Practice Management

As financial planners - especially those who provide comprehensive financial planning services - try to convey the overall value of the services they provide, it is increasingly popular to reduce how often portfolio performance is reported to clients. As the theory goes, if performance is reported less frequently, clients will fixated on it less often. Yet perhaps the reality is not that performance reporting is making clients focus on investments, but instead that clients are simply being prudent stewards of their wealth who want to know how they're progressing towards their goals? If that's the situation, then the reality is that restricting access to good portfolio information may not make clients think about it less, but instead may make them worry about it more! Which means, counter-intuitively, that the best way to make clients focus less on investments may be to make information available even more often! Continue reading "Is Quarterly Performance ... »

As the financial planning world continues its journey into the digital age, marketing and growing a financial planning practice faces new challenges. Some firms suffer as methods no longer work the way they once did, while others struggle to implement new strategies like blogging and social media without any clear strategy or understanding of how to do it successfully. Yet through it all, recent marketing research on advisory firms has shown a new category of marketing that has quietly emerged as the marketing method with the greatest growth on an absolute and relative basis: online search, where the firm attracts clients through Google, Bing, other search engines, and social media sharing. While the rise of online search is still in a nascent phase, its prospects are bright as the world goes digital. Accordingly, the best firms are beginning to take the key actions now that will be necessary for success, from better defining target clientele, to creating relevant content and distributing it, to beefing up the raw aesthetic quality of their websites so they leave a good impression - so that in the future, they won't have to find new clients, because the new clients will find them! Continue reading "In The Future, The Best ... »

Over the past few years, the Department of Labor has been working to bring transparency of fees and pricing to qualified plans, culminating in new regulations going into effect this year that will require new disclosures of direct and indirect compensation of service providers to the plan and the plan participants. While generally targeted at the segment of qualified plan consultants and advisors who regularly work with qualified plans, the reality is that any financial planner who has even just one qualified plan may be subject to the new rules - a fact that many are unaware of. Yet with the new 408(b)(2) rules set to go into effect in just 2.5 months, financial planners who provide any consulting, investment advisory, or other services have very little time to get up to speed on drafting and preparing the appropriate disclosures, or deciding whether to just walk away from their qualified plan clients. The decision may vary from firm to firm, but inaction is no excuse - especially since if the disclosures aren't provided in a proper and timely manner, the plan fiduciary will actually be required by the Department of Labor to fire the advisor! Continue reading "Are Financial Planners About ... »

The importance of making a good first impression has long been recognized - often influencing advisors regarding how they look, how they dress, and how they design their offices and conference rooms. Yet in an increasingly digital world, the reality is that by the time a prospective client actually shows up in your office to see it and meet you for the first time, the true first impression has long since been formed... by your website. And recent research shows it takes just seconds for clients viewing your website to form a first impression - one that may impact your relationship with your client, or worse, turn a prospective client away for appearing unprofessional. Yet advisors have generally spent little time and focus on the quality, look, and appeal of their website, and what time is spent is generally spent on the written content, which matters, but only if the website is already visually appealing enough to make a good impression! As a result, it may be time for many advisors to consider a website makeover, in recognition of the fact that looks do matter for first impressions, yet you as the advisor are rarely your client's first impression, anymore. Continue reading "Is Your Firm's Website ... »

Growing a financial planning business through referrals has long been accepted as the top strategy for building a practice, and in recent years one study after another has validated the approach by showing that the majority of advisors generate the majority of their growth through referrals. Yet an increasing number of studies are showing that a significant portion of growth-by-referrals is not really through any proactive referral marketing strategy, but instead is merely the result of passive referrals that show up on their own. Which in turn means that if passive referrals are actually how a majority of advisors are generating growth, it may be more a testimonial to the ineffectiveness of advisors as marketers at all, rather than the benefits of a referral strategy implemented on a purely passive basis. This doesn't necessarily mean a proactive referral marketing approach cannot be used to generate new clients... but it does raise the question: have we overstated how effective referrals really are in growing a business? Is referral marketing really a best practice, or simply the only result that's left in the absence of any other marketing best practice?

Continue reading "Is Growing Your Practice ... »

As Wall Street firms continue to struggle, beset from all sides by a waning public image, financial uncertainties, numerous regulatory battles that could drastically change their business model, and an ongoing defection of brokers and clients, the independent financial planning community continues to grow. In fact, within a few years, Cerulli predicts that wirehouses will no longer be the largest financial services channel. Yet at the same time, an increasing number of financial planning practices are not only taking business away from traditional wirehouse firms, but proactively focusing client attention on it with every media article that discusses troubles on Wall Street, to emphasize how their firm is different. The challenge, though, is that by trying to differentiate from the Wall Street firms by talking about their problems, we don't actually elevate ourselves - we remind clients of the trust problems in the financial services industry. The end result - celebrating the decline of Wall Street wirehouses may actually help to drag us down with them! Continue reading "Why Celebrating The Decline ... »

Historically, the update of a financial plan has been a somewhat arduous process, as new data is gathered manually from the client, entered into financial planning software, analyzed for problems or opportunities, and then finally delivered to the client. Perhaps even more challenging is the fact that it's never quite clear when or how often to do the plan update; annual updates are proactive but often produce a lot of work when nothing has actually changed, yet waiting for the client to request an update can be too reactive. In the digital age, though, monitoring a financial plan will be very different. As integrated technology allows plan details to updated automatically and continuously, we will reach the point where you don't notify the client that it's time for a plan update; the planning software will notify you! Continue reading "Monitoring A Financial Plan ... »

As financial planning firms increasingly incorporate the internet and their websites into their marketing, more and more practices are considering the use of a blog. Yet many are doing so without a clear understanding of why the blog is being done in the first place, beyond "everyone else seems to be doing it, so I guess I should, too!" In practice, it seems there are three primary reasons that most financial planning firms consider a blog: drip marketing for prospects, a communication tool for existing clients, or Search Engine Optimization (SEO) enhancement for your overall website. Fortunately, once you know which of these reasons matches the purpose for your blog, you can figure out what kind of content to create for it, to whom the blog updates should be distributed, and whether having a blog even makes sense for your firm in the first place!  Continue reading "3 Reasons Financial Planning ... »

As financial planning begins its transition into the digital age, the tools and technology that we use to deliver financial planning will change. Increasing use of account aggregation platforms by consumers like Mint.com will mean that clients come to the first meeting with their financial lives already detailed, from a net worth statement to asset allocation details to a breakdown of cash flow. This in turn will allow planners to greatly expedite the planning process - plugging in data immediately in the first meeting to begin crafting financial planning projections live, with clients, who discuss and input their goals on the spot. The end result - an electronic plan, as there will be no need for paper - will provide clients with both actionable steps and recommendations, and the ability to drill down for further detail (through the client software) if they wish. And the entire process will be completed not in a series of meetings, split up by a multi-week break for analysis, but instead in a single meeting, drastically enhancing the efficiency and productivity of the process for both the client and the planner. In turn, though, planners will be forced to add value not by just helping clients get their financial house in order - thanks to technology, it will already be in order! - but by actually delivering quality advice and a good planning experience! Continue reading "The Delivery of Financial ... »

One of the primary business virtues of comprehensive financial planning is the deeper relationship that is formed as a result of going through the financial planning process. The experience helps to engender trust between the advisor and the client, which in turn can aid in client retention, and make the client more comfortable referring the advisor to others. Yet at the same time, one of the primary challenges of being comprehensive and holistic is that when you do so much for the client, it's difficult for the client to explain what it is the advisor really does, in the process of making a referral. In fact, a recent survey highlights this striking contrast - clients of holistic advisors were almost 20% more likely to provide referrals, and amongst those who didn't refer, clients still generally felt that holistic advisors were more likely to have earned the right to receive referrals. Yet at the same time, the survey results also paradoxically revealed that clients who didn't refer their holistic advisors were almost 30% more likely to state it was because they didn't know any referrals or were uncomfortable to make referrals! In other words, holistic advisors were simultaneously more likely to earn the right to receive referrals, yet ended out making a significant portion of their clients less comfortable and less able to think of anyone to refer! Continue reading "Does Being A Comprehensive ... »

As financial planning continues to grow, it becomes more and more competitive, and increasingly difficult for firms to differentiate themselves. As a result, firms slow their growth rates, and some struggle to survive or grow at all. While most firms work harder and harder to make marginal improvements in their process, service, and value, to differentiate themselves from their competition, there is an alternative available: to seek to completely redefine the financial planning value proposition, letting go of things that are no longer truly important, and instead focusing on creating value that will make financial planning relevant to new audiences. And as financial planning enters the digital age, there is perhaps more opportunity than ever to begin doing things in a completely different - and better - way. So if you could rewrite the financial planning value proposition from scratch, would you still be doing it exactly the way that you do? Or is the reality that by letting go of "the way things have always been done" we could recreate a financial planning offering that would reach more people than ever?  Continue reading "Is It Time to Redefine The ... »

Over the years financial planners have had a love/hate relationship with marketing. In most of those years, though, it's more of a hate/hate relationship. The traditional methods of outbound marketing - from cold calling to traditional advertising - have had so little benefit for the overwhelming majority of planning firms, that most don't even have a budget for marketing in the first place. To the extent any business development occurs, it's strictly from referrals, and any "marketing" expenses don't extend much further than paying for social events with clients or centers of influence to cultivate more referrals. But as the digital age reaches financial planning, an entirely new marketing opportunity emerges: inbound marketing. The basic principle: instead of blasting out solicitations hoping you happen to hit a prospective client like finding a needle in a haystack, create content that is useful, relevant, and interesting for your target clients, and let them find you.

Continue reading "Growing a Planning Firm In ... »

Running a successful planning firm means not only being an effective financial planner, but also having the support of an effective staff. While a good hiring process can help to ensure that the right people are on board, the reality is that providing appropriate compensation with the right incentives can greatly facilitate the success of the firm. Yet there is much disagreement about the best way to provide incentives: should it be based on individual merit, or the revenue of the firm? Many suggest the former, noting that staff can control their individual merit more than they can impact the growth in the firm's revenue. But is it really true that staff - who are not out on the streets trying to find and develop new prospective clients - have so little impact on the revenue of the firm? Recent research suggests otherwise, as firms with revenue-based incentives nearly tripled their revenue growth from the bottom of the markets in 2008, compared to firms with merit-based bonuses. Which means in reality, your staff may impact the planning firm's revenue far more than you realize! Continue reading "Why Revenue-Based ... »

In an ideal world, everyone in your office would selflessly collaborate together in pursuit of the common goal to serve clients and ensure the success of the firm. In reality, though, your staff and co-workers probably run the gamut, from people who are really focused on the team and the good of the firm, to those focused just on themselves, to those who don't seem particularly motivated to do much of anything at all. The latter, in particular, can be the most frustrating when mixed in with an otherwise proactive and motivated team. But new research suggests that surprisingly, if you want to upgrade the demotivated team members and make your office "tribe" more collaborative, the key first step is actually to try to make those individuals more interested in just selfishly helping themselves! Continue reading "How Do You Create A More ... »

Financial planning is hard work. It's hard work for the clients, who must spend far more time than they are accustomed in the process of digging through their personal financial lives and their goals. It's also hard work for the financial planner, who invests an incredible amount of time into the process of creating a financial plan for the client, entering client data into financial planning software, "crunching" the numbers, and then crafting a written plan to explain and justify the results and the associated recommendations. Yet as planning software becomes increasingly more complex, we are approaching a difficult crossroads: the depth of the planning software requires more and more time to do the analysis, and necessitates more and more written detail to support the software output. As a result, the planning process itself drags out, taking hours and hours to create a plan and weeks and weeks to deliver recommendations to clients. But when did the complexity of financial planning software begin to drive the planning process, instead of being a tool to expedite it? Has our financial planning software become the enemy that's ruining our productivity, instead of improving it?  Continue reading "Is Our Financial Planning ... »