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Add Value To Client Relationships And Uncover New Goals By Asking: “What’s Possible Now?”

October 12, 2022 07:05 am 0 Comments CATEGORY: Client Trust & Communication

Prospective clients often approach a financial advisor because they have a problem. Perhaps they are approaching retirement and do not know whether their current path is financially sustainable, or maybe they have a complicated equity compensation problem to sort through. But after this initial problem is solved, long-term goals are discussed, and a financial plan is implemented, what comes next? Sometimes the advisor and their client can fall into a complacent routine, with annual check-ins that confirm that the client is on track to meet their long-term goals. However, advisors can add further value by helping them explore new goals to help them not just survive, but also thrive!

One method for getting clients out of their comfort zone to think about goals they might find exciting but were unsure about being realistic is for the advisor to ask the question, “What’s possible now?”. This question can have several benefits, from spurring clients to think about options they might not have previously considered, to energizing the client and giving them ideas for new goals to chase. For example, in conjunction with their advisor, a client might have created a long-term retirement goal but might not have thought much about potential near-term goals such as a sabbatical from work or a major vacation. Furthermore, framing the conversation as an exploration of potential outcomes that are meaningful to the client can be a good way for advisors to strengthen the bond they have with clients; not only does it let the advisor serve as a problem solver, but it also positions them as a confidant who the client can trust with sharing their big (and even not-so-big) dreams!

In terms of implementation, an advisor can choose to ask their client, “What’s possible now?” either by giving the client advance notice or by spontaneously bringing the discussion up during a meeting. One way the advisor can naturally introduce the question is to note how far the client has come since they started working with the advisor and, now that their financial plan is in order and they are on track with what has been put in place, how they now have the flexibility to consider new possibilities. And while additional goals or plans might come easily to some clients, others might respond that everything is going well and they have no other ideas; at this point, the advisor can ask follow-up questions (e.g., What have you not done, but have always wanted to do?) to help them explore new options and keep the conversation moving forward.

Ultimately, the key point is that financial planning is not just about solving problems but also about exploring new opportunities that are meaningful to clients. And given that many clients might not regularly think about new experiences they might want to pursue or goals they want to achieve, financial advisors can add value and reinforce their bond with their clients by helping them explore what’s possible!

#FA Success Ep 302: Structuring Your Ideal Week To Become A Highly-Leveraged Individual Advisor, With Libby Greiwe

October 11, 2022 07:06 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 302nd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Libby Greiwe. Libby is the owner of The Efficient Advisor, a financial advisor coaching and consulting business based out of Loveland, Ohio, that’s focused on helping advisors create systems and processes for themselves so that they can run their businesses in less time and with less stress.

What's unique about Libby, though, is how she developed the efficiency systems she coaches on by having lived it herself, growing to a $1M revenue practice that she was able to support with a lean team while working just 25 hours per week as a busy Mom, built primarily around creating what Libby calls an “Ideal Week” where she modeled exactly how she wanted to focus her time for maximum efficiency, and then put the team and systems in place to make it happen.

In this episode, we talk in-depth about how, while working for a broker-dealer, Libby realized their internal ‘structure for success’ was entirely built around working more to earn more and realized that she would need to build her firm with a different kind of mindset if she wanted to earn more while working less (so that she could have the time she wanted to start a family and take care of herself), why, in order to create even more efficiency, Libby decided to implement a tiered service model, which she created based on the amount of revenue per hour she wanted to generate from herself and her team, so that she could determine exactly how many hours of service a particular client would get, and how, by implementing workflow systems that were especially proactive in client communication, Libby was able to systematize a client experience that led her practice to actually be able to grow entirely on a referrals-only basis and no other marketing.

We also talk about how, while she was still working for a broker-dealer, Libby learned to differentiate herself not by learning to better sell her firm’s products but instead by diving deep into contract language of her clients’ insurance and annuity policies to find the gaps where those products didn’t really fit their financial planning needs, how after finding out she was pregnant and realizing she would need to change how she was using her time, Libby went through a process of relentlessly scrutinizing everything the firm did for clients to figure out what they could actually stop doing that no one would likely notice or miss, and why, even though Libby reached a point of efficiency where she was serving 285 clients while maximizing her recurring revenue, she decided to sell her practice and semi-retire at 37 so that she could focus on starting a new consulting business… to have an even greater impact on even more client households by teaching and coaching other advisors on her methods so that they can develop more efficient and effective practices, too.

And be certain to listen to the end, where Libby shares how she began to track time and energy she was spending on each client, which allowed her to right-size her client load to only serve the ones that she truly enjoyed working with (and not just the ones that were profitable), why Libby believes that, while it is important for advisors to absorb as much knowledge as possible and learn what other advisory firms are putting into practice, it is even more important to take the time to discern which pieces actually work for their individual practices and not try to just blindly replicate exactly what they see (as there is no perfect practice to copy because each advisor is a unique human being), and why Libby believes that because the financial services industry can be tumultuous, it can be easy for advisors to be derailed from their core visions of success, but by finding support in like-minded advisor communities, advisors can realize they are not alone and refocus their energy into following through with their own definitions of success.

So, whether you’re interested in learning about how Libby implemented her ideal week which led to more efficient, template-able processes, how Libby helps other advisors put into practice more efficient processes for their firms, or how shifting the focus of her service model to revenue per hour helped her maintain revenue for the firm while working less, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Libby Greiwe.

Communicating Client Value By Articulating Your Solution To Their ‘Job To Be Done’

October 10, 2022 07:05 am 0 Comments CATEGORY: Marketing

Communicating ongoing value to clients and prospects can be a challenge for financial advisors. Although there are many ways to articulate how an advisor can create value for a client, there is no guarantee that any one particular method will resonate with every potential client. An expression of value that works for one prospect might fall completely flat with another – and for advisors, it might feel like guesswork to find out what message will be the most effective for a particular client.

In this guest post, Michael Lecours, financial advisor and co-founder of fpPathfinder, introduces an approach for advisors to define their value for clients based on the “Jobs To Be Done” framework – that is, the specific outcome that the prospect wants from engaging with an advisor.

The concept behind the Jobs To Be Done framework lies in the insight that prospective clients often want something specifically unique beyond just the service provided by the advisor. For example, one client hiring an advisor to manage their investments might actually be seeking more free time from not having to manage their own portfolio, whereas another client might seek the advisor’s help because they want to reduce their stress level and fear making the wrong investment decisions. While the actual service performed by the advisor might be the same for both clients, the different ‘jobs’ of getting more free time and reducing stress levels reflect unique aspects of the advisor’s value that are most important to each client. While there are countless potential reasons that a client would seek an advisor, the Jobs To Be Done that clients generally need can be grouped into four categories: Functional (relating to the advisor’s knowledge and technical skills); Emotional (relating to the peace of mind created by professional advice); Social (relating to the ability to keep up or fit in with friends and peers); and Aspirational (related to achieving a certain future goal or status).

For advisors to convey their value in terms of a client’s Jobs To Be Done, they must first identify what those jobs are. One way to do this is to use a job-mapping approach to help identify where in the financial planning process the client or prospect became stuck, and what triggered their search for help. For instance, do they need help defining their big-picture goals? Are they too disorganized to put together the necessary documents for creating a plan? Or do they know what they need to do but want help executing their plan? Assessing the client’s challenges in each job-mapping stage – from Pre-Execution, Execution, and Post-Execution – can help the advisor determine the actual job that will help the client overcome the obstacle blocking them from finishing the process.

Ultimately, the key point is that advisors can convey their value to clients in terms of what clients really want from the relationship. And by assessing the different reasons that clients may be unable or unwilling to do their own financial planning and finding out where in the process the client may be stuck, advisors may find valuable insights into the actual job a client needs to be done. And when advisors understand the real Jobs To Be Done that clients are seeking, they can create a compelling value proposition based on what will help them complete those jobs!

Weekend Reading For Financial Planners (Oct 8-9)

October 7, 2022 02:04 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 amid the current bear market, usage of robo-advisors and other digital advice tools has plummeted, according to a recent study. This suggests that some consumers will be looking to human advisors to better understand their needs and help guide them through the recent market volatility.

Also in industry news this week:

A survey suggests that a third of their advisors don’t use their firm’s internal technology tools, preferring to use third-party options instead
The SEC has brought charges against a former broker who sold his practice to an individual who ended up defrauding the seller’s clients

From there, we have several articles on retirement planning:

Defying popular wisdom, a research study argues that younger workers should delay saving for retirement, even if it means foregoing a company match
Why the creator of the “4% rule” is sticking with it despite the current bear market and elevated inflation
A new paper argues that an actual safe withdrawal rate for retirees is significantly less than 4% when taking into account return data from developed countries other than the United States

We also have a number of articles on practice management:

Five key metrics that underpin advisory firm sustainability
Why firms should look to leading indicators rather than lagging ones (like AUM) to better understand their growth prospects
Why it is important for firms to create a formal client feedback system and the most important questions to ask on client surveys

We wrap up with three final articles, all about the meaning of money:

How the dramatic changes in the American economy, markets, and personal balance sheets during the past few years have shown the challenges of achieving sustained, widespread prosperity
Why now could be a great time to spend and get enjoyment out of one’s money, despite recent market volatility
A survey shows how individuals in 17 advanced economies rank what brings them the most meaning in their lives

Enjoy the ‘light’ reading!

Kitces & Carl Ep 96: Handling Politically Charged Clients Who Make It Uncomfortable To Be Their Advisor

October 6, 2022 07:01 am 1 Comment CATEGORY: Kitces & Carl Podcast

Kitces Carl Ep Handling Politically Charged Clients Who Make It Uncomfortable To Be Their Advisor

When it comes to politically charged discussions, financial advisors generally try to stay neutral and focus on providing clients with objective financial advice. Yet, while they seek to remain apolitical in their financial advice, the shifting political environment has made it increasingly common for more clients to express their political concerns and feelings with their financial advisors. While many advisors want to remain neutral, the recurring conversations about politics can be stressful, especially when the client and advisor have opposing political viewpoints. This can make it increasingly difficult for the advisor to work with these clients.

In our 96th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how to approach politically charged clients who may be difficult to work with, how to determine if a client’s fixation on their particular views interferes with the planning process, and, if needed, how to smoothly separate from clients and help them find a financial advisor that may be better suited for them.

As a starting point, it’s important to understand that for many clients who bring up politics, their concerns are often fleeting. If a client expresses serious concerns about politics and the potential effects it can have on their financial plan, the advisor may find it helpful to ask the client whether the subject can be put off until a later time so that the meeting can focus on the agenda at hand. If a client is adamant about their concerns, it may be a good idea for the advisor to perform a check-in to determine where their feelings are coming from. Some clients may be internalizing fears arising from what they see and hear in the media. These clients may just need someone to talk to, and the advisor can help by providing reassurance on the status of their financial plan.

However, there are other clients who may have a harder time letting go of their concerns, which can interfere with the work that needs to be done during the client-advisor meeting. If the advisor finds that working with these clients becomes increasingly difficult or stressful, it may be a good idea for the advisor to check in with their own emotional stress to understand whether the impact of the relationship is creating a strain on the advisor’s own mental health, and whether the strain is enough to warrant ending the engagement with the client. Importantly, if an advisor does determine that a client is not a good fit because of conflicting views, they can still approach the separation with compassion and empathy and part on good terms with the client by offering to find an advisor that is truly a better fit for them.

Ultimately, the key point is that not all clients may be a good fit for the advisor, and by understanding how to assess when they should terminate a client relationship, advisors can focus on giving all of their clients the best service possible – whether that means strengthening relationships with current clients or terminating relationships with unviable clients and guiding them to other resources that will support them. Because in the end, maintaining positive relationships is key to the financial advisor’s own success and mental health!

Automated Tax-Loss Harvesting Technology: Is The Value Overstated?

October 5, 2022 07:09 am 1 Comment CATEGORY: Taxes

In recent years, numerous software solutions have sprung up that aim to automate the process of tax-loss harvesting. Both retail-focused robo-advisors and advisor-focused TAMPs have begun to offer automated tax-loss harvesting, which – by systematically checking for losses to harvest, typically on a daily basis – purports to increase investors’ after-tax returns by 1% or more.

But what the providers of automated tax-loss harvesting often don’t mention is that the actual value of tax-loss harvesting depends highly on an individual’s own tax circumstances. The 1%+ added value of automated tax-loss harvesting may be achievable in some ‘ideal’ cases, such as an investor who frequently contributes to their portfolio, has short-term losses to offset, and/or has many individual security holdings. But in other cases where those factors aren’t present, the added value of tax-loss harvesting is often much lower – which suggests that the value of automated tax-loss harvesting is less about the automation itself, and more about capturing losses under the right circumstances when the factor(s) that enhance the value of losses are present.

Unfortunately, much of the technology dedicated to automated tax-loss harvesting fails to consider the individual tax circumstances that drive most of the true value of harvesting losses, and instead focuses on the portfolio-management aspect of efficiently capturing as many losses as possible. Which can be a problem when such technology advertises itself as an all-in-one solution for tax-loss harvesting with no additional effort required by the investor or advisor because, in reality, not all investors may benefit from tax-loss harvesting, and the crucial information necessary to decide whether an investor is (or isn’t) a good candidate for tax-loss harvesting is often the very information that automated tax-loss harvesting software fails to capture.

While there still can be uses for technology that automatically harvests losses – such as in the occasional circumstances where it really is beneficial to harvest as many losses as possible – many investors may be able to realize nearly the same value by harvesting losses tactically (that is, by recognizing when their circumstances might be beneficial for tax-loss harvesting, and harvesting losses only when those circumstances occur). And when factoring in the fees charged by those technology platforms, the value of such ‘tactical’ tax-loss harvesting might exceed the value the investor would have realized by relying on a technology solution to do it automatically!

Ultimately, the key point is that tax-loss harvesting is a tax planning strategy and not (just) a portfolio management strategy. What matters is not simply the amount of losses the investor is able to harvest – which most technology seeks to maximize – but that they are harvested when the investor is able to benefit the most from them. In this light, it may be worth spending a little extra time on the tax planning side before handing the process over to automation, to ensure that the losses harvested will be truly valuable in the long run.