Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with a discussion by compliance consultant Brian Hamburger, suggesting that while the investment adviser world seems to prefer SEC user fees to FINRA as a regulator, it may be better to step back and ask more basic questions about what effective enforcement and the role of regulation should really be in the first place. From there, we look at an array of practice management articles this week, including a discussion of how to protect your firm from fraud, how to better engage clients (and generate more referrals as a result), how to get past the growth wall once you hit it, the problems with micro-managing staff instead of empowering them and getting out of their way, and a look at a new tool to benchmark the compensation of advisors and staff. We also look at a few more technical articles, including a research paper on how to evaluate non-qualified stock option decisions, how to incorporate interior finance issues into your practice and work with clients, and a look and what "endogenous risk" means and how it impacts portfolios. We wrap up with two interesting articles; the first provides a good warning about how advisors can better navigate copyright laws when writing material for their blog or website, and the other is a lighter article on "10 Things Happy People Do Differently" which may not provide any great revelations but may provide some nice reminders for a few of you. Enjoy the reading!
As professionals, we take financial planning very seriously, and generally hope that our clients do as well. After all, if clients don't take their financial situation and its outcomes seriously, how will they ever change their behavior for the better? However, the reality is that in many fields, some of the best progress in helping people change their behavior comes not from raising the seriousness and penalties for making mistakes, but for turning the subject into a gaming experience that rewards positive outcomes. In the context of financial planning, this process of "gamification" creates the potential to help clients making the changes they need to achieve financial success. Although some aspects of financial planning would be difficult to turn into the kind of instantaneous feedback necessary for gamification to work - at least until technology moves along a few more years - other parts can be implemented now. For instance, even just making a financial planning action items list continuously available to clients, with checkboxes left blank until the task is completed, can help compel clients to finish what they need to in order to get to check the box! Will gamification have the potential to help clients having difficulty with change get to the financial planning outcomes they need and want?Read More...
Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with a number of surprise announcements in industry news, including the early retirement of FPA CEO Marv Tuttle due to family reasons, the decision by incoming NAPFA chair Ron Rhoades to resign his leadership position due to a compliance infraction, and a letter by the CFP Board to the Consumer Financial Protection Bureau suggesting the creation of a ratings system for advisor designations and certifications to help reduce elder abuse. We also look at an article explaining some of the upcoming changes with the CFP Board's new sanction guidelines, a discussion from Advizent's Steve Lockshin about how all advisors must help to raise the industry's low minimum standards, and the conclusion of the Investment Advisor/ActiFi study examining how advisors are being served on practice management issues. Wrapping up, there's an(other) article on the rise of the so-called "Robo Advisors", a discussion of how some stress in your business can actually be a positive but it's important to handle the stress so it doesn't become too much, and a technical discussion of some of the unique tax burdens of MLPs, along with a look at how advisors are adjusting investments for a potential inflationary cycle, and a striking article from Texas Tech's Michael Finke about how aging of the brain may reduce financial literacy in later years. Enjoy the reading!
For the first time in almost 20 years, the CFP Board has proposed a broad range of changes to the CE requirements that apply to all CFP certificants. The new rules would include an increase in the total number of CE credits required from 30 hours every 2 years up to 40 hours, an increase in the required Ethics education from 2 hours to 4 hours (but half of those hours can be earned from general ethics content, not only "ethics" content on the CFP Board's own Standards of Professional Conduct), and the opportunity to earn up to 4 hours of CE credit from pro bono services and/or practice management content. The changes under consideration address virtually every area for which the CFP Board has been criticized in recent years, although some areas - notably, CE credit for practice management - will be debated more actively than others. At this point, the proposed changes are only a proposal - and open for comment - but unless significant objections arise, it seems likely that these new requirements could be in place as soon as next year!
Although operating a business that delivers financial planning services is called a "practice" the reality is that most financial planners do little to actually practice their skills outside of the ongoing work they do for clients. Yet while this is standard in the financial planning world, it seems almost absurd in other contexts; if a professional athlete only practiced during the time that actual games were played, he/she wouldn't last long. In fact, looking at the history of top performers in most fields, from sports to business, shows that those who are most successful have an ongoing process for effortful practice and a deliberate strategy for self improvement.
Nonetheless, financial planners do little to hone and practice their own skillsets, especially once meeting the experience requirements for the CFP certification. Is the problem simply that most financial planners, like most people, aren't entirely comfortable with criticism and feedback - even if it's purely constructive - and would rather avoid the situation entirely? Or is there some other reason why financial planners don't actually do much to practice?
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Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with a review of the recent legislative shift on investment adviser oversight, suggesting that RIA lobbying was the successful driver that staved off the Baucus bill, and an article from the Journal of Financial Planning examining how the fiduciary standard should be properly applied by financial planners. From there, we look at two articles that challenge the traditional planning world, one suggesting that the next stage of financial planning may shift away from AUM to standalone planning fees (and highlighting a firm that is pushing this trend), and another focusing on some of the ways that financial planning in practice diverges from the theory. We also look at a few practice management articles, one about how young planners are being integrated into firms, another about how firms are getting creative in the benefits they provide to build employee morale and connections, and a third about how older clients and older staff members can diminish the value of a financial planning practice. This week's summary also includes a few technical articles, including one suggesting that HSAs may become less popular starting in 2014 with the new Obamacare-mandated insurance plans, how advisors may start getting questions from clients soon about crowdfunding investment opportunities, and how using a reverse mortgage as a part of a "cash reserve" strategy can boost retirement income sustainability. We wrap up with two recent controversial articles - one from Bill Gross suggesting that "the cult of equities" is dying and exploring the ramifications of a low-return environment, and the other from the Harvard Business Review suggesting that you should never hire an employee who makes grammar mistakes. Enjoy the reading!
Using newsletters for drip marketing has long been a cornerstone of marketing for financial planners. However, the newsletter process itself is relatively inefficient - costs of production can be high if it's printed, the process of building a distribution list is slow, the content often cannot be effectively shared, and there is no means for someone to find and access the content if they aren't already on the mailing list.
By contrast, operating a digital blog has no printing cost, has content that can be distributed on multiple digital channels, can easily be shared by readers and prospects with others, and can even be found by search engines without any further effort from the planner.
The challenge, of course, is that a financial advisor blog requires content - yet the reality is that for firms already producing a newsletter, the content is already being created. In which case, the blog is simply a more efficient way to get the content out there and drip market to a growing a list of prospective clients!Read More...
Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with three nice articles from this month's Journal of Financial Planning: the first is about planning techniques and issues for non-traditional couples; the second is an interview from Tiburon Strategic Advisors CEO Chip Roame about trends and developments in the industry; and the third is an article by Rick Adkins noting that financial services advertising has taken a distinctly planning-centric tilt in recent years, which may be a boon to the profession going forward. From there, we look at a few good practice management articles, about the importance of conducting staff meetings for your firm (and how to do them well), policies and procedures to handle departing employees (whether a voluntary or involuntary termination), and a good piece by Tom Giachetti about how honoring the fiduciary duty means more than just giving good advice - it's also about important "details" like ensuring clients are getting best execution on their investment transactions. This week's reading also includes a review of the new Morningstar forward-looking fund ratings, the rise of Zephyr Associates as a potential alternative for evaluating investments, an article on the difficulties of ETFs in penetrating the 401(k) marketplace, a look at whether today's low real return environment may be setting up retirees for unique new retirement challenges, and a good article from The Economist about the emerging LIBOR rate fixing scandal. We finish with two very interesting articles - one from practice management consultant Angie Herbers about how for many advisors the real challenge is not building a successful advisory practice, but how to deal with success once it's achieved and not undermine it, and another from the Harvard Business Review blog suggesting that, contrary to cliche and popular opinion, the most successful people may not be those who are most confident, but instead those who pair high ambition with relatively low confidence and who consequently bring a healthy dose of skepticism and self-improvement to everything they do. Enjoy the reading!
In the ongoing effort to differentiate, many financial planners are engaging in a "race to the top" to assert themselves as delivering the best quality advice subject to the highest standards. At the same time, the financial planning membership organizations are similarly competing to attract more quality members by implying their existing members are of the highest quality due to the organization's high Standard of Care.
Yet the reality is that most of the major financial planning organizations now have an almost identical standard of care... and as a result, the real differentiation is not what the standard of care is, but whether the members really adhere to it, even though most associations have no feasible way to monitor the activity of their members. Which raises the question - what's the point of even claiming a standard of care as a differentiator, if the organizations can't enforce those standards to deliver on the promise anyway?Read More...
As social media continues to rise in the digital age, financial planners are increasingly getting involved on platforms like Facebook and Twitter. However, fears and misconceptions about social media - along with a general uncertainty about exactly what the point is and why planners should get involved - have dramatically slowed advisor adoption. Yet the reality is that there are several simple and clear ways that platforms like Twitter can be used to create value for financial planners - including some easy ways, like helping the news find you and social listening, that pose no compliance hassles or risks, either! Keep reading for some tips about how to get started, what programs to use, and how to get start getting value from Twitter!
