Kitces.com - Advancing Knowledge in Financial Planning

Launching A Compliance-Ready Podcast To Enhance Your Digital Marketing

May 11, 2020 07:07 am 0 Comments CATEGORY: Marketing

In this day and age of social media and social distancing, podcasting is an ever-popular means for advisors to market themselves to grow their businesses and reach prospective clients in an ‘audio-intimate’ format unique to podcast episodes. However, advisors face the unique challenge of meeting strict compliance requirements when producing a podcast show. Because of regulations imposed by the SEC and FINRA, both RIAs and broker-dealers, respectively, have specific guidelines that must be followed when it comes to communications with the public and content that may be construed as advertising.

In this guest post, Ben Krueger – Founder of Cashflow Podcasting – discusses steps that advisors can take to work with their compliance teams and to set up their own podcast episodes. The three key steps that can help advisors streamline the approval process of their podcast proposals with their compliance departments include: establishing podcast goals that aim to provide value through educating and supporting a clearly identified target audience; developing a good working relationship with the compliance team members who will be involved in reviewing the podcast and taking measures to be proactive on what they need while keeping communication channels open and clear; and creating content that complies with regulatory requirements (e.g., avoiding testimonials, endorsements, unsubstantiated claims, etc.), and then reviewing and documenting all content produced.

In addition to these steps, creating a systematic timeline for the podcast process can also help to organize a recurring schedule of events needed to produce each episode and can help the advisor stay on a regular production schedule (as the entire process can take as long as two months for producing a ready-to-air show approved by compliance), which can be important to attract and maintain a regular audience of listeners. Identifying the right tools and services can also help streamline the process, from transcription, audio editing, and production services to social media archiving and monitoring tools.

Ultimately, the key point is that while there is plenty to manage in creating a successful podcast, compliance requirements should not keep advisors from producing an effective podcast program that will help to educate their clients and grow their business. By developing a clear vision of podcast objectives, understanding compliance requirements, proactively working together with compliance team members, and identifying the best technology solutions to meet their needs, advisors can create their own compliance-ready podcast episodes!

Weekend Reading for Financial Planners (May 9-10)

May 8, 2020 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 news of a new show to debut this weekend on CNBC that will feature not stock-picking entertainment but actual financial planning advice from real financial advisors (featuring advisor and media personality Josh Brown) in what may be the most visible attempt yet to burnish the public image of what it means to be a "financial advisor" away from existing negative portrayals like Wolf of Wall Street and Ozark.

Also in the news this week is an update to the SEC's Frequently Asked Questions guidance on Regulation Best Interest reaffirming that standalone broker-dealers will be required to stop using the "advisor" title after June 30th (though dually-registered broker-dealer/RIAs will still be permitted to do so, even when acting as a broker and not an RIA), registration is opening for a new online version of FINRA and NASAA Series 6, 7, 63, and 65 exams as Prometric testing centers look to stay closed for at least several more weeks in many areas (while the CFP Board has announced that the July CFP exam is being delayed to September to allow more time for in-person testing centers to open where the more comprehensive exam can be effectively proctored), a recent Fidelity study finds advisors are buying more active than passive funds in the midst of the current market volatility (though it may simply be because advisors who use active funds are more likely to actively manage them in the first place), FPA launches a "Virtual Externship" program for college students to get up to 160 hours of CFP experience if their prior in-person internships were cancelled, and a new study finds that it's the frequency of advisor-client interactions and the transparency of the advisor's compensation that drives perceived value from clients (more so than just "how much" the advisor charges and whether it's more or less than what other advisors charge).

From there, we have several articles around client communication and relationship-building, including a look at how therapists are adapting to a more virtual environment with their patients (with some lessons for financial advisors communicating with clients), how to be more mindful of whether what you're saying to clients is really empathetic or not (hint: any sentence that starts with "at least... [it isn't worse]" isn't actually very empathetic), and a reminder that it's almost impossible to really know what others are going through so even when they share their troubles it's a good idea to pause and say "tell me more about that" before just trying to (empathetically) respond without necessarily understanding what their true concern actually is.

We wrap up with three interesting articles, all around the theme of how businesses and their employees can and are continuing to adapt to the work-from-home environment and the potential of returning back to the office in the coming month: the first explores how a renewed focus on employee safety (from the potential transmission of the coronavirus) may force offices to shift away from the open-office trend and back towards cubicles (with barriers to support social distancing!); the second provides some helpful tips on apps and tools to use to be more productive in a work-from-home environment; and the last provides a helpful reminder for anyone in a position of leadership about how to communicate more productively with employees in an era when virtual workplaces necessitate a more proactive communication approach.

Enjoy the 'light' reading!

Kitces & Carl Ep 33: Triaging Clients Efficiently Through Critical Financial Care

May 7, 2020 07:01 am 0 Comments CATEGORY: Kitces & Carl Podcast

As the Coronavirus pandemic has caused significant economic disruption around the world, financial advisors have been faced not only with the daunting challenge of not only how best to stay abreast of the rapidly evolving legislative landscape offering assistance to individuals and businesses in need of financial relief but also in how best to assess which clients are most urgently in need of response and critical financial care.

In our 33^rd episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards talk about these challenges, and how despite the deluge of new legislation evolving seemingly every week, the most important thing for advisors to do during these difficult times is to maintain confidence as the experts and leaders that their clients rely upon (whatever the requisite expertise of the week may be). Because the confidence of an advisor doesn’t need to based on a mastery of the current legislative provisions available to clients alone; instead, linking one’s confidence to the ability to engage with the client – in the process of meeting with them, understanding their problems, and then developing a solution – is more effective, as these are the aspects of the relationship that clients ultimately value most.

This is not to say that the information itself is not important; on the contrary, having networks (e.g., a circle of trusted experts who have collectively agreed to help each other find answers for their respective clients) and organized systems to obtain and share information (e.g., collecting relevant documents and website links, and then posting those resources to a webpage on your website that is available to clients as a resource) can help advisors stay informed themselves, and to disseminate crucial information quickly to clients who may be in critical need of guidance.

For advisors who have too many clients who need immediate attention such that they cannot get back to all of them immediately, a triage strategy can help them determine which clients they should help first. By ranking clients’ issues in terms of the risk of failure those issues pose for the client (but obviously not necessarily telling the client they are being ranked!), advisors can help clients tackle issues that are the biggest threats to their clients’ financial well-being. And by organizing a three-step communication system of 1) responding to all clients initially, 2) setting clear expectations around when they can get a deeper response (especially if the client isn’t ranked first in the triage-ranking system), and then 3) following through with each client accordingly, advisors can ensure that all their clients are getting the attention and service they need to stay successful.

Ultimately, the key point is that advisors have access to networks to help them keep up with new information being released on a daily basis, and also easily accessible tools that can help them share that information quickly with their clients. More importantly, though, advisors should remember that, while clients may value the technical information their advisors provide to them, the real value clients derive from the relationship is their advisors’ ability to engage and connect with them, and to provide the leadership they need to stick to their financial plans!

Using Coronavirus-Related Distributions To Reduce The Tax Impact Of Distributions From Retirement Accounts

May 6, 2020 07:06 am 7 Comments CATEGORY: Taxes

In response to the COVID-19 global pandemic, the US Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act last month. A more than $2 trillion emergency fiscal stimulus package, the CARES Act was enacted to help ease the effects of the resulting economic damage caused by the pandemic by providing a wide range of provisions, including loans and tax credits, with the aim of helping individuals, businesses, healthcare entities, and state and local governments meet short-term cashflow demands. Among the many provisions provided by the CARES Act is the Coronavirus-Related Distribution for individuals affected by COVID-19.

Coronavirus-Related Distributions of up to $100,000 can be made from IRAs, employer-sponsored defined contribution plans, and/or employer-sponsored defined benefit plans in 2020 (and 2020 only) by a qualifying individual. Qualifying individuals are persons whose health or finances have been impacted by the coronavirus as described by the CARES Act. More specifically, individuals (or their spouses or dependents) who have been diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention are eligible, as well as individuals who have been financially impacted by COVID-19 because they have been quarantined, furloughed, laid off, or have had to reduce their work hours; unable to work due to lack of childcare; or are business owners who have had to close their business or reduce the number of business hours they can remain open. The Secretary of the Treasury may determine additional factors for eligibility, though no further factors have been established to date.

The $100,000 Coronavirus-Related Distribution limit is an aggregate amount for all 2020 Coronavirus-Related Distributions beginning January 1, 2020. While distributions from IRAs can be taken as long as the individual meets the requirements to take a distribution in the first place, current employees who are participants in employer-sponsored defined contribution and defined benefit plans won’t be able to take distributions if the plan does not allow participants to access their funds prior to separation from the company.

Current employees of a company participating in the employer’s defined contribution plan may be able to access plan money to take a Coronavirus-Related Distribution via a plan’s hardship or in-service distribution provision. Additionally, the CARES Act allows employers to amend their documents to make Coronavirus-Related Distributions their own distributable event, allowing any qualifying individuals to take such distributions at any time during 2020!

Distributions from defined benefit plans to current employees are more restricted, however, since hardship distributions are not allowed. Furthermore, while employers have the option to allow in-service withdrawals for participants age 59 ½ or older, employers do not have the option to amend their defined benefit plan to allow for Coronavirus-Related Distributions to be their own distributable event (as can be done with defined contribution plans). Accordingly, current employees who meet the requirements for Coronavirus-Related Distributions may only take a distribution from a defined benefit plan if their plan allows for in-service withdrawals, assuming they meet the age requirement for those plan withdrawals (no younger than 59 ½).

There are several potential benefits of Coronavirus-Related Distributions, including that they are exempt from the 10% early distribution penalty, income from the distribution (which must all be taken in 2020) can be reported as taxable income over three years, and repayments of the distribution can be made up to three years after the Coronavirus-Related Distribution was received. In addition, mandatory tax withholdings are not required for distributions from employer-sponsored retirement plans, and employers can amend defined contribution plans to permit participant withdrawals that would otherwise be prohibited.

Coronavirus-Related Distributions provide opportunities for advisors to help eligible clients with some alternative planning strategies. One such strategy can be used by clients who already took 2020 RMDs but who didn’t need to use the funds; they can designate the RMD as a Coronavirus-Related Distribution instead, as a means to return the unwanted RMD (as the CARES Act eliminated 2020 RMDs from IRAs and employer-sponsored defined contribution plans). Another strategy can be used by clients who may benefit from moving less-accessible funds in an employer-sponsored retirement plan into a more-accessible IRA (e.g., if a client believes they may be subject to limited cashflow in 2021 or later, having funds in their IRA may be much easier to access in subsequent years than funds in their 401(k) plan that only allowed for Coronavirus-Related Distributions to be taken in 2020).

Ultimately, the key point is that the CARES Act offers individuals whose health or financial situation is affected by COVID-19 some relief through Coronavirus-Related Distributions by potentially allowing them to more easily access retirement funds that may not have otherwise been accessible.

#FASuccess Ep 175: The Importance Of Family Dynamics To Make (Business) Time And Regain Control Of Work/Life Balance, with Travis Parry

May 5, 2020 07:03 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 175th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Dr. Travis Parry. Travis is the founder of Make Time Institute, which helps business owners, including financial advisors, to regain control of their time and achieve better work-life balance. What's unique about Travis, though, is that he spent nearly a decade working as a financial advisor as well and living firsthand the challenges of balancing the demands of an advisory firm with the needs of his family and home life before going back to school to earn a Ph.D. in family relations and human development and to study what it really takes to achieve a better work-life balance.

In this episode, we talk in-depth about Travis' "Make Time" approach to creating better work-life balance by overcoming what he calls the three myths of time management. The first myth is that there isn't actually such a thing as achieving balance but instead, it's better to identify your goals and values and to ensure that your time is prioritized to align with them. Second, that the key to regaining control of time isn't about being more productive in the work that you do, but again, about learning to prioritize what is really the most important and impactful work you should be doing with your time every day and letting go of the rest. And third, why, in the long-term, the key as a business owner isn't about just investing in your own personal development as a leader in the business, but in what Travis calls couples’ development. Because the reality is that for any advisor with a spouse and children, personal development and habit change can only occur if your spouse is on board with the change and you can develop together as a couple.

We also talk about Travis's own journey through the advisory business. How he started out in a major life insurance firm to leverage the training and resources in working with small business owners, why he decided to transition to the independent channel in order to focus more of his work on helping small business owners with their time and broader businesses than just the traditional financial services products, how a combination of family tragedy and the financial crisis derailed his advisory firm, and the way those disruptions ultimately led him to find what has become his life's work.

And be certain to listen to the end, where Travis shares why an inability to evolve an advisor's own time management systems is often one of the biggest blocking points that prevent a firm from growing and scaling, why he thinks Maslow's hierarchy of working towards self-actualization is wrong and how family plays a crucial role, and how the recent disruptions of the coronavirus may, for many advisors, end out reinforcing the exact kind of restructuring of time and priorities that Travis advocates in the first place.

The Latest In Financial Advisor #FinTech (May 2020)

May 4, 2020 07:06 am 1 Comment CATEGORY: Technology & Advisor FinTech

Welcome to the May 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 kicks off with the news that FTV Capital (the PE firm that invested heavily into rapidly rising Riskalyze) has taken a majority stake in Docupace, which historically was a ‘document management’ system for advisory firms that had expanded into front-office new-client onboarding but now – with FTV’s capital – aims to expand into the messier (but more desperately needed) opportunities for back-office business process automation (for what remains a very paperwork-intensive industry even with the shift to digitally e-signed forms).

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

Pulse360 launches new note-taking solutions for advisors to capture client notes digitally in a client meeting and immediately thereafter queue templated follow-up messages to clients
Hidden Levers expands into financial planning software with a stress-test-based approach to modeling retirement projections
Edmond Walters launches new Apprise financial planning software platform for ultra-high-net-worth clientele
SmartAsset’s SmartAdvisor launches an extension of its lead generation service that will queue up a ‘Live Connection’ to a prospect directly by telephone
XY Planning Network launches a new compliance archiving solution for websites, emails, and a wider range of ‘next generation’ social media platforms like Instagram and Facebook Groups

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including eMoney partnering with Allianz to expand its capabilities to illustrate annuities in a decumulation plan, Orion launching a marketing automation tool to offer prospects Advizr’s financial planning modules, Schwab striking a deal for API-based direct feeds to account aggregators that should set an industry template for reducing how often links break, and serial AdvisorTech entrepreneur Steve Lockshin announcing his latest venture, an estate planning solution dubbed “Vanilla”.

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]!