feed - Part 55

#FASuccess Ep 117: Forming A Specialized Advice Process To Add Real Value In Serving Small Business Owners, with Josh Patrick

March 26, 2019 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 117th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Josh Patrick. Josh is the founder of Stage 2 Planning, an independent RIA in Burlington, Vermont that specializes in working with small business owners.

What's unique about Josh, though, is the way he's been able to leverage his own personal experiences as a small business owner, before transitioning into financial planning as a second career, to create a deeply specialized advice process for small business owners and command retainer fees in excess of $50,000 a year from his clients.

In this episode, we talk in depth about exactly what Josh does to earn monthly retainer fees of $4,000 to $5,000 per month from small business owners, the 5 core areas that he advises them on, including setting clear values and culture, becoming operationally irrelevant in your business, learning how to really delegate effectively, how to set up effective business systems, and how to divide up the profit of the business into cash flows for lifestyle, emergency funds, business growth, and a retirement plan, and the way he's made his expertise known through a combination of blogging, podcasting, and public speaking to create a steady flow of small business owners who seek him out and are willing to pay his fees for the value they perceive.

We also talk about how many of these same business management principles map onto the business of being a financial advisor as well, where most financial advisors hit the ceiling themselves by failing to apply Josh's 5 principles of effective business, Josh's strategy for advisors to differentiate their firms while not making the firm too reliant on any one key employee or advisor, how advisors can create a guarantee that reduces a prospect's fear of signing on but without running afoul of regulators, and how most experienced advisors could apply a version of the 80/20 rule to their own practices to make themselves significantly more financially successful while simultaneously lessening the demands of the business on themselves.

And be certain to listen to the end, where Josh talks about the biggest challenge that he sees most financial advisors struggle with, the inability to delegate key tasks in client relationships, and how to overcome it by recognizing that in the end, even if team members make mistakes, there's still crucial learning opportunities, especially since the truth is that in the end, clients will rarely actually leave over a single mistake anyway, and whether they do or not is primarily a result of how the firm handles the mistake, not the mere fact that it happened in the first place.

#FASuccess Ep 116: Building A Consumer Media And Author Presence To Gain Credibility As A “Small” Independent Advisor, With Harold Evensky

March 19, 2019 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 116th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Harold Evensky. Harold is the co-founder and chairman of Evensky & Katz / Foldes Financial, an independent RIA in South Florida that oversees nearly $1.5 billion in assets under management.

What's unique about Harold, though, is that he was one of the early pioneers to financial planning under the RIA model all the way back in the 1980s, and taking a holistic goals-based wealth management approach to portfolio design in the 1990s, having literally written the book on it 22 years ago in 1997.

In this episode, we talk in depth about what it was like to start an RIA in the early days of the independent advisor movement before platforms like Schwab Advisor Services even existed. The way Harold hustled with seminar marketing up to six nights a week in the early days just to get clients and survive, how Harold engaged early on with the media as a means to establish credibility for the firm in its efforts to compete against mega-wirehouses of the time, and how becoming fee-only in the early 1990s helped the firm to differentiate itself, because back then, being a fee-only fiduciary actually was a niche.

We also talk about how the firm grew and evolved over time. What it was like to transition from an advisory practice to a business, how Harold thought through the process of introducing next-generation partners and beginning to relinquish control of the firm, the way Evensky and Katz instituted a formal management committee to separate management and ownership of the firm as the number of partners proliferated, and how the firm made an all-in bet on the shift from AUM fees to retainer fees, and then unwound the entire change and went back to charging AUM fees for wealth management less than three years later.

And be certain to listen to the end, where Harold talks about the evolution of the financial planning profession. The CFP Lite controversy of the 1990s, whether the CFP Board and FPA have lived up to their expectations, and what it will really take for financial planning to truly be recognized as a profession by the public.

So whether you're interested in hearing about what it was like breaking away from the brokerage world when an AUM structure was still a novel idea, how the financial planning profession has evolved over the past few decades, and where it may be headed, then we how you enjoy this episode of the Financial Advisor Success podcast.

Weekend Reading for Financial Planners (Mar 16-17)

March 15, 2019 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 mega-news that Envestnet is buying PIETech, the maker of MoneyGuidePro, for a whopping $500 million as Envestnet seeks to further expand itself into a holistic "financial wellness" technology platform.

Also in the news this week was the news that the SEC's "Share Class Selection Disclosure" initiative has culminated in 79 investment firms agreeing to return $125 million in inappropriately collected or improperly disclosed 12b-1 fees in their hybrid broker-dealer relationship with the client, another study reinforcing that while consumers still don't trust the financial services industry they overwhelmingly (97%) trust their own individual financial advisor, the revelation that this week's College Admissions scandal actually emerged as a tip-off to Federal investigators from someone seeking leniency in a securities fraud case, the news that Ameriprise is getting ready to launch a retail bank (so their advisors will be able to offer banking products to their clients), and a new advisory firm loan platform from SkyView Partners that will allow firms looking to merge, acquire, or complete a succession plan to bid out their loan needs to more than a dozen different banks at once.

From there, we have several insurance-related articles this week, including the news that Genworth (the largest long-term care insurer) is indefinitely suspending sales of traditional long-term care insurance through advisors and instead will rely solely on direct-to-consumer telesales instead (a potentially chilling trend for the availability of long-term care insurance to advisors from other carriers in the future), a good primer on the rise of "structured annuities" with various Buffer and Guard strategies to partially protect against downside, and an interesting look at how a decade of "unexpectedly low" interest rates have caused life, annuity, and long-term care insurers to make changes to their policies and premiums that have adversely affected both advisors and their clients.

We wrap up with three interesting articles, all around the theme of the brain and how it works: the first takes an interesting look at the connection between our brains and exercise, particularly running, and the ways that running appears to stimulate our brain functions (for which we may have had an evolutionary bias in the first place); the second explores the emerging research on why the brain is so "noisy," and how the difficulty in being able to silence our brains may not necessarily be a result of "faulty wiring" but instead part of the brain's learning mechanisms and how it is able to take in so much information in a wide range of contexts; and the last looks at how, because human beings must take in information to survive, but also exist as "herd animals," that sometimes our need to be right can conflict with our need to feel socially connected... thus helping to explain why sometimes we'll ignore factual information that might otherwise change our beliefs (because it would also disrupt our social connections), and how the key to really changing someone's mind is to start by being more connected to them socially so the "leap" to new information doesn't require such a socially disruptive leap of faith as well.

Enjoy the "light" reading!

How The Tools Of Financial Therapy Can Improve The Delivery (And Follow-Thru) Of Financial Planning Advice

March 13, 2019 07:03 am 0 Comments CATEGORY: General Planning

The fundamental purpose of financial planning is to help clients make better financial decisions to achieve their financial goals – and hopefully to feel happy or empowered along the way by having made those decisions. Yet as most financial advisors know from experience, getting clients to make better decisions (and ones that they feel happy about) is not so easy in practice.

Clients do not always listen. Clients don’t always follow through on the advice they are given. And sometimes clients even do things that truly worry us, and actually endanger their financial health in the process. And unfortunately, there is remarkably little training on what financial advisors should actually do in such instances!

In this guest post, Meghaan Lurtz, our Senior Research Associate at Kitces.com, explores how the tools and techniques of Financial Therapy could be that research-based solution that financial planners may want to give some serious consideration to for training on how to deliver better advice that actually sticks, and to learn to better help clients actually help themselves. Perhaps even more so than the recently in-vogue Behavioral Finance research, which in practice is more focused on categorizing the problem behaviors that clients tend to express, than what financial advisors can and should actually do about it.

For instance, Financial Therapy utilizes techniques like Solution-Focused Therapy (SFT) to help clients figure out what skills they may already possess to overcome their own (financial) challenges. Financial Genograms provide a means to unearth clients’ financial family history and how the relationships around them may be influencing their money behaviors. And exercises like “What Do You Believe” help to unearth and explore money scripts that may cause clients to get stuck in a financial rut, as their sometimes subconscious limiting beliefs sabotage their ability to make good financial decisions.

Of course, the reality is that at some point, problematic financial behaviors cross the line from something that a financial planner can help with (even one trained in financial therapy techniques), into a bona fide psychological disorder that merits a referral to a qualified mental health professional. Nonetheless, a wide range of financial therapy tools and techniques can be applied by financial planners in their routine work with clients, in an effort to help ensure clients actually follow-through on the advisor’s recommendations, and the client’s own financial decisions and commitments.

And fortunately, with the rise of organizations like the Financial Therapy Association, and new educational programs like the Certified Financial Therapist (CFT) designation, there are more opportunities than ever for financial planners to explore the tools and techniques of financial therapy and how they can be applied in a financial planning context with clients!

#FASuccess Ep 115: Building The Confidence To Turn A Personal Mission Into An Advisory Firm Niche, With Hilary Hendershott

March 12, 2019 07:07 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 115th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Hilary Hendershott. Hilary is the founder of Hendershott Wealth Management, an independent RIA based in San Jose, California that oversees nearly $75 million of assets under management.

What's unique about Hilary, though, is the way she's crafted a niche of not just serving, but trying to empower women clients, with a combination of both her traditional financial planning offering, a coaching program for women trying to accumulate wealth, and a very successful podcast focused on empowering women to take control of their finances.

In this episode, we talk in depth about how Hilary has been able to bring in an average of nearly $20 million of assets per year for the past 3 years through her podcast and website. What she talks about on the podcast to connect with her listeners and who it is she tries to attract, how she set up and launched her podcast, even though she's not a techie herself, and how she overcame her impostor syndrome fears to launch the podcast in the first place.

We also talk about the initiatives that Hilary has launched to try to further scale her services to clients. From a series of one-to-many online courses to teach wealth building skills, to a service called Ignite Investing that heavily leveraged technology to support working with smaller client accounts, to her current coaching program called the $50K Wealth Multiplier Experience, where Hilary does deep-dive coaching with women building wealth and is successfully charging $10,000 per year for her financial coaching services, entirely outside of her traditional financial planning offering.

And be certain to listen to the end, where Hilary shares how her own role as a business owner has evolved over the years. How she built her own self-confidence as a financial planning professional, why Hilary no longer works with a business coach herself and what she's doing instead, and why she continues to stay rooted in her financial planning practice, even as she continues to try to build more courses and grow her coaching clients as well.

Weekend Reading for Financial Planners (Mar 9-10)

March 8, 2019 02:40 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with yet another round of warnings from the SEC at a recent compliance conference that they continue to scrutinize hybrid RIAs for whether they're using the appropriate (lowest-cost) share class for any mutual fund held in an advisory or wrap account for which the advisor is already receiving a separate fee (including now when it comes to 529 plans as well).

Also in the news this week were two proposed bills in Congress that would ban mandatory arbitration (not specifically targeted at financial services, but nonetheless potentially disrupting industry-standard mandatory arbitration clauses in brokerage and many advisory agreements), and a new succession planning program from Wells Fargo that could make it feasible for wirehouse brokers to get paid as much as an independent RIA does to sell their practice (but without needing to leave the wirehouse in order to do so)!

From there, we have several articles around practice management and employee development and retention, including a discussion of what it means to craft a good employee experience, how to more effectively make new employees feel included from day 1 (so they don't get disengaged as leaders/managers tend to take input more from existing employees who have existing relationships), the rise of in-house "universities" at larger advisory firms to both develop their talent and better attract next generation advisors, why even though toxic employees tend to be more productive than average their cost to the firm in the aggregate still exceeds their productivity benefits, the business impact of having stressed-out workers, and why, despite their popularity, advisory firm bonuses for business development often don't work (especially if their purpose is to get advisors not already doing much of any business development to try to start).

We wrap up with three interesting articles, all around the theme of how the industry itself is changing: the first looks at how, as the role of the financial advisor changes, so too is the requisite skill set to succeed as a financial advisor of the future; the second explores whether wirehouses can really be successful in launching their own RIA platforms to try to prevent their entrepreneurially-minded brokers from leaving to start their own independent RIAs; and the last raises the question of whether the real transformative opportunity in the industry is not to lift the fiduciary duty of loyalty (that advisors must act in their clients' best interest and mitigate conflicted compensation), but simply to lift up advisors' educational standards so it's more likely that when a consumer engaged a financial advisor, he/she really has the "substance" to deliver in-depth quality financial advice in the first place!

Enjoy the "light" reading!

The Latest In Financial Advisor #FinTech (March 2019)

March 4, 2019 07:07 am 0 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the March 2019 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 mega-news that Envestnet has acquired PortfolioCenter from Schwab, and in the process, has stirred up a feeding frenzy of what may be once-in-a-lifetime deals as all the major portfolio performance reporting solutions compete for the nearly 2,000 legacy PortfolioCenter users that are now in transition.

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

Commonwealth spins off its proprietary broker-dealer operating system and advisor tools into a standalone entity, Advisor360, and then promptly licenses it out to MassMutual’s 9,000 brokers
Cetera stakes a new direction in the post-product future of the broker-dealer model with a “fee-for-service” advice initiative using AdvicePay
OnPointe Risk Analyzer launches a new Riskalyze alternative that aims to compete not just on risk tolerance assessment but marketing capabilities as well
FA Match raises a $500k seed round and builds a broker-dealer recruiting matchmaking platform for independent brokers looking to make a switch

Read the analysis about these announcements in this month's column and a discussion of more trends in advisor technology, including the latest new “Multiple Opinions” and “Timeline” features announcements from Riskalyze, Chalice Financial Network’s acquisition of SuccessionLink as a channel to recruit new advisors, PreciseFP launches a standalone “digital onboarding” solution with SSG that does not require advisors to change client portals and portfolio performance reporting solutions, and Yourefolio launches a new drag-and-drop estate plan flowcharting tool (at least for the subset of advisors still doing estate planning flowcharts!).

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 new 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]!

Weekend Reading for Financial Planners (Mar 2-3)

March 1, 2019 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 a fascinating study from Morningstar, which finds that, even as financial advisors increasingly frame "behavior management" as a key value proposition, consumer research ranks "helping me control my emotions" as dead last amongst the benefits of working with a financial advisor, instead showing a preference for more tangible benefits like the advisor's relevant skills and knowledge, how well the advisor communicates, performance results, and actually achieving financial goals.

Also in the news this week was a big announcement that Bank of America is dropping the Merrill Lynch name from its investment banking unit, consolidating the Merrill Lynch Private Banking and Investment Group (PBIG) into just Merrill Private Wealth (removing the "Lynch"), and retiring the 165-year-old U.S. Trust brand altogether... and raising the question of whether the days are numbered for the entire Merrill brand itself. And there's a fascinating discussion from Bob Veres about whether FPA chapters should consider "seceding" from the FPA to form a new "CFP Society" that would fulfill the original founding vision of the FPA to be the home for CFP professionals (while the FPA itself has declined from nearly 50% to barely 20% market share of CFP certificants since 2000).

From there, we have several articles on spending and cash flow decisions, from research that suggests social media (and the rise of modern media in general) may be helping to drive the ongoing decline in the National Savings Rate in recent decades, the rise of "stealth wealth" behavior for those who don't want to live ostentatiously (whether to avoid being solicited as a "wealthy" person, or simply to help find social circles that don't encourage profligate spending), research on the habits of wealth accumulators that differ from everyone else, a fascinating series of interviews with people who had "sudden wealth" events about how they really handled the money, the ways our spending does (or often doesn't) really align with our values (as an alternative way to determine whether we're "living within our means"), and why perhaps society needs to become more cognizant of - and more sympathetic towards - the fact that even households living within their means and exercising financial discipline are often still exposed to significant "financial fragility" as well.

We wrap up with three interesting articles, all around the theme of finding and building our own career path: the first explores the research of what it really means to "find your passion" or calling, and how it turns out that you're more likely to find a passion by simply engaging in something that's aligned with your values and having your passion for it build as you succeed (rather than trying to identify the passion and find the "perfect" passion job in the first place); the second provides a powerful reminder that almost by definition, you can't learn from experience until you're willing to do and experience something different than what you already do (which is why experimentation is so crucial); and the last is a fascinating reminder that while most people try to be good workers in their jobs, and find a good company to work for, that ultimately it's finding the right industry that may actually be most important to long-term career success, as even the best companies and workers may struggle in an industry that is shrinking, while a rising/growing industry tends to lift all boats (while providing an outsized reward to the top performers in particular).

Enjoy the "light" reading!

Kitces & Carl Ep 03: The Importance Of Likability As A Financial Advisor

February 28, 2019 10:51 am 0 Comments CATEGORY: Kitces & Carl Podcast Personal/Career Development

In a world where it can take as few as 50 great clients to build a successful advisory practice, many seasoned advisors have been able to build a business around a small group of clients who they like to work with (and who like them in return). Yet advisors who are at an earlier stage of their careers don’t typically have the luxury of being so selective in picking and choosing the clients who they want to work with and like, while instead there’s even more pressure on the advisor to be “likeable” in the first place; as the common aphorism goes, a client has to first “like you” before they’ll decide to trust you and hire you. Accordingly, then question then becomes, to what extent does likeability really matter in bringing on new clients and building relationships with existing clients, and conversely, how far should you go to come across as “likeable” to clients (even if it requires doing something that isn’t otherwise natural), and how common is it for clients to fire their advisors because they are “unlikable”?

In our third episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss the question of how important it is to be “likeable” as a financial advisor, why being your “authentic self” when it comes to communicating and interacting with clients might matter more, and why it’s important for newer advisors to avoid sending mixed signals to clients when trying to differentiate themselves.

Foregoing the (remarkably intriguing) possibility of developing a practice around the “curmudgeon” niche, the reality is that those who self-select into a career of financial advice often do so out of a desire to make a difference in people’s lives, which necessitates having some level of competency in interacting with others. Though beyond just being “likeable,” being able to connect with others is also about your style, behavior, and even your appearance… all of which might be adjusted in order to be more appealing to potential clients.

Because the reality is that it is important to tailor the way you communicate with and present information to various clients, as not all clients have the same preferences in how they want to receive advice in the first place (i.e., some clients might “only” want a big-picture summary, while others love to delve into all the gritty details).

Still, though, that doesn’t necessarily mean advisors should try to be something they’re not… and in fact, the more you try to be something you’re not, the easier it is to come off as inauthentic, instead. Rather, the key to finding people who like you and want to do business with you is by being your “authentic self,” and recognizing that, while not everyone may respond well to you, some will… and those are the people who you ultimately want to work with anyway!

On the other hand, “being your true self” doesn’t mean it’s a good idea to totally throw social conventions to the wind. Be aware that, particularly when clients come in, they expect certain things of a “professional”, and if you stray too far in an effort to try to stand out from other advisors (or just be your authentic self), then you can easily create uncertainty in the client’s mind as to whether or not you have the professionalism and competency to help them solve whatever problem it is that brought them to you in the first place.

Ultimately, the key point is that likability is important, to the extent that you need to provide great service to your clients in a way that works well for them. But, especially for newer advisors, it’s equally important to not create more barriers for yourself being inauthentic, or by trying to differentiate yourself in a way that is off-putting to clients. Because the differentiator that matters the most resides not in how you present yourself (whether by manner or dress), but in the questions you ask and the experience you create for clients… effectively differentiating on the value delivered to clients themselves, and not just by the advisor’s own style and likeability!

#FASuccess Ep 113: Scaling An Advisory Firm To Serve A Greater Mission Beyond Yourself, With Stacy Francis

February 26, 2019 07:21 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 113th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Stacy Francis. Stacy is the president and CEO of Francis Financial, an independent RIA based in New York City that manages nearly $280 million in assets for 140 affluent clients.

What's unique about Stacy, though, is her deep dive niche into working with and financially empowering women. From her RIA's focus on hourly consulting with women going through the divorce process before working with them as ongoing wealth management clients, to her launch of Savvy Ladies, a nonprofit dedicated to providing financial empowerment to women, and all stemming from Stacy's own challenging family situation of witnessing a beloved grandmother who stayed in an abusive marriage until the end because she wasn't financially empowered enough to leave.

In this episode, we talk in depth about Stacy's unique niche focus in working with women who were recently widowed or going through a divorce, the unique referral network that she's been able to develop by becoming known for a targeted specialization, how she effectively gets paid to market her wealth management services by getting paid hourly to consult with women going through the divorce process and then finding that nearly 95% of them stay on board for an ongoing basis thereafter, and why her biggest regret in the business is not making the decision to go all in to focus on her women and divorce niche sooner as her firm has grown as much in the past 3 years within her niche than in the prior 15 years leading up to it.

We also talk about the unique way that Stacy has structured her firm and developed her team to deliver services to clients. From a rotating team structure where one lead advisor may work with up to three different support teams of analysts and associate to service clients based on who will work with them best, to the firm's use of interns to efficiently deliver the labor-intensive aspects of their investment and financial planning process, why the firm has two full-time employees and its own intern in marketing to help support in its ongoing growth, and why Stacy not only uses a business coach to guide her own success but also hires a separate coach to work with her team members and navigate their success as well.

And be certain to listen to the end, where Stacy shares why and how she ultimately decided to grow her advisory firm beyond just delivering services to clients herself, and why she believes that financial planning is an especially good career for women because of how flexible it is to mold the business around your life, even as she recognizes that she didn't take advantage of that flexibility and ask for help early on in her own career when, in retrospect, she wishes she had.