The financial advice industry is changing rapidly, and advisors face an array of new competitive pressures, compliance challenges and potential threats. Just to keep up, you may need to shift gears, scale up, shift focus or otherwise change your firms status quo.
We find many of our best practice management ideas never get published they come from blog posts, conference coverage, webinars and other online offerings. So we pored through Financial Plannings digital content to find the best tips and tricks that our readers might have missed. By all means, steal a few of these ideas and start putting them to work for you.
Want prospects to take your advice and make a move? Reducing clients stress and increasing their physiological well-being will make them more likely to take action, said planning professor John Grable at the FPA Insight conference this spring. If you want to manage stress, remove your desk, he says particularly if clients are largely below 50 or primarily female. And dont have CNBC running in your office or Bloomberg or Fox Business, he adds.
Rather than going solo, team up for client meetings, suggests Melissa Joy, director of wealth management at the Center for Financial Planning in Southfield, Mich. Familiarity can lead to blind spots, she says: In our firm, that second team member has uncovered estate planning opportunities, suggested novel Social Security claiming methods and uncovered unknown client goals.
One primary reason why advisors have not established a succession plan is that they lack the ability to release control, says Jason Card, VP of advisor solutions for J.W. Cole Financial. The more systems, processes and controls you have in place, the better. Can you restructure an office visit so another advisor could step in and perform the technical aspects of the role without affecting the client experience?
As more complex cyber-attackers target sensitive financial data, one of the most important thing advisors can do is to test themselves to see how they would handle a breach, says Preparis CEO Armistead Whitney. It opens the eyes on a senior level ... to the role of the employees, which is what the SEC wants, he told an audience at the T3 conference. A test allows a firm to ID the weak links in its system.
Set up retreats and seminars to encourage families to discuss their finances in the context of their values, says Stacy Allred, managing director of Merrill Lynchs Center for Family Wealth Dynamics and Governance. She cites one family whose daughter came back from a boot camp convinced of the need for a family meeting. Her father opposed it at first, but the boot camp gave her the tools and motivation to push back. She got fired up and she was persistent, Allred says. She wanted to change the culture of not talking about these things.
Since email remains one of the most effective marketing tools in your arsenal, its important to send it off well equipped, says Kellie Gibson, marketing writer at Advisor Websites. A human-sounding, content-filled message with a well-thought-out subject line is more likely to get attention.
Its important for an advisor to understand where prospects see themselves in the short, medium and long term, says Drew Horter, founder of Cincinnati RIA Horter Investment Management. After our advisors determine and record personal and financial goals, we set actionable steps such as saving more money or shifting investment strategies.
Relationships matter, says Nathan Mersereau of Planning Alternatives in Bloomfield Hills, Mich. As youre assessing a potential relationship, he says, ask yourself: Would I want to spend a day in a canoe with this person? Administer the canoe test whenever you are acquiring a firm, adding a new executive (or even a client) or vetting a key vendor, he says.
Think about developing your own brand online, separate from what youre doing with your firm, says Sabrina Clark, director of marketing and corporate communications at BrandYourself. At the T3 conference, she suggested creating a good domain name, becoming active on social media and focusing on search engine optimization.
Although nearly half of all financial advisors are at least 55 years old, according to a Cerulli Associates study, most are not ready to sell, says Card. Acquisitions frequently fall apart because a buyer never took the time to get to know the sellers underlying motivations and desires, he says. Its become clear to me that building a rapport is critical.
Multiples can be an easy way to rough out valuations on a golf course, but theyre less useful for M&A calculations, says David DeVoe, managing partner of DeVoe & Co. Unfortunately, it is not uncommon to hear of advisors asking their employees to risk their savings often their life savings to become a company shareholder based on cocktail napkin math, he says.
Metrics are essential for the vision of the company, said Paul West, managing director of Carson Wealth Management, and firms have to make sure there is accountability and responsibility for tracking, performing and implementing those metrics. Net new AUM is one of the healthiest things a firm can track, West told advisors at TD Ameritrades national conference. Its a high-quality reality check and the best way to track growth.
Why dont more advisors use Google Analytics to understand their audience? Our best guess is that its jargon-rich, confusing and overwhelming, says Craig Faulkner, CEO of FMG Suite. But advisors only need to know three things about their site, he says: how much traffic comes to the site, who makes up that traffic and what visitors are actually doing.
Find the right way to work with other professionals, says Steve Dudash, president of Chicago-based IHT Wealth Management. First and foremost, be respectful of the other pros in the room, he says. Dont make someone else look bad. It will only come back to hurt you. But that doesnt mean you shouldnt question opinions or plans, he says. In fact, with attorneys, make it a point to find something to challenge them on, politely. It helps show that you are their equal and not just a guy looking to flip stocks or sell a big insurance policy.
Advisors who deal with elderly clients need to watch for signs of diminished cognitive abilities and potential elder financial abuse. The most important thing is for people to be trained to spot problems, says Betty Malks of the National Adult Protective Services Association. And they need to be trained to know where to go for help.
Advisors looking for publicity often have a hard time getting their point across. When speaking with a journalist, keep it short, says Impact Communications CEO Marie Swift: Know how to make your point in a couple of sentences. Other tips: Be specific, have a strong point of view and make it understandable to the general audience.
Your biography or About Me section is one of the most read pieces of content on your website, says Gibson. Select the experiences that shape your success [and] form your advisor identity, and package them in a way that prospective clients will buy. Avoid corporate-speak, and make sure you sound like you: Its near impossible [for prospects] to pick you when you sound like everyone else.
Even with very high federal estate-tax exemptions, annual exclusion gifts can still make sense, especially for clients in states with a state estate tax, says Mirick OConnell estate planning attorney Tracy Craig. Make these gifts at the beginning of the year, she says so if something were to happen to your clients during the course of the year, the value of the gift would already be outside of the estate for estate-tax purposes.
To grow your business, get out of your comfort zone, says John Anderson, managing director of practice management solutions for the SEI Advisor Network. Is there one prospect that you have targeted but havent found that perfect moment to connect with? he asks. Forget about trying to find the right time just find it. Dont send an email or a letter pick up the phone and call. Ask him/her out for coffee or lunch. Pick neutral ground.
To manipulate older parents, adult children may threaten not to visit or call. But when family members are the bullies, advisors must have the tools to ensure that clients get help. In those situations, Ill say to the client, I know you love your son, but, frankly, you should not give the house to him before you pass away because its not a good decision, suggests Stephen Lovell, an advisor in San Francisco.
Many RIA firms are in the retirement plan space as an accommodation to a couple of clients, says Meg Kelleher, an executive VP at Fidelity Institutional Wealth Services. She suggests firms be more deliberate: Weve seen the RIAs we work with thrive in the small plan market their average plan size is about $2 million in assets. A truth about small plans is that they often require customization, and RIAs are in a unique position to customize.
Parts 1 & 2 of your Form ADV are the first things regulators look at, says compliance consultant (and former advisor) Cindi Hill. Review both parts annually and make any necessary changes, she said at NAPFAs spring conference. And remember to give ADV Part 2 to every new client within 48 hours, she adds: Clients get five days to change their minds and get all their money back.
Dont let your boomer clients rely on an expected inheritance as a retirement plan, warns Atlanta estate planning attorney Jeff Scroggin: As their parents live longer, that inheritance may be minimal if theres any at all. In fact, some clients may have to support parents who are living longer than expected, he noted during a session at FPA Retreat in April. Moreover, 24 states have enacted filial support statutes that might let creditors go after children for the cost of a parents care, with possible criminal penalties for noncompliance.
4 ESTATE PLANNING IDEAS
Set clients up with donor-advised funds to get their children, grandchildren and other beneficiaries involved in long-term charitable giving as part of their estate planning process, says Kyle Brownlee, CEO at Wymer Brownlee in Enid, Okla. One good way to start is by helping clients articulate the core values they hope to pass on, he says.
Some assets could prove problematic in a bequest, says Atlanta estate planning attorney Jeff Scroggin. A firearm could be a liability if the weapon is prohibited or if the heir has a felony offense, he told a crowd at the annual FPA Retreat. Some airlines he cited Delta restrict an individuals ability to bequeath frequent-flier miles or perks. Stored reproductive assets can also create a minefield for planners: What would be a childs rights if he or she were born using frozen sperm after a parents death? Finally, for some celebrity clients, Scroggin suggests a key issue might be the valuation of the right of publicity.
Newly married couples should start thinking about estate planning sooner than later, advises Mirick OConnell estate planning attorney Tracy Craig. First-time married couples should change their beneficiary designation, review life insurance policies, attain durable powers of attorney and health advance directives, execute a basic will and discuss the planning ramifications of home ownership by one or both partners.
Ask questions to ensure you have the right estate planning attorney, say Premier Trust co-founder Robert W. Bruderman and Triad Advisors Executive Vice President and Chief Marketing Officer Jeffrey Rosenthal. Hypothetical case studies will help you assess attorneys competence and understand their potential fit. Asking about various trust strategies might help determine philosophical alignment. And Can you
explain ... requests will help you determine whether the attorney can break down complex concepts in relatable language for your clients.
4 SHIFTS FOR GEN Y
Advisors shouldnt just want to work with Gen Y clients because they will be wealthy someday, says Bozeman, Mont., planner Alan Moore. You want them because theyre profitable today, says the co-founder of XY Planning Network, an organization supporting fee-only advisors who serve Gen X and Gen Y clients. Moore and Minneapolis-area planner Sophia Bera suggested the following pricing during a NAPFA conference panel: $1,000 upfront, a $150 monthly retainer and 1% of AUM.
Connected to the world through technology, millennials are the first generation to be truly global, says David Thompson, managing director of the Phoenix Marketing International Affluent Practice. This mind-set is reflected by their willingness to seek employment in foreign countries, balance their portfolios with greater exposure to foreign or global securities or to hold money in offshore accounts. Wealth management firms must demonstrate a global perspective in ... asset allocation and diversification, communications and portfolio planning with these clients.
Some advisors are still stuck in the late 1990s, when social media didnt exist and websites were seen as an extension of a companys marketing brochure, explains Matt Matrisian, senior vice president and director of practice management at AssetMark. Advisors today must speak to their target market through an engaging website and, to a lesser degree, social media sites such as LinkedIn or Twitter.
Meagan Hency, director of product marketing at Hearsay Social, says most advisor websites are in need of a revamp. Make sure your site isnt frozen in time, she said. Its far easier to update content regularly to demonstrate that you are in touch than it is to make up for lost business as prospects move on to the next advisor that popped up in their search results.
TIPS & TRICKS FROM THE DREAM TEAM
Create your niche, know your value proposition and be sure to write it all down clearly.
In a Financial Planningwebinar earlier this year, listeners got some great ideas from a team of practice management experts: Joni Youngwirth, Commonwealth Financial Networks managing principal for practice management; Fidelity Investments executive vice president David Canter; and Christine Gaze, president of Purpose Consulting Group. -- Lee Conrad, editor of Bank Investment Consultant
PICK YOUR IDEAL CLIENTS
Advisors need to be clear about who their ideal clients are, says Canter. He suggests that advisors should identify their 15 best clients and then try to replicate them.
The parameters can vary, he says advisors can base it on who can serve as a referral to other clients, or even just who the advisor enjoys working with, he says. Either way, Canter says, advisors should then be able to articulate the value they bring to this specific group of clients.
Many of the best advisors specialize, Gaze adds: Theyre known for something. Advisors should identify a specific area whether geographic, sociographic or even employees of a specific company then research everything they can find on the topics relevant to this group. For advisors targeting a single employer, for instance, she suggests a deep dive into the companys benefits plan.
ZERO IN ON REVENUE
In addition to identifying your favorite clients, Youngwirth also suggests ranking clients on the revenue per household each generates.
Advisors often encounter an aha moment when they realize theyre actually losing money on some clients, she says: When they see this, they see their business in an entirely different light.
While advisors are often reluctant to prune their client list, a revenue-per-household gauge can be the catalyst for action, she says.
BECOME AN ELDERCARE RESOURCE
A 65-year-old couple can expect to pay 67% of their Social Security benefits hundreds of thousands of dollars on health care, Gaze notes. So its a part of their financial life that is ripe for advice.
She suggests that advisors offer seminars or a list of local eldercare resources; she also recommends the eldercare.gov site as a resource.
And talk to clients before theyre actually facing these situations, she adds: Have these conversations during peacetime.
WRITE DOWN YOUR BUSINESS PLAN
Advisors wear multiple hats, not the least of which is that of CEO, says Youngwirth, and most advisors are always looking to improve, she says. To balance all this, she argues that planners need to create a documented plan.
Brevity is crucial, she says: Having two or three lucid pages is better than a big huge plan full of gobbledygook. She also encourages advisors to share their plans. But just writing it down is a beneficial first step.
Some advisors tell me, I created a plan a few years ago, but its sitting in a drawer and never been used, she says. But even that is better than never doing a plan in the first place.
EXPERIMENT WITH GEN Y CLIENTS
Advisors should develop a test kitchen to offer advice to the emerging affluent, Canter says.
If youre working with clients who are boomers, find a way to engage with their kids, he says.
First, just ask for an introduction, he says. Or have a forum specifically for these clients bearing in mind that theyll be in a different life stage than your existing clients.
Maybe they need to begin saving for retirement or a new home, he suggests.
COACH YOUR STAFF
There can be a big disconnect between next-gen advisors and established advisors, says Gaze. Senior advisors need to do a significant amount of coaching she suggests five or six hours a month to close the gap.
Formalize meetings to make them a priority. Create time to connect instead of relying on ad hoc drive-bys. she says. And develop assignments that will allow junior advisors to create value for the team and develop their own skills. Have them research a topic thats relevant to clients, for instance, and present the findings to the team which allows you to coach them on presentation skills as well as analysis.
Gaze also offers advice for those younger advisors, whom she says should take ownership of their development plan. If youre not being given the time, ask for it, she says. In the words of my grandmother: Make yourself useful.