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#FA Success Ep 367: When Being In Business With Your Spouse Doesn’t Work Out And You Have To Start Over, With Kimberly Enders

January 9, 2024 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 367th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Kimberly Enders. Kimberly is the Lead Financial Planner and Managing Partner of Enders Wealth Management, a hybrid advisory firm based in Sterling Heights, Michigan, that oversees $50M in assets under management for 85 client households.

What's unique about Kimberly, though, is that after building a practice jointly with her husband, in 2015, she had to reinvent herself after a divorce left her without a practice and starting over with just 12 clients and $7M in assets and how, in the 8 years since, she has built herself up by developing a highly customized 12-month onboarding process for new clients that has driven her ability to generate rapid growth through referrals .

In this episode, we talk in-depth about what Kimberly learned through entering and then exited a business relationship with her husband that was, unfortunately for her, not structured in a way to fully protect her claim to the clients and revenue of the practice, what Kimberly did to turn her career around through honing in on her ideal target client and steadily pruning away those who are no longer a good fit , and how Kimberly has structured her 12-month onboarding plan for new clients that focuses on comfort with the technology and advisor/client relationships with her before she even starts to approach financial planning after a full 6 months with a new client… a system that has allowed Kimberly's firm to grow almost entirely from referrals alone.

We also talk about Kimberly's journey of trying every "Food Group" in the industry (all the different industry channels where you can work as an advisor) before starting an independent practice with her now-ex-husband , the way that Kimberly and her ex-husband grew the practice but each focusing on their individual strengths (where he drove marketing and business development, and Kimberly was focused on the client portfolios), and how Kimberly realized that while growth is good, too much growth too quickly can be detrimental to both her clients and her own ability to serve them to her high standard (which helped her get comfortable with letting go of early clients who were no longer the right fit).

And be certain to listen to the end where Kimberly shares why she suggests all new advisors try out a lot of the industry's "Food Groups" before picking a path (as she notes that knowing and getting experience in the other paths in the financial advisor industry helped round out her own knowledge, and find the path that truly aligned to her own values ), the unexpected surprises that Kimberly struggled with while starting her own advisory firm, including managing coworkers, starting an LLC and the headaches that come with payroll and benefit packages for her employees (beyond the client and portfolio work she was so comfortable with), and how Kimberly's definition of success has increasingly focused on the autonomy and control she has over her time to do with it as she pleases… while recognizing that business and financial success are what provide the money that allows her to have more control of her time in the first place!

So, whether you're interested in learning about how not to run an advising firm with a close friend or spouse, how to maintain a stable job regardless of the number of different companies in your employment history or how to create a practice that is so client-centered that everyone you serve can't help but tell everyone about it, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Kimberly Enders.

The Future Of Financial Advice: How Tech and Approaches In 2030 Will Differ From Today

January 8, 2024 07:04 am 0 Comments CATEGORY: Planning Profession

Professional service industries tend to evolve over time as the regulatory environment evolves and new technologies emerge. For instance, the financial advice industry has seen many changes to regulations (for both advisors and their clients), advisor business models, and the advisor technology landscape. These changes all have the potential to change the industry by shifting the current focus on selling financial products (including financial plans themselves) to providing a more in-depth and personalized experience that helps anticipate future issues in a client's life and better help them identify the goals that will help them thrive. And the wide scope of technology tools supporting advisors to shift into providing more client-centric services makes this new era in the future of financial advice possible!

The changing patterns in how financial advice is delivered can be compared to the similar trends seen in the evolution of medicine. Dr. Peter Attia, author of the book Outlive: The Science & Art of Longevity, describes the trajectory of medicine in 3 stages: Medicine 1.0 represents the time in history when healers believed that illness was attributed mainly to supernatural forces, Medicine 2.0 represents our current state of healthcare, in which genetic makeup and the environment play a major role in illness and disease, and where the focus of doctors lies primarily on the administration of treatments to cure and mitigate human ailments; and Medicine 3.0 is the projected future direction of medical care, where, instead of taking a reactive approach to disease and illness, healthcare practitioners instead invest more energy focusing on preventing illness and maintaining good health in the first place through more personalized plans for patients.

In the context of the financial planning industry, whereas Financial Advice 1.0 and 2.0 represent our past and present industry's reactive focus on coming up with solutions to address client problems, Financial Advice 3.0 offers an optimistic future glimpse of financial planning where advisors offer deeply tailored planning experiences, pairing human advice with digital service and support to fully engage clients in a more proactive approach to financial planning. Specifically, Financial Advice 3.0 improves on the previous iterations of planning by involving a more thorough technical analysis of a client's unique situation than it did before and drilling deeper to reveal more planning opportunities to present to clients.

Furthermore, with the efficiencies built-in to emerging technology (ranging from tax planning software that helps with the tactical aspects of executing tax planning strategies, to estate planning software that helps clients better understand their estate plan, to specialized planning software that lets advisors go deeper into various planning areas important to their clients, and even to advice engagement software that engages clients with the advice provided), advisors can focus more of their time on enhancing the 'softer' side of providing advice to clients and not just implementing a relatively static financial plan. And by building more empathetic relationships and having deeper conversations with clients, advisors who implement Financial Advice 3.0 build the trust needed to fully understand the client's unique situation and concerns while creating a highly engaging client experience.

Ultimately, the key point is that financial advisors have new technologies and approaches that increasingly support a shift into a more proactive, interactive, and dynamically engaging version of planning for clients – Financial Advice 3.0. This approach comes with a new generation of tools and resources that allow advisors to focus on building stronger client relationships and providing clients with a more meaningful planning experience. Which could lead not only to better planning outcomes for clients, but also to new opportunities for advisors to grow their firms!

Weekend Reading For Financial Planners (January 6-7)

January 5, 2024 02:00 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 comment letters submitted regarding the Department of Labor's (DoL) proposed Retirement Security Rule, which is intended to strengthen standards regarding the provision of certain retirement-related advice, reflect the contentious nature of the proposal, with brokerage and insurance industry groups arguing that existing regulations are sufficient to protect investors and questioning the legality of the measure and groups promoting a more consistent application of fiduciary standards writing in strong support of the proposal.

Also in industry news this week:

Recent data show that RIAs are gaining on wirehouses in terms of advisor headcount and assets under management, with these trends expected to continue over the next several years
The range of actions independent broker-dealers are taking to keep advisors under their umbrellas

From there, we have several articles on cash flow and spending:

A framework for determining whether a particular financial decision can be made relatively quickly or deserves additional consideration
Why "lifestyle creep", rather than inflation, might be more responsible for an individual's increased expenses and how to combat it
Why the hunt for good deals can be costly in terms of both time and money

We also have a number of articles on retirement planning:

Why the years immediately after retirement can be a particularly effective time to engage in (partial) Roth conversions
An analysis shows that "buffer" Registered Index-Linked Annuities (RILAs), where the product absorbs a certain amount of loss in the underlying index, continue to offer a better value proposition than "floor" RILAs, which cap the amount of downside risk the investor will face
Strategies that can help retirees get the most value out of of their Health Savings Account balances

We wrap up with 3 final articles, all about New Year's Resolutions:

Potential New Year's Resolutions for financial advisors to consider implementing, from engaging in more targeted marketing to sharpening their technical skills
How a pre-commitment strategy can increase the chances that an individual will follow through with their New Year's Resolution
A range of tactics for creating and implementing a successful New Year's Resolution, from engaging in the "Minimum Viable Effort" to replacing, instead of trying to eliminate, bad habits

Enjoy the 'light' reading!

4th Quarter 2023 Economic And Market Outlook: Labor Market, Inflation, And Geopolitics

January 3, 2024 07:02 am 0 Comments CATEGORY: Investments

Niels Bohr famously observed that "Prediction is very difficult, especially if it's about the future!" The sentiment is especially poignant when it comes to economic forecasting, as it's nearly impossible to get an accurate picture of the current state of the economy at any given moment. As a result, uncertainty about how the economy may unfold, even along the shortest time frames, is the default. However, given the ongoing debate around the various 'hard', 'soft', or 'no-landing' scenarios that have dominated the headlines due to the Federal Reserve's campaign to tame inflation, it's safe to say that economic uncertainty is especially elevated at the moment. The good news is that by gaining a better understanding of some of the economy's key drivers, financial advisors have the opportunity to deliver more value to their clients by helping them better identify the opportunities and risks present in this highly uncertain environment!

As has been the case for several quarters, the prevailing characteristic remains a "tale of 2 economies". While the manufacturing sector (which makes up 'only' 8% of the U.S. economy) contracted for the 12th consecutive month, the services sector (constituting about 78% of GDP) expanded for the 11th consecutive month, serving as a primary driver behind continued wage inflation as well as tightness in the labor market.

While there's certainly a chance that the Fed will achieve its 2% inflation target without a commensurate spike in unemployment, there are still plenty of threats on the horizon. Notably, banks face pressure on several fronts, including declining values of longer-term debt holdings impacting balance sheets, savers shifting out of savings accounts as they seek higher-yielding money market funds, and record-level office vacancy rates that hinder the refinancing of low-rate real-estate loans into higher-rate loans.

Consumers, meanwhile, have just about burned their way through their post-COVID savings, which was the main driver for GDP growth in 2023. With credit card balances and delinquencies spiking and student loan payments resuming, it's unlikely that consumers will be able to sustain their spending levels and ride to the rescue once again in 2024. Businesses are also feeling the pinch from higher interest rates, as November saw a rapid increase in the number of Chapter 11 commercial bankruptcies.

The labor market, while still remarkably resilient, has also started to show signs of stress. Since the Fed started raising rates in March 2022, job growth has steadily slowed; continuing claims for unemployment hit a 2-year high; the average work week is getting shorter; and job openings, 'quit rates', and wage growth for job switchers have all been falling.

The good news is that while there's little doubt that the economy is indeed slowing, there don't seem to be any "black swans" lurking around the corner, as was the case for 2008's severe recession. As a result, professional forecasters generally agree that there's less than a 50% chance of negative growth throughout 2024 and that unemployment could rise to a manageable 4.1%.

That said, plenty of factors can still impact the economy and markets, including the conflicts in Israel and Ukraine, increased tensions with China, a spiking debt-to-GDP ratio, and chances for a government shutdown. Moreover, historically extreme valuations in a small handful of mega-cap stocks that account for about 30% of the market weight in the S&P 500 (i.e., the Magnificent Seven) means that any sort of correction in those names could reverberate through the broader market.

The key point is that, given the current economic uncertainty, there are several ways that advisors can help clients prepare for potential downturns. This can involve reducing exposure to high-risk equities and longer-term bonds while moving towards shorter-term, lower-risk debt. Additionally, diversifying towards assets that still carry a risk premium but have a low correlation to stock market cycles or traditional bond inflation risks (e.g., reinsurance, private lending, consumer credit, long/short factor funds, commodities, and trend-following) can be beneficial. Ultimately, while no one has a (clear) crystal ball or control over any of the myriad factors influencing the markets, advisors play a crucial role in helping their clients understand and navigate these risks, keeping them focused on their long-term goals!

#FA Success Ep 366: Avoiding The ‘Big Swap’ Of Wealth And Health As Your Advisory Firm Grows, With Stevyn Guinnip

January 2, 2024 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome to the 366th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Stevyn Guinnip. Stevyn is founder of Grow Wellthy, a health and wellness consulting firm based in Springfield, Missouri that specializes in working with busy – but not always healthy – financial advisors.

What's unique about Stevyn, though, is how she combines her family roots in financial advice with her decades-long career in wellbeing and health as a coach to financial advisors, primarily to address what she calls The Big Swap – where we start our careers being younger and healthier but with very little income, and then grow to the point that we're financially successful but at the cost of swapping out our health – a trend that Stevyn is trying to reverse given how it impacts not only an advisor's quality of life but, ironically, also their finances but impacting when they have to retire (or not).

In this episode, we talk in-depth about how Stevyn sees the current "state of the union" when it comes to financial advisor health, and how in providing for others, they often forget themselves, leading to long hours and high stress, especially when coupled with the demands of life ranging from scaling businesses to building families, how, although Stevyn often sees the focus of financial well-being take precedence in the preparation for retirement, in reality, she views both financial wealth and physical well-th as necessary for advisors (and our clients) to have success and freedom in their later years, and how Stevyn utilizes the way that financial advisors are already wired – that is, around metrics, goals, and data – to visualize and optimize helping them find the metrics and measurements that cumulatively effect their health.

We also talk about how Stevyn's first introduction to the financial advisor industry actually pushed her away from it, as she watched her father (and many of his colleagues) achieve the financial success that set them up well for retirement, but without maintaining their holistic health that would have allowed them to truly enjoy their 'golden years', how Stevyn's own near-death experience in Australia caused her to recalibrate her own metrics and definitions of health, as well as sparked a pivot into focusing on financial advisors in particular, and how Stevyn has leveraged the language and terms that we as financial advisors use to speak about wellness, such as using "bad debt" to frame up concepts of sugar, sleep, and other high health hazards, and motivate advisors into action.

And be certain to listen to the end, where Stevyn shares how she saw her own metrics of health slip when building and scaling her business, which in turn made her realize that she didn't have to do it all and outsourced and reprioritized parts of her own business, why Stevyn believes that the first step to wellness comes from confronting and overcoming one's own procrastination and belief in future self, and by aiming for more incremental, natural changes focused around rest and movement, rather than the traditional images of diet and exercise, and why Stevyn views wellness not as a top-down process of science to behavior, but as a curiosity-driven journey between best practices, one's own inclinations, and finding behaviors and habits that we can comfortably sustain.

So, whether you're interested in the common health issues that financial advisors face, how Stevyn uses financial terms to frame health hazards and motivate advisors toward better health practices, or why Stevyn believes that wellness is a top-down process, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Stevyn Guinnip.

The Latest In Financial #AdvisorTech (January 2024)

January 1, 2024 07:03 am 0 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the January 2024 issue of the Latest News in Financial #AdvisorTech – 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!

This month's edition kicks off with the news that held-away asset management platform Pontera has raised $60 million in venture capital funding as advisors increasingly seek to directly manage clients' 401(k) and other outside assets – although claims by Washington state regulators that advisors' use of Pontera may violate state regulations on accessing data with client passwords, and/or employer retirement plans' terms of service, raises questions over whether Pontera (and the advisors who use it) can convince regulators that its underlying model doesn't violate client privacy.

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

JPMorgan has announced plans to shut down its robo-advisor offering after just four years, highlighting broadly the challenges of robo-advisors to overcome the challenging economics of acquiring and serving small clients, and in particular showing that even a company like JPMorgan with a large customer base can struggle to distribute its offerings when those offerings don't match the needs or wants of its (largely banking-focused) customers
Envestnet is rumored to be exploring a sale of account aggregation provider Yodlee, which highlights the struggles that account aggregation has had in living up to its original promise to provide holistic insights into client data – in large part because it has been such a challenge to maintain the integrity of the data itself, leaving little capacity to figure out how to convert that data into meaningful insights for advisors
Income Lab has announced that it has chosen BridgeFT to provide it with API access to multi-custodian data for its retirement planning software, signaling more broadly the need for API hubs that can allow technology startups to access custodial data without the cumbersome process of building and maintaining connections with individual custodians – a need that BridgeFT has risen to fill with its WealthTech API solution.

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including:

Arch, a technology provider aiming to streamline the significant administrative and paperwork burden of managing multiple alternative investments, has completed a $20 million Series A funding round as advisors' interest in alternatives continues to grow (though it remains to be seen if investor interest in alternatives will stay as high in a higher interest rate environment)
The SEC has been soliciting feedback from RIAs on their use of AI technology as it seeks to finalize its proposed "Predictive Data Analytics" rule, which has been widely criticized as imposing an onerous compliance burden on firms surrounding the technology they use (even if that technology has little to do with AI to begin with)

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]!

Weekend Reading For Financial Planners (December 30-31)

December 29, 2023 02:00 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 S&P 500 index is on pace to return around 24% in 2023, defying expectations that investors had early this year for weak growth and high volatility – which underscores both the unpredictability of markets in the short term and the need to diversify in order to defend against that unpredictability in the long term.

Also in industry news this week:

After the Massachusetts state regulators proposed a regulation that would require businesses to provide accurate up-front pricing information before a customer provides any personal information, life insurance industry groups have requested an exemption from the rule (since insurers need to have at least some of the customer's personal health information in order to provide an accurate life insurance policy quote)
The National Association of Insurance Commissioners has adopted a Model Bulletin stating that insurers are liable for any discrimination or other regulatory violations that might result from using artificial intelligence technology to make underwriting decisions, raising the question of whether the opportunity of AI is worth the risk of financial or criminal liability if the technology proves to have racial or other biases

From there, we have several articles on practice management:

Why advisory firm leaders can better improve their practice by taking time to identify the real problems impacting the firm, rather than focusing on implementing solutions that may not actually solve the real issues at play
Why the topic of bonuses for non-owner employees can lead to heated discussions between owners, and what firm leaders can do to ensure that everyone can be heard before a decision is made
Although advisors often survey their clients to gain valuable feedback on their firms' client experience, it's harder to get insight into the preferences of those whom the advisor wants to be clients (but aren't) – which may be different from what makes their current clients happy

We also have a number of articles on retirement planning:

How staying retired after taking an early retirement can be difficult, although the reasons change over time from primarily financial to primarily non-financial concerns
Although it's easy to look back on previous eras as being better than our own, there has really never been a better time than today to plan for retirement (since most eras in history didn't have a "retirement" to look forward to at all)
While people often work in order to enjoy more leisure time in retirement, the reality for many people is that their leisure time is much more valuable when they're younger, when they have young kids and parents who are still healthy – meaning it's worth considering a mid-career pause, even at the cost of working a little later into life

We wrap up with 3 final articles, all about pursuing growth and achievement in work and life:

In today's increasingly systematized world, companies that can find a more human-centric way to do business can succeed by conjuring up feelings of "love" in their customers and employees (as in, "I loved that!")
Although past achievements can seem almost predetermined in hindsight, in reality, almost any achievement requires patience, a willingness to learn from mistakes, and a lot of hard work – and so when struggling with current challenges, it's worth reflecting on how those traits helped with other achievements in the past
While high ambition and a little bit of 'craziness' are often needed to achieve far-reaching goals, it's also possible to be distracted by chasing too many goals at once – requiring a narrower focus, fewer distractions, and a little bit of practicality in order to fully embrace the 'crazy'

Enjoy the 'light' reading!

Kitces & Carl Ep 128: Noticing What You Spend Money On That’s Actually An Investment

December 28, 2023 07:03 am 0 Comments CATEGORY: Kitces & Carl Podcast

Throughout history, there has been an age-old question of the difference between an investment and an expense. Society often views expenses as a permanent fixture in life, suggesting that there is no path away from their burden. But what if there was an alternative path? What if there was a way to shift our financial mindset about expenses from one of endless sunk costs to one of intentional investment? And what if we could apply this perspective not just to how we spend our money, but also to how we use our talents and spend our time as well?

In our 128th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards explore how to allay the expense-centric mentality that many people apply to their finances, and consider the process of shifting into an investment-centric focus that encourages individuals to grant themselves the permission to free up time for business growth, spending time with family, and other important (and enjoyable!) activities. Identifying these investment opportunities in how we spend our time and resources can even help to enhance our performance and growth, both professionally and personally.

While spending is an ongoing and inevitable part of life, viewing it as a drain on resources rather than an investment for the future is a common trap. The ultimate goal is to realize that our allocated time and money can potentially produce meaningful benefits instead of viewing them simply as spent resources. And while the challenge in changing that mentality will be a unique process for everyone, there are many common strategies available. For example, investing time and money into scheduling multiple weekly sessions at an expensive (but highly effective) physical therapist can help alleviate chronic pain, devoting years of our life to obtain a college education can open up lucrative career opportunities, traveling in business class for international speaking engagements allows for a more comfortable and convenient flight (so that you're more energized and ready to offer a dynamic presentation upon arrival!), or simply committing to a monthly lunch date can maintain close ties with long-term friends.

One approach to help us validate the potential investments we make with our everyday spending is to consider how any potential profit to be gained from the investment stacks up against the pain of granting ourselves permission to commit to the cost of the investment. For example, a new business owner might struggle with the decision of hiring staff to cook, clean, or maintain a household to save themselves the time of doing the work themselves. And while doing so might feel like an indulgent and unnecessary expense, the potential profit to be gained from the additional time afforded by the household support can be used to significantly grow the business. Alternatively, giving oneself permission to work fewer hours by hiring support staff to help with routine tasks at work can be justified by the greater 'profit' of creating more quality time with family. Realizing the importance of the 'profit' to be made from our investments can often help us realize when it's obvious that we can’t afford not to make them!

Ultimately, the challenge isn’t so much about making the investment itself; instead, it's more about being able to identify the benefits that will result from the investment, and recognizing when the payoff will be worth the resources at stake. And by making the right investments into the things that result in outcomes that matters most to us, we can become confident in allocating our resources more intentionally – whether they involve time, energy, money, or a combination of all 3 elements – changing our view of expenses and instead filling our surroundings with meaningful opportunities for the future!

AI-Generated Financial Advice And The Fiduciary Catch-22

December 27, 2023 07:02 am 0 Comments CATEGORY: Regulation & Compliance

Financial advisors have a fiduciary obligation to act in their clients' best interests, and at the same time are prohibited by state and SEC rules from making misleading statements or omissions about their advisory business. These responsibilities also extend to the use of any technology used in the process of giving advice: A recommendation made with the aid of technology still needs to be in the client's best interests, while the technology also needs to carry out any function as it's described in the advisor's marketing materials and client communications.

In order to adhere to these regulatory standards of conduct while using technology, however, advisors need to have at least a baseline knowledge of how the technology works. Because on the one hand, it's necessary to understand how technology processes and analyzes client information to produce its output to have a reasonable basis to rely on that output to make a recommendation in the client's best interest. On the other hand, the advisor needs to understand what process the technology uses to begin with to ensure that their processes are being followed as described in their advertising and communications.

The recent rise of Artificial Intelligence (AI) capabilities embedded within advisor technology throws a wrinkle into how advisors adhere to their fiduciary and compliance obligations when using technology. Because while some AI tools (such as ChatGPT, which produces text responses to an advisor's prompt in a chat box) can be used simply to summarize or restate the advisor's pre-determined recommendations in a client-friendly way, other tools are used to digest the client's data and output their own observations and insights. Given the 'black box' nature of most AI tools, this raises questions about whether advisors are even capable of acting as a fiduciary when giving recommendations generated by an AI tool, since there's no way of vetting the tool's output to ensure it's in the client's best interests.Which also gives rise to the "Catch-22" of using AI as a fiduciary, since even if an AI tool did provide the calculations it used to generate its output, it would likely involve far more data than the advisor could possibly review anyway!

Thankfully, some software tools provide a middle ground between AI used 'just' to communicate the advisor's pre-existing recommendations to clients, and AI used to generate recommendations on its own. An increasing number of tools rely on AI to process client data, but instead of generating and delivering recommendations directly, they produce lists of suggested strategies, which the advisor can then vet and analyze themselves for appropriateness for the client. In essence, such tools can be used as a 'digital analyst' that can review data and scan for planning opportunities faster than the advisor can, leaving the final decision of whether or not to recommend any specific strategy to the advisor themselves.

The key point is that while technology (including AI) can be used to support advisors in many parts of the financial planning process, the obligation of advisors to act in their clients' best interests (and from a regulatory perspective, to 'show their work' in doing so) makes AI tools unlikely to replace the advisor's role in giving financial recommendations. Because ultimately, even as technology becomes ever more sophisticated, the clients who advisors work with remain human beings – which means it takes another human to truly take their best interests to heart!

#FA Success Ep 365: Scaling Expanded Advice Services To 100+ Team Members In A $5B AUM Enterprise, With Rob Nelson

December 26, 2023 07:04 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome everyone! Welcome to the 365th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Rob Nelson. Rob is the CEO and Founder of NorthRock Partners, an RIA based in Minneapolis, Minnesota, that oversees $5 billion in assets under management for 1,500 client households.

What's unique about Rob, though, is how while many advisory firms increasingly talk about being more than 'just' their client's financial advisor and instead their entire 'personal CFO', Rob has been able to scale NorthRock up to $5 billion of AUM to offer such a breadth of services, from bill paying to tax preparation to supporting clients on their bank lending, all while still charging an AUM-based fee that is similar to firms with a less comprehensive client experience by leveraging the economies of scale he's been able to create.

In this episode, we talk in-depth about the growth strategy that Rob's firm has executed over the past 6 years to grow from $1 billion to $5 billion in AUM, including organic growth from current clients – (many of whom are corporate executives and professional athletes with strong positive cash flow), strong new client asset flows from referrals (as current clients refer peers who could benefit from NorthRock's high-touch service), and opportunistic acquisitions of both larger and smaller practices that are willing to do a transaction with Rob because they want to offer their clients the comprehensive service that NorthRock has staffed up to provide.

We also talk about how Rob structured NorthRock to allow its advisors to leverage the expertise of centralized expert teams covering investments, insurance, and other planning areas, while remaining the primary relationship manager for the clients themselves, how Rob has expanded his leadership team to match the needs of his growing firm but finds that in a growing business there are always still more leadership gaps to fill, and how Rob recently decided to sell a majority stake in NorthRock to a larger holding company, instead of taking on money from a private equity firm, because he felt it allowed him to get funding with a longer-term mindset to support NorthRock's continued expansion (while being able to still maintain discretion over its operations as NorthRock grows for decades to come).

And be certain to listen to the end, where Rob shares his firm's approach to hiring, including being crystal clear about the job description of the person it wants to hire and what their typical day will look like, why Rob thinks repetitive practice (getting as many 'reps' in front of prospects and clients as possible) is the best way for associate advisors to develop their skills, and why, despite already building a large and successful multi-billion-dollar firm, Rob still thinks that he and his firm still have significant untapped potential that they have to get bigger to fully unlock.

So, whether you're interested in learning about how to operate a high-touch financial advisory enterprise, how to scale an advisory business through a combination of organic and inorganic growth techniques, or how to build a leadership team and staff to meet the needs of a rapidly expanding client base, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Rob Nelson.