feed - Part 42

Weekend Reading for Financial Planners (June 27-28)

June 26, 2020 03:00 pm 2 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the news that the CFP Board has been gearing up for its new Standards of Conduct and June 30th enforcement date by launching a comprehensive background check on all 87,000 of its CFP certificants... finding 1,240 that already have potential misconduct in their regulatory reviews or background checks and allocating a whopping $5M over the next two years to investigate them and begin to clean out its own potential 'bad apples'.

Also in the news this week is some surprise relief from the IRS that anyone who took an RMD earlier this year (all the way back to January 1st) that proved to be unnecessary because the CARES Act suspended 2020 RMDs will now have until August 31st to "undo" the RMD and roll it back into their retirement account (even if it's for an inherited retirement account or would otherwise violate the once-per-year rollover rule), and a new industry study finding that the overwhelming majority (78%) of the mass affluent are already using a financial advisor and only 1% of them are dissatisfied with their advisors (suggesting that advisors are generally serving clients well, but that it may be increasingly difficult to get new clients with so many already attached to advisors they're satisfied with!).

From there, we have a number of articles around industry trends, including a look at the slow-but-steady growth of financial planning across the broader financial services industry, a glimpse of just how much money brokerage platforms are still collecting from asset managers behind the scenes in various revenue-sharing and shelf-space agreements, and how ongoing competition and especially consolidation in the RIA custodial world may soon drive a new wave of advisor migrations.

We also have a few marketing-related articles, including: tips on how to leverage any expert content you've created by 'repurposing' it across an advisor blog, social media, videos/YouTube, and podcast; suggestions on what to do to make your advisor website more compelling (hint: treat it like your professional in-person office space and make it look professional); and some new technology tools to help support the advisor marketing process (from Loom for quick videos to Zapier to connect email marketing and advisor CRM systems and Linkfire to more readily share a podcast).

We wrap up with three interesting articles, all around the theme of personal creativity and originality: the first explores how not fitting in and "being a weirdo" can actually support creativity; the second looks at how ADHD is also increasingly being linked with creativity and divergent thinking; and the last examines a recent study that finds we all tend to systematically underestimate our own originality, and that the average person is actually far more creative than they give themselves credit to be, as long as they spend at least a little time iterating on thinking of new ideas (because the first or second idea isn't always original, but the 5th or 6th almost always is even if we don't realize it!).

Enjoy the 'light' reading!

The 15 (Fiduciary) Duties To Clients That CFP® Professionals Must Comply With

June 24, 2020 07:01 am 3 Comments CATEGORY: Ethics

CFP® professionals – like any professional – are expected to give advice in the best interests of their clients. Both as a hallmark of professionalism, and simply because it’s good business to do so. Yet in practice, it’s not enough to just say that CFP® professionals are fiduciaries; professional adherence requires setting forth clear Standards of Conduct about how, exactly, CFP® professionals are expected to deliver their services in a fiduciary manner, so CFP Board can determine when a CFP® professional is not meeting their obligations and may need to be disciplined… or, at worst, have their CFP® marks suspended or revoked.

To provide clear guidance, CFP Board’s new Code of Ethics and Standards of Conduct (“Code and Standards”) delineate a series of 15 Duties To Clients that CFP® professionals must adhere to, from the Fiduciary Duty to Clients itself, to an obligation for providing key information and relevant disclosures of Material Conflicts of Interest, confidentiality obligations, the duty to uphold core professional principles including Integrity, Competence, and Diligence, as well as entirely new Duties regarding the selection of external professionals (to which the CFP® professional may refer clients) and even the selection of technology itself.

In addition, CFP Board’s new Code and Standards also establish new guidance in previously controversial areas, particularly with respect to how CFP® professionals disclose their compensation, and the use of compensation disclosures as a marketing term (e.g., the “Fee-Only” label)… not to induce CFP® professionals towards any mode of compensation in particular, but simply to ensure that whatever compensation methodology the CFP® professional chooses, that they are accurate in how they describe their prospective compensation to their Clients.

In the end, the 15 Duties Owed To Clients by CFP® professionals are not meant to impose substantial new obligations on CFP® professionals – and in reality, are commonly followed and generally recognized as best practices anyway. Still, though, by enumerating the 15 Duties as part of the Code and Standards itself, CFP Board both provides additional guidance to CFP® professionals on what they are expected to do as a matter of not just “best” but standard practices… and also establishes the grounds by which CFP® professionals may be disciplined for failing to meet the minimum standard of their professional duties!

#FASuccess Ep 182: How Private Wealth Management In A Multi-Family Office Differs From Traditional Financial Planning, with Richard Joyner

June 23, 2020 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 182nd episode of Financial Advisor Success Podcast!

My guest on today's podcast is Richard Joyner. Richard is a wealth manager and the president of Tolleson Wealth Management, a multi-family office based in Dallas, Texas, that oversees nearly $6.5 billion of assets under management for just 180 affluent families. What's unique about Richard, though, is the way he's developed Tolleson to serve ultra-high-net-worth clientele with a breadth of private wealth management services that truly goes beyond the traditional financial planning approach.

In this podcast, we talk in-depth about what Tolleson actually does for clients who have an average family net worth of tens of millions of dollars, from a deeper level of client financial management and support, including bill-paying services and family spending reports, to advanced tax and estate planning services that delve into techniques that can produce seven-figure estate tax savings, private banking services to help clients obtain loans and receive corporate trustee services, and why arguably the biggest value Tolleson provides to their clients is supporting their family learning and helping affluent parents conduct family meetings to develop their children and grandchildren to become responsible stewards of the wealth legacy they will someday inherit.

We also talk about the business of multi-family office private wealth management itself, the composition of 180 staff members that Tolleson employs to support its 180 client families, the combination of flat fees and AUM fees that Tolleson charges its ultra-high-net-worth clients, how the firm justifies what can amount to $150,000 a year or more in advisory fees, and why despite having a heavy component of AUM fees for clients with tens of millions of dollars, that Tolleson has chosen to outsource most of its investment management and serve as a manager of managers instead.

And be certain to listen to the end, where Richard shares the policies that he's had to put in place to train and develop next-generation talent in the firm to be able to manage such ultra-high-net-worth clients, the combination of structured learning through designations like CPWA and internal mentoring the firm uses to balance technical and interpersonal skills development, and how Richard managed to balance his own workload and commitments to serve as the president of a multi-family office with 180 employees and still maintain a client-facing role for himself as well.

Kitces & Carl Ep 36: Protecting Your Own Self-Confidence As A Financial Advisor

June 18, 2020 07:01 am 0 Comments CATEGORY: Kitces & Carl Podcast

When markets turn volatile and clients get stressed, at best, financial advisors face their own stress in trying to help clients stay the course; at worst, they absorb the ‘blame’ from clients who are unhappy with economic and market outcomes beyond the advisor’s control. And when clients turn negative, it is easy for mental exhaustion to set in and for confidence levels to take a hit. Yet when self-confidence suffers, so too can our motivation and productivity. Accordingly, taking measures to protect our self-confidence not only helps to preserve our ability to function optimally at work, but also helps to maintain our mental and emotional well-being by ensuring we focus our time on activities that bring us energy and positive engagement.

In our 36th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards discuss how advisor self-confidence can impact productivity, offering some ideas for financial advisors to protect their personal confidence and keep a positive mindset. As for financial advisors, in particular, healthy confidence levels can help them to avoid ‘imposter syndrome’ (which can distort an advisor’s sense of personal value), grow through the business challenges they’re facing, and support their clients with the ‘rational overconfidence’ they sometimes need to display as effective leaders.

Confidence also plays a crucial role when the advisor needs to establish appropriate pricing levels for their services and value, where a lack of confidence can result in advisors discounting their own value because they fail to realize that clients are willing to pay the price the advisor is actually worth. On the other hand, advisors who are able to preserve a high level of confidence tend to price themselves and their services more fairly and will naturally find themselves facing more business opportunities. Confidence also helps advisors deal with difficult situations, such as losing clients or key employees, with more positivity and the ability to see the circumstance as an opportunity versus a setback, which can ultimately be the key that potentially distinguishes between business growth and stagnation.

Being able to recognize one’s ‘unique abilities’ (like those identified by Dan Sullivan’s Unique Ability Discovery Process program) or key strengths (such as those identified by Gallup’s StrengthsFinder assessment) – activities that a person enjoys and excels at, and that are energizing – are key to maintaining one’s confidence and improving productivity at work. And once these ‘unique abilities’ are identified, finding the time to intentionally do those things as much as possible can help to stabilize energy levels and foster a positive mindset, which in turn tends to help maintain higher confidence levels. Equally important for protecting one’s confidence are recognizing the factors that erode energy levels and identifying how to take counteractive steps against the effects of those factors. For example, spending time outside in fresh air, going for a walk, and getting more sleep are some activities that can help prevent energy levels from dropping and, in turn, keep confidence levels from deteriorating.

Ultimately, the key point is that by taking steps to identify activities that not only drain energy levels but also increase them, financial advisors can protect their energy levels from falling, which is an important step in preserving confidence levels and a positive mindset – key elements of fruitful client relationships, successful career advancement, and overall business growth!

#FASuccess Ep 181: Pivoting To A New And Better Marketing Approach After Your First Niche Misses, with Benjamin Brandt

June 16, 2020 07:03 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 181st episode of Financial Advisor Success Podcast!

My guest on today's podcast is Benjamin Brandt. Benjamin is the founder of Capital City Wealth Management, an independent RIA based in Bismarck, North Dakota that oversees $60 million of assets under management for nearly 80 households. What's unique about Benjamin, though, is the way he initially developed a focused niche after going out on his own as an independent, and then had to pivot when he discovered that there weren't enough people in that original niche in his small Midwest town to fill his desired client base.

In this podcast, we talk in-depth about how Benjamin initially selected and established his local niche, the way he optimized his website to maximize local search engine optimization opportunities, how he pivoted to launching a podcast to broaden his reach beyond his local market, the way he adapted his website SEO to draw attention to his new retirement podcast, and the marketing funnel that Benjamin has developed to turn his podcast listeners into email subscribers, into webinar watchers, and eventually into an introductory meeting as a prospective client.

We also talk about how Benjamin is building his advisory firm to fit his own lifestyle goals, the way he runs meeting surges with all of his clients twice a year to maximize his focus and also his time off, the ongoing financial plan update and monitoring process he uses with clients to stay efficient, and why he intends to cap his practice once he achieves his goal of 100 clients and $100 million in assets under management by age 40.

And be certain to listen to the end, where Benjamin shares the 5-10-15 rule he developed to figure out for himself what topics to cover on his podcast, the importance of creating forcing mechanisms for yourself to ensure that you stay focused on really following through to achieve your goals, and why Benjamin believes that the key to long-term success as an advisor is giving yourself permission and the financial foundation to be able to grow slowly so you don't feel the pressure to take on clients who aren't a good fit but can be hard to let go of later.

#FASuccess Ep 180: Getting A Year’s Worth Of Growth Every Month By Going All-In On A Clear Target Market, with Ryan Inman

June 9, 2020 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 180th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Ryan Inman. Ryan is the founder of Physician Wealth Services, an independent RIA based in San Diego that serves over 140 physician clients. What's unique about Ryan, though, is the way he's gone all in on the niche of serving physicians to the point of renaming his advisory firm, launching a "Financial Residency" podcast, and restructuring his entire financial planning process into ‘inpatient’ and ‘outpatient’ services, to the point that now in his fifth year of business, he's adding more clients every month than he added in his entire first year as a generalist.

In this podcast, we talk in-depth about how Ryan chose the niche of working with physicians, the mindset shift he had to go through to get comfortable narrowing the focus of his practice, how going to the FinCon Financial Bloggers Conference gave him the inspiration to actually market to and reach his niche, and how he has ultimately found that having a focused niche is making it easier to market because you don't actually need to reach a lot of people to get new clients when your niche marketing is focused.

We also talk about Ryan's financial planning services themselves. His unique fee structure of charging clients either $500 a month or $833 a month (those are his only two options), the unique expertise in student loan planning he had to develop to really serve his niche effectively, what he does for his clients upfront and on an ongoing basis to earn those monthly fees, and why Ryan ultimately had to go outside of traditional financial planning software and to use tools like YNAB to actually help his clients in the areas that they needed advice most.

And be certain to listen to the end, where Ryan talks about the importance of having your own financial foundation set before you launch your own firm and why he waited almost two extra years before going out on his own. Why even though Ryan is glad he waited to launch his firm, he regrets not focusing into a niche earlier on, and how if he could do it over again, the only thing he'd really change is finding a business partner sooner rather than later, because, in the end, it can be pretty lonely launching an independent advisory firm from scratch.

Summer Reading List Of “Best Books” For Financial Advisors – 2020 Edition

June 8, 2020 07:01 am 3 Comments CATEGORY: Personal/Career Development

In a ‘normal’ year, summer is the season of vacation and family trips, as client meetings tend to slow down (if only due to the clients' own vacations), and advisors get a little more time for rest and relaxation. Unfortunately, the coronavirus pandemic has disrupted a lot of family and vacation plans for 2020… yet the need for getting some rest remains, as it is arguably even more important to find time to recuperate from the client and business stresses of recent months. Which in practice, often includes finding a little time to catch up on some good books!

The question, of course, is then to figure out “what’s a good book to read these days?” As a voracious reader myself, I'm always eager to hear suggestions from others of great books to read, whether it's something new that's just come out, or an "old classic" that I should go back and read (again or for the first time!). And so, in the spirit of sharing, a few years ago I launched my list of "Recommended (Book) Reading for Financial Advisors", and it was so well received that in 2013 I also started sharing my annual "Summer Reading List" for financial advisors of the best books I'd read in the preceding year. It quickly became a perennial favorite on Nerd's Eye View, and so I've updated it every year, with new lists of books in 2014, 2015, 2016, 2017, 2018, and a fresh round last year in 2019.

And now, I'm now excited to share my latest Summer Reading list of top books for financial advisors in 2020, including some suggestions from our growing ‘team of nerds’ here at Kitces.com (including Derek Tharp, Erica Crane, and Matt Nelson), with suggestions on books about building a virtual culture (if you decide to keep your advisory firm virtual even after businesses are permitted to re-open in person!) or alternatively hiring a virtual assistant, how to refine and focus your marketing message by figuring out exactly what your value is to clients (in essence, what ‘job’ your clients are really hiring you to fulfill) and how to more effectively differentiate (under the philosophy that for branding purposes, “it’s better to be different than [just] better”), tips on how to better communicate with clients and help them change their behaviors to achieve their own goals, ways to take small steps to improve your own life (and why it’s easier to improve yourself by taking small steps instead of making big change resolutions), a discussion of whether we’re focusing on the wrong measures of economic growth and wealth in setting economic policy, and a look at how various government policies over the past 200 years have limited the ability of many minority populations to be able to accumulate wealth in the first place (which, due to two centuries of compounding – or the lack thereof – have amplified the racial wealth gap in America, with profound implications on the diversity of financial planners and who we serve as well).

So as the summer season gets underway, I hope that you find this suggested summer reading list of books for financial planners to be helpful… and please do share your own suggestions in the comments at the end of the article about the best books you've read over the past year as well!

Weekend Reading for Financial Planners (June 6-7)

June 5, 2020 03:01 pm 3 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the big industry news that both the Department of Justice, and the shareholders of both Charles Schwab and TD Ameritrade, have all approved the proposed 'Schwabitrade' merger, making it now only a matter of when (not if) the merger will happen (for what may still be a multi-year transition before the integration is complete in 2022 or 2023!).

Also in the news this week is a new Department of Labor fiduciary proposal that has been sent to the Office of Management and Budget (OMB) for review and should be revealed in July (but more likely to coordinate with Regulation Best Interest's lower standard than reinstituting the prior DoL fiduciary rule), and a new industry study finding that the AUM model is weathering the pandemic recession better than the traditional commission-based model, but the pullback may still leave scars on some advisory businesses.

From there, we have a number of tax-related articles, including the passage of a new Paycheck Protection Program (PPP) Flex Act from Congress that will make it easier for businesses to use PPP (and to still benefit from payroll tax deferral even if they have a PPP loan forgiven), the tax issues that arise from remote workers doing their work from a new/different state (that may trigger multi-state taxation, even if only there on a temporary basis during the pandemic shutdown), and how ultra-low interest rates are stirring fresh interest in ultra-HNW estate planning strategies from IDGTs and intra-family loans to GRATs.

We also have a few advisor technology articles, including the latest annual tech survey from financial planning magazine showing a growing interest in model marketplaces and 'robo' solutions (albeit with some concerns about their sampling methodology and whether it is really representative of the advisor community), a look at the popular options for advisor portfolio performance reporting, and how increasingly 'capable' advisor tech tools are becoming so complex they're actually becoming less likely to be used and valued in many cases!

We wrap up with three interesting articles, all around the theme of #BlackLivesMatter and the explosion of conversations around race, which have significant implications for the financial services industry as well: the first explores how advisors of color (and those from communities of color) are being impacted by the widespread protests; the second examines some of the challenges of black advisors, in particular, who are trying to build their financial planning careers; and the last provides some helpful and grounded suggestions for advisors who do want to 'do something' and better understand race issues but aren't certain where to start and how to become a better Ally, with a "Justice In June" program that provides concrete exercises of books, videos, and podcasts that take 10, 25, and 45 minutes per day.

Enjoy the 'light' reading!

Kitces & Carl Ep 35: Favorite Questions To Ask A Prospective Client To Build Trust In The First Meeting

June 4, 2020 07:19 am 3 Comments CATEGORY: Kitces & Carl Podcast

Every business transaction (whether for a good or a service) moves both parties involved towards a desired state. A prospective customer or client needs something, and they also need someone to help them get it. Along the way, the person providing the good or service may or may not be successful in helping the customer or client reach their desired outcomes (whatever those may be), and one of the biggest determinants of their success is good questions.

In our 35th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards explore their favorite questions to ask in a first meeting with a prospective client in order to get to know them better, start to establish trust, and take the initial steps towards building what will hopefully develop into a long-term, mutually beneficial relationship.

As a starting point, it’s important to keep in mind the path that the prospective client took in order to book their initial meeting in the first place (e.g., were they referred by an existing client or did they come in ‘cold’?) because that will help frame the initial conversation and give the advisor a confidence boost as the prospective client and advisor get to know each other.

Because asking good questions is about far more than checking off each box from a 17-point intake form or formulaically reciting from a predetermined script. In fact, the best questions are often ones that people have never been asked before, or are, at least, asked in such a way that offers someone a different perspective. While such questions can often create some discomfort (the best questions usually do!), they can also pave the way for some meaningful insights.

From there, perennial favorites include such questions as, “What's important about money to you?” (which helps lay the groundwork for establishing what really matters to the client and what might help keep them on track later on down the line), Dan Sullivan’s “What would need to happen in the next three years for you to deem this relationship a success?” (which provides a more concrete time frame around figuring out what their ‘desired future state’ is), and George Kinder’s famous three questions about what someone would do given increasingly narrow time frames on their longevity.

Perhaps one of the most useful questions, however, is simply, “What brought you in to see me today?” Because the disappointing reality of this business of financial advice and planning is that people don’t spontaneously come to the realization that they really need to get a comprehensive financial plan as soon as possible. Rather, there has usually been some sort of triggering event that brought them in and there’s some immediate and pressing need that they have at the moment, and understanding the triggering event accompanying their pain point can be very powerful when building trust.

Ultimately, the key point is that, no matter which questions an advisor uses in their first meeting with a prospective client, building trust is about being open to having a conversation, being comfortable and confident, and being empathetic to whatever a prospect’s pain point may be. Because, at the end of the day, the real beauty of this business is helping clients get from what they want to what we all know they need.

The Latest In Financial Advisor #FinTech (June 2020)

June 1, 2020 07:08 am 2 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the June 2020 issue of the Latest News in Financial Advisor #FinTech – 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 and wealth management!

This month's edition kicks off with the news that Goldman Sachs has acquired Folio Institutional and its $11B RIA custody platform for 450 (mostly small) RIAs… and raising the question of whether Goldman is making a play to compete for small RIA custody opportunities as Morgan Stanley acquires E*Trade Advisor Services and Schwab acquires TD Ameritrade, or if Goldman will repurpose Folio to capture large wirehouse breakaway teams, or simply use it as a custodial platform for their own RIAs (Ayco and United Capital), or turn it into a robo-advisor solution paired with Marcus, or use Folio’s fractional share trading capabilities to build a direct indexing solution. Or perhaps all of the above!?

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

Franklin Templeton acquires the robo-advisor-for-advisors AdvisorEngine, but the real play may be to reinvigorate Junxure CRM?
AdvicePay rolls out Offices for Enterprises as LPL signs on to the trend of fee-for-service financial planning
Smarsh acquires Entreda as device management cybersecurity becomes a more pressing issue in a future with more remote workers
Plaid launches an integration with Microsoft that will offer consumers (or advisors and their clients) a spreadsheet-based budgeting tool with automated account aggregation
PlanTechHub launches a new financial planning software competitor built around actually showing the value of a financial advisor’s recommendations to clients

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, with special AdvisorTech consulting guests Craig Iskowitz and Kyle Van Pelt, covering news including Aurora Capital acquiring FMG Suite to build ‘Hubspot for financial advisors’ as interest grows in advisor digital marketing, Vise.ai launches a new robo-tech-turned-TAMP solution for advisors, Envestnet launches a next-generation client portal that includes not just performance reporting and news but also client To-Dos, Fidelity rolls out a new Virtual AI assistant not for clients but to support advisor back-office servicing, and Morningstar doubles down on its bet of a more ESG-centric future by fully acquiring Sustainalytics (after buying an initial 40% stake back in 2017).

And be certain to read to the end, where we have provided an update to our popular new “Financial Advisor FinTech 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]!