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#FASuccess Ep 070: Taking Leaps Of Faith As An Introverted Career Changer To Build A Successful Advisory Firm with Sue Stevens

May 1, 2018 07:01 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome, everyone! Welcome to the 70th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Sue Stevens. Sue is the founder of Stevens Wealth Management, an advisory firm in the Chicago area that serves 150 clients with nearly $350 million in assets under management.

What's unique about Sue, though, has been her ability to take "leaps of faith" in making several major shifts in her career, both in the decision to launch her own advisory firm, to create her own job opportunities at major companies like Vanguard and Morningstar... and her decision to enter the financial services industry in the first place and eventually get her MBA and become a CPA, a CFA, and a CFP professional, after spending her 20s as a freelance and professional cellist who played in the Chicago Symphony Orchestra!

In this episode, we talk about the leaps of faith that entrepreneurial financial advisors have to take, why even as such an entrepreneurial person Sue still took an entry-level job and worked for years in a lower-paying apprenticeship position when she started her career, why building your own self-confidence is such an ingredient for success as a financial advisor, and why managing your own personal finances is also a crucial ingredient for success as a financial advisor and an entrepreneur who sometimes has to take leaps of faith.

We also talk about Sue's own advisory firm, including how she cultivated clients over time as an introvert through writing on Morningstar.com, why she started out with a flat-fee retainer model but eventually switched to the AUM model, the annual strategic planning process she uses to keep the business on track, how she leverages the Strategic Coach framework of having free days, focus days, and buffer days, and why all of the employees in her firm are women (even though she didn't set out to hire an all-female staff).

And be certain to listen to the end, where Sue talks about the process she went through to craft her own dream job description as the owner of the advisory firm... and why that ultimately led her to decide to sell her firm to a much larger one, not so that she could retire, but so that she could regain the freedom to focus her energy where she wants to, both inside and outside the business.

So whether you are interested in learning more about taking a leap of faith as a career changer, why an advisor who set out to run a flat-fee retainer model switched to AUM, or how you can craft your own dream job description as an advisory firm owner, I hope you enjoy this episode of the Financial Advisor Success podcast!

Managing Personal Productivity When Telecommuting From A Home Office

April 30, 2018 07:01 am 2 Comments CATEGORY: Personal/Career Development

With the rise of internet connectivity, it is increasingly feasible to work from anywhere, and simply rely on technology to accomplish key tasks and facilitate important communication. Which for many, is appealing simply to escape the distractions of the busy office environment. Not to mention the opportunity to reduce what for many is a 15-mile driving commute down to a 15-foot walk down the hall!

The caveat, however, is that the traditional office environment provides a lot of structure that is actually very important to maintain personal productivity. As a result, shifting to a home office environment may increase available time – by eliminating the commute and the work colleague distractions – but may not necessarily improve productivity, given the introduction of all the distractions of home and family!

Consequently, to maintain personal productivity in a home office environment, it’s necessary to establish some “office” structure of your own. Including having an office space that is physically separate – at a minimum, with four walls and a door that you can close – to establish (both to family and in your own head) when you’re really “at work” and should not be interrupted with the distractions of home. Similarly, even though you’re at home and can work “anytime”, it’s more effective in practice to have set Office Hours when you intend to be in your office and working… both to set expectations (for yourself and family), and so that you can draw the line of when to stop working (or else, for workaholics in particular, a home office can become all-consuming!).

In addition, it’s important to recognize that while working from home can eliminate the distractions of work colleagues, most people will ultimately crave at least some human interaction with others. Which means those who choose to work from a home office need a plan to deal with the loss of human interaction. From using technology for video conferencing to conduct team (and client) meetings, to using chat tools to maintain inter-office conversation and social interaction, engaging in social media (as a true social engagement channel), and even joining a local association or networking group to have opportunities outside the house, it’s vital to have a plan to maintain your social connections, as one of the most common reasons that people stop working from home is the feeling of social isolation.

And for those who are happy working from home, and intend to do so for a long time to come – be certain to (re-)invest into making your home office into a real space of your own for work, from buying quality office furniture and a comfortable work chair, a good keyboard and mouse, well-sized screens, and even creating multiple workspaces in your home office (to the extent that space allows)… as even though the office may be in your home, you should still treat it like a real office, especially since you may spend a lot of cumulative hours of time there in the years to come!

Weekend Reading for Financial Planners (Apr 28-29)

April 27, 2018 12:12 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 while it appears the Department of Labor is not going to defend itself against the recent 5th Circuit Court of Appeals loss that would vacate its fiduciary rule, a coalition of three state attorney generals (from California, New York, and Oregon) are petitioning the court to be allowed to defend the fiduciary rule in the DoL's stead, and mega advocacy organization AARP has also filed a similar petition to take up the case, requesting an en banc review of all 17 appeals judges (beyond just the 3 who made the original ruling). Also in the news this week is turmoil in Australia over its fiduciary rule that took effect several years ago, as it turns out that just banning commissions and having a best interests obligation may not be enough to protect consumers, without actually breaking up vertically integrated product manufacturers and distributions that, even without commissions being paid, are still finding ways to incentivize their advisors to give overly conflicted advice (and providing a potential roadmap for the next stage of the fiduciary debate in the 2020s!?).

From there, we have several practice management articles this week, from a look at why the top producers are the least happy in broker-dealers (when normally businesses would try their hardest to make their top producers the most satisfied!), to a discussion of the key issues to consider in finding a new broker-dealer that might make you happier in the long run, why it's a bad idea to focus on trying to be the "best" at what you do (and instead focus on the standards, process, or habits that will get you to being the best), and why even great financial advisors often hit a wall in their businesses (because eventually, it's not actually about being a great/better financial advisor, but learning to be a great/better business owner and CEO of an advisory business!).

We also have several tax-related articles, including: a discussion of the confusion that has emerged since the Tax Cuts and Jobs Act eliminated the entertainment deduction for businesses but kept the meals deduction (leading to questions of when a meal is "entertainment" and when it's just a meal); an analysis trying to quantify the economic value of using retirement accounts (finding that it's mostly about the ongoing tax deferral of interest, dividends, and capital gains, and not about the tax deduction you get up front for contributing!); and the last looks at how estate planning is changing since the adoption of the Revised Uniform Fiduciary Access to Digital Assets Act (or RUFUDAA for short) to facilitate digital estate planning.

We wrap up with three interesting articles, all around the theme of behavioral finance and decision-making: the first looks at how natural selection appears to favor getting larger (in both nature, and in business), yet ultimately larger species (and businesses) tend to get so large they accelerate their own demise and extinction, which means that while the key when you're small is to get bigger (for safety and economies of scale), the key when you're big is to be paranoid about avoiding the potential extinction event you may not otherwise be able to adapt to quickly enough; the second explores our human tendency to explain "lucky" events with narratives, to the point that we seem to discount the value of efficient algorithms in part because they're so efficient there's no compelling narrative to explain them; and the last looks at fascinating research that finds the decisions we make actually change our own preferences, causing us to repeat similar decisions in the future (even if we don't remember the original one), which helps to explain why small bad choices can often compound into big ones, but similarly suggests that making small positive choices can compound into highly favorable long-term outcomes!

Enjoy the "light" reading!

What “Works” In Digital Marketing And Social Media Advertising For Financial Advisors

April 26, 2018 03:01 pm 2 Comments CATEGORY: Client Trust & Communication

As social media usage continues to grow amongst financial advisors and their prospective clients, advisors are growing increasingly interested in whether spending money on social media advertising can provide a good return on investment to amplify their digital marketing results. Because, as I've learned myself through many years of testing and experimenting with social media, while it can be a powerful tool, it can also be easy to waste money if not done properly.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we explore how financial advisors can use digital marketing and social media to grow their business, and particularly why it's important to have a clear understanding of what you are trying to accomplish in the first place (e.g., awareness, engagement, or acquisition) in order to get a good ROI on social media and other digital advertising!

When it comes to potentially spending on social media advertising, the first question to consider is what, exactly, you’re trying to accomplish. Because the reality is that digital marketing, like any kind of marketing, is actually a multi-step three-phase process: Awareness, Engagement, and Acquisition. The Awareness phase is simply about making people aware that your business exists in the first place. The people you reach are not necessarily ready to do business with you, but you want to make them aware that you exist. The Engagement phase is where you try to actually help a prospective client begin to know, like, and trust you... because as the famous saying in the marketing world goes, people need to engage with your brand 7 to 9 times before they’ll be ready to do business with you! The Acquisition phase is where you actually try and acquire a client, where you transition from marketing into the sales process, because the prospect is ready to do business, is interested in doing business with you... and now you just have to convince them to actually take that action.

These phases (Awareness, Engagement, and Acquisition) matter in a social media context, because they influence what you are trying to do through social media in the first place. For instance, if you broadcast useful content on Twitter or via Facebook, its very effective for building awareness, so it may make sense to spend some dollars to try to further build your audience. Particularly on Facebook – with their ad tools specifically built to help you target people who are not already following your page but would likely be interested in learning more about you with.

However, building awareness alone isn’t enough to actually get new clients, and no one will ask you to manage their life savings based on even the wittiest of 280-character tweets. You actually have to engage prospects in order to get them to know, like, and trust you enough to want to do business with you. On social media, engagement means doing something that prompts people to take a further action, from running a TweetChat on Twitter or asking a provocative question to stir conversation on Facebook... but the key is that you have to get them to do something. Which you might then pay to promote (e.g., a particularly popular tweet, a Facebook article or survey that you pay to boost), though these still aren’t necessarily big ad spends, because you may only be spending to promote to the audience you've already built.

The third part of the funnel is acquisition, where a different set of strategies are relevant. This is the domain where very targeted ads, that really invite people to actually hire you and do business with you, can work. But this still doesn't mean just plastering ads out for the whole world to see. Your targeted messages should go to the people who are already engaged with you... such as paying to target a particular offer or invitation to do business with you sent to the already-engaged audience that has 'Liked' your Facebook page. But it's not about asking people to 'Like' your Facebook page at this stage; you're paying to an offer in front of them to take a next step towards actually becoming a client of yours!

Ultimately, though, the key point is to recognize that any digital marketing advertising you do has to align with what you're trying to accomplish. There are lots of strategies which may or may not be effective – from keywords and organic search, to SEO and retargeting (all discussed in greater depth in today's Office Hours below) – but the key is that you need to do more than just throw ads out into social media. Digital advertising can work great, but it's almost never about sending out a magic ad or Tweet. You need to build awareness, find ways to engage your audience, and then prompt them to take action that allows you to acquire them as a client. If you don't have a well thought out process, digital advertising will likely not provide the return on investment that you want!

The Problem With Benchmarking To Financial Planning Goals: Investor Results vs Advisor Results

April 25, 2018 07:01 am 0 Comments CATEGORY: Retirement Planning

Hypothetical Mutual Fund Portfolios Relative To Straight-Line Benchmark (6-Years)

Benchmarking the results of an investment manager is a basic form of accountability that helps to determine whether the manager is really adding value with their investment process. For which the evolution in recent decades of ever-more-finely-sliced benchmarks – from the Morningstar Style Box to factor regression analysis – applies an ever-increasing focus on determining exactly which managers are really adding value, and which are simply benefitting from the underlying results of a well-performing asset class (or factor) they happened to already own.

Of course, benchmarking has a dark side as well. For underperforming managers, it can literally cause them to be fired – arguably for a justified reason of underperformance, but an outcome that incentivizes at least some managers (including some financial advisors who manage portfolios) to become closet indexers… while others are always in search of alternative “benchmarks” that are less prone to (potentially) unfavorable outcomes in the first place.

In this context, a recent “innovation” suggested by some advisors and managers is to benchmark results relative to the investor’s (financial planning) goals in the first place, rather than the manager’s comparable benchmark. After all, the whole purpose of the portfolio is (usually) not merely to grow for the sake of growing, but to grow for the purpose of achieving a goal. Which means, arguably, the real focus should be on the investor’s progress towards their goals, not their (potentially short term) performance relative to some investment benchmark.

Yet in practice, benchmarking investment managers and financial advisors to goals may simply give them “credit” for favorable results that were really nothing more than the market delivering whatever the market was going to return – which is beyond the control of the manager anyway. And in a world where most financial projections are done with a straight-line return assumption, benchmarking to goals can actually quickly become the equivalent of a (relatively high) absolute return benchmark that is even more likely to lead to disappointing results that makes the manager look even worse (at least in the short term when the next inevitable bear market occurs).

More generally, though, the key is to recognize that even though investors should care about their investment results relative to a goal, the process of evaluating an advisor or manager and the value they do (or don’t) add to the process still needs a proper investment benchmark. In other words, there’s a difference between benchmarking the investor’s results to their goals (driven by the markets) and benchmarking the advisor’s or manager’s results (driven by their own investment decisions). And while benchmarking relative to goals may be appropriate to measure the former, it is still not an appropriate way to evaluate the latter!

#FASuccess Ep 069: Interrupting The Pattern With The Philosophy That Each Client Is The Only Client with Barry Glassman

April 24, 2018 07:01 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome, everyone! Welcome to the 69th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Barry Glassman. Barry is the founder and president of Glassman Wealth, a wealth management firm in the Washington DC area that serves 250 affluent families and has grown to nearly $1.2 billion in AUM in barely 10 years since Barry broke away from his former hybrid broker-dealer firm.

What's unique about Barry, though, is the amount of time and energy he spends focusing on building his advisory business as a business, including why, even though he's been nominated to most of the industry's "Top Advisor" lists, he's most proud of the purposeful culture that's allowed Glassman Wealth to win a local Washingtonian "Best Places to Work" award.

In this episode, we talk about Barry's approach to differentiating his firm by doing what he calls "interrupting the pattern" from what clients and prospects are typically used to, which includes his website home page that leads with the message "It's not about pie charts" and even lists some of the competing firms he refers prospects out to, how he records a quick personal video for every prospect before he meets with them, why he doesn't give out gifts with the firm's logo, and how he differentiates himself in his relationship with attorneys, accountants, and other centers of influence by engaging them more proactively than the pattern they're used to with most other advisors.

We also talk about Barry's unique philosophy in deciding how to service his clients and connect with prospects in the first place, where he starts with the mental exercise of pretending they're the only client or prospect the firm will meet with all year, figures out what that client would want and expect, and then working backwards to figure out what the firm can systematically execute on and deliver, using technology to help personalize the experience, for each and every client of the firm's 250 affluent clients.

And be certain to listen to the end, where Barry talks about where he goes to get inspiration as an entrepreneurial business owner, why he doesn’t go to more than one financial advisor conference every year, and why he thinks it's so important for advisors to look outside the industry for real perspective on entrepreneurship.

So whether you are interested in learning more about growing a firm after breaking away from a broker-dealer, why it is important to "interrupt the pattern" of what your clients and prospects are used to, or how you can differentiate yourself by engaging with centers of influence more proactively than they're used to, I hope you enjoy this episode of the Financial Advisor Success podcast!