Nerd's Eye View blog

Why Checklist-Style Financial Planning Works: What Advisors Can Learn From Dave Ramsey’s Baby Steps

September 21, 2022 07:05 am 3 Comments CATEGORY: Financial Psychology

There are many financial advisors who take issue with the financial advice offered by popular personal finance personalities such as Dave Ramsey. Some disagree on technical details like the plausibility (or purported lack thereof) of his assumptions for future investment returns, while others criticize broader elements of his approach (like his reliance on rules of thumb and a one-size-fits-all approach to building wealth). Whatever the reason, many advisors dismiss Ramsey’s guidance without considering why the advice is so popular in the first place.

But Dave Ramsey's huge following in the general public – and the number of people who testify that his methods have helped them make progress towards their financial goals – suggests that there is clearly something in his approach that resonates with many people. So for advisors, it may be worth exploring whether there is anything to be learned from Ramsey's approach to financial advice – even if they may disagree on the details, advisors may find in Ramsey's advice a new and perhaps better way to communicate with (and motivate) clients.

One core element of Ramsey's teachings is his "Baby Steps" process for building wealth, which lays out a seven-step sequence for everyone to follow: 1) build a $1,000 starter emergency fund; 2) pay off all (non-mortgage debt); 3) save a 3- to 6-month emergency fund; 4) save 15% of income for retirement; 5) save for children's education; 6) pay off the mortgage early; and finally, 7) build wealth and give.

Though many potentially valid criticisms of this process tend to concern technical details (e.g., the ideal size for an emergency fund, how much income should really be saved for retirement, etc.), what makes Ramsey's Baby Steps so popular among the general public is that they are easy to implement and are geared towards getting the individual to take action with as little friction as possible (in contrast to more advanced steps that would require additional research or analyses to complete). In other words, instead of focusing on a complex, customized plan based on a person's unique circumstances that might make for an ideal financial plan on paper, the Baby Steps are geared toward laying out a clear and inviting path for action – which might be more attractive (and effective) from a non-expert's perspective.

For advisors, the takeaway here is not about whether the Baby Steps offer the best advice for those who follow them, but that there could be merit in providing clients with a clear and cohesive set of steps (similar to a checklist) that helps them orient themselves in terms of where they currently stand in the process and what actions lie ahead. Additionally, a checklist-based framework may even help advisors be more efficient in their planning since it can be a way to systematize the planning process into a set of repeatable steps across many clients (particularly if the advisor serves a specific niche where the steps for building wealth might really be similar across the advisor's whole client base)!

The key point is that a checklist-style approach to financial planning can provide clients with a better understanding not only of what actions they should be taking immediately but also of the goals they are working towards in the long run. Focusing on action-oriented next steps rather than on the technical details behind them can help clients reconcile some of the knowledge gaps that might keep them from making progress toward their goals.

#FA Success Ep 299: Finding The Motivation To Grow Again With Authenticity And Client Significance, With Tim Regan

September 20, 2022 07:04 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 299th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Tim Regan. Tim is the founder of PrairieView Wealth Partners, a hybrid advisory firm based in Orland Park, Illinois, that oversees $100 million in assets under management for 190 client households.

What's unique about Tim, though, is how he leverages the independence he gained by transitioning from an insurance agency model to becoming a hybrid with Thrivent Advisor Network to focus his firm on faith-based planning and restructure his own back office by shifting it into a separate company that also partners with other financial advisory firms to offer them middle and back-office support as well.

In this episode, we talk in-depth about how, after realizing his firm was too big to be a solo and too small to be big, Tim decided to split his firm into two businesses where PrairieView Wealth Partners remains a financial advisory firm that focuses on the front office aspects and Focus Forward focuses on middle and back-office support so that he could create capacity for his advisory firm to focus more on the client experience, why Tim was inspired to offer middle and back-office support through Focus Forward to other advisory firms (separated by what Tim refers to as an “iron curtain”) in the $75 to $250 million AUM range that were also struggling with having the support and capacity they needed to grow and scale past the founder, and why, since Focus Forward was already knowledgeable in the day-to-day operations of the firms that they support, Tim decided to incorporate continuity agreements with his advisory firm so that advisors can have the peace of mind that if something were to happen to them, PrairieView could ensure their practices would continue their legacies.

We also talk about why, after two decades as a captive agent for Thrivent Financial, Tim decided instead to join their RIA platform, Thrivent Advisor Network, so that he could have more independence to offer his clients a wider range of solutions than just what was available through Thrivent, how Tim got comfortable concentrating on faith-based planning in today’s environment, because as Tim puts it, his faith is simply an authentic part of him and he wants to work with clients who similarly believe in the importance of aligning their faith and values with their money to live up to their God-given potential, and why even though Tim outsourced his middle and back office services he keeps his marketing support in a full-time, in-house role… with a strong focus on not just external marketing so that their story can be told the way they see fit but also internal marketing to work on enhancing their existing client experience (and get more clients talking about them to potential referrals).

And be certain to listen to the end, where Tim shares how, despite being a goal-setting type of person, he ironically struggled with actually achieving the significant growth goals he set for himself (as once they were achieved, the motivation to grow was gone) and instead ultimately decided to focus his energy on what he calls “goals that have significance, rather than goals that are only significant at a single point in time”, why Tim believes hiring the right people early is always a good idea (even if there is a fear of spending money) as when the time comes for needed support it’s already too late to have the time it takes to find those right people, and why Tim believes in the importance of daily affirmations as a way to set ‘mini-goals’ that help him focus on being a better husband and father, to pray, and to make time to take care of himself, too.

So, whether you’re interested in learning about why Tim split his firm so that he can offer back-office support to other advisory firms that are similar in size, how and why Tim implements faith-based planning to his clients, or why Tim also offers continuity planning for the advisory firms that his business supports, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Tim Regan.

What (Really) Makes Advisors More Productive And The Third Kitces Research Study On Advisor Productivity

September 19, 2022 07:01 am 1 Comment CATEGORY: Nerd's Eye View

2022 marks the 50^th anniversary of the enrollment of students into the first Certified Financial Planner (CFP) course, and in the years since then, financial planning (and the process of creating a financial plan) has changed extensively. Early on, the ‘financial plan’ was primarily used as a way to demonstrate a prospective client’s ‘gaps’ and needs for products such as mutual funds or life insurance (which the advisor would then be ready to sell to the client). Eventually, as client relationships grew to be more ongoing and less transactional, financial planning grew to encompass other areas of clients’ financial lives, such as taxes and estate planning. Today, the financial plan itself is increasingly becoming not just a ‘value-add’ supporting other services like portfolio management, but rather the whole purpose of (and primary value proposition for) the client relationship to begin with.

In 2018, we released the first Kitces Research study on “How Financial Advisors Actually Do Financial Planning”, which examined how financial planners today are actually executing their financial planning processes, delivering their financial plans, what technology tools they are using, and how they price their services. In 2020, we conducted a second survey to further explore the changing trends in financial planning brought about by improvements in advisor technology, shifts to the advisor business model, and changes in the regulatory environment.

Our 2018 and 2020 studies revealed some surprising insights into how advisors spend their time – namely that for the ‘typical’ financial planner, only about 20% of their working time is actually spent meeting with clients, while over twice that amount (45%) is spent on behind-the-scenes tasks like preparing for client meetings, running financial planning analyses, and managing investments (with the remaining 35% being split between business development and other management/administrative tasks). What’s notable, however, is that the most ‘productive’ (i.e., top-earning) advisors, on average, spent ‘only’ about 10% more of their time on client meetings compared with the least-productive advisors while reducing their back-office work in turn. In other words, by leveraging back-office support, the most-productive advisors added roughly 4 hours per week – totaling around 200 hours per year – on the high-value task of meeting with clients… and nearly doubled their income in the process!

A lot has changed since 2020, though. Most notably, during the COVID-19 pandemic and its aftermath, many advisory firms embraced technology, allowing them to work and meet with clients remotely. Likewise, other developments – such as the implementation of the SEC’s Regulation Best Interest rule and the CFP Board’s updated Financial Planning Practice Standards – have necessitated changes to many advisors’ financial planning processes. And, as always, technology continues to evolve to provide opportunities to streamline the ways advisors provide value (and deepen the value they do provide).

Accordingly, we’re excited to announce the third Kitces Research study, which will once again examine the process that financial advisors go through to create and deliver a financial plan. Following on the themes of the 2018 and 2020 studies, this research will seek to uncover more insights about what distinguishes the most productive advisors from the rest, what factors (such as how they spend their time, what tools they use to support their process, and how they price their services) drive that productivity, and most importantly, what actions other financial advisors can take to improve their own productivity (and consequently, their income and well-being!).

So whether you’re frustrated that your financial planning software doesn’t do what you need it to in order to demonstrate its value, or are simply looking for ideas to refine your financial planning process to be more time-efficient or cost-effective (or valuable and able to command a higher price!), I hope you’ll take a few minutes to participate in this year’s Financial Planning Process survey and help the world better understand what real financial planners actually do!

Weekend Reading For Financial Planners (Sept 17-18)

September 16, 2022 02:03 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with a report from Future Proof, dubbed the “world’s largest wealth festival”, held this week on(!) Huntington Beach, California. In addition to being held outdoors, the event stood out from ‘standard’ industry conferences in other ways, from the wide scope of its content to the diverse makeup of its attendees.

Also in industry news this week:

How the SEC appears poised to issue new or amended rules regarding its Custody Rule and 12b-1 fees by the end of the year, and what advisors can do to prepare their firms
A new report suggests that smaller firms have seen lower employee attrition rates than larger ones during the pandemic, and the steps firms can take to maintain a stronger company culture to attract and retain staff

From there, we have several articles on retirement planning:

A survey indicates that while pre-retirees largely understand the benefits of delaying Social Security benefits, only 11% plan to wait until age 70 to claim them, suggesting that advisors can play an important role in influencing clients’ retirement income decision making
Recent research shows that spending often declines throughout retirement, not because retirees have less income or fewer assets, but rather due to changes in health and preferences, offering advisors an additional data point to help project client expenses in retirement
With Medicare’s open enrollment period approaching in less than a month, advisors can add significant value to their clients by assessing whether changing their coverage could save them money

We also have a number of articles on spending and cashflow:

With an increasing number of retirees holding mortgages, advisors can add value by helping clients explore the financial and emotional considerations that go into the decision of keeping a mortgage or paying it off early
While some clients coming off a summer vacation might be tempted to buy a vacation home, advisors can help them consider the full range of consequences of doing so, from unexpected expenses to the potential for family conflict
How the travel industry has added to the growing number of subscription services, offering everything from discounted flights to access to luxury accommodations

We wrap up with three final articles, all about parenting and family dynamics:

The importance of friends for middle schoolers, and why ‘peer presence’ might be a more important dynamic than ‘peer pressure’ for parents to consider
How some parents helped develop an entrepreneurial mindset in their children, often by taking a step back
Why a growing number of family foundations are choosing a time-limited, rather than perpetual, approach in order to donate money faster

Enjoy the ‘light’ reading!

Asking The Toughest Kinder Question: How To Help Clients Explore Regret Productively And Take Action

September 14, 2022 07:04 am 0 Comments CATEGORY: Client Trust & Communication

When it comes to helping clients clarify their most important financial planning goals and priorities, many advisors may find it difficult to facilitate the insightful conversations necessary to guide clients through an exploration of these values. Clients may be tempted to postpone having such intimately personal discussions, and advisors may not be certain how to frame the discussion so that it is both productive and comfortable for the client. But by first establishing trust and guiding the client through an exploration of what their ideal future looks like, advisors can ask specific questions that help the client identify what specifically is most important to them in their lives right now, that will be most impactful in helping them structure their ideal future.

George Kinder, the father of Life Planning, developed a 3-question discovery process designed to help advisors achieve this by helping clients assess their life values and identify their most important personal priorities. While the first question asks clients to explore what their ideal future looks like (as they deepen a shared trust with their advisor, co-creating a future vision together), the second helps clients imagine the future goals that would be needed to realize their ideal future. The third and final question encourages clients to examine what they would need to do right now, in the present moment, to ultimately achieve their most important goals.

While the first 2 Life Planning questions are forward looking, asking the client to contemplate aspects of their future selves, the third question requires clients to consider what feelings they would have about the future they just imagined if they were told they only had 1 day left to live. What would they miss? What did they not get to be? What did they not get to do? Notably, the question refrains from using the word “regret”, which can have a negative association that, for many people, may discourage them from having an open and positive exploration of their feelings. Despite this, the client’s regret is really the essence of what is being examined by this question, as a way to identify the gap between the client’s dream of a perfect future and the reality of their current situation.

Importantly, because regret can be a powerfully negative emotion that can raise very uncomfortable feelings for the client, it is critical that the third Life Planning question be asked carefully, with unconditional positive regard and empathy for the client. To do this, advisors can offer their support and guidance as a facilitator, responding in a nonjudgmental manner to the client’s responses. In addition, asking thoughtful and engaging follow-up questions can keep the conversation flowing and allow the client to dig deeper into their underlying motivations. While planning recommendations should not be made during the discussion of the 3 Life Planning questions (which is time devoted for the client to explore and imagine their future dreams), the responses and insights that are shared during the process can eventually be used to develop a meaningful and actionable financial plan for the client.

Ultimately, the key point is that George Kinder’s 3 Life Planning questions can help the advisor and client better understand what the client genuinely values most and what they can start doing now to bridge the gap existing between where they currently are and where they want to be in the future. And by helping clients visualize the path they need to take with clarity and objectivity, advisors can provide the support and guidance to help them realize their most meaningful futures!

#FA Success Ep 298: Navigating The Evolution From Broker-Dealer To RIA Platform Leadership, With Carolyn Armitage

September 13, 2022 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 298th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Carolyn Armitage. Carolyn is the President of Thrivent Advisor Network, an RIA platform that offers partnership and affiliate models for financial advisors and oversees $6.5 billion in assets managed by over 20 affiliated independent advisor businesses.

What's unique about Carolyn, though, is how she quickly rose through the corporate ranks in the financial services industry to leadership positions for several major broker-dealers, where she developed and implemented strategies to facilitate their transition from brokerage to advisory models… giving her a unique first-hand perspective over the past several decades on the industry’s ongoing evolution from brokerage to RIA platforms.

In this episode, we talk in-depth about how Carolyn grew her career to become a leader in the financial services industry and made her mark by becoming an established executor for major broker-dealers that wanted to shift away from solely commission-based models and add advisory models, the paths that Carolyn navigated at companies like H.D. Vest and Financial Network to improve upon or outright establish new advisory platforms within their existing brokerage businesses, and how in three short years, Carolyn built a new training and development platform for LPL’s largest advisors – helping them recruit and retain advisors, create better compensation packages, and even build succession and continuity plans – to the point that the program was so successful LPL had to de-emphasize and eventually disband the program just to avoid creating an over-concentration of growth in that subset of firms Carolyn had developed!

We also talk about how, while Carolyn was first working in the broker-dealer space, it was the opportunity she received to explore and analyze the newly emerging advisory side of financial services that led her to truly appreciate the benefits of financial planning for not only the client relationship but also the steady revenue streams it created for advisory firms, how Carolyn faced head-on the internal setbacks and challenges that arose as she was building new kinds of advisory platforms within very large firms that were sometimes resistant to change, and why Carolyn was ultimately inspired to join and lead Thrivent Advisor Network because of their transparency, ethical standards, and their commitment to their mantra of living generously by dedicating volunteer time (and hundreds of millions of dollars in donations) to help improve the communities they operate in.

And be certain to listen to the end, where Carolyn shares why she believes that financial advisors can benefit from focusing on intentionality when managing their business so that they can create space for themselves to concentrate on the parts of the business they love (like working with clients rather than being entrenched in the operational demands needed to scale and grow their businesses), why Carolyn believes in the importance of truly taking the necessary time to find the right employees that align with the values of the firm and can help build a positive work culture, and how Carolyn got comfortable to view her own mistakes and failures in business as learning opportunities to reflect and improve… and now tries to instill that belief within her team so they can feel safe in a nurturing environment where they have room to experiment and ultimately help the firm grow.

So, whether you’re interested in learning about how Carolyn navigated her career path through leadership roles as the financial services industry evolved and shifted toward adopting advisory models and focusing on financial planning, how Carolyn helped broker-dealers adopt RIA frameworks and enhance how they partner with financial advisors, or why Carolyn decided to lead an advisor network that aligns better with her values and focuses on living generously, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Carolyn Armitage.

A 5-Step Prospecting Process To Sell Your Advisor Value With Greater Confidence And Trust

September 12, 2022 07:07 am 4 Comments CATEGORY: Practice Management

For many financial advisors, choosing their profession was based on a genuine desire to help others achieve their financial goals. Yet, while these advisors recognize the importance of business development to grow their firms, they are also very often intimidated by the process of adopting sales techniques to convert leads to clients. It can feel stressful at best and disingenuous at worst. Sometimes, advisors can fall prey to the ‘scarcity’ mindset, which compels them to take any and all prospects who consider engaging them, regardless of whether there is a good fit. This inevitably leads to unsatisfying (and even unprofitable) client relationships and resentment for the sales process itself, making it harder to serve the firm’s full client base. These factors can understandably create a crisis of confidence for advisors, who struggle to market themselves and showcase the value they offer in a genuine manner, despite the business imperative to do so.

In this guest post, Stephanie Bogan, Founder & CEO of Limitless Advisor Coaching, explains that while the ability to sell with confidence is one of the most important skills advisors can develop on their path to success, there are ways for advisors to build their confidence through a ‘no-stress’ sales process that can help them tell their story and quote their fees without apology or hesitation. And by using such a process, advisors will have a systematic way to identify the right clients for their practice and filter out the wrong ones.

Implementing a no-stress sales process involves five steps: 1) the initial inquiry; 2) a brief ‘Learn More’ call to screen prospects for fit; 3) the Discovery Meeting to collect further insight into the client’s needs and goals, clarify expectations and next steps; 4) preparation of a 1-page financial plan that reviews the client’s situation and that defines the value the advisor can add through the relationship; and 5) the 2nd meeting to present the plan, review recommendations, quote a fee, and, if the fit is right, extend an offer.

Core to the no-stress sales process is establishing trust equity with the prospect. This entails the advisor explaining that they deliver their clients’ desired outcomes and that throughout the relationship, the advisor will see, hear, and understand the client’s goals and needs. The end result is that prospects will have a naturally implicit understanding that if they engage with the advisor, the advisor will be there to help them solve their problems. Importantly, using the no-stress sales process can help advisors seamlessly transmute their knowledge of the value that they can deliver to prospects so that they, too, perceive that value.

Ultimately, the key point is that the no-stress sales process offers advisors a structured approach to help them genuinely convey their expertise, credibility, and character while expressing their value with confidence to attract the right clients for their firm. And instead of making advisors shy away from the often-dreaded fee conversation, this process can help them feel more confident (and even convince prospects) that the fee they charge is an honest reflection of the value they offer!

Weekend Reading For Financial Planners (Sept 10-11)

September 9, 2022 02:00 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that as Millennials grow their wealth, they could be increasingly turning to financial advisors for guidance. But amid competition from large asset managers and broker-dealers, advisors can consider how they can shape their service offerings and fee structures to attract Millennials and build client relationships that could last for decades to come.

Also in industry news this week:

As broker-dealers increasingly offer fee-based planning services, RIAs are responding by enhancing their own service offerings, and offering alternative fee structures to differentiate themselves from the competition
More states are adopting continuing education requirements for investment advisers, with three states establishing rules that must be followed by the end of 2022

From there, we have several articles on practice management:

A new company aims to train the next generation of planners and provide a valuable outsourced service to advisory firms
Why creating internal career paths and considering fully remote workers could help firms thrive in the current tight labor market for advisor talent
What advisors are doing to maximize the efficiency of their firms without bringing on additional staff

We also have a number of articles on retirement planning:

How the introduction of new ‘modern’ tontine products could provide retirees with a new way to mitigate longevity risk
The options available to clients who want to reverse their decision to start claiming Social Security benefits
How sequence of return risk can affect accumulators as well as retirees

We wrap up with three final articles, all about time management:

Why scaling your time can be more effective than trying to stretch or save it
How exercise can not only extend your lifespan, but also increase the quality of those years
How the ‘money value of time’ can help explain why certain periods of time are more valuable than others

Enjoy the ‘light’ reading!

Kitces & Carl Ep 94: Is Being A Financial Planner A Service Business Or An Intellectual Property Business?

September 8, 2022 07:05 am 0 Comments CATEGORY: Kitces & Carl Podcast

For many financial advisors, the most valuable part of what they offer comes down to the financial advice that they give, whether it be the expert guidance they give to a certain niche or a unique point of view that presents unique insights to an individual client. However, the advice given to clients is not always the only useful offering provided, as the process through which financial advisors deliver their advice can also be an important part of their value proposition. As while most financial planning advice may ultimately be modeled on similar principles, the process by which a client's situation is analyzed and how the advice is delivered can be vastly different depending on the advisor’s particular areas of expertise, niche, firm size, standards of conduct, and other differentiating factors.

In our 94th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how an advisor’s process can be considered a form of intellectual property, and how advisors can market themselves not only as providers of client-specific financial advice, but also as developers of systematic and effective processes used to deliver their advice.

Marketing a service process as intellectual property can be of great value to an advisor – not just as a business venture itself, but also as a way to articulate a firm’s ethos and brand, and even as a channel for the advisor’s own personal development. While creating blogs, books, podcasts, and other types of creative work can be instrumental in publicly affirming the brand identity of what an advisor is creating, it can even help the advisor grow personally and professionally. Clarifying and formalizing what their process is can help generate leads that are drawn to the unique aspects of the advisor’s process, and thinking through best practices and the reasons for implementation can encourage advisors to understand and articulate their most important personal priorities, helping them to identify their own career goals and trajectories.

Importantly, creating a marketable financial planning process can be intensely time-consuming work and can require substantial creative energy, which means that consistency and perseverance will be key to (eventually!) developing a valuable offering for consumers. In the end, though, advisors who commit to a regular schedule to create their intellectual property offering – regardless of what form it takes – will more likely be successful in creating a relevant and functional tool, and at the same time may come away with a deeper understanding of their own character and values!

Tax-Loss Harvesting Best Practices (And How To Scale It Across A Client Base)

September 7, 2022 07:01 am 7 Comments CATEGORY: Taxes

Tax-loss harvesting – i.e., selling investments at a loss to capture a tax deduction while re-investing the proceeds to maintain market exposure – is a popular strategy for financial advisors to increase their clients’ after-tax investment returns. For many, however, tax-loss harvesting remains somewhat more of an art than a science: Because the value of harvesting losses is so dependent on an individual’s own tax situation, there is no single strategy that can be implemented across an entire, diverse client base. And to complicate things further, when it is decided to go ahead with tax-loss harvesting, there are numerous considerations involved to ensure the strategy is carried out correctly and avoids running afoul of the IRS’s wash sale rules (which could disallow losses and negate the value of the strategy altogether).

But because tax-loss harvesting can be so valuable in certain situations, having a framework for deciding which clients could be good candidates for tax-loss harvesting and a process for executing the strategy properly can be beneficial for advisors. And given the challenges of scaling the strategy across dozens or even hundreds of clients, a key consideration when developing these best practices should be how well they can be systematized and repeated whenever the advisor reviews client accounts for tax-loss harvesting opportunities – a factor which can be aided with technology, including software tools that many advisors already use regularly.

For example, advisors who use a Customer Relationship Management (CRM) tool may be able to use that tool to narrow down the list of clients to those who are good tax-loss-harvesting candidates, such as those in higher tax brackets (who are likelier to realize more value from deducting capital losses). From there, the advisor’s financial planning software may be able to model the client’s future tax rate when the investment is ultimately sold, allowing the advisor to estimate the long-term value of harvesting the loss today. Finally, many software tools for trading and rebalancing may incorporate tools for tax-loss harvesting, such as checking for potential wash sale violations and allowing the advisor to designate replacement securities. With these three tools (i.e., the advisor’s CRM, planning software that models future tax scenarios, and trading and rebalancing tools), advisors can build a systematic start-to-finish process for tax-loss harvesting – and because all three are already core parts of many advisors’ existing technology stack, doing so might require no additional investment in technology!

The key point, however, is that – like many tax planning strategies – tax-loss harvesting requires at least some individual attention to each client’s tax situation to ensure it is the right strategy for that client. Additionally, there are many considerations both in deciding when to harvest losses and in executing the strategy, which makes it all the more important to have a repeatable process to ensure that nothing gets missed.

At a minimum, advisors can consider using a standardized tax-loss-harvesting checklist to reduce the likelihood of overlooking any important information. And because there is often pressure to act fast when markets are down and when tax-loss harvesting opportunities present themselves, having a well thought-out framework for harvesting losses can help advisors focus more of their attention on the clients who will get the most value from it (and fully deliver on that value in the end!).