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#FA Success Ep 329: When Scaling Gets (Operationally) Messy And Outsourcing Operations To Streamline Or Automate, With Charesse Spiller

April 18, 2023 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Charesse Spiller Podcast Featured Image FAS

Welcome back to the 329th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Charesse Spiller. Charesse is Founder and Principal Consultant for Level Best, an operations and process strategy consulting firm based in Houston, Texas.

What's unique about Charesse though, is how she has founded a consulting firm that doesn’t just try to teach financial advisors how to systematize and automate, and instead actually works as an outsourced provider to build and implement those systems… with a goal of working themselves out of a job over 6 to 12 months so the advisory firm can once again run on its own (but now, in a far more streamlined and efficient process).

In this episode, we talk in-depth about how Charesse developed her approach of not only evaluating an advisory firm’s technology, but also their processes and systems, and incorporates the importance of training the firms’ teams to implement best practices within their existing system, how Charesse defines her 3 pillars of operations including streamlining (which is all about creating an efficient repeatable process), automation (which is about leveraging technology to not just streamline a task but make automate it away altogether), and delegation (for that subset of tasks that can’t feasibly be automated, but could still be trained and handed off to another team member to free up the advisor’s time), and how Charesse developed her own 3 tiers of service from consulting with advisors about the tech they could be using, to working with advisors to build their workflows and process maps within the firm, to helping firms actually implement their new workflows and processes in their technology (and train their teams to actually use the tech and follow the new processes!).

We also talk about how Charesse discovered that for larger RIAs the real blocking point in scaling is often not whether the firm has developed systems and processes but a lack of clear accountability about which team member is responsible for each step of the process as the firm grows, why Charesse decided to create an educational resource and community called FinOps Co-op to further educate operations professionals on how they can optimize their systems and processes on an ongoing basis, and how Charesse realized that even though she was helping others optimize their time and businesses, she needed to help herself as a founder of a consulting firm and hired a financial coach to get her more centered and steer away from possible burnout.

And be certain to listen to the end, where Charesse shares how she’s lived first-hand the challenge that all service firms face as they begin to scale up with staff and have to revisit and increase their pricing to be able to afford to scale up, how she decided to go from an employee in an advisory firm to a freelancer supporting advisory firms to an all-in founder of a consulting firm for advisors, and how Charesse has combined reading business books, leveraging local mentoring programs, and forming 2 Mastermind groups for herself to level up her own marketing, sales, and leadership skills as she and her business grew.

So, whether you’re interested in learning about how Charesse helps advisory firms create better processes and follow through on implementation, how Charesse is helping to further educate operations professionals on best practices through her FinOps Co-op, or why Charesse offers additional consulting services to advisory firms as they scale so that their processes evolve as the firm evolves, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Charesse Spiller.

3 Ways To Ask For Referrals More Effectively Based On Pro-Social Psychology

April 17, 2023 07:06 am 0 Comments CATEGORY: Marketing

New client growth is the lifeblood of financial planning firms and there are myriad strategies for attracting qualified prospects, but many of these come with a hard-dollar or time cost for the firm. Which is why many advisors seek to leverage client referrals, where their clients refer family members, friends, or colleagues to the advisor. At the same time, asking clients to make referrals (and having the referred individual actually reach out to the advisor) can be challenging. With this in mind, advisors can use several ways to ask for referrals and tactics to increase the chances that their clients will make more successful ones.

Giving and receiving referrals can be thought of as a pro-social, virtuous loop, where both the giver and receiver of the referral receive benefits from the exchange, where giving a referral can help someone who needs it and at the same time feels good to provide help. This suggests that in addition to the advisor receiving referrals, clients, too, can benefit from the positive feedback of giving referrals and the emotional satisfaction of helping their friends and family (as research has found that financial planning clients most commonly refer friends or family members who either asked for a recommendation for an advisor or told them about a financial challenge they were having, leading the client to suggest their advisor might be able to help).

Importantly, asking a client for referrals won't guarantee that the referral will actually contact the advisor. For instance, research has found that while 25% to 35% of financial planning clients make referrals, advisors only meet referrals from 3% to 5% of their client base. This may be because the recipient didn't request a referral in the first place or because the client provided an advisor's contact information without explaining how they may have benefited from working with the advisor or why the advisor might be able to help the recipient.

One way an advisor can improve the outcomes of client referrals is to ask their clients 'referral story' questions, which can help clients articulate to potential referral recipients their own personal connection to financial planning, their experience with their advisor, and the benefits of their work together. By asking clients to identify a specific issue they worked on with the advisor, the steps they took to address the issue, and the greatest impact they got from solving it, clients can start crafting their own referral stories that can provide more context to the recipients of their referrals. Advisors can also improve their referral outcomes by asking for feedback – even framing it as asking for advice – from their clients (e.g., asking for advice on how they might go about meeting and working with others like them). And by doing some research on their referrals, advisors can ask for introductions to only those who they believe would make good clients.

Ultimately, the key point is that while client referrals can be one of the most cost-effective methods for attracting prospective clients, successful referrals do not necessarily come automatically. But by helping clients craft their own referral story and enlisting their support in generating referrals, advisors can increase the chances of getting more referrals – and introductions to the best referrals – going forward!

Weekend Reading For Financial Planners (April 15-16)

April 14, 2023 02:01 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 on the heels of introducing its own self-clearing platform and acquiring fellow RIA custodian Shareholder Services Group, Altruist announced that it raised $112 million in a series D funding round, bringing its total funding to more than $290 million. The company said the bulk of the funds will go toward research and platform development as it attempts the challenging task of getting more mid-sized RIAs to move over to Altruist from their current custodian.

Also in industry news this week:

The Foundation For Financial Planning has gotten a boost toward its goal of connecting 10,000 CFP professionals with pro bono work thanks to increased funding from Orion Advisor Solutions
FINRA has resubmitted a proposal, now with tighter rules, that would allow a broker working remotely to supervise other brokers, without the broker's home being designated as a branch office

From there, we have several articles on practice management:

How delegating tasks that they don't enjoy can not only save an advisor time, but also empower their staff
Why technical experts can be more successful in leadership roles than 'professional managers'
Why one large RIA focuses on filtering prospective clients and employees to promote the long-run sustainability of its company culture

We also have a number of articles on Social Security:

Why news stories about possible future reductions in Social Security benefits are likely leading some individuals to claim early, and what advisors could do to assuage these fears
How advisors can help clients reduce the amount of their Social Security benefits (and overall income) subject to taxation
A proposed strategy within defined contribution retirement plan investments that could encourage more individuals to delay claiming Social Security benefits

We wrap up with 3 final articles, all about managing distractions:

Why focusing on what one can control can be more productive than 'doomscrolling' through the news
The potential productivity and happiness benefits of doing an audit of one’s online activity
How concerns about distraction are not exclusive to the modern era, having been shared by medieval monks centuries ago

Enjoy the 'light' reading!

How Different Monte Carlo Models Perform In The Real World: Assessing Quality Of Predictiveness In Retirement Income Forecasting Models

April 12, 2023 07:07 am 0 Comments CATEGORY: Retirement Planning

When planning for retirement, it’s effectively impossible to precisely forecast the performance and timing of future investment returns, which in turn makes it challenging to accurately predict a plan’s success or failure. And while Monte Carlo simulations have made it possible for advisors to create retirement projections that seem to have a reasonable basis in math and data, there has been limited research as to whether Monte Carlo models really perform as advertised – in other words, whether the real-world results of retirees over time would have aligned with the Monte Carlo simulation’s predicted probability of success.

Given the importance of some of the recommendations that advisors may base on Monte Carlo simulations – such as when a client can retire and what kind of lifestyle they can afford to live – it seems important to pay attention to how Monte Carlo simulations perform in the real world, which can reveal ways that advisors may be able to adjust their retirement planning forecasts to optimize the recommendations they give. By conducting research assessing the performance of various Monte Carlo methodologies, Income Lab has suggested that, at a high level, Monte Carlo simulations experience significant error compared to real-world results. Additionally, certain types of Monte Carlo analyses were found to be more error-prone than others, including a Traditional Monte Carlo approach using a single set of Capital Markets Assumptions (CMAs) applied across the entire plan, and a Reduced-CMA Monte Carlo analysis, similar to the Traditional model but with CMAs reduced by 2%.

Notably, Historical and Regime-Based Monte Carlo models outperformed Traditional and Reduced-CMA models not only in general, but also throughout most of the individual time periods tested, as they had less error across many types of economic and market conditions. Furthermore, compared with the Traditional and Reduced-CMA Monte Carlo methods, the Regime-Based approach more consistently under-estimated probability of success, meaning that if a retiree did have a ‘surprise’ departure from their Monte Carlo results, it would be that they had ‘too much’ money left over at the end of their life – which most retirees would prefer over turning out to have not enough money!

Ultimately, although Historical and Regime-Based Monte Carlo models seemed to perform better than the Traditional and Reduced-CMA models, advisors are generally limited to whichever methods are used by their financial planning software (most of which currently use the Traditional model). However, as software providers update their models, it may be possible to choose alternative, less error-prone types of Monte Carlo simulations – and given the near-certainty of error with whichever model is used, it’s almost always best for advisors to revisit the results continually and make adjustments in order to take advantage of the best data available at the time!

#FA Success Ep 328: Turning Senior Housing Guidance From A Non-Discretionary Value-Add To A Pay-For-Value Service, With Thomas West

April 11, 2023 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 328th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Thomas West. Thomas is a Senior Partner for Signature Estate & Investment Advisors, an independent RIA based in Los Angeles, California, that oversees nearly $16 billion in assets under management, with $570 million of those assets being managed by Thomas' practice that serves more than 250 client households.

What's unique about Thomas, though, is how he has leveraged providing advice to seniors looking for appropriate housing and health care as they deal with medical and cognitive issues in their later years, into a standalone offering he calls the "Lifecare Affordability Plan", which was so successful as a value-add to his clients and their elder parents that he was able to spin it out to a separate DBA under his firm and begin charging for it as a standalone service.

In this episode, we talk in-depth about how, in the early stages of his career selling long-term care insurance, Thomas realized that so-called 'one-legger' senior couples – where one spouse is healthy but the other is not, such that if something happened to the healthy spouse, they’d both be in trouble – face unique challenges as a couple because their decisions about health care have significant financial ramifications but are usually decided with the family (not the financial advisor), how Thomas leveraged the guidance he was providing to senior couples that needed help navigating health and especially cognitive decline into creating a DBA to his firm that offers his trademarked "Lifecare Affordability Plan" so that he could get paid for the in-depth advice he was providing, and why Thomas feels his planning is so important as it he saw personally how his father-in-law struggled with managing his financial planning during the financial crisis in 2008 while facing medical issues of his own shortly after his mother-in-law died of cancer.

We also talk about why despite the rising industry trend towards centralized model portfolios managed on a discretionary basis, over 90% of the assets that Thomas and his firm manage are held on a non-discretionary basis, how Thomas has found because he mostly manages non-discretionary assets and has to call clients about every investment recommendation it has actually increased the frequency of client communication and portfolio customization and allowed him to more deeply engage with clients, and why Thomas' firm doesn’t charge more for the additional service of trading assets for clients on a discretionary basis and instead charges less for clients who are willing to let him manage with discretion (yet in practice, has been able to differentiate and grow primarily with the firm’s higher-priced non-discretionary offering instead).

And be certain to listen to the end, where Thomas shares why he believes that newer advisors have an opportunity to provide value for their clients by being proactive in having conversations about planning for medical crises before they arise, and by doing so, they can create deeper, longer-lasting relationships with their own clients, how Thomas has become more comfortable with easing into his big ideas and understanding that they won’t all succeed (as he admits that he would dive headfirst into ideas and take failure personally in the past), and how Thomas' own definition of success has shifted through his career from one that focused on being competitive about his production in the early years, to the greater good impact that he feels his elder planning work brings now, which has kept him working far harder now than he ever expected when he first launched his advisory business years ago.

So, whether you’re interested in learning about how providing a standalone Lifecare plan has helped Thomas create more longer-lasting relationships with his clients, why Thomas feels managing non-discretionary assets for his clients gives them more agency in their financial planning, or how Thomas plans to expand his financial planning vision beyond his practice, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Thomas West.

Highlights From The 2023 T3 Advisor Conference

April 10, 2023 07:07 am 0 Comments CATEGORY: Conferences

The 2023 Technology Tools for Today (T3) Advisor Conference, held last month in Tampa, Florida, featured a large gathering of financial advisors and representatives across the fintech industry attending the 2½-day conference. Hosted by Joel Bruckenstein and his team from T3 Consulting, the conference covered everything from how technology providers are continuing to expand their features and integration capabilities to how advisors can manage their own expanding tech stacks to the ever-present question of how AI tools like ChatGPT will impact the advisory industry.

In this guest post, Craig Iskowitz – CEO and founder of Ezra Group, a financial technology consulting firm – summarizes this year’s conference highlights with his signature Twitter-driven recap, kicking off with presentation highlights from financial planning software platform MoneyGuide, which announced its own version of the increasingly popular “one-page financial plan”, reflecting the greater demand from advisors to streamline printed plan materials. Additionally, MoneyGuide rolled out a new "Plan Pulse" dashboard allowing advisory firms to look across all of their clients’ plans and identify those who have fallen behind.

Another ongoing theme of the conference, which has persisted for several years, is the continuing effort to expand software integration capabilities to cover all parts of a client’s plan with no gaps caused by the failure of one tool to talk to another, and the different approaches that firms take to achieve better integration – whether they work to increase their integration with different third-party software tools (like MoneyGuide), offer a variety of products and services that can be purchased separately but integrate seamlessly with one another (like Morningstar), or combine virtually every type of technology tool into a single “growth platform” (like Riskalyze) that seeks to serve as virtually the advisor’s entire tech stack in one product!

Other major highlights from the T3 Advisor Technology Conference included:

Several speakers talked about how their firms are using AI technology, including Orion Advisor Technology President Brian McLaughlin, who discussed how advisors add value in ways that can’t be co-opted by AI and whose firm recently integrated ChatGPT into its RedTail CRM software.
The resources that advisory firms invest in new technology can be wasted if employees don’t know how (or why) to use it. As Sequoia Financial’s Chief Technology Officer Trevor Chuna discussed, a software adoption plan goes beyond just initial training and includes updates on new features, ongoing training, and regular communication to get ongoing results.
An update from Fidelity provided data suggesting that clients increasingly want support in areas beyond investment management from their financial advisors – which in turn has led advisors to invest heavily in specialized planning software to go deeper into more areas as robo-advisor technology has drastically reduced the cost of providing investment management.
An update from Schwab, amidst the final stages of its integration with TD Ameritrade (scheduled for completion before next year’s T3 conference), confirmed that TDA's thinkpipes and iRebal trading and rebalancing tools are expected to be retained and migrated over to Schwab. The Schwab executives also noted that the Schwab Advisor Center platform will incorporate many of the most popular features and functionality of the Veo advisor platform. SAC, like Veo, allows for integrations with many third-party platforms.
RIA owners who sell their firms to large RIA aggregators based on overall price alone – without fully understanding the terms of the deal – can find themselves regretting their decision, according to Dynasty Financial Partners founder Shirl Penney.

Finally, the annual T3/Inside Information Software Survey, which assesses the software programs used by financial advisors, found that almost every software category has seen greater adoption among advisors – as while advisors are increasingly offering comprehensive advice and expanding how they provide value to their clients, their tech stacks are also expanding in kind – which only reinforces the challenges of navigating and maximizing the value of numerous software tools via enhanced integration capabilities in the software platforms themselves.

Ultimately, the 2023 T3 Advisor Conference brought together vendors, industry thought leaders, financial advisors, and students to gain insight into the fast-paced growth and change of the financial planning industry and the new technology tools available to help financial planning businesses flourish. And with the expansive array of new and upcoming technology solutions, there was an increased focus – which will no doubt continue as a theme in future conferences –not just on the tools themselves but also on how to use an entire suite of technology solutions while still creating a seamless planning experience for clients!