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#FA Success Ep 379: Creating A Client Deliverable That Focuses On Behavior Over Returns With Custom Intelligrations, With Hans Blake

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

Welcome everyone! Welcome to the 379th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Hans Blake. Hans is the founder of Intelligent Investing, an RIA based in Greenville, South Carolina, that oversees $50M in assets under management for 40 client households.

What's unique about Hans, though, is how through a desire to create a more centralized dashboard to help his clients understand their financial health, coupled with a deep fascination with technology and its potential as a behavioral finance tool, led him to create Intelligrations, a form of financial dashboard software that dynamically consolidates a client's key asset data points and assembles them into an easy-to-understand 1-page visual statement of their entire financial picture.

In this episode, we talk in-depth about how Hans prioritizes Intelligrations to focus on higher-level financial goals and what can actually be controlled to reduce the risk that clients are tempted to financially misbehave, the journey Hans took in developing and building his Intelligrations software within his firm, from an Excel wireframe idea to actual software code that integrates with key industry vendors to automate the input of the right client data, and how Hans and his wife built Intelligent Investing as a couple to be a boutique advisory firm with a white-glove approach to serving high net worth executives approaching retirement to navigate that emotional, financial transition.

We also talk about, how Hans has implemented a set of core values within the firm that not only remind themselves why they do what they do, but also demonstrate their service approach and value to each potential client up front, the discovery process Hans has implemented to learn about a prospect's current financial state, share the firm's passion and core values, and ultimately separate his ideal, long-term clients, from the short-term, emotional ones, and how, through many conversations and initial rejections, Hans realized that "No's" aren't always permanent and, through creativity and patience, a solution to any problem standing in the way will eventually reveal itself.

And be certain to listen to the end, where Hans shares his struggle with imposter syndrome and self-doubt, having to constantly remind himself to reflect on the years of work, experience, and sacrifice it takes to build a firm or innovative technology, and to enjoy, with gratitude, the hard-earned fruits of his labor, Hans' realization that finding what his key skillset was and focusing on it, while also understanding his weak spots and outsourcing the help he needed was incredibly valuable in building his business, and how surprising it is to Hans to struggle to get clients when he's worked hard to build a great firm and an exceptional technology tool, only to find himself surrounded by countless other companies that claim to do the same innovative things that his firm actually does.

And so, with that introduction, I hope you enjoy this episode of the Financial Advisor Success podcast, with Hans Blake.

The Latest In Financial #AdvisorTech (April 2024)

April 1, 2024 07:04 am 0 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the April 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 of an emerging wave of price increases from long-term AdvisorTech vendors like Orion and InvestCloud, which the companies are positioning as a necessary response to the impact of inflation on their underlying costs (from data to staff) and in some cases simply a fix to legacy pricing agreements that were no longer economical… but advisors are criticizing as their PE firm owners simply trying to squeeze more revenue and profitability out of advisory firms (that, to be fair, have had their own lift in profitability from rising markets in 2023, such that software price increases will still have a minimum impact on their overall profitability).

From a broader perspective, though, the pricing changes come in the midst of an environment where a growing number of AdvisorTech providers are increasing prices, from new “upstart” vendors that have improved their capabilities to the point that they can raise fees, to existing vendors repricing to “current market rates”. Which is opening the door to a new wave of lower-priced vendors (e.g., Advyzon and Panoramix competing against Orion)… with the question of whether they, too, will someday raise their prices as they gain traction as well?

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

Startup Wealthfeed raises $2M of venture capital to launch a new digital prospecting tool that helps advisors find prospects in the midst of various “money-in-motion” events who, in theory, would be receptive to a prospective financial advisor reaching out.
SmartAsset launches an Advisor Marketing Platform to help advisors buying SmartAsset leads to automate the follow-up and nurture of those leads, from automated calls and text messaging to nurture emails, in an effort to lift lead quality and conversion rate.

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

Orion has rolled out a new Estate Visualizer tool as an extension of its Orion Planning tools, but it’s not clear if Orion Planning users will want to go that deep into estate planning just to reach next generation clients that they still might not be a good fit to serve.
Vanilla announced a new Scenarios tool to facilitate advisors working with ultra-HNW clients that need to model various four-letter estate planning strategies (e.g., GRATs, SLATs, CRUTs, and ILITs) to show the impact of the advisor’s advice (at least for those clients who still have Federal estate tax exposure).
Behavioral-finance consulting firm Shaping Wealth is developing a new AI conversational agent, dubbed Lydia, whose purpose is not to replace financial advisors in tough behavioral conversations with clients, but instead to replace (or at least, simulate) clients as a way for financal advisors to practice and train in handling difficult client conversations.

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 (March 30-31)

March 29, 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 a recent survey suggests Americans are increasingly prioritizing work-life balance over higher salaries, with 2/3 of respondents indicating that they would rather work at a job that they loved rather than a job they disliked but paid more money. Nonetheless, Kitces Research suggests that when it comes to financial advisors, those with sufficient experience can often have both, with thriving advisors earning more and working fewer hours!

Also in industry news this week:

- With the new “T+1” rules for trade settlements will go into effect in late May, the SEC has issued a risk alert for broker-dealers and RIAs outlining the requirements they face and areas of focus for the regulator during upcoming examinations
- A recent survey suggests that while client satisfaction with their financial advisors increased during 2023, more than a third of wealthy Millennials indicated they are planning to change advisors in the coming year

From there, we have several articles on prospect and client communication:

How advisors can adapt their communication styles to match the personality types of prospects and clients
Why focusing on diagnosing a prospect’s financial problems, rather than working to build a personal relationship, could be a more effective strategy to win clients
How to craft an effective advisor website biography to show an advisor’s humanity and help prospects overcome their fear of reaching out for help

We also have a number of articles on wealth management:

How building a team of advisors – including financial, legal, and mental health professionals – can help the recipient of a financial windfall manage both the technical and psychological aspects of their newfound wealth
How financial advisors can support clients in processing the emotional and financial ramifications of receiving an inheritance
How advisors can help newly wealthy clients avoid common pitfalls, including insufficient insurance coverage and the temptation to pay household workers ‘under the table’

We wrap up with 3 final articles, all about innovation:

How chance hallway conversations led to one of the biggest breakthroughs in artificial intelligence technology
How the interstate highway system not only allowed for faster travel around the country, but also facilitated the growth of the economy as a whole and the rise of national chains
Why malls are turning to high-end stores, gyms, and experiences to reinvent themselves at a time when many traditional shopping centers are struggling

Enjoy the ‘light’ reading!

Why Guyton-Klinger Guardrails Are Too Risky For Most Retirees (And How Risk-Based Guardrails Can Help)

March 27, 2024 07:01 am 0 Comments CATEGORY: Retirement Planning

One way financial advisors can add value for retiring clients is to estimate how much they can spend sustainably during their retirement years without depleting their investment portfolio. Advisors in this position have several options to help them determine a client's initial spending level, from 'static' approaches like the 4% Rule to more dynamic approaches that allow for higher initial withdrawal rates (but introduce the possibility of spending cuts during retirement).

One method introduced by Jonathan Guyton and William Klinger in 2006 is the "guardrails" framework. With this approach, an initial portfolio withdrawal rate is selected and, if market returns are strong (and the withdrawal rate falls 20% lower than the initial rate), dollar withdrawals are increased by 10% (providing more income than would a static withdrawal approach). On the other hand, in a time of weak market returns (that resulted in the withdrawal rate rising 20% higher than the initial rate), dollar withdrawals would be reduced by 10% (to avoid exhausting the portfolio). Compared to static withdrawal strategies, this approach not only provides an explicit plan for adjustments to keep retirees from spending too much or too little, but also gives retired clients an idea of what spending changes they would need to make if a market downturn were to occur.

Nonetheless, Guyton-Klinger guardrails have several serious shortcomings. For instance, this strategy assumes that retirees will target steady withdrawals throughout retirement, whereas portfolio income needs often vary over time (e.g., to cover retirement income needs before claiming Social Security benefits). Perhaps more importantly, this method can result in sharp reductions in retirement income that would be unfeasible for some retirees. Additionally, these income reductions tend to overcorrect for market losses, meaning that far more capital is often preserved than necessary at the cost of severe reductions in the retiree's standard of living.

As an alternative to the Guyton-Klinger guardrails approach, a risk-based guardrails strategy that relies on a financial plan's probability of success, as determined through Monte Carlo simulations, can be used to determine the initial dollar withdrawals and the need for (and magnitude of) upward or downward adjustments. An examination of how a retirement portfolio would have performed using this method reveals that much smaller income reductions would have been required, relative to the classic guardrails system, to prevent exhausting the client's portfolio. For instance, those retiring just before the Global Financial Crisis would have only seen a 3% income reduction from the initial withdrawal rate using risk-based guardrails, compared to 28% for the classic Guyton-Klinger guardrails approach, and those retiring before the Stagflation Era would have experienced a (still painful) 32% reduction, compared to 54% for the original approach!

Ultimately, the key point is that while Guyton-Klinger guardrails have offered a simple yet innovative framework to introduce dynamic spending adjustments during retirement, a future market downturn could leave clients (and potentially their advisors!) surprised at the depth of spending cuts called for by this approach. Instead, implementing a risk-based guardrails system can help mitigate the need for and size of downward spending adjustments while ensuring that a retiree's portfolio supports their lifetime spending needs!

#FA Success Ep 378: Scaling Growth At 1/4th The Cost Of M&A By Wading Through The “No’s” Of SmartAsset Leads, With Michael Collins

March 26, 2024 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Michael Collins Podcast Featured Image FAS

Welcome back to the 378th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Michael Collins. Michael is the CEO & Founder of WinCap Financial, an RIA based in Boston, Massachusetts, that oversees $80M in assets under management for 70 client households.

What's unique about Michael, though, is that since 2021 he has been able to grow WinCap Financial at a rate of more than $10M of AUM per year through consistently reaching out to leads purchased through SmartAsset, spending $5K/month that turns into $10K in recurring revenue in less than 100 days, an average of more than 4X the return on financial investment than if those clients had been obtained through an acquisition buying at a traditional 2X revenue multiple.

In this episode, we talk in-depth about how Michael maintains his ongoing $5K/month marketing spend with a process that has an ultimate failure rate of 95% because the financial ROI on the prospects that do close continues to make sense (and he is ultimately not afraid of sorting through the No's to find the right Yes's for WinCap), how Michael supports his SmartAsset conversion rate with a weekly blog that is written by taking the upcoming economic calendar, automating it into a narrative article in his writing style using ChatGPT, and then simply editing it to add his own commentary (which cuts the time it takes for him to write from 2 hours down to 30 minutes), and how Michael has systematized everything from his follow-up emails to text messages to his weekly blog and an ongoing tracking sheet to ensure no prospect slips through the cracks, which allows him to generate his results with a high volume of SmartAsset leads while only spending 8–10 hours/month on the entire process.

We also talk about Michael's advisor journey that began with selling Gateway Computer "Cow Boxes" in college (and getting used to the No's that came along with computer sales) and how Michael channeled that comfort-with-hearing-No into his career shift into wealth management with a process that has a "20 leads to 3 prospects to 1 new client" marketing formula, the reason Michael's decided during the pandemic to take a chance on leaving his then-current advisory firm starting his own RIA (after realizing that he was already doing the important aspects of both client service and business development himself, which made it difficult to justify why his current firm was owed an 80% share of the revenue he was bringing in), and how, when the stress of launching his firm was at an all-time high and a concern for the sustainability of WinCap at the end of 2022 was a major challenge, Michael found that acts of service in education – by becoming a part-time adjunct professor teaching college students – became a key rewarding element of life that kept him going.

And be certain to listen to the end, where Michael shares how moving from a large, firm-supported environment to an independent practice wasn't as hard as he expected because he could easily integrate tools and platforms he was already familiar with (and had the financial ability to get a $50K bank loan to buy a big chunk of SmartAsset leads, which further helped to jump-start his new practice), how surprised Michael was with the amount of support he did get when he launched WinCap, with more than 80% of his previous client base also following him into his new firm within a year, and how Michael had long struggled to take the leap because of the perceived safety and credibility in being part of a larger advisory firm but ultimately found that he could get similar credibility by affiliating his new firm with reputable RIA custodians… which helped Michael's clients, and also Michael himself, find the necessary confidence to move forward.

So, whether you're interested in learning about how to effectively use lead generation tools like SmartAsset to grow and connect with potential clients, how to justify a shift from a large company-supported firm to an independent solo practice or how to use ChatGPT to 'Frankenstein' blog posts that communicate complicated financial information in an easier-to-understand way for your audience, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Michael Collins.

How To Bring A Team Together For A (First-Time, In-Person) Retreat

March 25, 2024 07:01 am 0 Comments CATEGORY: Practice Management

For the advisor leading a virtual team, the day-to-day can offer a rewarding blend of flexibility, creativity, and productivity; at the same time, though, many of the benefits of remote work can also make it challenging to build a tight-knit team culture. For example, with flexibility comes fewer synchronous interactions, which in turn can result in less innovation, team bonding, and collaboration. While these criteria are not crucial to running a viable business, the reality is that they are still important factors in establishing a flourishing business, and face-to-face time in some form or another can be invaluable for building a strong, aligned team. This isn't to say that founders should throw in the virtual towel and try to convince their team members to move to their "headquarters" (assuming there is, in fact, a brick-and-mortar building for team members to even go to); instead, holding an in-person team retreat once or twice a year can be a powerful way to bring the team together… without having to commit to an in-person office in the long term.

In this article, Kitces Managing Editor Sydney Squires shares how the fully virtual Kitces team constructs its biannual team retreats – and how other leaders of virtual teams can also plan and execute a retreat of their own.

As a starting point, to get the most out of a team retreat, it's important to focus on 1 key theme driving the feeling that team members should leave with at the end of the retreat. This can be curated by assessing present team needs (which means the theme will likely change from retreat to retreat). For example, while a seasoned team who has just finished a busy tax season may need a retreat that leaves them feeling "recharged", a more recently formed team full of new hires may benefit more from feeling "aligned" with each other and with the company's vision. Starting with a theme is essential because it acts as a filter through which all other decisions can be made, from the type of venue that's selected to the different activities planned out.

Whatever theme is selected as the focal point of the retreat, 4 key takeaways can further drive home the main idea: (Re-)Setting The Vision (where company leaders share the past, present, and future vision of the company); Learn Yourself, Learn Your Team (where team members learn about each other and how to work together more cohesively); Connect With Who You Serve (where team members meet with those whom they work with closely, ranging from clients to contractors to Centers Of Influence); and, perhaps most importantly, Be Humans Together (where everyone can enjoy their face-to-face time and bond as a team).

While a great deal of work is involved in the logistical planning of organizing a retreat (e.g., determining dates, selecting a location, finding a venue, purchasing flights, and all of the other 'little' things required to get a virtual team into the same place at the same time), a good checklist – like the downloadable template we provide – can be instrumental in helping leaders ensure that all arrangements are optimally organized. Generally speaking, beginning the retreat planning process at least 4 months before the retreat date usually provides for enough time to work through all of the logistical details and offers enough advance notice to team members – though the time may vary depending on the retreat activities and the level of the retreat organizers' event planning experience.

Ultimately, the key point is that an in-person retreat can be a powerful tool to help a virtual team get many of the benefits of face-to-face collaboration without requiring the team to be physically together all the time. Additionally, with a cohesive theme guiding the agenda and a comprehensive checklist of logistical tasks, a team leader can delegate many of the organizational responsibilities that will contribute to a memorable and productive retreat!