feed - Part 29

The Latest In Financial #AdvisorTech (November 2021)

November 1, 2021 07:05 am 2 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the November 2021 issue of the Latest News in Financial #AdvisorTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors!

This month's edition kicks off with the big news that Schwab is working on its own internal “Personalized [Direct] Indexing” solution, that is expected to become available to both its retail investors and the RIAs on its platform, in what Schwab itself describes as a “freight train” coming for mutual funds and ETFs in what it is calling a new era of “personalization”… from the advice that advisors provide, to the (direct-indexing-based) personalized portfolios that Schwab will bring to the table. And in the process, attempt to win away a potential of trillions in market share from the existing mutual fund and ETF complex?

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

Fidelity launches real-time fractional share trading, in what is widely viewed as a signal that it, too, is working on a direct indexing offering
Addepar acquires AdvisorPeak rebalancing software to expand from performance reporting to full-scale portfolio management
White Glove acquires Gainfully as service companies to help financial advisors increasingly acquire their own (proprietary) tech to better scale themselves
Panoramix rolls out a new Pro edition that provides both GIPS-compliant composite tracking and its own rebalancing software tool that is aggressively priced for smaller/newer RIAs

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

Envestnet partners with Healthpilot to help advisors facilitate better Medicare enrollment choices for their clients
Flourish Crypto launches a solution that will allow advisors to trade their clients’ direct-held Bitcoin and other cryptoassets in discretionary portfolios
Microsoft launches a new Financial Services Cloud to compete against Salesforce FSC for the largest advisor enterprises
Riskalyze overhauls its Portfolios engine for major speed enhancements (and a signal that it’s investing in itself for the long run!)

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

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

Kitces & Carl Ep 71: When You Want To Delegate But Don’t Want To Manage

October 21, 2021 07:04 am 1 Comment CATEGORY: Kitces & Carl Podcast

Many long-time solo financial advisory firm owners with successful practices are eventually faced with the choice either to continue growing their practice into a larger-scale business, or to deliberately level growth so that they can maintain a solo ‘lifestyle’ practice. Owners who choose not to further grow their firms tend to target a different set of goals in comparison to growth-oriented owners looking to increase revenue and clientele, as these lifestyle practice owners often have goals that involve having more time and flexibility to enjoy life outside of the firm. For these owners, this can mean that they will eventually need to consider hiring team members or using outsourced solutions to help them with the tasks that they may dislike or consider too time consuming. However, small firm owners who may not have had to rely on other employees may be concerned about the extra work that comes with hiring employees, and how it might detract from their flexibility and ability to maintain their ideal vision of a lifestyle practice.

In our 71^st episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how firm owners can approach the hiring decision by first considering their own goals and then deciding what kind of assistance they need to maximize their freedom while maintaining a healthy practice.

The first step for the owner is to be clear on how they want to maintain their firm. This introspection can help the owner identify their priorities so that their actions align with the right goals, and can serve as a check against ill-suited goals that might simply be based on what other businesses may be doing. This exercise can also help the firm owner draw out what exactly makes them happy, which, for many firm owners, can simply be to have a certain level of flexibility between their professional and personal lives.

Then, depending on how they want to operate their firm and the goals they have in place, firm owners can prioritize the range of responsibilities they want to keep for themselves and those they are willing to delegate. For some advisors, this could mean figuring out how to free up space in their schedule, whether it be through extending the interval between investment performance reports or finding ways to reduce time spent on email during the day. If the owner decides to hire a new employee to manage some of the firm's responsibilities, they do not necessarily need to spend more time in the office working with the new hire or grooming them to take on ever-increasing responsibilities. Technology provides opportunities for fully virtual employees, and firm owners might be surprised to find out how many potential candidates would thrive at the tasks the owners themselves do not enjoy!

Another option to help owners delegate responsibilities is to outsource tasks, potentially giving them to a part-time virtual employee or by tucking into a larger firm that can handle back-office responsibilities. This can allow the firm owner to spend more time on client-facing activities that may be the most enjoyable part of their work, while getting the back-office support they need to sustain those client relationships as well as their desired level of work-life balance.

Ultimately, the key point is that by first considering their own goals and the range of tasks to keep or delegate, firm owners who are considering outside help may find it easier to decide if they should hire a new employee or outsource the work. Regardless of the reason – whether it be a firm owner who chooses to maintain a small lifestyle practice or to transition from a solo practice to a business enterprise – prioritizing the most important work processes and streamlining (or getting rid of!) those that are unproductive are helpful exercises for any advisory firm!

Adjusting Monte Carlo Success Thresholds By Tolerance For Spending Volatility

October 20, 2021 07:03 am 8 Comments CATEGORY: Retirement Planning

Monte Carlo simulations are an important part of an advisor’s toolbox when constructing a client’s financial plan, as they demonstrate the wide range of potential outcomes that a retiree might experience. These simulations inform the retiree of how much they can spend in the short-term to avoid plan failure in the future, and they also suggest corrective spending levels along the way as plans get updated – an immensely difficult task given that no one knows precisely what will happen. Advisors can assess a number of important variables through Monte Carlo simulations, the most important of which is the frequency of accomplishing the client’s financial goals.

However, when constructing plans that are guided by probability-of-success outcomes, advisors walk a delicate line. Creating a plan with a 100% chance of success, for example, may assume that the retiree has no flexibility in spending and thus will not recommend spending increases… which would present a risk that the retiree may die with too much of their money remaining in the bank, having missed out on experiences, memories, and comforts they could have had. On the opposite side, creating a plan with a higher chance of failure can make clients uncomfortable, given the uncertainty of the future. Accordingly, advisors strive to find the right balance between these two scenarios, and while practices vary in the industry, many advisors tend to target a fixed threshold— say 90% – to determine whether a plan is strong enough to actually implement.

One key assumption of the 90% threshold is that clients should accept a 10% probability that they may need to course-correct at some point in the future to achieve their goals, should investment returns prove unfavorable. While a 90% success threshold might be a suitable threshold for many clients, advisors should recognize that every client has a different willingness and ability to take corrective action when needed, and perhaps a one-size-fits-all approach should be reconsidered. Some clients may prefer a plan that requires course correction 50% of the time, while others may shy away from any chance of failure at all.

Fortunately, advisors can adopt simple processes to identify appropriate (and uniquely customized!) target success thresholds for their clients. Conversations with clients about risk management can evolve, such that advisors shift away from a focus on the unpredictable movements of the market and, instead, move toward more controllable variables within a financial plan (e.g., discretionary spending categories), assessing the corrective actions that a client would be willing to take if needed. By identifying a client’s willingness and ability to modify spending, advisors can utilize a more appropriate and customized Monte Carlo success rate that reflects the client’s true tolerance for risk.

Ultimately, a client’s retirement plan will be more effective when it largely comes down to their comfort with risk, rather than the advisor’s comfort with risk. Because if the scenarios have been discussed and both parties are comfortable with the plan – along with the adjustments that may be needed to stick to that plan – then clients will feel more confident and willing to take the necessary steps to deal with the market fluctuates in the short-term. And, of course, markets can also exceed expectations… not all adjustments need to be negative!

#FA Success Ep 251: Accelerating Inbound Referrals By Planting Better Seeds With More (Radical) Relevance, With Bill Cates

October 19, 2021 07:02 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 251st episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Bill Cates. Bill is the founder of Referral Coach International, which helps financial advisors attract more of their ideal clients through referrals.

What's unique about Bill, though, is that he teaches his financial advisors clients how to generate more (and better) referrals from their clients by focusing their communication and messaging in such a way that makes them more referrable in the first place, and then not following that up by asking for referrals but seeking “introductions” instead.

In this episode, we talk in depth about why Bill makes a clear distinction between a (less meaningful) referral where a client gives their advisor someone’s contact information, and an introduction, where the client actively introduces someone to their advisor, the two main reasons Bill says that clients are reluctant to give introductions and how advisors can proactively address those concerns by communicating with clients how referrals are handled internally, and how Bill suggests that advisors can plant the seed for clients to be receptive to providing introductions by periodically checking in with clients to ask for their honest feedback not just on whether they’re satisfied with the advisor’s service but whether it is meeting their expectations.

We also talk about Bill’s advice on the importance of making sure that, when asking clients for introductions, that the conversation frames the discussion in such a way that clients can visualize the specific types of people that would be a good fit, why Bill recommends that advisors put some effort into not only helping clients reach their more traditional financial planning goals but also discovering what’s on their bucket lists and helping them work towards those goals as well, and how, by marrying a target market with a specific client category, advisors can hone their messaging in such a way that they can achieve, as Bill calls it, “radical relevance”.

And be certain to listen to the end, where Bill shares why, despite his own anxiety around the sustainability of his own business early on, he decided to double down on his own niche of serving financial advisors (and how keeping a narrow focus ended out being the right decision for both him and his business), Bill’s perspectives on how financial advisors should actively own the value that they offer to their clients when helping them make good financial decisions that they wouldn’t have otherwise made without their help, and why, in a post-pandemic world, the need for financial advisors to have messaging that is as clear and relevant as possible is more important than ever.

So whether you’re interested in learning how Bill honed his business process by turning “asks” into proactive promotions, how he frames his own skillset to clients to cultivate better referrals, or how he makes clients come to him, rather than the other way around, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Bill Cates.

The One-Page Financial Plan: Focusing Advice On What Matters Most

October 18, 2021 07:05 am 10 Comments CATEGORY: General Planning

In the delivery of “the financial plan,” advisors have traditionally presented the thick, leather-bound, firm logo-embossed, three-inch binder to clients. On top of being a tool to present “the plan” to clients, this also was an outward demonstration of the sheer depth of analysis the advisor completed to compile this plan; a physical manifestation of the advisor’s “value”. Yet while that depth of meticulously compiled information can be helpful, it also comes with drawbacks. As, in practice, the especially thorough financial plan can be overwhelming to clients, if they open it at all. And at the end of the day, in-depth financial planning analyses can also quickly become out-of-date. To address this challenge, several years ago financial advisor and client communication guru Carl Richards made the alternative case – in his book The One-Page Financial Plan – that all of a client’s “need to know” information ought to be distilled into just a single page instead. In other words, the advisor would simply deliver a One-Page Financial Plan.

It’s worth noting that a One-Page Financial Plan (OPFP) doesn’t mean that the three-inch binder’s worth of information doesn’t exist; the OPFP is an alternative for a deliverable, not an alternative to the work itself. It’s about making a distinction between what advisors could share with a client, versus what a client needs (and really wants?) to know. Which means the creation of an OPFP is all about focusing that limited space to hone in on what each client truly needs to see and wants to talk about.

Beyond the sheer time savings of not producing such a lengthy physical financial plan deliverable, one of the major advantages of the OPFP is its ability to be a “living plan”. Because the traditional financial plan is often so long and time-consuming to produce, most firms only update it once every several years. By contrast, the OPFP can easily be updated on an ongoing basis every year, or even at every check-in meeting with the client throughout the year – which makes it easier for an advisor to pivot in unforeseen circumstances and disruptions (such as, for example, a pandemic!). Rather than reacting to a few years’ worth of changes, advisors can proactively adjust and update the plan as life happens.

Because the OPFP is a living document, a first draft can be constructed as soon as an advisor begins meeting with a new client, simply using standard Document and Spreadsheet tools (e.g., Word and Excel in Microsoft, or Docs and Sheets in Google). As while the Plan will shift a lot over the first few weeks, it nonetheless provides a framework that advisors and clients can work through together to reach mutual clarity. And once an OPFP has been refined and has buy-in from both an advisor and client, it can even become the centerpiece of meetings, because both parties agree that the OPFP has the most important information in order to make informed decisions.

Simmering down a financial plan to one page may be a hard adjustment at first, but it is certainly worth pursuing as a time- and information-efficient option to show clients what they need to know. Many advisors also refine their OPFP strategies over time, opting for more graphics (built from templates to ensure they’re easy to update), or building in automations to make the Plan even easier to compile and comprehend. But ultimately, the OPFP is useful as a tool to drill down to a client’s two biggest questions: “Am I doing OK?” and “What should I do next?” Providing a one-stop-shop to answer these two questions nudges clients (and advisors!) to stay focused on the right things—and work together to keep heading in the right direction!

#FA Success Ep 250: Connecting Better With Prospects By Sharing Stories Instead Of Expertise, With Deirdre Van Nest

October 12, 2021 07:01 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 250th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Deirdre Van Nest. Deirdre is the founder of Crazy Good Talks, a communication coaching firm that helps financial advisors be better communicators, in both private and public settings, in order to help their clients and prospects actually take that next desired step.

What's unique about Deirdre, though, is that she has developed a very specific process that she uses to teach advisors how to employ a variety of foundational stories that in turn lets them make a deeper connection with those they’re trying to reach and connect with.

In this episode, we talk in depth about why Deirdre feels that it’s less important for advisors to worry about whether or not the people they’re communicating with “get” what they’re saying (and how it’s far more important to focus on making an emotional connection instead), how Deirdre teaches financial advisors to take the technical body of content that every other advisor (as well as the public) has access to and present it in such a way that prospects will be more inclined to take a specific next action, and why Deirdre feels that every financial advisor can learn to be a highly effective and emotionally compelling communicator, even for advisors for whom public communication doesn’t come naturally.

We also talk about the key question that Deirdre recommends that advisors should ask in the first 30 minutes of a prospect meeting in order to get, as she puts it, “into their hearts instead of their heads”, why, after getting the answer to that question, advisors should avoid showing prospects how they can solve whatever issue it is that a prospect is dealing with and instead use that opportunity to create empathy by sharing one of their own foundational Why, Desire, or Teaching stories, and why Deirdre believes that advisors who truly feel that the service they’re offering is in the best interest of the people they work for have a duty to learn how to be as persuasive, inspiring, and compelling as possible.

And be certain to listen to the end, where Deirdre shares how advisors can make the intangible service they offer more tangible in the eyes of prospects by emphasizing (and even naming) their planning process (rather than focusing on their service alone), the key mindset shift that Deirdre made in prospect meetings that helped her focus on simply helping the person she was meeting with rather than feeling pressured to do everything perfectly in order to close the sale, and why Deirdre feels it’s so important for advisors to look at their words, message, and stories as business assets that they need to invest their time and efforts into over time.

And so with that introduction, I hope you enjoy this episode of the Financial Advisor Success podcast, with Deirdre Van Nest.

Taking Agency Of Your Time For High-Performance Income, Growth, And Advisor Happiness

October 11, 2021 07:03 am 2 Comments CATEGORY: Practice Management

Financial advisory firm owners face a variety of demands on their time, from working directly with clients, to growing their business, and achieving goals outside of work as well. Trying to address all of these demands can lead owners to feel like they don’t have enough time, their days don’t go as planned, and they can never quite get to the goals they’re trying to reach. A problem that most financial advisors try to solve by seeking out and adopting better tools and technology for time efficiency. But the truth is that everyone has the exact same number of hours to use during the day; breakthroughs in professional and personal fulfillment come not by making those hours more efficient, but by making more conscious decisions about how those hours are spent in the first place.

The key, then, is for firm owners to gain agency—the capacity to act independently and make their own free choices—over their time. Similar to saving enough money to gain financial independence, gaining agency over our time requires an intentional framework that regulates where one’s attention flows, to ensure that it is used in ways that best align time with goals, which in turn drives our growth, income, and happiness.

Creating a system to take agency over one’s time starts with understanding the difference between being available and being accessible. Being available is generally viewed as a best practice, as it means advisors can provide services to clients whenever they need to be served. But as a result, being available also means being at someone else’s disposal. This can lead to a seemingly infinite number of distractions and disruptions that can derail even the most well-scheduled day. In other words, being always available to clients means that a firm owner is never actually in charge of their time.

On the other hand, being accessible means being able to be reached. A firm owner who is accessible still provides services to clients that need to be served, but sets the terms for communication that work for both themselves and their stakeholders. Creating a model of accessibility requires the advisor to set clear expectations about how and when they will be accessible, though. Doing so, however, creates more calendar space and allows the advisor’s time to be more intentionally aligned with the experiences they want to have.

Once a firm owner has adopted a mindset of accessibility (and not just availability), it is important to create clarity about what they really intend to do with their time at work, once that time will be more consciously allocated. The key questions the owner needs to answer include how big they want their firm to be; who the ideal client is; what lifestyle they want to enjoy; and finally, how they can best invest their time based on the previous answers.

It is then time for the firm owner to connect this vision to reality by using time management models and techniques to make it clear to everyone what gets their focus, how their time is allocated, and what actions are assigned along the way. These tools include an annual firm calendar (which first spells out lifestyle goals and then lets the business decide how to use the remaining time), a model weekly schedule (which lays out how the owner spends their time each week), and personal productivity techniques (including morning routines, personal rituals, and professional routines).

Ultimately, moving to an accessible-not-available mindset and creating structures to manage this accessibility can help firm owners gain control over their time and better position themselves to achieve their personal and professional goals. Because at the end of the day, time can be neither created nor destroyed, but it can be wasted if it is not consciously allocated!

Weekend Reading for Financial Planners (Oct 2-3)

October 1, 2021 02:28 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 Franklin Templeton is acquiring O’Shaughnessy Asset Management and its ‘Canvas’ direct indexing platform, as yet another traditional asset manager stakes a view that the future will increasingly be built not on mutual funds and ETFs but the use of technology to build more customized portfolios down to the individual stock level (configured via a software interface, and implemented as an SMA that asset managers can charge for?).

Also in the industry news this week:

An RIA is forced to pay out nearly $1M in restitution as a settlement for charging advisory fees on “house accounts” without assigning an advisor to service those clients
FINRA institutes a new rule that will allow ex-brokers to reinstate their Series licenses within 5 years (instead of ‘just’ 2 years) as long as they complete their FINRA CE requirement and pay a (nominal) fee

From there, we have tax planning articles, including:

End-of-year tax planning strategies for the fourth quarter, which are taking on a greater focus with the potential for significant tax law changes that may come into effect for 2022
A look at how ultra-popular GRATs have become with ultra-HNW clients (with one estimate that more than 50% of the top 100 wealthiest families are using the estate planning strategy)
The outlook for the Qualified Small Business Stock (QSBS) tax incentive that may be halved (from $10M to only $5M of capital gains that can be excluded) in the years to come

We've also included a number of marketing-related articles:

How to structure an advisory firm if it wants to serve multiple niches at once (hint: each niche needs its own team of advisors within the firm)
Why client satisfaction isn’t just a function of the service they receive, but their expectations of those services
How the future of growth is all about formulating expertise and making it more ‘visible’ to prospects (e.g., through blogging, social media, and other digital marketing channels)

We wrap up with three final articles, all around the theme of how technology is reshaping our world:

Why the rise of technology platforms for small businesses is making it easier to be a successful solopreneur (despite the calls that firms must achieve greater size and economies of scale to survive)
The ways that Decentralized Finance (DeFi) and the blockchain could change the financial services industry (by becoming the next generation of broker-dealers and RIA custodial platforms?)
How the intersection of human and artificial intelligence is proving to be more effective than humans or AI alone… suggesting that the future of financial advice is less about robots versus humans and more that success will be defined by the human advisors who best augment themselves with technology!

Enjoy the 'light' reading!

#FA Success Ep 248: Scaling Diamond Teams Profitably By Charging Separate Planning Fees, With J.D. Bruce

September 28, 2021 07:09 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 248th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is J.D. Bruce. J.D. is the Chief of Innovation for Abacus Wealth Partners, an RIA headquartered in Santa Monica, CA that manages over $4B in assets for 1,900 clients.

What's unique about J.D., though, is how he’s been able to help scale Abacus to the size it is today by implementing Angie Herbers’ Diamond Team Model, in order to offer a variety of different service models for different types of clients.

In this episode, we talk in depth about how J.D. and Abacus segment their clients into three styles based on their complexity and net worth, including Builders, Protectors, and Changemakers, how Abacus charges a separate financial planning fee in addition to an AUM fee for most of their clients in order to emphasize the planning work that they do and have the flexibility to charge different amounts for different clients depending on where those clients land along the complexity curve, and how J.D. found that implementing Angie Herbers’ Diamond Team Structure was the key to unlocking the puzzle of making sure that clients are comfortable working with different advisors over time while staying connected to the firm.

We also talk about how Abacus has built a focus on working with those who are most interested in shaping their financial lives to reflect their most deeply held values, why J.D. feels that financial planning firms should be focused on their advisors’ capacity, which isn’t defined solely by the amount of time they spend doing their work, but by the emotional impact of the work they do as well, and why Abacus moved away from a “revenue under management” compensation model and toward a model that bases an advisor’s compensation on the competencies they’ve gained and what they’re capable of in the future, rather than just what they’ve accomplished in the past.

And be certain to listen to the end, where J.D. shares why he feels that finding new talent that is a “good cultural fit” isn’t nearly as desirable as hiring people who can become "culture adds" and help change Abacus’ perspective and see things in a different way, why J.D. feels that AUM fees will inevitably compress industry-wide to 50 basis points, but that the price of advice overall will increase as financial planning itself becomes more valuable (and something we can increasingly charge separately for), and how, even though J.D. admits to having an innate dislike of conflict, he realizes that some level of internal conflict and disagreement are often necessary ingredients for advisory firms looking to grow and change.

So whether you’re interested in learning how J.D. and Abacus have implemented Diamond Teams in their practice, how they use different service models and fee structures for their three client segments, or how they structure their compensation, then we hope you enjoy this episode of the Financial Advisor Success podcast, with J.D. Bruce.

Client Testimonials: Leveraging The New SEC-Acceptable Marketing Practices To Connect With New And Existing Clients

September 27, 2021 07:06 am 3 Comments CATEGORY: Marketing

Since the 1970s, the Securities and Exchange Commission (SEC) has prohibited Registered Investment Advisers (RIAs) from using client testimonials in their advertising. While their rules were intended to protect consumers by preventing advisors from showcasing only the best investment results of a few select clients, two major developments in recent years have necessitated reforms of the existing rules to permit the use of testimonials by financial advisors.

First, consumers are increasingly reliant on testimonials and reviews when choosing which products and services to buy, leading to the massive growth of testimonial-based marketing in other industries, but leaving financial advisors without a key tool in their marketing toolbox. Second, the expansion of RIAs’ services beyond ‘just’ investment advice – often addressing increasingly complex family, career, and retirement questions alongside (or sometimes even instead of) managing an investment portfolio – means that the blanket prohibition against testimonials, meant to tamp down on misleading performance numbers, also stifled advisory firms’ ability to highlight other important features like planning expertise and exceptional client service that might matter far more to potential clients than past investment returns.

In May 2021, the SEC finalized its updated advertisement rules to allow the use of testimonials in RIA marketing materials. This change offers a new opportunity for advisory firms to provide social ‘proof’ of their ability to build relationships through their services and to develop trust and a positive reputation among potential clients. The proliferation of options available to potential clients makes the ‘stamp of approval’ of a good testimonial a key part of the client’s decision of whom to hire, which makes it all the more important for advisors to understand how to deploy testimonials as part of their overall marketing strategy.

The core goals of using testimonials are to connect with a target audience in a relatable and authentic way and to highlight the firm’s services and specialties. Accordingly, a good testimonial will go beyond general praise, and will instead reflect the firm’s own values and areas of specialization. For example, a firm with a certain niche focus might use a testimonial that specifically acknowledges their unique area of expertise, not just in a positive manner, but with honesty as well – after all, the trust-building effect of testimonial advertising only works as far as the testimonials themselves are trustworthy.

Of course, the ability to select good testimonials depends on actually having a ‘supply’ of testimonials, so firms must find some way to gather testimonials to be able to choose the ones that work best for them. Some firms may already have an existing trove of material on third-party review sites like Yelp or Google Reviews (which were permitted before the new rules went into effect), while others can use a Net Promoter Score (NPS) survey or a direct email request to current clients to obtain new testimonials.

Regardless of how the testimonials are ultimately used – on the firm’s website, in social media posts, on third-party platforms, or elsewhere – they should complement the firm’s overall marketing strategy and comply with SEC rules including appropriate disclosures and client confidentiality (e.g., the client must give permission for the firm to use their testimonial in public). Luckily, the same principles that make for an effective testimonial – honesty, authenticity, and transparency – also lend themselves to compliance under the new rule, so that ultimately, firms that take advantage of the new rule allowing testimonials can do so while highlighting their services in a relatable, trust-building way!