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Weekend Reading For Financial Planners (Feb 11-12)

February 10, 2023 01:13 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 according to CFP Board leaders, “everything is on the table” when it comes to the organization’s announced competency standards review. Among others, one notable item that could be reviewed is the current certification requirement that a candidate must have attained at least a bachelor’s degree, which some observers have suggested limits the pool of potential CFP professionals at a time of high demand for advisor talent.

Also in industry news this week:

The SEC this week released its 2023 examination priorities, which include its new marketing rule, Reg BI, and complicated investments
The House of Representatives is considering legislation that would broaden the definition of who qualifies as an accredited investor and is potentially eyeing a role for financial advisors to help guide clients interested in private investments

From there, we have several articles on practice management:

A structured approach firms can use to design a forward-looking org chart
Why outsourcing certain operational tasks still requires ongoing work from firm employees
How firms can get employee buy-in when making major business changes

We also have a number of articles on retirement planning:

A study has found that retirement can lead to cognitive impairment, possibly as the result of reduced social engagement
Why professionals might consider taking several mini-retirements throughout their careers
A simple rule that can help individuals choose the best place to live

We wrap up with three final articles, all about meetings:

Why internal meetings can be bad for both productivity and employee wellbeing, and how firms can make them better
How one company benefited from canceling all meetings for an entire week
Tactics firms can use to reduce the burden of meetings, from sending asynchronous videos to implementing ‘No-meeting Wednesdays’

Enjoy the ‘light’ reading!

Kitces & Carl Ep 105: When A Prospect Doesn’t Meet Your Minimum: Navigating The Awkwardness Gracefully

February 9, 2023 07:05 am 0 Comments CATEGORY: Kitces & Carl Podcast

Kitces Carl Ep When A Prospect Doesnt Meet Your Minimums

For many financial advisors, setting asset minimums helps ensure that their firm can generate enough revenue to maintain business costs and compensate the advisor appropriately. While finding prospective clients who are a good fit for the firm can be challenging, what can be even more challenging is letting a prospect who doesn’t meet the firm’s asset minimum requirements know that they wouldn’t be a good fit for the firm. The topic of assets and net worth can be a very sensitive topic; some prospects may take it very personally when they’re told they don’t have enough to be taken on as a client, and at the same time, many advisors feel awkward when they have to turn prospective clients away.

In our 105th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards discuss some of the reasons that conversations about asset minimums with prospective clients can be so difficult, and offer a few ways to gracefully inform a prospect they do not meet the firm’s asset minimum while still providing value for them even if the relationship isn’t going to continue.

As a starting point, it’s important to recognize that many prospective clients may not know what an asset minimum is, why some advisors have them, and whether they would qualify to work with a particular advisor because of their minimum requirements. A simple way for advisors to educate prospects about asset minimums is to include the information on their firm’s website. This would help prospects searching for an advisor online to self-select themselves out from firms whose asset minimums may not apply to them. This could also help prevent them from scheduling unnecessary meetings in the first place, saving both the advisor and the prospect time and potential awkwardness.

Additionally, advisors can spend time in the initial discovery meeting explaining who the firm’s clients generally are when meeting with new prospects, reviewing typical asset management ranges and any particular niches served. This can help prospective clients who don’t see (or comprehend) the information on the firm’s website understand why working with the advisor might not make the most sense for them, which can help to avoid any hard feelings and make it easier for the prospect to accept why the advisor may decline the engagement. Importantly, even though a working relationship may not make sense, advisors can still offer to help the prospect move forward with their financial planning needs. For example, the advisor can offer a list of vetted advisors with lower (or no) asset minimums who would potentially be a better fit for the prospect , and they can even compile a brief list of some simple action items for the prospect to tackle on their own, so that they can begin addressing some of their most immediate financial planning needs.

Ultimately, the key point is that even though asset minimum conversations can be awkward, being honest and upfront can keep advisors from feeling pressured to engage with a client who can’t generate enough revenue to justify the relationship. And by communicating with honesty, clarity, and empathy, advisors can help mitigate any of the prospect’s disheartened feelings of rejection while still providing valuable guidance on what they can do on their own and who can help them, letting the prospect go with their dignity intact.

Navigating The Thrift Savings Plan: Planning Opportunities To Support Federal Employees, Military Servicemembers, And Veterans

February 8, 2023 07:02 am 0 Comments CATEGORY: Retirement Planning

Seasoned financial advisors have likely worked with clients with a wide variety of workplace retirement accounts, which can vary in terms of their investment offerings, fees, and other characteristics. But given that the U.S. government is the largest employer in the country, it can be especially helpful for advisors to be familiar with the ins and outs of (and recent changes to) the Federal government’s own defined contribution plan: the Thrift Savings Plan (TSP).

The TSP is available to both civilian Federal government employees as well as military servicemembers, and those who have left service can choose to maintain their TSP accounts (though they can no longer make contributions). While many features of the TSP (e.g., Roth contribution options and employer matches) are common to other workplace-defined contribution plans, the TSP has certain unique attributes, including lower fees than many private-sector plans and a fixed-income investment option exclusive to the plan.

In 2022, the TSP underwent a series of changes impacting its many account holders. These include the opening of a “Mutual Fund Window” to supplement the limited offering of investment funds previously available to plan participants (though the associated expenses make it prohibitively expensive for many participants). In addition, the TSP updated its website and introduced a smartphone app, which required participants to create new credentials and verify their personal information. Notably, advisors can support clients in navigating these new changes by helping them decide if investing through the Mutual Fund Window makes sense, walking them through the registration process for the new site (if they have not already), and ensuring that their information (including beneficiary information) transferred over correctly.

Advisors can also add value for clients who are TSP participants by understanding how the TSP fits within the Federal employee and military retirement systems, which combine the defined contribution TSP feature with a defined benefit pension (though because the value of this pension has been reduced, TSP management has increased in importance). Further, advisors can support these clients by helping them manage the retirement savings choices that come with career transitions; for example, because many military members have ‘encore’ careers (as they are often eligible to retire well before ‘traditional’ retirement age), balancing their cash flow and retirement savings needs is crucial during their transition period.

Advisors working with clients who have been deployed to combat zones can also add value by being aware of the related TSP considerations. For instance, because income earned while deployed in a combat zone is tax-free, any pre-tax TSP contributions can result in a commingling of tax-free combat pay and taxable earnings (though this can be prevented by making Roth contributions during periods where income is untaxed). In addition, the annual deferral limit increases significantly during the year of a combat deployment, providing an opportunity to contribute even more money to the TSP (if doing so fits within the client’s cash flow plan).

Ultimately, the key point is that while the TSP is similar to many other workplace retirement plans, advisors who understand its unique attributes and stay up to date with its ongoing changes can better serve the Federal employees and military servicemembers who participate in the plan. And given that there are about 6.2 million TSP account holders, these individuals represent a large potential pool of clients!

#FA Success Ep 319: Competing For Big Clients As A Small Boutique With A Focus On Task Management, With Jim Niedzinski

February 7, 2023 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Jim Niedzinski Podcast Featured Image FAS

Welcome back to the 319th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Jim Niedzinski. Jim is a Co-Founder of Motive Wealth Advisors, an independent RIA based in the suburbs of Detroit, Michigan, that oversees $250 million in assets under management for nearly 50 families.

What's unique about Jim, though, is how he and his partner have successfully built a 'small’ boutique firm that effectively competes with big wirehouses to attract and retain ultra-high-net-worth families and have differentiated themselves by developing and implementing a client task management system that goes beyond traditional CRM to really ensure that the advice they are giving actually gets implemented by their clients.

In this episode, we talk in-depth about how Jim and his partner felt they could differentiate themselves from bigger firms by trying to maximize how many of their financial planning recommendations actually get implemented by clients, and decided to build their firm around Asana – a task and project management tool – instead of a traditional CRM system, to ensure that the advice they give is set in motion, how Jim leverages relationships he built with accountants, attorneys, and other professionals through cold calls early on in his career to now be able to gain a steady flow of referrals of very HNW clients, and how, through referrals only, Jim and his partner have grown their firm from $0 in AUM to $250 million in less than 3 years since breaking out on their own.

We also talk about how Jim and his partner leverage back-end support from Tru Independence so that they can have more time and capacity to help their clients with their complex financial issues, how Jim has found in his move ‘upmarket’ to more affluent clients that there is actually less fee sensitivity that’s led him to increase his fee schedule after the first few years, and why Jim and his partner are intentional about serving no more than 25 clients each as they want to have enough capacity to serve their clients well and continue to do so for the foreseeable future.

And be certain to listen to the end, where Jim shares why, even though he didn’t initially set out to own his own firm when he started his career, he is happy that he pursued entrepreneurship as he felt validated with the amount of support he received when he launched (and the amount of clients that followed him), why Jim believes that younger, newer advisors making decisions about where to work should focus on finding a firm based on the character and quality of people they could work with (rather than a fancy website) and where they could gain a mentor that would allow them to absorb as much information as possible, and how Jim’s perspective on building a client base was impacted by Greg McKeown’s “Essentialism” that you can be more present and effective in client relationships by being more focused… which has only reinforced his focus on keeping a small and focused client base with whom he can be maximally effective as a financial advisor.

So, whether you’re interested in learning about how Jim utilizes Asana instead of a CRM to track and manage client tasks, how leveraging back-office support helps Jim and his partner gain more time to provide even more value for their clients, or why Jim places importance on truly, deeply caring for clients and their needs, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Jim Niedzinski.

The Latest In Financial #AdvisorTech (February 2023)

February 6, 2023 07:01 am 0 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the February 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 the “financial monitoring software” platform Elements has raised $5 million in a seed-extension funding round as it seeks to establish a foothold in the rapidly growing AdvisorTech category of “advice engagement” tools designed to draw clients further into the ongoing (not just upfront) financial planning process. Because as the focus of financial advice shifts from “The Plan” that is created initially and then only periodically updated every few years, to a year-round process of ongoing “planning”, the demand has grown for more tools that help advisors connect and engage with their clients more frequently (while also giving them actionable information to actually engage about). For which Elements has positioned itself as an early leader that is now gaining momentum.

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

TradingFront, the white-label “robo advisor for advisors” is shutting down amid broader struggles among B2B robo advisor platforms to convince advisors to pay for better digital onboarding that they expect their custodians to provide (and improve upon) for ‘free’
Zoe Financial launches a new TAMP for advisors in its lead-generation network to make it easier to onboard and serve the smaller (below-traditional-minimums) clients that Zoe is bringing to them
Advisor360° buys onboarding software platform Agreement Express to deepen its own middle- and back-office automation capabilities and expand its opportunities with enterprise (insurance broker-dealer) clients

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

BridgeFT launches a new custodial data warehousing and integration solution called WealthTech API, to give larger advisory firms (and even other AdvisorTech providers) more ability to build their own custom software without having to download, reconcile, and store the data themselves
Kwanti unveils a new fund Screener feature to its investment analytics platform, making it easier for advisors to find the next new addition or improvement to their existing model portfolios.

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 to [email protected]!

Weekend Reading For Financial Planners (Feb 4-5)

February 3, 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 SEC has issued a risk alert outlining Reg BI-related deficiencies discovered during recent examinations of broker-dealers, from dual-registered advisors not clearly communicating whether they were acting as a commission-based broker or a fee-based investment adviser to firms failing to update their training and compliance systems to meet the requirements of Reg BI.

Also in industry news this week:

Annuity sales hit record levels in 2022, possibly spurred on by volatile markets and rising interest rates
A recent survey suggests that an overwhelming percentage of both employers sponsoring retirement plans and their employees are interested in receiving advice from financial advisors

From there, we have several articles on advisor marketing:

How advisors can get more clients by devoting just two hours per month to marketing
5 research-backed tactics advisors can use to improve their marketing ROI
How finding a ‘patient zero’ can help new firms market to their chosen niche

We also have a number of articles on investing:

Why falling interest rates were not necessarily the key driver of investment returns during the past 25 years
Why there might not be a rush among investors to fixed income investments, even as yields reach levels not seen in years
While Indexed Universal Life policies have been insurance companies’ hottest products in recent years, economic headwinds and concerns about their utility could slow their growth

We wrap up with three final articles, all about Artificial Intelligence (AI):

How AI could revolutionize a wide range of professions, from education to medicine
How ChatGPT and other large language models can be used by investment professionals now and in the future
How AI systems could both create greater efficiencies for human financial advisors and challenge current advisory business models in the years ahead

Enjoy the ‘light’ reading!