Nerd's Eye View blog

Why Blogging Will Replace Marketing Newsletters For Financial Planners

July 12, 2012 11:03 am 10 Comments CATEGORY: Marketing

Using newsletters for drip marketing has long been a cornerstone of marketing for financial planners. However, the newsletter process itself is relatively inefficient - costs of production can be high if it's printed, the process of building a distribution list is slow, the content often cannot be effectively shared, and there is no means for someone to find and access the content if they aren't already on the mailing list.

By contrast, operating a digital blog has no printing cost, has content that can be distributed on multiple digital channels, can easily be shared by readers and prospects with others, and can even be found by search engines without any further effort from the planner.

The challenge, of course, is that a financial advisor blog requires content - yet the reality is that for firms already producing a newsletter, the content is already being created. In which case, the blog is simply a more efficient way to get the content out there and drip market to a growing a list of prospective clients!Read More...

The End Of Qualified Dividends For Small Business Owners

July 11, 2012 11:02 am 1 Comment CATEGORY: Taxes

With the looming "fiscal cliff" at the end of 2012, a wide range of tax increases are scheduled to occur at the start of 2013. One of the most dramatic is the treatment of dividends, which will nearly triple from a current maximum rate of 15% to a top rate of 43.4% (or higher when accounting for high-income phaseouts). In the case of small business owners with closely-held C corporations, this presents a unique planning opportunity, because the client can actually control the timing of dividends, choosing to extract cash and profits from the business by the end of 2012 instead of waiting for 2013 and beyond. And given the magnitude of the scheduled tax increase, it may well make sense to do so. While some clients may at least adopt a wait-and-see approach until the election and potential end-of-year tax legislation, the reality is that it's prudent to at least begin planning now - because getting this "wrong" for a business with $1,000,000 of accumulated profits could cost the client a whopping $284,000 in lost taxes!Read More...

Mind-Mapping Your Way Through The Data Gathering Meeting

July 10, 2012 11:01 am 11 Comments CATEGORY: Client Trust & Communication

For most clients and planners, the data gathering process is simply viewed as a necessary evil to obtain the information required to produce a financial plan. The planner proceeds through a long list of questions, covering everything from financial details to client goals and aspirations, recording it on a data form or notepad to be used later. A new approach is emerging, though - to complete the data gathering process using mind mapping, which organizes information visually, in a manner that both the planner and client can build upon. The end result is a data gathering meeting that is more collaborative and interactive, as clients become part of the process of building a mind map that takes shape before their eyes - and also becomes an actual takeaway from the meeting, as the mind map document itself is provided in print or electronically to the client as well. Which means in the end, mind mapping may be a way to improve the financial planning experience itself.
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When A Prospect Searches For You On The Internet, What Do They Find?

July 9, 2012 11:04 am 1 Comment CATEGORY: Marketing

As we enter the digital age, gathering information on the internet becomes a regular part of our lives, whether it's looking up the answer to a question, purchasing a product, or looking for a professional to work with. At the same time, many planners have been reluctant about trying to establish a "web presence" out of fear that whatever appears on the internet may be immortalized, good or bad. Yet the reality is that as the number of websites explodes to unimaginably large numbers, most people will only ever see what search engines show them. Consequently, we actually have a remarkable amount of power to "control" what people see about us on the internet, by establishing a web presence to try to ensure that the information we want prospective clients to see is in fact the first thing they do see. Furthermore, the reality is that having the basics like a website has shifted from being a "nice to have" aspect of your marketing, to a minimum requirement just to be deemed a legitimate professional in the first place. And of course, if you're curious about where you stand and what your prospects might see, there's an easy way to find out: when you search for yourself on the internet, what do you find?Read More...

Weekend Reading for Financial Planners (July 7-8)

July 6, 2012 07:01 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with three nice articles from this month's Journal of Financial Planning: the first is about planning techniques and issues for non-traditional couples; the second is an interview from Tiburon Strategic Advisors CEO Chip Roame about trends and developments in the industry; and the third is an article by Rick Adkins noting that financial services advertising has taken a distinctly planning-centric tilt in recent years, which may be a boon to the profession going forward. From there, we look at a few good practice management articles, about the importance of conducting staff meetings for your firm (and how to do them well), policies and procedures to handle departing employees (whether a voluntary or involuntary termination), and a good piece by Tom Giachetti about how honoring the fiduciary duty means more than just giving good advice - it's also about important "details" like ensuring clients are getting best execution on their investment transactions. This week's reading also includes a review of the new Morningstar forward-looking fund ratings, the rise of Zephyr Associates as a potential alternative for evaluating investments, an article on the difficulties of ETFs in penetrating the 401(k) marketplace, a look at whether today's low real return environment may be setting up retirees for unique new retirement challenges, and a good article from The Economist about the emerging LIBOR rate fixing scandal. We finish with two very interesting articles - one from practice management consultant Angie Herbers about how for many advisors the real challenge is not building a successful advisory practice, but how to deal with success once it's achieved and not undermine it, and another from the Harvard Business Review blog suggesting that, contrary to cliche and popular opinion, the most successful people may not be those who are most confident, but instead those who pair high ambition with relatively low confidence and who consequently bring a healthy dose of skepticism and self-improvement to everything they do. Enjoy the reading!

Is The Cloud Really A More Secure Place For Your Client Data?

July 5, 2012 11:06 am 5 Comments CATEGORY: Practice Management

As financial planning slowly transitions into the digital age, and increasingly common discussion is whether to transition client information to the cloud, where it will be hosted on servers in a data center, instead of the planner's office. Given the frequency of high profile data breaches announced in the media, is it really safe to move client information out of the office? Yet in most cases, the planner's office, and the client's home, are not nearly as secure as we make it out to be. Data centers have fences, guards, sophisticated security monitoring, and intrusion detection systems built to rebuff those trying to access data inappropriately, while the client's best data defense is often little more than opening the door of the mailbox, and planning firms often lack the size and scale for truly effective security either. In point of fact, most firms don't even have the systems to know if they've been "hacked" in the first place, and wouldn't know until clients began to report identity theft problems! In addition, a persistent media bias that highlight major companies with data breaches but not small businesses that lose client files, may be misdirecting focus and causing us to misjudge the relative safety of the options. Which means ultimately the reality is that, notwithstanding the occasional high profile story, cloud security may actually still be far more effective at protecting client data than we realize!Read More...

3 Estate Planning Strategies That May Die Soon

July 4, 2012 11:10 am 3 Comments CATEGORY: Estate Planning

As Congress and the White House continue to search for revenue to close the gap on the US fiscal deficit, numerous estate planning strategies - especially for high net worth clients - are coming under attack. Recent legislative or budget proposals have threatened the use of both Grantor Retained Annuity Trusts (GRATs) and Intentionally Defective Grantor Trusts (IDGTs), both popular strategies to "freeze" the value of hopefully-rapidly-appreciating assets for transfer to the next generation. In addition, the new rules on portability - currently temporary, but likely to become permanent at some point in the future - threaten the even more popular and common estate planning strategy, the bypass trust. While the exact timing for when these new rules become permanent law, the reality is that change appears to be coming. As a result, some clients may wish to accelerate the implementation of strategies before the laws change... while others may prefer a wait-and-see approach before deciding what estate planning strategies to implement at all!Read More...

Splitting After-Tax 401(k) Distributions For Roth Conversion

July 3, 2012 11:01 am 55 Comments CATEGORY: Retirement Planning

As more and more baby boomers retire, an increasingly popular strategy is to split pre- and after-tax funds in a 401(k) at retirement, with the goal of rolling over the pre-tax funds into an IRA, and converting the after-tax funds into a Roth IRA, taking advantage of the non-taxable nature of the after-tax contributions.

Yet the effectiveness of the strategy is ambiguous at best; recent guidance from IRS Notice 2009-68 would suggest that the approach shouldn't be allowed at all, and although some esoteric and technical workarounds have been suggested, none have truly been tested or subjected to IRS scrutiny. As a result, while many 401(k) plans are willing to issue separate checks to accommodate those who wish to try the strategy, and the odds of getting caught are low, caution is still merited about whether the client will really end out with the desired tax treatment.Read More...

A Unique Way Planners With Niches Grow Business That Others Can't

July 2, 2012 11:02 am 6 Comments CATEGORY: Practice Management

As the steady drumbeat continues to beat about the value of planners creating niche practices, most discussion of niches focuses on having a more clearly defined value proposition for clients and being able to make yourself more relevant for a target client market. Yet a recent article points out another important benefit that emerges when lots of planners all begin to establish niche practices - the opportunity for cross-referrals between planners with different, non-overlapping niches! In a world where most planners are generalists who all do everything for everyone, there is little need to ever cross-refer; but when most planners specialize in niches, cross-referrals can become increasingly common. And if planners will well-defined niches are more effective in converting prospects into clients, then the reality is that a collaborative group of niche planners may generate more clients in total than all of them could achieve by each acting as an individual generalist, as the whole really can act more effectively than the sum of its parts!Read More...

Weekend Reading for Financial Planners (June 30-July 1)

June 29, 2012 07:03 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with an article about the FPA, its declining membership, and prospective organizational changes as the CEO retires in 2014. From there, we look at a number of practice management articles, including an overview of the emerging niche of firms that provide quality lead generation for financial advisors, how to sustain a study group, the importance of e-delivery of documents not only for your firm but for your clients, a new software package to help with investment advisory fee billing, and two marketing articles - both emphasizing the value of being unique and different and having a niche to grow the business effectively. From there, we look at an interesting interview with Jeremy Grantham about investing opportunities, a striking article that suggests the giant pile of cash corporations are sitting on may be a bad sign and not a good sign, an article from the Journal of Financial Planning about a new way to manage tail risk for client portfolios, and coverage of an emerging new product called a "stand-alone living benefit" designed to provide all the lifetime income guarantees contained in today's variable annuities but wrapped around a client's own investment account instead. We wrap up with a slightly more light-hearted list of investing tips and maxims that would probably be a good reminder for almost any planner and his/her clients. Enjoy the reading!