Nerd's Eye View blog

Teaching Financial Planning As A Part- Or Full-Time Career Opportunity

November 16, 2020 07:03 am 2 Comments CATEGORY: Personal/Career Development

The traditional role of a financial advisor is to provide financial planning services to their clients, or at least to support the financial planning process in an advisory firm. However, with the growing number of programs that provide the educational foundation required by the CFP Board for rising certificants to earn their CFP designations, there is an increasing demand for qualified teachers of financial planning. This growing opportunity has appealed to many advisors – not only has it offered new career options for financial planning professionals as an alternative to client-facing work, it can also be a unique marketing opportunity that increases the credibility of an advisor as a well-qualified financial planning expert in their work with clients, and gives firms an opportunity to see first-hand the top students in a local program that might be future hires (at least within the limits of what university conflicts-of-interest policies will allow for their instructors).

However, there are many different types of teaching roles that a financial advisor can consider. A position as a part-time instructor may make the most sense for advisors who want to continue serving financial planning clients. Compensation typically ranges from $3,000 to $7,000 per semester course, though part-time instructors at the undergraduate level are generally required to have earned a Master’s degree in a related field in order to get the paid teaching opportunity. For those who are interested, aside from the time commitment of actually teaching courses (which typically involves approximately 45 hours per semester per course), advisors should be aware of the time commitment involved in preparing for the course (for the first-time instructor, this can involve several hours per lecture given). Accordingly, given the relatively low salary range and high time commitment, financial advisors who choose to teach in these roles generally do so out of a love for teaching and as a way to give back to the industry by helping to prepare new advisors.

Full-Time instructors, on the other hand, tend to have a regular assignment of courses with some certainty of when and which subjects will be offered throughout the year. The job security of a full-time instructor is much more stable than that of a part-time instructor and, for non-tenure track positions (i.e., less permanent appointments with little or no research commitments), annual compensation levels generally start in the $50,000 to $80,000 range. However, full-time positions will make it more difficult for an advisor to continue working outside the classroom (though it may still be possible); thus, advisors will typically need to be willing to give up work in their financial planning practices, and should be prepared for an academic career (and academic compensation levels). In addition, advisors again will generally be required to have earned a Master’s degree and have some relevant professional experience for a full-time instructor role.

Individuals interested in pursuing tenure-track professor roles will find opportunities at research and/or teaching universities with financial planning PhD programs (and occasionally PhD programs in other fields, such as Family and Consumer Sciences), though the requirements to qualify for an appointment are much more stringent than for other types of teaching roles. New “assistant professors” can expect starting salaries to range widely from $60,000 to $130,000. While maintaining a financial planning practice may be very difficult for a tenure-track professor because of the work involved in both teaching and research, advisors can find ways to stay connected to their firm, potentially through occasional ad hoc planning work, relying on other firm partners, or by outsourcing work to others.

For those in a tenure-track position, earning tenure involves a long process unto itself, but their positions become very secure as tenured faculty positions are permanent, lifetime appointments (where it’s very difficult to get fired short of very substantive failures to do the core job). However, research universities will generally require a significant amount of research to be done by their faculty in a tenured professor role. For example, some popular CFP Board Registered PhD programs expect their faculty to publish an annual average of three articles in peer-reviewed academic journals every year, though the actual expectation varies greatly and can be gauged by determining what tenured professors published during their own probationary (tenure-track) period. In addition to research requirements, some institutions (e.g., those that are accredited by the Accreditation Council for Business Schools and Programs, or ACBSP) require individuals to have 15 finance graduate credits in order to teach in their programs, though other institutions (accredited by the Association to Advance Collegiate Schools of Businesses, or AACSB) don’t necessarily share this 15-credit requirement, but may have their own standards (which vary by institution, and could still include a 15-credit requirement) that define requirements for teaching eligibility.

Ultimately, the key point is that there are many financial planning teaching opportunities, some of which have relatively low education and experience requirements that can be managed by a financial advisor without having to give up their practice of financial planning itself. On the other hand, for those who actually wish to pursue a financial-planning-based career in academia on a full-time basis, there are also growing opportunities for full-time instructors and even tenure-track faculty positions at a research university. Regardless of the role, though, teaching opportunities in the financial planning field can serve as a great way for advisors to enhance their current job roles (or even switch careers altogether!) and to contribute to the profession by supporting the education of aspiring financial planners!

Weekend Reading for Financial Planners (Nov 14-15)

November 13, 2020 02:58 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with a look at what a Biden administration may mean given the increasing odds that the Senate will remain Republican (by winning just one of the two Georgia Senate run-offs), which could stymie major tax legislation from the White House but leaves the way clear for potential new fiduciary regulatory reforms for financial advisors (as a new SEC Chair or Department of Labor Secretary from the White House is all it takes to potentially queue up a new rulemaking process in the coming years).

Also in the news this week is a fresh Risk Alert from the SEC's Office of Compliance Inspections and Examinations highlighting that, as RIAs increasingly expand into multiple locations, they're not always implementing appropriate 'branch office' compliance oversight programs, and the CFP Board has published a new set of "sample" (consumer-tested) Engagement Letters that CFP certificants can use both to describe their services in plain language and also to meet the CFP Board's own new "Duty to Provide Information" obligation that took effect on June 30th.

From there, we have several practice management articles, from a look at how, despite the industry buzz of "consolidate or perish", that small independent advisory firms continue to thrive, and it's some of the largest advisor platforms that appear to be struggling to maintain their size (despite their scale!), to a reminder of the key areas of an advisory business that must be balanced in order to drive (sustainable) growth, and a good discussion of what a COO actually does in a growing advisory firm that has more than 10 employees (and requires an additional level of infrastructure and management to keep the firm organized).

We've also included some articles on client communication this week, from some suggestions on questions to ask new (or prospective) clients to help deepen the relationship, tips on how to make virtual client meetings more collaborative (by not just screen-sharing but creating visuals that the advisor and client can collaboratively fill out and complete), and a good reminder that even though the work-from-home environment may feel more casual it's still important to remember that clients can see you (at least when the video is on!) and that putting together a professional look still matters in a professional services business.

We wrap up with three interesting articles, all around the theme of the ongoing challenges for both teams, businesses, and individuals continuing to work from home: the first explores how effective team communication in a virtual environment is all about "bursty" communication (with concentrated groups of meetings, followed by blocks of focus time); the second explores the ongoing challenge of loneliness when working from home for extended periods of time; and the last looks at what some businesses are starting to do now to head off the growing concern of work-from-home burnout, from 'spontaneous' 3-day weekends to allowing team members the option for 30-hour work weeks or simply having "self-care" days where it's required to turn the computer/laptop off, step away, and unplug from the home office that is otherwise so hard to disconnect from when it's right there in the house!

Enjoy the 'light' reading!

How Virtual Financial Planning Meetings Can Actually Enhance Client Intimacy (And How To Make It Happen)

November 11, 2020 10:27 am 5 Comments CATEGORY: Client Trust & Communication

In recent years, technological advances in remote communication have allowed all sorts of professionals to expand beyond having clients just in the towns and cities where they live and meeting those clients in just one location. Financial advisors have been taking advantage of that trend as well, as the internet and video and other collaborative meeting tools have increasingly made it feasible to serve clients across the country (or even around the world), start practices on a shoestring budget, or simply to keep clients when they relocate themselves (resulting in a more and more geographically diverse clientele over time). Still, financial advisors who adopted a fully virtual “location-independent” practice were in the minority... until this past March, when suddenly, those who were fortunate enough to have jobs that lent themselves to remote work, found themselves having to navigate the world of virtual work literally overnight, including financial advisors.

The transition wasn’t always smooth, and many advisors still lament what’s been lost by not being able to meet with clients in person. But the good news is that it turns out that there are some rather favorable aspects to meeting clients virtually, and engaging with professionals in a virtual environment is something that psychologists have been studying in their domain for many years now. In fact, a recent literature review in the Journal of Financial Planning suggests that virtual financial planning may be just as good (or perhaps even better) as advisors address their clients’ emotional concerns!

Specifically, the research shows that virtual client meetings create a lower barrier to entry for otherwise-nervous clients who want to meet, and provide more flexibility in how and when meetings happen, as they offer increased logistical convenience and reduce any stress around actually going to the meeting itself. And as it turns out, having the option to meet from a more comfortable and familiar (i.e., home) location may even have a therapeutic benefit in and of itself! Meanwhile, that same flexibility increases the advisor’s availability, which can be particularly valuable in times of need.

Beyond that, virtual financial planning can potentially help clients adhere to their plans as well. In a more ‘normal’ environment, where in-person meetings typically take an hour or so and happen only once or twice a year, it is very easy for tasks to fall through the proverbial cracks. Instead, shorter and more frequent virtual meetings can help both clients and advisors focus on a few of the most important tasks… and the supporting follow-through necessary to ensure they actually get done. This can be especially helpful for clients who are stressed about their finances, as might be more inclined to keep their virtual meeting and actually talk to their planner, instead of canceling or putting their meeting off.

That’s not to say that virtual meetings aren’t without their challenges, though, but the good news is that there are some simple strategies advisors can use to deal with those challenges effectively. At this point, it’s no mystery that “Zoom Fatigue” is a very real thing, as our brains simply aren’t wired to deal effectively in a (prolonged) virtual environment. Not only do they hinder our ability to read body language and receive subtle (but extremely important) nonverbal cues, but they also reduce the amount of feedback that participants provide, as it’s natural for our brains to zone out in such situations. To combat “Zoom Fatigue” and stay focused on the task at hand, advisors can try having only the video conferencing system open on their computer, shutting off notifications from their phones and other communication applications, avoid using a virtual background, keep microphone and cameras ‘on’, and use all the reduced distractions to focus themselves on being more active listeners.

Ultimately, the key point is that, although financial advisors have had to manage a plethora of changes in a post-pandemic world, the good news is that there are several benefits that clients (and advisors) can enjoy as a result, including offering lower barriers to entry and greater flexibility and convenience, as well as an increased likelihood that clients will adhere to their advisor’s recommendations. And while there are various challenges inherent in remote settings, there are a few easy-to-implement strategies that advisors can employ to not only harness the utility of virtual meetings, but in many cases, provide even better outcomes for clients!

#FASuccess Ep 202: Improving Client Follow-Thru On Advice By Scaling A Quick-Touch Monthly Meeting Model, With Pamela Capalad

November 10, 2020 07:02 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 202nd episode of Financial Advisor Success Podcast!

My guest on today's podcast is Pam Capalad. Pam is the founder of Brunch & Budget, a financial planning and coaching firm based in New York City that serves nearly 200 clients with a particular focus on first-generation immigrants and serving communities of color.

What's unique about Pam and her Brunch & Budget business though, is the way she's built her clientele by – literally – having brunch with prospects to talk about budgeting and other cash flow planning issues, and how she figured out how to turn that into ongoing financial coaching relationships paying as much as $300 to $900 per month on an ongoing basis for Pam's structured financial coaching accountability system, coupled with 20-minute monthly check-in meetings.

In this episode, we talk in-depth about how Pam structures her ongoing monthly advice process, the upfront four meetings that she uses to onboard and start every client relationship, how she uses MeisterTask as the center of her client relationship to hold clients accountable for what they're working on, the reason Pam decided to ditch eMoney advisor and now uses MX as her account aggregation client portal to help them through their budgets and track their monthly spending, and why Pam found that a higher frequency of shorter monthly meetings – quick touches with clients – was more effective than longer quarterly or semi-annual meetings when it came to helping clients actually make progress towards their goals.

We also talk about how Pam's model itself has evolved from starting out with one-time engagement for providing budget and other financial advice to a monthly model that began at just $20 to $60 per month, and then increased to $100 a month, and then up to her current minimum of $300 a month as she built out her service model for clients. Why Pam's model is built on a sliding scale that can amount to as much as 3% to 4% of a client's household income, and how Pam justifies that advice fee to clients. And the group financial planning model that Pam is now beginning to test to expand the reach of her services to serve more people of color.

And be sure to listen to the end where Pam shares how hiring for scale became the biggest challenge in her business as it grew beyond her personal capacity to serve clients, how different it is to provide financial planning advice to clients who are the first generation of their family to accumulate wealth, and why she now frames her business niche as serving people who are afraid to talk about money and the ways that Pam has adopted her financial planning process to get them comfortable with working with her.

So whether you’re interested in learning how Pam uses MeisterTask to hold clients accountable, what made her decide to ditch eMoney Advisor and what she uses now, or how she is expanding the reach of her services to people of color through a group financial planning model, then we hope you enjoy this episode of the Financial Advisor Success podcast.

Designing (Better) Compensation Models That Motivate Employees And Support Advisory Firm Culture

November 9, 2020 07:03 am 0 Comments CATEGORY: Practice Management

Human beings respond to incentives, and as a result, compensation is one of the most influential drivers of employee motivation and is often used by employers as a way to guide their team’s behaviors. For example, some employers design their compensation structures to reward employees for experience gained and/or length of service provided to the company, or by adjusting an employee’s pay to compensate for certain benefits (e.g., paying extra to cover health insurance costs when the company has no group insurance plan, or by reducing pay to compensate for retirement plan contributions the company makes on behalf of the employee). Very frequently, though, employers overlook the fact that it is not actually the money itself that influences their employees but, rather, it is what the money offers to or makes possible for the employee that matters most. And it’s those emotional connections to money that ultimately must be tapped effectively in order for compensation incentives to actually create the desired business outcomes.

In this guest post, Angie Herbers – Chief Executive and Senior Consultant at Herbers & Company, an independent management and growth consultancy for financial advisory firms – identifies the common mistakes that many financial advisory firms make in developing their compensation models, and also discusses four key drivers behind the money that actually motivate employees. And that by understanding the different types of compensation that address the needs of specific motivational drivers, advisory firms can design better compensation models that will not only save time, but will also enhance the firm’s culture!

There are four common mistakes that advisory firms tend to make when creating their compensation structures. The first is designing an incentive structure without a clear focus – or with a focus on too many objectives – as many firm owners try to tie too many metrics to compensation (e.g., revenue, and profit, and client service) rather than on prioritizing one main objective with a clear focus (and a better chance of meeting that objective) for all. A second mistake is using compensation as a way to adjust for benefits; either increasing pay to make up for benefits the company does not offer (e.g., higher pay for no health insurance… but then what happens if the firm adds health insurance later?) or reducing pay to compensate for benefits the company does offer (e.g., reduced pay in exchange for employer contributions to an employee’s retirement plan… that the employer was probably going to make anyway for their own benefit!?). A third mistake that firm owners make is offering partnership rights as a form of compensation (i.e., not paying partners a salary for their active role in the business, and letting net partnership distributions be the primary or sole compensation), as the income a partner receives for ownership and what an employee receives for work in the business reflect two very different functions. And the last common mistake is neglecting to update the compensation structure over time, which should be reviewed and updated often to respond to the behaviors that the firm wants to influence (as the needs and demands of the business itself do tend to evolve over time as well).

When it comes to the actual drivers that make employees want to earn compensation, there are four basic feelings that serve as central motivators, and certain types of compensation offered can generally serve to satisfy these feelings for employees: 1) control (regular base salaries that employees can rely on receiving for the role they play in the company), 2) advancement (incentive-based pay that gives employees a sense that what they do is helping them advance through the ranks), 3) assurance (benefits offered to convey that employers care about their employees and are taking measures to provide care for them), and 4) achievement (compensation tied to a career-track plan). And for employees to develop trust in their employers, they need to have at least some of these feelings satisfied by the compensation they receive for the work that they do.

Ultimately, the key point is that if employers take the time to analyze their teams’ compensation needs, and decide which of the four motivational drivers are most important to their employees (and it may be the case that all four are important to a firm), firm owners can better understand which compensation structures would be most beneficial to implement, and why. And when effective compensation structures are in place that satisfy employees’ motivational needs, the result often produces more streamlined employee management… not to mention inevitably enhancing the firm’s culture and overall morale, as well!

Weekend Reading for Financial Planners (Nov 7-8)

November 6, 2020 02:57 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 a prospective win for presidential candidate Biden may cause regulatory reform of financial advice to become an issue once again in 2021, as a new administration may seek to reign back the expansion of advice at broker-dealers that was permitted by this year's introduction of Regulation Best Interest (or at least, may more actively enforce Reg BI against broker-dealers that overstep the line when switching their RIA and broker-dealer hats).

Also in the news this week is the announcement that Canadian RIA aggregator, CI Financial, is considering a potential public listing on the New York Stock Exchange in what could become the second publicly traded RIA aggregator (alongside Focus Financial) in yet another wave of new buying activity for advisory firm acquisitions (potentially pushing already-record RIA valuations even higher in the coming years?), and a look at recent InvestmentNews Research data showing just how dramatic the shift to independence has been, as both independent broker-dealers and RIAs continue to gain nearly 1,000 new advisors per year from wirehouses, insurance broker-dealers, and banks.

From there, we have several practice management articles all around the theme of leveraging staff hires, from the importance of creating a vision of the firm's future org chart when it grows to better visualize what the next hires should be to keep the growth moving forward, to the benefits of hiring service-minded advisors (in lieu of rainmakers) to scale an advisory firm, and some tips on how to successfully transition existing clients to service-minded advisors without undercutting their credibility.

We've also included some marketing articles this week: a look at some advisory firms that are doing content marketing well, and what they're actually doing that makes it work; a review of 10 advisor websites that are especially appealing, and what they are doing to make the content, design, and messaging so effective at connecting with the prospects they're looking to attract; and some suggestions on advisor marketing strategies that are actually working in the age of social distancing.

We wrap up with three interesting articles, all around the theme of leveraging one's time and efficiency: the first is a look at why Inbox Zero may not be something to aspire to, as being efficient with email can still misfocus an advisor's time on the tasks that don't really matter most; the second explores the challenge of "hoarding" to-dos and the compulsion we sometimes have to keep and check off everything... instead of focusing on just checking off the tasks that truly matter the most; and the last provides some valuable tips to overcome the tendency as financial advisors in a service-minded profession who just want to help people of saying "yes" to everything, because in the end we still only have so much time and have to learn to say "no" to helping everyone in order to have the most positive impact on those we can help the most.

Enjoy the 'light' reading!

Kitces & Carl Ep 46: Communicating With Long-Standing Clients When Transitioning To A Planning-Based Business Model

November 5, 2020 07:04 am 5 Comments CATEGORY: Kitces & Carl Podcast

Over the past decade or so, the financial planning profession has continued to shift away from its transactional business model roots – where a client is a “client” simply because you’ve done business with them at some point in the past – to a model driven by long-term planning relationships (where a client is a client because they’re actually in an ongoing client relationship). As such, many advisors are making that same transition themselves, as they expand their expertise and introduce additional services for their long-standing clients to round out an ongoing service model. Along the way, though (and often due to the performance-centric nature of the transactional relationship), advisors may not have formed a full and complete understanding of all of their clients’ circumstances (beyond what was necessary to know to implement the original product recommendation). In turn, those same clients may themselves be accustomed to a certain cadence and routine of annual meetings. The net result is that advisors may sometimes struggle when trying to figure out the best way to introduce those clients to a more holistic planning-centric relationship, and gain a clearer picture of what’s most important to them beyond the original product need (that the advisor may not have really delved deeply into in the past).

In our 46^th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards explore best practices for transitioning longer-term transactional clients to a more planning-centric relationship, how to introduce the concept during regular meetings (particularly when the advisor may need to gather additional information that they hadn’t asked for along the way), and why a gradual (and possibly interactive) transition may be better than making any big “now we’re doing financial planning!” announcements.

As a starting point, it’s important to understand that there’s no shame in needing to learn more about long-term clients. One approach to introducing the conversation is simply to include some initial discovery questions as part of a ‘normal’ agenda, which in turn would provide the advisor a reason to start spending more time on deeper questions in subsequent meetings, as a means of going beyond the ‘traditional’ client review meeting that’s so often just focused on portfolio performance reviews.

From there, advisors can start filling in information gaps that may have opened up over the year, not by shoving a thick intake questionnaire in front of the client (which could prompt clients to wonder if their advisor shouldn’t already have asked for that information years ago), but by using modern interactive planning software where the pertinent information can be populated live (and collaboratively) in the meetings themselves. The important thing again, though, is that these things don’t have to happen all at once, and instead can happen iteratively over time.

Ultimately, the key takeaway is that advisors don’t need to make any drastic changes in the way they interact with their clients to introduce a more planning-based approach. Rather, by making the process more conversational, interactive, and gradual, advisors can start by asking deeper questions to find out more about their clients’ long-term goals, gather any missing data by using interactive planning tools available in various planning software applications, build more financial planning depth from there in subsequent meetings, and foster a deeper relationship with a more engaging process of real financial planning.

Using Retirement Accounts To Reduce Estimated Tax Penalties Via Tax Withholding From (Required Minimum) Distributions

November 4, 2020 07:23 am 17 Comments CATEGORY: Taxes

The United States tax system is set up on a “pay-as-you-go” basis, which means that taxpayers are required to pay taxes throughout the year as income is earned, whether it be through withholding income or making estimated tax payments. Individuals who don’t pay timely taxes throughout the year may be assessed Estimated Tax Penalties by the IRS, which are based on the amount of unpaid tax and the Federal short-term rate (in the first month of the quarter in which taxes were not paid) plus three percent. While understanding and helping clients comply with the requirements of tax payments can preclude Estimated Tax Penalties, advisors can also use simple arbitrage strategies to help clients maximize their savings when making estimated tax payments with tax-advantaged retirement account distributions.

While taxpayers who have income withheld to pay their tax liability generally aren’t required to make quarterly payments (as the IRS considers withholdings as if they were paid throughout the year, regardless of when they were actually paid), those who opt to make estimated tax payments must pay their estimated tax liability on a quarterly basis following a schedule of “General Due Dates for Estimated Tax Installment Payments” provided by the IRS. For taxpayers who choose to pay their taxes with estimated tax payments (versus through withholding taxes from paychecks or other qualifying accounts such as pensions or retirement plans), there are basically three options to calculate tax payments. Tax payments can be estimated based on the taxpayer’s prior year’s tax liability, where the estimated annual amount is equal to 100% of the prior year’s tax for income under $150,000, or 110% for income over $150,000, with the total estimated amount paid in equal quarterly installments. While this is generally the simpler way to calculate estimated payments (and more fool-proof in avoiding penalties, since the prior year’s tax will generally be known), individuals can also make estimated tax payments based on the current year’s tax liability instead. In this case, the amount due would be 90% of the current year’s liability paid in equal quarterly installments. The caveat to using the current year’s tax liability to calculate estimated tax payments is that, if the tax liability is underestimated, tax payments may be too low, and an Estimated Tax Penalty may result. The third way to make estimated tax payments is to use the Annualized Income Installment method, in which payments are based on the individual’s actual quarterly tax liability. While this method is cumbersome and time-consuming, it can be beneficial for taxpayers who earn income unevenly throughout the year.

Clients who pay their taxes by withholding income can benefit from the fact that quarterly payments are not necessarily required by the IRS. While paychecks are generally received on a regular basis throughout the year, resulting in withholding taxes in a true “pay-as-you-go” manner as intended by the IRS, retirement account distributions are often made only once per year, which effectively creates a “pay-as-you-go” loophole for taxpayers whose income consists of retirement account distributions! Because of this, advisors whose clients rely on retirement account distributions for income can help maximize savings by withholding taxes later in the year, thereby letting clients keep their money longer (and letting those funds grow in the meantime) without risk of incurring Estimated Tax Penalties.

For clients who may have inadvertently underpaid (or missed) estimated tax payments during the year, using an ‘erase-and-replace’ strategy can help them avoid an Estimated Tax Penalty by using a retirement account to withdraw the amount of underpaid estimated tax and withholding the entire amount from that distribution. The client can then ‘roll over’ non-retirement funds (that otherwise would have been used to make the estimated tax payment) within 60 days of the distribution to avoid any taxes due on the distribution itself, provided that no other rollovers have been made in the last year (so as not to violate the once-per-year-IRA-rollover ule).

Ultimately, the key point is that by leveraging the flexibility of tax withholding from retirement account distributions, advisors can develop strategies to help clients avoid tax penalties while keeping their money invested for longer and postponing tax withholdings until later in the year.

#FASuccess Ep 201: Building A Scalable Advisor Marketing Engine That Eliminates Reliance On Rainmakers Or Referrals, With John Wernz

November 3, 2020 07:05 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 201st episode of Financial Advisor Success Podcast!

My guest on today's podcast is John Wernz. John is the former chief marketing officer for Wealth Enhancement Group, an independent RIA based in Minneapolis that has nearly 20 billion of assets under management for nearly 20,000 affluent clients. What's unique about John, though, is the way he's scaled Wealth Enhancement Group's organic growth through marketing over the past decade, as the firm has grown from nearly 1 billion of AUM to nearly 20 billion, attracting more than 1.5 billion of net new client assets in the past year alone, not including acquisitions.

In this episode, we talk in-depth about how John built the organic marketing engine at Wealth Enhancement Group, why direct mail became a foundation for the firm's growth strategy, how Wealth Enhancement Group leverages third-party data sources to enrich its client personas to better target its marketing, why the firm uses a centralized sales team to field all prospecting queries before handing them off as leads for local advisors to close in service, and how John structures what is now a 30-person marketing team to execute across all of Wealth Enhancement Group's marketing channels.

We also talk about the economics and metrics of advisor marketing. How John evaluates the lifetime value of a client to the firm and why the company will happily spend more than $5,000 to get one new client. The core marketing metrics that Wealth Enhancement Group uses to track its success, including cost per lead, cost per appointment, cost per client, and why the firm doesn't target a certain percentage of revenue to spend on marketing and sales, and instead uses a media efficiency ratio to determine which marketing programs are worth sustaining or not.

And be certain to listen to the end where John shares how Wealth Enhancement Group's marketing success has led to a unique acquisition strategy to accompany it targeting firms in metropolitan areas that have enough depth to deploy their marketing strategies in that new market. How a growth-based acquisition strategy can result in cost synergies with a merger but avoid any layoffs in the acquired firm. And why John sees digital marketing from SEO to social media advertising, paid search to re-targeting, and more, as the next great frontier of scalable advisor marketing.

So whether you’re interested in learning how John’s firm uses direct mail marketing, how he calculates the firm’s media efficiency ratio, or how Wealth Enhancement Group uses acquisitions to open up new marketing channels, then we hope you enjoy this episode of the Financial Advisor Success podcast.

The Latest In Financial #AdvisorTech (November 2020)

November 2, 2020 07:08 am 0 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the November 2020 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 includes guest contributor Kyle Van Pelt, and kicks off with the big news that Morgan Stanley is acquiring asset manager Eaton Vance, in what was largely billed in the media as asset management consolidation of Eaton Vance’s mutual fund family… but in practice may be a $7B bet from Morgan Stanley on the future of Direct Indexing technology to displace ETFs and mutual funds, as in practice more than half of Eaton Vance’s assets were actually managed or overlay portfolios of its subsidiary Parametric (which is estimated to control a whopping 75%+ of the current Direct Indexing marketplace). Though in practice, Morgan Stanley will likely simply re-package Parametric into an ultra-HNW solution for its own 16,000+ brokers serving affluent clients… leaving the door still open for other Direct Indexing startups (or fast-encroaching incumbents) to gain market share with the mass of independent advisors.

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

LPL acquires Blaze Portfolio for $17M to in-house its own model marketplace through rebalancing software
Lincoln Investment acquires Hanlon Advisory Software as the old IAS all-in-one ‘silver bullet seeks a new home
YCharts recapitalizes with LLR Partners to expand its footprint from investment research to investment communication (and potentially proposal generation?)
CapGainsValet launches its 2020 season of capital gains estimates for mutual funds with a new Delivery service to give advisory firms a weekly update on their firms’ individual holdings

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including MoneyGuide’s new built-in analytics to identify potential product sales opportunities for clients, Income Conductor’s novel discount on E&O insurance for independent advisors that use their retirement income planning software (with underwriters presuming that clients will be more likely to be satisfied with their outcomes?), ScratchWorks FinTech accelerator announces its season 3 winners with $5M of funding and opens for new applications for Season 4, and CRM systems signal that they may be becoming the new ‘hub’ for advisory firms as Holistiplan, fpPathfinder, fpAlpha, and Knudge all announce new integrations to Redtail and Wealthbox!

And be certain to read to the end, where we have provided an update to our popular new “Financial AdvisorTech Solutions Map” as well!

I hope you're continuing to find this column on financial advisor technology to be helpful! Please share your comments at the end and let me know what you think!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!