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The Latest In Financial Advisor #FinTech (May 2017)

May 1, 2017 07:01 am 1 Comment CATEGORY: Technology & Advisor FinTech

Welcome to the May issue of the latest news in Financial Advisor #FinTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors and wealth management!

This month's edition kicks off with the surprising news of two major (and unexpected) leadership changes at the leading financial planning software firms, with Advicent CEO Phil Cunningham and MoneyGuidePro President Kevin Knull both stepping down from their positions this month. In Advicent's case, the news comes as NaviPlan and Profiles continue to lag in market share, and Figlo is not yet making substantial inroads since its 2014 acquisition, while word has emerged that owner Vista Equity Partners is shopping the company for new ownership (after a 6-year hold since EISI's acquisition in 2011). On the other hand, Knull's departure from MoneyGuidePro comes on the heels of major enterprise successes, including a big deal last fall with Cetera (which beat out eMoney Advisor despite former eMoney Advisor CEO Edmond Walters being a Cetera board member!), and the adoption of Knull's brainchild, MyMoneyGuide, as the backbone for Schwab's Intelligent Advisory offering... suggesting that Knull is leaving on a high note (and given his history, will likely resurface in a leadership position somewhere in the industry again soon). In the meantime, though, this means that two of the top three financial planning software companies are experiencing leadership turnover at a critical juncture for the industry, which further opens the door to new players in the current hyper-competitive environment.

From there, the latest highlights also include:

A fascinating new advisor software survey, that looks at not only advisor adoption, but also user ratings, and reveals how often advisors stay with technology they're unhappy with (ostensibly due to the lack of data portability and the challenges of data migration?)
Major new product rollouts from TrueLytics, Orion, MaxForAdvisors, and Snappy Kraken
Oranj acquires TradeWarrior rebalancing software, and AdvisorEngine acquires Kredible
Quovo raises $10M in Series B financing
Investopedia expands its Advisor Insights Q&A platform, even as NerdWallet shuts down their Ask An Advisor solution
Morningstar announces it will launch a Model Marketplace in 2018 to compete with the likes of TD Ameritrade and Riskalyze (and of course, Envestnet itself)

You can view analysis of these announcements and more trends in advisor technology in this month's column, including the emergence of new "robo-for-advisors" platforms Investment POD and ActiveAllocator (which don't appear to be substantively differentiated from today's TAMP and rebalancing software solutions), how doing tax prep is becoming big client lead gen business (and not just for financial advisors getting referrals from CPAs), how Wealthfront is stretching for revenue by rolling out a Securities-Based Lending solution (while telling consumers to stop "getting hung up on the disclosures"), and that XY Planning Network will be running its second annual FinTech competition for financial advisor software (deadline for those who wish to enter: May 31st).

I hope you're continuing to find this new column on financial advisor technology to be helpful! Please share your comments at the end and let me know what you think!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!

Weekend Reading for Financial Planners (Apr 29-30)

April 28, 2017 02:57 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the big news that TD Ameritrade has struck a deal with DFA that will cut transaction costs for DFA mutual funds by as much as 67% (down to $9.99/trade), potentially setting off a new pricing war with the other RIA custodians when it comes to asset managers that refuse to pay sub-TA and other revenue-sharing fees back to the platforms.

From there, we have several articles about marketing, including a look at what you should (and shouldn't) be measuring for success when engaging in social media, how a face-to-face request can be 34 times more effective than just sending an email (though with the ability to send a high volume of emails, the latter can still be more productive in certain situations!), and when it makes sense to try to publish a book as a financial advisor (hint: don't do it for the book sales, do it for the credibility it gives you to attract more clients, and get a ghost writer to help you put your thoughts down on paper if necessary).

We also have a number of practice management articles this week, focused around the theme of attracting and retaining next generation talent, including: how advisory firms are starting to formalize their career tracks as a way to compete for young talent, why having clearly written job descriptions (including criteria for advancement) are crucial to become an "employer of choice", why it matters that you formally write down your business' "core values" (and how to get started), why attracting and retaining next generation talent is essential to build an enduring business that has transferable value, and some tips for next generation advisors looking to buy into an advisory firm (and how to think about the risk of doing so).

We wrap up with three interesting articles, all around the theme of personal and professional change: the first is a look at how a key role of the financial planner is helping clients to change and adapt to an uncertain future, but our own role as financial planners is changing as the nature of money itself continues to change and evolve; the second is a look at a financial advisor who was struggling with a near-failing advisory firm, and ultimately went through a process of deep self-reflection to figure out what it would take to turn it around (including a hard look at whether he really wanted to be a business owner or not, and how much income he really wanted and needed to feel successful); and the last is a fascinating look at how the Great Depression was one of the nation's darkest and most stressful times, but also a period of tremendous productivity growth and invention, which helps to serve as a reminder that while it's not always fun to feel stressed, it's actually the stress that helps to drive us forward to achieve the things that ultimately help to bring financial success... and personal happiness, too. (So if you are wishing your life was less stressful... be careful what you wish for!)

Enjoy the "light" reading!

What Does It Take To Really Specialize In Working With Retirees?

April 27, 2017 08:14 am 6 Comments CATEGORY: Retirement Planning

In the world of financial advice, focusing on retirement planning has long been the most popular strategy. And the reasoning is quite straightforward. Just as bank robber Willie Sutton once explained why he robbed banks - "Because that's where the money is" - working with retirees means working with clients who have already accumulated substantial assets, and working with them on the retirement transition in particular means an opportunity to engage a new client when there is "money in motion". Except there's just one problem: really specializing in working with retirees entails far more than just managing retirement rollovers!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we delve into what it really takes to specialize in working with retirees, with expertise that spans far beyond just creating a diversified retirement portfolio.

In part, the challenge is simply that effectively managing a retirement portfolio, and the distributions that occur from it, is about more than just managing the investments themselves. Because retirement portfolios also have to face sequence of return risk - the possibility that even if the portfolio generates the desired long-term return, if it achieves that return with an unfavorable sequence, ongoing distributions could catastrophically deplete the portfolio before the good returns show up! As a result, the best strategy for retirement income isn't necessarily the one that produces the best return.

But frankly, retirement income issues just scratch the surface of what it really means to specialize in retirement and retirees. There are also issues such as planning for the timing of Social Security benefits, retiree-specific tax planning, making Medicare and other health insurance decisions, health issues more generally, housing wealth and reverse mortgages, housing lifestyle choices and whether to "age in place" or utilize a Continuing Care Retirement Community, handling cognitive decline and the problems that come with it, and even the emotional issues associated with death, grieving, and losing loved ones. These are the issues that retirees face, and need help with - and this is the kind of expertise advisors need to truly differentiate themselves as being retirement experts!

Of course, this all raises the question of how you actually learn to be a true retirement specialist in the first place, and where to learn all of this other stuff? Fortunately, there are some retirement-specific designation programs, such as the Retirement Income Certified Professional (RICP) program from the American College, the Certified Retirement Counsel (CRC) program from InFre, and the Retirement Management Analyst (RMA) program from the Retirement Income Industry Association, as well as specialized training programs, and a growing number of specialized conferences, too. In fact, while there are probably too many "generalist" financial advisor conferences already, we may need even more specialized conferences in the future, to support the increased importance of specializing into a niche!

But the bottom line is that if you want to be a financial advisor who truly specializes in retirement planning and working with retirees, it is going to mean doing a lot more than just focusing on a client's retirement portfolio. It's going to mean developing a much deeper understanding of the strategies and issues that are unique to this specialization!

Buying Happiness And Life Satisfaction With Greater Cash-On-Hand Reserves

April 26, 2017 07:01 am 7 Comments CATEGORY: General Planning

The classic view of cash in the world of investing is that it’s something to avoid, or at least minimize. To the extent cash is truly needed for immediate or near-term liquidity, holding some may be a necessity. But the investment goal is always to hold as little cash as possible, and put the rest to work on your long-term behalf.

Except a recent research study by Ruberton, Gladstone, and Lyubomirsky finds that maintaining a healthy level of cash-on-hand (or at least in a checking or savings account) appears to improve our feelings of financial well-being and life satisfaction. And the relationship holds up even after controlling for income, spending, and other investments, as well as age and employment status. In other words, no matter how much total wealth and income we have, we’re just not as happy unless it’s also accompanied by a healthy pile of cash (or at least, a sizable and readily available bank account).

From the investment perspective, it’s purely irrational for anyone to need to hold a substantial cash balance above and beyond what’s needed to cover actual near-term spending needs. But the research results are more understandable given the research on mental accounting, that we tend to bucket our holdings into groups of current income, current assets, and future income (or at least, assets to fund future income). Which means even if we have ample income, and ample assets for future income, we’re just not content until we also have a healthy allocation to current assets. Which in practice, means cash (or at least cash equivalents).

As a result, rather than always encouraging clients to fully deploy their available cash, perhaps instead it would be better for advisors to start by asking clients “how much cash do you need to hold to feel comfortable and sleep well at night”, and then invest what’s left around that constraint. Because in the end, what’s the point of trying to invest a little more cash for a little more return, if in the long run greater wealth buys little additional happiness anyway, but having more-than-enough cash today may have a more positive impact on financial well-being? Or viewed another way, perhaps holding some comfort cash is not “under-investing”, but simply giving up on extra yield as a way to “buy” a little more financial contentment?

#FASuccess Ep 017: Using Social Media and Blogging to Drive Business Growth As A Reformed Broker with Josh Brown

April 25, 2017 07:01 am 9 Comments CATEGORY: Financial Advisor Success Podcast

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

This week’s guest is Josh Brown, a financial advisor and CEO of Ritholtz Wealth Management, and regular guest on CNBC’s The Halftime Report, but known to most in the financial advisor community through his prolific presence on social media – including more than half a million Twitter followers – and his popular finance blog, The Reformed Broker.

What’s fascinating about Josh, though, isn’t just that he’s active on social media, but that his firm has been able to turn it into real business growth. As having broken away to become an independent RIA with less than $100M of AUM in late 2013, Ritholtz Wealth Management has grown in under four years to a 13-person firm managing nearly $500M in AUM. In fact, Josh and his team get anywhere from 10-30 inbound prospect inquiries each week now, thanks to the constant publication of valuable (and entirely free!) content produced through the blogs of Josh, firm founder Barry Ritholtz, and several other advisors-who-also-write in the firm.

In this episode, Josh tells the story of how he became one of the best known voices in the industry, after starting out doing cold-calling for nearly a decade in a number of small regional broker-dealers before finally deciding to make the switch to become an investment adviser, and how the trajectory of his entire career was changed when he decided it was worth racking up some credit card debt to accept an invitation to a financial conference where he ended up meeting his future business partner. Josh also talks about how his own role in the firm has shifted and evolved as the business has grown, and the steps he takes to make sure he’s still working on the business and not just in the business.

And be certain to listen to the end, where Josh shares some of the books that have been most influential to his career, and the advice that he offers to anyone – whether a newer advisor, or an experienced one – on how to get started if you want to build your own digital presence with blogging and social media.

So whether you’ve been curious to learn how an advisory firm with a prolific blogging and social media presence turns free content online into real business, or want to hear the story of how a cold-calling broker ultimately broke out to success by becoming an investment advisers, or just want some ideas on how to build your own business with more digital marketing, I hope you enjoy this latest episode of the Financial Advisor Success podcast!

Advisor’s Guide To Choosing The Best Portfolio Rebalancing Software

April 24, 2017 07:01 am 11 Comments CATEGORY: Technology & Advisor FinTech

For many advisory firms, portfolio rebalancing technology is one of the single most important pieces of technology that they have. While other software is certainly important – from a CRM for managing client relationships, to eSignature for streamlining account opening and administrative processes, to financial planning software for helping guide your clients long-term financial plan – arguably no other piece of software is impacting your clients' portfolio on a regular basis more than rebalancing software. Yet, amongst a sea of different options and software features, it can be hard to know which solution is best for you and your clients.

In this guest post, Craig Iskowitz, CEO and founder of Ezra Group (a management consulting firm providing advice to the financial services industry on marketing and technology strategy), shares some of his own thoughts on the best portfolio rebalancing software available, including portfolio management features, pricing, integrations, user experience, and more! Reviews include all the major rebalancing software providers, from iRebal and Tamarac, to TradeWarrior, tRx, and RedBlack!

And arguably, in today's environment, the need for rebalancing software is even more urgent to stay competitive, with the rise of "robo-advisors" that can already automate rebalancing, along with tax loss harvesting. The good news, though, is that as the original "robo" solution for portfolio automation, all the major rebalancing software platforms can handle this... and more! But only for advisors who are willing to move away from portfolio rebalancing Excel spreadsheets!

And so, whether you currently have a rebalancing solution and want to ensure it is up to date, know that it has been a while since you've evaluated rebalancing options and want to get started with the process, or haven't been convinced of the value of rebalancing software and are still using spreadsheets or calculating rebalance trades by hand... I hope that you find this guest post from Craig to be helpful!