3 Ways to Save on Staying in Shape This Fall

Just because beach getaways are fading away along with the summer season, that doesn't mean you have to give up on being fit and outside. It's easy to get and stay in shape while saving money if you have your plans ready now.

source https://blog.turbotax.intuit.com/income-and-investments/3-ways-to-save-on-staying-in-shape-this-fall-17903/

Weekend Reading for Financial Planners (Sep 30 – Oct 1)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a good recap of the Winners and Losers in President Trump’s new Tax Reform proposal, which appears to be “good” news for those who don’t itemize deductions, high-income individuals, and especially owners of pass-through businesses (including many financial advisors themselves!), but bad news for those who live in high-tax-rate states, those with large homes and mortgages, high-wage employees, and people with large medical (or more recently, natural disaster) deductions.

From there, we have several advisor technology articles, from this week’s blockbuster deal announcement that Envestnet is acquiring FolioDynamix (to form a combined entity that will support nearly $2 trillion of advisory and nonadvisory TAMP assets), to new reviews of the wealth management technology platform AdvisorEngine and a new Medicare enrollment solution for financial advisors (and their clients) called i65, and a nice listing of software solution that financial advisors can use to help improve their digital marketing presence and connect with prospects online.

There are also several practice management and marketing articles this week, including: why offering a “free first appointment” is not necessarily a good way to approach prospects; how telling your personal story, including the tough times in your life, can help you connect with prospects; how to shift your business towards a niche and strategies to refine it further; and a look at some recent research that reveals a new factor driving which clients refer their advisors: the extent to which they feel knowledgeable about their own investments.

We wrap up with three interesting articles, all about changing our own habits and mindset as financial advisors: the first explores how, if you really want to change and improve your habits, it’s not just about making a commitment to do so, but actually trying to change your own self-identity and especially your environment to make it more conducive to the new habit; the second takes a challenging look at what it really means to be “open-minded” and the ideals to strive for (though they’re difficult for anyone/everyone to achieve!); and the last is a fascinating look at how, despite the increasingly popular discussion of pursuing “work/life balance”, that most people actually find their greatest moments of happiness when they are most deeply engaged, suggesting that perhaps the better prescription is not to be more balanced, but to be deliberately unbalanced and more focused, but with the internal self-awareness to recognize when it’s time to hit the “pause” button or make a change.

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-sep-30-oct-1/?utm_source=rss&utm_medium=rss&utm_campaign=weekend-reading-for-financial-planners-sep-30-oct-1

Self-Employed for a Few Months? What You Should Know

If you lose your job or are disgruntled at work, you may have the temptation to strike out on your own. Be your own boss, and you’ll never lose your job again – plus you don’t have to report to...

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source https://blog.turbotax.intuit.com/self-employed/self-employed-for-a-few-months-what-you-should-know-24002/

Why Is it So Hard to Ask For Referrals As A Financial Advisor?

Growing a client base and acquiring more ideal clients is a challenge all advisors face, regardless of how successful they currently are. And although almost everyone in the industry has heard that asking for referrals is an important way to grow a business, many advisors struggle with this. Which raises the question, as recently posed by Ron Carson at a recent keynote presentation: “Why don’t more advisors ask for referrals? Are advisors afraid to ask for referrals because they’re not proud of their own services?”

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we talk about why it is so hard to ask for referrals as a financial advisor, and how the many barriers – including our pride (or lack thereof) in the company or products we represent, our confidence in our own value, or even shame about the industry we are in – can make it hard to ask for referrals.

Of course, when financial advisors get started, it isn’t feasible to ask for referrals, because you don’t have any clients yet to refer you; instead, the only choice is cold calling, “cold knocking” (walking the streets and knocking on the doors of small businesses), or some other cold prospecting strategy. In fact, arguably for newer advisors, the whole appeal of being able to ask for referrals to generate new business is the opportunity to get away from cold calling and other types of prospecting!

Yet the caveat is that it’s difficult to ask for referrals, if you’re not actually proud of your company and its products. Because if you know, deep down, that your solutions aren’t really the best for your clients, you’ll likely self-sabotage your own behavior – as I experienced myself when starting out as a life insurance agent, struggling to prospect and ask for referrals because I was embarrassed about the sales tactics my company was using at the time!

Of course, ultimately becoming a real financial advisor is not about getting paid for your company’s products, but getting paid for your own advice, knowledge, and wisdom. But that still means it’s hard to ask for referrals until you’re actually confident in yourself, and your own knowledge. And here, too, many struggle, because if we don’t actually know anything about financial planning, and we know that we don’t, then we can’t confidently convey our value. Which is why professional designations like the CFP marks are so helpful… because often it’s only after completing a designation that many will really start to feel confident that they can bring value to the table, and ask for referrals.

Although even once advisors have expertise and can truly add value as a financial advisor, it can still be hard to have confidence to ask for referrals, when telling people “I’m a financial advisor” risks making you a social pariah because so many consumers have had bad prior experiences with advisors! That’s the challenge of trying to do business in a low trust industry. When metrics like the Edelman Trust Barometer finds that fewer than 50% of all consumers trust financial services companies, it’s literally an odds-on bet that if you say “I’m a financial advisor” and ask for referrals, that the person’s first and immediate impression of you will be negative!

The bottom line, though, is just to recognize that there really are a lot of barriers that make it hard for us to ask for referrals, all of which are built around our own fears and discomfort in what we do, the value we provide, or the company/industry we represent. Our fears hold us back. And often our fears are quite well-founded. It really is uncomfortable asking for referrals when you’re not proud of the company and products you represent. Or you’re not confident in your own value. Or you’re ashamed of the industry you’re in. So, if you find yourself at one of these blocking points, figure what do you have to do to grow past it – whether it’s leaving your company, reinvesting in yourself and your education, or differentiating yourself from the rest of the industry – or you won’t have the confidence you need to ask for referrals!

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source https://www.kitces.com/blog/asking-for-referrals-financial-advisor-referrability-confidence-proud-value-trust/?utm_source=rss&utm_medium=rss&utm_campaign=asking-for-referrals-financial-advisor-referrability-confidence-proud-value-trust

Risk Composure: The Real Predictor Of Who Can Stick To Their Investment Plan

Regulators around the world require financial advisors to assess their clients’ risk tolerance to determine if an investment is suitable for them before recommending it. For the obvious reason that taking more risk than one can tolerant will potentially lead to untenable losses. And even if the investment bounces back, an investor who loses more money than he/she can tolerate in the near term may sell in a panic at the market bottom, and miss out on that subsequent recovery.

Yet the reality is that many investors end out owning portfolios that are inconsistent with their risk tolerance, and it’s only in bear markets that they seem to “realize” the problem (which unfortunately leads to problem-selling). Which raises the question: why is it that investors don’t mind owning mis-aligned and overly risky portfolios until the moment of market decline?

The key is to recognize that investors do not always properly perceive the risks of their own investments. And it’s not until the investor’s perceived risk exceeds his/her risk tolerance that there’s a compulsion to make a (potentially ill-timed) investment change.

Yet the fact that investors may dissociate their perceptions of risk from the portfolio’s actual risk also means there’s a danger than the investor will misperceive the portfolio risk and want to sell (or buy more) even if the portfolio is appropriately aligned to his/her risk tolerance. In other words, it’s not enough to just ensure that the investors have portfolios consistent with their risk tolerance (and risk capacity); it’s also necessary to determine whether they’re properly perceiving the amount of risk they’re taking.

And as any experienced advisor has likely noticed, not all investors are equally good at understanding and properly perceiving the risks they’re taking. Some are quite good at perceiving risk and maintaining their composure through market ups and downs. But others have poor “risk composure”, and are highly prone to misperceiving risks (and thus tend to make frequently-ill-timed portfolio changes!).

Which means in the end, it’s necessary to not only assess a client’s risk tolerance, but also to determine their risk composure. Unfortunately, at this point no tools exist to measure risk composure – beyond recognizing that clients whose risk perceptions vary wildly over time will likely experience challenges staying the course in the future. But perhaps it’s time to broaden our understanding – and assessment – of risk composure, as in the end it’s the investor’s ability to maintain their composure that really determines whether they are able to effectively stay the course!

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source https://www.kitces.com/blog/risk-composure-stability-risk-perception-predicting-investor-behavior-biases/?utm_source=rss&utm_medium=rss&utm_campaign=risk-composure-stability-risk-perception-predicting-investor-behavior-biases

#FASuccess Ep 039: Using Behavioral Assessment Tools To Really Understand A Client’s Wealth Building Potential with Sarah Fallaw

Welcome back to the thirty-eighth episode of the Financial Advisor Success podcast!

My guest on today’s podcast is Sarah Fallaw. Sarah is the founder and president of DataPoints, a technology company that is creating behavioral science and assessment tools for financial advisors to use to better assess, understand, and coach their clients’ financial behaviors.

What’s fascinating about Sarah’s work with DataPoints, though, is the way that they have applied research rigor to the fundamental question of: what are the financial behavioral traits that lead people to actually turn their income into wealth. As advisors, many of us are already familiar with the concept of the mild-mannered “Millionaire Next Door” who, through steady frugal savings behaviors, has managed to accumulate substantial wealth, without being flashy about it. Well, as it turns out, that original research was done by Thomas Stanley – who was Sarah Fallaw’s father – and it’s his initial work that she has now extended even further, and turned into a series of assessment tools for advisors to use with our clients!

In this episode, we talk about Sarah’s research on how people build wealth, the key financial behaviors and traits – including conscientiousness, financial literacy, frugality, planning, responsibility, confidence – that lead to building wealth, why and how they measure “social indifference” (how sensitive you actually are to trying to keep up with the Joneses) to understand someone’s wealth building potential, and the way that they’ve turned all of this research into a series of assessment tools that we as advisors can use… whether it’s giving the assessment to young accumulator prospects to really understand how likely they are to save and accumulate wealth, or to give it to new or even existing clients just to better understand where their strengths are, and where their potential financial challenges will be in the future. We even explore how these kinds of behavioral assessment tools could even become a way to show the true value of financial advice – where we provide the assessment to clients year by year, and actually show them not just how they’re accumulating wealth over time, but how we’re actually helping them to change their financial attitudes and behaviors for the better!

And be certain to listen to the end, where Sarah talks about the challenges in actually launching a technology company that provides solutions for advisors, how “perfection can definitely be the enemy of good” when it comes to getting a new company launched (true for both technology and advisory businesses!), and why – even when it comes to starting a technology company – it’s still all about focusing in on a narrow niche of the particular type of target clientele (or target financial advisor) that you want to serve.

So whether you’ve been curious to learn more about the research on what actually leads to wealth-building behavior, are curious about a new technology solution you could use to identify clients (or even prospects) with good wealth-building potential, or simply want perspective on what it takes to build a successful business, I hope you enjoy this episode of the Financial Advisor Success podcast!

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source https://www.kitces.com/blog/sarah-fallaw-datapoints-podcast-building-wealth-behavioral-assessment-tools-thomas-stanley-millionaire-next-door/?utm_source=rss&utm_medium=rss&utm_campaign=sarah-fallaw-datapoints-podcast-building-wealth-behavioral-assessment-tools-thomas-stanley-millionaire-next-door

Launching An ESG Shareholder Engagement Initiative As An Advisory Firm Value-Add

Historically, socially responsible investing (SRI) has been about a fundamental decision: whether to hold a “traditional” diversified portfolio, or to screen out companies for various environmental, social, or governance (ESG) criteria in order to meet an SRI mandate. The end result has been an endless debate about whether a portfolio that used ESG screens will subsequently produce returns that are better, worse, or the same as the traditional portfolio.

Yet the reality is that an SRI approach doesn’t have to be a choice between traditional portfolio investing or using ESG screens. An alternative approach is to try to shape the stocks in a traditional portfolio to better adhere to an SRI mandate, by leveraging the proxy voting and shareholder engagement process to steer the company’s management itself in a more SRI-focused direction.

In this guest post, Justina Lai and Ria Boner of Wetherby Asset Management share how they implemented an ESG shareholder engagement initiative within their own advisory firm, leveraging the outside resources of an external non-profit called “As You Sow” that works with institutions (including advisors) to mobilize shareholder resolutions.

The end result of their ESG shareholder engagement initiative was a deeper engagement with clients themselves, for what was ultimately a fairly modest financial and logistical cost for the firm. However, because there are specific requirements that must be met for clients to vote proxies, including owning individual securities directly, affirming their ownership, and delegating proxy voting authority to a third party, advisory firms must be certain to implement a proper process to ensure their shareholder engagement efforts with clients are successful!

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source https://www.kitces.com/blog/esg-shareholder-engagement-initiative-proxy-voting-as-you-sow-wetherby/?utm_source=rss&utm_medium=rss&utm_campaign=esg-shareholder-engagement-initiative-proxy-voting-as-you-sow-wetherby

Weekend Reading for Financial Planners (Sep 23-24)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a recap from the recent “Deals and Dealmakers” Summit on mergers and acquisitions in the advisory industry, which suggests that demand remains strong for advisory firms, though buyers are increasingly focusing on the largest ($1B+ AUM) sellers. Also in the news this week was a fascinating interview with Matt Lunch of Strategy & Resources about the future of the Independent Broker-Dealer (IBD) model, and the announcement that the CFP Board’s Center for Financial Planning is finally launching its new academic journal, dubbed “Financial Planning Review” (FPR), and will have a Call For Papers in October to be considered for the inaugumidral issue coming mid-2018.

From there, we have several technical planning articles this week, including a look at the projected Social Security COLA for 2018 (which will ironically increase payments for upper-income individuals, but likely not for lower- and middle-income households due to the looming unwind of Medicare Part B’s Hold Harmless provisions from 2016-2017), strategies to reduce clients’ state income taxes by changing their state of residence (and what it takes for HNW clients to really substantiate their change in address), and what affluent clients should bear in mind as the IRS increasingly targets its resources on focused examinations of high-income individuals (but with fewer full-tax-return audits).

We also have several practice management articles, from a discussion of whether the traditional A/B/C client segmentation approach is actually just a relic of the old commission-based world and needs to be re-designed for modern advisory firms, to a look at the concept of “Client Journey Mapping” and why there are many opportunities for advisory firms to innovate by focusing on how technology can be used to improve the client’s experience in interacting with the firm, and a fascinating discussion from advisor consultant Stephanie Bogan about how for many advisors the best strategy for handling prospects who ask for discounts or exceptions to the advisor’s minimums is simply to have a stringent “no exceptions” policy.

We wrap up with three interesting articles, all focused on thinking about the ways the advisory industry is changing: the first looks at how the recent Equifax breach was actually an excellent “micro-moment” opportunity for advisors to demonstrate their value and relevance for clients beyond just their investment portfolios… yet few seem to have stepped up to provide proactive guidance to their clients on issues like credit freezes; the second is a look at the real-world consequences of “non-fiduciary” conflicted advice, where the problem is not just that occasional “bad actors” make highly questionable (but still “suitable”) sales to clients, but the fact that because of a current lack of fiduciary standard, they get away with it and keep doing it over and over again; and the last is a good reminder that ultimately, in trying to help clients stick to their investment plan, the best solution is not just about trying to change the portfolio to fit the client’s investment behaviors, but also figuring out how to use the behavioral finance research to help clients adjust their behaviors so they are less stressed about (or focused on) their portfolios in the first place!

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-sep-23-24/?utm_source=rss&utm_medium=rss&utm_campaign=weekend-reading-for-financial-planners-sep-23-24

Fall Energy Efficient Improvements to Save Money at Tax-Time

Fall is here, and if you're remembering your heating bills from last winter, you probably are already thinking about what you can do to cut that bill. Today, we look at tax breaks that help save you money while you make your home a bit more energy efficient.

source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/home/fall-energy-efficient-improvements-to-save-money-at-tax-time-15400/

Happy First Day of Autumn: How to Not “Fall” Behind on Your Tax Preparation

When we started filing our taxes, it felt overwhelming. However each year we try to learn and adjust our system, especially since I’m self-employed. It’s not a cake walk, but we feel more prepared and confident getting our taxes done....

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source https://blog.turbotax.intuit.com/tax-planning-2/happy-first-day-of-autumn-how-to-not-fall-behind-on-your-tax-preparations-32033/

Money Saving Tips for Selling Your House

One of the best feelings in life is buying or selling your home, especially in the hopes that the process goes smoothly and everyone ends up happy. While selling your house can be a bit intimidating, emotional, and sometimes expensive,...

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source https://blog.turbotax.intuit.com/tax-planning-2/money-saving-tips-for-selling-your-house-31987/

Setting Proper Client Minimums: AUM Account Vs Retainer Fee Minimums For Advisors

Setting proper client minimums is an important practice management issue that every advisor needs to consider. For many advisors, the idea of having “minimums” is an unpopular, as their goal is to be ready and willing to serve any prospective client who needs help. But the truth is that there’s only so much time in the day – which means not everyone can be served – and given the overhead costs to operate an advisory firm, serving clients that are “too small” may well be a money-losing proposition for the business (even if it brings some revenue in the door).

Of course, even for advisors who are ready to set client minimums for their advisory firm, it’s one thing to say “you should have minimums”, and another to figure out how to actually structure the minimum (e.g., a minimum account size, or a minimum advisory fee?), and what level it should be set at!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we discuss best practices in how advisors should actually go about setting client minimums, the benefits and trade-offs in setting minimums based on investment account sizes (e.g., an AUM minimum) versus a minimum fee (e.g., a minimum annual retainer), and how to figure out what the minimum revenue per client should be for the business to be profitable.

Most advisors that have a minimum simply set a minimum AUM requirement (i.e., a minimum household or portfolio account size). The virtue of having an asset minimum to work with a client is the sheer simplicity. If the advisor sets an asset minimum of $250,000, and charges a 1% advisory fee, then the advisor has effectively set a $2,500 minimum fee for clients. Additionally, the advisor has set a minimum without any special billing requirements or complexities.

By contrast, some advisors prefer to set a minimum annual fee instead (regardless of account size), such as $2,500/year, and simply charge all clients that fee at a minimum (either as an annual retainer, or sometimes billed quarterly or even month). The good news of such a retainer-fee minimum structure is that it opens up new markets – for instance, young professionals who have limited assets but high income and good wealth-building potential who can happily afford the fee from their income. The bad news, though, it that it introduces additional billing complexity, as now the advisor needs a way to invoice, track, and process those minimum fees and have a way to actually get paid by the client (especially if there is no investment account to manage and sweep fees from!).

Regardless of the structure, though – an annual $2,500 minimum fee, or a $250,000 account minimum at a 1% rate that adds up to $2,500/year – it’s still necessary to determine what the minimum revenue should be, and whether any particular advisor needs a minimum revenue per client that is higher or lower than $2,500/year.

Ultimately, most advisory firms do this one of two ways. The first option is to set the minimum fee based on the cost to actually service a client in the first place, by adding up the total overhead cost of the business and dividing by the number of clients; for instance, if the firm has 180 clients and the total cost of overhead is $450,000, then the firm must charge $2,500/year just to cover its office rent, staff, and other overhead costs. The second option – especially popular for solo financial advisors – is to price the minimum is based on the value of the advisor’s time (since that is his/her primary constraint as an individual advisor). Thus, if the advisor wants to earn $200,000 per year and can only generate about 1,200 productive client-facing hours, the advisor needs to earn at least $166 per hour when doing client work, which means if a client takes 12 hours per year to serve, the minimum fee must be $166/hour x 12 hours = $2,000/year.

The bottom line, though, is that some minimum level of revenue per client is necessary for an advisory firm to execute well as a business. It can be administered as either a minimum account size, or a minimum retainer fee, though each has its benefits and disadvantages and who the advisor can (or cannot) work with, and it’s especially important to recognize that if the advisor is going to have a non-investment-account retainer minimum, the advisor had better be delivering some real financial planning value outside of the investment account!

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source https://www.kitces.com/blog/advisory-fee-client-minimum-account-assets-retainer-fee-best-practices/?utm_source=rss&utm_medium=rss&utm_campaign=advisory-fee-client-minimum-account-assets-retainer-fee-best-practices

Celebrate Fall with 2 Big Ways to Save in the Cooler Months

What better way to celebrate Fall than by saving some money? (Well, maybe jumping in a pile of leaves is just as great.) Now with the temperature beginning to drop, it’s time to start looking around the house for ways...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/home/celebrate-fall-with-2-big-ways-to-save-in-the-cooler-months-20312/

What is a Tax Bracket?

Did you know that not everyone or every dollar earned is taxed the exact same amount? This is because the United States tax system aims to be progressive. A progressive tax system tries to collect more tax from those who...

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source https://blog.turbotax.intuit.com/tax-planning-2/what-is-a-tax-bracket-24007/

What Inflation Rate Should You Assume For College Expense Planning?

With the rise of 529 plans and increased focus amongst parents on saving for college, financial advisors have increasingly included college expense planning as a part of the comprehensive financial planning process for clients. And while the mathematics of funding education are relatively straightforward (at least in contrast to more complex retirement planning projections), the reality is that most advisors rely on some very simplistic college expense inflation assumptions for planning purposes (e.g., CPI + 3.0%). Yet, the increasing availability of college expense data reveals that the pace of inflation for college expenses may be slowing – at least for some types of college degrees – and that it’s necessary to take a more nuanced approach to college inflation assumptions.

In this guest post, Derek Tharp – our Research Associate at Kitces.com, and a Ph.D. candidate in the financial planning program at Kansas State University – explores the historical data on the rising cost of a college education, and particularly the ways in which college inflation rates have varied based on institution type, location, and even the family income of the student.

For instance, according to the data in the Trends in College Pricing 2016 report (published annually by the CollegeBoard), the reality is that for students looking at private institutions, the common CPI + 3.0% inflation rate typically assumed by financial advisors has actually not been the case for some time now. Instead, the inflation rate for private colleges has been trending substantially lower for more than two decades! Yet by contrast, for high-income families looking at public institutions, a CPI + 3.0% inflation assumption for the cost of college may actually be too low!

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For wealthy families, private college inflation has lagged CPI + 3.0% for more than two decades!
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In addition to variations by institution type and family income, considerable variability exists by location. For instance, over the past 12 years, annual real college expense inflation at public institutions has ranged from a low of 0% in Ohio to a high of nearly 8%/year in D.C. and Hawaii. Additionally, location-specific trends are made more complex by the role that declining (or increasing) public funding has in increasing (or decreasing) the amount of aid that may be available to students to offset college expenses (which impacts the typical “discount” between the published cost of college and the actual net price that students typically pay).

Of course, just because we’ve seen trends in the past does not mean that those trends will be the same in the future, but particularly given the unique dynamics of college inflation rates for above-average-income families (who most typically work with financial advisors), and the risk that for some clients there may be several college inflation trends moving in the same direction that may substantial increase (or decrease) the savings that clients need to fund their educational goals, the annual CollegeBoard’s Trends in College Pricing report provides a tremendous amount of data that advisors can (and should) use to customize their college inflation assumptions!

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source https://www.kitces.com/blog/inflation-assumption-education-funding-college-expense-planning-tuition-fee-room-board/?utm_source=rss&utm_medium=rss&utm_campaign=inflation-assumption-education-funding-college-expense-planning-tuition-fee-room-board

#FASuccess Ep 038: From Wirehouse Cold Calling Scripts To The Flexibility Of Independence with Winnie Sun

Welcome back to the thirty-eighth episode of the Financial Advisor Success podcast!

My guest on today’s podcast is Winnie Sun. Winnie is the co-founder of Sun Group Wealth Partners, a hybrid RIA on the LPL platform based in Los Angeles that oversees nearly $200 million of client assets.

What’s fascinating about Winnie’s firm, though, is how she managed to successfully launch her advisory business in a wirehouse through cold calling – with a unique tactic of calling businesses after hours, to deliberately read her cold calling script to their voicemail, and get those cold-calling prospects to call her back! From there, she evolved her business development strategy into a seminar marketing approach, before she ultimately shifted into a niche advisory firm servicing clients in the television and movie industries… building on her background with a television audience production company she founded when she first graduated from college and worked with shows like America’s Funniest Home Videos, Jeopardy, and Wheel of Fortune.

In this episode, Winnie talks about what “works” and what doesn’t when it comes to social media marketing, why she still balances spending 2/3rds of her time in the wealth management business, and 1/3rd engaging in social media, video, and other multi-media efforts to market her business – because as Winnie puts it, “if no one knows you exist, you can’t serve them as clients” – how she’s structured her team with a partner to support her practice, and the details of why she ultimately decided to break away from a wirehouse to join an independent broker-dealer… despite the generous offer a competing wirehouse had made.

And be certain to listen to the end, where Winnie shares her perspective on everything from the challenges of our industry’s gender or racial diversity – or lack thereof – and the relatively simple change that could be make the advisory business more appealing to young women, along with why she chose to pursue social media marketing, as an introvert, to help facilitate her own work/life balance while growing her business.

So whether you’ve been curious about what it takes to successfully grow a business via social media, or are simply looking for alternative marketing ideas to cold calling scripts, or want some perspective on how targeting a particular type of clientele can be amplified with digital marketing, I hope you enjoy this episode of the Financial Advisor Success podcast!

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source https://www.kitces.com/blog/winnie-sun-group-wealth-partners-podcast-cold-calling-scripts-tweetchat-independence/?utm_source=rss&utm_medium=rss&utm_campaign=winnie-sun-group-wealth-partners-podcast-cold-calling-scripts-tweetchat-independence

How Changes in Your Life Can Save You Money

Whether you got married this year or are purchasing your first home, changes experienced in your life can bring about many questions and uncertainties. Although you may have questions about how life events affect your finances, one thing is certain,...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/how-changes-in-your-life-can-save-you-money-31738/

Differentiating The Next Generation Of Financial Planning Software

Financial planning software has changed substantially over the years, from its roots in demonstrating why a client might “need” certain insurance and investment products, to doing detailed cash flow projections, goals-based planning, and providing account-aggregation-driven portals. As the nature of financial planning itself, and how financial advisors get paid for their services, continues to evolve, so too does the software we use to power our businesses.

However, in the past decade, few new financial planning software companies have managed to gain traction and market share from today’s leading incumbents – MoneyGuidePro, eMoney Advisor, and NaviPlan. In part, that’s because the “switching costs” for financial advisors to change planning software providers is very high, due to the fact that client data isn’t portable and can’t be effectively migrated from one solution to another, which means changing software amounts to “rebooting” all client financial plans from scratch.

But perhaps the greatest blocking point to financial planning software innovation is that few new providers have really taken an innovative and differentiated vision of what financial planning software can and should be… and instead continue to simply copy today’s incumbents, adding only incremental new features while trying to forever be “simpler and easier” – without even any clear understanding of what, exactly, is OK to eliminate in the process.

Nonetheless, tremendous opportunity remains for real innovation in financial planning software. From the lack of any financial planning software that facilitates real income tax planning, to the gap in effective household cash flow and spending tools, a lack of solutions built for the needs of Gen X and Gen Y clients, and a dearth of specialized financial planning software that illustrates real retirement distribution planning (using actual liquidation strategies and actual retirement products). In addition, most financial planning software is still written first and foremost to produce a physical, written financial plan – with interactive, collaborative financial planning often a seeming afterthought, and even fewer financial planning software solutions that are really built to do continuous ongoing planning with clients (not for the first year they work with the financial advisor, but the next 20 years thereafter), where the planning software monitors the client situation and tells the advisor when there’s a planning opportunity!

Fortunately, though, with industry change being accelerated thanks to the DoL fiduciary rule, the timing has never been better for new competitors to try to capture new market share for emerging new financial advisor business models. Will the coming years mark the onset of a new wave of financial planning software innovation?

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source https://www.kitces.com/blog/differentiating-next-generation-financial-planning-software-advisor-fintech-differentiation-focus/?utm_source=rss&utm_medium=rss&utm_campaign=differentiating-next-generation-financial-planning-software-advisor-fintech-differentiation-focus

3 Tax Reasons for Why You Should Think Twice Before Betting on the Big Game

Are you ready for some football? If so, maybe you’ve been thinking about putting a little money on the game, and if you are, it’s important to know that there may be tax implications. Like other sources of income, gambling...

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source https://blog.turbotax.intuit.com/income-and-investments/3-tax-reasons-for-why-you-should-think-twice-before-betting-on-the-big-game-31981/

Weekend Reading for Financial Planners (Sep 16-17)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with tips from leading cybersecurity expert Brian Krebs on what you (and your clients!) should do to protect themselves from potential identity theft after the recent news of the massive 143 million person data breach at Equifax.

From there, we have several regulatory articles this week, including an in-depth look from Investment News on the current state of FINRA and whether the industry watchdog needs better oversight and governance itself, the latest warning from the SEC to investment advisers to do a better job monitoring and overseeing their advertising (including the use of third-party recognition programs), and the emerging discussion of whether the best regulatory path forward might not be to apply a uniform fiduciary duty to all advisors and brokers but simply to better regulate the term “advisor” in the first place (and let non-advisor salespeople continue to not be subject to a fiduciary duty, as long as they distance themselves from the “advisor” title).

We also have several practice management articles, from a look by Cerulli at the latest trend of advisors towards outsourcing portfolio management (as the majority of CFP professionals now use some kind of third-party manager), why effective leadership in an advisory firm is all about not treating everyone the same and instead focusing the leadership’s time, energy, and resources into its top emerging talent, and tips on how to effectively groom next generation “G2” talent in an advisory firm to eventually take over and manage client relationships. In addition, there are also articles on how to develop a prospect tracking list, the merits of having a client advisory board versus conducting a client focus group, and when it makes sense to use video as part of your marketing (and how much it costs to get it done right).

We wrap up with three interesting articles, all focused around the psychology of how you position your business, your clients, and your team: the first explores how in the end, the best business models are very simple ones (e.g., make complex things simple, make boring things exciting, or eliminate middlemen), and raises the question of whether as advisors we try too hard to convey complex value propositions when simpler ones would be better; the second is a reminder that in most businesses (including financial advising), the bulk of utilization, revenue, and referrals tend to come from a small subset of “whale” clients, which makes it especially important to connect with them and make them feel appreciated (but balance against overserving them to the point they’re unprofitable!); and the last is a look at how a business that consults on behavioral economics structures its own employee team bonuses, with an emphasis on not just paying a year-end performance-based bonus, but giving employees guidance on how to spend their bonuses in a manner that is most likely to actually contribute to their happiness.

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-sep-16-17/?utm_source=rss&utm_medium=rss&utm_campaign=weekend-reading-for-financial-planners-sep-16-17

IRS Gives Tax Relief to Victims of Hurricane Harvey and Hurricane Irma

Following the recent destruction caused by Hurricane Harvey and Hurricane Irma, the IRS has announced a variety of tax relief for victims of Hurricane Harvey in parts of Texas and victims of Hurricane Irma in parts of Florida, Puerto Rico...

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source https://blog.turbotax.intuit.com/tax-news/irs-gives-tax-relief-to-victims-of-hurricane-harvey-and-hurricane-irma-32050/

Self-Employed? Don’t Forget About the Estimated Tax Deadline

If you’ve taken the plunge into self-employment, congrats on being your own boss! Whether you’re working as a contractor or making money in the fast-growing sharing economy, don’t forget you may need to pay estimated taxes. The upcoming third quarter...

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source https://blog.turbotax.intuit.com/self-employed/self-employed-dont-forget-about-the-estimated-tax-deadline-19852/

The Conflicts Of Interest Between RIAs And Their Custodians (and Brokers And Their B/Ds)

The need to manage conflicts of interest is a central issue in meeting an advisor’s fiduciary obligation to clients, whether it’s part of an RIA’s fiduciary duty under the Investment Advisers Act of 1940, or any financial advisor’s obligation when serving any retirement investors under the Department of Labor’s fiduciary rule. Yet the reality is that prospective conflicts of interest go beyond just those that financial advisors may face with the product compensation they receive for implementing various insurance and investment products. In fact, financial advisors often face direct conflicts of interest with the very platforms they’re affiliated with, particularly when it comes to practice management advice in how to grow their own business and serve their clients!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we discuss the conflict of interest that exists between RIA firms and their RIA custodian platforms (as well as between brokers and their broker-dealers), and why advisors should perhaps be a bit less reliant on their platforms for financial planning education and practice management insight, given the “conflicted advice” they’re receiving!

A straightforward example comes up in the context of whether financial advisors should aim to serve “next generation” clients – in particular, the next generation heirs of their existing clients. Concerned about the assets that might leave their platform, RIA custodians regularly encourage and urge advisors to build relationships with the heirs of their clients, so that the assets don’t leave. Yet ultimately, that just emphasizes that to the custodian, the “client” isn’t even the client – it’s simply their pot of money, that the custodian wants to retain, regardless of who owns it… which means pursuing the assets down the family tree. By contrast, financial advisors who are focused on their clients – the actual human beings – would often be better served by simply focusing on who they serve well… which means if the firm is retiree-centric, the best path forward is not to chase pots of money to next-generation heirs when their retired clients pass away, and instead is simply to go find more new retirees! In other words, advisors are getting advice from their RIA custodians to pursue next-generation clients is often based more on what’s in the custodian’s best interests, not necessarily what the advisor’s best interests for their practices!

Another way that RIAs sit in conflict with their RIA custodial platforms is that in the end, one of a fiduciary advisor’s primary goals is actually to proactively minimize the profit margins of our RIA platforms! Thus, advisors try to minimize transaction costs, lobby for lower ticket charges on trading, pick the lowest-cost share classes that don’t have 12b-1 fees or revenue-sharing agreements, find the optimal balance in selecting No Transaction Fee (NTF) funds versus paying transaction fees based on the size of the clients’ accounts and what will be cheapest for them, obtain best execution pricing regardless of order routing kickbacks, and minimize client assets sitting in cash. And all of this matters, because how do RIA custodians actually make money? Ticket charges, revenue-sharing from asset managers, getting basis points on NTF funds, order routing revenue on execution, and making a 25+ basis point interest rate spread on money market funds. Which means the better the job that the RIA does for its clients, the less profitable they are for their RIA custodian (a fact that advisors are often reminded of by their RIA custodian relationship managers!), and RIAs have a fundamental conflict of interest between being “good advisors” for their custodial platform and watching out for their clients’ best interests.

Notably, this phenomenon is not unique to RIAs. It’s perhaps more noticeable because we usually talk about RIAs as being fiduciaries that are minimizing their conflicts of interest, but it’s equally relevant for those who work on a broker-dealer platform as well. Because as product intermediaries, broker-dealers ultimately make their money off of transactions, and it is impossible to sell financial service products without a broker-dealer! Yet the challenge is that the B-D can make more when they are offering both compliance oversight and getting a slice of GDC on all transactions, as opposed to just a compliance oversight slice of advisory fee business. Which means that while a fee-based business model may be more stable and valuable in the long run for a financial advisor, able to grow to a larger size and sell for a higher multiple, B-Ds are often at risk for making less money as their advisors shift to fee-based business that makes more for them (or alternatively, forces the B-D to increasingly try to reach into the advisor’s fee-based business with ever-expanding “compliance oversight”).

The point is not to paint every B-D or RIA custodian in a nefarious light – as they’re just trying to run their businesses – but it’s crucial to understand that in many situations, what’s best for the broker-dealer or RIA custodian is not necessarily best for the advisor on the platform. Which is concerning, because too many advisors don’t seem to acknowledge these inherent conflicts of interest, especially since advisor platforms are often the primary place they go for financial planning education and practice management insight, not realizing the conflicted advice they are receiving. And so, while it can be great to take advantage of some of the resources that these platforms provide, advisors should still be careful to consider whether the advice they receive is really in their best interests as an advisor, or ultimately about maximizing revenue for the platform instead!

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source https://www.kitces.com/blog/conflict-of-interest-fiduciary-ria-custodian-advisor-broker-dealer-agency/?utm_source=rss&utm_medium=rss&utm_campaign=conflict-of-interest-fiduciary-ria-custodian-advisor-broker-dealer-agency

Predicting Wealth Building Behavior With DataPoints Assessment Tools

The Millionaire Next Door became a NY Times Bestseller in 1996 by revealing how little we understand about millionaires, and the behaviors that help people to become millionaires. While the traditional view was that wealth comes from an inheritance, or becoming an executive in a major corporation, and that you can identify millionaires by their high-end suits, luxury cars, and large houses in affluent neighborhoods, in reality a huge swath of millionaires become such simply by living frugal lives of cheap suits, practical cars, and modest homes, which allows them to convert a substantial portion of their income into wealth over time.

Of course, having a healthy income, and willingness to take calculated risks for success, do clearly help in the wealth-building process. But the key point was that not only is affluence not necessarily correlated to outward signs of wealth, but in reality some of the greatest wealth-building behaviors come from not flaunting that wealth and being “socially indifferent” to trying to keep up with the Joneses.

Now, a company called DataPoints – founded by Sarah Stanley Fallaw, the daughter of The Millionaire Next Door author Thomas Stanley (and herself trained as an industrial psychologist) – is turning The Millionaire-Next-Door insights about wealth building behaviors into a series of assessment tools that financial advisors can use.

For advisors who are trying to expand their practices to work with “younger” wealth accumulator clients, the DataPoints assessment tools provide a unique research-based approach to actually understand which prospects are likely to be successful wealth accumulators, and which prospects should be avoided because the assessment reveals in advance they will be especially difficult to work with. And for new and existing clients, a rigorous wealth building assessment tool as a part of the discovery process can help the advisor understand where to focus their advice and efforts to help the client actually change their financial behaviors for the better.

In other words, while as financial advisors we increasingly find ourselves talking about the “behavioral” value of financial planning advice, DataPoints is actually creating tools that help to measure what a client’s wealth-building behaviors actually are. Which on the one hand makes it easier to be effective with clients – as we can get a better understanding upfront of the client’s financial tendencies – but also makes it possible to actually measure the success of the advisor-client relationship by the extent to which the advisor actually helps their client (measurably) change their financial behaviors and attitudes!

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source https://www.kitces.com/blog/datapoints-building-wealth-assessments-sarah-fallaw-thomas-stanley-millionaire-next-door-book/?utm_source=rss&utm_medium=rss&utm_campaign=datapoints-building-wealth-assessments-sarah-fallaw-thomas-stanley-millionaire-next-door-book

Five Tips to Get in Good Financial Shape by the End of the Year

As summer comes to a close and the days get shorter, the holidays seem just around the corner. This time of year, many of us begin to worry about gaining weight later in the year, and to prevent weight gain,...

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source https://blog.turbotax.intuit.com/tax-planning-2/five-tips-to-get-in-good-financial-shape-by-the-end-of-the-year-20214/

#FASuccess Ep 037: Leveraging Unique Centers Of Influence To Grow A Niche Advisory Firm For Doctors with Johanna Fox Turner

Welcome back to the thirty-seventh episode of the Financial Advisor Success podcast!

My guest on today’s podcast is Johanna Fox Turner. Johanna is the founder of Fox and Company, a fee-only financial planning firm that specializes in working with physicians.

What’s unique about Johanna’s advisory business, though, is the sheer volume of rapid success that she’s had with her recent pivot to specializing in doctors. After having already spent more than 10 years building her fee-only advisory business, and more than 30 years working as a CPA with a separate accounting firm, focusing into a niche has transformed her growth, from a practice that had steadily grown to 150 clients over a decade, to one that is now fielding 4 prospect inquiries a week from doctors, and has a waiting list to accept new clients! And 100% of her doctor clients work with her virtually, through email and video conferencing!

In this episode, Johanna details not only why she decided to make a shift to a niche advisory firm working with doctors – on a purely virtual basis – as an experienced 60-year-old advisor, but how she actually went about marketing her new niche, the unique Centers of Influence – two leading bloggers for doctors – that she’s been able to build relationships with to generate a high volume of referrals, and why answering online questions in a niche can generate substantial new business, even as answering similar questions on “Ask An Advisor” Q&A sites like Nerdwallet generates no results at all.

In addition, we talk about the way that Johanna completely restructured her advisory fees into a three-tiered retainer structure to serve her niche (because the Centers of Influence she gets referrals from don’t believe in the AUM model!), what scheduling and video teleconferencing software she adopted to work with those new clients, and the 5-meeting financial planning process she uses to work with clients, built heavily around using eMoney Advisor not only to do financial planning, but also making the eMoney portal a central part of her value proposition with clients.

And be certain to listen to the end, where Johanna talks about how she broke the news of shifting into a niche to her existing clients, and why despite her fears, her existing non-doctor clients haven’t left even as she focuses into her new doctor niche… although, ironically, she voluntarily decided to transition out nearly 1/3rd of her smallest clients just to help create capacity for the new growth she’s now experiencing!

So whether you’re curious about the unique Centers of Influence that can be cultivated in a niche, want to understand how an existing advisor can pivot into a niche, or simply want a glimpse of how an advisor has customized everything from her pricing and business model to her services and deliverables to fit her specific target clientele, I hope you enjoy this episode of the Financial Advisor Success podcast!

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source https://www.kitces.com/blog/johanna-fox-turner-and-company-podcast-fee-only-financial-planning-for-doctors-only-centers-of-influence-coi/?utm_source=rss&utm_medium=rss&utm_campaign=johanna-fox-turner-and-company-podcast-fee-only-financial-planning-for-doctors-only-centers-of-influence-coi

Advisor Platform Comparison: Wirehouse vs RIA Aggregator vs Independent RIA

The wealth management industry has evolved significantly over the years, now offering a variety of different business models and platforms for advisors, from traditional wirehouses and independent broker-dealers, to independent RIAs, and increasingly the RIA aggregator and network platforms that support them. As a result, it’s become increasingly challenging for advisors to simply figure which model and path is the best to choose!

In this guest post, Aaron Hattenbach shares his experience working as an advisor in 3 different wealth management models: Wirehouse (at Bank of America Merrill Lynch); RIA Aggregator (with HighTower Advisors); and ultimately transitioning to his own fully independent RIA (his current firm, Rapport Financial).

And so if you’ve ever wanted a comparison between working at a wirehouse, an RIA aggregator, and an independent RIA, from someone who has actually had experience in all three, Aaron’s guest post here should provide some helpful perspective – whether you’re a veteran of the industry considering whether to make a change, or a new financial advisor trying to decide where to start your career.

Conducting in depth research in advance goes a long way in sparing you the potential headaches and risks that can come with moving your practice from one firm to another… given that every time you move your practice to another firm, you run the risk of losing your valuable and hard earned client relationships! And so I hope you find today’s guest post to be informative, as you consider what may be the best potential path for you!

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source https://www.kitces.com/blog/comparison-hightower-advisor-ria-aggregator-vs-merrill-lynch-wirehouse-vs-independent-ria/?utm_source=rss&utm_medium=rss&utm_campaign=comparison-hightower-advisor-ria-aggregator-vs-merrill-lynch-wirehouse-vs-independent-ria

Can I Write Off My Grandparent as a Dependent?

Mothers Day and Fathers Day have come and gone, and this week we get the granddaddy of them all: it’s National Grandparents Day!  That’s worth celebrating – after all, where would any of us be without them? Making it through...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/family/can-i-write-off-my-grandparent-as-a-dependent-31843/

Weekend Reading for Financial Planners (Sep 9-10)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a series of big news stories around broker-dealers, including the announcement that LPL is going to force most new hybrid advisors who join the platform to use LPL’s own corporate RIA (and not outside RIAs, nor even the RIAs of its OSJs), the news that Mass Mutual is cutting its MetLife annuity trail compensation by a whopping 73% for advisors who left the MetLife broker-dealer in recent years (a potentially troubling precedent), and the emerging trend of smaller broker-dealers “tucking in” to larger B/Ds by becoming a branch OSJ in order to avoid the compliance and technology burdens of running a B/D while maintaining their team and culture.

From there, we have a few practice management articles, including one on how trying to make all your clients happy can actually reduce the success of the business (as it hopelessly divides the limited resources of the business), another on why it’s better to try to win new client business by being “different” than just showing how you’re “better” (in large part because few consumers will believe you when you say you’re better anyway!), and a third on how to handle the news when you find out you’re losing a great client (by changing your own mindset to focus on the capacity opportunity it creates!).

We also have several more technical articles this week, from a discussion of how it’s not enough to just talk about “success” and “failure” risk of a retirement plan because there are really several different degrees of “bad” (from not maintaining a desired standard of living, to not being able to support a basic floor standard of living, or true depletion and bankruptcy), to a fascinating study that looks at what investors really want from an advisor’s investment reporting (and how it’s not only a performance reporting issue but also a trust issue), and a look at how our understanding of investor risk profiling is beginning to change with a more nuanced understanding of the different factors at play (which should only get better as we gather more big data on how investors really do behave).

We wrap up with three interesting articles, all focused on the theme of overcoming our own personal hurdles and demons: the first looks at how for successful advisory businesses, one of the greatest “risks” is becoming satisfied that the business is good enough, and never asking pushing it to be great (which leaves substantial upside on the table!); the second is the story of investment writer Morgan Housel, who was a lifelong sufferer of severe stuttering, but went through a personal shift that has allowed him to at least partially overcome his disability, to the point that he is now working actively as a professional speaker on behavioral finance and investment issues; and the last is the story of writer Jeff Goins, who transitioned from being “just” a successful writer to an entrepreneur and business owner, and grew the business to more than a million dollars of revenue… making himself miserable in the process, and ultimately leading him to make a difficult decision to “downsize” the business, which while scary ultimately led him to be substantially happier, and to take home substantially more in profit as well!

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-sep-9-10/?utm_source=rss&utm_medium=rss&utm_campaign=weekend-reading-for-financial-planners-sep-9-10

What is a Qualified Joint Venture?

QJV may sound like a shopping network, but it’s actually a handy tax provision that allows mom-and-pop businesses to simplify their tax filing. If you are in business with your significant other or know someone who is, listen up! QJV...

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source https://blog.turbotax.intuit.com/income-and-investments/business-income/what-is-a-qualified-joint-venture-31650/

Spent Too Much Getting Your Dorm Ready? 4 Savings to Help College Students (or Parents)

With a new college school year beginning, it’s comforting to know that you’ll be getting some help from Uncle Sam in dealing with the blizzard of college related expenses that are hitting. The IRS provides a number of education tax...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/education/spent-too-much-getting-your-dorm-ready-4-savings-to-help-college-students-or-parents-20108/

CFP Board Quietly Raises Certification Fees By 17% But To What End?

While the CFP Board has done a lot to justify its certification fees over recent years – from increasing the number of CFP certificants over the past 10 years by nearly 50% (despite the fact that the number of financial advisors is down over the past 10 years), to raising the status of the marks with its ongoing successful public awareness campaign – an important but little-noticed announcement was buried half way through the CFP Board’s recent monthly email update: the CFP Board will be increasing its annual certification fee from $325 per year to $355. And while this increase may seem modest, because $145 of the total certification fee is earmarked for the public awareness campaign, the reality is that this is a 17% increase on top of the $180 portion that actually goes towards operations of the CFP Board. Which raises the question: why such a large increase, and why now?

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we discuss the recently announced 17% increase in CFP Board certification fees, as well as why accountability of the CFP Board to its certificants is important, and why it is concerning that the CFP Board has given no substantive explanation for why it is pushing through such a large increase – and particularly for an organization coming off of a $1.3M surplus in 2015 and with over $20M in reserves.

Of course, fee increases aren’t unusual in the long run for any organization, as it’s essential to keep pace with rising staffing costs due to inflation. And this is still only the first increase the CFP Board has put in place since 2011… which, even then, was just tacking on the $145 surcharge to cover the public awareness campaign. It has actually been nearly 10 years since the CFP Board raised its core certification fees, relying instead on the rising number of new CFP certificants paying those fees to fund growth instead. Additionally, both the public awareness campaign and CFP Board satisfaction ratings appear to suggest the CFP Board is making some good progress.

Nonetheless, accountability is crucial, and especially since the CFP Board has been prone in recent years to taking actions without soliciting much input or holding public comment periods. In fact, while the CFP Board did put forth a recent public comment period on proposed changes to their Code of Ethics and Standards of Conduct, the reality is that their bylaws require the CFP Board to do this, and it has been over 5 years now since the CFP Board put forth a public comment period on any other changes to the 3 E’s (Education, Exam, and Experience) – effectively eschewing the practice ever since the CFP Board got “voted down” in negative public comments regarding increasing the number of required CFP CE credits.

Which raises the question once again of why a 17% fee increase, and why now? Especially on top of the fact that the organization is already running a substantial operating surplus of $1.3 million dollars in 2015 and has more than $20 million in net reserves available. Was there a major downturn on the CFP Board’s 2016 Form 990 that we just can’t see yet? Is the CFP Board trying to raise more revenue internally for its Center for Financial Planning initiative, even though the organization originally said it would be funded separately (especially in light of the fact that the CFP Board tried to put through a $25 fee increase last year in the form of a “voluntary donation” that certificants were going to be defaulted into)?

Unfortunately, the reality is that we just don’t know, because the CFP Board gave no substantive explanation for why it is pushing through such a large increase beyond saying that it “supports the operations of CFP Board in fulfilling its mission and strategic priorities”. And so, while it’s not necessarily a negative for an organization to raise its fees over time, the question remains: why does the CFP Board now, all of the sudden, need another $2.3 million in its operating budget for 2018? And what does it take to get some transparency and basic explanations from the CFP Board on why it is pushing through a 17% fee increase?

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source https://www.kitces.com/blog/cfp-board-raises-certification-fee-17-percent-increase-operating-budget-salary-raises/?utm_source=rss&utm_medium=rss&utm_campaign=cfp-board-raises-certification-fee-17-percent-increase-operating-budget-salary-raises

The Challenges To Consider When Using A Funded Ratio To Track Progress Towards Retirement

Saving and accumulating for retirement takes decades. As a result, most people will spend a very long time working towards the goal with only small, incremental progress along the way. And it can be very hard to stay focused and motivated to achieve a long-term goal when there’s no sense of progress.

Fortunately, the most straightforward indicator of forward progression is simply to see a retirement account balance that grows over time. But the challenge is that just viewing the balance gives no context to where it stands relative to the retirement goal being pursued. It’s just an abstract number.

An increasingly popular strategy to give context to the progress of saving towards a (retirement) goal is the funded ratio – where the current account value is presented as a percentage of the total savings necessary to achieve the goal (or at least, be on track for the goal with an assumed growth rate).

The virtue of the funded ratio is that it takes an abstract account balance and relates it directly to a goal or outcome, and can give savers a sense of accomplishment as the percentage slowly and steadily climbs towards 100%. The bad news, though, is that once account balances grow large, the funded ratio itself can become highly volatile as markets move up and down, and the discount rate used to calculate the funded ratio can unwittingly turn into an indirect absolute return benchmark that is difficult to keep up with.

Unfortunately, the sensitivity to assumptions means the funded ratio can ultimately be just as problematic as many other approaches to quantify investment results and progress towards goals. Nonetheless, the rising focus on trying to benchmark portfolios against the goals they’re meant to achieve means it may become an increasingly popular approach in the coming years, notwithstanding its flaws!

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source https://www.kitces.com/blog/funded-ratio-for-individual-retirement-savings-goals/?utm_source=rss&utm_medium=rss&utm_campaign=funded-ratio-for-individual-retirement-savings-goals

#FASuccess Ep 036: Turning A Utilities Niche And A Radio Show Into A National Advisory Firm with Scott Hanson

Welcome back to the thirty-sixth episode of the Financial Advisor Success podcast!

My guest on today’s podcast is Scott Hanson. Scott is a co-founder in Hanson McClain, an independent RIA based in the Sacramento area that manages nearly $2.5 billion of assets under management for nearly 4,500 clients, most of which are telecom and utility workers.

What’s fascinating about Scott’s firm, though, is not merely that they managed to turn a niche in working with Pacific Bell retirees into a mega-RIA, but how their steady focus on reinvesting into marketing has allowed Hanson McClain to build an advisory firm where none of the advisors are responsible for their own marketing and business development, and instead can focus entirely on serving their clients – which in turn has led Hanson McClain to achieve a stunningly high Net Promoter Score of 85 with its clients!

In this episode, we talk about how Hanson McClain markets itself, what it took to get established in their initial niche working with Pac Bell employees, how they expanded successfully into marketing with a call-in radio show (although Scott isn’t very upbeat on the potential of marketing through radio today!), why direct mail for seminars and other marketing events still works for business development, and the depth of the marketing team that Hanson McClain maintains to sustain its growth.

In addition, Scott shares his own journey as an advisor, from starting out at a financial-planning-centric life insurance firm, to transitioning to work at an independent broker-dealer while building his hybrid RIA, why he eventually decided to let go of his FINRA licenses to focus solely on the RIA, and the challenges in managing and maintaining growth in an ever-larger advisory firm.

And be certain to listen to the end, where Scott shares why he decided with his partner to sell 70% of Hanson McClain to a private equity firm – despite the fact that he thinks the firm can grow to double or even quadruple its size in the coming years – because ultimately, the reality is that growth requires cash, and in the end it can still be a better deal to own a smaller slice of an ever-growing pie… and have the benefit of taking a few chips off the table as well!

And so whether you’ve ever been curious to know how a startup RIA ultimately grows to become $2.5B under management, are looking for marketing ideas and perspective on the benefits of having a radio show, or simply want to understand why an experienced and successful advisory firm would decide to sell to private equity (even when there’s no desire to retire), I hope you enjoy this episode of the Financial Advisor Success podcast!

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source https://www.kitces.com/blog/scott-hanson-mcclain-retirement-network-podcast-niche-radio-show-money-matters-parthenon-capital/?utm_source=rss&utm_medium=rss&utm_campaign=scott-hanson-mcclain-retirement-network-podcast-niche-radio-show-money-matters-parthenon-capital

The Latest In Financial Advisor #FinTech (September 2017)

Welcome to the September 2017 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 big news that Personal Capital has crossed $5B of AUM, and raised another $40M of venture capital as it looks to expand by hiring more financial advisors in multiple major cities across the US, as the revenue growth of “cyborg” (tech-augmented human) advisors continues to outpace pure robo-advisors, and Personal Capital’s revenue continues to stay ahead of all other major robo-advisors combined, thanks in large part to its innovative Personal Financial Management (PFM) app that serves as the company’s client acquisition funnel (even as banks continue to struggle to monetize PFM software solutions at all!).

And also in the big news this month is the announcement that Canadian financial planning software company PlanPlus has acquired risk tolerance assessment provider FinaMetrica, raising the question of whether PlanPlus is about to make a push into the US financial planning software market to compete against the likes of eMoney Advisor, MoneyGuidePro, and NaviPlan.

From there, the latest highlights also include a number of major new partnership announcements this month, including:

• JemStep picks up two major enterprise deals, with the Advisor Group broker-dealers, and KeyBank’s Investment Services division, as its efforts to integrate with the Pershing platform is finally beginning to pay dividends with its Invesco parent backing;
• Apex Clearing announces yet another partnership, this time with tech-savvy TAMP provider FolioDynamix, setting up a new RIA custodian pricing war in 2018;
• Advicent’s NaviPlan rolls out a new integration with Envestnet, and expands the APIs in its Narrator platform; and
• Envestnet’s Tamarac announces a new in-depth integration available in the Salesforce App Exchange, despite the fact that Tamarac’s own Advisor CRM is built on Dynamics!

You can view analysis of these announcements and more trends in advisor technology in this month’s column, including Vestwell being selected as the winner of the recent XY Planning Network FinTech competition, WealthAccess rolling out a new Business Intelligence dashboard to roll up advisor/client PFM data into a consolidated business reporting tool, TD Ameritrade rolls out a Facebook Messenger Chatbot as a sign of the future of client service and communication, and the emergence of a new category of “client financial profiling” tools, including ROL Advisor, DataPoints, and Whealthcare, that aim to deepen the client relationship far beyond what a mere risk tolerance profile alone can reveal about a client’s attitudes about money.

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 TechNews@kitces.com!

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source https://www.kitces.com/blog/the-latest-in-financial-advisor-fintech-september-2017/?utm_source=rss&utm_medium=rss&utm_campaign=the-latest-in-financial-advisor-fintech-september-2017

Celebrate Labor Day with 6 Ways to Save on Taxes for New Parents

Happy Labor Day weekend! If you are in labor this weekend or were in labor anytime this year you may find that babies not only bring you joy, but they can also bring you bundles of savings come tax time....

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/family/celebrate-labor-day-with-6-ways-to-save-on-taxes-for-new-parents-20212/

Football Season Savings: National Tailgate Day

Football season is finally back! I think we can all agree that nothing goes better with football than food and friends. As fun as tailgating can be, without careful planning and shopping it can get very pricey. Luckily, there are...

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source https://blog.turbotax.intuit.com/income-and-investments/football-season-savings-national-tailgate-day-24003/

Weekend Reading for Financial Planners (Sep 2-3)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a slew of big news, including that the Department of Labor has received OMB approval to issue a formal proposal to delay the full enforcement date of the fiduciary rule by another 18 months until mid-2019 (but will still have to collect and consider public comments before making it final), the IRS is loosening rules on hardship distributions and employer retirement plan loans for those impacted by Hurricane Harvey, a Federal judge has struck down the Obama administration’s overtime pay rules (which could have impacted a wide range of financial advisor trainees and paraplanners), HUD has announced new rules that will increase costs and reduce borrowing limits for HECM reverse mortgages, and this weekend Wall Street will be finalizing the switchover to shift most trade settlements from T+3 to T+2 instead.

From there, we have a number of articles on marketing for financial advisors, including: new research on how the financial services industry is using social media (and that even though LinkedIn is the most adopted platform, Twitter is actually the one with the most advisor activity!); the rise of text messaging as a way of communicating with clients; a guide on Facebook marketing and advertising for financial advisors; guidance on the key information that must be on your advisor website to communicate both your costs and your value; and a look at how and why most financial prospects slip through the cracks (and what advisors should do about it).

We wrap up with three interesting articles: the first explores the concept of “nonlinear” thinking, why it’s so much better to improve a car’s fuel efficiency from 10 Miles Per Gallon to 20MPG (instead of improving from 20MPG to 50MPG), and how such nonlinear concepts translate to other parts of the business world; the second explores the critical thinking concept of “inversion”, where instead of focusing on your goals and what it takes to succeed, you focus on what could ruin the outcome (and identify that as something concrete to avoid!); and the last takes a fascinating look at the true difference between an “amateur” and a true “professional”, which is all about the mindset of how you approach problems and try to create solutions.

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-sep-2-3/?utm_source=rss&utm_medium=rss&utm_campaign=weekend-reading-for-financial-planners-sep-2-3