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#FASuccess Ep 174: Leveraging Zapier And PreciseFP To Weave Together Independent Advisor Open Architecture, with Shanna Tingom

April 28, 2020 07:09 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 174th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Shanna Tingom. Shanna is the founder of Heritage Financial Strategies, a dually registered advisory firm located near Phoenix, Arizona, that oversees $50 million of assets under management for nearly 250 middle-market clients. What's unique about Shanna, though, is the way she's been able to weave together her advisor technology stack to heavily automate key processes throughout her firm to service 250 clients efficiently and did so by not using industry-standard CRM systems.

In this episode, we talk in-depth about Shanna's unique advisor technology stack. Why she chose to use marketing automation provider HubSpot for not only her website, but her core CRM system and business workflows, the way she's adopted Zapier as a solution to integrate HubSpot into industry or software providers, and why she selected PreciseFP and not her own CRM system to become the core data hub for her advisory business.

We also talk about Shanna's journey through the advisory business itself. Why she's thankful she started out at a large financial services firm for their training and infrastructure, why she ultimately chose to make the transition to become an independent advisor instead, the difficult challenges that Shanna faced when going out on her own and losing the existing infrastructure and premier brand that a large firm provides, and how she selected Cambridge to become her new independent broker-dealer platform for the future.

And be certain to listen to the end, where Shanna shares the moment where she was so unhappy in her advisory firm that she was about to quit altogether, how delegating investment management to third-party TAMPs helped restore her own happiness and well-being, the way she now structures her AUM and planning fees to incorporate investment advice, financial planning advice, and the cost of third-party providers, and the mental trick of drawing lines in the sand that Shanna uses to help herself make changes that she knows will be difficult to make.

Elevating Client Service To Actually Drive Growth Through Client Referrals

April 27, 2020 07:03 am 4 Comments CATEGORY: Practice Management

Financial advisors who want to grow their firms faster can examine a wide range of advisor marketing strategies and sales tactics. But the reality is that if an advisory firm is struggling to grow, often the problem isn’t actually a matter of better marketing; instead, it’s about developing a better client service process. Because while the most significant value proposition of a real financial advisor is ultimately to help their clients live better lives, having a consistently remarkable client service process is what allows a financial advisor to successfully elicit the positive feelings experienced by their clients, which are essential in establishing lasting trust and driving the referrals necessary to bring about growth. And simply put, the fact that an advisory firm has high retention of existing clients doesn’t mean its client service process is good enough to bring new client growth as well.

In this guest post, Angie Herbers – Chief Executive and Senior Consultant at Herbers & Company, an independent management and growth consultancy for financial advisory firms – explains how the Client Service Process is actually the key to growth, and how it consists of not only the client service experience itself, but also the Operations Experience – the behind-the-scenes activities that clients may or may not see directly, but that they can certainly feel the effects of through every interaction they have with the firm. And in order to create an exceptional client service process based on cultivating trust, there are four components that must be mastered, in the following order: 1) Understanding, 2) Control, 3) Discipline, and 4) Stability.

The first stage of trust is Understanding, and involves the advisor not just having a solid grasp on what the firm does and who it works with, but also a deep connection to and alignment with the firm’s motivation, of why it does what it does and chooses to work with the clients it has. Next comes Control, in which financial advisors decide what services they will (and will not) provide for clients, with the confidence that those services align with the firm’s (and their own) motivation and purpose. In this stage, advisors also help clients realize that they, too, have a level of control in choosing to follow the advice they are given (or not), and this autonomy serves to deepen further the trust being cultivated between client and advisor. The next stage is Discipline, in which advisors and their staff need to continually uphold all the details, big and small, of the client service process promised to clients, which, over time, create the “living client” who trusts the firm culture and process so intrinsically that they essentially mirror the actions and feelings of the firm at all times. The last stage involved in cultivating trust is Stability. For the advisor, stability represents a solid belief that, whatever transition the business may face, it will maintain the integrity it needs to continue to grow. Similarly, the client has full faith that, whatever transitions they themselves face in their lives, their advisors will provide the stability to always guide them through the experience.

Ultimately, the key point is that the client service process is the primary area where advisors should focus in order to grow their firms. And while other components like marketing, sales, and human capital are all very important, they will not mean much if the client service process is faulty. Because it is the client service process, which includes both the client service experience and the firm’s operations experience, that is most crucial in establishing positive emotions between the client and advisor, on which long-term trust and a strong, lasting client-advisor relationship are built.

Weekend Reading for Financial Planners (Apr 25-26)

April 24, 2020 02:49 pm 5 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 Senate and House (and imminently, the President) are signing into law the next wave of coronavirus pandemic stimulus, a $484B bill that includes another $310B of funding for the PPP (along with another $60B for the EIDL program) as small businesses continue to seek capital to stay running and keep employees on board.

Also in the news this week is a fascinating study that the coronavirus has driven nearly 1-in-4 Americans to seek out a financial advisor for the first time (resulting in a surge of new client inquiries for many advisory firms), that TD Ameritrade (and Schwab) still see the Schwabitrade deal as being 'on' for the second half of 2020, feedback to a NASAA proposal that all IARs of RIAs be required to earn 12 hours/year of CE credit and that NASAA should permit other types of CE (from CFP to FINRA) to also count, and a FINRA proposal to aggregate the SEC's Investment Adviser Public Disclosure data into FINRA's own BrokerCheck site so consumers can have a one-stop shop at BrokerCheck to see the regulatory and disciplinary history of dual-registered brokers.

From there, we have several articles on investing and retirement planning, including how coronavirus volatility is leading more RIAs to leverage the block trading capabilities of their RIA custodians to reduce trading costs for clients, a Blackrock research finding that advisor portfolios tended to significantly underperform their benchmarks in the market decline (but not due to poor equity selection, and instead due to underweighting government bonds as a safety diversifier against the risk of recession), new research that questions whether there's really any economic value to so-called "bucket strategies", and some guidance about how to think about changing the client's financial plan when an update shows a significantly lower Monte Carlo probability of success.

We wrap up with three interesting articles, all around the theme of our opportunity to (re-)build when/as the country eventually emerges from the coronavirus pandemic: the first looks at how, despite incredible innovation and progress, the country has perhaps focused too much energy on building software and technology and not enough on infrastructure and companies that make things we need (until now, when we realize what we don't have and can't quickly mass-produce); the second looks at how the dynamics of venture capital and its addition to high margins and fast exits may have amplified our lack of building (and what it takes for investors to re-focus on building); and the last looks at how the collective call of the country to fight the coronavirus is itself stimulating a fresh wave of business innovation that may already be creating a lasting positive mark on the country that will remain to our benefit long after the coronavirus is gone!

Enjoy the 'light' reading!

Should Financial Advisors Accept (And Disclose) Paycheck Protection Program Loans?

April 23, 2020 09:52 am 59 Comments CATEGORY: Practice Management

Last month, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2+ trillion emergency fiscal stimulus package, with the intention to mitigate the economic damage created by the Coronavirus pandemic. For many individuals and small business owners who are facing financial hardship, including many financial advisors themselves, the Paycheck Protection Program (PPP), which originally authorized $349 billion in forgivable loans, is a compelling opportunity offered by the CARES Act providing much-needed financial relief.

While the initial round of funding was quickly depleted (as funds were exhausted only 2 weeks after applications were first accepted), Congress is now considering renewing PPP funds with an additional $310 billion. While the opportunity for relief with a loan (potentially one that is tax-free and forgivable, depending on how it is used) is attractive, the question for many financial advisors is whether or not they should take a loan in the first place, as there are many factors for advisors to consider.

First is whether the funds being requested are truly necessary to keep the business running, and whether the advisor really does need the funds as much as the next person in danger of losing their business. PPP funding is forgivable only if used for specific purposes (namely, payroll costs, mortgage interest, rent, utilities, and interest on other loans incurred prior to February 15, 2020); importantly, loans are not intended to serve as a ‘rainy-day’ fund or as reserves for future anticipated hardship.

Another important consideration that advisors should make is around disclosure requirements. As while PPP loans are not required to be disclosed in item 14K on FINRA Form U-4, they may need to be included in Item 18B of the Adviser’s ADV. Furthermore, while the ADV disclosure is not considered a derogatory mark against the advisor by regulatory agencies, clients (or potential clients) may feel otherwise. However, the manner in which the advisor chooses to present themselves to clients can influence their perception of the disclosure (e.g., some advisors who openly talk about the loan with clients have encouraged those who also need financial relief to apply for a loan; this approach has worked well to inspire some clients).

Ultimately, the key point is that the PPP has been (and, if more funding becomes available, can continue to be) a valuable resource that may help financial advisors in financial distress caused by the Coronavirus. While there are many considerations to make before choosing to apply for a loan, advisors should think quickly and be ready to apply for funding should more funds become available.

Fixing Unwanted RMDs Taken Before The CARES Act Waiver Of 2020 RMDs

April 22, 2020 10:05 am 11 Comments CATEGORY: Retirement Planning

With the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act by Congress last month, Americans were provided with a more-than-$2 trillion emergency fiscal relief package that included benefits for many individuals, small business owners, healthcare providers, and government entities. For financial advisors with clients who have retirement accounts or who are beneficiaries of retirement accounts, one particular provision of interest established by Section 2203 of the CARES Act is the suspension of Required Minimum Distributions (RMDs) during 2020.

The suspension of RMDs applies to all IRA accounts (including SEP and SIMPLE IRAs) and defined contribution plan accounts, such as those under 403(a), 403(b), 401(a), and 401(k) plans, as well as the Federal Thrift Savings Plan (TSP). RMDs from 457(b) plans are also suspended, but only from plans offered by government employers.

In fact, not only can individuals who have RMDs for 2020 suspend their distributions, but individuals who either turned 70 ½ in 2019 or who were older but had retired in 2019 (taking advantage of the provision offered by IRC Section 401(a)(9)(C)(i)(II), the “Still-Working Exception”) can avoid any 2019 RMDs that were delayed to 2020.

Beneficiaries of retirement accounts are also eligible to suspend their 2020 RMDs. Specifically, these include individuals who are Designated Beneficiaries that can ‘stretch’ their RMDs with the life expectancy method and Non-Designated Beneficiaries (e.g., charities, estates, and certain non-See-Through trusts) who inherited the account from a decedent who died on or after their RBD.

On the other hand, accounts that are not eligible for suspended RMDs include defined benefit plans, non-governmental 457(b) plans, annuitized annuities held in an otherwise eligible plan, and 72(t) Distributions. Qualified Charitable Distributions (QCDs) are also not impacted by the CARES Act’s suspension of RMDs (and can still be made normally in 2020 for those who were otherwise QCD eligible).

For financial advisors with clients who have already taken RMDs for 2020 from their retirement accounts (or who have postponed RMDs for 2019 in 2020, as noted above) but who could have benefitted from suspending the distributions, there are a few ways to address the unwanted now-no-longer-necessary RMDs. Individuals can return the funds to the original account or rollover the funds to another retirement account (either through the 60-day-rollover window, or the extended rollover deadline offered through IRS Notice 2020-23), or for individuals directly affected by the COVID-19 virus (e.g., they or their family member has been diagnosed with the illness or has been experiencing financial hardship caused by the pandemic) by using the Coronavirus-Related Distribution Provision outlined in Section 2202(a) of the CARES Act.

However, in the case of IRA owners, it’s important to be mindful of the once-per-year IRA-rollover rule. Effectively, the rule prevents an unwanted RMD (or any other IRA distribution) from being rolled back into another IRA via a 60-day rollover (or using the relief provided by Notice 2020-23) if another IRA-to-IRA or Roth IRA-to-Roth IRA 60-day rollover has been completed during the past 365 days. Though IRA owners ‘stuck’ with multiple distributions may be able to fix them while steering clear of the once-per-year rollover rule by rolling the second, third, fourth, etc. distributions to a non-IRA-based employer-sponsored retirement plan that accepts roll-ins. If no such plan account is available, they may, at least, be able to salvage some tax benefits by timely completing a Roth conversion (which is also not subject to the once-per-year rollover rule).

For non-spouse beneficiaries of inherited retirement accounts, there is, unfortunately, no option to fix an unwanted RMD, as they are not permitted to do rollovers in any case. Spousal beneficiaries, on the other hand, do at least have the option to make spousal rollovers to move distributions to their own retirement accounts (but such rollovers are subject to the once-per-year rollover rule).

Ultimately, the key point is that financial advisors whose clients are retirement account owners can use relief offered through the CARES Act by suspending 2020 RMDs that aren’t immediately needed. For retirees who may already have taken their RMDs for 2020 (or for certain individuals who took 2019 RMDs timely in 2020), there are strategies for them to return these unwanted distributions using the 60-day-rollover rule, the relief provided by IRS Notice 2020-23 (which pushes back the deadline to rollover distributions taken on or after February 1, 2020, to July 15, 2020), or a Coronavirus-Related Distribution (for individuals directly affected by the COVID-19 virus).

#FASuccess Ep 173: Growing To $250M In Five Years By Crafting A More Specialized Client Experience, with Andrew Leonard

April 21, 2020 07:03 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 173rd episode of Financial Advisor Success Podcast!

My guest on today's podcast is Andrew Leonard. Andrew is the founder of Geometric Wealth Advisors, an independent RIA based in the Washington, D.C. area that oversees nearly $250 million of assets under management for 110 client households.

What's unique about Andrew, though, is his decision to focus into a unique niche serving the partners of the big three strategy consulting firms, Bain, McKinsey, and BCG, propelling his firm to organically add almost $200 million of net new assets in just 5 years almost entirely from a single white paper he wrote for his niche, and the ongoing one-meeting-close referrals he's been able to generate as a now recognized expert in that niche.

In this episode, we talk in-depth about what it really means to customize the financial planning process and experience to a particular type of niche clientele. The unique opportunities and challenges in working with management consultants who may make more than $1 million a year and save $250,000 annually into their portfolios but have been trained to analyze and scrutinize financial models and projections, how Andrew evolved his financial planning process to focus almost entirely on live interactive presentations of financial planning models using eMoney's Decision Center and eschewing the written plan altogether, and how Andrew combines in-person and virtual delivery to a clientele who are largely distance-based and spread across the country, and why Andrew ultimately decided to stick with the traditional assets under management model for a somewhat non-traditional niche clientele.

We also talk about why and how Andrew decided to pursue this type of clientele in the first place. Why he ultimately found it easier and more personally rewarding to work with high-income management consultants than the traditional retiree with significant retirement assets to manage, how he selected and narrowed down the type of niche clientele he wanted to pursue, the white paper marketing strategy he used to accelerate his growth after his first 10 niche clients, and why he finds that when focused on a niche, the biggest challenge is no longer how to market and attract high-quality clients, but the difficulties in finding the right kind of financial advisor talent to service that rapidly growing base of clientele instead.

And be certain to listen to the end, where Andrew shares why he found it so emotionally draining to work with retired clients, the real-world challenges of deciding to pivot from what had been a more generalist practice for his first seven years into this deep niche focus, and the unique cost-benefit analysis tool that he created on his website specifically to demonstrate the value of a financial advisor to his hyper-analytical clientele.