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#FA Success Ep 309: Leveraging Structured Notes To Differentiate A Highly-Leveraged $300M Solo Practice, With Anh Tran

November 29, 2022 07:06 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 309th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Anh Tran. Anh is the Founder and Managing Partner for SageMint Wealth, a corporate LPL-affiliated RIA based in Orange, California, that oversees nearly $325 million for 195 client households.

What's unique about Anh, though, is how, as a solo advisor, she differentiates her firm by leveraging the combination of a high-touch concierge approach to client service with a unique investment management approach through the use of very carefully chosen structured notes to differentiate her portfolio design from other advisors.

In this episode, we talk in-depth about how, even though it is admittedly more time consuming for her firm, Anh conducts extensive due diligence and analysis to integrate structured notes into her client portfolios and ladders them on a rolling quarterly basis so that clients can continuously reinvest at then-current rates and features, why Anh decided to hire not a second advisor to scale her firm but, instead, hired a full-time Director of Advanced Strategies to serve as an internal consultant to identify and outline ways to increase client service efficiencies as well as implement the technology to improve those strategies over time, and how Anh doesn’t implement a service model based on a client’s assets but rather segments clients based on how complex their needs are (which will determine the number of touch points they will receive, and in turn, the amount of fees they pay).

We also talk about how Anh began her career as an attorney, but decided to move away from the more transactional short-term relationship of litigation, and then, it was while she was working for Goldman Sach’s Ayco, that she realized that she could have a greater impact on her clients’ lives through financial planning and ultimately decided to become a CFP, the confidence struggles that Anh faced when she was assigned senior executives at Fortune 500 firms as a 20-something advisor and had to learn to get comfortable in demonstrating her expertise without feeling intimidated, and why Anh decided to remain a licensed attorney so that she could utilize her legal knowledge to guide clients through their estate planning needs (though she owns and operates her estate-planning firm with her husband as a separate entity).

And be certain to listen to the end, where Anh shares how she struggled early in her career to find a mentor that looked like her (especially as an Asian female advisor who is not from a wealthy background), but by leveraging study groups provided through LPL and other channels, she now has a steady foundation where she can gain insight with advisors who are similar to her (while helping to uplift other minorities in the financial services industry), why, after years of evolving her own confidence, Anh feels it’s important for younger, newer advisors to present their authentic selves to clients from the beginning of their careers so that they can not only connect with clients better but truly develop deeper and longer-lasting client relationships, and why Anh defines success simply by the term "freedom", where she can pick and choose the types of clients she works with, serves them the way she sees fit, has the ability to provide opportunities for her staff to thrive and grow, and has the flexibility to be present for her husband and her children.

So, whether you’re interested in learning about why Anh differentiates her portfolio management with structured notes, how hiring a Director of Advanced Strategies helped Anh transform her business, or how Anh helps uplift other minorities in the financial services industry, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Anh Tran.

101 Things That Advisors Actually DO To Add Value (Beyond Just Allocating A Portfolio)

November 28, 2022 07:05 am 2 Comments CATEGORY: Practice Management

Traditionally, investment planning has been at the forefront of how financial advisors add value for their clients. From advisors who earn commissions from the sales of financial products to fee-only investment advisors who charge based on client assets under management, the value advisors provide to their clients has often been centered on investment management. But, with the rise of index funds and the commoditization of investment advice, generating sufficient investment ‘alpha’ to justify a fee has become more challenging for advisors. Combined with growing advisor (and consumer) interest in comprehensive financial planning services, the number of ways advisors can add value for their clients has expanded greatly. And at a time when working as a fee-only planner, or even as a fiduciary, is not the same differentiator that it once was, being able to offer a value proposition tailored to the needs of the advisor’s ideal target client has become more crucial than ever before and could be one of the keys to success for advisors in the years ahead!

When an advisor is thinking about their value proposition for clients, they might be tempted to list as many planning value-adds as they possibly can (to reach the broadest possible base of potential clients). But this can create challenges for the advisor as well, as they will have to spend significant time managing the variability of the planning needs of their diverse client base. An alternate approach, however, is for the advisor to focus their client service proposition on the planning needs of a specific target client, which not only increases the efficiency of the planning process, but can also facilitate marketing efforts as prospects who fit the target profile will be most attracted by the depth and specificity of the advisor’s planning services!

To start crafting the persona of their ideal client, advisors can list key attributes of their target client. For advisors at established firms, this could mean thinking about their top clients, while those starting new firms could think about the type of clients they would like to serve. Client differentiators could include age, occupation, personal affinities, professional affiliations, and other criteria. The key is not necessarily to narrow down to a specific niche that meets every trait of the ‘ideal’ client, but rather to generate a sample persona that allows the advisor to start thinking about their ‘ideal’ client’s planning needs.

Once an advisor has a better idea of who their target client is, they can then consider how to tailor their value proposition to those clients. Because the advisor’s target client will probably only have certain planning needs (and may not require others), advisors can offer the value-adds from the hundreds of options available that best serve this target client. By applying the ideal-target-client framework, advisors can not only better target their marketing efforts (as they can align their website and other advertising efforts with their ideal client’s needs), but they can also streamline their day-to-day work, as they will encounter fewer ‘new’ issues as their client base grows.

Ultimately, the key point is that while there are more than 100 different ways to add value to their clients’ lives, the most successful advisors are likely to be those who are able to go deeper into the areas that are most important for their specific clients. In fact, by crafting an ideal target-client persona and shaping their service offering around the value-adds that most apply to these clients, not only can advisors enhance their efficiency, but they can also better differentiate themselves from more generalist firms, potentially leading to more efficient marketing and greater client growth in the long run!

Weekend Reading For Financial Planners (Nov 26-27)

November 25, 2022 02:20 pm 2 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 Biden administration’s Department of Labor (DoL) is planning to propose its own ‘fiduciary rule’ that seeks to create higher standards than the rule put in place by the Trump administration (though perhaps not as tough as the Obama administration’s original ‘fiduciary rule’ proposal). Among potential measures, the new rule could provide that a single recommendation would be considered fiduciary advice, so that if an advisor has a relationship of trust and confidence with the participant, that a rollover recommendation will be fiduciary advice.

Also in industry news this week:

The Biden administration has extended the student loan payment pause out to as far as August 31, 2023 amid legal battles over its broader student loan relief plan
Why RIA M&A activity has slowed down since October and how deal structures could be affected in the current economic environment

From there, we have several articles on spending:

How advisors can support clients looking to cope with high rents and elevated home purchase costs
How adult children can more effectively give advice to their parents
Several easy ways advisors can help find unclaimed assets and save money as the year comes to an end

We also have a number of articles on retirement planning:

How advisors can incorporate Social Security benefits into a client’s retirement asset allocation
Why annuities with “Protected Lifetime Income Benefits” could be an attractive option for clients looking for additional upside exposure in addition to guaranteed income benefits
Why there are a few silver linings amid the challenge of high inflation

We wrap up with three final articles, all about time management:

Why creating a routine checklist can be more effective than keeping a fixed daily schedule
Best practices for removing distractions and boosting productivity
How to diplomatically set boundaries amid a sea of invitations and meeting requests

Enjoy the ‘light’ reading!

Establishing Solo 401(k) Plans For Self-Employed Workers: Options, Contribution Limits, Deadlines, And More!

November 23, 2022 07:06 am 14 Comments CATEGORY: Taxes

Among the several different types of retirement plans that are available to self-employed workers, solo 401(k) plans can offer the most flexibility and the ability to contribute the highest amount of tax-advantaged savings. But alongside those advantages, there are some specific rules and regulations that are unique to solo 401(k) plans, which can add to the complexity of setting up and maintaining a plan. And for advisors who serve self-employed clients, managing a solo 401(k) plan is often a different process than managing other types of investments.

However, the advantages of solo 401(k) plans – which include higher contribution limits for individuals with moderate incomes as well as the ability to make Roth contributions to the plan (plus additional nondeductible contributions which can be converted into even more Roth dollars) – mean they can often be worth the added complexity, particularly for individuals who want to save a high percentage of their income and/or build tax-free Roth savings. They can also permit participants to take loans from the plan, creating a source of emergency funds without the need to make a (potentially taxable) distribution.

Setting up and maintaining a solo 401(k) plan involves creating plan paperwork (including a written plan document and adoption agreement), keeping records of contributions and withdrawals, and for plans with more than $250,000 in assets, filing Form 5500-EZ annually with the IRS. Business owners typically outsource some or all of these tasks, and they can do so in one of two ways: by choosing a pre-approved, ‘off-the-shelf’ plan with a broker-dealer firm (who then serves as custodian for plan assets), or by hiring a third-party plan provider to create a ‘self-directed’ plan, which can invest in a wider range of assets.

Although both types of solo 401(k) plans come with particular benefits, there are also tradeoffs to each approach. Off-the-shelf plans can be easier to administer, since the broker-dealer handles most of the plan paperwork and holds the plan assets often for little to no cost. However, off-the-shelf plans also tend to offer fewer options; for example, TD Ameritrade’s merger with Charles Schwab resulted in the elimination of Roth features from their off-the-shelf solo 401(k) plan.

Self-directed plans, meanwhile, offer more ability to tailor a plan’s features to an individual’s needs. These features can include the ability to make Roth or nondeductible contributions, to take loans from plan assets, and to invest in non-traditional assets such as real estate, crypto assets, and precious metals – many of which are not allowed by most off-the-shelf solo 401(k) plans. But self-directed plans can be complex to manage, with the possibility of assets being held in multiple locations (as well as the responsibility of the plan participant to avoid investing in prohibited assets or making prohibited transactions), and costs that typically include startup fees of several hundred dollars, along with additional fees for ongoing maintenance.

The key point is that advisors can offer a valuable service by guiding their self-employed clients to the right solo 401(k) plan option, and by filling in the gaps between whatever services the plan provider performs and what the client is responsible for (such as opening accounts, keeping track of contributions and distributions, or preparing Form 5500-EZ). Ultimately, with the potential for added wealth that solo 401(k) plans can create, making the process of managing the plan a little easier for clients is a great opportunity to provide value that the client can see from year to year.

#FA Success Ep 308: Accelerating Growth From Referrals By Building Checklists For Every Meeting Detail, With Matthew Blocki

November 22, 2022 07:07 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Matthew Blocki Podcast Featured Image FAS

Welcome back to the 308th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Matthew Blocki. Matthew is the CEO of Equilibrium Wealth Advisors, an independent RIA based in Pittsburgh, Pennsylvania, that oversees more than $275 million in assets under management for 330 client households.

What's unique about Matthew, though, is how he and his firm have implemented pre-meeting, during-meeting, and post-meeting checklists to create more efficient processes that not only save their staff (and clients') time, but also map out all the details to be covered for each client meeting, ensuring that no detail in the client’s life is missed.

In this episode, we talk in-depth about why and how Matthew and his firm decided to develop and then implement their pre-, during-, and post-meeting checklists as a way to better position themselves as their clients’ personal CFOs offering a more concierge experience, how Matthew leverages one-to-many recorded videos and online FAQs to increase his communication with existing clients on key issues, and why, while Matthew feels his firm is only incrementally better than other good advisory firms, he attributes the 4x growth of his firm over the past 4 years to the fact that, like horses in a race, sometimes being just incrementally better than your competition and beating them out by an inch is all it takes to be the winner of the race.

We also talk about how Matthew made the decision to break away from a large insurance company after a point of self-reflection where he realized that his career goals weren’t really truly helping him grow as an advisor and were really set by the company’s culture and its internal competition structure that made him feel like he had to just keep getting more new clients instead of focusing more on the existing ones, why, after considering corporate and tuck-in RIA models, Matthew ultimately decided to go the independent RIA route as he felt it was the best way for him to maintain autonomy and implement the systems and processes that he felt would best serve his clients the way he wanted to see them served, and how, after realizing that Matthew and his team were serving close to 700 clients at the insurance company, he decided to run an analysis of his revenues and profits and saw how 80% of his revenue and profits were coming from just 20% of his clients… and consequently decided that those would be the only ones he would even want to continue with, and would leave the rest behind, in the transition to independence.

And be certain to listen to the end, where Matthew shares how he formulated the 125-150 client capacity targets for his advisory teams that he set to determine when to hire the next new advisor (to ensure his existing advisors have enough time to really focus on their client experience, and do not reach a stage of burnout), why Matthew implements a top five values exercise with his clients so that they can focus on what is best for them, their family, and their peace of mind rather than just what is the best financial decision, and why Matthew believes that for him, the key to being a successful advisory firm owner has been the recognition that the adversity he’s faced and tension he's felt at various points along the way is what helps him to recognize when he’s actually growing and learning and is about to get to the next level.

So, whether you’re interested in learning about how having checklists for each meeting stage helps Matthew’s firm carve out more time to focus on the client experience, how implementing client capacity goals ensures that Matthew’s advisors are not overworked and gives the firm the room to grow and scale over time, or how, by offering direct indexing, Matthew helps his physician clients maximize their tax-loss harvesting, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Matthew Blocki.

Increasing Financial Planning Efficiency With A Systematized Annual Process

November 21, 2022 07:03 am 1 Comment CATEGORY: Practice Management

A common service model for many financial advisory firms is to schedule annual client meetings throughout the year where the advisor meets with each client in the month they started working with the firm, and conducts a comprehensive review of all planning topics for the client. Which means that on any given workday, advisors might find themselves reviewing one client’s portfolio and another’s estate plan in the morning, and having a meeting with a third client later in the afternoon. However, by creating a systematic annual process to monitor and update client plans based on seasons, not only can advisors save time and work more efficiently, but they can also communicate the value of ongoing financial planning services to prospects and clients more effectively.

One way to implement a seasonal model is to group client meetings (and the requisite meeting prep) by topic, and then to thematically organize seasons throughout the calendar year. With this approach, the advisor can focus on particular planning areas (e.g., tax and estate planning) for all of their clients in each given time period, with designated seasons for meeting prep and separate seasons for client meetings. Which means there would be ample time to prepare for meetings that would cover only one set of planning topics – e.g., advisors would discuss tax and estate planning with clients in the fall and prepare for those meetings in advance over the summer, while discussing retirement and investments in the spring and preparing for those meetings in the winter.

This approach allows advisors to focus more deeply on each topic they discuss with clients and, because of the systematic nature of the schedule, can also save time while improving both efficiency and efficacy. Furthermore, advisors can adjust the annual calendar to accommodate their team members’ work-life balance needs. For example, with summers designated as meeting prep seasons, team members with children can have more workweek flexibility (given the lack of client meetings) and enjoy more days off while their kids are on summer vacation.

Importantly, implementing any new client meeting system also requires communicating to clients how the system works and setting clear expectations with them upfront. This may be done through a Client Engagement Standards document, which can ensure clients understand the process and their obligations to provide the advisor with the requested information. And by making sure that clients have this level of clarity, advisors and clients alike can have confidence that no part of their plan will slip through the cracks.

Ultimately, the key point is that by establishing a seasonal cadence of when and how clients’ financial plans are updated and monitored, advisors can improve efficiency while easily demonstrating to their clients the full range of work involved in monitoring and updating their plans. So for advisors who feel overwhelmed with the range of responsibilities they have in a given week, implementing a systematic annual planning process based on seasons can not only provide more structure to their processes, but also provide a better experience – not only for their clients, but also for their work teams – in the process!