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#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.

The Best Of Weekend Reading 2023: Top 25 Articles You Might Have Missed

December 25, 2023 07:01 am 0 Comments CATEGORY: Weekend Reading

Each week in Weekend Reading For Financial Planners, we seek to bring you synopses and commentaries on 12 articles covering news for financial advisors including topics covering technical planning, practice management, advisor marketing, career development, and more. And as 2023 draws to a close, we wanted to highlight 25 of the most popular and insightful articles that were featured throughout the year (that you might have missed!).

We start with several articles on retirement planning:

Data showing where American retirees currently stand, from their average net worth to how they spend each hour of the day
How, according to a recent study, delaying Social Security benefits typically leads to greater lifetime wealth than claiming benefits early in order to reduce portfolio withdrawals
Why common advisor concerns about Monte Carlo analysis are more about the software tools they use rather than the technique itself

From there, we have several articles on investment planning:

Why holding on to stocks, rather than moving to cash, could be a smart move, even if a recession is expected to occur
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"

We also have a number of articles on cash flow planning:

Why it can be valuable for clients to consider the 'hidden' costs of buying a vacation home before jumping into a purchase
What being "upper-middle class" actually means in dollar terms
A recent study suggests a causal connection between married couples who use a joint bank account and increased relationship happiness
How setting a spending cap can help couples reduce money conflicts and enjoy more guilt-free spending

We continue with 3 articles on tax planning:

How advisors can help clients take advantage of the 0% long-term capital gains tax bracket
How IRMAA surcharges, while a nuisance, tend to represent a relatively small percentage of a retiree's income
How advisors can help clients reduce the amount of their Social Security benefits (and overall income) subject to taxation

Next, we have a few articles on insurance planning:

How advisors can add value for clients by helping them make better Medicare decisions
Why high-deductible health plans with paired HSAs could be the most cost-effective and tax-efficient health insurance option for many clients
Why an advisor decided to buy an indexed universal life insurance policy for himself

We also have a number of articles on practice management:

10 'harsh' lessons one business owner learned on his entrepreneurial path and how they apply to financial advisors
What actions advisory firm owners can take when they find they have too much work on their plate
Why stressed-out firm owners might consider downsizing their client base rather than selling their firm

From there, we have several articles on financial advisor marketing:

Why ChatGPT could be a valuable tool to support advisor marketing, from creating ad copy to drafting prospect emails
How offering a "second-opinion service" can help advisors generate more referrals from clients and centers of influence
How to optimize the 5 most important pages on an advisory firm website

We wrap up with 3 final articles, all about career development:

How a series of mental exercises can help individuals build resilience and overcome challenges they face
How both "macro" and "micro" focus can contribute to productive, fulfilling work
How cultivating a sense of moxie can help individuals address "impostor syndrome"
Why showing poise, the combination of style and substance, is often at the heart of a successful career

Thanks for letting us be a part of your reading list each week and we'll look forward to highlighting more insightful articles in 2024!

Weekend Reading For Financial Planners (December 23-24)

December 22, 2023 02:10 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 Envestnet has published research highlighting a number of key trends that they believe will shape the growth of the advisory industry in 2024 and beyond, which reflect at a high level advisors' ongoing shift towards providing more and deeper financial planning while leaning on technology to make that level of planning possible.

Also in industry news this week:

The SEC has been sending letters to advisory firms requesting details on their use of AI technology, raising questions about whether they may be considering revising their proposed AI rule that received significant pushback earlier this year for the wide breadth of the types of technology it covers
DPL Financial has announced it has sold over $2 billion worth of fee-only annuities in 2023, doubling their total sales from 2022, which highlights both the significant number of advisors looking to shift their annuity business from a commission-based to a fee-only model, and the growing interest in annuities from existing fee-only advisors seeking to offer more retirement income options to their clients

From there, we have several articles on marketing:

A newer advisor lead generation service, Datalign Advisory, has seen early success with its unique auction-style model where advisors can bid on prospects who are a good match for their services, which can help eliminate some of the conflicts inherent in other lead generation models (though it remains to be seen whether it can scale its own marketing efforts in a way that can make its business model successful)
How a regular weekly marketing schedule can help advisors overcome the challenges of finding time to consistently market their services
Why some of the oldest tactics for finding new clients – including corporate wellness programs, seminar marketing, and custodial referrals – can still help advisors overcome their challenges with achieving organic growth

We also have a number of articles on retirement planning:

With the end of the year comes a bevy of new key tax planning numbers, including several delayed provisions of the SECURE 2.0 Act that are set to kick in for 2024, which are helpful for advisors to know as they discuss tax planning strategies with their clients
While individuals may, for various reasons, regret filing for Social Security benefits early, 2 strategies can help to give them a second chance to delay their benefits (and receive a higher monthly benefit as a result)
Although middle-income individuals can often benefit the most from a tax-efficient retirement withdrawal strategy in percentage terms, higher-income individuals can also see significant savings that make it worth considering the effective tax rate of each marginal dollar in retirement

We wrap up with 3 final articles, all about finding ways to grow in the new year:

Why a "self-review" at the end of the year can be a valuable way to reflect on accomplishments and lessons learned from the past year, and to gain insight on how to keep progressing in the year ahead
Amidst a proliferation of advice on how to improve habits in the new year (which can quickly become overwhelming), it's better to work on changing one thing at a time, with a focus on making the change as enjoyable as the habit it's replacing
New Year's resolutions often fail because they're tied to an arbitrary date, which fades in importance as time passes – which means that more lasting change should be anchored in a deeper sense of self-identity

Enjoy the 'light' reading!

Implementation Questions To Properly Prioritize And Address To-Dos For Consistent Follow-Through

December 20, 2023 07:05 am 0 Comments CATEGORY: Client Trust & Communication

After a financial advisor and their client have agreed on a financial plan, there are usually a lot of good feelings going around. The causes of the client's worries have been identified, there's agreement on the steps that will get the client to where they want to be, and all that's left is to take action to implement the plan. But while it seems like the momentum of the earlier steps of the planning process should carry through into the implementation stage, all too often, the opposite occurs: despite all the steps being in place, the client fails to take the agreed-on actions. While the advisor, not wanting to nag or badger the client and sour the good feelings that abounded earlier in the relationship, finds themselves at a loss for how to follow through. As a result, the plan stagnates, and the next steps – some genuinely timely and others needed to set the client on the right track for the long term – go unaddressed until the next plan update rolls around.

For advisors feeling the frustration of stalled implementation, the first step can be understanding some of the reasons that clients may hesitate to take action even when they may have previously seemed ready to act. Often, there are 3 main causes of clients failing to implement. First, when discussing future-oriented plans like retirement, clients may feel as though those plans should have a high priority for them – and yet, when it's time to make the necessary adjustments today (and often, the lifestyle tradeoffs that are needed to start saving more for the future), the needs of tomorrow suddenly have a lower priority than when everyone was simply talking about them. Secondly, clients may sometimes find themselves simply unable to carry out the tasks recommended by the advisor if those actions aren't discussed in sufficient detail. Lastly, for a client who may be new to working with a financial advisor, it may simply take time for the client to become familiar enough with the planning process and the advisor to take action. After all, conversations are one thing, but taking action can often require a great deal of trust that the advisor understands the client enough to make recommendations in their best interests.

Fortunately, advisors can help clients minimize the potential for inaction by asking some simple implementation questions after the plan has been agreed on that can help focus priorities, clarify the most important next steps, and ultimately build up a rapport that can create the foundation of trust needed before the client takes action. For example, asking the client which task they feel is most important can help reinforce the client's prioritization of the task, while asking the client to share what they know about how to accomplish the agreed-on actions can uncover any potential blocking points stemming from a client's lack of knowledge about how a task should be done.

Ultimately, the key point is that clients don't always fully understand the roadblocks that work against implementing their financial plan. Advisors can achieve more consistent follow-through when they can uncover obstacles to implementation before they happen – and by asking questions to identify these impediments, they can also help the client clarify what they need to do going forward, all while building on the client-advisor relationship that will keep the momentum moving forward each time the plan is updated and renewed (and re-implemented) in the future!

#FA Success Ep 364: Scaling Marketing To Sell A $2.2B Advisory Firm And Advising Advisors On The Lessons Learned From Selling, With Ted Jenkin

December 19, 2023 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome everyone! Welcome to the 364th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Ted Jenkin. Ted is the consultant of JPTD Partners, a consulting firm based in Atlanta, Georgia, that helps financial advisors gather offers, negotiate, and ultimately sell their advisory firms.

What's unique about Ted, though, is how his journey to facilitate financial advisor mergers and acquisitions started from selling his own $2.2-billion AUM advisory firm that he spent more than a decade building… and the perspective he gained as a founder who sold his firm influences the way he now helps other advisors prepare for and understand the acquisition offers placed in front of them, and their own options to exit the firms that they may have spent their careers building.

In this episode, we talk in-depth about how, after Ted went through the challenge of getting multiple offers to sell his firm and struggled to figure out how to compare them, he found that many other advisors were asking him for advice based on his experience and ultimately decided to build a consulting firm to help fellow advisory firms field and compare multiple acquisition offers at once, how Ted has now come to see himself as a "Zillow for an advisory practice's worth" as he got deeper into the weeds of evaluating how buyers really assess the value of an advisory firm and price its 'true' profit margins, and how Ted's unique niche as an advisor who sold helping other advisors to sell has led to the point where after just a few years his firm is now representing 115 active advisory firms actively shopping for a buyer (allowing him to get even deeper into the current trends of what buyers are really offering and how to maximize the value of a deal).

We also talk about how Ted initially built his own advisory firm with what he calls a "manufactured celebrity" approach by immersing himself in media appearances that made him a go-to local advisor in the Atlanta area, how the success of Ted's marketing approach ironically led to severe burnout (because Ted enjoyed marketing to clients far more than the ongoing servicing of clients and management of a large multi-billion-dollar firm) that resulted in him exiting 'early' when he was still in his forties, and how Ted overcame his nerves of "becoming an employee" again as a result of selling the firm and negotiated his own buy-out deal to play into those same strengths relating to his ability to grow (ultimately resulting in a bigger payout for himself).

And be certain to listen to the end, where Ted shares what he would recommend advisors consider in their own exit plan to maximize value ( even if the transition is still years down the road), how Ted has often found that determining the real value of a firm is more complex than 'just' looking at the bottom line of a firm's profitability, and how Ted learned that while he had considerable strengths in some parts of the business, he wishes he had outsourced his weaknesses to others sooner despite his fear of giving up control (and realizes that if he had, he probably would have been able to stay with the business longer and continued to build it even bigger and make it even more valuable).

And so, whether you're interested in learning how Ted helps advisors navigate mergers and acquisitions by diving into how buyers really assess the value of advisory firms, how niching down helped him scale his consulting firm, and his transition from business owner to employee post-sale of this firm, I hope you enjoy this episode of the Financial Advisor Success podcast, with Ted Jenkin.

2023 Highlights – The Top 22 Nerd’s Eye View Blog Posts You Might Have Missed

December 18, 2023 07:02 am 0 Comments CATEGORY: Nerd's Eye View

As 2023 comes to a close, I am once again so thankful to all of you, the ever-growing number of readers who continue to regularly visit this Nerd's Eye View Blog (and share the content with your friends and colleagues, which we greatly appreciate!).

We recognize (and appreciate!) that this blog – its articles and podcasts – is a regular habit for tens of thousands of advisors, but that not everyone has the time or opportunity to read every blog post or listen to every podcast that is released from Nerd's Eye View throughout the year. As many of you noted in response to our Reader Surveys, most of you choose which content to read or listen to based on headlines and topics that are of interest (and skip the rest). Yet in practice, this means that an article once missed is often never seen again, 'overwritten' (or at least bumped out of your Inbox!) by the next day's, week's, and month's worth of content that comes along.

Accordingly, just as I did last year, and in 2021, 2020, 2019, 2018, 2017, 2016, 2015, and 2014, I've compiled for you this Highlights List of our top 22 articles in 2023 that you might have missed, along with a few of our most popular episodes of "Kitces & Carl" and the "Financial Advisor Success" podcasts. So whether you're new to the blog and #FASuccess (and Kitces & Carl) podcasts and haven't searched through the Archives yet, or simply haven't had the time to keep up with everything, I hope that some of these will (still) be useful for you! And as always, I hope you'll take a moment to share podcast episodes and articles of interest with your friends and colleagues as well!

Don't miss our Annual Guides as well – including our list of the "10 Best Financial Advisor Conferences To Attend in 2024", the ever-popular annual "2023 Reading List of Best Books For Financial Advisors", and our increasingly popular Financial Advisor "FinTech" Solutions Map and AdvisorTech Directory!

In the meantime, I hope you're having a safe and happy holiday season. Thanks again for the opportunity to serve you in 2023, and I hope you enjoy all the new features and resources we'll be rolling out in 2024 (and beyond!), too!