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Applying Fiduciary Principles To Demonstrate Value And Build Client Trust During 401(k) Rollover Conversations

September 23, 2026 07:03 am 0 Comments CATEGORY: Regulation & Compliance

While a financial advisor might prefer to manage all of a client's investible assets, when clients participate in a workplace retirement plan such as a 401(k), the assets in the plan typically can't be moved to a new managed account while the client remains employed there. A key moment for an advisor, then, occurs when a client separates from service by retiring or leaving their former employer and becomes eligible to roll their workplace retirement plan into an IRA.

While there are many potential reasons to roll over the plan assets, there may also be good reasons to keep assets within the employer plan, which suggests that clients could benefit from a personalized analysis when deciding whether or not to roll over their employer plan assets. And while a financial advisor is well-positioned to perform such an analysis, the ability to generate additional fees if the client decides to roll over the assets into an advisor-managed IRA creates a significant conflict of interest.

Amidst a fractured landscape of fiduciary requirements when it comes to rollover planning (e.g., different standards for RIAs and broker-dealers), the CFP Board has released a guide to applying its fiduciary duty to rollovers. While the CFP Board's fiduciary standard applies to CFP professionals, it offers a step-by-step framework that could allow all advisors to demonstrate the value of their advice and build greater trust with their clients in the process.

Given the many potential conflicts of interest that could go unmentioned and unaddressed by those without a fiduciary duty towards their clients, CFP Board requires a Duty of Loyalty of its certificants. In the case of rollover recommendations, this means identifying and disclosing conflicts fully, obtaining informed client consent, and managing conflicts with the client's best interest.

CFP Board also offers a seven-step process for applying its Duty of Care, which allows an advisor to take a methodical approach to analyzing a client's unique situation and developing recommendations accordingly. For instance, an advisor will want to understand the full range of options available to a client separating from their employer, as well as the tradeoffs involved in different alternatives (which go beyond costs and fees to include investment options, tax planning opportunities, and other factors). Also, documenting in writing the advisor's recommendations (along with supporting reasoning) as well as the client's ultimate decision can help avoid misunderstandings and provide institutional memory for the firm.

Notably, this analysis can be useful for both a client whose first instinct might have been to roll their workplace retirement plan assets to an IRA managed by their advisor (as they might not be aware of the potential benefits of keeping assets in an employer plan), as well as those who might be skeptical of rolling additional assets into an account managed and billed on by their advisor (as they might not have considered the benefits of unified asset allocation and coordinated tax planning opportunities).

Ultimately, the key point is that while rollover conversations are common among financial advisors and their clients, the decision isn't necessarily simple. From a fiduciary perspective, it merits both a thorough analysis of the available options and their tradeoffs, and the identification and disclosure of conflicts of interest that might be present. By doing so, an advisor can foster a more trusting relationship with their client that will hopefully last well beyond the time of the rollover recommendation!

And if you want to go deeper on this topic, hear directly from the author on the Financial Advisor Technician podcast.

Leveraging Video The Right Way To Add $1M Of New Revenue In Less Than 12 Months: #FASuccess Ep 508 With Nate Hoskin

September 22, 2026 07:07 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome everyone! Welcome to the 508th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Nate Hoskin. Nate is the co-founder of SageContent, a platform that supports financial advisors in creating video marketing content.

What's unique about Nate, though, is how his own experience using video content to generate explosive client growth in his previous advisory firm led him to want to support other advisors in creating video marketing content that actually provides a positive return on investment.

In this episode, we talk in-depth about how Nate decided to found his own advisory firm and started creating educational video content on personal finance topics, how Nate's videos initially generated 80,000 followers in short order (but not necessarily leading to new clients because his relatively younger followers weren't necessarily good matches for his firm's portfolio management focus and AUM-based fees), and how Nate changed his service and fee models (leaning into comprehensive financial planning and changing to subscription retainer fees) and soon attracted 172 clients generating close to $1 million of annual revenue.

We also talk about how Nate experienced serious stress amidst this explosive growth (leading him to raise his fees and trim down his client base), how Nate realized that his passion is in helping other advisors create video content (ultimately leading him to sell his advisory firm), and how Nate's current company offers both lighter-touch and full-service video production services that allow advisors to create effective video marketing content efficiently.

And be certain to listen to the end, where Nate shares how advisors sometimes get trapped in the middle when it comes to the length of their video content (publishing videos that are too long for platforms such as YouTube Shorts and Instagram Reels but are too short for consumers looking for a deeper level of content), how Nate views the difference between "performative marketing" (that focuses on taking action) and "performance marketing" (that focuses on the results of tactics used, and why Nate thinks that even if advisors decide to delegate parts of their video production that it's important for them to be engaged with the content as they remain the visible face speaking to potential clients.

So, whether you're interested in learning about developing effective video marketing content, converting viewers into prospective clients, or what to keep in mind when considering whether to outsource video production tasks, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Nate Hoskin.

Taking Equity In An Acquiring Aggregator: Weighing The Growth Opportunities Against Valuation And Illiquidity Risks

September 21, 2026 07:03 am 0 Comments CATEGORY: Practice Management

Although many advisors looking to sell their practices are ready to retire and cash in on the enterprise value they've spent their careers building, an increasing number of advisors are selling and staying, choosing to sell either because they believe they can grow faster by joining a larger firm with more capabilities or services, or simply because they want to offload many of the operational or compliance headaches that have taken up so much of their time when operating on their own. And in some cases, the seller is simply so upbeat on the potential of the buyer's continued growth that even though they plan to exit themselves, they want to roll over a portion of their equity into an acquirer for a period of years to have the potential for a second liquidity event (the proverbial "second bite at the apple"), ideally at the acquirer's higher valuation multiple. Taking equity can also be beneficial for advisors looking to defer a portion of the capital gains taxes associated with the sale of their practice (until the acquirer ultimately exits). Yet the reality is that trading an advisor's own equity for potentially illiquid and opaque equity in the acquirer's business presents a unique set of challenges that advisors must carefully weigh, as they can have significant economic consequences for the seller if not everything works out exactly as projected upfront.

In this guest post, Rich Chen, founder of Brightstar Law Group, explores how advisor sellers receiving equity in the acquirer's firm has become increasingly common, often 25%–40% of the seller's exit valuation and sometimes as much as 75%, and what advisors should watch out for to ensure they are getting "fair value" and the bundle of rights they are expecting for the cash they're giving up!

The rising popularity of taking equity in an acquirer's business appears to be driven in large part by the rapid growth of serial acquirers, aggregators, and other industry "roll-up" models, whose growth rates are often far in excess of what the advisor themselves could otherwise invest in. In other words, why sell the firm and reinvest the proceeds into a balanced portfolio of publicly traded securities that might grow at 8% in the long run, when the advisor can roll equity into an acquirer that will also grow with the market (as its AUM fees grow with rising client portfolios) and its organic and subsequent acquisition growth… potentially driving 15%–25%+ growth returns. In what is admittedly a "risky" small business, but one that the advisor-as-seller who ran their own business for decades may be quite comfortable with. Many buyers, in turn, want advisors (especially those who will continue with the firm post-closing) to take equity in the buyer's firm as part of the acquisition, because doing so preserves cash and provides more leverage to fund future acquisitions, while also aligning the interests of the selling advisor with the buyer.

The caveat is that while buyers may scrutinize a seller's firm to determine a value, sellers are often much more limited in assessing the buyer's business to understand whether the shares they're receiving are appropriately valued. Firms often use their own internal valuation formulas, that may truly represent a fair market value, or simply a multiple that the firm hopes to achieve in the future, with the risk borne by the seller if that growth, margin improvement, or other goals don't materialize. Sellers can at least partially protect themselves by asking for more disclosures about the buyer's valuation methodology, and a representation of the buyer's most recent external valuation or comparables (and then monitor financials ongoing by requesting information rights), but the seller's ability to negotiate is often still limited. And even a robust valuation can be undermined by dilution from subsequent acquisitions, management grants, or new capital raises between closing and exit.

In addition, it's important to recognize that not all equity received is necessarily even saleable. In some cases, equity received from the acquirer while the seller remains working at the buyer's firm will still have vesting contingencies (that might not be earned, and the buyer might even still have the right to terminate the advisor and end their vesting period). Even if vested, the shares are typically not liquid, not simply because it's hard to find a buyer for a small minority stake, but also due to the fact that operating agreements often have outright restrictions on transfers, and/or include repurchase rights that themselves might not be the most favorable terms for the seller to be compelled to sell back. And private equity sponsors and other preferred investors often sit ahead of the seller's equity class in a distribution waterfall, so the proceeds ultimately available to the seller's shares may be materially less than the headline ownership percentage implies.

Ultimately, the key point is to understand that taking equity in an acquirer's firm entails a whole separate level of risks and opportunities, beyond 'just' the effort of selling the advisory firm itself for a desirable valuation and with appealing payment terms. And while some provisions may be negotiated (if only by adjusting the valuation the seller receives for the buyer's equity shares), often complex businesses with a wide shareholder base cannot change terms for any one incoming partner… which means sellers must be especially proactive in due diligence to protect themselves and be clear about whether the acquirer's equity is really a good opportunity.

Weekend Reading For Financial Planners (September 19–20)

September 18, 2026 02:00 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that Anthropic announced an advisor-specific plug-in to its Claude tool, which will incorporate data from many key advisor tech tools. While the new "Claude for Financial Advisors" plug-in offers the potential to solve the long-simmering problem for advisors of integration across tools in their tech stacks, it also raises questions, including how advisors will use any time savings gained from leveraging the tool and whether these activities can create a positive ROI for the usage-based fees Anthropic charges.

Also in industry news this week:

A survey finds that it's still early innings for many advisors in terms of their AI use, and a strong majority of respondents are seeking more time for prospecting and deepening client relationships despite the tech investments they've made
Only 3% of clients would replace their human advisor with an AI tool, according to a recent survey, though a higher percentage have considered changing their advisor for other reasons (with communication frequency and digital presence appearing to be key factors for younger clients)

From there, we have several articles on tax planning:

When comparing the tax benefits of donating appreciated securities versus making a Qualified Charitable Distribution (QCD), the QCD often comes out on top
Although the IRS's introduction of a new code for custodians to report Qualified Charitable Distributions (QCDs) on 1099-R might make it easier for taxpayers to report QCDs on their tax returns, custodians might not always report those QCDs consistently, meaning it's still up to the IRA owner to make sure that what's reported on their tax return matches the contribution they made in reality
While many advisors recommend clients convert most or all of their pre-tax retirement accounts to Roth, doing so means losing the opportunity to make Qualified Charitable Distributions (QCDs) from a pre-tax IRA – meaning that if the client has charitable intentions, they end up paying tax on the converted dollars when they could have been distributed to charity tax-free as a QCD

We also have a number of articles on generating client referrals:

How newer firm owners can move beyond their personal network to create a sustainable referral engine
Why getting a client to refer a friend or family member is only the first step in them becoming a client, with a firm's online presence potentially playing a major role in the referred individual's decision to move forward as well
How advisors can generate more unsolicited referrals that actually turn into good-fit clients

We wrap up with three final articles, all about retirement lifestyle:

A recent study ranks the best and worst states and cities for retirement based on 46 indicators falling within the broader categories of affordability, quality of life, and health care
How retirement presents an opportunity for individuals to enjoy a slower-paced, more analog lifestyle
While engaging with the arts can be an enjoyable activity in its own right, a recent study suggests doing so could come with health benefits as well

Enjoy the 'light' reading!

Breaking Bad News To A Client About Prior Problematic Financial Decisions: Kitces & Carl 199

September 17, 2026 07:04 am 0 Comments CATEGORY: Kitces & Carl Podcast

When a financial advisor engages a new client, they are analyzing a lifetime’s worth of financial decisions that have brought the client to this point. While this often includes many great decisions, it is also likely that a client has mis-stepped along the way… or at minimum, made suboptimal decisions for their goals. Yet these conversations about a client’s past financial decisions are rarely as simple as correcting a mistake or ‘optimizing’ a portfolio – these are often the best financial decisions a client could have made at the time.

In this 199th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how to have a curious and compassionate conversation about a client’s financial past and help them lay the groundwork for the future.

As a starting point, it’s helpful to remember that every ‘less optimal’ decision carries an emotional and logistical history – at some point, that financial decision seemed to be the client’s best path forward. For example, if a client purchased a life insurance policy that no longer seems to fit their goals, the first question the advisor can ask is what problem the client was trying to solve. The advisor’s recommendation will vary widely if a client purchased that policy as an investment vehicle, was based on a friend’s recommendation, or was to lay the groundwork for starting a family.

From there, there may be an opportunity to recalibrate the client’s finances in the light of their current goals. Often, in the light of current cashflow, insurance, and investment needs, the client may be organically inclined towards change anyway. When possible, advisors can use growth-oriented language, emphasizing how they can help clients get from “here” to “there” with these financial changes – which feels more encouraging and less critical.

At times, advisors may need to be more candid about a poor financial decision, especially if it will have an outsized negative impact on their future. When this happens, it is important to be clear but compassionate about the client’s viable steps forward. And the advisor can emphasize where these ‘suboptimal’ financial decisions created good habits and strengths – for example, a whole life policy may not be the best fit for a client’s long-term goals, but it may have helped the client with building initial habits around consistently saving.

Ultimately, the key point is that when it comes to a client’s past financial decisions, it’s best to start with curiosity and the client’s motivations at the time. From there, exploring whether that decision still fits their goals is generally a viable way to help them adjust their financial reality to their current goals… and make more informed and sustainable decisions in the future!

Managing Legacy Investments: 6 Best Practices To Reduce RIA Fiduciary And Compliance Risk

September 16, 2026 07:04 am 0 Comments CATEGORY: Regulation & Compliance

While financial advisors often have discretionary control over a client's entire investment portfolio, sometimes new clients enter an advisory relationship with large, 'legacy' positions that they do not want (or are not able) to liquidate. For instance, the client might own a significant number of shares in a closely held business, hold a large position in company stock subject to a lock-up period, or have inherited shares of stock from a loved one that hold emotional value. While an advisor might be tempted to view such positions as peripheral (particularly if the firm isn't charging a fee on those assets), they can be subject to regulatory and civil litigation risks if the firm doesn't have a clear process for advising on (or around) them – including thorough documentation and consistent disclosure of recommended actions to clients.

In this guest post, Rich Chen, the founder of Brightstar Law Group, discusses how RIAs' fiduciary obligations apply to legacy positions, common scenarios (and traps) when dealing with them, billing considerations for firms, and best practices for advisors in managing legacy assets.

Under the Investment Advisers Act of 1940, investment advisers, whether or not they are registered with the SEC, owe clients a Federally-defined fiduciary duty comprised of two distinct obligations: a duty of care and a duty of loyalty. Notably, both duties apply to legacy assets; while the scope of an advisor's fiduciary obligations may be shaped by agreement between the client and advisor, the duty cannot be waived completely.

There are several 'traps' advisors can fall into when managing legacy assets, from assuming that limited trading authority means limited responsibility (when it does not), over-reliance on verbal understandings that are never documented (and that a client might remember differently years later), inconsistency across documents (e.g., an advisory agreement saying one thing and billing statements implying another), and arrangements that were reasonable when established but have become increasingly problematic as a client's circumstances have changed. Presenting alternatives (to continuing to own the legacy position) to the client – and documenting this communication – is the advisor's best defense against regulatory examination and civil litigation.

Billing on legacy assets presents another challenge, as regulators will want to ensure that the advisor's fees are reasonable given the level of service they're providing. Firms have multiple options for handling billing around legacy investments, including excluding legacy assets from billing entirely, continuing to bill on those assets while documenting client-imposed restrictions, and adopting alternative fee structures (e.g., charging a flat planning fee plus an asset-based fee on managed assets) designed to better align compensation with services rendered. Importantly, there is no one 'right' approach; a firm might choose a particular approach based on its own service model and the unique circumstances of its clients.

Amidst this backdrop, several best practices emerge for working with client assets to prevent misunderstandings and mitigate the risk of civil litigation and/or regulatory actions, including documenting client restrictions, clearly defining the advisor's role, evaluating the asset's impact on the overall portfolio, reassessing legacy asset arrangements periodically, ensuring billing practices remain appropriate, and preparing for examination scrutiny in advance. In sum, the most effective firms recognize that legacy assets require more process than advisor-managed assets, not less, because the advisor's limited authority makes documentation and communication all the more important.

Ultimately, the key point is that because there is no universal rule concerning handling legacy investment positions, firms can best serve their clients' interests (and protect themselves) by building a repeatable, consistent framework to deploy when working with a client with such a position!

And if you want to go deeper on this topic, hear directly from the author on the Financial Advisor Technician podcast.