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#FA Success Ep 366: Avoiding The ‘Big Swap’ Of Wealth And Health As Your Advisory Firm Grows, With Stevyn Guinnip

January 2, 2024 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Stevyn Guinnip Podcast Featured Image FAS

Welcome to the 366th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Stevyn Guinnip. Stevyn is founder of Grow Wellthy, a health and wellness consulting firm based in Springfield, Missouri that specializes in working with busy – but not always healthy – financial advisors.

What's unique about Stevyn, though, is how she combines her family roots in financial advice with her decades-long career in wellbeing and health as a coach to financial advisors, primarily to address what she calls The Big Swap – where we start our careers being younger and healthier but with very little income, and then grow to the point that we're financially successful but at the cost of swapping out our health – a trend that Stevyn is trying to reverse given how it impacts not only an advisor's quality of life but, ironically, also their finances but impacting when they have to retire (or not).

In this episode, we talk in-depth about how Stevyn sees the current "state of the union" when it comes to financial advisor health, and how in providing for others, they often forget themselves, leading to long hours and high stress, especially when coupled with the demands of life ranging from scaling businesses to building families, how, although Stevyn often sees the focus of financial well-being take precedence in the preparation for retirement, in reality, she views both financial wealth and physical well-th as necessary for advisors (and our clients) to have success and freedom in their later years, and how Stevyn utilizes the way that financial advisors are already wired – that is, around metrics, goals, and data – to visualize and optimize helping them find the metrics and measurements that cumulatively effect their health.

We also talk about how Stevyn's first introduction to the financial advisor industry actually pushed her away from it, as she watched her father (and many of his colleagues) achieve the financial success that set them up well for retirement, but without maintaining their holistic health that would have allowed them to truly enjoy their 'golden years', how Stevyn's own near-death experience in Australia caused her to recalibrate her own metrics and definitions of health, as well as sparked a pivot into focusing on financial advisors in particular, and how Stevyn has leveraged the language and terms that we as financial advisors use to speak about wellness, such as using "bad debt" to frame up concepts of sugar, sleep, and other high health hazards, and motivate advisors into action.

And be certain to listen to the end, where Stevyn shares how she saw her own metrics of health slip when building and scaling her business, which in turn made her realize that she didn't have to do it all and outsourced and reprioritized parts of her own business, why Stevyn believes that the first step to wellness comes from confronting and overcoming one's own procrastination and belief in future self, and by aiming for more incremental, natural changes focused around rest and movement, rather than the traditional images of diet and exercise, and why Stevyn views wellness not as a top-down process of science to behavior, but as a curiosity-driven journey between best practices, one's own inclinations, and finding behaviors and habits that we can comfortably sustain.

So, whether you're interested in the common health issues that financial advisors face, how Stevyn uses financial terms to frame health hazards and motivate advisors toward better health practices, or why Stevyn believes that wellness is a top-down process, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Stevyn Guinnip.

The Latest In Financial #AdvisorTech (January 2024)

January 1, 2024 07:03 am 0 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the January 2024 issue of the Latest News in Financial #AdvisorTech – 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!

This month's edition kicks off with the news that held-away asset management platform Pontera has raised $60 million in venture capital funding as advisors increasingly seek to directly manage clients' 401(k) and other outside assets – although claims by Washington state regulators that advisors' use of Pontera may violate state regulations on accessing data with client passwords, and/or employer retirement plans' terms of service, raises questions over whether Pontera (and the advisors who use it) can convince regulators that its underlying model doesn't violate client privacy.

From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:

JPMorgan has announced plans to shut down its robo-advisor offering after just four years, highlighting broadly the challenges of robo-advisors to overcome the challenging economics of acquiring and serving small clients, and in particular showing that even a company like JPMorgan with a large customer base can struggle to distribute its offerings when those offerings don't match the needs or wants of its (largely banking-focused) customers
Envestnet is rumored to be exploring a sale of account aggregation provider Yodlee, which highlights the struggles that account aggregation has had in living up to its original promise to provide holistic insights into client data – in large part because it has been such a challenge to maintain the integrity of the data itself, leaving little capacity to figure out how to convert that data into meaningful insights for advisors
Income Lab has announced that it has chosen BridgeFT to provide it with API access to multi-custodian data for its retirement planning software, signaling more broadly the need for API hubs that can allow technology startups to access custodial data without the cumbersome process of building and maintaining connections with individual custodians – a need that BridgeFT has risen to fill with its WealthTech API solution.

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including:

Arch, a technology provider aiming to streamline the significant administrative and paperwork burden of managing multiple alternative investments, has completed a $20 million Series A funding round as advisors' interest in alternatives continues to grow (though it remains to be seen if investor interest in alternatives will stay as high in a higher interest rate environment)
The SEC has been soliciting feedback from RIAs on their use of AI technology as it seeks to finalize its proposed "Predictive Data Analytics" rule, which has been widely criticized as imposing an onerous compliance burden on firms surrounding the technology they use (even if that technology has little to do with AI to begin with)

And be certain to read to the end, where we have provided an update to our popular "Financial AdvisorTech Solutions Map" (and also added the changes to our AdvisorTech Directory) as well!

*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 (December 30-31)

December 29, 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 the S&P 500 index is on pace to return around 24% in 2023, defying expectations that investors had early this year for weak growth and high volatility – which underscores both the unpredictability of markets in the short term and the need to diversify in order to defend against that unpredictability in the long term.

Also in industry news this week:

After the Massachusetts state regulators proposed a regulation that would require businesses to provide accurate up-front pricing information before a customer provides any personal information, life insurance industry groups have requested an exemption from the rule (since insurers need to have at least some of the customer's personal health information in order to provide an accurate life insurance policy quote)
The National Association of Insurance Commissioners has adopted a Model Bulletin stating that insurers are liable for any discrimination or other regulatory violations that might result from using artificial intelligence technology to make underwriting decisions, raising the question of whether the opportunity of AI is worth the risk of financial or criminal liability if the technology proves to have racial or other biases

From there, we have several articles on practice management:

Why advisory firm leaders can better improve their practice by taking time to identify the real problems impacting the firm, rather than focusing on implementing solutions that may not actually solve the real issues at play
Why the topic of bonuses for non-owner employees can lead to heated discussions between owners, and what firm leaders can do to ensure that everyone can be heard before a decision is made
Although advisors often survey their clients to gain valuable feedback on their firms' client experience, it's harder to get insight into the preferences of those whom the advisor wants to be clients (but aren't) – which may be different from what makes their current clients happy

We also have a number of articles on retirement planning:

How staying retired after taking an early retirement can be difficult, although the reasons change over time from primarily financial to primarily non-financial concerns
Although it's easy to look back on previous eras as being better than our own, there has really never been a better time than today to plan for retirement (since most eras in history didn't have a "retirement" to look forward to at all)
While people often work in order to enjoy more leisure time in retirement, the reality for many people is that their leisure time is much more valuable when they're younger, when they have young kids and parents who are still healthy – meaning it's worth considering a mid-career pause, even at the cost of working a little later into life

We wrap up with 3 final articles, all about pursuing growth and achievement in work and life:

In today's increasingly systematized world, companies that can find a more human-centric way to do business can succeed by conjuring up feelings of "love" in their customers and employees (as in, "I loved that!")
Although past achievements can seem almost predetermined in hindsight, in reality, almost any achievement requires patience, a willingness to learn from mistakes, and a lot of hard work – and so when struggling with current challenges, it's worth reflecting on how those traits helped with other achievements in the past
While high ambition and a little bit of 'craziness' are often needed to achieve far-reaching goals, it's also possible to be distracted by chasing too many goals at once – requiring a narrower focus, fewer distractions, and a little bit of practicality in order to fully embrace the 'crazy'

Enjoy the 'light' reading!

Kitces & Carl Ep 128: Noticing What You Spend Money On That’s Actually An Investment

December 28, 2023 07:03 am 0 Comments CATEGORY: Kitces & Carl Podcast

Kitces & Carl Ep Noticing What You Spend Money On That's Actually An Investment

Throughout history, there has been an age-old question of the difference between an investment and an expense. Society often views expenses as a permanent fixture in life, suggesting that there is no path away from their burden. But what if there was an alternative path? What if there was a way to shift our financial mindset about expenses from one of endless sunk costs to one of intentional investment? And what if we could apply this perspective not just to how we spend our money, but also to how we use our talents and spend our time as well?

In our 128th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards explore how to allay the expense-centric mentality that many people apply to their finances, and consider the process of shifting into an investment-centric focus that encourages individuals to grant themselves the permission to free up time for business growth, spending time with family, and other important (and enjoyable!) activities. Identifying these investment opportunities in how we spend our time and resources can even help to enhance our performance and growth, both professionally and personally.

While spending is an ongoing and inevitable part of life, viewing it as a drain on resources rather than an investment for the future is a common trap. The ultimate goal is to realize that our allocated time and money can potentially produce meaningful benefits instead of viewing them simply as spent resources. And while the challenge in changing that mentality will be a unique process for everyone, there are many common strategies available. For example, investing time and money into scheduling multiple weekly sessions at an expensive (but highly effective) physical therapist can help alleviate chronic pain, devoting years of our life to obtain a college education can open up lucrative career opportunities, traveling in business class for international speaking engagements allows for a more comfortable and convenient flight (so that you're more energized and ready to offer a dynamic presentation upon arrival!), or simply committing to a monthly lunch date can maintain close ties with long-term friends.

One approach to help us validate the potential investments we make with our everyday spending is to consider how any potential profit to be gained from the investment stacks up against the pain of granting ourselves permission to commit to the cost of the investment. For example, a new business owner might struggle with the decision of hiring staff to cook, clean, or maintain a household to save themselves the time of doing the work themselves. And while doing so might feel like an indulgent and unnecessary expense, the potential profit to be gained from the additional time afforded by the household support can be used to significantly grow the business. Alternatively, giving oneself permission to work fewer hours by hiring support staff to help with routine tasks at work can be justified by the greater 'profit' of creating more quality time with family. Realizing the importance of the 'profit' to be made from our investments can often help us realize when it's obvious that we can’t afford not to make them!

Ultimately, the challenge isn’t so much about making the investment itself; instead, it's more about being able to identify the benefits that will result from the investment, and recognizing when the payoff will be worth the resources at stake. And by making the right investments into the things that result in outcomes that matters most to us, we can become confident in allocating our resources more intentionally – whether they involve time, energy, money, or a combination of all 3 elements – changing our view of expenses and instead filling our surroundings with meaningful opportunities for the future!

AI-Generated Financial Advice And The Fiduciary Catch-22

December 27, 2023 07:02 am 0 Comments CATEGORY: Regulation & Compliance

Financial advisors have a fiduciary obligation to act in their clients' best interests, and at the same time are prohibited by state and SEC rules from making misleading statements or omissions about their advisory business. These responsibilities also extend to the use of any technology used in the process of giving advice: A recommendation made with the aid of technology still needs to be in the client's best interests, while the technology also needs to carry out any function as it's described in the advisor's marketing materials and client communications.

In order to adhere to these regulatory standards of conduct while using technology, however, advisors need to have at least a baseline knowledge of how the technology works. Because on the one hand, it's necessary to understand how technology processes and analyzes client information to produce its output to have a reasonable basis to rely on that output to make a recommendation in the client's best interest. On the other hand, the advisor needs to understand what process the technology uses to begin with to ensure that their processes are being followed as described in their advertising and communications.

The recent rise of Artificial Intelligence (AI) capabilities embedded within advisor technology throws a wrinkle into how advisors adhere to their fiduciary and compliance obligations when using technology. Because while some AI tools (such as ChatGPT, which produces text responses to an advisor's prompt in a chat box) can be used simply to summarize or restate the advisor's pre-determined recommendations in a client-friendly way, other tools are used to digest the client's data and output their own observations and insights. Given the 'black box' nature of most AI tools, this raises questions about whether advisors are even capable of acting as a fiduciary when giving recommendations generated by an AI tool, since there's no way of vetting the tool's output to ensure it's in the client's best interests.Which also gives rise to the "Catch-22" of using AI as a fiduciary, since even if an AI tool did provide the calculations it used to generate its output, it would likely involve far more data than the advisor could possibly review anyway!

Thankfully, some software tools provide a middle ground between AI used 'just' to communicate the advisor's pre-existing recommendations to clients, and AI used to generate recommendations on its own. An increasing number of tools rely on AI to process client data, but instead of generating and delivering recommendations directly, they produce lists of suggested strategies, which the advisor can then vet and analyze themselves for appropriateness for the client. In essence, such tools can be used as a 'digital analyst' that can review data and scan for planning opportunities faster than the advisor can, leaving the final decision of whether or not to recommend any specific strategy to the advisor themselves.

The key point is that while technology (including AI) can be used to support advisors in many parts of the financial planning process, the obligation of advisors to act in their clients' best interests (and from a regulatory perspective, to 'show their work' in doing so) makes AI tools unlikely to replace the advisor's role in giving financial recommendations. Because ultimately, even as technology becomes ever more sophisticated, the clients who advisors work with remain human beings – which means it takes another human to truly take their best interests to heart!

#FA Success Ep 365: Scaling Expanded Advice Services To 100+ Team Members In A $5B AUM Enterprise, With Rob Nelson

December 26, 2023 07:04 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome everyone! Welcome to the 365th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Rob Nelson. Rob is the CEO and Founder of NorthRock Partners, an RIA based in Minneapolis, Minnesota, that oversees $5 billion in assets under management for 1,500 client households.

What's unique about Rob, though, is how while many advisory firms increasingly talk about being more than 'just' their client's financial advisor and instead their entire 'personal CFO', Rob has been able to scale NorthRock up to $5 billion of AUM to offer such a breadth of services, from bill paying to tax preparation to supporting clients on their bank lending, all while still charging an AUM-based fee that is similar to firms with a less comprehensive client experience by leveraging the economies of scale he's been able to create.

In this episode, we talk in-depth about the growth strategy that Rob's firm has executed over the past 6 years to grow from $1 billion to $5 billion in AUM, including organic growth from current clients – (many of whom are corporate executives and professional athletes with strong positive cash flow), strong new client asset flows from referrals (as current clients refer peers who could benefit from NorthRock's high-touch service), and opportunistic acquisitions of both larger and smaller practices that are willing to do a transaction with Rob because they want to offer their clients the comprehensive service that NorthRock has staffed up to provide.

We also talk about how Rob structured NorthRock to allow its advisors to leverage the expertise of centralized expert teams covering investments, insurance, and other planning areas, while remaining the primary relationship manager for the clients themselves, how Rob has expanded his leadership team to match the needs of his growing firm but finds that in a growing business there are always still more leadership gaps to fill, and how Rob recently decided to sell a majority stake in NorthRock to a larger holding company, instead of taking on money from a private equity firm, because he felt it allowed him to get funding with a longer-term mindset to support NorthRock's continued expansion (while being able to still maintain discretion over its operations as NorthRock grows for decades to come).

And be certain to listen to the end, where Rob shares his firm's approach to hiring, including being crystal clear about the job description of the person it wants to hire and what their typical day will look like, why Rob thinks repetitive practice (getting as many 'reps' in front of prospects and clients as possible) is the best way for associate advisors to develop their skills, and why, despite already building a large and successful multi-billion-dollar firm, Rob still thinks that he and his firm still have significant untapped potential that they have to get bigger to fully unlock.

So, whether you're interested in learning about how to operate a high-touch financial advisory enterprise, how to scale an advisory business through a combination of organic and inorganic growth techniques, or how to build a leadership team and staff to meet the needs of a rapidly expanding client base, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Rob Nelson.