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#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!

Weekend Reading For Financial Planners (December 16-17)

December 15, 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 this week's round of public hearings on the Department of Labor's proposed new fiduciary rule featured fierce opposition from the brokerage and insurance industries – which, while unsurprising given those industries' stance against the DoL's previous fiduciary rule (which ultimately caused it to be struck down in court in 2018), nonetheless highlights the debate over what constitutes a relationship of "trust and confidence" that rises to a fiduciary standard, and whether broker-dealer representatives and insurance agents who hold out as advisors should continue to be regulated 'just' as product salespeople when they aren't actually giving advice.

Also in industry news this week:

Most businesses that operate in the U.S., including partnerships, LLCs, and corporations, will soon be required to report specific information on their "beneficial owners" to the Treasury Department – which notably includes all state-registered RIA firms, as well as potentially many businesses owned by clients of financial advisors
Pontera has raised $60 million in venture capital funding, highlighting the growing advisor demand for its technology for directly managing clients' 401(k) plan assets (while raising questions about whether its success will spawn future competition that could temper its growth expectations)

From there, we have several articles on practice management:

As organizations grow, employees often struggle with issues such as stretched capacity, skill gaps, and burnout, which makes it important for leaders to be attentive to the issues their employees face and to have solutions available to address those issues directly
Although performance reviews after a challenging year can be a difficult process, managers can help take them in a more positive direction by being clear about the company's future (and the employee's place within it)
For solo advisors, the decision of whether or not to hire an employee can be a difficult one, but hiring may be at least worth considering to ensure that clients can continue being served either in the event of an unexpected incapacitation or when they ultimately decide to retire

We also have a number of articles on retirement:

For people over age 70 1/2, making a Qualified Charitable Distribution from an IRA can have significant tax benefits – so much so that they're worth the often-cumbersome process required to make the contribution itself
Although bonds are currently an attractive option for retirement income given today's higher interest rates, immediate annuities can potentially provide even higher yields, making them worth considering for retirees who are likely to (at least) reach their life expectancy
Although many people focus on tax brackets when deciding which accounts to withdraw from in retirement, a strategy around managing the "effective marginal tax rate" can add material after-tax value to a client's retirement savings

We wrap up with 3 final articles, all about health and wellness:

How the true secret to so-called "Blue Zones" with high concentrations of people who live beyond 100 years old might not be diet, climate, or lifestyle, but bad data
How runners can improve their training and even race times by incorporating short interludes of walking into their run
How the science of the way our nervous system is involved with digestion can uncover the key to treating and preventing digestive disorders

Enjoy the ‘light’ reading!

Kitces & Carl Ep 127: Creating Value Through Presence (And The 50 Fires Podcast)

December 14, 2023 07:03 am 0 Comments CATEGORY: Kitces & Carl Podcast

Kitces & Carl Ep Creating Value Through Presence (And The Fires Podcast)

In the world of financial advisors, tradition often emphasizes technical numbers, structure, and a firm focus on solving financial problems. However, in practice, forging a human connection – such as sitting around a fire and having a conversation, digging into emotions, feelings, and fears – and tying it to a client's mindset surrounding their financial priorities and goals can be a powerful way to encourage individuals to explore and reassess their perspectives on finances.

In our 127th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards delve into Carl's latest project – the "50 Fires" podcast. This project, in partnership with the creative team behind "The Big Bang Theory" and featured on Chip & Joanna Gaines's Magnolia Network, centers on 'campfire conversations'. In these sessions, Carl engages in heartfelt discussions with his guests about their personal relationships with money, with the goal of providing financial advisors with ideas for integrating meaningful communication prompts into their own client meetings.

While conversations between financial advisors and their clients often focus on the quantitative aspects of a client's financial life (e.g., balance sheets, investment portfolios, and retirement projections), "50 Fires" aspires to demonstrate how the qualitative aspects of a person's relationship with money can reveal personal values and priorities that provide an advisor with important situational context of a client's financial goals. Through these discussions, Carl explores the stories and wisdom embedded in religious beliefs and family practices, uncovering poignant experiences from recognizing one's socioeconomic status in junior high school because they only owned 1 pair of jeans, to symbolic moments like cherishing an unopened can of Coke because of its representation of financial prosperity in India. These narratives not only shed light on the root of a person's financial mindset but also help to understand their financial behaviors, revealing the deeper lessons learned from these experiences.

Additionally, these conversations underscore an important takeaway: clients often value the personal connections formed with their financial advisors that are based on discussions that go beyond sharing just financial concerns. While these intangible personal connections may be challenging to market, the ability to guide clients into meaningful conversations to identify the big goals and values they have regarding money is universally appreciated. Everyone has financial concerns and yearns for genuine connections with others, even when they may not be consciously aware of these things. And experiencing such a connection with a financial advisor can significantly enhance a client's willingness to engage in the financial planning process.

Ultimately, the key point is that the ability to successfully connect with prospects and clients on an emotional level, using soft skills to navigate their relationship with money, is crucial to build trust and develop stronger relationships with clients. Carl envisions "50 Fires" as a catalyst, providing the spark to ignite millions of genuine discussions about money around the world. This initiative aims to normalize everyday conversations about money while facilitating deeper connections with clients, potentially influencing not only their thought process around finances but also shaping the financial outlook of future generations!

Preserving HSA Eligibility And Maximizing Contributions After Age 65

December 13, 2023 07:03 am 0 Comments CATEGORY: Retirement Planning

Although numerous tax-advantaged vehicles are available for retirement savings, Health Savings Accounts (HSAs) have particular benefits for individuals saving for retirement. Specifically, HSAs offer a "Triple Tax Benefit" that includes tax-deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses. This can allow individuals to save a significant amount that can be withdrawn tax-free for medical expenses later in retirement. Therefore, for workers looking to boost their savings towards the end of their working years, HSA contributions can be the most tax-efficient vehicle available.

The caveat, however, is that to be eligible to contribute to an HSA, an individual must be covered by a qualifying High-Deductible Health Plan (HDHP) with no other non-HDHP coverage. And because government-funded health insurance options such as Medicare are not considered qualifying HDHP coverage, enrolling in Medicare – either directly through its website or by applying for Social Security benefits (which automatically enrolls someone in Medicare once they reach age 65) – means that an individual will no longer be eligible to contribute to an HSA.

For retirees, self-employed workers, and others who rely on Medicare as their sole option for health insurance after reaching age 65, this means there is effectively no way to contribute to an HSA after age 65. However, people who continue working beyond age 65 (or whose spouse does so) and have access to an employer-provided HDHP can continue making HSA contributions as long as they don't enroll in Medicare or apply for Social Security benefits. And because there's no age cap on HSA contributions, it's possible to keep contributing for as long as the person is still working and remains on a qualifying HDHP (although retiring and subsequently enrolling in Medicare will ultimately end HSA eligibility).

Advisors can help their clients who want to keep contributing to HSAs after age 65 by planning strategies that help to preserve their eligibility and maximize the amount they can contribute. For instance, if someone has applied for Social Security benefits and inadvertently enrolled in Medicare (which would make them ineligible for HSA contributions), they may be able to withdraw their Social Security application within 12 months and cancel their Medicare coverage to restore their eligibility – although doing so would require paying back any Social Security benefits actually received.

Additionally, when married couples have one spouse with HDHP coverage, the other spouse can enroll in Medicare without affecting the HDHP-covered spouse's HSA eligibility (and if the HDHP covers both spouses, one spouse can still contribute up to the higher family contribution limit even if the other spouse is covered by Medicare and ineligible to contribute to their own HSA).

And when someone working past age 65 does decide to retire, they will need to navigate the "6-month rule", where Medicare coverage is considered to begin 6 months before applying for benefits. This means the individual will need to plan carefully to calculate their maximum allowed HSA contribution to avoid inadvertently overcontributing to their HSA, since they may become ineligible for contributions well before they actually retire and apply for Medicare!

The key point is that while it's possible to contribute to an HSA after age 65, the specific rules around HSAs and Medicare introduce an additional layer of planning that's needed once an individual crosses the age-65 threshold. But given that the point of working past 65 is often to boost retirement savings, and given the tax-efficient benefits of HSAs as a retirement savings vehicle, the extra planning can ultimately be worthwhile on account of the additional tax-free savings for those who can navigate the challenges of doing so!

#FA Success Ep 363: Finding The Best Networking Approach For Prospects (And New Career Opportunities), With Christa Madison

December 12, 2023 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Christa Madison Podcast Featured Image FAS

Welcome back to the 363rd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Christa Madison. Christa is the Managing Director of Financial Planning and Business Development at Sebold Capital, a fee-only RIA based in Chicago, Illinois, which manages $300M across more than 100 client households.

What's unique about Christa, though, is how she used her business development and networking skills to overcome the challenges that sprung up when, through a combination of personal and professional shifts, she found herself building her book of business from scratch, 3 separate times, and how she leveraged those pivots as an opportunity to account for how her own skills and competencies had changed and grow into larger (and more lucrative) opportunities.

In this episode, we talk in-depth about how Christa's start in insurance sales at Northwestern Mutual brought both successes in building a book of younger clients just beginning their career journeys, and challenges as she struggled to hit sales goals when her young clientele were more interested in starting Roth IRAs and didn't need much insurance yet, how Christa's intensive networking event schedule and simple but uniquely branded way of following up allowed her to feed into a '10-3-1' prospecting pipeline (in which on average, for every 10 prospects she approached, 3 were interested, and 1 became a client) and continually rebuild her book of business when she transitioned roles, and how despite her skillset at networking, Christa still found after having to start over 3 times that it takes 3 years, on average, for her prospecting to start to grow from scratch into its own robust referral network.

We also talk about how Christa overcame the unique challenge of maintaining professional momentum while building a family, which prompted her to step into contracting roles when she needed more flexibility and out of them when she needed more stability, how when faced with the need to find a new opportunity Christa leveraged her networking skills to find and then just walk into the lobbies of 20 local-area firms until she found one that was interested in hiring her (and got the job!), and the reason that Christa ultimately decided that as she approached her 3rd time building a book of business, she wanted to build it in the RIA channel instead.

And be certain to listen to the end, where Christa discusses why she feels that her background and early experience in the insurance channel made her a stronger financial advisor (and why she worries that advisory firms today may be underestimating the value of those experiences), how Christa's willingness to 'start over' as a paraplanner in a fee-only firm led her on the promotional fast-track to become the director of 2 departments, and how Christa found that no matter where she went, her people-first prospecting approach helped her grow a client base, especially amongst those in need of financial guidance who lacked support because they weren't 'top of the top' financial prospects for other financial advisors but were more than able to allow her to successfully grow her own practice.

So, whether you're interested in how Christa successfully navigated a reboot of her own career multiple times, how Christa adapted her services to meet the needs of young clientele who don't fit a 'traditional' client mold, or how Christa maintained career propulsion while her personal life demands evolved over time, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Christa Madison.