Weekend Reading For Financial Planners (September 6–7)

CFP Board Compensation Survey Indicates Advisors With CFP Marks Earn 13% More Than Peers

(Michael Fischer | ThinkAdvisor)

While the share of advisors with the CFP marks has risen steadily over time, and now numbers more than 100,000 CFP certificants today, relative to an estimated 300,000+ total financial advisors, the reality is that about 2/3 of financial advisors still are not CFP professionals. This means that, for most advisors, the decision to obtain this designation remains an open one. A crucial factor in an advisor's decision to prepare for the CFP exam – often requiring them to sacrifice evenings and weekends to complete the requisite coursework (which can take more than a year) and spending many thousands of dollars – is whether they will actually earn more as a result of doing so.

According to a survey (highlights of which can be found here with more detailed survey results available for CFP professionals by logging in here) conducted by CFP Board (which naturally has an interest in promoting the value of the CFP marks) of 1,489 financial planners (including both CFP certificants and those without the marks), while the median total compensation amongst all financial planners surveyed was $185,000 in 2024, CFP professionals earn 13% more than their counterparts who do not have the certification (after accounting for factors such as years of experience, company size, and job role). Total compensation varied by experience and role amongst the full group of planners, with those having more than 20 years of financial planning work experience earning a median of $359,000 (with those with less than 5 years of experience having median total compensation of $107,500) and supervisors of five or more staff members showing median total compensation of $400,500 (with non-supervisors having median compensation of $140,000).

The survey also showed that, in addition to base salaries and incentive compensation, advisory firms typically offer a variety of benefits to their planners, including professional certification or designation dues (received by 93% of respondents), health insurance (90%), and professional association dues (87%). In terms of paid time off, respondents received a median of 20 days per year as well as a median of 10 holidays (also, more than 80% of firms offered parental leave).

Overall, 84% of CFP professionals surveyed said they experience personal fulfillment with their careers, with 53% of respondents expressing "very high" fulfillment. Digging deeper into different attributes of work life, 86% of respondents who are CFP certificants rated their career stability a 4 or 5 on a 5-point scale, with 83% saying the same for work-life balance, 79% for career advancement, 76% for professional development, and 73% for compensation.

Altogether, CFP Board study's findings reflect previous research (including Kitces Research on Advisor Productivity) that CFP professionals tend to earn more than their counterparts without the certification (and can drive more revenue for their firms as well) and, according to Kitces Research on Advisor Marketing, that they have lower client acquisition costs as well. Which suggests that there is potentially a strong ROI to the time and money it can take to earn the CFP marks, though, notably, such benefits likely accrue over time (i.e., advisors might not experience a sudden influx of prospect inquiries after earning the marks, but rather benefit in the long-run from the credibility boost that can come with being a CFP professional).

RIAs Failing At Managing Young Advisors' Careers, DeVoe Report Suggests

(Christopher Williams | Financial Advisor)

Running an RIA means managing different groups of stakeholders. While many firm leaders might naturally want to focus on the needs of clients (given that they're paying the bills), the firm's advisors and other staff have a range of potential needs as well, from training to a defined path that allows them to see how they could progress within the firm.

A recent by M&A consultancy DeVoe & Company (based on a survey of 117 RIAs) doesn't hold back on the state of people development at firms today, arguing that "the industry is trending toward mediocrity", with "inconsistent performance management", a lack of clarity when instituting incentive compensation plans, and most firms are treating training as an "afterthought". The company found that while 68% of RIAs surveyed said that a "well-defined career path" is the top request made by next-generation employees at their firms, only 38% of respondents said they offer clearly articulated career paths (down from 50% in 2024 and 53% in 2023), with the percentage of firms offering only "informal direction" growing to 54%.

The survey found that 49% of firms are reviewing employees once per year (which DeVoe called the "bare minimum" requirement), with 22% conducting reviews twice a year, 17% holding quarterly reviews, and 3% not holding formal reviews at all. The report noted that these reviews are not only an opportunity to look at (backward-looking) performance, but also an opportunity for coaching to provide employees with forward-looking development plans. Many employees also appear to lack clarity on their firm's incentive compensation plans as well, with 43% of firms surveyed indicating they have a clear, methodical incentive compensation plan (down from 49% in 2023 and 2024 and 57% in 2022). DeVoe also found that while firms are showing interest in succession planning, many are getting stuck in the planning stage itself. For instance, while 43% of firms said they have a formal succession plan in place (the same percentage as in last year's report), 27% said they're drafting a plan and 23% said they have a plan but having implemented it.

Perhaps reflecting the combination of these data points, DeVoe found that the percentage of firms suffering somewhat higher than normal attrition rose to 19% in 2025 compared to 14% in 2024 and those reporting much higher attrition reached 9%, the highest level since 2022. Which ultimately suggests that while RIAs that effectively focus on employee development (which could include instituting employee career paths and implementing training programs [whether internal or outsourced] to help advisors develop their skills) could achieve a 'virtuous cycle' of more satisfied, better-trained employees who are ready to step in to leadership roles, those that don't could face a 'vicious cycle' of greater employee attrition and a lack of preparedness for next-gen advisors to lead the firm into the future.

Surveys Suggest The "Great Wealth Transfer" Will Bring Client Defections, Introducing Key Decision Points For Firms

(Alex Ortolani | WealthManagement)

Much has been written about the pending "Great Wealth Transfer", the expected passage of wealth from members of the Baby Boomer generation to their heirs (with research and consulting firm Cerulli Associates estimating that $124 trillion could be transferred through 2048, with $105 trillion flowing to heirs and $18 trillion going to charity). Given that many of the expected transferors of wealth will be current clients of financial advisory firms, a key question is how (and whether) firms can hold on to their assets as they pass to the next generation.

A pair of recent surveys from The Harris Poll and Cerulli Associates indicate that many heirs will look to leave their parents' advisors when they eventually receive their inheritance(s). Harris found that 43% of heirs of high-net-worth Americans aged 55 or older plan to switch financial advisors after receiving an inheritance (even if they generally like the advisor), while 42% plan to stay with the current advisor. Cerulli found similar results, with 52% of survey respondents (affluent investors expecting an inheritance or who have already received one) indicating that they don't plan to keep their benefactor's advisor (with 48% planning to keep them, though the report noted that such a relationship could be short-lived if the heir isn't satisfied with the level of service they receive). According to the Harris survey, the top reasons cited for wanting to switch firms, among others, were not having a similar investment philosophy (38%), a misalignment of values (33%), and not knowing them personally (26%).

In the end, advisory firms (particularly those with a high percentage of retired clients) face several choices when it comes to creating a strategy to address the "Great Wealth Transfer", as some might choose to take actions to encourage heirs to stick with the firm (e.g., by offering the planning services needed among the younger cohort and/or by proactively forming relationships with them before their current client passes away), while others might decide that such investments aren't worth the potential return and instead focus on attracting more clients that fit their ideal client profile (e.g., by targeting the cohort of individuals who retire each day).

3 Common Mistakes Made By ETF Investors

(Tony Dong | ETF Central)

One of the biggest trends in the investment industry in recent years has been explosive growth in the variety, availability, and use of exchange-traded funds (ETFs). While they are generally recognized to be more tax efficient, have more flexible trading, and have lower expense ratios than mutual funds, they can still come with potential pitfalls that could prove costly for advisors and their clients.

To start, while ETFs can be traded throughout market hours (and even in extended and overnight hours), the timing of these trades can affect the price an investor receives for their purchase or sale. For instance, trading near the market open or close (and especially after-hours) can result in larger bid-ask spreads than at other times, in part because the underlying securities in the ETF may still be adjusting to overnight news at the open or experiencing a high volume of late-day trades (suggesting that waiting until the market has settled and avoiding late-day trading could lead to better prices received for ETF trades for clients).

Another potential pitfall involves the tax treatment of ETF holdings. While many investors assume that an ETF will be tax efficient, different types of ETFs come with different taxation and reporting considerations. For example, some ETFs (including some popular ETFs employing covered call strategies) generate income from equity-linked notes that is typically taxed as ordinary income rates rather than as qualified dividends. Also, some ETFs (often those investing in commodities or volatility-linked futures) issue K-1 forms, which can complicate and/or delay a client's tax filing (even if a position was small and/or short-term).

Finally, the index benchmarks used by ETFs might not match an advisor's expectations and can change over time. For instance, a holder of an information technology ETF might be surprised to find that it doesn't include all major technology names, as while the underlying benchmark index might include some of them (e.g., Apple and Microsoft) it might not include others (e.g., Amazon can fall under a consumer discretionary sector classification and Meta and Alphabet can be characterized as communications services companies). In addition, because ETFs can change the benchmark index they track, evaluating historical performance isn't necessarily a fair apples-to-apples comparison, as an extended period could cover several previously used benchmark indexes that might not be as relevant today.

Ultimately, the key point is that while ETFs remain an attractive and relatively simple way for advisors to invest client assets, these vehicles still require evaluation, both upfront and ongoing, and careful trading to ensure they provide the most value (and fewer hassles) for their clients.

How Fund Fees Continue To Predict Past Performance

(Jeffrey Ptak | Basis Pointing)

Financial advisors frequently use mutual funds and ETFs as a convenient way to build diversified client portfolios (without the hassle of buying a large number of individual stocks). Unlike individual stocks, though, these funds come with fees that can vary significantly across different funds. Which might lead advisors to wonder whether funds with premium fees deliver improved returns to justify their greater cost.

To explore this question, Ptak sorted all U.S. open-end funds and ETFs (excluding funds-of-funds but including dead funds) into five cost buckets based on the expense ratios they imposed between 2009 and 2024. He then compared each fund's return in a given month to the average return of all other funds in the same peer group that month (with the difference being the monthly excess return versus the category average). Finally, he averaged all of the monthly excess returns and averaged them for each cost bucket every month and compounded the monthly average excess return. Through this process, he found that there is an almost perfect stairstep from the cheapest funds (which had the highest excess return) to the most expensive funds (which had the lowest return), with the outperformance of the cheaper funds growing as the evaluation period (e.g., 1 year, 5 years, 15 years) grew longer.

In sum, while some individual ETFs and mutual funds with relatively higher fees might outperform their peers, Ptak's analysis indicates that, on the whole, advisors and clients can see their assets grow faster when invested in lower-priced funds.

"Boomer Candy": When Simple Investment Strategies Come With Premium Prices

(Larry Swedroe | WealthManagement)

During the past few years, a number of ETFs have been introduced that offer investors some form of downside protection (e.g., a 'buffer' that absorbs an initial percentage of losses up to a certain limit or a  'floor' that provides a guaranteed downside limit) in exchange for limitations on upside returns. These funds could be particularly popular among investors nearing and in retirement looking to limit their investment losses while participating in (some) upside (which is why The Wall Street Journal has dubbed them "Boomer candy").

However, an analysis by ABR Dynamic Funds (which offers its own funds designed to mitigate volatility) shows that the underlying structure of these funds can sometimes be relatively simple and perhaps not merit the fees associated with them. For example, a recently released product offers exposure to the S&P 500 with a 9.81% cap on gains over one year and complete downside protection (which is likely very attractive to investors who are willing to give up some upside potential to avoid downside risk). However, the underlying mechanics of this fund are fairly simple, with about $95 of every $100 dollars invested going to Treasury bills (earning the 'risk-free rate', recently in the 4%-5% range) and the remaining dollars invested in an S&P 500 100/110 call spread. With this structure, the Treasury bills guarantee the principal back (by covering potential losses in the small percent invested in the call spread) and the call spread provides the potential upside.

Given this relatively simple investment framework, some advisors interested in such a strategy might just decide to implement it themselves, avoiding a fund's expense ratio (which can be particularly pronounced given that the fee is being charged not only on the assets going to the [somewhat more complicated] call spread but also on the Treasury bill investment [which could likely be obtained much cheaper with little effort]). More generally, strategies that cap upside returns (often in the single-digits) remain correlated to the underlying index (more so than a bond investment with a similar return profile might) while missing out on a portion of the significant gains the index can achieve (with the S&P 500 having several 20+% annual returns during the past decade alone), in return for the mitigation of downside risk that could be pursued through other means.

In the end, while "Boomer candy" funds might entice many prospective and current clients, financial advisors can potentially implement such strategies in a more cost-effective manner, or perhaps stick to a simpler asset allocation approach that meets clients' risk tolerance and capacity while positioning them to meet their financial goals.

The Rule Of 40: A New Scorecard For RIA Leaders

(Ray Sclafani | ClientWise)

There are no shortage of potential Key Performance Indicators (KPIs) financial advisory firms can consider tracking to evaluate their health (as well as benchmarking studies to compare their performance to that of other firms). In addition, investors in the RIA space (including private equity firms and others) are using their own metrics to determine how (and whether) different firms are building value.

One popular metric (which originated with venture capitalists evaluating software businesses) is the "Rule of 40". Under the "rule" a company adds its revenue growth rate (i.e., its trailing 12-month revenue compared to the prior 12 months) to its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin (i.e., EBITDA divided by revenue, using normalized EBITDA adjusted for one-time expenses and true owner compensation). If the total of these two figures is greater than or equal to 40, the firm is considered to be financially healthy. Notably, healthy firms could look very different; for example, a fast-growing firm might have 30% revenue growth and a 10% EBITDA margin and meet the Rule of 40's requirements while a more established but slower-growing firm with 10% revenue growth and a 30% EBITDA margin could do so as well. Digging deeper, RIAs evaluating their Rule of 40 figure could consider using their organic revenue growth (i.e., revenue from net new client assets and assets brought to the firm by existing clients) in the calculation to get a better sense of enterprise value (as doing so excludes factors that are relatively out of their control (e.g., market performance) and revenue derived from acquisitions [which doesn't reflect the performance of the acquiring firm's legacy business]).

Altogether, whether or not a firm is considering a sale or an outside investment, the Rule of 40 formula can provide valuable insight into its overall health and perhaps shape conversations amongst firm leaders in terms of areas of focus, whether in exploring tactics to boost organic revenue growth in the coming year or finding ways to increase its profitability.

Mediocre Management Is Quietly Killing Great RIAs

(Joe Duran | Citywire RIA)

As an RIA grows over time, so too does its personnel infrastructure, perhaps starting with a single founder/advisor, before adding support staff, additional advisors, and managers to oversee the growing staff headcount. And while a firm might look healthy when it comes to certain measurable KPIs, Duran suggests that a leadership deficit could be lurking behind the scenes and potentially imperil the firm's growth to the next level.

First, he notes that it's important for RIA founders to recognize that the skills they need to be an effective leader (and the skills of other managers within the firm) will likely change as the firm grows (e.g., the skillset to lead a single department within the firm is different than what's needed to oversee several departments simultaneously). Next, he suggests that while many firm leaders might be tempted to prioritize the firm's profitability, healthy profit margins can hide talent and infrastructure deficits that can prevent the firm from scaling efficiently (suggesting that investments in these areas could provide a strong ROI in the long run even if they lower profitability in the short run). Finally, as a firm grows, evaluating managers on well-defined, measurable performance metrics (which they might define for themselves) can ensure that leaders are held accountable for results, reward execution, and identify areas to correct.

Ultimately, the key point is that as an advisory firm grows, so too does the importance of strong leadership from its founder and the management team that has been built out over time. Which suggests that firms that put themselves in the best position for long-run success won't necessarily be those that rely on 'what got them there', but rather those that are able to evolve (and be willing to hold themselves accountable) as the complexity of their business grows as well.

The Transformative Power Of Centralized Operations

(Matt Sonnen | WealthManagement)

When an RIA founder starts their own solo practice, they have to take on the full range of client service tasks, from creating financial plans to transferring cash to processing paperwork. But as a firm grows and new hires are made, founders can have the chance to reduce this administrative burden.

One approach to doing so is to create a centralized team to handle various administrative tasks (e.g., trading, investment management, and client service requests) to allow the advisor to focus on client relationships (and avoid having to play 'whack-a-mole' with every 'urgent' issue that arises). Sonnen suggests that the tasks best suited for centralization meet two criteria: being repeatable (i.e., they follow a consistent and predictable process) and not requiring any client-specific knowledge (i.e., intimate familiarity with a client's unique circumstances). With a centralized support team in place, the firm's CRM typically becomes a key piece to implement this approach, ensuring that every request is documented, assigned, and completed efficiently.

In sum, centralizing operations not only can allow a firm to scale more efficiently (as doing so can free up time for advisors to attract and serve more clients) and allow each team member to focus on the tasks they do best, but also result in better client service through faster response times and consistent service (which could ultimately could allow for additional growth without sacrificing client satisfaction and retention).

Optimizing Ourselves To Death

(Nick Maggiulli | Of Dollars And Data)

The information age and the introduction of new technologies has made it easier than ever for an individual to 'optimize' their lives, whether in terms of their productivity (e.g., implementing time management strategies to get the most out of every minute of the day), health (e.g., finding an 'optimal' diet and exercise routine to improve longevity), or finances (e.g., finding the 'perfect' asset allocation, even if it means getting as granular as the basis-point level).

However, Maggiulli argues that the quest to optimize our lives has perhaps gone too far, particularly for those whose quest for optimization has added stress to their lives. For instance, an individual trying to stick to a very specific diet or time-based eating regimen might get nervous when circumstances lead them to 'cheat' on their program (even if the effects in the short run are very minor). Similarly, while measuring daily activity (whether the number of steps one takes each day or the amount of time spent on different tasks at work) can provide valuable information, obsessing over these figures in the quest for an 'optimized' life could lead to greater anxiety and less happiness. And in the world of finance, checking returns and account balances constantly (as well as trading frequently) could lead to greater stress (and, potentially, worse returns). Amidst this backdrop, Maggiulli suggests an alternative approach might be to try to 'get the big things right' rather than trying to seek optimization (e.g., maintaining a regular exercise routine rather than tracking the minutiae of every single workout) to get many of the benefits of healthy or productive practices while being less stressed about it.

In the end, while optimization can be tempting to pursue, many individuals might find that the juice isn't worth the squeeze. And for financial advisors, this could mean helping clients explore what they actually want their wealth to do for them and then create a financial plan accordingly (instead of trying to build as large of a net worth as possible for its own sake).

Are You Optimizing For The Wrong Thing?

(Jack Raines | Young Money)

When an individual has success in a particular area (e.g., finding clients through a particular marketing tactic), it can be tempting to go all-in, potentially to the detriment of other activities. However, just because something is working now doesn't necessarily mean it will continue to do so in the future.

Raines found success growing the audience of his blog, largely through social media content creation, reaching 10,000 newsletter subscribers relatively quickly and earning healthy income from ad placements. Which led him to extrapolate that if he could reach 50,000 subscribers, he'd earn enough ad revenue to support his lifestyle. With this in mind, he went all-in on optimizing for more newsletter subscribers using his formula of posting engaging content on Twitter and LinkedIn, eventually reaching the 25,000-subscriber mark. However, problems started to arise as he soon found it harder to get more subscribers from his social media posts (whether because they weren't achieving the same reach or because he had tapped out on individuals interested in subscribing to his newsletter) and engagement with ad placements fell (leading to reduced payments from advertisers). Which left him scrambling given his focus on optimizing this approach. Ultimately, he realized that building his subscriber count wasn't the only way to be successful, instead finding that the loyal subscriber base he already had could open doors in the form of outside employment and book-writing opportunities.

Ultimately, the key point is that while optimizing for a tactic that is currently working is tempting, zooming out to consider other opportunities could lead to a more durable (and perhaps more interesting) business or career!

Developing A "Good Enough" Mindset To Increase Financial Contentment

(Meghaan Lurtz | Nerd's Eye View)

In his book The Paradox of Choice: Why Less is More, author Barry Schwartz identifies two personality types: Satisficers, who tend to be content with having just enough, and Maximizers, who continually strive to attain and achieve more, no matter how far they get. Given their different outlooks, Maximizers and Satisficers have strikingly different approaches to goal-setting and the expectations they set for themselves. Whereas Maximizers rarely (if ever) reach their goals because they are constantly striving to push for more, Satisficers can reach goals much more easily, as their sense of what they consider to be 'good enough' is much more attainable.

Interestingly, because of their constant drive to obtain and achieve more, Maximizers generally tend to be wealthier than Satisficers. Accordingly, financial advisors may commonly find themselves working with clients who are Maximizers, or who at least display Maximizer tendencies, with high expectations of achieving and attaining more from the financial planning relationship, whether it be through higher portfolio returns, optimized tax strategies, or even lower advisory fees. Yet, to maximize in all places, with all choices, and all at once is simply not possible. Which, for Maximizers, can be very upsetting. And naturally, they may consider their financial advisor (at least partly) to blame – as while they hired the advisor to help them maximize, they are still not maximizing! While the advisor understands that full maximization is not possible, it is hard to get the Maximizer client on the same page.

Luckily though, there are methods the advisor can use to maintain an amicable relationship with their client, and even help them minimize the regret they may associate with not being able to completely maximize their goals. For instance, encouraging the client to slow down and prioritize their goals can be an effective step to help them see that focusing on only one (or on a very few) goals at a time can lead to a greater chance of success in achieving that goal. Another key to working with Maximizers is to help them identify realistic comparison groups (or even using a past point in time to compare themselves to) so that they are not setting unrealistic expectations for themselves when seeking social proof through making comparisons to others. Finally, advisors can help Maximizers by managing their expectations, and even adjusting them as necessary.

Ultimately, while working with Maximizers may be a stressful experience for many financial advisors, these relationships don't always have to be difficult. By implementing certain strategies, advisors can help their Maximizer clients have a more realistic view of their goals (and their drive to reach those goals), so that they can narrow their focus on what they value most, which, in the end, can help them minimize any regrets over unmet objectives and maximize their satisfaction from successfully achieving what matters most to them!

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We hope you enjoyed the reading! Please leave a comment below to share your thoughts, or send an email to [email protected] to suggest any articles you think would be a good fit for a future column!

In the meantime, if you're interested in more news and information regarding advisor technology, we'd highly recommend checking out Craig Iskowitz's "WealthTech Today" blog.