Download Jeff Brown's "Associate Advisor Career Path" below, and check out "#FA Success Ep 362: Developing Associate Advisor Compensation Plans And Career Tracks To Scale Capacity Past $1.5B AUM, With Jeff Brown" on building advisor career tracks, a multi-faceted marketing approach to generate leads, and rolling up into a larger RIA.
Jeff Brown’s Associate Advisor Career Path
Jeff Brown’s Associate Advisor Performance Review
Download Jeff Brown's "Associate Advisor Performance Review"(Level I, II, III) below, and check out "#FA Success Ep 362: Developing Associate Advisor Compensation Plans And Career Tracks To Scale Capacity Past $1.5B AUM, With Jeff Brown" on building advisor career tracks, a multi-faceted marketing approach to generate leads, and rolling up into a larger RIA.
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This month's edition kicks off with the news that Black Diamond has announced the launch of its own CRM system, targeting advisors at mid-size firms who have data complexity and workflow needs greater than what more basic CRM options can accommodate, but who don't yet need (and don't want to pay for) the Salesforce-based options – like Black Diamond's existing Salentica CRM software – that offer the most customizability.
From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:
- Nitrogen CEO Aaron Klein and TIFIN President Jack Swift have announced their departure from their respective firms, the latest in a wave of founder/CEO departures from AdvisorTech firms after a 7+ year cycle of rapid PE-funded growth – raising questions about whether investor demands for growth and profitability in AdvisorTech firms is realistic (or whether it places an undue burden on firms' employees and leadership) given the reality that advisors tend to be slow to adopt new technology in the first place.
- Envestnet has announced a partnership with Empower to offer a turnkey 401(k) plan management solution for advisors with small business owner clients – but it isn't clear whether making 401(k) plan management 'easier' will actually convince more advisors to manage 401(k) plans, given how advisors have largely been averse to 401(k) plan management when it isn't a core part of their business
- Elements, the financial health-focused tool for engaging prospects and clients, has announced a new RIA partnership model to serve clients who don't have enough assets to meet an advisor's minimums – but given the struggles of previous attempts to expand access to smaller clients, it isn't clear how the program will bring in enough small clients to create sustainable revenue (especially given that advisors generally aren't marketing themselves to small clients to begin with)
Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including:
- Digital marketing platform FMG has announced a new premium website design service, responding to the desire of financial advisors for a unique advisor-specific website to stand out to prospective clients for less than the cost of a custom-built site
- As technology providers have struggled to achieve wide distribution among advisors who remain reluctant to change out their technology, an increasing number have turned to "tech-facilitated marketplace" (where the technology facilitates connections between buyers and sellers, and is 'free' for the advisor while taking a cut of the transaction) and "tech-enabled services" (where a service is provided in a technology wrapper to be less costly than a standalone service ) – which on one hand, creates more options for advisors to find solutions to meet their needs, but on the other, can create confusion about what the advisor is actually paying for (and whether they really need it)
And be certain to read to the end, where we have provided an update to our popular "Financial AdvisorTech Solutions Map" (and also added the changes to our AdvisorTech Directory) as well!
*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!
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Financial advisors looking to increase their firm's productivity may often start by choosing either to hire more employees as a way to delegate their workload, or to implement new technology solutions to increase the efficiency of their work processes. While the expectation is often that investing in these solutions will enhance efficiency, advisor capacity, and margins without proportionally increasing costs, the reality is that they typically have a modest impact on profitability (with no more than an estimated 10% margin of improvement). This suggests that technology alone may not be the panacea for scalability and profitability many advisors hope for. Yet, a more direct and potentially immediate revenue-boosting solution is for advisors to adjust their firm's fee structure, aligning their fees with the true value of their services – which often results in significantly higher profitably!
In our 126th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how raising one's advisory fees may perhaps be the most efficient strategy for growth and scaling, and how advisors can justify and execute a fee increase for their own services.
As a starting point, the positive math of raising advisory fees is relatively straightforward, primarily because it avoids the same resource-intensive investment and ongoing costs that accompany other growth strategies, such as implementing new technology solutions or hiring additional staff. However, while the work of raising fees may be as 'simple' as sending an explanatory email to announce fee increases to clients, there are often psychological barriers that prevent some advisors from charging appropriately for their services. For example, many advisors may hesitate to raise fees for long-time clients who have been with them since the beginning – the ones who took a gamble on a fledgling practice and practitioner. Others may face deep-seated beliefs that clients will react badly to increased fees, and some advisors may even struggle with asserting their own value proposition.
Nonetheless, clients are willing to pay for perceived value – especially when that value goes beyond the technical aspects of financial planning (including personalized attention such as goal clarification, behavioral coaching, and empathetic listening). Which means that when advisors find themselves ready to take their next steps to growth, hiring more people or implementing new technology are not the only solutions to consider. Instead, raising fees to accurately reflect the true value of an advisor's services might be the best solution to help advisors realize their growth goals.
Ultimately, though, the key point is that whatever fee structure an advisor may choose, it is important not to underestimate one's own growth and value. By reflecting on their value, recognizing and acknowledging the complex narratives that might have limited their past pricing strategies, and embracing the worth of their services, advisors may develop a new perspective on raising fees as a growth strategy – recognizing that this approach not only serves to increase growth, but also ensures the firm's success and sustainability, serving as a win-win situation for both advisors and clients!
The traditional way that most financial planning has been offered was for an advisor to create "The Plan": a comprehensive document outlining a client's financial strategy that was delivered either on a one-time basis or updated annually. However, as the industry has shifted towards an ongoing relationship model, advisors have felt compelled to demonstrate consistent value to their clients throughout the year. The problem, however, is that a typical client's big-picture financial situation doesn't tend to change much from year to year, and the process of updating "The Plan" entails intensive document review and time-consuming data entry. Which means that updating a client's financial plan more frequently would offer little additional value to the client and would be very inefficient for the advisor.
As a result, tools have emerged that are designed to keep clients engaged in the financial planning process throughout the year, addressing the inefficiency and time burden of frequently updating the full financial plan itself. Recent Kitces Research on Advisor Technology indicates that while these newer Advice Engagement tools are not yet widely adopted among advisors (likely due at least in part to the newness of the category overall), most advisors who do use advice engagement software tend to like it – which in turn suggests that as more advisors become familiar with advice engagement tools, the rate of adoption will increase as advisors see the potential for a more dynamic ongoing financial planning process.
Broadly, advice engagement tools incorporate 3 key elements that enhance the process of financial planning: First, they use visualization tools to simplify complex and abstract financial planning concepts for clients. Second, they facilitate clear and organized communication between the advisor and client to ensure that important information is effectively conveyed. And third, advice engagement tools help clients understand where they stand in the financial planning process itself – and, most importantly, what comes next – to provide a clear roadmap and prepare the client for what lies ahead. The current tools in the Advice Engagement category vary in their use of Visualization, Interaction, and Process (VIP) elements, offering advisors the option to tailor the technology to the client experience that they desire.
Which means that for advisors considering adopting advice engagement technology, the process starts with deciding which engagement elements can do the most to enhance the advisor's existing financial planning. For many advisors, tools that help to define and navigate the planning process for clients can be the most valuable starting point, with interaction fostering more dynamic communication and visualization delivering information in an impactful, meaningful way.
Ultimately, as financial advice continues to steer away from static plans and towards a more dynamic planning relationship with clients, advisors will increasingly benefit from tools that can help them not only analyze and project financial data, but also deliver information to clients more effectively. Because as the increasing adoption and high satisfaction of advice engagement tools show, giving clients a "VIP" experience really does increase their engagement not only with the advisor, creating a deeper client-advisor relationship, but also with the financial planning process itself, making both client and advisor more successful in the long run!
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My guest on today's podcast is Peter Tiboris. Peter is a Partner of Park Avenue Capital, an advisory firm affiliated with Northwestern Mutual based in New York City, that oversees $2.4 billion in assets under management for 1,377 client households.
What's unique about Peter, though, is how he and his business partner have built up their firm through a combination of organic growth, and a series of mergers and acquisitions all conducted within the Northwestern Mutual ecosystem, where Park Avenue Capital's size as one of the largest Northwestern Mutual offices in the country, and their ability to access debt-financing, provides a unique acquisition differentiator that is just further accelerating their growth.
In this episode, we talk in-depth about how Park Avenue Capital has grown to $20 million in revenue through a combination of organic growth and M&A activity, their approach to evaluating and valuing potential acquisitions, and the unique bank financing arrangements they made to be able to fund serial acquisitions over time, the way Peter and his firm build out 3-person advisor pods – including the lead advisor, an associate advisor, and a client service associate – and structures team support around the pods so allow them to increase their client capacity and productivity with a target of 50% gross profit margins, and how Peter and his business partner built a service-oriented culture at Park Avenue Capital, including hiring the former general manager of the St. Regis hotel in New York to bring a new mindset to the firm about what it really means to provide a personalized client experience (and bind the client to the firm's brand, rather than to their specific advisor).
We also talk about how Peter started in the industry in New York city in the aftermath of 9/11 as an insurance salesperson charged with cold-calling potential customers (and how he took inspiration from the work of author Nick Murray to overcome the challenge of hearing "no" from prospective clients on a regular basis and push through to grow his book of business), how Peter still thinks of his firm as being in the early stages of a startup despite all the growth and acquisitions because the business challenges that arise continue to be new and different as the firm grows, and why and how Peter created a business decision approach for himself by consciously considering what his older self would think of a potential choice, rather than just what his current self would prefer.
And be certain to listen to the end, where Peter discusses how he and his business partner came to the decision to hire a full-time CEO of their advisor enterprise so that they can focus on their strengths of generating new business and looking at the big picture of their business (rather than needing to manage the day-to-day operations of the firm), Peter's advice for advisors starting out as they try to generate prospects and build their initial book of business, and why Peter remains so upbeat about the advisory business, as one of the few high-income careers in America that can be achieved with very little in business startup costs (especially since large firms will often 'front' you a desk, a computer, and a phone), where success is determined primarily by your ability to control and manage through your own visceral reaction to hearing the word "no" from prospects until you get to the next "yes".
So, whether you're interested in learning about building a firm through M&A, using a pod structure to maximize the number of clients an advisor can serve, or how to create a service experience that ties clients to the firm's brand rather than to their individual advisor, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Peter Tiboris.
One of the main goals of financial advisors who market themselves is to build a foundation of trust with their prospective clients so that they feel comfortable in discussing often-sensitive financial topics and ultimately acting on the advisor's recommendations. The challenge, though, is that advisors usually have only a short amount of time to build this trust, and while advisors can use different channels (e.g., their websites, newsletters, and social media) to demonstrate their expertise, these channels often don't give advisors enough time or space to convey what makes them ultimately worth hiring. This is because telling the full story of an advisor's background, philosophy, and expertise could easily fill up a book; in fact, many advisors have written books to share their knowledge and experience, which can establish them as trustworthy and desirable professionals for prospects to seek out.
In this guest post, Michael Levin, a New York Times bestselling author and ghostwriter, writes about how financial advisors can make a more effective impression on prospective clients by writing, publishing, and distributing a book that establishes their authority, confidence, and, above all, trust.
When writing a book, the first goal is to make the reader feel like the author understands them, which draws them in and makes them want to know more about the author. Establishing that the author understands the reader's problems (e.g., through examples of how the author has solved those problems for others) early on in the book creates a connection with the reader. And because of this rapport, the reader will want to listen to the advisor's story. Put differently, since people care (and want to read) about their own problems, then by extension, they care about the people who understand and can solve those problems, too.
After creating the initial connection, the next goal for the author is to establish expertise in a captivating way. One way to do this is to create value on every page by giving readers clear and authoritative information that they can actually use. Some advisors may be wary of giving away too much information and providing the tools that readers could use to do everything themselves (rather than hiring the advisor). However, in reality, there's almost always more that could be said when a current or prospective client is in the room with the advisor. So, while advisors may want to avoid providing so much information as to be overwhelming to nonexpert readers, being otherwise as generous as possible (for instance, by outlining a detailed process to solve a specific problem) can develop a sense of gratitude in the reader, while giving them a glimpse of what could await them if they became a client.
Finally, as with many other forms of marketing, ending the book with a call to action makes it clear to the reader what they can do next. A brief, clear description of the types of clients the advisor works with, the services provided, and what to expect after the client's initial outreach helps the reader understand whether they might be a good fit as a client and how they can become one (which, if they've made it to the end of the book, they hopefully want to!).
The key point is that while an advisor's book can showcase the advisor's expertise and empathy, the story's real hero is the reader, not the advisor. By keeping the reader and their challenges front and center, the author demonstrates relevant expertise and encourages the reader to trust them with their problems. And when the reader can see themselves reflected in the pages of the book, they'll want to know more about how that advisor can be a part of their journey!
For all of the myriad ways financial advisors can structure and run their practices, firm owners generally encounter similar stages in the development of their firms. At some point, solo advisors will need to decide whether to increase their headcount, and an ensemble practice may later evolve into a centralized brand with significant enterprise value. The journey will be unique for each advisory firm owner, but one thing they all have in common is that they will eventually have to divest themselves of their ownership stake, either through a voluntary (or involuntary) dissolution of the business or through the full or partial RIA sale, with the latter naturally being the most economically ideal outcome.
In this guest post, Chris Stanley, investment management attorney and Founding Principal of Beach Street Legal, discusses in depth the various stages of buying, selling, and merging an investment advisory and financial planning business.
The initial step towards the eventual sale of an advisory firm requires the seller to identify a well-suited counterparty, which can be challenging given the population of well-funded serial acquirers who have a material advantage over firm owners, many of whom have likely never bought or sold a business. Once the seller and potential buyer are ready to get serious about a deal, the next step will be to sign a mutual Confidentiality and Non-Disclosure Agreement (CNDA), which contractually obligates the parties to keep any information that is shared (as the name implies) confidential.
From there, both parties can begin their respective preliminary due diligence. Once they are comfortable with the information and documents that have been shared, they can sign a Letter Of Intent that, while still high-level, provides enough detail about the proposed transaction for the seller to make an informed decision about whether to proceed. At that point, the definitive transaction documents are drafted, providing details around items such as equity and/or asset purchase agreements, a possible promissory note, and a bill of sale. Notably, these documents will serve as evidence in any subsequent disputes, making it imperative for both seller and buyer to fully understand the terms.
Once all that work is completed and both parties are satisfied with the terms of the transaction, it’s time to seal the deal and legally bind themselves by signing the contract. This moves the deal into the closing period, where the transaction can be publicly announced and any closing conditions must be met (such as obtaining consent from the seller’s clients to transition to the new owner). Only then can the new owner begin the work of integrating processes and systems and serving their new clients.
Ultimately, the key point is that the process of transferring ownership of an advisory firm is an immense undertaking and is almost always far more intensive and involved than most parties can imagine. However, given that all advisory firm owners will inevitably face the transfer (or dissolution) of their ownership stake, it’s important to consider what a future sale or merger might look like, as it’s far better for potential sellers to understand the steps involved well in advance rather than trying to figure it out on the fly!
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My guest on today's podcast is Suzanne Powell. Suzanne is a Senior Financial Advisor at Meridian Wealth Management, an RIA based in Lexington, Kentucky, where she oversees approximately $110 million in assets under management for nearly 150 client households.
What's unique about Suzanne, though, is how she grew to more than $100M of AUM by intentionally organizing her schedule from month to month throughout the year, clustering client and nearly all of her prospect meetings in the Fall and Spring, allowing her to spend the remaining 6 months away from the office and with her family, while still not needing to spend much time on prospecting by leveraging (and almost fully automating her responses to) a steady flow of SmartAsset leads.
In this episode, we talk in-depth about how Suzanne has been able to drive client growth through the lead-generation service SmartAsset and dials the lead flow up or down depending on how busy her month is, the way Suzanne has set up a series of email and especially text message automations that allow her to convert a very high percentage of her SmartAsset leads into clients without needing to be available to immediately to inquiries reply herself, and how Suzanne has customized the targeting of which leads she buys from SmartAsset to ultimately generate nearly $70M of new assets over the past 5 years for less than $100,000 in cumulative marketing spend.
We also talk about how Suzanne structures her weekly meeting schedule to balance the need to have 5 to 6 meetings a day during her busy seasons while still having time to prepare for each meeting and complete follow-up tasks, how Suzanne uses a standardized client meeting agenda to stay on track and ensure each meeting fits within the allotted 1-hour time block, and how Suzanne leverages technology – including a large, retractable television monitor located next to her desk – to present and adjust her clients' financial plans during the meetings instead of presenting them with a physical plan (which saves essential meeting prep time during her busy meeting season).
And be certain to listen to the end, where Suzanne shares how she entered the financial advisory industry without a Bachelor's degree and how she earned her degree 20 years later by taking college courses while working full-time as an advisor and will now officially be able to become a CFP certificant, how bringing her own consistent and authentic presence has allowed Suzanne to convert prospects into clients several years after their first contact with her (because as Suzanne notes, the fact that someone doesn't become a client today doesn't mean they aren't still watching and keeping up with you!), and why Suzanne has taken an approach of not trying to work and save for retirement as a time to enjoy when she gets there, but instead has structured her busy-season-light-season approach to client meetings to allow for more space to enjoy trips and time with her family now, instead.
So, whether you're interested in learning about how to use a compressed meeting schedule to free up time away from your business, how to structure those meetings to effectively provide value to clients, or the tools Suzanne uses to automate the process of converting SmartAsset leads to viable prospects, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Suzanne Powell.
As marketing and prospecting processes become increasingly digital for financial advisors, many prospective clients learn about advisors and what they offer not from an introductory call, webinar, or speaking event but from the advisor's website itself. Talking about money is often highly personal and can leave individuals feeling vulnerable, so choosing who to serve in such a high-trust role as a financial advisor can have immense stakes. Which is why it's crucial for websites to give prospects the ability to see themselves as clients, and to understand what beginning and maintaining an advisor-client relationship might look like. These steps can make a measurable difference in 'demystifying' an otherwise obscure process for a first-time prospect and help them move into action.
In this guest post, Mikel Bruce, CEO of TinyFrog Technologies, discusses building a prospect-focused Process page into an advisory firm's website as a crucial part of the sales funnel to get calls from prospective clients by clarifying the process, demonstrating an advisor's unique value proposition, and providing an easy way for prospects to 'raise their hand' when they're ready to act.
As a starting point, a well-built Process page performs 4 critical functions. First, it establishes expectations for the prospect around the process of becoming a client (including the type of calls involved, the onboarding steps, and how long it takes) and the general communication style of the firm. Importantly, keeping this overview simple, high-level, and prospect-focused is crucial. Second, a Process page should use language that helps prospects identify with and envision themselves as ideal clients of the firm. Third, the Process page should describe the specific (and likely niched) issues the firm addresses with its clients. Fourth, the Process page clearly shows how interested prospects can move forward in scheduling a consultation (or however a firm would like to meet with them) by offering easily accessible call-to-action tools (e.g., calendar and scheduling software tools built directly into the Process page). Process pages can also include a simple FAQ section to address questions about fees, working style, or the frequency of meetings that ongoing clients can expect.
Once advisors have created their Process page, they have a few ways to start optimizing it. First, they can build funnels that direct traffic to the Process page from different places on the website, with multiple user paths depending on the type of prospect and their pain points. Advisors may also want to A/B test various aspects of their pages – calls to action, for example, or different language – to see if one feature or another influences how many prospecting calls they get in turn.
The key point is that finding a trustworthy advisor with whom prospective clients can build a relationship is not a quick or easy process – but an advisor with an effective Process page can help prospects envision the unique value they can derive from engaging with the advisor, making it easier for them to understand the benefits of a long-term planning relationship and, ultimately, to decide to become clients!
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