Nerd's Eye View blog

Weekend Reading For Financial Planners (April 1-2)

March 31, 2023 02:01 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, according to a recent survey, RIAs are considering metrics for growth other than assets under management, from the number of clients to diversifying the services they offer. And given that growth can create additional time burdens for advisors, many advisors are looking to automation as a way to gain efficiencies as they scale.

Also in industry news this week:

How RIAs appear to be increasingly pushing back against proposed rules and enforcement actions from the SEC
How one broker-dealer reminded its advisors that they do not necessarily have full independence when it comes to selling their firm

From there, we have several articles on spending:

Why now could be a good time to buy a house despite elevated mortgage rates
Why some of the most valuable 'luxury goods' money can buy do not have brand names
How advisors can help clients transition from savings mode during their working years to spending down their portfolio in retirement

We also have a number of articles on management:

7 books that can help new managers lead effective teams
How to create an employee onboarding process that can improve retention
How advisory firm leaders can take advantage of the trend of 'boomerang employees'

We wrap up with 3 final articles, all about personal growth:

Why taking a massive leap in personal growth can be rewarding, despite the risks
Why self-compassion is more effective than self-criticism when it comes to overcoming mistakes
A step-by-step process for finding and developing your passion without having to spend 10,000 hours working on it

Enjoy the 'light' reading!

Discovery Meeting Framework: 6 Questions To Help Prospects Who Are Resistant To Change

March 29, 2023 07:02 am 0 Comments CATEGORY: Financial Psychology

Financial advisors often approach discovery meetings with prospects as an opportunity to ‘sell’ the value of the financial planning services they provide. This is often done by having the advisor learn about the prospect’s needs and show the prospect how the advisor can help them achieve their financial goals, ideally motivating the prospect to sign up for the advisor’s services. But for some prospects, the value they will get from an advisor is not just in the dollars and cents of planning, but also in making changes to their behavior. Which means that advisors can help prospects get on the path to change (often starting with actually signing up for the advisor’s services!) by using financial psychology and behavior change principles with effective discovery meeting questions.

The Transtheoretical Model (TTM) of change offers a framework that can help financial advisors motivate clients who might be resistant to or struggling with change. TTM involves a 6-step process, where each step is designed to help individuals progress through change. Notably, the TTM process intersects with the financial planning process and the common challenges that arise in financial planning meetings can often be aligned with and explained by the different stages of TTM. For instance, new prospects might still be in the pre-contemplation stage of TTM, when they aren’t clearly aware of the problems they should solve, or they may be in the contemplation stage of TTM, when they are aware of a problem but aren’t yet ready to take action on it. In these cases, deciding whether there is value in engaging with an advisor at all and whether they will be able to follow through on what the advisor will ask them to do are often the key challenges for prospects that the advisor can address in the discovery meeting.

With this in mind, crafting the right questions to help prospects absolve themselves of the doubts they may have about an advisor’s value and their own ability to take on the responsibility of following their financial plan can serve both the prospect and the advisor well – because building up a prospect’s confidence in the advisor’s value and in their own capability to follow their plan (with their advisor’s support, of course!) will increase their own chance of success as well as the likelihood that they will sign on as a client.

Accordingly, there are 3 questions advisors can ask to address doubt by understanding what makes their prospects feel dissatisfied. These include asking about the prospect’s (dis)satisfaction with their net worth, with their financial decision making and self-confidence, as well as with their financial relationships. Together, these questions can help the advisor discover specific challenges that the prospect faces and start a conversation about how working with the advisor could help address these issues.

There are also 3 questions that explore the forces leading prospects to delay and procrastinate. These include exploring how prospects value action, talking about next steps, and asking the prospect to get started working with the advisor. These questions and the resulting discussion can help spur prospects to take action by officially becoming a client.

Ultimately, the key point is that while asking these 6 questions all together might not necessarily result in more prospect discovery meetings or better conversion rates, advisors might find that new clients are more likely to comply with their plans and take action on their tasks when this approach is used from the start of the relationship. Because at the end of the day, the more advisors are able to support the process of behavior change in their client relationships, the easier and more impactful their client work will become!

#FA Success Ep 326: Finding Marketing Success By Building Spreadsheets To Track That Advisor Data, With Erica Pauly

March 28, 2023 07:05 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 326th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Erica Pauly. Erica is the Founder and Owner of Track That Advisor, a consulting and coaching firm based in Gilbert, Arizona, that helps advisory firms track, and then improve upon, their marketing results.

What's unique about Erica, though, is how she built a series of spreadsheet tools to measure the details of each step of her advisory firm’s marketing funnel, from lead generation to each meeting in the sales process to client onboarding and getting initial revenue for the firm… and then turned it into a series of tools that any advisory firm can use to evaluate how their marketing is performing, where it needs to improve, and how they compare to the average advisory firm as a benchmark.

In this episode, we talk in-depth about how, through a series of Google Sheets, Erica helps advisory firms begin to track each of the steps in their marketing funnel, analyze how successful those steps are in turning a lead into client, and develop strategies to help improve those metrics, why Erica focuses on 5 key marketing metrics of stick rate, close rate, average client size, pending days, and cost per client, to quickly gain an overall picture of an advisory firm or individual advisor’s marketing process (and compare those numbers to her benchmarking data to identify where improvements should be made first), and why Erica ultimately built an additional tool on top of her spreadsheets that she calls the ‘Tracker Genie’ that helps advisory firms quickly spot gaps in their data and fix them (because in the end, it’s not just about tracking marketing data, but helping advisory firms to actually do what it takes to input and maintain their data in the first place!).

We also talk about how, while working in a marketing role at an advisory practice, Erica began to track data on their individual advisors’ marketing efforts because she realized that she didn’t have the data to support her suggestions for the firm’s strategic planning and decided to start measuring how the firm was performing at each step along the way so that she could prove that her recommendations were based on actual evidence, how, after moving to another state because of a job opportunity for her husband, Erica was contacted by the firm that she tracked data for asking her to continue her work for them, helping her realize there is a demand for her specific type of work and gave her inspiration to found Track That Advisor, and why Erica still deliberately chooses to use Google Sheets to track data (instead of a standalone software application), as it allows her to customize layouts for individual advisory firms and make it easier for support staff to navigate (instead of asking them to learn a whole new software platform).

And be certain to listen to the end, where Erica shares how, as a self-proclaimed introvert and people pleaser, she has learned to become more comfortable with having difficult conversations with advisors about their strategies and how they are performing, why Erica hasn’t taken the role of CEO in her own firm and has instead given that role to one of her trusted employees (because she recognizes that her strengths lie in analyzing data and coaching others, but she still needed someone in the role that has the drive and ability to help the firm continue to grow), and how Erica learned the hard way the importance of not only finding employees that are the right fit, but having detailed processes and workflows so that as the firm grows, she can ensure that she is maintaining firm culture and business execution and ensure that the firm can continue to grow into her long-term vision and beyond.

So, whether you’re interested in learning about how Erica and her team track advisor data and keep advisory firms accountable, how using Google Sheets allows Erica more flexibility in creating customizable data sheets for the advisory firms she helps, or how Erica has evolved Track That Advisor and her plans for the future of the business, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Erica Pauly.

How Marketing With The CFP Marks Reduces Client Acquisition Costs And Accelerates Revenue Growth

March 27, 2023 07:05 am 0 Comments CATEGORY: Marketing

When consumers shop around before buying a good or service, many factors can play a role in their final decision, from previous experiences to the recommendations of friends and even to the companies’ branding. And when it comes to how a consumer perceives a brand, there are three critical components that come into play: brand awareness (simply knowing that the brand exists), recognition (recognizing a brand for its unique components and features), and brand equity (the value associated with a specific brand). These factors, especially brand recognition and equity, are often used to help fill in knowledge gaps when contemplating the purchase of a product or service, especially when the consumer isn’t clear about the actual value of what they’re considering.

In the context of financial advisors, surveys have shown that CFP certification serves as an important branding signal for consumers seeking the services of a qualified advisor. For instance, a 2015 study found that consumers had higher brand awareness of the CFP marks, even more than the well-known ChFC, CFA, CLU, and PFS designations. In addition to having better brand awareness, research has also suggested that the CFP marks tend to have better brand recognition, and that consumers were just as likely to associate the CFP marks and CPA designation with professionals who offered financial advice, with an increasing inclination toward using a CFP professional for financial planning.

Further, the benefits of how the CFP marks are perceived as a valuable brand appear to have a meaningful impact not only on how advisors spend their time, but also on their revenue growth as well. According to the 2022 Kitces Research study, “How Financial Planners Actually Market Their Services”, advisors without the CFP marks typically spend more of their time on marketing activities relative to CFP practitioners (allowing them to spend more time on higher-value tasks). Similarly, CFP practitioners were found to have a lower practice-wide Client Acquisition Cost (CAC) and greater revenue growth in 2021!

Accordingly, promoting the brand of the CFP marks to the public can be a good way for advisors to boost their own personal brands in the minds of consumers, and at the same time serve to promote recognition of CFP certification more broadly as a sign of high-quality financial advice (and supporting CFP Board’s own publicity efforts). Some strategies to do so can include simply talking about their own experiences as CFP professionals more intentionally (e.g., in meetings with both prospects and centers of influence, such as accountants and lawyers, who might provide referrals), and promoting the marks in their social media posts and other marketing strategies (e.g., SEO tactics, drip marketing campaigns, and online advertisements).

Ultimately, the key point is that CFP certification not only provides advisors with the technical knowledge they need to provide high-quality service to their clients, but also is a valuable signal that can influence a consumer’s decision on who to look to for financial advice. And by promoting the marks to the public, advisors can further build brand recognition and equity for the marks, elevating all CFP professionals in the process!

Weekend Reading For Financial Planners (March 25-26)

March 24, 2023 02:25 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 CFP Board of Standards launched its 1st ad campaign, dubbed "It’s Gotta Be A CFP", following its transition to a 501(c)(6) organization. In a change from previous campaigns, the first ad directly recommends that consumers seek out a CFP professional for financial advice, and future ads could more directly explain the benefits of earning the CFP marks.

Also in industry news this week:

Top Democratic Senators are urging the Treasury Department to crack down on a range of estate planning strategies for high-net-worth individuals, including GRATs and IDGTs
Amid fallout from recent bank failures, both Republicans and Democrats are considering whether current FDIC insurance limits should be increased

From there, we have several articles on retirement planning:

Why contributions to Roth accounts can sometimes have greater uncertainty than traditional contributions in terms of their after-tax accumulation despite not being affected by future tax rate changes
How the 'funded ratio' metric can help advisors create effective retirement spending recommendations
A comparison of a range of variable spending strategies in retirement, from a 'floor-and-ceiling' approach to a 'ratcheting rule'

We also have a number of articles on advisor marketing:

How to optimize the 5 most important pages on an advisory firm website
4 tools advisors can use to improve their website’s search visibility
How advisors can create and deploy effective keywords to help consumers find their websites when searching online

We wrap up with 3 final articles, all about changes to professional credentials:

The CFA Institute has unveiled a slate of changes to its certification process, from incorporating practical skills modules to new job-focused pathways in private wealth and private markets
Why some states are considering reducing the higher education requirements to become a CPA
CFP Board has announced the members of its new standards commission, which will review and evaluate its competency requirements for Education, Examination, Experience, and CE to earn and maintain the CFP marks

Enjoy the 'light' reading!
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Kitces & Carl Episode 108: Crafting A (Marketing) Manifesto To Show What You Really Stand For

March 23, 2023 07:02 am 0 Comments CATEGORY: Kitces & Carl Podcast

Offering financial advice can mean many things for different financial advisors, and there are many reasons that advisors choose to join the planning profession. But for many advisors, the process of articulating their philosophies about financial advice and what it is the advisor stands for can be much more challenging than learning the technical aspects of financial planning. Clarifying these ideas and developing a mission statement, or ‘manifesto’, can be a rewarding exercise that resonates with prospects and clients and can also be useful to create impactful marketing collateral – not only to express how and why advisors believe financial advice should be provided on a broader level but also to support their business growth by attracting the right types of prospects and clients.

In our 108th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how advisors can communicate and market their own philosophies on financial planning and how the process of crafting a ‘manifesto’ can help advisors clarify and realize their most fulfilling vision of what it means to be a financial advisor.

Advisors who are looking for ways to articulate what it is they stand for can start by identifying who their ideal clients are and what they enjoy most about helping them. Having frank conversations with clients and prospects and asking them about how they have been served well (or not so well) by other financial professionals in the past, their most important successes, and the common mistakes they most often see others make can help advisors clarify their clients’ specific priorities, unique needs, and commonly experienced pain points. Furthermore, by connecting how their financial advice addresses their clients’ most common concerns, advisors can better understand the key elements that can serve as the foundation for a meaningful and relevant manifesto.

While there is no set rule on how long or short a manifesto used for marketing purposes needs to be, it is generally useful to provide it in a format that can be easily read and distributed. A small pamphlet or booklet can serve as a tangible deliverable for prospects, just as a website page can be easily accessible and can communicate the advisor’s beliefs just as clearly. Regardless of the format, a well-written, earnest manifesto can help advisors market their services to prospects while communicating their sincere beliefs about financial planning.

Ultimately, the key point is that by understanding and articulating what they stand for, advisors can more easily connect to prospective clients who will benefit the most from their services. Furthermore, doing so through a manifesto used as a marketing tool can also support the organic growth of the advisor’s business, and connecting with more of the right prospects upfront means the advisor will have more opportunities to establish and sustain more rewarding client relationships in the long run!

Instant-Issue Term Life Insurance: What Are The Costs Of Low-Hassle Coverage, And When Are They Worth It?

March 22, 2023 07:01 am 0 Comments CATEGORY: Insurance

Traditionally, when a person applies for individual life insurance, they would need to go through an extensive underwriting process that lasts several weeks (or months) and may include personal and family health questionnaires, interviews, and/or physical examinations. Though this process was time-consuming and intrusive from the perspective of the person applying for insurance, it was considered a 'necessary evil' in order for the insurance company to feel comfortable issuing the policy on the person’s life. In more recent years, however, insurance carriers have increasingly offered “instant-issue” term life insurance policies, where a decision is made whether or not to issue a policy for a person within minutes of their submitting an application, with no additional underwriting.

Although these policies make it possible to fast-track the insurance application process for some individuals (who might otherwise be stymied by the traditional underwriting process), they aren’t necessarily right for everyone. For instance, because instant-issue policies require insurers to arrive at a decision without knowing the full details of an applicant’s current health or medical situation, they are generally only offered to the healthiest individuals – while those with pre-existing health conditions (who might still be eligible for insurance through the traditional underwriting process) might be declined after applying for an instant-issue policy. Which frustratingly can make it more difficult (or expensive) to subsequently be insured through traditional underwriting, since the fact of having been declined – albeit for an instant-issue policy with higher health standards than traditional underwriting – can create a ‘black mark’ on the individual’s health history.

Consequently, despite the convenience of instant-issue policies, it’s important not to automatically assume that they will always be the right choice for a person looking to apply for life insurance. Instead, it can be better to weigh the potential benefits of instant-issue (which, beyond the speed and convenience of obtaining coverage, can also avoid the scenario of a previously unknown medical issue coming up during underwriting and jeopardizing the person’s ability to obtain coverage) against the potential costs (which can include higher premiums than traditional underwriting, limits on the amount of death benefit available, and inability to convert to permanent insurance).

Financial advisors can play a key role in helping their clients weigh these factors against their own needs, and – in situations where the client just needs to get at least some coverage in place – guiding them towards a decision that will lead to action. Because ultimately, one of the greatest benefits of instant-issue life insurance is that it can make it much more convenient for healthier individuals to obtain life insurance – which could make it well worth the potential higher costs and other risks involved if the convenience of instant-issue is what catalyzes the client to actually get coverage to begin with!

#FA Success Ep 325: Building Success In The Financial Advice Business From A Financially Challenged Upbringing, With Brenda Hiscock

March 21, 2023 07:05 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 325th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Brenda Hiscock. Brenda is a financial planner with Objective Financial Partners, an advice-only advisory firm based in Ontario, Canada, that works with clients on project-based financial plans, and also offers outsourced paraplanning to other Canadian advisory firms.

What's unique about Brenda, though, is how she not only came to the financial services industry without any financial background, but did so despite a very financially challenging upbringing, and while navigating challenges of homelessness, bankruptcy, and alcoholism in her 20s, through which she not only persevered and rose through the ranks as a financial advisor, but has been able to leverage those real-world experiences and challenges to provide an even deeper more meaningful level of engagement with her current clients and how their financial pasts can impact their financial behaviors in the present and future, too.

In this episode, we talk in-depth about how, while Brenda was still in high school, her mother died suddenly and she was left with the responsibility of caring for her younger sibling which created a large financial burden that Brenda couldn’t handle despite working 2 jobs and eventually led to her becoming homeless and beginning a cycle of alcohol addiction as a coping mechanism, how Brenda learned after her early struggle with alcoholism and 2 failed stints in rehab before finally getting sober 19 years ago that being able to work from home with a flexible schedule wasn’t just a nice-to-have for work/life balance but essential for her to have the space she needed for her mental health, and how Brenda’s perspectives on financial planning and especially the benefits of insurance were so deeply shaped by both her financial struggles as a teenager after her mother died without life insurance, and her financial stability after disability insurance kept her from falling back into homelessness when she was diagnosed with cancer just 1 year after getting sober and had to take a year off from work to get the care she needed.

We also talk about how, when Brenda realized she would have to take care of her younger sibling, she asked for help and her high school placed her in a cooperative education program that got her a job as a teller at a credit union which began her career in the financial services industry, how, later in her career, Brenda began a job in insurance (because she knew how important having insurance can be) but ultimately found that her first-hand experiences in the benefit of insurance didn’t make it any easier to sell insurance and prospect for new clients, and how Brenda’s effort to find the right position for her in the financial services industry ultimately led her to financial planning where she realized that she could have a greater impact in the lives of clients as she could use her personal experiences and life lessons to educate them on how to properly handle their finances and break through their emotional issues with money.

And be certain to listen to the end, where Brenda shares how she found she enjoys financial planning because she can combine her intuitive math skills with her love of working with people, educating, and having deep conversations that can impact the future of clients’ lives, how Brenda is continually working on making peace with the struggles she has endured through her life but feels that they were necessary to get her where she is today and to become a living life lesson to others in the importance of having insurance, support from others, and a good financial plan of your own, and why Brenda believes it is important for younger, newer advisors to not only find mentors but be ready to proactively ask their mentors for help in achieving their career goals to ensure they get the support and wisdom they want and need.

So, whether you’re interested in learning about why Brenda feels it is vital and beneficial to have life and medical insurance, how Brenda overcame her addiction and cancer diagnosis, or how Brenda helps her clients get past their emotional connections with money, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Brenda Hiscock.

How Listing Fees On Advisory Firm Websites Can Clearly Communicate The Cost (And Value) Of Planning

March 20, 2023 07:06 am 0 Comments CATEGORY: Marketing

When a prospect is looking for a financial advisor, understanding how much they will need to pay can often be a tricky proposition. In part, this is due to the many commission-based advisors whose compensation depends on the sale of insurance or investment products, where the price that a client pays is baked into the price of the product or is included in (often opaque) fees associated with buying, selling, and/or holding the investment. But even as fee-only financial planning has gained in popularity and advisory firm websites have become ubiquitous, it can still sometimes be hard for prospective clients to determine how much they would pay for advice before actually reaching out to the firm. But by listing fees on the firms' websites in a transparent manner (no matter their fee model) and linking their fees to the value they offer, advisors can provide prospects with a better idea of whether the firm is a good fit, potentially leading to a higher conversion rate of prospects into clients.

Financial advisory firms have a wide range of options when it comes to displaying their fees on their website. For instance, firms charging on an Assets Under Management (AUM) basis can provide a chart (or even a calculator!) that connects a prospect’s assets with the percentage fee they would pay as a client. A firm with a retainer fee model might show what a prospect’s expected fee would be based on their individual circumstances and the criteria the firm uses to determine its fee (e.g., the complexity of the prospect’s financial situation). And firms that charge on an hourly basis can provide their hourly fee(s) and the estimated number of hours it will take to work with a client based on their particular circumstances.

Given that comprehensive financial planning is not a commodity service where consumers might make a choice on price alone, advisors also have the opportunity to use their website to demonstrate the unique value they provide to clients. And by showing prospects in advance of the initial discovery call how their specific financial planning needs will be met, advisors enable them to come to the call with a better understanding of the firm and what it offers, allowing them to prepare more specific and relevant questions about the planning process. This can be accomplished in a variety of graphical means, from a table comparing the firm’s service offerings with those of other types of advisors to a client service calendar that shows prospects the work the firm will be doing on their behalf once they become clients.

Ultimately, the key point is that because an advisor’s website often serves as the first touchpoint for prospective clients, it is an important tool to help explain the types of clients with whom the firm works and the value the firm provides. And by using the website to clearly communicate the information needed to help visitors understand the value the advisor provides as well as the fees charged, advisors can attract prospects who would be ideal clients for their firm!

Weekend Reading For Financial Planners (March 18-19)

March 17, 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 just weeks after introducing its own self-clearing platform, RIA custodian Altruist announced this week that it is acquiring fellow custodial platform Shareholder Services Group (SSG), a move that will make the combined RIA custodial platform the third-largest in terms of RIAs served. This is significant, as most ‘upstart’ RIA custodians have struggled to gain material traction in a hyper-competitive RIA custodial landscape, but Altruist appears to be winning small-to-mid-sized firms in particular by cutting down on their outside technology costs with its unique ‘all-in-one’ that has the core portfolio management and performance reporting components built in directly to the platform.

Also in industry news this week:

How the collapse of Silicon Valley Bank could impact Federal Reserve policy and market performance going forward
Why advisors could soon be an important access point for consumers looking to add private investments to their portfolio

From there, we have several articles on the collapse of Silicon Valley Bank (SVB):

A play-by-play of how SVB went from a rapidly growing regional bank to a failed one in mere months
How banking practices could change for consumers in the wake of the SVB collapse
How government officials have attempted to balance the stability of the banking system while avoiding ‘moral hazard’

We also have a number of articles on cash flow and spending:

How advisors can help clients create a cash management plan that keeps their bank deposits within FDIC limits and earns them a relatively strong return
Why being ‘rich’ goes well beyond where one stands in the national income distribution
A new study suggests that while happiness increases with income on the whole, unhappy people are less likely to see happiness gains once they reach higher income levels

We wrap up with 3 final articles, all about living a healthy lifestyle:

Recent research upends previous assumptions about how one’s metabolism changes over time
Why walking can bring many of the health benefits of more strenuous exercise routines
How short bursts of exercise throughout the day can lead to significant health benefits

Enjoy the ‘light’ reading!