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Kitces & Carl Ep 92: When Clients Want Certainty You Just Can’t Give Them

August 11, 2022 07:02 am 0 Comments CATEGORY: Kitces & Carl Podcast

Many clients seek financial advisors for their expertise and their abilities to guide them through financial decisions. However, for some clients, the ambiguity that inevitably arises from uncertain outcomes can be very distressing, especially when it comes to investments during volatile times. While these clients may have general concerns about their financial future, their concerns may also be in reaction to messaging from other sources that guarantee (unrealistically) low or even ‘no-risk’ solutions. In these cases, advisors must find ways to ease their clients' worries while also reassuring them that their plans are on track.

In our 92nd episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss why some clients need more certainty than others in their financial plans, how to educate clients who may not understand the inevitability of at least some level of risk in a financial plan, and how to maintain confidence and trust from clients who are fearful of their financial plan failing.

As a starting point, it’s important to understand that there is a difference between risk and uncertainty. As while risk can be quantified with a level of calculation that helps to give context to possible outcomes, it also helps clarify some of the considerations that can influence those outcomes. And for clients who don’t understand the mechanics of these factors and potential outcomes, the uncertainty of where their financial plans stand can be very uncomfortable. Especially when there are volatile conditions, some clients may be very distressed by the seemingly chaotic uncertainty of their situation, and not necessarily understand that the potential risks have all been planned for. Furthermore, by communicating proactively, advisors can maintain the confidence their clients have in them and deflect any misleading messaging from other institutions that may guarantee products that promise any level of unrealistic certainty.

Ultimately, the key point is that for many clients who have concerns about uncertainty (as with their investments, especially during volatile times), they may simply be uncomfortable about following a financial plan framed as a dynamic pathway subject to change as needed in the future. For these clients, in particular, financial advisors can help them make sense of the unpredictability that their plans account for, giving advisors an opportunity not only to educate their clients, but also to communicate their confidence and knowledge that they will be there to help the client keep their financial plan on track!

How To Manage Strong Emotions When Asking Clients Kinder Life Planning Questions

August 10, 2022 07:01 am 0 Comments CATEGORY: Client Trust & Communication

When financial planning clients think about their future, they might imagine a relaxing retirement, world travel, or other pleasant experiences. What they’re probably not considering is their own death, even though everyone’s time remaining on Earth is finite (even if the number of years they have left is unknowable). And using this perspective, advisors can add value for clients by helping them prioritize their goals and explore whether their current behaviors match their desired outcomes.

With this in mind, it is easy to see how George Kinder’s three Life Planning questions help clients focus on the things that matter most to them. While Kinder’s first Life Planning question asks clients to ‘dream of freedom’, and to describe their ideal future life if nothing were to hold them back, the second question asks the client to do the same but, this time, while imagining they only have 5 to 10 years left to live.

The goal of the second Kinder Life Planning question is to encourage the client to focus on the present and to analyze gaps between how the client is actually living today and how they said they wanted to be living if all they had were the next 5 to 10 years. While this can help clients find more clarity around the particularly important aspects of their lives right now, it can also lead to potentially intense feelings of grief and/or loss.

While clients may feel vulnerable and uncomfortable having this discussion, advisors using the Kinder questions can help ease their clients’ discomfort by welcoming and normalizing any emotions that may come up, while keeping the focus on a deep exploration of the client’s priorities and specific goals. During this conversation, it is important for the advisor to offer complete support for and acceptance of the client, with the intent to discover – not to judge – the client’s views, using techniques such as exploratory questions and repeating back what they hear from the client.

When wrapping up the conversation around the second Life Planning question, the main objective is to determine how the client’s goals will be integrated into their financial plan (e.g., through a ‘statement of purpose’) and to identify how the relationship that exists between the financial planner and the client will support implementation. This is a way of grounding the discussion back to the financial plan and giving the client some framework of momentum.

Ultimately, the key point is that Kinder’s second Life Planning question forces clients to prioritize their goals within a restricted timeline. And because this question often elicits answers and insights that can be profound and emotionally painful, potentially exposing gaps between their current and desired behavior, it is important for advisors to be prepared to help clients gain clarity around how their priority gaps will be reconciled with sensitivity and compassion. Even though this can be a difficult conversation, in the end, it can lead to a deeper understanding of the client’s most important and immediate priorities, while also cultivating a growing sense of trust and confidence that enriches the advisor-client relationship!

#FA Success Ep 293: Jumpstarting Growth By Showing Up Differently Where Prospects Are (Digitally) Concentrated, With Anna N’Jie-Konte

August 9, 2022 07:04 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 293rd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Anna N’Jie-Konte. Anna is the founder of Dare to Dream Financial Planning, an independent RIA based in New York City that has grown to more than $400,000 of annual revenue in barely 3 years by building a focused base of 32 ongoing clients coupled with more than a dozen project-based planning clients who go through a one-day financial planning intensive.

What's really unique about Anna, though, is how she accelerated her early growth to $400,000 of revenue by not just trying to build her own podcast audience, but leveraging her reach by appearing on other existing podcasts that already had a sizable audience, coupled with developing her own virtual conference that worked with financial influencers to again leverage her reach through their audiences, all to get in front of as many of her ideal clientele as she could, as quickly as she could, in her early years.

In this episode, we talk in-depth about how Anna built a network of 19 financial influencers to launch a free 5-day virtual conference in order to get her name in front of more than 1,000 engaged prospects, the way Anna determined the ideal podcasts to target to get the word out about her advisory business by intentionally choosing over 70 podcasts that discuss economic or business issues but have not directly featured financial experts before, and how Anna has managed to buck the industry naysayers who believe marginalized communities can’t be served profitably and has instead been able to succeed by continuously evolving her niche to increasingly stand out as a financial advisor of color successfully working with people of color.

We also talk about why Anna decided to leave her former position at a broker-dealer and launch her own independent RIA so that she could have the freedom to work with clients who, like her, are entrepreneurs and women of color in their 30s and 40s, how Anna came to the realization that despite the traditional industry approach of seeking out a large firm with a stable salary and benefits as the key to work/life balance as a parent that the better path to motherhood for her, and being able to be more present with her family, was to leave the large-firm job and become an entrepreneur instead, and why, in addition to her ongoing retainer clients, Anna has chosen to offer a one-month and now even a one-day financial planning engagement to expand the reach of the types of clients she can serve.

And be certain to listen to the end, where Anna shares how she continues to teach herself to be comfortable with choosing a career path of entrepreneurship that is pervaded with doubt and uncertainty (after growing up in a household that valued stability and consistency), how, during the early stages of launching her firm, Anna realized she needed to put aside her pride of being a one-woman band and hire the help she needed to not only grow the firm, but to also save her from serious burnout, and why Anna believes authenticity, taking risks, and being outspoken regardless of what others think are the keys to creating a successful career path as a financial advisor and business owner.

So, whether you’re interested in learning about how Anna launched her own virtual conference with financial influencers and leverages podcast appearances as a means of cross-promotion to get more prospects, why Anna decided to launch her own firm to gain the freedom to work with more of her ideal client and to have more time with her family, or how Anna realized it’s important to not only take risks to have a successful career, but to also know when to ask for help, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Anna N’Jie-Konte.

Creating Powerful Advisor Marketing Messages That Better Connect With Your Ideal Prospects

August 8, 2022 07:05 am 1 Comment CATEGORY: Marketing

Good marketing based on using impactful messages for consumers is a foundational element for many types of businesses that allows companies to define and convey their unique value. For financial advisors, effective messaging often tells the story of how their advisory practice serves clients, with the intent to resonate with the audience and inspire them to engage with the firm. But while the messaging on many advisory firm websites speaks to a firm's capabilities, a better approach to drive engagement is to frame communication around the prospect's needs.

Employing a few key principles to shift the perspective and focus on what clients and prospects need can instantly create a more compelling message that will improve engagement. First, it's important to make the consumer (rather than the firm) the main character in the firm's communications. Flipping "we" statements into "you" statements puts the consumer front and center in the story – not the firm. The firm can then consider the unique needs of its target client (and the firm's ability to deliver solutions to these unique needs) to create more relevant messages. These needs can be determined by interviewing current clients who the firm considers to be 'ideal' target clients in order to learn about their priorities. Finally, the firm can use this information to craft messages that speak specifically to the prospects they want to reach, touching on the issues that are most unique – and most relevant – to them.

After the firm has developed its messaging with the target client and their needs in mind, it can consider how to best deploy them effectively on the firm's website. The goal is to show prospects how they will benefit by helping them understand what they will experience from working with the firm without simply describing the firm's services. This can be done in several ways, such as describing a 'path' (of three or fewer steps) the prospect will be guided to follow to achieve their goals, or creating a 'call to action' for what the client will need to do to get their plan in motion (e.g., scheduling a complimentary consultation or downloading a free sample financial plan).

As with any marketing investment, it is important for firms to track the results of these changes; for example, monitoring the number of website visitors during a certain period and the number of prospects who scheduled a consultation. One specific way to measure the effectiveness of messaging – and to identify where adjustments should be made – is through A/B testing, a marketing tool that is used to compare different content assets against one another. For instance, a firm could test an 'A' version with its current messaging that uses "we" statements against a 'B' version that includes "you" statements to see which generates more engagement.

Ultimately, the key point is that successful financial advisory practices value the power of words and understand the importance of having a solid messaging framework. Yet firms of all sizes and maturity often struggle with optimizing their messaging to get it just right. But by making a simple – yet crucial – shift in their messaging strategy by flipping "we" statements into "you" statements, firms can earn more credibility and (hopefully) attract more clients!

Weekend Reading For Financial Planners (Aug 6-7)

August 5, 2022 02:14 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 SEC has issued a new bulletin clarifying the responsibilities of brokers under Regulation Best Interest (Reg BI). The guidance indicates that, despite early fears that Reg BI was ‘overly accommodating’ to the brokerage industry, the Commission is expecting that reducing conflicts of interest should be an ongoing task for broker-dealers rather than a one-time compliance disclosure change, and that brokerage firms will want to ‘show their work’ when it comes to their compliance responsibilities (a potential best practice for RIAs, too!)!

Also in industry news this week:

A study suggests that a significant number of brokers who are disciplined by FINRA are engaging in ‘regulatory arbitrage’ by moving to state-regulated insurance companies, making it more difficult for consumers to learn about their past infractions
How the proposed “Inflation Reduction Act” will impact financial advisors and their clients

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

How advisors can generate topic ideas for content to engage their target audience
The best practices (and pitfalls to avoid) for advisors when crafting an email subject line
Why campaigns that combine “sunk marketing” with “momentum marketing” can lead to greater results for advisors

We also have a number of articles on retirement planning:

How the variability in annuity payouts across annuity providers has exploded in 2022, creating an opportunity for advisors to add value to clients by comparison shopping across insurance companies
Why state long-term care insurance programs are driving demand for private policies, and the implications of these programs for advisors and their clients
How advisors can support clients in choosing a Medigap policy

We wrap up with three final articles, all about the advisor regulatory landscape:

Why better regulation of the insurance industry could make life easier for financial advisors
What advisors need to know about the new IAR continuing education requirements
Why pursuing title reform for financial planners is a worthwhile endeavor, even if it might be a bumpy process

Enjoy the ‘light’ reading!

Why Childfree People Require A Unique Financial Planning Process

August 3, 2022 07:07 am 0 Comments CATEGORY: General Planning

For financial advisors, dealing with issues concerning clients’ children, from education costs to legacy goals, is a common part of the planning process. But a growing number of individuals are going through life without ever having children. And no matter the reason, clients without children have unique planning needs that are important for advisors to recognize.

First, advisors can determine whether a client is “childless” (does not currently have children but might in the future) or “Childfree” (does not currently have children and does not ever plan on having children). And if a prospect or client does identify as Childfree, advisors can respect their lifestyle by refraining from asking whether they are certain about the decision or prying into their reasoning behind the decision (because questioning along these lines can often be misinterpreted as judgment calls, and the Childfree client likely already has to field these intimate questions from friends and family on a regular basis!).

For advisors with Childfree clients, it is important to recognize that these clients often have different lifestyle arrangements than clients with children. For example, they may be in a long-term relationship without being legally married, or they may live in more-than-2-person groups for both personal and financial reasons. In addition, Childfree clients often have more flexibility and mobility when it comes to relocating or taking extended time away from work throughout their careers (which increases the opportunity to do the detailed cash flow planning to make that happen!). Yet being Childfree can also come with additional burdens, such as being expected to take care of aging parents or other dependent family members (because they are often expected to have ‘extra’ time by not having to care for their own children).

Because of their particular situation, Childfree clients often have unique planning needs, particularly when it comes to insurance. For instance, Childfree clients, especially those who are single, may have less need for life insurance than couples with dependent children. On the other hand, Childfree clients often have an increased need for disability coverage, as they might not have a support system to carry them through their retirement. Similarly, Childfree clients often prioritize long-term care insurance as a way to ensure they are not a burden on others in old age.

Childfree clients can also face unique estate planning challenges. For example, it is more common for Childfree people to want to spend or gift their money during their lives (as they do not have children or grandchildren to leave money to upon their death). Which means that advisors with Childfree clients who opt for a ‘Die With Zero’ approach must balance their spending and gifting by maintaining a sufficient financial cushion to cover their lifetime spending needs. Also, because they might not have any immediate relatives, Childfree clients might explore the option of using a professional trustee and fiduciary as their executor, POA, and medical proxy.

Ultimately, the key point is that Childfree individuals have unique goals and challenges to address in the planning process. And those advisors who are able to address the specific needs of Childfree clients have a potentially profitable opportunity to serve a growing niche market!

#FA Success Ep 292: Syndicating Private Real Estate Opportunities To Differentiate With HNW Clients, With Matthew Topley

August 2, 2022 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 292nd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Matthew Topley. Matthew is the Founder and CIO of Lansing Street Advisors, an independent RIA based in Ambler, Pennsylvania that oversees $160 million in assets under management for 60 client households.

What’s unique about Matthew, though, is how he differentiates his firm by offering his high-net-worth clients opportunities to diversify their investment portfolios by syndicating private real estate partnerships that directly purchase individual multi-unit rental properties.

In this episode, we talk in-depth about how after years of working as a trader, Matthew realized his career and retirement were dependent on the stock market and decided to diversify his investments in real estate so that he could create passive income for himself, how after years of investing in his own real estate properties and struggling with management and landlord duties that made the real estate not-so-passive in reality, Matthew was introduced to ‘truly passive’ real estate investing through syndication deals and ultimately was inspired to offer those opportunities to his clients, and the tools and systems that Matthew has had to implement in order to scalably execute on private real estate syndication deals with his high-net-worth clients on an ongoing basis throughout the year.

We also talk about how, despite his deep roots in portfolio management as a trader, Matthew has built the center of his “virtual family office” solution for high-net-worth clients around their financial planning advice, why Matthew and his firm choose to outsource their financial plan preparation and other back-office services so that they can focus specifically on their client conversations around financial planning advice and real estate investment opportunities, and how Matthew has been able to so effectively differentiate his firm with its syndicated private real estate offering, even though, in practice, it tends to be no more than 10% to 20% of the typical client’s portfolio.

And be certain to listen to the end, where Matthew shares how, even though he has a background in institutional investing, he is surprised by the number of products still being sold to high-net-worth clients that are not in their best interests, why he feels it’s important for those entering the financial advisory industry to gain as much knowledge as possible and have a good sense of self-awareness to create a better path for a successful career, and why Matthew strongly believes in owning a firm as it gives him the freedom to make his own decisions, the time to work on the aspects of his business he truly enjoys, and the opportunity to create a bigger impact on society.

So, whether you’re interested in learning about how Matthew leverages real estate syndication deals to enhance his firm’s value proposition, how utilizing a “virtual family office” approach creates an essential one-stop shop for his high-net-worth clients, or how owning his firm has put him in a better mental and physical space to focus his energy on more positive attributes of his business and personal life, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Matthew Topley.

The Latest In Financial #AdvisorTech (August 2022)

August 1, 2022 07:04 am 2 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the August 2022 issue of the Latest News in Financial #AdvisorTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors!

This month's edition kicks off with the news that Envestnet has acquired Redi2, one of the most widely used ‘revenue management’ systems in broker-dealers that facilitates the flow of dollars coming in and being paid out to advisors in all the various increasingly complex ways they can get paid (from upfront commissions via various product types to trails to advisory fees to standalone planning fees), along with its BillFin solution for independent RIAs doing standalone AUM billing.

The deal is well timed to a recent Risk Alert from the SEC about advisors engaging in (unwittingly) incorrect billing due to a lack of strong billing systems and processes. But arguably, it also signals a broader trend, particularly amongst broker-dealers, towards increasingly complex revenue models (with various combinations of third-party products, in-house products, advisory fees through a wide range of SMAs and TAMPs, home office models, and Rep-as-PM portfolios, and fee-for-service financial planning) that necessitates increasingly sophisticated billing systems to handle the growing complexity, as the industry continues its evolution from product sales to advice fees (and the messy middle that comes in the midst of that transition).

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

Catchlight offers up a new system that scans information about prospects online to determine which ones are ‘qualified’ and worth pursuing further
AssetMark acquires Adhesion Wealth from Vestmark as TAMPs continue to seek scale for both technology development and distribution
CapIntel raises an $11M Series A round to bring its proposal generation tools from Canada to the US

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

Independent Advisor Alliance partners with ‘We Handle Tech: 4 Advisors’ as advisor demand grows for Managed IT Services providers to outsource IT support
Income Lab and MoneyTree both launch new ‘One-Page Financial Plan’ summary reports as advisors continue to demand more tools to demonstrate the ongoing value of financial planning after the upfront planning process is complete!

In the meantime, we’ve also made several updates to the beta version of our new Kitces AdvisorTech Directory, to make it even easier for financial advisors to look through the available advisor technology options to choose what’s right for them!

And be certain to read to the end, where we have provided an update to our popular “Financial AdvisorTech Solutions Map” as well!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!

Weekend Reading For Financial Planners (July 30-31)

July 29, 2022 02:02 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with a survey indicating that while about 70% of advisors overall feel successful, those who charge fees (and enjoy the stability that recurring fees provide) tend to feel more successful than those who rely on less-stable commissions, with the effect being particularly pronounced for female advisors.

Also in industry news this week:

A survey suggests that consumers recognize that they are keeping more money than they should on the sidelines as they maintain a pessimistic outlook for markets and the economy
Why a recent SEC settlement is a warning that large RIAs need to pay close attention to the revenue sources of an affiliated broker-dealer

From there, we have several articles on advisor fee models:

How advice-only fee models can offer advisors greater flexibility in their service offerings and the clients they serve
Why creating an annual client service calendar is a helpful way to demonstrate an advisor’s value proposition to clients and regulators
How advisors can overcome the “Triple Whammy” of having too much work for too many clients for too little money

We also have a number of articles on mortgages:

How holding on to a mortgage while investing is a form of leverage, and why a mortgage itself is not an inflation hedge
How advisors can add value to clients considering cash-out refinances
Why some clients see home renovations as a way to delay inevitable bad news

We wrap up with three final articles, all about the current work environment:

The best practices, from happy hours to retreats, advisory firms can use to maximize the hybrid work environment
Why co-working space is the new ‘hot’ amenity in apartments and condo buildings
Why the return of in-person conferences is attracting parents who want to get out of the house, and the wide range of upcoming conferences for advisors

Enjoy the ‘light’ reading!

Kitces & Carl Ep 91: Is It Better To Have Clear Goals Or ‘Just’ A Strong Sense Of Direction?

July 28, 2022 07:02 am 0 Comments CATEGORY: Kitces & Carl Podcast

Financial advisors are often innately inclined to set long-term goals and stay on the course to help their clients achieve their goals, as the advisor understands the bigger picture of having a financial roadmap and its benefits. However, when long-term goals in a financial plan are too rigid, many clients may not be naturally inclined to stick with those goals or even with the financial advisor. It can be especially difficult for clients to stick to a strict ‘goals-based’ approach when their long-term goals are likely to change, or when the goals that their financial advisor conveys as important are not clearly connected to the client’s bigger ‘why’.

In our 91st episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss why setting goals overall is an important step in developing a financial plan, but how structuring those goals around a broader sense of direction can guide the financial plan toward achieving more client satisfaction over time.

As a starting point, it’s important to recognize that goals are just guesses that are highly subject to change. Often, goals set in the initial stages of developing the financial plan do not end up being the goals achieved (which is okay!). While it is a good idea to create a roadmap for clients with long-term goals, leaving only a little room for flexibility and change can make it challenging for clients to commit, especially when they are unsure about why the goals are important in the first place. In reality, life will always change and nearly all goals will have to be adjusted at some point in time. A good way for advisors to meet the clients in the middle is to set smaller, more flexible goals that identify the clients’ desired "direction" so that they can set loose, adaptable "goals" and course-correct along the way.

Ultimately, the key point is that a ‘goals-based’ approach is not a one-size-fits-all solution. Because the future is uncertain, goals need to be reevaluated, clarified, and adjusted over time. And goals that are not based on a client’s current reality can be difficult for clients to connect to. Importantly, as the advisor/client relationship matures and goals are clarified, having flexibility allows for a deeper understanding by both advisor and client of why these goals are important. Furthermore, when the intent behind achieving the goals is understood, deeper trust – and longer-lasting relationships! – between the client and the advisor are established, instilling more confidence that goals will be achieved.