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#FASuccess Ep 019: The Evolution And Emergence Of A True Financial Planning Profession With Bob Veres

May 9, 2017 07:01 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the nineteenth episode of the Financial Advisor Success podcast!

This week’s guest is Bob Veres, the publisher of the Inside Information newsletter on practice management for financial advisors, and a long-time industry commentator on the world of financial planning. In fact, Bob has been covering financial planning as a journalist for more than three decades now, going all the way back to when he first became editor of “The Financial Planner” (now Financial Planning magazine) in 1982!

In this podcast, Bob shares his perspective on how financial planning has evolved over the decades, from “Needs-Oriented Selling” in the 1980s – when financial advisors largely sold life insurance, mutual funds, and real estate limited partnership tax shelters – to the 1990s when the availability of personal computers gave advisors superior access to investment information and stoked the growth of the mutual fund model, to the rise of the AUM model in the 2000s, and where Bob thinks it will go from here: a world where financial planners simply get paid a fee for financial planning services.

In addition, we also look at how marketing for financial planning has shifted (from cold calling scripts, to seminars, to client appreciation events, and now digital marketing), the evolution of the membership associations that support financial planners, and why – as he details in his new book, The New Profession, the coming decade may finally be the one that leads to the emergence of a bona fide financial planning profession, on par with medicine and law.

And be certain to listen to how Bob helped me get my own start in publishing The Kitces Report, and why this Nerd’s Eye View blog wouldn’t be in existence today without his early help and support!

So if you’ve ever been curious about why the IAFP merged with the ICFP to form the FPA, how what financial planners do really has shifted over the years, and want some perspective on where it may all be going from here… I hope you enjoy this latest episode of the Financial Advisor Success podcast!

3 Ways Financial Advisors Can Get CPAs To Actually Refer Clients

May 8, 2017 07:01 am 13 Comments CATEGORY: Practice Management

Social Image 3 Step Process CPA Referrals

Virtually every practice management study for financial advisors indicates that most advisors generate most of their growth through referrals, and that CPAs are a good "Center Of Influence" (COI) for generating those referrals. Except in practice, most financial advisors struggle to actually generate any referrals from CPAs, and referrals given to CPAs – in the hopes of reciprocal CPA referrals in return – often feels like a long walk down a frustrating one-way street.

In this guest post, Dave Zoller - a financial advisor who previously worked in a CPA firm – shares his perspective on what it actually takes for financial advisors to generate referrals from CPAs, how most advisors fail to generate referrals due to a lack of differentiation (from all the other advisors who read the same studies and are asking for the same referrals), and how to establish a proactive relationship with CPAs – that can actually generate referrals – by first working with them proactive to help solve the common problems that arise when they're preparing tax returns for (your joint) clients.

In fact, Zoller suggests that the best way to cultivate a referral relationship with a CPA is to start by deepening the relationship with the CPAs of your existing clients, where you already have a natural introduction – your common client whom you both serve. By showing how effectively you work with the CPA of your existing (joint) clients, the more encouraged the CPA will be to refer new clients to you!

So whether you've been wondering how to break into the world of generating referrals from CPAs, or have been frustrating by months or years of referring out clients to CPAs and waiting fruitlessly for reciprocal referrals that never seem to come as desired, I hope you find this guest post from Dave Zoller helpful to understanding what you need to do to break through from here!

Weekend Reading for Financial Planners (May 6-7)

May 5, 2017 02:56 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with a look from CFP-and-doctor Carolyn McClanahan about what financial advisors need to consider when it comes to the potential future of health insurance for clients under the American Health Care Act (AHCA), which could substantially impact clients with pre-existing health conditions, and "early" retirees trying to bridge the health insurance gap between the end of employment and the beginning of Medicare.

From there, we have several technology-related articles, from early looks at the new Orion Eclipse rebalancing software and the new RobustWealth rebalancing and client onboarding "robo" tools, to some of the recent FinTech startups in the Envestnet | Yodlee incubator platform that are building new solutions for financial advisors (leveraging Yodlee data), and a first glimpse at a new advisor business intelligence (and advisory firm valuation) tool called Truelytics.

We also have a number of practice management articles this week, including: the rising trend of advisory firm mergers (as an alternative to just selling and exiting the firm); the common crossroads that advisory firms hit at they grow (and how to overcome them); what advisors should do to overcome "succession planning paralysis"; and tips on how to find an ideal buyer for your advisory firm if you're looking to sell (and want to be certain you get the right fit).

We wrap up with three interesting articles, all around the theme of behavior change and improving savings behaviors for clients: the first is a series of recent research studies finding that most consumers actually prefer accounts that impose otherwise "unnecessary" restrictions and penalties on withdrawals (a form of "commitment device" that actually helps us to want to save, knowing the restrictions will help us follow through successfully!); the second is a fascinating look at how to help clients think about and change their spending behaviors by grouping spending into Owe, Grow, Live, and Give categories (where the trade-offs help us weigh decisions between freedom, comfort, purpose, and abundance); and the last is an overview of the research on behavior change that we as advisors can apply in working with our clients, to help them actually follow through on the recommendations that we give them!

And be certain to check out the brief video at the end... a recent new commercial from Schwab Intelligent Advisory, highlighting the financial planning services that Schwab is now offering directly to consumers, as the firm increasingly tries to compete with outside broker-dealers that may be impacted by the DoL fiduciary rule under the tagline "Intelligent Tech, Personal Advice"... but puts itself in a position to compete with the RIAs on its Institutional platform as well!

Enjoy the "light" reading!

Specializing in (Collaborative) Divorce as a CDFA Financial Advisor

May 4, 2017 02:01 pm 3 Comments CATEGORY: Practice Management

As financial advisors move inexorably towards niches and specialization to grow their businesses and differentiate, one of the biggest challenges is simply figuring out which niche to pursue, how to actually get the expertise to pursue it, and what the business model is to serve it well. As the reality is that not all niches fit our "traditional" business models of managing assets for a fee, or implementing financial services products. A case-in-point example is the emerging divorce planning niche, and the unique role that financial advisors can play in the collaborative divorce process.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we talk live from the annual conference of the Institute for Divorce Financial Analysts (IDFA), with Justin Reckers, who has built a successful advisory business focused on the divorce niche.

For those who aren't familiar, the IDFA grants the Certified Divorce Financial Analyst (CDFA) designation, which provides the baseline education necessary to understand the unique financial planning issues involved in divorce planning. Which is helpful not only to better understand the issues a client might face when getting a divorce, but gives the advisor the expertise to become the financial expert in the new world of "collaborative divorce" - a new type of divorce process that is intended to leverage neutral third-party experts, including a financial advisor, to expedite the divorce process without the involvement of a judge or the court system.

In fact, Reckers notes that a major revenue stream of his business is charging financial planning hourly fees - at $325/hour - to serve as a financial advisor "neutral" in collaborative divorce cases, with typical hourly fees totaling up to 10,000 to $12,000 per case, and some ultra-high-net-worth divorce cases where fees can add up to $100,000 or more. A substantial hourly fee specialization opportunity, in a world where most financial advisors struggle just to bill $2,500 of their time to construct a financial plan!

Other business models in the divorce niche include doing expert witness work in divorce cases that do go to court, with the opportunity to ultimately work with the clients in those cases after the divorce has finalized as well. (Just be certain not to solicit clients during the case, which can be a conflict of interest that undermines your credibility as an expert witness!)

In fact, Reckers has had so much success in the divorce niche, that he's launched a turnkey financial planning platform - Wellspring Divorce Advisors - that teaches those who have obtained the CDFA designation how to actually build a successful advisory business in the niche. And with upwards of 2,000,000 people getting divorced every year, there's ample room for more growth amongst financial advisors in this particular niche!

But the bottom line is simply to recognize how financial advisor generalists often struggle to get paid for their time, while those who specialize in a niche - such as divorce planning - have the opportunity to get paid for their expertise, at far higher hourly rates, with the opportunity for much deeper client engagements that "just" a standalone financial plan. And unlike many niches - where the only path to expertise is personal experience and a journey of self-education - the opportunity of the divorce niche is perhaps especially appealing, given both designations like the CDFA program from IDFA to learn the requisite expertise, and financial planning platforms like Wellspring Divorce Advisors that teach how to use that expertise to execute the niche business model!

Excel Spreadsheet Productivity Tips For Financial Advisors

May 3, 2017 07:01 am 12 Comments CATEGORY: Technology & Advisor FinTech

Despite the availability of financial planning software and CRM tools, Excel spreadsheets are still incredibly popular amongst financial advisors to do everything from a "specialized" analysis of a particular client situation (e.g., evaluating internal rates of return when choosing between a pension or lump sum), to keeping track of certain task workflows or even important business metrics.

In this guest post, Derek Tharp – our Research Associate at Kitces.com, and a Ph.D. candidate in the financial planning program at Kansas State University – provides a few Excel productivity tips for financial advisors, including how to quickly do time-value-of money calculations using built-in formulas, discounted cash flow analyses for evaluating Social Security and pension strategies, as well as some practical keyboard shortcuts for navigating Excel more efficiently.

And so, whether you are relatively new to Excel and want to learn some things for the first time, use it regularly and might want to polish up on some shortcuts to gets things done more efficiently, or need a resource to pass along to associate planners and other individuals in your firm who may have less experience with Excel… I hope that you find this guest post from Derek to be helpful!

#FASuccess Ep 018: Taking Control Of Your Advisory Business So The Business Doesn’t Control You With Angie Herbers

May 2, 2017 07:01 am 3 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the eighteenth episode of the Financial Advisor Success podcast!

This week’s guest is Angie Herbers, one of the leading practice management consultants for financial advisors, who has published numerous research studies on best practices, and authors a widely read monthly column on practice management for Investment Advisor magazine. Her consulting services are in such demand, that she has a stringent screening process to decide who to work with, and turns away almost 90% of the advisors who contact her, in search of a select group of just 15 advisors she will work with at any one time, who she believes she can best help.

What’s fascinating about Angie, though, isn’t simply that she runs an incredibly successful “lifestyle” business as a practice management consultant, but that she approaches the issue in much the same way that we as advisors approach financial issues with our own clients. In the case of our clients, it's not just about the technical planning strategies, but the client's relationship with money, and how that impacts the financial decisions they make. In the case of Angie's coaching and consulting with advisors, it's not just about the technical practice management strategies, but the advisor's relationship with the business itself, and how that impacts their business decisions.

Because in this podcast, we really talk about how the connection between an advisor and his or her advisory firm really is like a relationship. A relationship with a rather selfish entity - the business - that, for the sake of growing itself and maximizing its value, will demand more and more of your time, attention, dollars, and resources. To the point that if you don't manage and try to control the relationship, then the business controls you.

And be certain to listen to the end, where we talk about the growth barriers that financial advisors often hit as their advisory firms grow, why $350,000, $750,000, and $1.2 million dollars are key revenue thresholds that often cause new breaking points in the business, and what it takes to change the business - and sometimes, yourself - to climb over that wall and get to the other side.

So whether you’ve been feeling like your advisory business is controlling you – and wish it was the other way around – or are on the growth path, and want to prepare for the next inevitable barrier that will come, I hope you enjoy this latest episode of the Financial Advisor Success podcast!