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#FA Success Ep 337: Becoming An ‘Accidental’ Entrepreneur When Independence Isn’t Chosen But Forced By Circumstance, With Danika Waddell

June 13, 2023 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Danika Waddell Podcast Featured Image FAS

Welcome back to the 337th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Danika Waddell. Danika is the President and Founder for Xena Financial Planning, a virtual advisory firm that advises 40 client households of women in tech and supports more than $275K of ongoing revenue.

What's unique about Danika’s path, though, is how, she launched her own independent RIA not out of a desire to be an entrepreneurial business owner, but because an IAR registration filing error by her prior firm left Danika, through no fault of her own, unable to be compensated for working with clients for an extended period of time… for which the fastest way to begin working again was to launch her own firm and register herself instead.

In this episode, we talk in-depth about how a state regulator audit of Danika’s former firm revealed that she was not properly registered with the state of Washington and sparked an investigation during which she was prevented from working with her clients at the time and sidelined her for several months, how, on top of not being able to work with current clients, Danika also found out that during the investigation she would only be compensated for her base salary and not for any client work (including prior completed projects) which ultimately cut her total revenue-based compensation by about 50%, and how, even though Danika’s former firm quickly registered her upon learning of their error, she realized that the only way to work with clients would be to either wait an indeterminate amount of time until the state’s investigation was over… or leave the firm, which ultimately led her to launch her own firm so that she could get paid and get working with clients again (and… maintain more control of her own registrations and career in the future).

We also talk about how Danika’s former career in corporate finance at a number of tech startups inspired her to work with women in tech, as she realized that she understood the financial issues they faced and by being specifically niche-focused, she could create more repeatable processes and it would be easier to scale the business over time, how Danika drove rapid growth for her firm by leveraging volunteering at industry associations to connect with other advisors and Centers of Influence, for whom Danika created a one-page reference document to help her connections refer more of her ideal client, and how instead of using a traditional client portal or vault, Danika creates personalized private Google sites for each client to centralize all of their documents and links to their various logins in one central place for easy access.

And be certain to listen to the end, where Danika shares how, even though she didn’t originally intend on becoming an advisory firm owner, she feels it was the better move for her as getting pushed outside of her comfort zone helped her personally evolve and become even more energized and comfortable embracing her curiosity, how Danika has dealt with the unexpected reality of loneliness as a solo advisor by embracing mastermind groups and industry communities to build deeper more profound relationships with other advisors (and gain some insights along the way), and why Danika believes that joining local industry associations, connecting with like-minded individuals, and finding a mentor can be especially valuable for younger, newer advisors to develop their own communities early on as a foundation to navigate a better long-term career path for themselves.

So, whether you’re interested in learning about how Danika evolved her fees from an hourly rate to a flat fee, why Danika feels spacing out her 5-meeting process helps her get a better understanding of her clients’ goals and makes it more likely clients will implement her recommendations, or why Danika invested $7,500 in the creation of her website so that she can create better branding toward her niche, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Danika Waddell.

Summer Reading List Of “Best Books” For Financial Advisors – 2023 Edition

June 12, 2023 07:07 am 0 Comments CATEGORY: Personal/Career Development

While 2023 got off to a bumpy start for many advisory firms, still smarting from a rough prior year of market returns (and volatile revenue), a relative return to ‘normalcy’ means that for most, the advisory business has reached whatever its new post-pandemic normal will be. Firms that were returning to the office have done so, those that are staying remote are remaining as such, and either way most advisory firms have figured out how to continue to service and retain clients, and are slowly adapting to finding new (or reinvigorating old) paths to grow at least slowly once again. For which the approaching summer season is once again providing its usual respite – a time when most advisors take more time off (if only because clients are harder to pin down for summer meetings as more once again take summer vacations away from home)… and find some time to read and catch up on a few good books!

For those who love to read, though (and especially for those who have limited time and will only get to read just 1 or 2 books over the summer), the perennial question is always “so… what’s a good book worth reading this summer?”

As a voracious reader myself, I’ve always been eager to hear suggestions from others of great books to read, whether it's something new that's just come out, or an "old classic" that I should go back and read (again or for the first time!). And so, in the spirit of sharing, a few years ago I launched my list of "Recommended (Book) Reading for Financial Advisors", and it was so well received that in 2013 I also started sharing my annual "Summer Reading List" for financial advisors of the best books I'd read in the preceding year. It quickly became a perennial favorite on Nerd's Eye View, and so I've updated it every year, with new lists of books in 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, and a fresh round last year in 2022.

And now, I'm now excited to share my latest Summer Reading list of top books for financial advisors in 2023, from a new framework in how to think about our “Geniuses” in where we do our best work at work, to how to restructure the way we work for a remote (or at least partially-remote) workplace, how to re-set the growth foundation of the advisory business to be more competitive in an increasingly crowded landscape, a masterpiece on best practices in how to scale a (multi-)professional services firm (remote or in-person!), learning to give better feedback to team members, or migrating our own role in the business to be less advisor and more instructor, manager, or executive leader.

So as the summer season and summer vacations get underway, I hope that you find this suggested summer reading list of books for financial planners to be helpful… and please do share your own suggestions in the comments at the end of the article about the best books you've read over the past year as well!

Weekend Reading For Financial Planners (June 10-11)

June 9, 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 the House has passed legislation that would expand the definition of who qualifies as an accredited investor eligible to invest in certain private investments to include those who pass an exam designed by the SEC, and those with certain licenses or educational backgrounds, including financial advisors. And given the opaque nature of many private investments, financial advisors could play an important role in helping their clients assess whether these opportunities make sense for their portfolio and broader financial plan.

Also in industry news this week:

A study has found that during the past several years, investors are not just bypassing mutual funds for ETFs, but are increasingly investing in individual equities, shaped by a new wave of younger market participants
Congressional leaders are planning to introduce legislation that would fix a variety of drafting errors in “SECURE Act 2.0”, including sections regarding RMDs and IRA contribution limits

From there, we have several articles on cash flow and wealth:

Why being ‘rich’ and being ‘wealthy’ are not necessarily the same thing and how advisors can help clients identify the differences
How a client might have hundreds, and not just 4, “money scripts” that drive their financial decision-making
How exploring a client’s social-emotional relationship with money can help explain their spending decisions and other financial choices

We also have a number of articles on retirement:

Why many retirees are choosing “semi-retirements”, continuing to work part-time well after traditional retirement age
Why the biggest challenge retirees face could be replacing the social networks they built during their careers
3 techniques advisors can use to help reluctant retirees spend more

We wrap up with 3 final articles, all about the path to career success:

Why it is important to recognize that even the most successful individuals typically have to make sacrifices both along the way and in their current positions
How to identify and mitigate the “microstresses” that build up throughout the work week
How cultivating a sense of moxie can help individuals address “impostor syndrome”

Enjoy the ‘light’ reading!

Form U4: Common Missteps And Best Practices For RIAs

June 7, 2023 07:02 am 0 Comments CATEGORY: Regulation & Compliance

All Investment Adviser Representatives (IAR) of registered investment advisory firms are required to file Form U4, a regulatory filing containing public disclosures of certain information about financial professionals. And while IARs are responsible for keeping their own Form U4 up-to-date, Form U4 – unlike other regulatory forms like Form ADV that require an annual amendment – doesn’t need to be amended unless there is a change warranting an update, which can often lead to an IAR’s Form U4 being neglected over years or even decades, potentially becoming out-of-date if the IAR forgets to amend the form for any changes to their situation. Which means that, in order to fulfill their regulatory responsibilities for maintaining the accuracy of their Form U4, IARs (particularly those who haven’t looked at their Form U4 in a while) can benefit from a deeper understanding of Form U4 in general and from refreshing themselves on what’s in their own Form U4.

In this guest post, Chris Stanley, investment management attorney and Founding Principal of Beach Street Legal LLC, breaks down the key details of what’s included on Form U4, common missteps that may trip up IARs in their filings, and best practices for preparing and filing Form U4 with state and Federal regulators.

One of the first challenges in preparing Form U4 is understanding which sections to complete: Because Form U4 is used by both IARs and registered representatives of broker-dealers, some sections of the form aren’t applicable for those registering solely as IARs. And when completing the sections of Form U4 that they are responsible for, IARs may come across language that is ambiguous or even conflicts with the language used on different regulatory forms. For instance, while some IARs who are independent contractors with their firms may be considered “employees” for the purposes of the firm’s Form ADV, they would still need to classify themselves as “independent contractors” when completing their Form U4.

Additionally, IARs and their employers may need to familiarize themselves with the requirements of the state(s) in which they’re registered to properly complete Form U4. For example, some states require registrants to be fingerprinted before approving their registration, and some have different rules for dually-registered IARs, which may only allow IARs to be registered with RIAs and broker-dealers if they are affiliated with each other – or may not allow dual registration in any case. And because IARs generally cannot solicit new business or render investment advisory services until their registration has been approved by their applicable states, any hangups in the registration process caused by incorrectly filling out Form U4 can leave the IAR unable to do their job for several weeks or more.

Ultimately, even though many IARs rely on their compliance departments to handle their Form U4, IARs are still responsible for reviewing and ensuring the accuracy of their Form U4 and for making sure that any required updates are reflected on the form (either by amending the form themselves or by notifying the proper compliance personnel at their firm). Additionally, it’s worth remembering that, save for certain personal information like home addresses and birthdates, much of the information on Form U4 is made public on the SEC’s website. Which makes it all the more important for IARs to ensure Form U4 is up to date and that the way they are presenting themselves to current and potential clients in public – including content on their website, advertisements, and social media post – aligns with their (also publicly available) regulatory disclosures!

#FA Success Ep 336: Showing Prospects An (Asset) Map To Generate More Advice Engagement, With H. Adam Holt

June 6, 2023 07:07 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 336th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Adam Holt. Adam is a principal with RubinGoldman and Associates, and the Founder and CEO of Asset-Map, a financial planning tool that helps financial advisors create a visual representation of their clients’ financial situation, reaching over 1.25 million users.

What's unique about Adam, though, is how he combined his early career training in geographic information systems to make land use decisions using maps, with his work as a financial advisor sitting across from ultra-high-net-worth clients, and began to create “mind maps” to visually capture for himself all the details of their very complex financial situations… which became so popular with his clients, and then other financial advisors in his firm, that he eventually turned it into an advisor software company – Asset-Map –that helps financial advisors create their own visual representations of their clients’ financial situation.

In this episode, we talk in-depth about how, while working with ultra-high-net-worth clients, Adam began to draw his own financial maps to help him better visualize his clients’ complex financial situations on one page (and then realized that by showing his financial planning maps to his clients, they became better engaged in the financial planning process, why Adam structures his Asset Maps to concentrate on 5 components – important people in the household, income sources, assets, liabilities, and insurance policies – to illustrate a holistic picture of the clients’ financial journey, and how Adam designed his Asset-Maps to be used as tear sheets (instead of serving as a “one-page financial plan”) because the goal is not to conduct a complex analysis, but instead simply to provide clients with a quick and easy-to-understand visualization of the topic to facilitate a complex conversation, instead.

We also talk about how Adam almost didn’t land his first job with Equitable because he didn’t do well on his insurance exams and only lucked into the job because a newly-hired manager happened to need one more insurance producer to meet his own numbers, how, in the early stages of his career, Adam wanted to work with business owners and found that by asking people he knew for help to connect him with business owners (instead of asking for a referral), he ended up gaining referrals more genuinely and consistently, and how, after getting his initial version of Asset-Map approved by the compliance department of his firm, Adam tripled his production each year for 3 years… which caught the attention of other advisors in the firm, eventually leading to Asset-Map being incorporated into the financial planning process for 1,600 of the firm’s clients and eventually become the standalone software company it is today.

And be certain to listen to the end, where Adam shares how he didn’t initially think Asset-Map would grow beyond his practice but found that having mentors and hiring the right people for the right roles helped support his journey and get him where he is today, why Adam encourages advisors looking to launch their own fintech companies to pursue their ideas as long as it is innovative and they feel can solve a real problem, but still have a realistic understanding of the amount of sacrifices, lifestyle changes, and support that is needed to really build a software business, and why Adam believes the key to success for younger, newer advisors is being committed to continually learning from the industry and to acquire their CFP marks… not for the credentials themselves, but so they can gain knowledge to become credible educators to attract and serve their future clients.

So, whether you’re interested in learning about how Adam leveraged his education in geographic information systems to create his Asset Map, why Adam believes that surrounding oneself with the right people can help increase accomplishments, or why Adam feels, in financial planning, direction is better than precision on a 30-year journey, then we hope you enjoy this episode of the Financial Advisor Success podcast, with H. Adam Holt.

The Latest In Financial #AdvisorTech (June 2023)

June 5, 2023 07:02 am 0 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the June 2023 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 Riskalyze has completed its previously-announced rebranding, and will now be known as “Nitrogen”, a ”growth platform” for advisory firms – which represents less of a shift in the platform’s core function (given that Riskalyze’s risk tolerance tool was always more about providing a clear way for advisors to generate a proposal that demonstrates their value to prospective clients and facilitating their conversion into paid customers, than it was ‘just’ about quantifying risk tolerance for compliance purposes), and more of an acknowledgment of its true value proposition as a ‘sales enablement’ tool which has allowed it to achieve dominant market share (despite spawning numerous low-cost risk tolerance assessment competitors).

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

InvestCloud, a TAMP and all-in-one advisory technology platform which has undergone rapid growth in recent years through the acquisition of numerous disparate technology tools in order to compete with its more-established competitor Envestnet, has announced the departure of 7 senior executives (including the CEO), suggesting that the platform’s execution of a growth-through-acquisition hasn’t paid off as hoped for by its private equity owners
Marketing automation technology platform Snappy Kraken has rolled out Freedom360, an outsourced marketing service running on the same technology that it builds and sells to advisors to implement themselves, highlighting an emerging opportunity for technology providers to sell ‘fractional’ services to advisors craving a cost-effective way to outsource the tasks that the technology can facilitate (without having to hire their own internal staff)
Health and longevity software maker Genivity has been acquired by Lumiant to join its suite of holistic life planning tools, raising questions about whether the wave of individual specialized planning options in recent years is beginning to encounter the reality that advisors can’t realistically adopt (or at least don’t want to separately pay for) every specialized tool on the market

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

CRM platform Redtail has announced a significant overhaul of its pricing model by switching to a per-user fee (rather than its previous model of including up to 15 advisors on one database license) – which, while equating to large price increase for midsized advisory firms, may in fact go to show just how much it has underpriced its software under its current model, which will now be aligned with (and even still cheaper than some) other providers in the CRM category
Retirement income planning platform Income Lab has released a new ‘Retirement Stress Test’ feature allowing clients to see how their retirement plans would have fared during various historical worst-case scenarios, continuing the platform’s push to move retirement conversations beyond abstract Monte-Carlo-style probability-of-success numbers

And be certain to read to the end, where we have provided an update to our popular “Financial AdvisorTech Solutions Map” (and also added the changes to our AdvisorTech Directory) as well!

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