit (whose cost is validated not by the benefits of advice to the client, but the improved productivity for the business of workers with less financial stress?)
Envestnet launches a new “Opportunities To Engage” solution to bring a Morgan Stanley “Next Best Action”-style recommendation engine to independent advisors
New CFP Board “fiduciary tech” standards may upend historically opaque financial planning and especially insurance product-illustration software

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including Mastercard acquiring account aggregation and financial API provider Finicity after losing Plaid to Visa, Apex expands its RIA custodial capabilities with a new more out-of-the-box “Extend” platform, the quiet world of advisor software surveys suddenly becomes hotly debated as inconsistent sampling methodologies show wild swings in market share, and Wealthfront announces a “New Mission” for the 2020s focused on banking as its future, effectively ending the robo-advisor movement as Betterment remains the 'last robo standing' in what has turned out to be a niche solution for a subset of self-directed young investors rather than the ‘disrupt the advisor industry’ movement robo-advisors once predicted they would be.

And be certain to read to the end, where we have provided an update to our popular new “Financial Advisor FinTech Solutions Map” as well!

I hope you're continuing to find this column on financial advisor technology to be helpful! Please share your comments at the end and let me know what you think!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!