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Weekend Reading For Financial Planners (Nov 19-20)

November 18, 2022 02:07 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that AdvisorTech giant Envestnet has announced a partnership with New Zealand-based FNZ that will allow Envestnet to offer custodial services to advisors beginning in the second half of 2023. At a time of significant change in the RIA custodial space, epitomized by the ‘Schwabitrade’ integration (also in late 2023), Envestnet’s custodial offering will provide advisors with an alternative option to the legacy custodians and could offer potentially attractive synergies for advisors already in the Envestnet ecosystem.

Also in industry news this week:

The CFP Board has proposed a series of changes to its disciplinary processes, including a two-year deadline for advisors subject to an interim suspension to file a petition for reinstatement
A potential compromise during the lame-duck Congressional session could see a boost to the child tax credit and extended tax breaks for businesses

From there, we have several articles on tax planning:

How advisors can add value for their clients by managing their exposure to mutual fund capital gains distributions
How advisors can help their clients turn their HSAs into wealth-building machines
A new research study suggests that delaying taxes in retirement is often not the optimal course of action

We also have a number of articles on practice management:

Why looking inward at their leadership style can be one of the best ways for firm leaders to prevent employee turnover
Three things other than pay that firms can do to attract currently employed talent
The time management principles that are used by the most successful leaders

We wrap up with three final articles, all about gift giving:

How advisors can decide on the best client gifts from the wide range of options, from bottles of wine to donations to a favorite charity
Why it is important to first consider regulatory requirements and firm policy before giving clients gifts
How advisors can give clients gifts that are both thoughtful and could lead to referrals in the new year

Enjoy the ‘light’ reading!

Kitces & Carl Ep 99: What Does It Take For You To Find The Confidence To Take Action?

November 17, 2022 07:02 am 0 Comments CATEGORY: Kitces & Carl Podcast

Kitces Carl Ep What Does It Take For You To Find The Confidence To Take Action

For many financial advisors, improving business development strategies can be a challenging task to address. With the myriad tools available to advisors that help them analyze the potential outcomes of their ideas and strategies, collecting the data to do so has become easier than ever. At the same time, though, over-analyzing strategies prior to implementing them can create a substantial gap between ideating a plan and actually putting it into motion. And sometimes, the fear of committing to an idea that might end in failure can be the real reason for the hesitation to implement in the first place.

In our 99th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how advisors can recognize behavior that may be impeding them from starting a plan, how incrementally implementing a plan can help put overall risk in perspective, and how changing small behaviors can help advisors gain confidence to implement important plans vital to continue growing and scaling their businesses.

As a starting point, it’s important for advisors to recognize when they fail to take action because of the human tendency to hide from the pressure of implementing a risky idea. This can emerge as procrastination, overanalysis, or becoming occupied with any number of tasks that they feel are necessary to complete first (such as ensuring every minute detail has been thoroughly examined and vetted) before taking any steps toward executing the actual idea being considered.

One way to deal with this hesitation to take action is to set goals in smaller increments, which can ensure progress while keeping the workload reasonable. As while it is easy to get caught up in the (sometimes unfounded) fears that even just one misstep can have catastrophic consequences, keeping a realistic perspective on the impact of failed attempts also becomes more manageable when aiming for smaller subgoals that are part of a larger process. Importantly, by implementing micro-actions instead of tackling larger tasks, advisors may find it easier to address failure when it does come up, as the fear of failing at one small step in a larger process is much easier to handle than the fear of total failure of the whole system. And by identifying how to break up their process into smaller, more manageable steps and keeping the potential failure of each particular step in perspective, advisors can more easily see their plan through.

Ultimately, the key point is that finding the confidence to take action on a risky strategic plan begins with identifying behaviors that might sabotage our efforts and examining how risky the plan actually is. While it may feel scary at first, taking smaller steps can help the advisor not only put the actual risk of a plan into better perspective, but can also be much easier to implement and test new approaches when those smaller steps don’t work out as planned. Which, over time, can help the advisor build the confidence they need to take the necessary action that will bring them closer to achieving more (and even bigger!) business goals!

Discussing Inflation And Market Turmoil Using Questions To Navigate Difficult Client Conversations

November 16, 2022 07:03 am 2 Comments CATEGORY: Client Trust & Communication

With inflation running hot, a potential recession looming, and both stock and bond markets seeing significant drops so far this year, there is no shortage of potential stressors for financial planning clients. And as crises arise and stress builds up, some clients may reach a tipping point where they seek out their advisor looking for answers to ensure their financial plan remains on track. While it might be tempting to answer the client’s concerns coolly and directly, starting the conversation by first asking the client questions can result in a more fruitful discussion.

During times of stress, whether induced by market turmoil or other unpredictable factors, an individual’s first reaction is often fear. But sometimes this fear can morph into anger, as feelings of anger can give an individual a sense of control as opposed to the disempowering feelings of helplessness and vulnerability that often come with fear. So when a client calls and appears to be angry about situations beyond their control, it is important for advisors to recognize that fear may be the client’s underlying emotion behind the outward anger they are displaying. Further, this also means that while the client may appear to be angry with the advisor, they may actually be reacting from fear of a stressful situation.

When an angry client contacts their advisor during periods of financial stress, an advisor’s first instinct might be to directly address their concerns, perhaps by explaining how the client’s portfolio is diversified or that the market is almost certain to bounce back at some point in the future. But to an angry client, these quick answers could feel dismissive or combative, potentially escalating the situation. Instead of trying to answer the client’s concerns immediately and directly, the advisor can start the conversation with a series of questions to help the client diffuse their anger and better understand their underlying feelings. By engaging in active listening (e.g., by reflecting the client’s answers back to them), advisors can better understand the client’s feelings and thought processes while allowing the client to feel heard. Next, asking questions that help the client realize that there is always an alternative ‘Plan B’ solution (and figuring out what such a plan could look like) can empower the client by reassuring them that it is still within their power to take action and prevent their plan from failing, even if their market fears came true.

Ultimately, the key point is that crises are likely to come up for clients over the course of a relationship that lasts many years, and an advisor’s reaction to their client’s fear and anger can make the difference between provoking heated emotions and helping the client feel like they have gained more control over the situation. By asking questions, actively listening, and exploring possible scenarios – rather than immediately giving answers – advisors can skillfully diffuse stressful situations and potentially strengthen the bond with their client in the process!

#FA Success Ep 307: Dropping Your Broker-Dealer License Without Dropping The Broker-Dealer Platform, With Stacey Hyde

November 15, 2022 07:01 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 307th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Stacey Hyde. Stacey is the President of Envision Financial Planning, an independent RIA based in Memphis, Tennessee, that oversees nearly $200 million in assets under management for 206 client households.

What's unique about Stacey, though, is how, to gain more flexibility and independence for her firm, she and her partner decided to drop their FINRA licenses and launch their own RIA… while continuing their relationship with Commonwealth as their now-former broker-dealer platform.

In this episode, we talk in-depth about why Stacey and her partner decided to drop their broker-dealer licenses, and drop out of the corporate RIA structure, transitioning instead to fully owning their own independent RIA while remaining affiliated to their now-former broker-dealer so that they could keep the benefits of having back-office, tech, and investment support, why Stacey wanted to create her own investment advisory agreement for her firm from scratch so that she could simplify language for clients and help them better understand the firm’s offerings and the nature of their relationship, and why Stacey and her firm implement a fee schedule where the tiers are not graduated but instead have hard breakpoints where after a certain threshold, clients can see an outright drop in their fees… which makes it easier for Stacey to communicate the fee schedule to clients, while also incentivizing them to add funds and consolidate their accounts with Stacey to reap the benefits of those reduced fees breakpoints.

We also talk about how Stacey and her firm built their client base by leveraging both client referrals and an advisor network that has a long-standing relationship with a national steel company where Stacey is one of the advisors in a niche service offering that provides the company’s employees advice on their benefits packages (and, eventually, their retirement rollovers), how throughout most of Stacey’s career, she struggled to find the right position that fit her desire to help clients, and eventually decided that she would have to hang her own shingle as an independent to be able to serve clients exactly the way that she wanted, and how, even though it was difficult to transition away from her most recent employer, Stacey found comfort in the fact that clients ultimately rallied around her and offered support… which made her realize she had a greater impact in her clients’ lives and wasn’t seen as just their “advisor.”

And be certain to listen to the end, where Stacey shares how, even though she loves to travel to Colorado, she was afraid of taking more personal trips as she didn’t want to be seen as an inattentive advisor, but as more clients are embracing virtual and asynchronous meetings, she has realized she can do more of what she loves and be her authentic self while still staying connected with clients, why Stacey wishes she could have gone independent much sooner and attributes the delay to her internalization of societal messages that she believes reinforces a lack of confidence in women and makes them question their abilities to build a career on their own (which took her years to overcome for herself), and why Stacey believes that it is important that advisors show clients that they truly care and are not motivated purely by compensation as it creates better alignment, trust, and overall a more successful career.

So, whether you’re interested in learning about how Stacey can better serve her clients because she dropped her FINRA licenses, why going independent but still affiliating with her former broker-dealer helps Stacey and her partners clarify their brand, or why implementing breakpoints in fee schedules helps Stacey to better communicate fees and keep them fair for all clients, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Stacey Hyde.
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Hiring Next-Gen Associate Advisors: A Guide To Recruiting, Training, And Retaining For Your RIA

November 14, 2022 07:05 am 1 Comment CATEGORY: Practice Management

In the not-so-distant past, the typical career path toward becoming a financial advisor was to build up a book of business on one’s own, often by either tapping into one’s own personal networks or cold-calling prospective clients in bulk to generate enough business to gain a foothold. But the obvious flaw with this ‘eat-what-you-kill’ model was that newer advisors overwhelmingly succeeded or failed – not by virtue of the quality of advice they gave to their clients, but by how effectively they could sell the financial products for which they were usually compensated via commission.

In more recent years, however, the rise of the fiduciary advice model (in which the quality of advice provided to the client really does matter to the firm’s success) has allowed a new career path to emerge: that of the associate advisor, who generally takes on financial planning tasks, like data gathering and analysis, to support the lead advisor so that they can focus more on managing the client relationship and bringing in new business. And as the associate gains experience and trust among existing clients, they can gradually take over some of the lead roles themselves, to be supported by new associate advisors of their own – thus allowing the firm to transition its clients from the founder to the next generation of advisors.

But for many experienced advisors (and particularly those whose careers evolved through the older eat-what-you-kill model), integrating an associate advisor into an existing practice can come with its own challenges. For example, seeing eye-to-eye on the expected responsibilities of the associate advisor’s role, as well as the role’s future possibilities and its meaning to the associate advisor’s career trajectory, may not come naturally, especially when the senior and associate advisor are each from distinctly different generations – which can result in dissatisfaction from both parties if they aren’t both clear and in agreement on the role’s purpose and where it is headed.

In this guest post, Penny Phillips, president and co-founder of Journey Strategic Wealth, uses her expertise in helping advisors address some of the common challenges in introducing new associate advisors into their firms and how senior advisors can scale their time and productivity to successfully integrate associate advisors into their advisory practices.

One of the most important components of bringing on an associate advisor is being clear about the purpose and requirements of the role during the hiring phase. And because associate advisors are often hired in the early stages of their careers, it should also be clear how they will be taught and supported by the firm to succeed in the role. This can be achieved by establishing a framework of Objectives central to the associate advisor role, as well as clearly identifiable Key Results that will help team members recognize whether they are achieving the desired results.

Furthermore, this Objectives and Key Results (OKRs) framework can also be extended to the associate advisor’s career development to define and work toward key skills that bring them closer to what they want to achieve. And as the senior advisor’s own role evolves with the addition of an associate, they may want to develop their own set of OKRs to ensure they are progressing towards their goals for themselves and their practice!

Ultimately, the key point is that finding and developing an associate advisor will take time and effort – for both the senior advisor and the associate advisor. However, a successful partnership between senior and associate advisors has the potential to last many years and can allow the practice to scale up in ways that aren’t possible for a solo advisor. Taking care to start the process on the right foot can therefore pay dividends for both parties in the long term!

Weekend Reading For Financial Planners (Nov 12-13)

November 11, 2022 02:02 pm 5 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that as enforcement of the SEC’s new marketing rule began on November 4, advisory firms are taking a variety of approaches. While some are looking to gain a first-mover advantage by leveraging client testimonials and third-party endorsements (and adjusting their compliance programs before doing so), others are taking a wait-and-see approach.

Also in industry news this week:

Why “SECURE 2.0” appears to remain on track to be passed by the end of the year, no matter the final results of the midterm elections
Amid an “incredibly active” period for cyberattacks, the director of the SEC’s examinations division highlighted the areas of cybersecurity where advisory firms are most often deficient

From there, we have several articles on advisor marketing:

Three tactics advisors can use to improve their ‘close’ rate with prospective clients
How a regular firm newsletter can keep clients engaged and improve retention
The most effective question advisors can use to end initial prospect meetings

We also have a number of articles on retirement planning:

How the recent increase in interest rates has made TIPS a more viable option to increase a retired client’s safe withdrawal rate
Why advisors need to take care when analyzing the expected performance of Registered Index-Linked Annuities (RILAs)
While “free” Medicare Advantage plans might sound enticing, advisors can help their clients assess whether a different plan might actually be more cost-efficient

We wrap up with three final articles, all about personal growth:

How advisors can harness the power of compounding, not just with investments, but to improve their health and relationships as well
How advisors can help their clients overcome the cyclical nature of investment knowledge, particularly when FOMO kicks in
Five mindsets that advisors can use to create success in their professional and personal lives

Enjoy the ‘light’ reading!