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#FASuccess Ep 166: How Organic Growth Begets More Growth: The Size Bonus Of Building A Local And National Advisor Brand, with Peter Mallouk

March 3, 2020 07:01 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 166th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Peter Mallouk. Peter is the founder and president of Creative Planning, an independent RIA based in Kansas City that oversees more than $50 billion of assets under management for over 30,000 client families.

What's unique about Peter, though, is the way he's been able to build Creative Planning to an incredible milestone of $50 billion of assets under management nearly from scratch in the past 16 years and without mergers, acquisitions, or outside capital along the way, and why, after building the $50 billion, he's recently decided to begin the process of acquiring outside firms and to take outside equity investment from a private equity firm.

In this episode, we talk in-depth about Creative Planning's organic growth path over the past 16 years. The way the firm built early on with RIA custodial referrals with a then-unique offering of fully customized client portfolios and comprehensive financial planning bundled into a single AUM fee, how the firm's growth engine has shifted increasingly to referrals from existing clients and even direct inbound inquiries as more and more branch locations of Creative Planning become one of the largest local independent firms in their metropolitan areas across the country, and why it takes a very narrow focus on the kind of firms Creative Planning is willing to acquire to ensure that such acquisitions help and don't hinder its long-term organic growth strategy.

We also talk about Peter's perspective on broader industry trends, including why even with an increasing focus on fee compression and the commoditization of investment management, Creative Planning remains committed to the AUM model and not charging separately for planning, how the industry's professed talent shortage isn't necessarily a problem for firms with a clearly differentiated value proposition in the marketplace, and why he believes that independent advisory firms may be near a peak in valuation multiples, leading Creative Planning itself to recently sell a minority stake to a PE firm.

And be certain to listen to the end, where Peter shares what he actually intends to do with the outside capital that Creative Planning raised (and it's not to fund acquisitions), the firm's aggressive growth plan over the next 3 years, and why even as the leader of a $50 billion RIA, Peter still keeps a base of 100 clients that he sees for the bulk of his time every week and encourages most of his leadership team to keep client-facing roles with a portion of their time as well.

The Latest In Financial Advisor #FinTech (March 2020)

March 2, 2020 07:04 am 1 Comment CATEGORY: Technology & Advisor FinTech

Welcome to the March 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 results of the latest T3 Advisor Software Survey, which continues to show that a subset of dominant players hold the largest market share in each key category… but that at the same time, upstarts in virtually every major advisor software category from Advyzon to RightCapital to Wealthbox to YCharts are gaining market share, and that some of the biggest shifts in advisor interest are coming from the “miscellaneous” listing of new advisor software categories that are still being created!

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

FP Alpha and Intelligent Decision Tools are both launching new “Expert System” artificial intelligence tools that help analyze client documents and data to provide not just financial planning projections but real financial planning observations and recommendations
Indyfin launches a new third-party lead generation service with its own bundled call center (to save advisors the time of qualifying prospects), while FMG Suite and TwentyOverTen launch their own website-integrated digital marketing tools
Fidelity spins off Akoya to build the next generation of account aggregation solutions that rely on (more stable) APIs than (constantly-breaking) screen-scraping by logging in with client credentials
RightCapital launches RightPay to facilitate fee-for-service financial planning payments as the trend of “Financial Planning as a Service” (FPaaS) continues to gain traction

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including the shift towards “re-bundling” of the advisor tech stack into various platform combinations, the rising trend of ‘second-act’ FinTech entrepreneurs coming back to launch new companies to disrupt the ones they originally built and sold, the emergence of Regulation Best Interest compliance and training tools as the June 30^th effective date looms, and the latest list of the Best (Advisor) FinTech companies to work for!

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]!

Weekend Reading for Financial Planners (Feb 29 – Mar 1)

February 28, 2020 03:00 pm 2 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the industry news that Massachusetts has become the first state to officially put forth a 'final' fiduciary rule for brokers providing investment recommendations in their state... albeit in a form that is significantly watered down from the original, though still higher than the SEC's Regulation Best Interest it sought to supplant, as the fiduciary fight increasingly shifts from Federal regulators to the states (and New Jersey and Nevada working on finalizing their own fiduciary rules as well).

Also in the news this week is a significant Supreme Court ruling regarding fiduciary disclosures, that at least under ERISA, it's not enough to provide qualified plan documents and related disclosures, and that plan sponsors must actually ensure that the participants read them in order to start the statute of limitations clock ticking... or risk facing a never-ending open-ended liability exposure that a plan participant could sue over questionable actions many years later because they didn't have 'actual knowledge' of the problematic issue until they actually read the disclosures for the first time!

From there, we have several articles on this week's hot topic of the investment markets and the coronavirus, including a good reminder of why it's important to send out extra communication to clients during turbulent markets (not to tell them to stay the course, but to show them that you as the advisor are 'on the case' and managing their situation... even if the current decision happens to be to stay the course anyway), a look at the recent yield curve inversion that the coronavirus appears to have spawned, and some interesting data on the coronavirus itself and how even though virus fears are currently routing markets it is actually less communicable and less fatal than many other feared disease outbreaks in recent years (e.g., SARS, MERS, Ebola).

We also have a few articles on recent industry studies and trends, including one that finds the key for 'smaller' advisory firms (defined as <$500M of AUM) will be "growth by specialization" in the 2020s, another study noting an emerging split between the 'big' firms trying to acquire and consolidate to achieve massive scale as one-stop-shops and the rest that will survive and thrive by being 'boutiques' that compete against them for narrow slices of affluent clientele who can pay their premium fees, a look at other industry trends that advisory firms must contend with to succeed in the coming trend including 'operational experience' and the unbundling of fees, and a fascinating look at how, in the end, the opportunities in the 'long tail' of niches are actually far bigger (or at least, far more numerous in actual clients) than where the bulk of the industry focuses today (prospective and current retirees between the ages of 50 to 75 with significant investable assets to manage).

We wrap up with three interesting articles, all around the theme of being more personally productive and focused: the first is an interesting look at how, even 100 years ago when the medical profession was emerging (and smartphones and social media couldn't be conceived of), educators were providing lessons not only in the technical knowledge to learn but how to learn and avoid then-modern-day distractions; the second looks at how nearly 90 years ago, John Maynard Keynes predicted an 8X increase in productivity and the drop to a 3-hour workday on the back of that productivity, yet somehow we succeeded in the productivity but failed in the shorter workday to accompany it; and the last explores how the key to success is not to pursue big goals and perfection but to 'just' be 1% better than the competition (because that's all it actually takes to win the game!).

Enjoy the 'light' reading!

Kitces & Carl Ep 28: Email Productivity Hacks And Getting More Done In Your Day

February 27, 2020 07:07 am 3 Comments CATEGORY: Kitces & Carl Podcast

Just about every financial advisor is intimately familiar with the overwhelm induced by an overflowing email inbox. From emails from clients inquiring about basic service requests and financial plan priorities, to team members scheduling staff meetings and service meetings, not to mention the plethora of industry newsletters, helpful educational blog updates, networking group announcements, wholesaler product reviews – on top of all the outright spam – can easily amount to hundreds of emails coming in on a daily basis!

And in addition to simply finding the time to keep up with just looking at all the email that comes in (and reading at least some of them), financial advisors also find themselves responsible for dedicating large chunks of time to actually responding to emails. Which can make it seem nearly impossible to keep up with the deluge of information that comes into an advisor’s email inbox every day! Fortunately, though, there are a few ‘tricks’ that can help keep things under control.

In our 28th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards talk about some simple strategies they use to manage their own own sometimes-overflowing email inboxes, and the cognitive relief that a well-organized (and well-managed) email inbox can bring.

For instance, Michael has specifically configured his own system to manage the tremendous volume of email that comes in on behalf of the blog. Specifically, he has implemented a system of multiple email addresses (to route inquiries by category to different team members), inbox folders with Outlook-based “Rules” to sort email into them (for separating out newsletters to review, informational items requiring no follow-up, and follow-up items that are low- or high-priority) and a routine where email is reviewed on a daily basis.

Delegating email management can also be a very effective means to stay on top of large volumes of email, especially for busy advisors who don’t have time to review every message that comes in. An executive assistant not only can ensure that spam messages are kept at a minimum, but can also make sure that high-priority items get a timely response and, depending on the level of responsibility delegated, can even send responses on behalf of the advisor. They can also ensure that any messages that can (or should) be delegated to another team member are routed as quickly as possible.

There are also some tech tools that can aid with email efficiency, such as TextExpander (for Mac users) and PhraseExpress (for PC users), which both quickly create template language for commonly repeated email responses (which can be most useful for advisors who aren’t particularly fast typists). Microsoft Outlook has a built-in feature that allows an email account owner to designate a second person as an Assistant, who can then access the email account simultaneously from a different computer to share the responsibility of sorting through email, and helping an advisor review only the messages they really need to see.

Ultimately, the key point is that having a well-managed, organized email box allows a financial advisor to spend less time on the distracting busywork that reviewing email can be, and more time to spend on tasks that require cognitive focus and concentration – like preparing financial plans and meeting with clients. Or even to enjoy more time with friends and family!

When A Client’s Financial Problems Are Beyond Financial Advice: How (And When) To Refer Clients To A Mental Health Professional

February 26, 2020 07:02 am 3 Comments CATEGORY: Client Trust & Communication

As financial advisors know, talking to clients about money can get emotionally charged, especially when the discussion concerns major (and potentially traumatic) life events. And sometimes, clients can become so distraught or unable to face the challenging issues in their past… even as the failure to deal with those issues prevents them from moving forward in their financial future. Which can also be distressing for a financial advisor who is striving to help, but who may recognize that the help the client needs is beyond the scope of what the advisor can provide and that referring the client to a mental health professional is the best course of action.

In practice, though, the point when a referral should be made is not always clear. As while it might be obvious that a client who has expressed (for instance) suicidal thoughts, or is otherwise in acute mental or emotional distress, is in need of a mental health professional’s services, how can a financial advisor tell when a client might just be “sad” (and who might simply need an empathetic ear to move forward with their financial planning recommendations)? And when a referral is in order, how does the financial advisor actually give that referral in the first place, without offending the client and potentially driving them away?

To understand when and how to involve an outside mental health professional, it is helpful to consider how money issues can impact an individual’s emotions across a spectrum of stress/anxiety. On the one hand, even common, everyday issues such as basic retirement planning or changes in income levels may be mildly stress-inducing, while more serious issues such as a death in the family or divorce can be very upsetting. On the other hand, at the farthest end of the spectrum are issues that involve disorders and conditions that are psychologically diagnosable, such as addiction, clinical depression, and hoarding behaviors.

To decide whether a referral to a mental health professional should be offered, the first factor to consider is the financial advisor’s own comfort level with the client conversation. Some firms have specialized models designed for clients working through emotionally-charged issues (e.g., divorcees, widows/widowers, etc.); these firms often already have processes in place that can more easily accommodate these clients’ needs, which, in turn, may make it easier for advisors to work with clients themselves, versus offering a mental health referral. On the other hand, if the financial advisor is uncomfortable with a client’s emotions that arise during a conversation, the best course of action can simply be to recognize and acknowledge the client’s distress, and to offer a referral for the client to see someone who is better-equipped to help the client with their stress or anxiety. And even if an advisor is comfortable working with a client who is experiencing high levels of stress, it may still be better for the advisor to refer the client to a mental health professional if they don’t actually have the time capacity (and thus ability) to fully service the client’s needs.

Of course, there’s still the challenge of just bringing up a mental health professional to a client in an unawkward way in the first place. One way to normalize the referral process is to discuss mental health referrals to clients as part of any other referral resource (e.g., CPAs, estate planners, etc.) early in the relationship, and reviewing those resources periodically during annual service meetings, which can then help clients be more comfortable accepting the referrals should the need ever arise. For advisors uncertain who to refer to, a helpful way to identify suitable mental health professionals is for them to personally make use of the mental health professional’s services themselves, which can give them the opportunity to discuss with clients, from firsthand experience, precisely what clients can expect when making referrals to see those professionals. However, some advisors may not have time to vet a network of referrals, or may have clients in need of immediate attention from a mental health professional. In these instances, advisors can work directly with the client to make calls together to find a suitable professional (or ask the client for permission to reach out to friends and family who can help with this).

Ultimately, the key point is that financial advisors should not be afraid to refer clients to mental health professionals, and that it’s perfectly OK to recognize that there is a level of emotionally-charged issues that clients experience, which advisors are not necessarily trained and equipped to handle (especially when those issues impact, but themselves are outside the purview of, financial planning itself). Advisors who are able to identify a network of mental health professionals that they can have on hand to use as referral sources, can, over time, develop a strategy to broach the subject of making referrals with clients in the first place, and make the process of providing mental health referrals a natural and comfortable process not only for themselves but for their clients as well.

#FASuccess Ep 165: Navigating Broker Protocol When The Firm You Start With Isn’t The One You Want To Stick With, with Steve Kampschmidt

February 25, 2020 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 165th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Steve Kampschmidt. Steve is the founder of Freedom Found Financial, an independent RIA based in northern New Jersey that oversees just over $20 million in assets under management for 30 affluent clients.

What's unique about Steve, though, is that he just recently formed his advisory firm having broken away from the training program at a major wirehouse after realizing that with an entrepreneurial mindset and a goal of building a lifestyle practice with good work/life balance, it was simply far more economical for him to operate his own firm and control his own expenses than to give the majority of his income up to the grid.

In this episode, we talk in-depth about how Steve built his initial base of clients at the wirehouse through modern cold-calling techniques leveraging ZoomInfo, the salary base that the wirehouse provided while he built his initial base of clients, the type of alternative non-AUM business model he decided he wanted to create that necessitated a shift away from the wirehouse, and why he's now operating with the blend of annual retainer fees and monthly subscription fees for various client types.

We also talk about where Steve went to find the information and consulting support he needed to make the transition smoothly. What Steve actually went through to comply with the Broker Protocol when leaving his firm, the factors that led him to select Fidelity as his custodian of choice, the way he built out his advisor technology stack, and why he chose not to purchase any kind of portfolio performance reporting software and to rely solely on eMoney's financial planning portal instead.

And be certain to listen to the end, where Steve talks about realistic expectations and how many clients will stick with you if you choose to leave a large firm and its national brand, his tips for career-building in the early years especially as a career changer, and why in the end, the biggest key to success is simply having the confidence in yourself, and being willing to make whatever changes it takes to service your clients the way that you want to serve them.