feed - Part 34

Weekend Reading for Financial Planners (May 1-2)

April 30, 2021 02:58 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with a recap of the key provisions in President Biden's new "American Families Plan", which includes not only a wide range of provisions regarding child care and education for children, but also a number of "revenue-raisers" of significant pertinence to financial advisors, from higher top ordinary income tax brackets, to a new (much-higher) top capital gains rate, and the elimination of step-up-in-basis rules that would cause all unrealized gains to become taxable as capital gains at death.

In addition, there are several additional articles around this week's tax proposals, including:

How estate planning may begin to change if step-up-in-basis really is eliminated
How the concentration of wealth in equities is leading tax policy to shift away from raising ordinary income tax rates and towards rising long-term capital gains rates in particular

From there, we have several interesting articles on retirement:

While retirement is traditionally viewed as the end of work, considering the positives of work (from having a sense of identity to a purpose to get up every morning) may actually provide the key to what leads to a happy retirement
Increasing longevity, along with an increase in our "productive" years, is leading to a rethinking of work and when we "should" retire
Living longer in our later years is leading to a rise in how many people live long enough to experience a cognitive decline, creating a focal issue for financial advisors who are often the first to observe such issues in their clients

We've also included a number of practice management articles on the theme of improving services to clients:

Why the real key to understanding what clients want isn't just about getting feedback on what you're doing but client input about what they actually want
The limitations of being a data-driven firm when it comes to figuring out what clients might want that the firm is not already doing (and therefore can't be evaluated in the existing data)
How the best firms adopting more technology are not using it to expedite client interactions but to free up time for more meaningful interactions instead

We wrap up with three final articles, all around the theme of the ongoing evolution of the advice business itself:

Why higher standards for financial advisors could actually increase growth and retention rates (as consumers are more likely to seek out a financial advisor in the first place when they have more financial trust in advisors)
The challenges of emerging "point and click" credentials and why it's important to distinguish between advisor certificates and actual certification
How the coming decade may witness a transformation of the planning profession, from how firms leverage technology to how the world of advisors is regulated (or, alternatively, begins to peer-review and regulate itself?)

Enjoy the 'light' reading!

#FASuccess Ep 226: Building CPA Alliances To Reach A More Affluent Clientele To Serve, With Paul Saganey

April 27, 2021 07:02 am 2 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 226th episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Paul Saganey. Paul is the President and Founder of Integrated Partners, a hybrid RIA headquartered in Waltham, Massachusetts that manages over $10 billion for about 18,000 affluent clients.

What’s unique about Paul, though, is how he’s generated hypergrowth for his firm through building strategic alliances with accountants, acting as a resource for CPA firms to build out their own “financial services divisions”, where Integrated Partners supports behind the scenes and the CPAs can remain the “heroes” for their clients throughout the process.

In this episode, we talk in depth about how Paul learned early in his career about the power of referrals from professionals with established relationships when he was an insurance agent creating estate plans for the high-net-worth clients of wirehouse advisors, how Paul expanded that model and generated initial success by doing financial and estate plans for partners at CPA firms, why it became clear for Paul that he needed to get really clear up front that while the CPAs still “owned” the client relationship, it was Paul’s responsibility to actually make and implement the recommendations, and how client relationships change when professionals each charge a separate fee for their respective services.

We also talk about the importance Paul places on being product- and solution-agnostic and having a platform where he can remain product- and solution-agnostic, his key decision in 2016 to re-examine his business model and ultimately form his own RIA (and how that set the stage for him to change his vision for his firm to gain a national reach), and the tremendous growth that Paul is now generating by attracting outside advisory firms who want to “tuck in” to Integrated’s CPA referral program and get themselves in front of higher-net-worth clients.

And be sure to listen to the end, where Paul discusses how “moving up the complexity curve” by working with wealthier clients helps advisors fight the “fear” of fee compression (as they are able to more consistently charge higher fees for providing advice on more complex needs), Paul’s vision for coming years for Integrated Partners to expand their reach by doubling the number of CPA firms that they partner with, and the “Who Not How” methodology that Paul has used throughout his career to not only become a better business leader, but find ways to collaborate with others to create synergies.

So whether you’re interested in learning how Paul built out Integrated Partners’ CPA strategic alliance program, how he’s leveraged that program to expand nationally, or why working with wealthier clients can help advisors combat the fear of fee compression, then I hope you enjoy this episode of the Financial Advisor Success podcast with Paul Saganey.

#FASuccess Ep 225: Generating A Positive Marketing ROI With Direct Mail Seminar Events, With Matt Gulbransen

April 20, 2021 07:06 am 3 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 225th episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Matt Gulbransen. Matt is the President of Pine Grove Financial Group, an RIA in Minnesota that manages over $550 million for about 325 families.

What’s unique about Matt, though, is that despite the widely held belief that direct mail and educational seminars have gone the way of the dinosaur, he has continued over the past decade to see positive marketing results from using direct mail to fill seats at in-person seminar events geared towards educating people about planning for the plethora of life transitions they face as they approach retirement… and then convincing them to work with him to navigate those retirement transitions.

In this episode, we talk in-depth about the ROI that can still be generated from a marketing funnel built around direct mail seminars, Matt’s key realization around why fear-based marketing will only get you so far and doesn’t ultimately help clients move forward to do business, the reason Matt started to charge an upfront planning fee for new clients as he gained traction with his seminars as a means of demonstrating that the work he and his team was doing had value, how Matt has adapted his process in a world where in-person events haven’t happened for a year, and why Matt feels that pre-retirees and retirees are still an attractive target market despite the level of competition in the niche.

We also talk about the way Matt has been able to leverage a relatively lean (at least by industry standards) team of nine people to service $550M of AUM by building out workflows and integrations within their tech stack in order to become ultra-efficient at their most common tasks, why the firm’s desire to focus on tax-savvy household-level allocations led Matt to choose 55IP as their core portfolio management software instead of more popular alternatives, and the various other technology tools that Matt’s firm has implemented to support “tax alpha” as a key value-add they bring to their clients (especially given that Matt and his clients live in a high-tax state).

And be sure to listen to the end, where Matt shares the challenges of starting his career as a young advisor at a wirehouse, how the challenges of prospecting led Matt to shift to the bank channel that had a more captive audience of prospects that could be referred to him, how it was Matt’s initial success with seminar marketing and the realization that he could grow an advisory firm without having a big-name brand behind him that eventually led him to launch his RIA, and how Matt has started to further scale the efficiencies he’s already built in his practice by bringing on outside advisor teams who are able to bolt on seamlessly to his system.

So whether you’re interested in learning how direct mail is still a viable means of attracting qualified prospects, how advisors can still use seminars to demonstrate the value of financial planning, or how Matt has been able to manage a relatively lean team with workflows and automations, then we hope you enjoy this episode of the Financial Advisor Success podcast with Matt Gulbransen.

Weekend Reading for Financial Planners (Apr 17-18)

April 16, 2021 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 Gary Gensler, known for his aggressive enforcement at the CFTC a decade ago, has officially been confirmed by the Senate as the next SEC Commissioner... setting the stage for what may be a significant uptick in the enforcement of Regulation Best Interest amongst broker-dealers as the world of brokerage and investment advice continues to converge.

In addition, there are several other notable regulatory news items this week, including:

Robinhood sues the state of Massachusetts to overturn its state fiduciary rule, claiming that Massachusetts' recent enforcement actions against Robinhood's trading practices aren't valid because the firm is "just" a self-directed brokerage firm and not providing retail advice
The Department of Labor issues a new FAQ on the recently updated ERISA fiduciary rules signaling more aggressive enforcement of its fiduciary framework on brokers that recommend IRA rollovers

From there, we have several interesting consumer and advisor studies:

How generational preferences for financial advice are increasingly gapping apart according to J.D. Power, with 52% of those under 40 preferring an advisor committed to ESG and 73% preferring to pay for advice on a monthly subscription basis (compared to only 24% and 34%, respectively, of those over age 40)
Unlike prior bear market cycles, the majority of investors who made portfolio changes became more aggressive in 2020 (not more conservative)
A new consumer survey from Cerulli finds that 44% of consumers would prefer to invest according to their ESG preferences, while 'only' 14% of advisors indicate their clients have a moderate preference for doing so

We've also included a number of articles on investment trends:

Steps that advisors can begin to take to implement an ESG investment approach with their clients (on more than just a one-off accommodation basis)
What to do if parents accumulate "too much" money in their 529 college savings plan
Real-world results of a firm that implemented Direct Indexing in 2020 and got to see first-hand how much additional tax-loss harvesting can occur in volatile markets

We wrap up with three final articles, all around the theme of adapting ourselves for greater success:

Why it's important to have "strong opinions, weakly held" by being confident in what we know but also very open to new information that could change our recommendation
How "feedback" is crucial to making long-term improvements beyond just trying to research for ourselves what we "should" do
Why the long-term key to success in growing a business is all about staying as close as possible to the end client, and not allowing your team or various intermediaries to put too much distance between the advisor and their end clients

Enjoy the 'light' reading!

Alternative Custodian Options For Independent RIAs In The Wake Of Schwabitrade

April 12, 2021 07:05 am 3 Comments CATEGORY: Practice Management

Bob Veres Alternative Custodians Graphic

For most independent RIAs who want to manage client portfolios (and be compensated for doing so), having an independent RIA custodian to work with is a necessity. As in practice, RIA custodians not only actually hold client assets (an important consumer protection) but also provide the core technology platform to open client accounts, to make deposits into and withdrawals from those accounts, to keep track of and trade in client accounts, to bill advisory fees from client accounts, and to integrate client investment data to the advisor’s CRM and other key components of the advisor’s technology stack.

Because of the similarities in these core investment functions from one RIA custodial platform to another, though, it’s often hard to differentiate between them. And because RIA custodians make very little (and now, for many, absolutely nothing) from each trade in a client’s account, the businesses must operate with enormous volume to achieve the requisite economies of scale to be able to compete. Which in practice has led to a wave of RIA custodial consolidation in recent years, from E*Trade acquiring Trust Company of America (and then being acquired by Morgan Stanley), to TD Ameritrade acquiring Scottrade Advisor Services and then being acquired by Charles Schwab to form the largest RIA custodian that houses the majority of all RIA assets.

Yet in practice, while RIA custodians often seem substantively similar, there are differences from technology to service to culture. Such that the mega-merger of TD Ameritrade and Schwab in particular – two firms that in the past had very opposite approaches to technology and very different cultures – has left many RIAs (from those already at Schwab or especially TD Ameritrade, to those looking to form an RIA and decide on a custodian, or break away from a broker-dealer and get started with a new platform) wondering whether “Schwabitrade” is the right place to be in the future. And if not, where else to go and how else to choose between Schwabitrade, Fidelity, and a litany of mid-sized-to-smaller RIA custodial options available.

In this guest post, industry commentator Bob Veres shares his perspective on 5 of the “lesser-known” alternatives to Schwabitrade (and Fidelity) for RIA custodial services, including BNY Mellon’s Pershing Advisor Solutions and its “Menu of Models” approach, Shareholder Services Group’s (SSG) high-touch service approach for advisors with no AUM minimums, TradePMR’s custom-built advisor technology platform, SEI’s all-in-one investment platform for RIAs, and newcomer Altruist’s efforts to build a ‘next generation’ RIA platform unencumbered by the legacy constraints of today’s existing RIA custodians.

Ultimately, the reality is that Schwab is the dominant player in the marketplace because the RIA custodial model is one where size and scale matters, allowing the company to provide the widest breadth of services at the lowest cost (for “free”, as Schwab only makes money on clients’ underlying holdings and doesn’t charge advisors directly). Nonetheless, the reality is that like the financial advice business itself, one size rarely fits all, many clients (and their advisors) have unique needs that necessitate a more specialized solution… and many advisors still see the value in sometimes paying a little more in order to get the service and/or capabilities that are most meaningful for their RIA firm and the clients they serve.

Weekend Reading for Financial Planners (Apr 10-11)

April 9, 2021 02:59 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 President Biden's newly proposed infrastructure plan, which may inject as much as $2.3T into the economy to tackle long-standing infrastructure projects that have long had bipartisan support... but still faces criticism from both Republicans and Democrats, and a "price tag" that is leading to proposed tax increases on both businesses and high-income individuals that may generate a lot of tax planning discussions for financial advisors and their clients in the months to come.

In addition, there are several other notable news items this week, including:

The CFP Board is kicking off the next round of its $10M/year public awareness campaign with a new set of TV commercials and radio ads on the value of seeking out a CFP professional
A new consumer study on pre-retirees that finds they are a much more age-diverse group than the traditional view of "those aged 55 - 64 within 5 years of retirement"

From there, we have several articles on advisor marketing to describe fees and value:

The benefit of stating advisory fees directly on the advisor's website, and tips on how to do so and position the fees effectively
Why it's often better to offer a 'low-cost' reasonably priced service than a "free" one (that usually really isn't)
How "simply" being an accountability partner that helps clients actually do what they plan to do can be a major enhancement to justify an advisor's value for the fees they charge

We've also included a number of articles on industry recruiting trends:

An emerging push to shift the broker-dealer and RIA custodian recruiting model from a commission-based to a flat-fee model
How Schwab is pressuring recruiters to get paid directly from the RIAs they recruit, in an effort to force more transparency
How earnouts for advisor acquisitions were on the rise in 2020 but are on the decline again in 2021 as acquisition demand heats up

We wrap up with three final articles, all around the theme of maximizing our focused productivity:

How interruptions reduce our focus, but knowing that an interruption is coming can actually help us to focus and work faster
Why focusing is often difficult because we spend too much time thinking about what we give up by focusing and not what we gain by doing so
Why "success" in the end isn't just about having good ideas, but actually executing them... which usually means getting focused on the very few things that will have the most impact if executed well

Enjoy the 'light' reading!

Kitces & Carl Ep 57: Transitioning “Good” Clients Who Simply Can’t Be Served Profitably

April 8, 2021 07:05 am 1 Comment CATEGORY: Kitces & Carl Podcast

If there’s one thing that just about every financial advisor can agree upon, it’s that surviving the first few years in the advice business is very difficult. As a result, there’s a natural tendency for newer advisors to not be terribly picky about who they take on as clients, as getting any new clients that can generate any new dollars flowing into the business is often necessary for survival. However as advisers begin to find success, they have the opportunity to start building their practice with focused intent. For some, that means growing and scaling by hiring staff to support a growing number of clients. For others, that may mean remaining a ‘solo’ lifestyle practice and serving a (relatively) small number of (often highly profitable) clients.

But, no matter what a practice may look like, many advisors reach a certain point where the clients that helped them get off their feet early on are no longer a good fit… whether because they “can’t be serviced profitably” given new staff infrastructure, or don’t generate enough revenue to fit the more focused lifestyle practice, such that they can even become a drag on overall business results. In the case of no-longer-profitable clients who aren’t pleasant to work with in the first place, the solution is often straightforward. But what if they’re not unpleasant, just “unprofitable”? Which raises the question: How should advisors handle clients who they otherwise know they are helping and truly enjoy working with, but just aren’t profitable to serve?

In our 57th episode of Kitces and Carl, Michael Kitces and client communication expert Carl Richards discuss how to determine if a client doesn’t meet the profitability goals of a business, how to think about serving unprofitable clients who are otherwise a pleasure to work with and need good financial advice, and how to communicate with those clients when there’s no other choice but to let them go.

As a starting point, it’s important to first identify which clients are actually unprofitable for the practice. Accordingly, a common rule of thumb is to take the average revenue per client across the firm (by taking total revenues of the firm and dividing that number by the total number of clients) and then dividing that number by three. Since most advisory firms have overhead somewhere in the neighborhood of 30-40%, those clients who are generating less than about a third of the average revenue per client simply aren’t covering their slice of the basic costs of running the business.

From there, advisors can make a deliberate decision to designate a certain number of clients as “pro bono” and continue to serve them. But after those proverbial pro bono seats are full, there may be even more clients that now need to be transitioned. At that point, the best way to handle that conversation is by being candid and honest, and by explaining that, because of the level of service that’s being provided, the firm needs to charge a higher fee commensurate with the services it’s providing… and that it wouldn’t be in the client’s financial interest to pay the firm’s (new, higher) minimum fees. At that point, the advisor is communicating that they aren’t a good fit for the client (rather than the other way around, in a manner that could hurt the client’s feelings), and can best help by finding a different advisor who is!

Ultimately, the key point is that advisors chose this profession because they want to help people, but it’s equally important to acknowledge that advisors can’t help everyone… and that there are also other advisors out there who do great work, and for whom one advisor’s unprofitable client could still be a very good client for them. In other words, just because a client can’t be served profitably by one advisor doesn’t mean they can’t be served well by any advisor (as one advisor’s “C” client may still be someone else’s “A” client!). Which means transitioning clients who aren’t a good fit isn’t simply about “rejecting” them or leaving them to fend for themselves… instead, it’s an opportunity to help them find the advisor who will want to service them at the level they need and deserve, for the benefit of all!

#FASuccess Ep 223: Finding Success In Succession By Building Towards The Successor’s Vision, With Marianela Collado

April 6, 2021 07:04 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 223rd episode of Financial Advisor Success Podcast!

My guest on today’s podcast is Marianela Collado. Marianela is the CEO and majority shareholder of Tobias Financial Advisors, an independent RIA based in Plantation, FL, that services over $500 million of assets for just under 300 households.

What’s unique about Marianela, though, is that she is the next generation owner and leader of Tobias Financial, having successfully navigated an unexpectedly accelerated succession plan laid out by the founder, Ben Tobias, and in the years since has grown the firm from a one-person practice into a business with multiple lead-advisors and an eye towards developing a subsequent succession plan for the next, next generation… all while intentionally keeping the Tobias Financial name.

In this episode, we talk in-depth about how Marianela’s deep background and expertise in tax planning for ultra-high net worth individuals gave her instant credibility when coming into a practice where clients had only ever worked with the founder, how her vision for building out a larger advisory business with the capacity to serve more clients didn’t end out being a roadblock for the succession plan since she and Ben shared the same foundational values around client service and advice, and the subtle changes that Marianela made around client experience and branding ahead of the final execution of the agreement that helped foster a sense of natural transition from the client’s perspective.

We also talk about how Marianela identified early on after joining the firm that, in order to create a solid foundation for growth later on, she would have to formalize a development program to attract and retain talent, the tangible lesson everyone at the firm learned shortly thereafter about why a succession plan is such an essential element of servicing clients well, what it was like when Marianela realized the gravity of the role she assumed after she was handed the company checkbook and instantly responsible for her staff’s livelihoods, and how that led her to hire someone else to run the day-to-day operations of the firm so that she could focus on leading the business’s growth and its client service.

And be certain to listen to the end, where Marianela shares how she set out to create a cohesive culture within the firm, align employee compensation with firm goals, and formalized her advisors’ organization structure by implementing Angie Herber’s Diamond Team model, how she fosters relationships with CPAs and attorneys by conducting “sound checks” to get feedback on planning strategies she’s implementing with her own clients (and, in turn, making those outside centers of influence shine in the eyes of their own clients), and the industry recognition that Tobias Financial has earned for building out a diverse team of advisors and support staff (and the key insights around diversity and inclusion that helped Marianela create a structure to achieve such diversity with her team).

So whether you're interested in how Marianela executed a successful succession plan, how she's managed to 2x the size of the firm she took over in a little over three years, or how she's been able to build such a diverse team, then we hope you enjoy this episode of the Financial Advisor Success podcast with Marianela Collado.

The Latest In Financial #AdvisorTech (April 2021)

April 5, 2021 07:03 am 1 Comment CATEGORY: Technology & Advisor FinTech

Welcome to the April 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 AssetMark has acquired UK financial planning software provider Voyant for $145M, with plans to bring the planning software as a new competitor to the US (in addition to likely deeply integrating it into AssetMark’s own technology stack), highlighting both on the ongoing rise of financial planning, the dearth of new financial planning competitors with enough market share for strategic acquirers, and the reality that financial planning software continues to be an appealing synergistic value-add not only to investment-centric firms offering financial planning but also asset managers and TAMPs trying to expand into working with more planning-centric advisors.

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

Orion acquires Hidden Levers to not only expand their risk-centric proposal generation tools but also to overlay portfolio stress testing onto the risk management of advisory firms themselves
Tifin Group acquires Totum Risk and MyFinancialAnswers to bring together yet another emerging advisor platform with embedded financial planning
Outsourced IT managed service providers have become the latest RIA services play for PE firms looking to roll up in the RIA channel
AdvicePay rolls out mobile deposits for financial planning checks to cut down on overnight postage fees for large enterprises (no-longer-)overnighting paper checks

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

Envestnet fully acquires Apprise’s high-net-worth planning tools to feed its new Trust Services Exchange
Skience launches a new data warehousing solution for mid-to-large-sized advisory firms that want more control over their client data
Pershing beta tests a new digital repapering process that aims to take the pain out of breaking away from a broker-dealer
FP Alpha launches a new “Tax Snapshot” to compete against Holistiplan as technology-driven reviews of tax returns get increasingly popular

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]!

Weekend Reading for Financial Planners (Apr 3-4)

April 2, 2021 02:55 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the announcement that the CFP Board is updating the Principal Knowledge Topics of the CFP exam to reflect the ever-growing focus on behavioral coaching for clients that emerged from its latest Practice Analysis of what financial planners do in practice with clients, adding in not just a "behavioral finance" educational component but an entire "Psychology of Financial Planning" category that will become incorporated into CFP curricula (and the CFP exam itself) in 2022 and beyond.

In addition, there are several other notable studies about financial advisors and financial advice in the news this week, including:

The majority of consumers earning more than $100,000/year use a financial advisor, and a whopping 95% of them say the advisor is worth it (but more than half of consumers think financial advisors are far more expensive than they actually are!)
The overwhelming majority of consumers working with a financial planner agree that it's better to focus on the long-term and ignore short-term market volatility (though it's not clear how often financial advisors change their clients' minds to be more long-term, or simply attract long-term-oriented clients and then help them to stay on track?)

From there, we have several articles on advisor marketing:

Why it's important to "get mad" in speaking about the frustrations and 'financial injustices' in clients' lives to get them motivated to work alongside a financial advisor to solve those issues
Thinking differently about 30-second or even one-sentence "elevator pitches" to open the curiosity loop with prospects (or quickly figure out if they're not a fit and move on)
Why good branding isn't just about showing your value and Values but also tackling head-on the primary objections that result in not getting business the way you're currently doing it

We've also included a number of articles focused on retirement planning:

Who exactly will be eligible for the new "free" COBRA health insurance subsidy that just took effect at the start of April
How technology is changing the way we engage as we get older to "get more life from our longer lives"
5 different "types" of retirement savers based on their psychographic tendencies to save for and be optimistic about the future (or not)

We wrap up with three final articles, all around the theme of maximizing your own career and productivity:

How perfectionism is the enemy of delegation, and the way to break through if you're stuck trying to figure out what you're comfortable delegating
A framework to build your own career plan as a young financial advisor
Creating a system for and around yourself to pull your focus away from the $10/hour tasks that can be delegated and towards the $10,000/day tasks that only you can uniquely do to add the most value to the business

Enjoy the 'light' reading!