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Takeaways From The T3 Advisor Technology Conference: PFM Portals, Dashboards, And Robo-Advisor-For-Advisors Platforms

February 23, 2015 07:01 am 18 Comments CATEGORY: Conferences

Celebrating its 10^th year as an event, this year’s Technology Tools for Today (T3) advisor technology conference was the biggest ever, punctuated by a stream of major product launch announcements at the conference itself, and buzzing about the literally billions of dollars of merger and acquisition activity for advisor technology firms in the two weeks leading up to the conference.

The breakout categories at this year’s event included several new “Personal Financial Management” (PFM) tools for advisors to work collaboratively with their clients, including the launch of EMX Select from eMoney Advisor (which, finally, will be “unbundled” from their financial planning software!) and a new solution called “Narrator” from Advicent (maker of NaviPlan and Financial Profiles). Also highly visible at this year’s T3 conference were an onslaught of more than half a dozen new “robo-advisor-for-advisors” solutions, all seeking to bring a better technology platform for advisors to build their businesses and automate much of the onboarding and investment implementation with their clients.

Yet underlying the potential efficiency of all these new technology solutions is the ongoing challenge that for many advisors, working with smaller clients isn’t actually a matter of efficiency (which technology can solve), but a marketing problem to get a sufficient volume of those clients in the first place. And while several new technology solutions are aiming to automate more of the advisor marketing process, along with making advisor websites more engaging with a series of “self-help” tools that can get prospective clients interested in actually working with an advisor, the question remains: how many advisory firms have a good enough marketing process to actually leverage these tools in the first place?

Weekend Reading for Financial Planners (Feb 21-22)

February 20, 2015 03:01 pm 15 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with two big news announcements, including a new $60M round of venture capital for robo-advisor Betterment that will be used in part to build out its robo-advisor-for-advisors solution Betterment Institutional (with a reported 90 RIAs already using the platform), and a detailed review of Form ADV for the new Schwab Intelligent Portfolios "robo" solution as well that reveals the platform will only be "free" because its 30bps management fee will be covered by the profits Schwab makes on its underlying ETF and bank offerings (including a 7%-30% cash allocation in all portfolios!).

From there, we have several practice management articles this week, including a look at how doing financial planning for Millennials means retooling the advisor's services (and business model?) away from AUM-centric retirement accumulations and towards building "financial independence" instead, an interview with "Reformed Broker" and financial advisor Josh Brown as he approaches 100,000 Twitter follows about how his blog and social media presence helped to build a $170M AUM practice, a look at the importance of effective branding and communications for advisors, and some tips on how to publish an "e-book" to establish your credibility.

We also have a few technology-related articles, from a look at how to better "personalize" and humanize the ways you use technology with your clients, to software reviews for the latest Tamarac iPad app and the newest release of eMoney Advisor's financial planning software (dubbed "EMX").

We wrap up with three interesting articles: the first is a letter from CFP Board chair Richard Rojeck as the organization celebrates its 30-year anniversary, looking back at what has been accomplished and where the CFP Board still sees opportunity from here; the second is a review of the recent new book "The Incredible Shrinking Alpha" by Larry Swedroe looking at how the competition for alpha is fiercer than ever (which makes less and less of it available to capture); and the last is a great reminder that helping clients through the stressful times can be stressful for the advisor as well, so now - while markets are relatively calm - might be a good time to take a "reboot", and make sure you're fresh for when the next inevitable bear market finally comes.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including highlights of the Technology Tools for Today (T3) conference, a review of the news that Betterment has raised another $60M of venture capital (in part to support its new service for advisors, but also to expand its capabilities to answer basic financial planning questions), and more!

Proposals For Eliminating Stretch IRAs, Repealing NUA, And The $3.4M Retirement Account Cap In The FY2016 Treasury Greenbook

February 18, 2015 07:01 am 22 Comments CATEGORY: Retirement Planning

Every year, the proposed changes to the tax laws encapsulated in the President’s budget request for the Federal government are recorded in the Treasury Greenbook, which is then taken under advisement by Congress to create its own budget resolution. And while the President’s budget request does not necessarily dictate what Congress will decide to do, it does provide valuable insight into potential legislation that may be considered in the coming months and years.

While some tax proposals in the Greenbook are relatively minor, or pertain to issues not directly relevant to our work as financial planners, this year’s FY2016 budget request had several proposals that would represent major changes in the world of planning for retirement accounts, both during clients’ lives and after they pass away.

Accordingly, following on last week’s review of the “good” and the “bad” of the proposed tax law changes for retirement accounts, we look at some of the “ugly” provisions that could have a more dramatic impact in the coming years, from the possible elimination of stretch IRAs (requiring the 5-year rule for most non-spouse beneficiaries), to a $3.4M “cap” on retirement accounts (though it is actually just a cap on new contributions to retirement accounts), and the proposed repeal of the Net Unrealized Appreciations (NUA) rules for those who were born after 1965!

Best Practices For Advisory Firm Partnerships – It’s Not About Avoiding Conflicts But How You Manage Them

February 16, 2015 07:01 am 9 Comments CATEGORY: Practice Management

In recent years, there has been a growing interest in both high-profile acquisitions of advisory firms, and a more general “urge to merge” as the increasing costs of running an advisory firm drive more to seek scale by banding together. Yet while the industry discussion often goes to the favorable results of the biggest mergers with the greatest success, the reality across most industries is that anywhere from 70% to 90% of mergers and acquisitions, and there’s little reason to imagine that advisory firms would be any different… suggesting that at least some of the vaunted benefits of large ensemble practices may be distorted by a significant survivorship bias.

Seeking to explore this issue further, a new industry white paper on “Best Practices in Investment Advisory Partnerships” has delved into what makes advisory firm partnerships work, and what causes them to fail… cultivated from both the experiences of the authors (who themselves were advisory firm owners who went through a problematic merger) and interviews with dozens of advisory firm partners of businesses both large and small.

What emerges from this new exploration of advisory firm partnerships is the idea that in more ways than a few, an advisory firm is like a marriage, where deep trust and a mutual commitment to the success of the relationship is crucial to navigate the inevitable conflicts that will arise over time, and that while every individual and partnership is different to some extent, the triggers of partnership problems are far more consistent than most might expect.

Weekend Reading for Financial Planners (Feb 14-15)

February 13, 2015 03:31 pm 14 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the latest big acquisition news, as a private equity firm acquires portfolio accounting and reporting solution Orion Advisor Services, marking the last of the major RIA portfolio accounting platforms that have been acquired (after last week's Advent acquisition). And notably, the deal caps a series of massive Advisor FinTech acquisitions that dramatically trump all the dollars that have ever been invested into "robo-advisors", suggesting that the big money sees even more opportunity in serving advisors in the long run (rather than competing with them!). Although also in the news this week were some further details from the looming Schwab "robo-advisor" solution, which the company announced is targeting a whopping $400 billion of AUM through both its retail and advisor channels!

From there, we have several practice management articles this week, including a look at how advisory firms with strategic plans fleshed out to the point of having actionable implementation steps are outpacing the growth of firms without a strategic plan (or with one lacking the specificity to actually implement), how often the greatest challenge a firm's advisor-owner faces is the need to change his/her own perspective to move the business forward, and some tips on what to think about when crafting communication as an advisory firm (from what to include on your website for prospects, to how to work with the media effectively).

We also have several more technical articles, from a review of the some of the popular "cutting edge" estate planning strategies in use for higher net worth clientele who still face a Federal estate tax problem, to an in-depth look at all the different types of long-term care insurance (traditional LTC, hybrid coverage, etc.) and how to compare them and evaluate which is best and when, and a discussion of the problems with many of today's life expectancy calculators and what to consider if you decide to use one. There's also a discussion of retirement researcher Wade Pfau's new launch of the "Retirement Wealth Index" and the "Retirement Affordability Index", which are meant to give today's retirees some perspective on how good/bad of a time it is to retire.

We wrap up with three interesting articles: the first is a poignant reminder from advisor Ric Edelman that as both an advisory firm grows and changes, and the industry and environment changes around us as well, that whatever got us to where we are successfully is rarely what works to keep us moving forward from here; the second is a fascinating glimpse at a recent study suggesting that as self-driving cars become a reality in the coming decade, the need for vehicle ownership could drop by more than 40% (drastically reducing what clients need to budget, both for a car, and for that 2-car garage!); and the last is an interesting reminder that the whole central role that money plays in our lives today is actually a relatively "recent" phenomenon since World War II, and that in fact the rise of financial planning and its whole reason for being may ultimately boil down to helping us relate in a healthy way to money and the powerful role that it plays in our lives.

Enjoy the reading!

Eliminating Small RMDs And Killing The Backdoor Roth – Key Retirement Proposals Under President Obama’s FY2016 Budget

February 11, 2015 07:01 am 20 Comments CATEGORY: Retirement Planning

Earlier this month, President’s Obama released his budget request for the Federal government for the coming 2016 fiscal year. Included in the budget are a long series of tax proposals, summarized in the so-called “Treasury Greenbook” that provides an explanation of each proposal and what it would entail.

While the tax proposals in this year’s budget span a wide range of categories and topics, the proposed retirement changes are significant, and include some good, some bad, and some that are downright ugly. This week, we review some of the good (eliminating RMDs for those with less than $100,000 of retirement assets and allowing inherited IRA rollovers for non-spouse beneficiaries) and the bad (Roth crackdowns including no more backdoor Roth contributions and new Roth RMDs after age 70 ½). Next week, we’ll look at the ugly, including the infamous proposed $3.4M “cap” on retirement accounts (which is actually far less restrictive than it has been made out to be in the media), and the potential elimination of stretch IRAs and Net Unrealized Appreciation (NUA) rules.

Of course, the caveat is that these tax proposals are just that – proposed – and most would require legislative action from Congress to implement... which may not happen anytime soon! Nonetheless, the proposals provide important insight into what the White House considers to be “bargaining chips” for tax reform going forward, which means there is at least some “risk” that they could be introduced into legislation (or attached to existing legislation) in the coming years!

Introducing The First Advisor Symposium On Social Media And Blogging, And The XYPN15 National Conference

February 10, 2015 07:01 am 22 Comments CATEGORY: Industry News

While the financial services industry – and financial advisors in particular – are relatively slow adopters of technology, the world of “Advisor FinTech” is beginning to accelerate, from an explosion in the number of technology vendors serving independent advisors, to the growing number of advisors adopting digital “inbound” marketing, blogging, and social media.

However, while there is a conference dedicated to Advisor FinTech – the Technology Tools for Today (T3) conference, getting underway later this week! – there has never been enough interest in advisor blogging and social media to justify a standalone conference. Until now.

This week, I’m excited to announce that I will be helping to co-organize the first Advisor Symposium on Social Media and Blogging. Running in conjunction with the popular (Personal Finance) Blogger Conference “FinCon”, the Advisor Symposium will launch in September in Charlotte, NC. And notably, we will also be running our first XY Planning Network national conference in the days leading up to the event as well, for those who are interested in learning more about how to serve Gen X and Gen Y clientele effectively and profitably. I hope to see you there!

The Challenge Of Selling The Invisible: How Do You Make An Intangible Service Like Financial Planning More Compelling?

February 9, 2015 07:01 am 13 Comments CATEGORY: Marketing

When it comes to buying a product, most are relatively straightforward to evaluate. They have a physical presence that can be examined. We can ask others who have purchased and still have the product what they think of it. And there are usually many ways to assess quality. With a service, on the other hand, what the prospective client buys is intangible, and the service provider – like the financial planner – is effectively forced to be “selling the invisible” to a prospective client.

Accordingly, Harry Beckwith’s book “Selling The Invisible” tackles the interesting challenge of how best to sell an intangible service (like financial planning)… with the conclusion that in the end, because there’s no real way for most consumers to evaluate the quality of a service or the depth of someone’s expertise in the first place, the driver in the end is usually not about the skillset of the financial planner. Instead, decisions are often made based on far more “mundane” factors like whether the prospective client feels a personal connection and relationship to the advisor, to even simple details like how the advisor dresses, the look of the office, or the way the receptionist answers the phone.

On the one hand, the fact that an advisor’s actual expertise may rarely be the deciding factor in whether he/she is fired may be dismaying to some. Yet on the other hand, the reality is that the factors that prospective clients may rely upon instead are generally under the advisor’s control as well, and there aren’t even that many (the firm’s website, the person who answers the phone or greets people when they enter, the physical office, etc.). And in the end, Beckwith makes the key point that ultimately the real challenge that advisors face is not convincing clients to work with them over other competitors, but simply that it’s worthwhile to “buy the invisible” instead of doing nothing at all!

Weekend Reading for Financial Planners (Feb 7-8)

February 6, 2015 03:01 pm 13 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the big news of two major acquisitions in the world of advisor financial technology (FinTech), including Fidelity's purchase of financial planning software provider eMoney Advisor (and their popular PFM client portal) for more than $250M, and SS&C's acquisition of Advent for a whopping $2.7B (raising questions of what the future may hold for Advent Axys and Black Diamond).

From there, we have a few more technical financial planning articles this week, including: a review of the new Section 529 ABLE accounts for disabled beneficiaries; new research from retirement researcher David Blanchett on the optimal asset allocation glidepath in retirement; a look at the emerging use of longevity annuities for retirement (including in qualified retirement accounts); and some ideas of how to generate "tax alpha" for clients.

We also have several practice management articles, from a look at whether it's better to hire a new or more experienced financial planner for your advisory firm, to whether and how advisory firms can really scale as they grow (and the problems to watch out for in trying to do so), and a discussion of how one financial planner has increased her closing ratio for new clients from 20% to more than 90% by focusing heavily into a niche and then refining her services and sales process to appeal to her unique clientele.

We wrap up with three interesting articles: the first looks at whether the debate about how to fund more exams for SEC-registered investment advisers is misplaced, and whether there's really any actual problem with the current (admittedly low but not historically aberrational) exam rate at all; the second looks at new questions being raised about whether two-tier AUM fees (e.g., a lower fee on cash and fixed income, and a higher fee on equities) is creating a problematic conflict of interest for advisors who are now financially incentivized to invest their clients in a riskier manner; and the last looking at a recent report on the world of financial advisors in the UK, which two years ago implemented an industry-wide ban on commissions and finds that the sky is not falling after all (though some early advisory gap is emerging).

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including a further discussion of the Fidelity acquisition of eMoney Advisor, SS&C's acquisition of Advent, and the recently announced (and somewhat dismal) results of the SEC's cybersecurity sweep of broker-dealers and RIAs! Enjoy the reading!

Modular Vs Comprehensive Financial Plans – Are The Parts Worth More Than The Whole?

February 4, 2015 07:01 am 39 Comments CATEGORY: Client Trust & Communication

As the popularity of financial planning has grown, so too have financial plans grown. Literally. In one recent study, 90% of advisors spend at least 6 hours to produce a financial plan, 40% spend upwards of 15 hours, and the sheer length of the physical financial planning document has grown dramatically over the decades.

On the one hand, a longer financial plan implicitly suggests that the plan must include more extensive analysis, more recommendations, and therefore be a “better” plan. And to some extent, that may be true. However, the caveat is that physical financial plans may have grown so large that the associated list of recommendations is too daunting to actually implement. In other words, the thoroughness of being fully comprehensive may not be a dazzling display of value, but simply overwhelming.

As a result, perhaps the best way to demonstrate the value of financial planning is not to make the plan as comprehensive as possible up front, but instead to make it comprehensive by building one module at a time over a span a weeks, months, or years – whatever it takes to help the client to actually implement, one step at a time, until everything is done. Which means in the end, perhaps when it comes to modular financial planning, the parts are actually worth more than delivering the whole up front, at least when measured by the success of actually getting clients to implement?

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Takeaways From The T3 Advisor Technology Conference: PFM Portals, Dashboards, And Robo-Advisor-For-Advisors Platforms

Weekend Reading for Financial Planners (Feb 21-22)

Proposals For Eliminating Stretch IRAs, Repealing NUA, And The $3.4M Retirement Account Cap In The FY2016 Treasury Greenbook

Best Practices For Advisory Firm Partnerships – It’s Not About Avoiding Conflicts But How You Manage Them

Weekend Reading for Financial Planners (Feb 14-15)

Eliminating Small RMDs And Killing The Backdoor Roth – Key Retirement Proposals Under President Obama’s FY2016 Budget

Introducing The First Advisor Symposium On Social Media And Blogging, And The XYPN15 National Conference

The Challenge Of Selling The Invisible: How Do You Make An Intangible Service Like Financial Planning More Compelling?

Weekend Reading for Financial Planners (Feb 7-8)

Modular Vs Comprehensive Financial Plans – Are The Parts Worth More Than The Whole?

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