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#FASuccess Ep 050: The Value Of Hiring A Financial Advisor Coach To Maintain Your Business Focus with Tracy Beckes

December 12, 2017 07:01 am 4 Comments CATEGORY: Financial Advisor Success Podcast

Welcome, everyone! Welcome to the 50th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Tracy Beckes. Tracy runs an eponymous financial advisor coaching firm, and in fact was one of the very first coaches to specialize in working with financial advisors nearly 20 years ago.

What's fascinating about Tracy, though, is not merely her history as a coach for financial advisors, but the way that she's been able to systematize her coaching strategies into concrete tools and templates that she uses with her coaching clients to help them navigate the common challenges of trying to run what she calls an "Effortless, Outrageous" practice.

In this episode, we talk in depth about some of Tracy's coaching tools, from the value of creating Engagement Standards with clients that set the terms of both what the advisor commits to doing for the client and what the client is expected to do to be a productive part of the advisor-client relationship, to why it's so important to create a "cadence of accountability" within an advisory firm with a regular series of daily, weekly, and quarterly scheduled meetings, to the benefits of creating a one-page strategic business plan that sets forth the business' Core Values, its Purpose, its Big Stretch Goal, and a series of 3-year, 12-month, and 90-day objectives, all built to help the firm create better focus in what it does... and how establishing a clear target market or niche can actually bring tremendous efficiency to an advisory firm and an advisor's time in the business.

We also talk about what financial advisor coaching itself actually is, how it differs from training or consulting, why successful financial advisors so often seek out coaches – even when they're already fairly successful in their businesses – and why the real secret to advisory firm growth is all about systematizing, developing people, and honoring the power of the 80/20 rule... which a financial advisor coach can help you to focus on.

And be certain to listen to the end, where we talk about how the real secret to having more productive team meetings is all about your ability to actually structure meetings to make key decisions or solve problems... and how advisors can better craft a meeting agenda process that helps to target the most important issues at every meeting.

So whether you have been considering hiring a financial advisor coach to maintain business focus, contemplating how you can better set and manage expectations for your relationships with clients, or interested in how you can have more productive team meetings, I hope you enjoy this episode of the Financial Advisor Success podcast!

3 Real #FinTech Disruptions In The Financial Advisory Industry

December 11, 2017 07:01 am 9 Comments CATEGORY: Technology & Advisor FinTech

While the accelerating pace of technological change has many industries buzzing about the risk of disruption – including the world of financial advice – in practice, many forecasted disruptions never come to pass. Sometimes, it’s because the new “innovation” isn’t really all that much better than the status quo – at least, not better-enough to convince people to make a change. In other cases, it’s simply because it’s a new solution that consumers aren’t yet accustomed to paying for.

In fact, often some of the most disruptive business models are the ones that succeed through the use of cross-subsidies – giving away “for free” something that consumers were previously paying for, because there’s an opportunity to make money in other ways instead. Or viewed another way – not every part of every business model must be compensated, as long as there’s at least one component that is valuable to someone who’s willing to pay enough to make it economically viable.

In the context of financial advisors in particular, the rise of technology and the opportunities of cross-subsidy models introduce the potential for numerous disruptions in the coming years. From an RIA custodian that gives away the actual custody services, trading, and execution for free (and gets paid for its technology platform instead), to model management software that makes it feasible to buy index ETFs (or factor-weighted smart beta, or portfolios with SRI tilts) without the need for a mutual fund or ETF itself, and even the possibility that in the future some financial advisors might stop charging for investment management altogether and instead charge fee-for-service financial planning and “give away” the investment management services for free!

Ultimately, the challenge of disruptive cross-subsidy models is that they still require finding someone who is willing to pay for a key component of value, potentially at a cost that is far higher (or at least far different) than what he/she was accustomed to previously. Nonetheless, from Google Maps disrupting Garmin, to Chance the Rapper and other musicians increasingly giving away their music for free (and getting paid for live performances and merchandising instead), the reality is that significant disruption can occur by finding the one most valuable component of a solution… and giving everything else away for “free” to support that core value.

Is it time for the industry supporting financial advisors – and the financial advisor business model itself – to experience such a disruption?

Weekend Reading for Financial Planners (December 9-10)

December 8, 2017 02:57 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the "leaked" announcement that Merrill Lynch isn't "currently" making plans to leave the Broker Protocol, while avoiding making any official statement that would foreclose on their ability to leave next year, even as rumblings begin that Wells Fargo might be thinking about whether to leave the Protocol instead, and use its FiNet platform as a way to retain its more independent-minded brokers without allowing them to be recruited away.

From there, we have several articles about advisor technology, including the results of the latest annual Advisor Technology survey from Financial Planning magazine (which unfortunately is no longer headed by advisor tech guru Joel Bruckenstein and doesn't provide nearly as much useful information as it once did), a review of the MaxMyInterest platform that is using "robo" tools to automate maximizing cash yields for RIA clients (and self-directed investors), an overview of the tech strategies and roadmaps of the leading RIA custodians, a discussion of the ongoing rise of model portfolios (and the technology to execute them), and a good reminder of how challenging it is for financial advisors to switch financial planning software platforms.

We also have a few more technical tax-planning articles this week, from a great in-depth overview of year-end tax planning strategies, a reminder of why estate tax planning is still relevant for high net worth clients (even if the estate tax exemptions are increased or potentially repealed), and a list of "tax alpha" strategies that advisors can engage in to improve a client's after-tax portfolio returns.

We wrap up with three interesting articles, all around the theme of the changing future of financial planning: the first looks at how the rise of digital personal finance tools is making it easier and easier for researchers to test new forms of "digital nudges" to help people improve their financial behaviors; the second explores the ongoing rise of financial planning academic, as the number of degree-based financial planning programs now exceeds adult certificate programs and more and more financial planning practitioners are becoming part-time professors; and the last provides a good reminder that, even as the RIA community worries about whether the SEC's uniform fiduciary standard could lead to FINRA becoming a regulator of RIAs, that the SEC hasn't done a particularly good job of regulating RIAs either... including the fact that if the Investment Advisers Act of 1940 was enforced as written, the majority of "advisors" at broker-dealers would already be fiduciary RIAs, and the entire DoL fiduciary rule would have been a moot point in the first place!

Enjoy the "light" reading!

Advisor #FinTech As A Distribution Channel For Insurance And Investment Products

December 7, 2017 12:32 pm 2 Comments CATEGORY: Technology & Advisor FinTech

Periscope Office Hours Cover Image December 5 2017 FinTech As A Distribution Channel For Insurance And Investment Products

The competition for getting a financial advisor's attention has never been fiercer... which in recent years has led to an explosion of increasingly aggressive wholesaler efforts to try to get in front of advisors, especially in the RIA channel. The volume of inquiries has risen so much, most advisors don't even have the time to politely say "no" to all the requests, and instead are increasingly adopting a "don't call us, we'll call you if we want information" approach, or simply going directly to the websites of product manufacturers for the information they need. Which means asset managers, insurance companies, and other financial services product manufacturers need to find new and innovative ways to reach advisors in the first place, to get their investment, insurance, and annuity products to market.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we look at an emerging trend of investment and insurance product distributioin: the idea of technology itself as a product distribution channel to reach advisors... and the opportunities, innovations, and conflicts of interest that arise from such arrangements!

The most apparent starting point for this shift of technology as a distribution channel was the rise of the robo-advisors. Robo-advisors first started gaining real momentum in 2014, and it was around this time that asset managers – particularly fund managers – began asking, "Do we need to launch our own robo advisors, or risk being excluded from the trend?" But the reality was that there was nothing unique about robo-advisors that required the use of ETFs. Effectively robo-advisor technology was simply a way to gather assets and execute a managed account, which means the technology was basically just another distribution channel for the asset manager - companies that could get their products into the managed account wrapper were the winners. And so, after Schwab picked up over $2B in assets in just their first 3 months of Schwab Intelligent Portfolios - comprised nearly 70% of Schwab's own proprietary products - BlackRock decided to acquire FutureAdvisor to distribute their iShares ETFs, Invesco bought Jemstep to distribute PowerShares ETFs, and WisdomTree invested heavily into AdvisorEngine to distribute WisdomTree ETFs, as asset managers began seeking robo-platforms that they could put their funds on and offer the technology to advisors – turning the robo-advisor into a distribution channel (and owning your own robo-advisor as a vertically integrated distribution strategy).

Over the past year, this evolution of technology as a distribution channel has gone one step further, with the rise of the so-called “Model Marketplace”, where advisors can select third-party investment models, and then have trades automatically executed in the advisor's own portfolio management or rebalancing software tools. The distinction from the early robo-advisors like Wealthfront, Betterment, FutureAdvisor, and Schwab Intelligent Portfolios was that advisors remain responsible for (and in control of) placing trades, although that trading is made very easy by the technology. However, the caveat for such portfolios was that in order to use them for free, advisors typically must use pre-fabricated models in the marketplace... which are often made by the asset managers, and include their own proprietary funds. In point of fact, the technology is so becoming a distribution channel, that now asset managers are starting to subsidize the cost of advisor technology, just to have a chance to get their funds into the hands of the advisors that use the technology! And notably, this trend isn’t unique to “just” rebalancing software and model marketplaces, as financial planning software such as MoneyGuidePro and Advizr have begun to partner with product companies to easily recommend appropriate insurance or investment products where the client can open the account or apply electronically on the spot from within the planning software itself!

And despite the rapid push towards new technology channels, I suspect we’re still in the early phases of this transition to the idea that Advisor FinTech itself can be a distribution channel. From the technology company’s perspective, the good news of this emerging channel is that it provides a new source of revenue for companies, especially since advisors have already shown far more willingness to have technology costs borne by the expense ratios of insurance and investment products, rather than by paying for the software directly from their own Profit and Loss statement.

However, with this new distribution channel will come new innovation, opportunities, and conflicts of interest – as technology companies struggle with everything from overcoming the same growth problems that robo-advisors faced in the first place (as it's very hard to grow user adoption, and existing incumbents with existing brands can easily leapfrog new entrants), to technology companies navigating the mid-point between the conflicts of getting paid for product distribution and trying to satisfy independent fiduciary advisors (as the recent debacle of TD Ameritrade’s ETF Market Center illustrated).

The bottom line, though, is simply to recognize that a major shift is currently underway. As advisors increasingly adopt the technology, the technology itself is becoming a distribution channel for products that asset managers, insurance companies, and annuity companies, who seem very willing to pay for access in a competitive marketplace. Which means more new tools and innovation for advisors. But also tools with a whole new range of conflicts of interest that we’ve never had to deal with before!

Strategies To Minimize Or Delay Required Minimum Distribution (RMD) Obligations

December 6, 2017 07:01 am 42 Comments CATEGORY: Taxes

The benefit of contributing to pre-tax retirement accounts like IRAs and 401(k) plans is the opportunity to receive an upfront tax deduction, and enjoy the growth that remains tax-deferred as long as the investments remain in the retirement account. For those accumulating towards retirement, this provides additional tax-deferred compounding growth that can help bridge the gap towards retirement itself. With the expectation that once someone reaches retirement, they will begin to take distributions – and Uncle Sam will finally get his share of the tax-deferred account.

To ensure this final outcome, the Internal Revenue Code requires that retirement account owners begin liquidating their accounts upon reaching age 70 ½. Of course, for those who actually need to use their retirement account to fund their retirement lifestyle anyway, distributions will likely be occurring already. However, for those who don’t need the funds, the Required Minimum Distribution (RMD) obligation ensures that at least some money is distributed – and taxed – every year.

For those who don’t actually need to use their retirement accounts – yet, or at all – the mandatory withdrawals of the RMD obligation presents a substantial tax challenge, as the forced distributions not only trigger taxes on the RMD amount itself, but also risks driving the retiree up into a higher tax bracket when stacked on top of all of his/her other retirement income as well.

Fortunately, though, the reality is that there are numerous strategies that can be leveraged to manage and minimize required minimum distributions – both for those who have already reached the RMD phase, and also those still accumulating towards it, who want to plan ahead to minimize the bite of RMDs in the future.

Ultimately, it’s impossible to completely and indefinitely avoid the requirement to distribute retirement accounts – if only because, even to the extent the account isn’t liquidated during life, the beneficiaries will be subject to additional RMD obligations after the death of the original account owner. Nonetheless, the potential exists to at least partially manage and minimize RMDs, and mitigate some of their tax bite!

#FASuccess Ep 049: Getting Paid For (Hourly) Financial Planning By Packaging Financial Advice with Anna Sergunina

December 5, 2017 07:01 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome, everyone! Welcome to the 49th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Anna Sergunina. Anna is the owner of MainStreet Financial Planning, an hourly-based financial planning firm founded under the Garrett Planning Network that has grown to more than $600,000 of revenue, all from simply getting paid to provide hourly financial planning advice (with no income from insurance products or managing investment portfolios at all).

What's fascinating about Anna's business, though, is the way that she's figured out how to communicate the value of hourly financial planning – by creating very specific financial advice packages for various types of prospective client profiles – and then using her website to both explain the value of financial planning packages to prospects, and to screen out those who aren't really likely to take the process seriously.

In this episode, we talk in depth about Anna's 5-meeting process for financial planning, why she charges $100 as an upfront deposit just to have an Initial Inquiry approach meeting with prospects, the way she focuses first on the client's spending to help them understand what they can save and what kinds of goals might be possible, and then proceeds to an interactive financial planning session using MoneyGuidePro, all of which leads up to a final meeting where she ultimately presents financial planning recommendations and then helps clients to implement them.

We also talk about how Anna sets the level for her financial planning fees, the sources of new business that has her firm on track to add more than 100 new financial planning clients this year, the way she re-engages existing clients for ongoing financial planning updates to generate a level of recurring revenue, and why and how she built extensive workflows in her Wealthbox CRM to manage the financial planning logistics with her ever-growing 6-person team.

And be certain to listen to the end, where Anna shares her own path into the industry, how she actually bought out MainStreet Financial Planning from its original founder, the way she's decided to structure her week with some days dedicated to working in the business and others solely for working on the business, and why she thinks it's so crucial that even fiduciary financial planners learn how to sell. Because you can't get paid for your knowledge and expertise until you can sell someone on its value and why they should pay you.

So whether you have been trying to figure out how to better communicate your financial planning services, have been contemplating providing hourly services and wanting to know how to do it successfully, or are interested in more effectively using CRM to manage workflows, I hope you enjoy this episode of the Financial Advisor Success podcast!