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TD Ameritrade To Schwab Conversion Tips For Financial Advisors

August 28, 2023 07:01 am 0 Comments CATEGORY: Practice Management

The announcement of the merger between Charles Schwab and TD Ameritrade in November 2019 kicked off a marathon of preparation for advisory firms to transition their clients on the TD Ameritrade custodial platform to Schwab. And with the final conversion of clients scheduled to take place over the upcoming Labor Day weekend of 2023, the marathon is approaching its final sprint toward the finish line. While many RIAs have already tackled some of the bigger issues around the conversion such as informing clients of the changes and updating regulatory documents, there are still some operational intricacies in the TD Ameritrade to Schwab transition process for advisors to address that could cause headaches if they're missed.

In this Guest Post, Grier Rubeling, a transition consultant for RIAs and founder of Advisor Transition Services, offers a series of actionable tips to help advisors (and their clients) get through the 'Schwabitrade' transition smoothly.

At a high level, some of the operational challenges of the transition amount to adjusting to Schwab's way of doing things for advisors who are used to TD Ameritrade. For instance, TD Ameritrade rep codes that are used to organize client accounts will be converted to an 8-digit Schwab "master number", which is used for account grouping, billing, account service, and more. Advisors will also need to familiarize themselves with Schwab's treatment of sundry accounts for fee billing and tax withholding elections for distribution, both of which differ in some key ways from TD Ameritrade.

Additionally, although Schwab states that most advisors' tax-lot settings for cost basis purposes will carry over after the conversion, some advisors with specific personalized settings (such as having multiple default lot-selection methods for different security classes) will likely need to research Schwab's Transition Planning Guide for information on whether and how those settings may change post-conversion. And any changes made between now and the conversion date of Labor Day weekend likely won't carry over, meaning they would need to be re-implemented once the transition is complete.

Finally, there is a category of tasks that involves tying up some loose ends that may remain after the conversion. For example, any checks or third-party direct deposits addressed to TD Ameritrade will be accepted for around 90 days after the conversion, but may encounter delays, so it's important to ensure that clients' deposit instructions are updated quickly. Additionally, any open trade orders (e.g., Good-Til-Canceled or Good-Til-Date orders) for non-mutual-fund securities will be canceled and will need to be re-ordered after the conversion. And for clients with IRAs, all contribution and distribution reported by Schwab will reflect only post-conversion transactions – meaning that advisors will need to keep careful records for any clients who contributed or withdrew prior to the conversion.

Ultimately, while this is by no means a fully comprehensive list of potential issues for advisors to consider about the TD-to-Schwab conversion, they may be some of the most common and important to address to ensure a smooth transition. Because with Schwab's customer service resources likely to be stretched thin in the days and weeks following the conversion, the more potential issues that advisors can identify and address before they become a problem, the less of the advisor's own resources need to be tied up in operational headaches (allowing them to keep the focus on their client-facing work)!

Weekend Reading For Financial Planners (August 26-27)

August 25, 2023 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 CFP Board survey indicates that consumers do not expect AI tools to replace human financial advisors, but rather supplement advisors' work. Further, 87% of respondents said they would trust advice from human advisors, more than any other source of advice surveyed, and well above the 37% who said they trust generative AI tools.

Also in industry news this week:

The SEC settled its first charges related to its new marketing rule with a firm that advertised 2,700% annual returns
A survey suggests that older Americans prefer the term "longevity" to "aging", perhaps informing the way advisors discuss related issues with their clients

From there, we have several articles on retirement planning:

How advisors can help clients explore what they really want out of retirement rather than relying on 'scripts' for what retirement looks like
9 traits that determine whether an individual will be happy in retirement, and how advisors can help clients achieve them
Why retirement wealth extends beyond dollars and cents to time, relationships, health, and skills

We also have a number of articles on investment planning:

A recent study found that investors lagged the performance of the funds in which they invested by 1.7% per year over the past decade, suggesting a potential role for advisors in helping them overcome this "behavior gap"
While there are many potential ways to get rich in the markets, they can vary significantly by their degree of difficulty, likelihood of success, and time required to be successful
How to approach designing a portfolio built to last for hundreds or thousands of years

We wrap up with 3 final articles, all about remote and hybrid work:

How opinions of remote and hybrid work differ based on geography
How some recent research has poured cold water on the idea that remote workers are more productive, at least in certain professions
Why a hybrid work approach where employees come into the office on specified days could boost productivity and employee satisfaction

Enjoy the 'light' reading!

Kitces & Carl Ep 119: Navigating Succession Plans When Founders Are Having Second Thoughts On Retirement

August 24, 2023 07:05 am 0 Comments CATEGORY: Kitces & Carl Podcast

For many next-gen financial advisors who start with or move their careers to an established firm, eventually earning an equity stake in that firm can be an exciting prospect and is often a major career goal that many advisors aspire to achieve. However, when these aspirations are delayed or blocked by senior advisory firm partners who choose to delay their retirement plans, it can leave younger advisors frustrated and in a place of uncertainty about their futures with their firm.

In our 119th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how frank conversations between younger advisors and firm owners about succession plans and career-track expectations can mitigate the repercussions of retiring advisors who may reconsider their original plans to retire or scale back from firm activities.

As a starting point, it's important for younger advisors to acknowledge that for many long-time financial advisors, their professional success and lifelong career experiences have become an integral part of their personal identity. Whereas many senior advisors can spend decades developing client relationships and honing their craft, it can be challenging for them to transition to a lifestyle where their main focus is no longer on working with their clients. At the same time, it is also important for firm owners to understand the frustration a rising financial advisor may experience when their own goals and career aspirations are sidetracked by unexpected delays in the retirement plans of senior advisors and partners.

However, having candid discussions about the firm's succession plans and how they mesh with newer advisors' career goals can be the best way for owners, retiring advisors, and successors to understand each other's perspectives. Such discussions can help ensure that the firm's succession plans best support all interested parties, whether that means adhering to the current plan or amending the plan with compromises, which could entail offers of partial equity or decision-making control to succeeding advisors or gradually scaling back the engagement level in firm activities by senior advisors. And if a mutually acceptable plan is not agreed upon, having direct, upfront conversations about the process will better position the succeeding advisor to determine whether to part ways and pursue a new path on their own or with a different firm.

Ultimately, while firm owners and next-gen advisors may have very different opinions on what succession means to them and the timelines that succession plans may follow, allowing all interested parties to clearly communicate their priorities and expectations can help the firm customize a plan that can support everyone's goals, or at least maintain clear communication to ensure that potential successors will be able to decide if the firm's goals align with their own or, if they don't, whether it would make more sense for them to part ways. Because when a workable succession plan is created, it not only helps the firm owner ease into retirement when they are ready to do so, but it also gives the succeeding advisor the opportunity to set realistic expectations around fulfilling their own career goals – potentially furthering the firm's legacy for years to come!

“Legacy IRA” Rollover To A Charitable Gift Annuity: Using This New Tax-Advantaged Opportunity To Help Clients Achieve Charitable And Retirement Goals

August 23, 2023 07:03 am 0 Comments CATEGORY: Taxes

Charitable Gift Annuities (CGAs) have long been a popular way for individuals with charitable intentions to plan their legacies. By contributing a lump sum to a charity in exchange for fixed recurring payments for life (with any leftover funds after the donor's death going to the charity), the individual can ensure that their funds are directed towards a purpose that aligns with their values, while also retaining a steady source of income for the rest of their life. However, the caveat with current CGAs has been that they could only be funded with after-tax dollars before the donor’s death, meaning that if an individual only had tax-deferred funds (e.g., in an IRA or 401(k) plan) to contribute to the Charitable Gift Annuity, they would need to withdraw – and be taxed on – those funds first. Testamentary CGAs, on the other hand, can be established after a donor’s death, funded with IRA or other assets to provide income for another person. But the SECURE 2.0 Act, passed in December 2022, created the ability for individuals over age 70 1/2 to make a one-time Qualified Charitable Distribution (QCD) of up to $50,000 of IRA funds into a CGA, with the amount distributed to the CGA being excludable from the donor's taxable income.

In this guest post, Kathleen Rehl, a semi-retired financial advisor and educator now focusing on her own estate planning considerations, shares her experience with creating her "Legacy IRA" rollover to a Charitable Gift Annuity to support her chosen nonprofits after Congress passed the SECURE 2.0 legislation at the end of 2022.

The potential benefits of the new Legacy IRA rules are threefold. First, they allow donors to enhance their charitable giving legacy and ensure their future charitable intentions are fulfilled. Second, they reduce the donor's tax bill in the year the CGA is created by excluding the amount contributed to the CGA from taxable income. And third, they create a stable lifetime income stream that can be paid to the donor and/or their spouse.

All of which is important during a time when members of the Baby Boomer generation, who have accumulated unprecedented levels of wealth compared to previous generations, are preparing to make decisions on how to balance their intentions for transferring that wealth – whether that be passing it on to the next generation of family members or friends, or providing for causes that are meaningful to them – with their own needs for sustainable retirement income. And while a Legacy IRA may only be one piece of the puzzle (since the $50,000-per-person lifetime limit may only represent a small portion of the assets of many high-net-worth families), it can still serve as a unique and valuable legacy and tax planning tool – and given the minimal expense and hassle of setting up and maintaining the CGA (since the charitable organization typically handles all of the administrative aspects of doing so), there may be no reason for any individual with charitable intentions and lifetime income needs not to use it to the extent that the one-time $50,000 limit allows!

Ultimately, for financial advisors, the Legacy IRA can be one part of a broader toolkit for helping retired clients with values-based, purposeful legacy planning. By understanding the eligibility requirements and rules around the new law and gift annuities in general, and having a 'recipe' that clients can follow for establishing their own Legacy IRAs, advisors can help plant the seeds with their clients around strategic giving (while also differentiating themselves to potential new clients as a go-to resource for estate planning and charitable giving)!

#FA Success Ep 347: When The Firm You Sell To Gets Sold And You Have To Reinvent Yourself, With Cary Carbonaro

August 22, 2023 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 347th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Cary Carbonaro. Cary is the Senior Vice President & Director of Women and Wealth Services for Advisor Capital Management, an independent RIA with offices around the country and headquartered in Ridgewood, New Jersey, that oversees more than $6 billion in assets under management for 1,700 client families.

What's unique about Cary, though, is how she navigated selling her practice to United Capital and after several years of establishing herself in a leadership role, she then had to navigate the sale of United Capital itself to Goldman Sachs, and the complexities and challenges that followed as she found herself in a very different kind of culture that wasn’t aligned to her media-driven approach to advisor marketing.

In this episode, we talk in-depth about how, in 2001, Cary left her Director of Marketing role at Lord Abbett selling mutual funds and in the face of the tech crash realized that mutual fund companies were so cutting their marketing budgets that she may as well just launch her own advisory practice instead, how after years of growing successfully on her own, Cary realized her gift was bringing clients in and that she needed help with scaling her back-office and consequently decided to sell her practice and tuck into United Capital and their support systems, and how Cary dealt with the sudden sale of United Capital to Goldman Sachs that virtually overnight forced her to change the way she’d been marketing herself as an advisor for nearly 20 years because of the new corporate policies of the buyer.

We also talk about how Cary tried to navigate the 2-year non-compete clause in her contract and even offered to buy back her practice and undo the non-compete, how Cary ultimately reached a compromised path with a 6-month non-compete and decided that was good enough to be able to make a transition and not have to totally start over, and how, after the 6-month non-compete period was over, Cary was ultimately able to retain nearly 90% of her and her lead advisor’s clients and decided to move her practice to a new RIA where she could go back to serving her clients as she wished and continue her work in the media that she enjoyed.

And be certain to listen to the end, where Cary shares how she faced a messy divorce while also navigating the 2008 financial crisis and had to move her practice to smaller firm so that she could prevent her husband from seeking retribution and give herself time, how, in the early years of launching her practice, Cary dealt with feelings of inadequacy because she felt she needed to have all the answers to her clients’ questions but over time and by teaching CFP courses herself was able to overcome her confidence issues, and how Cary’s definition of success is evolving as her career grows from ‘just’ increasing the size of the practice to now finding the freedom and time to pursue her passion of speaking, writing, and appearing in the media… with the focus on influencing and changing the financial services industry to create better opportunities for other women to succeed in their careers.

So, whether you’re interested in learning about how, prior to the United Capital sale, Cary’s practice was a diamond tier practice and ranked as one of the best performing practices of the firm, how Cary walked away from 2 $500,000 a year jobs so that she could manage her practice the way she saw fit, or how Cary is working on her second book detailing her challenges with the sale of her firm and her vision for making the industry more female-friendly, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Cary Carbonaro.

How Niches Improve Advisor Marketing Satisfaction And Efficiency

August 21, 2023 07:09 am 0 Comments CATEGORY: Marketing

Many financial advisors start their own firm because of an entrepreneurial itch, a desire to work with a specific type of client, or perhaps because they want to have more control over their work life. But typically, the opportunity to create and implement a marketing strategy is not one of these reasons. In fact, data from the latest Kitces Research study, How Financial Planners Actually Market Their Services, shows that many advisors find marketing to be difficult and not very effective. For instance, out of the 25 marketing tactics reviewed, only 6 of them had a success rate (defined by the acquisition of at least one new client during the past year as a result of the tactic) of at least 70%. In addition, advisors surveyed were largely dissatisfied with the results of their marketing efforts in terms of generating leads, as well as the quality of those prospects. Finally, the study found that in general, advisor marketing tactics are relatively inefficient overall, failing to recoup the costs of the tactic from the first year of revenue generated by new clients.

Nonetheless, one group of advisors reported more marketing success than others: those serving client niches. For instance, niche firms have greater satisfaction with the number of leads received, the ‘fit’ of the prospects with the firm, and the effectiveness of their lead generation strategies when compared to non-niche firms. Further, niche firms reported greater marketing efficiency levels than non-niche firms with respect to most marketing tactics used. In particular, niche firms had significantly higher efficiency scores than non-niche firms when using search engine optimization and drip marketing, two tactics that require relatively little of an advisor’s time to implement. These advantages likely contributed to niche firms’ higher average client growth rate (58%) compared to non-niche firms (26%).

While choosing a niche can seem challenging for firm owners, using a methodical process can help an advisor choose a niche they can serve effectively. First, an advisor can consider the many niche options from which to choose, including professional (e.g., doctors or employees of a certain company), technical (e.g., equity compensation), values-based (e.g., shared religious or political views), and affinity (e.g., frequent travelers) niches. To help narrow down the possibilities, an advisor can consider the types of problems they solve well, any special skill sets they might have (e.g., tax planning or working with blended families), as well as the type of clients they like working with the most. Next, the advisor can decide on the specific services they would want to provide to clients in that niche based on the advisor’s skills and interests, as well as the needs of those in the niche group. Finally, the advisor can create a marketing plan to target that niche, which, as research has shown, is likely to be more successful than marketing to a broader audience.

Ultimately, the key point is that while marketing is a challenge for many advisors, choosing a client niche can make a firm’s marketing efforts more effective and efficient. And while selecting and implementing a niche takes work, research shows that it can pay off not only in better marketing, but also in greater growth for the firm as well!Read More...

Weekend Reading For Financial Planners (August 19-20)

August 18, 2023 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 study has found that consumers are increasingly likely to spread their portfolios across a range of asset managers, and that this trend is particularly pronounced amongst more affluent clients (e.g., millionaires), suggesting that advisors who believe they hold "everything" their clients have may actually have less than they realize. At the same time, though, the report also found that asset managers that are the primary source of retirement advice tend to hold a larger percentage of a client's portfolio, suggesting that offering financial planning services tailored to the needs of a firm's clients really is helping as a source of organic growth (as clients bring more assets under the advisor's management), and more generally positions smaller firms (that can provide more targeted advice) compete against large asset managers that are struggling to scale advice as they are also vying for client assets!

Also in industry news this week:

FINRA has enacted a more thorough expungement process in an effort to ensure that all sides have a chance to be heard when brokers seek to have customer disputes removed from their record
CFP Board is encouraging its certificants to commit to at least 20 hours of pro bono service each year and a variety of programs are available to help advisors meet this goal

From there, we have several articles on spending:

Why individuals might consider their net worth, as well as their income, when it comes to deciding how much to spend each year
The range of options available for couples deciding how to organize their finances
How setting a spending 'cap' can help couples reduce money conflicts and enjoy more guilt-free spending

We also have a number of articles on practice management:

How offering authentic, frequent, and powerful recognition can improve employee engagement and retention
How managers can frame questions to get more honest responses from their employees
Why middle managers can play a crucial role as connectors within an organization

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

Why the negative effects of a lack of sleep on both health and productivity might outweigh the additional time gained by going to bed later and waking up earlier
The importance of rest, including the benefits of taking breaks throughout the day
How to stay in sync with one's circadian rhythms and the benefits of doing so

Enjoy the 'light' reading!

Motivational Interviewing Techniques To Help Clients Talk Themselves Into Implementing Advice

August 16, 2023 07:02 am 0 Comments CATEGORY: Client Trust & Communication

Financial advisors create value for clients not only by giving good advice, but also by ensuring that the advice they give is actually implemented. After all, financial planning is worth a lot more to clients when they act on the advisor's recommendations (and realize the projected outcomes), in contrast to the advisor simply handing clients "The Plan" that is never actually implemented. And yet, getting clients to implement – even when they agree with the logic of the advisor's recommendations – is notoriously tricky, and despite many advisors' best efforts, some clients endlessly procrastinate, much to those advisors' frustration.

In this guest post, Derek Hagen, financial behavior expert and founder of financial therapy and life planning firm Money Health Solutions, explains why change (e.g., taking action on their financial plans) can be so difficult for some clients, how the resistance to change often stems from a client's ambivalence about whether to change at all, and how advisors can help clients work through that ambivalence through the technique of Motivational Interviewing (MI).

Psychologists have described the process of change through a series of 6 steps, starting before the person is even aware there is a change to be made, progressing through the stage of deciding to change, and then actually making the change. But the caveat is that, in the early stages of this process, the person is not yet ready to make the change: They're still ambivalent as they consider the benefits of changing and will often delay taking any action (sometimes indefinitely) until they've resolved this inner conflict.

Successfully resolving this ambivalence often depends on internally fueled motivation; as many advisors know, no amount of education or rational argument can usually convince an ambivalent client with little motivation to take action. Consequently, by focusing conversations with clients around change, advisors can help them tap into their own motivation to work through the ambivalence keeping them from taking action on their financial plan.

One technique for framing conversations around the change process is Motivational Interviewing (MI). Rather than attempting to convince a client to take action through numbers and logic, MI is focused on accepting and respecting the client's reasons for being hesitant to change and encouraging the client to develop their own reasons to move forward. MI encourages clients to express themselves without fear of being interrupted or misinterpreted, subsequently giving them the space to develop their own thoughts that give them the motivation to change.

For example, a key skill of MI is reflective listening, where the listener repeats their own version of what the speaker has said when the speaker has stopped talking – which both ensures that the listener has understood and allows the speaker to clarify and/or continue with the line of thinking. Advisors can use different types of reflections to subtly reframe a client's thoughts in ways that encourage reassessment and exploration of new ideas – which can be what helps them finally break through the barrier of ambivalence and into readiness for change.

Ultimately, clients often come to advisors in the first place because, at least on some level, they are motivated to make a change. The key point, though, is that even though clients may desire change, their ambivalence may still be holding them back when the time comes to take action. Which means that getting clients to implement advice isn't (just) about convincing them about the 'right' course of action – it's about helping them prepare themselves to go beyond wanting to make a change and really feeling ready to make a change!

#FA Success Ep 346: Moving Procrastinating Clients To “Yes” Instead Of Selling As A Fee-Only Advisor, With Jim Ludwick

August 15, 2023 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 346th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Jim Ludwick. Jim is the founder of MainStreet Financial Planning, an hourly, fee-only financial planning firm, and also created Procrastination Junction, a coaching program for fee-only financial advisors looking to improve their sales skills.

What's unique about Jim, though, is how he's leveraged nearly 3 decades of experience in converting procrastinating prospects into recurring fee-only financial planning clients, with an approach that's less about "selling" the value of financial planning and more about simply helping clients with "moving" – from where they are to where they need to be, know they should be, and want to be… but sometimes still need a little help to overcome their own procrastination and move themselves there.

In this episode, we talk about how, as a career-changer after serving in the Air Force and as a hospital administrator, Jim first found success in the financial services industry as an insurance salesman by leveraging the local network he'd built over his professional career, coupled with formal sales training that taught them how to frame conversations in a way that helped clients state the need for insurance themselves (rather than pitching insurance directly), how, when Jim opened his fee-only firm after relocating to a new area where he did not have a natural network, he leveraged the Garrett Network and NAPFA to rebuild a referral pipeline, this time getting business from other advisors, and how, although it meant 'losing' more prospects along the way, Jim modified his sales and funnel process over the years to increase the likelihood that he would only be sitting down with engaged, ready-to-act prospects in the first place – which in turn boosted his conversion rate, efficiency, and profitability.

We also talk about why, despite sales being a bit of a taboo within the advice industry, Jim views embracing sales as an essential part of building a high-quality fee-only financial advice business, how Jim built his financial planning business to prioritize work/life balance and transitioned his company to remote meetings long before it was the norm (and even turned it into a value-add for clients who wanted to visit him in Italy for part of the year!), and how hiring not just an assistant, but someone with a strategy mindset who was determined to grow in and with the company, proved pivotal to the growth of MainStreet Financial and led to a successful, naturally integrated succession plan when Jim's assistant-turned-partner eventually bought him out nearly 8 years later.

And be certain to listen to the end, where Jim shares how surprising it was that, despite his experience in sales and entrepreneurship, it still took 3 years to build a successful advisory business starting from scratch, how shifting the business from hourly to recurring-revenue clients who were expected to come back annually for a check-up proved crucial to Jim's ability to hire employees and begin to scale, and how Jim's drive to serve and help others was not only the genesis of a successful advisory business but led him at the tender age of 75 to launch yet another new business… his education program to help fellow fee-only advisors embrace sales, overcome imposter syndrome, and improve their overall communication skills based on his own years of industry experience and success.

Moving On From Clients Who Aren’t A Fit By Establishing Criteria To Protect Yourself

August 14, 2023 07:02 am 0 Comments CATEGORY: Practice Management

When a financial advisor first opens their own firm, they often start with few (or no) clients and little revenue. And while they might have an ideal target client in mind, it can be tempting to bring on any client who can pay the advisor’s fee so that the advisor can simply ‘keep the lights on’. But as the firm grows, these initial clients might not generate as much revenue as the firm’s newer clients, perhaps because they were grandfathered into a lower annual fee schedule. While an advisor might be loyal to these clients (particularly those who came on board during their early days and have stuck with the advisor since then), without a "kill criteria", continuing to serve them can sometimes create challenges for the firm’s bottom line.

However, deciding to move on from a less profitable client can be hard for advisors because they might not want to let down a client who has stayed with the firm for several years or with whom they have developed a personal relationship. Which means that without establishing objective criteria to determine when to let a client go or setting a date to do so, advisors can end up with ‘1-more-year’ syndrome, where they continue to serve these clients at the cost of their firm’s profitability or the available free time to enjoy for themselves, putting off the conversation of raising fees or of terminating the relationship for 1 more year.

In her book "Quit: The Power Of Knowing When To Walk Away", professional poker player Annie Duke suggests a potential solution to this type of problem: implementing "kill criteria", objective measures that can help someone decide when to quit an activity. For Duke, the best kill criteria have both a "state" (i.e., an objective, measurable condition) and a "date" (i.e., a specific time set to measure the state and take action). For instance, an advisor might set a certain date each year where they identify the clients whose annual fees are less than the average per-client overhead costs for the firm, or perhaps clients who generate well-below-average revenue but take a well-above-average number of hours to serve. And because actually following through on kill criteria can be challenging (e.g., letting a client go), it can help to have a ‘quitting coach’ to hold the individual accountable for their pre-commitment. For an advisor, such an individual could be an actual professional coach, or perhaps a mentor or trusted peer willing to hold the advisor accountable for the kill criteria they set.

When advisors identify clients that match the advisor’s kill criteria, they have several potential options to choose from to move on from the client, including referring the client to another advisor who might be a better fit, ‘graduating’ the client to handle their finances on their own, or, if many clients meet the criteria, engaging in a partial sale of the business. Advisors could also consider instituting (or increasing) minimum fees, which could give clients the option of continuing to work with the advisor for a higher fee.

Ultimately, the key point is that because moving on from smaller clients can be a challenging decision, using kill criteria not only can help advisors objectively identify these clients, but also can make it more likely that the advisor will follow through on letting the clients go when the kill criteria are met. Which can ultimately improve the financial health of a firm and, potentially, the advisor’s own wellbeing as well if they are able to work fewer hours serving more profitable clients!