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#FA Success Ep 343: The Evolution Of Super-OSJ Platforms To Support Independent Advisors, With Rita Robbins

July 25, 2023 07:05 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 343rd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Rita Robbins. Rita is the Founder and President of Affiliated Advisors, a Super-OSJ with Royal Alliance that provides support to 90 financial advisors and collectively oversees $3.5 billion in assets under advisement.

What's unique about Rita, though, is how as the founder of one of the first woman-owned Super-OSJs nearly 30 years ago, she has witnessed first-hand the evolution of the Super-OSJ model from providing local oversight of brokers selling proprietary products, into back-office platforms that provide an increasingly open-architecture product shelf coupled with compliance, technology, marketing, business management, and other support to independent financial advisors.

In this episode, we talk in-depth about how Rita experienced the evolution of broker-dealer platforms throughout her decades-long career where the technology and compliance, that was once the core of what Super-OSJs provided, is now increasingly supplanted by more in-depth services to support their advisors, how Rita has grown and scaled her platform by focusing on 3 levers of recruiting advisors, organic growth from the advisors and platform itself, and inorganic growth from advisors buying and selling practices with about half being internal sales, and how the growth of Rita’s firm accelerated in the pandemic because of the middle- and back-office support it provides its advisors through technology, including and especially the ability to work remotely as so many banks and wirehouses were ill-prepared for the digital transition.

We also talk about how, despite not being a financial advisor herself or ever working with clients, Rita became very familiar with the needs of the advisor community after spending 10 years on the road as a wholesaler, which gave her the confidence to launch an OSJ, how Rita was inspired to start her own OSJ after helping an insurance company launch their own broker-dealer platform and realizing that she wanted to have more control over her own success which could only be done if she went out on her own, and how Rita has expanded the leadership of her platform to include 2 new partners that each have their own specializations so the new partners expand – rather than merely dividing up – the capabilities of the firm.

And be certain to listen to the end, where Rita shares how she dealt with the early-career pressures of having to show up and even dress the same way men did to prove she was trustworthy, how Rita was able to overcome the trauma of discovering a business partner and long-term friend had been embezzling money from the firm that was only discovered when a team member discovered their health insurance had lapsed because the business partner wasn’t paying the premiums, and how Rita still struggles with the balance between getting caught up on things that can't really be controlled and giving time for business challenges and business cycles to work themselves through to the next stage of growth.

So, whether you're interested in learning about how Rita structures her broker-dealer platform to support advisors, why Rita believes that Affiliated Advisors' values helps her platform stand out amongst others in the industry, or why Affiliated Advisors deliberately does not have an independent RIA, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Rita Robbins.

Academic Research Vs Industry Experience: Evaluating The Value Of Practice Management Advice

July 24, 2023 07:02 am 0 Comments CATEGORY: Practice Management

As a financial advisor, there are many potential sources of advice on running a practice and serving clients, from fellow advisors to coaches to academic researchers and others. Sometimes, it can be tempting to rely solely on the advice of those with an ‘in-the-trenches’ perspective, as these individuals have actually lived out a similar experience and can appreciate some of the nuanced challenges that an industry outsider might not. For example, in the financial planning context, it can be difficult for those who have not worked with clients to understand the challenges in gathering needed financial data from them. However, there can also be value in insights that come from outside perspectives, and it’s even possible that ‘those who have done’ could be extremely misguided about what they believe works.

The experience of bodybuilders provides an interesting perspective to this dynamic, as they are incentivized to learn as quickly as possible and to do what works to achieve their specific bodybuilding goals. One of the important questions for these athletes is the amount of time they should rest between sets of exercise to promote maximum muscle growth. But while a survey of bodybuilders found that shorter rest periods (30-60 seconds) were considered to be more advantageous for building muscle, academics using randomized control studies determined that longer intervals between sets (3 minutes) actually led to greater muscle growth. This is an example of outside research serving as a useful check on the accepted conventional wisdom among practitioners.

At the same time, while bodybuilders have the benefit of very fast feedback loops (as they can generally see the results of changes to their workout routine very quickly – often within days or weeks) and can typically identify the causal reason for the new results (e.g., changing the amount of rest time between sets), success as a financial advisor is far more multifaceted and subject to lots of random noise that can be misinterpreted in processes with very long feedback loops (since effective business development practices can take months, quarters, or years to provide any real results). For example, if an advisor has a good streak of converting prospects into clients, it could be because of a change they made in their discovery meeting process, or it could just be the result of random noise (e.g., prospects that approached the firm in a given month just happened to be more engaged, while those who approach the firm next month might be less so).

This raises the question for advisors of how to evaluate practice management advice and industry research and which sources of advice to trust. To start, it can be sensible to give greater weight to advice or resources from those who have been in the trenches trying to solve a business issue, though it would be imprudent to cut off the potential to learn from other avenues entirely (e.g., a planning template designed by an outsider but tailored to the needs of a firm’s clients could be more useful than one designed by another planner for a different type of client). And when reviewing academic research, signs advisors can look for to assess the study’s reliability and relevance to their practice include larger sample sizes, participants who are similar to their own clients, and qualified researchers with industry experience.

Ultimately, the key point is that while those with on-the-ground expertise often provide helpful practice management advice, academic researchers and others can also provide valuable perspectives. Because as the example of bodybuilders shows, sometimes commonly accepted wisdom among practitioners can benefit from being challenged by outside research!

Weekend Reading For Financial Planners (July 22-23)

July 21, 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 Charles Schwab's latest annual RIA Benchmarking Study shows that while average firm assets under management fell in 2022, due largely to weak market performance, organic growth remained strong, mitigating a portion of the market effects on client portfolios. Further, the study identifies the traits of "top performing" firms, which, during the past 5 years, saw nearly triple the client and net organic asset growth compared to other firms.

Also in industry news this week:

How an SEC committee proposal to allow third-party examinations of the growing number of RIAs harkens back to a similar proposal that failed to advance in Congress more than a decade ago
A study shows that a majority of advisory firm clients surveyed chose the first advisor with whom they met, though younger clients appear to be doing more research before choosing an advisor

From there, we have several articles on wellbeing:

Why tracking employee wellbeing metrics could be good for both firms and their employees
How vacations can improve an individual's physical, mental, and spiritual health, in addition to their work performance
Key wellness trends that firms can consider implementing with their employees to promote their wellbeing and potentially improve retention

We also have a number of articles on spending:

Why a previous skeptic of luxury cars decided that buying a $65,000 Porsche was the right decision for her
Why it is important for clients to consider the 'hidden' costs of buying a vacation home before jumping into a purchase
How advisors can help clients strike a balance between living for today and delaying gratification

We wrap up with 3 final articles, all about career development:

Why neither advisory firms nor their advisors can get everything they want out of an employment relationship
The important, but less obvious, factors an advisor can consider when thinking about changing firms
What knowledge workers can do to avoid having their jobs taken over by artificial intelligence tools

Enjoy the 'light' reading!

IAR CE: Continuing Education Requirements For Investment Adviser Representatives And How Different States Adopt NASAA’s Model Rule

July 19, 2023 07:07 am 0 Comments CATEGORY: Regulation & Compliance

Continuing Education (CE) requirements are common for many professions, but historically there has been no minimum CE requirement for individual Investment Adviser Representatives (IARs) of advisory firms. While holders of certain credentials (e.g., CFP certificants and CFA charterholders) have CE requirements to retain their credentials, IARs without such credentials haven’t traditionally had any ongoing CE requirements. Which meant that an IAR could go years – or even decades – in their career without any requirement to refresh or expand the knowledge they had when they were first registered. To address this issue, the North American Securities Administrators Association (NASAA) in 2020 released a Model Rule creating the first-ever CE requirements for IARs. In 2022, the first states to adopt the new Model Rule implemented their IAR CE requirements, and by 2024, at least 15 states will have begun requiring IAR CE.

In this post, Senior Financial Planning Nerd Ben Henry-Moreland discusses how IARs can determine whether they’re required to complete CE and, if so, how to go about it – since with the adoption of the Model Rule ramping up among states, more and more IARs will be subject to the new CE requirements.

At a high level, every IAR who is registered in a state requiring CE must complete a total of 12 CE credits each year, comprising 6 credits of Ethics and Professional Responsibility and 6 credits of Products and Practice. The caveat, however, is that content must be approved by NASAA to count towards IAR CE requirements – the only exception being CE content that goes towards FINRA’s Regulatory Element CE requirement for registered representatives of broker-dealers, which can also be used for IAR CE (when the IAR is also a registered representative) even when it isn’t specifically approved by NASAA. On the other hand, holders of other credentials who have their own CE requirements, such as CFP certificants and ChFC designees, can only apply CE credit for their designations towards their IAR CE requirements if the content is NASAA-approved, meaning that IARs who hold those credentials may benefit from finding CE sources that are eligible for both sets of requirements (particularly if they’re used to getting ‘free’ CE from sources like product vendor webinars, which largely aren’t NASAA-approved).

There are other considerations for IARs to be aware of, particularly for those becoming registered as IARs for the first time, changing firms and/or state registrations, or temporarily withdrawing their registration (such as to leave work to raise a family). And for IARs who fall behind on their CE requirements, it’s important to be aware that, while IARs who don’t complete the required 12 credits can still renew their registration and work with clients in the following year, failure to catch up in the next year results in being unable to renew the IAR’s registration in any states with IAR CE requirements.

Looking ahead, it will be worth monitoring how different states adapt NASAA’s IAR CE Model Rule into their own investment adviser regulations. Because while the states that have already adopted IAR CE requirements follow the Model Rule almost verbatim (making it relatively easy for IARs who work across state lines to understand their requirements), it seems inevitable that we’ll see more individual nuances as more states adopt the rule. Ultimately, however, although IAR CE is a new requirement that will take time to iron out wrinkles in its implementation, it is a positive development that will raise the bar for an industry that previously had no baseline requirement for individuals giving investment advice to regularly update and expand their knowledge.

#FA Success Ep 342: Scaling To $1M Of Financial Planning Fee Revenue By Specializing In The Divorce Niche, With Nancy Hetrick

July 18, 2023 07:05 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Nancy Hetrick Podcast Featured Image FAS

Welcome back to the 342nd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Nancy Hetrick. Nancy is the Founder and CEO of Smarter Divorce Solutions, a consulting firm based in Phoenix, Arizona that provides financial expertise to individuals and couples (and sometimes, mediators and attorneys) going through the divorce process.

What's unique about Nancy, though, is that after going through her own 'do-it-yourself' divorce process – and then discovering after the fact that none of it was enforceable after her ex-husband chose not to comply with the agreement – she decided to become a divorce expert to help other women avoid the same fate… and in the process scaled her divorce practice as high as 8 team members and $1M of annual revenue in divorce fees, on top of growing her RIA to $65M of AUM when her divorcee clients inevitably needed help with rollovers and investment implementation after the divorce was finalized and they received their settlements.

In this episode, we talk in-depth about how Nancy overcame her initial imposter syndrome and went from finding attorneys to be threatening to realizing that they are just regular people and do not necessarily know a lot about finance by recognizing how important her own life experiences were, how Nancy also did expand her technical expertise by earning not only the CDFA credential, but also became a Master Analyst in Financial Forensics with a Matrimonial Specialization and a Certified Divorce Coach, too, and how Nancy grew her business in the divorce niche through networking events not to connect with individuals going through a divorce, but rather to build relationships that positioned her as an expert who "provides individuals and couples with a kinder, gentler, and much more affordable divorce" with people who could then refer to Nancy their own friends and family who might be going through a divorce.

We also talk about how Nancy explains the value of her divorce planning work to prospective clients and what she actually does to earn her fees on a divorce case, the steps that Nancy took to begin to scale her divorce practice as she built her reputation and the volume of clients grew, and how Nancy ultimately decided that the responsibilities that go along with being the CEO of a growing RIA and divorce practice, from managing a growing roster of employees to dealing with compliance and paperwork, were not for her, such that she eventually decided to fire most of her staff, sell her RIA, and 'just' focus on the divorce work as a solo practitioner (and is now happier and has better take-home pay than when her business was much larger!).

And be certain to listen to the end, where Nancy shares how, in reality, there are so many sub-specializations within the divorce planning niche that she wants to develop a national directory to help prospective divorcees right the find divorce financial planner, why Nancy suggests that despite the depth of specialization that’s necessary to work in the divorce space the best approach is to simply dive in and use client cases as a form of on-the-job training, and how Nancy found her own 'happy place' by just focusing on the divorce work she enjoys the most – both doing it directly with clients, and training other CDFA designees to build and run their divorce practices more effectively – and let go of the rest!

So, whether you’re interested in learning about how, because there are so many ways to niche in divorce financial planning, Nancy decided to create her own training program to help other financial advisors learn how they can niche focus their practices, how Nancy intentionally met with prospective clients at least 6 times over a 6-month period so that she could build a trusted reputation and gain more prospects, or how Nancy still operates as an IAR for her firm that she successfully merged and has structured solicitor agreements for the foreseeable future, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Nancy Hetrick.

Announcing IAR Ethics CE Day And The State Of The (Nerd’s Eye View) Blog

July 17, 2023 07:01 am 0 Comments CATEGORY: Nerd's Eye View

In the early days when financial advisors were first and foremost salespeople for insurance and investments products, the reality is that "advisor training and education" wasn't really about finance or advice… it was mostly just about learning how the company's products worked and how to effectively sell them to consumers. But as technology (in particular, the internet!) has increasingly made financial services products available directly to consumers, financial advisors have focused more and more on the business of financial advice itself.

This shift has not only led to ongoing growth of advanced professional designations like CFP certification and various 'post-CFP' designations, but more recently, it has even led to regulators recognizing that financial services professionals should probably have a greater obligation to maintain their educational knowledge on finance and the responsibilities of being a professional advisor. Accordingly, in 2020 the North American Securities Administrators Association (NASAA) introduced a Model Rule for the first-ever CE obligation for Investment Adviser Representatives (IARs) to maintain their Series 65 license after initially obtaining it.

As states then began to implement the Model Rule in 2021 and IAR CE obligations first took effect (in 3 states) in 2022, our Kitces Members Section made our written Nerd's Eye View blog content eligible for IAR CE credit to help financial advisors fulfill the new requirements (while also getting crossover credit for CFP, CPA, and other professional designations and licenses that advisors at RIAs often hold!).

Now in 2023, we're excited to announce the launch of our first-ever "IAR CE Day", a 6-hour live virtual event that will run on August 24th and allow financial advisors to fulfill the entire annual IAR Ethics CE obligation in a single day event (in addition to crossover credit for the bi-annual CFP Ethics requirement, and CE credits for other professional designations as well). While we're committed to maintain more than enough IAR CE Ethics content in our Members Section for Members to fulfill all their requirements each year, we've heard the feedback that many of you would prefer a live video-based event (instead of written articles for IAR CE)… and so for those who'd prefer to see it than read it, our IAR Ethics CE Day is for you!

We've also just launched our latest Kitces Course – "How To Dissect Existing Life Insurance Documents To Ensure Client Coverage Matches Their Needs" – as we continue to expand our curriculum of training for financial advicers on how to really delve deep in the data gathering process and the slew of primary documents that clients are expected to provide but few advicers are ever really trained in what to do with them. Our newest course on Life Insurance Policies adds to our existing programs on reviewing Tax Returns and navigating Estate Documents as well, and we're committed to continue to expand our financial advicer curriculum in the years to come!

This July also marks the release of our latest Kitces Research Study – this time, on Advisor Technology – where we delved deep into literally hundreds of vendors to understand what financial advisors are using (or not), what they actually like (or not), and the trends that are driving the growth of certain advisor technology vendors (or whole categories) over others. The results will be available to Members (and those who participated in the survey itself) next week, with the study available for free to the full advicer community at the end of the summer. In addition, on August 8th we'll be conducting a paid AdvisorTech Trends webinar, hosted by yours-truly and our Kitces Consulting Consortium partner Craig Iskowitz, to provide further perspective on trends and opportunities of particular interest to professional investors (VC, PE, and family offices), strategy teams, and AdvisorTech vendor and platform executives!

In the meantime, we continue to make ongoing investments into the Kitces platform and the Kitces team. The first half of the year saw 4 new hires at Kitces, including new Director of Advisor Learning & Development Patty Stilwell, Digital Content Editor Estelle Di Francia, Digital Engagement Specialist Kelsey Hopper, and Engagement Specialist Claudia Lopez! In the 2nd half of the year and into 2024, we'll also be hiring a new Manager of People & Culture, a Curriculum DesigNerd and Instruction DesigNerd for our Education team, and a full-time Director of Advisor Research. We're also making heavy updates to the back-end of our website, with new systems that should expedite the login process and speed up pageloads and Members Section navigation (yes, we've heard your feedback that the site is loading more slowly lately, and we're doing something about it!).

All in pursuit of our mission: Making Financial Advicers Better, And More Successful, as we continue to execute on providing financial advicers with relevant content across our 4 strategic pillars: Navigation, Education, Research, and Development (and yes, our organizational strategy really does spell out N-E-R-D!). I hope you'll continue the journey along with us in 2023 and beyond!