event feed
A few months ago, many of you were kind enough to complete a series of two reader surveys - one for the Nerd's Eye View blog, and another for The Kitces Report newsletter. In the coming months, I'm excited to announce that you'll be seeing the fruits of those survey results, in the form of a number of upgrades and improvements to this platform. The visual look of the blog will be modernized (yes, including an increase in the default font size!), the comment system will be replaced, and several enhancements will be made to the members section for newsletter subscribers. In addition, we will begin to offer periodic webinars for continuing education credit, and later this year the written content of the blog will be complemented by a new podcast.
You'll see these changes roll out incrementally in the coming months. For the time being, this is just an announcement of changes to come, with an important note that if you're using an RSS reader to follow the content of this blog, there's now an updated RSS feed link to use (as the details of this post explain, you just need to complete a simple update to your blog reader software to ensure you continue to receive new content in the future).
In the meantime, thank you to all of you who voted Nerd's Eye View as #1 in the recent Zywave survey of the top news sites and blogs for financial advisors!
As I come up to speed on the world of blogging, it is my goal to make it easier for all of you to read the content on this website. Accordingly, I have configured this blog's content to publish via FeedBurner, so that you can conveniently using any number of blog reader programs to keep up with new content.
The COVID-19 pandemic has forced a number of dramatic changes for the typical financial advisor, who suddenly found themselves meeting with all their clients virtually, managing their entire team virtually… and trying – usually unsuccessfully – to network with other financial advisors at virtual conferences. As in the end, while the transition to Zoom-based conferences was ‘reasonably’ successful at delivering content for advisors, it’s done very little to alleviate the sense of isolation that has come with 18+ months of a work-from-home environment and the near-total shutdown of financial advisor conferences.
And so as vaccination rates continue to rise across the country – now accelerating as age 5–11 vaccines begin to roll out – advisors are steadily returning to the office, conferences are preparing to re-open their doors for in-person events in 2022… and a lot of advisors are expressing a newfound desire to get out from their 4 walls, take a trip (or an extended vacation!), and reconnect with other financial advisors and get some fresh ideas and inspiration about ‘what’s next’ for their own advisory businesses. Which just raises one key question: if you’re going to go back out for a conference in 2022, for the first time in nearly 3 years… what’s the best conference to attend?
As someone that has been speaking at 50-70 conferences a year for almost 15 years myself, I’ve seen the good and bad of our wide range of industry events, which are spread across membership associations, broker-dealers, insurance companies, RIA custodians, product manufacturers, media companies, private events, and more. And as a result, I am often asked for my own suggestions of what, really, are the industry’s ‘best’ conferences to attend.
Accordingly, back in 2012, I started to craft my own annual list of 'best-in-class' top conferences for financial advisors, allocated across a range of different categories (as what’s best for solo advisors isn’t the same as what’s best for larger advisor enterprises, what’s best for fee-for-service advisors isn’t the same as what’s best for AUM firms, more technically oriented advisors will prefer different conferences than those seeking practice management or marketing ideas, etc.).
Having updated our annual conference list in every year since, I’m excited now to present my newest list of “Top Financial Advisor Conferences” for the upcoming 2022 year, including both some technical conferences, a wide range of practice management conferences, and highlighting a few never-before-seen events that are emerging for the first time in the coming year.
In addition, we've also launched a new "Master Conference List" of all financial advisor conferences in 2022, for both advisors looking for a wider range of events to attend, and for vendors looking for more conferences to exhibit at!
Of course, because of the disruption of the pandemic, it’s not entirely clear whether some events will show up in 2022 differently than they did the last time they were in person (which for most, was all the way back in 2019!). Nonetheless, as long as you find the conference that is the right type for you, the odds are good that your experience will be good when the content is more relevant, and the other attendees are similar to you (because they, too, were looking for the same thing!).
So I hope you find this year’s 2022 conferences list (and our new Master Conference List) to be helpful as a guide in planning your own conference budget and schedule for next year, and be certain to take advantage of the special discount codes that several conferences have offered to all of you as Nerd’s Eye View readers!
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Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with a report from NASAA finding that the SEC’s Regulation Best Interest rule that took effect on June 30, 2020, has so far failed to achieve its stated goals of requiring broker-dealers to act in their clients’ best interests while making investment recommendations. Among other things, the report found that broker-dealer firms actually offered a higher number of “complex, costly, and risky” investment products than before the rule was implemented (and failed to discuss less costly or risky alternatives when recommending those products), still offered contests to incentivize advisors to sell more products (and thus creating a conflict of interest when recommending strategies to clients), and failed to fully update their policies and procedures to comply with the new rule. But ongoing confusion about Reg BI’s provisions means that the SEC will likely need to provide more guidance to enable more broker-dealers to come into compliance.
Also in industry news this week:
- The SEC issued a Risk Alert detailing the issues it found with RIA firms’ advisory fee billing, which included inaccurate fee calculations, inadequate disclosures, and (a lack of) policies and procedures to ensure clients were charged the correct amount
- In a different Risk Alert focusing on so-called 'robo-advisors', the SEC stated that it had found deficiencies in nearly every digital advisory firm it had examined, including the failure to collect enough client information to truly make (and monitor) recommendations in the client’s best interests
From there, we have several articles on practice management, including:
- Why it is important for advisors to systematize their processes, even if it takes time to implement the new systems, and how to get started
- How financial advisory firm owners can get their firms out of a ‘rut’ by focusing on staffing, technology, and reflecting on their own purpose
- Why it is important for firm owners to take time to meet directly with their staff, and how to make those conversations more effective
We also have a number of articles on retirement planning:
- How the flexibility financial independence provides can benefit both parents and their children
- How a personal family crisis led one advisor to shift from focusing on the quantitative aspects of retirement planning with clients to embracing the qualitative impacts of the decision to retire
- How the “End of History Illusion” shows that an individual’s interests and goals ten years from now might be very different from their preferences today, which makes it especially hard for clients to predict what they may enjoy in retirement until they’re almost already there.
We wrap up with three final articles on the themes of charitable giving, selflessness, and gratitude:
- How generous acts like charitable giving actually produce physiological changes in our bodies and brains that make us happier and healthier
- New research shows that people really do become more generous with age
- How reflecting on the abundance we have – and challenging ourselves to occasionally live without it – can help restore the gratitude that declines as we accumulate more of the things we want
Enjoy the ‘light’ reading!
Welcome back to the 254th episode of the Financial Advisor Success Podcast!
My guest on today's podcast is Eliza De Pardo. Eliza is the founder of her eponymous advisor consulting firm, with a particular focus on working with mid-to-large-sized independent advisory firms.
What's unique about Eliza, though, is the focus she takes on the human capital issues that arise as advisory firms try to scale up, recognizing that a financial advice business is first and foremost a service business, which means attracting, retaining, and developing the firm’s people is the biggest key to long-term success.
In this episode, we talk in depth about the unique challenges that advisory firm founders face as they grow and scale their advice businesses, including how the ability to attract and serve clients is so fundamental to growing the first $1M of revenue but takes a back-seat by the third million of revenue (and all the growth thereafter), why it’s the advisors who are most effective at moving away from the client-facing work to develop their team management skills instead that tend to have the most success at scaling their firms, and why even as advisory firm founders take on a greater focus in management as they grow, the long-term key to scaling is about getting comfortable with the scariest hires of all – dedicated management, including a COO and eventually a CEO that isn’t the founder – to create the infrastructure necessary to grow the firm to the next level.
We also talk about some of the key business productivity metrics that advisory firm owners should monitor as they grow, including their average revenue per advisor (which across all firms averages about $500,000 per revenue-generating professional), their average revenue per staff (which leads advisory firms to hire a new team member every $250,000 of new revenue), and how one of the biggest keys to scaling up is about shifting the ratio of non-revenue-producing to revenue-producing team members from a 1:1 ratio when the firm is small, to a 2:1 ratio as it approaches $1B of assets under management.
And be certain to listen to the end, where Eliza shares her own 15-year journey through the advisory business in building her career as a practice management consultant, the parallels between the challenges in the consulting business and the advisory business when you lose out on a big prospect (and why you have to learn not to take those misses personally), and why most advisory firms need to learn to hire sooner but not necessarily faster (because no matter how much you need the next hire, it’s still crucial to ensure you find someone who will represent the firm well to the end clients it serves).
So whether you are interested in learning how hiring a COO affects advisor well-being, how to know when to scale up and hire, or how to leverage "non-revenue" staff for firm growth, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Eliza De Pardo.
Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with updates on the proposed tax law changes in the “Build Back Better” Act currently being debated in Washington. The latest version of the bill brings back several IRA-related measures that were in the House Ways and Means Committee’s proposal from September but were omitted from the bill when it was introduced last week, including a return of the ban on ‘backdoor’ Roth IRA contributions (beginning in 2022), a prohibition on IRA contributions for higher-income taxpayers with retirement account balances greater than $10 million (beginning in 2029), and Required Minimum Distributions (RMDs) for retirement accounts with balances greater than $10 million (also beginning in 2029).
Also in industry news this week:
- The Public Investors Advocate Bar Association plans to call on the SEC to revise form CRS to add insurance and dispute resolution disclosures, including an explanation of any mandatory arbitration clauses and the amount of E&O insurance a firm is carrying in the event the client is harmed and needs to be made whole
- M&A activity in the RIA industry set a record for an eighth consecutive year in 2021, concentrated among the industry’s largest firms, but some in the industry think the pace of M&A could slow down going forward because even large firms with a lot of dollars available to deploy can only digest and integrate ‘so many’ acquisitions at a time
From there, we have several articles on how advisors can better generate client referrals, including:
- Why advisors are more likely to get referrals from clients when they show empathy for the client’s concerns, and when the client does not feel pressured to provide them
- How generating a clear and specific message of what kind of clients the advisor serves (and what kind of clients might not be a potential fit) can lead to more frequent and successful client referrals
- Why it is important for advisors to position themselves to be able to ask clients for referrals and prepare carefully for the referral request so that clients feel empowered to make referrals
We also have a number of articles on retirement planning:
- Why clients generally make poor predictions about their life expectancy, and the tools that are available for advisors to make better longevity estimates and more accurate financial projections
- How Monte Carlo analysis can be better implemented and the importance of communicating the results of Monte Carlo simulations to clients in a manner beyond ‘just’ a single-number probability of success
- An analysis of risk in ‘buffer’ and ‘floor’ products and why these strategies do not offer a ‘free lunch’
We wrap up with three final articles, all about the theme of being intentional when creating goals:
- Why seeking out fame and fortune for their own sake might not lead to client (or advisor) wellbeing
- Methods advisors and their clients can use to reduce the negative impacts of comparing themselves to others
- How acting with intention can lead to greater client happiness (and results in better financial planning!)
Enjoy the ‘light’ reading!
When preparing a financial plan, advisors often tend to break down the key issues of a client’s situation into smaller parts in order to ‘zoom in’ and separately analyze each problem. While this analytical approach aligns very well with the education and technical training many advisors have, a ‘synthesis-based’ approach, where the aim is to generate insight from ‘zooming out’ and to garner a more comprehensive understanding of the client’s finances and lifestyle concerns, can be a valuable complementary perspective in the financial planning process. For example, synthesizing a big-picture view of a client’s long-term goals and financial concerns can help an advisor create a long-range tax plan that is likely to be more effective in reducing tax burdens than a “rearview mirror” attempt to plan taxes based on what has already happened within the tax year.
Operating at the analytical level can work well when considering questions that have little behavioral or lifestyle implications (e.g., choosing which tax lot to sell when raising cash); however, synthesis can be particularly useful when thinking about significant choices that do impact the client’s lifestyle or behavior. Furthermore, while synthetic thinking may have a bad reputation as being sloppy or uninterested with the details, sometimes a detailed (and labor-intensive) analysis is simply not necessary to make good decisions. Other times, a synthetically derived reason might be compelling enough to override a decision based on analysis. For example, an advisor operating on an analytical level might eschew a ‘no-consumer-debt’ constraint if expected investment returns would be greater than the interest on the debt. However, this approach could backfire for a client who may not be able to manage credit responsibly and who may be prone to developing reckless spending patterns. A more synthetic approach would consider such big-picture behavioral factors when developing client recommendations.
When it comes to famous financial ‘gurus’, advisors often disagree with their synthetically focused popular recommendations. This is because advisors tend to optimize at a more technical and granular level, while gurus tend to optimize at a more generalized behavioral level. For example, financial personality Dave Ramsey advocates the ‘Debt Snowball’ method, where a borrower pays off the smallest debts first rather than those with the highest interest rates. This approach might not seem optimal to an advisor, but at a behavioral level the momentum (and sense of achievement) built from paying off debts could encourage the client to pay off the remaining debts faster than if they were to use what may seem to some advisors as the more ‘sensible’ approach of tackling high-interest-rate debt first.
Ultimately, the key point is that advisors can use both analysis and synthesis as complementary approaches to help create better financial plans for clients, and that neither approach should be neglected. Advisors can be mindful of their potential biases as they look for solutions through a ‘zoomed-in’ analytic lens and consider when a more ‘zoomed-out’ synthetic approach may be more appropriate. Because understanding the ‘zoomed out’ perspective of a client’s situation and identifying the details that warrant a ‘zoomed in’ analysis can only lead to better recommendations for clients who stand to benefit from both approaches!
Welcome to the November 2021 issue of the Latest News in Financial #AdvisorTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors!
This month's edition kicks off with the big news that Schwab is working on its own internal “Personalized [Direct] Indexing” solution, that is expected to become available to both its retail investors and the RIAs on its platform, in what Schwab itself describes as a “freight train” coming for mutual funds and ETFs in what it is calling a new era of “personalization”… from the advice that advisors provide, to the (direct-indexing-based) personalized portfolios that Schwab will bring to the table. And in the process, attempt to win away a potential of trillions in market share from the existing mutual fund and ETF complex?
From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:
- Fidelity launches real-time fractional share trading, in what is widely viewed as a signal that it, too, is working on a direct indexing offering
- Addepar acquires AdvisorPeak rebalancing software to expand from performance reporting to full-scale portfolio management
- White Glove acquires Gainfully as service companies to help financial advisors increasingly acquire their own (proprietary) tech to better scale themselves
- Panoramix rolls out a new Pro edition that provides both GIPS-compliant composite tracking and its own rebalancing software tool that is aggressively priced for smaller/newer RIAs
Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including:
- Envestnet partners with Healthpilot to help advisors facilitate better Medicare enrollment choices for their clients
- Flourish Crypto launches a solution that will allow advisors to trade their clients’ direct-held Bitcoin and other cryptoassets in discretionary portfolios
- Microsoft launches a new Financial Services Cloud to compete against Salesforce FSC for the largest advisor enterprises
- Riskalyze overhauls its Portfolios engine for major speed enhancements (and a signal that it’s investing in itself for the long run!)
And be certain to read to the end, where we have provided an update to our popular “Financial AdvisorTech Solutions Map” as well!
*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!
Many long-time solo financial advisory firm owners with successful practices are eventually faced with the choice either to continue growing their practice into a larger-scale business, or to deliberately level growth so that they can maintain a solo ‘lifestyle’ practice. Owners who choose not to further grow their firms tend to target a different set of goals in comparison to growth-oriented owners looking to increase revenue and clientele, as these lifestyle practice owners often have goals that involve having more time and flexibility to enjoy life outside of the firm. For these owners, this can mean that they will eventually need to consider hiring team members or using outsourced solutions to help them with the tasks that they may dislike or consider too time consuming. However, small firm owners who may not have had to rely on other employees may be concerned about the extra work that comes with hiring employees, and how it might detract from their flexibility and ability to maintain their ideal vision of a lifestyle practice.
In our 71st episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how firm owners can approach the hiring decision by first considering their own goals and then deciding what kind of assistance they need to maximize their freedom while maintaining a healthy practice.
The first step for the owner is to be clear on how they want to maintain their firm. This introspection can help the owner identify their priorities so that their actions align with the right goals, and can serve as a check against ill-suited goals that might simply be based on what other businesses may be doing. This exercise can also help the firm owner draw out what exactly makes them happy, which, for many firm owners, can simply be to have a certain level of flexibility between their professional and personal lives.
Then, depending on how they want to operate their firm and the goals they have in place, firm owners can prioritize the range of responsibilities they want to keep for themselves and those they are willing to delegate. For some advisors, this could mean figuring out how to free up space in their schedule, whether it be through extending the interval between investment performance reports or finding ways to reduce time spent on email during the day. If the owner decides to hire a new employee to manage some of the firm's responsibilities, they do not necessarily need to spend more time in the office working with the new hire or grooming them to take on ever-increasing responsibilities. Technology provides opportunities for fully virtual employees, and firm owners might be surprised to find out how many potential candidates would thrive at the tasks the owners themselves do not enjoy!
Another option to help owners delegate responsibilities is to outsource tasks, potentially giving them to a part-time virtual employee or by tucking into a larger firm that can handle back-office responsibilities. This can allow the firm owner to spend more time on client-facing activities that may be the most enjoyable part of their work, while getting the back-office support they need to sustain those client relationships as well as their desired level of work-life balance.
Ultimately, the key point is that by first considering their own goals and the range of tasks to keep or delegate, firm owners who are considering outside help may find it easier to decide if they should hire a new employee or outsource the work. Regardless of the reason – whether it be a firm owner who chooses to maintain a small lifestyle practice or to transition from a solo practice to a business enterprise – prioritizing the most important work processes and streamlining (or getting rid of!) those that are unproductive are helpful exercises for any advisory firm!
