Weekend Reading For Financial Planners (October 11–12)

Study Identifies 4 Types Of High-Growth Advisors

(Dimple Shah | Barron's)

There are many potential avenues for growth for a financial advisory firm, whether it's attracting older, wealthier clients to boost a firm's average Assets Under Management (AUM) or seeking to work with working-age clients who are likely to see their portfolios grow over time. Of course, given that growth is easier said than done, creating a growth strategy and sticking to it can often lead to better results than a more haphazard approach.

Using data from 5,700 financial professionals on its platform between 2020 and 2023, broker-dealer Osaic in a recent report identified four avatars of advisors demonstrating strong growth (which, for the study, meant outpacing market returns [of a 60/40 portfolio] in assets under administration for two consecutive years). The first avatar of high-growth firms is the "Rainmaker", who generates new business through relationships and referrals, including from Centers Of Influence (COIs, such as CPAs and estate attorneys), client appreciation and educational events targeting specific industries or demographic groups, and formal referral networks (i.e., where professionals with complimentary skills collaborate and cross-refer clients).

The second avatar was the "Advisor as CEO", who create formal business plans, set growth, targets, and track progress against key metrics while leading a team that can support a larger client base (with team-led practices studied overseeing an average of $250 million in AUM, compared to $80 million for solo practitioners). Next, advisors in the "Financial Planner" persona go deep into a range of planning topics for their clients, using structured, repeatable processes that allow them to deliver these services efficiently (this group also often charges a separate planning fee, which the report found often results in clients engaging more deeply in the process). Finally, advisors acting as "Private Wealth Specialists" typically serve clients with complex planning needs and who have at least $5 million in investible assets. These advisors often target two or three distinct client segments (often industry or occupation-based) and have the technical expertise to meet these groups' unique needs.

In sum, while there is no single path to advisory firm growth, zeroing in on a firm's and/or advisor's strengths that match one (or more?) of the identified 'avatars' could lead to stronger (and perhaps more sustainable) client growth in the years ahead.

More States Take (Adverse) Stands On Data Aggregators For RIAs

(Sam Bojarski | Citywire RIA)

Historically, advisors haven't had many avenues to manage clients' 401(k) plan accounts, since unlike traditional custodial investment accounts, advisors generally lack discretionary trading authority in employer-sponsored retirement plans. Which wasn't necessarily a big issue back when most clients hired advisors after they had already retired and were able to roll over their employer plans into an IRA managed by the advisor; but as advisors have increasingly taken on working-age clients (and the 401(k) plan itself has taken on greater importance in retirement planning), the friction between 401(k) and non-401(k) plan assets has grown into a bigger issue from an operational, compliance, and ability-to-add-value-through-investment-management standpoint.

In this environment, several data aggregation tools, with Pontera being the most prominent, have emerged to enable advisors to more efficiently and securely manage their clients' 401(k) plan accounts by giving the advisor the ability to not just view and actually trade in the 401(k) account. Which would seem to be a preferable solution to the sometimes-used method of logging in with the client's credentials (which can trigger the requirement for custody audits), since with new 401(k) management solutions like Pontera the advisor doesn't need to collect the client's login information (as it is entered by the client themselves and stored securely without giving the advisors access to the credentials), and can allow advisors to more efficiently serve clients with 401(k) plan assets (including those who might not have enough non-401(k) plan assets to meet the advisor's minimums).

Nevertheless, regulators in several states have recently begun to scrutinize advisors' use of Pontera and similar technology, with some citing concerns that recommending clients to share their login credentials with third-party technology may constitute harmful conduct by potentially violating clients' user agreements with their 401(k) platforms (as most Terms of Services explicitly state that users are not permitted to share their credentials with third parties given the security risks). For instance, Colorado (mirroring similar approaches taken by Washington and Missouri) has taken a strict approach, issuing a September 19 alert to advisors in the state that clients' use of data aggregation (in the absence of a direct agreement between the provider and the custodian) "is likely a dishonest and unethical business practice under Colorado's state investment adviser rules". On the other end of the spectrum, however, Texas and Delaware have taken a more accommodative approach, issuing guidance mentioning the utility of these tools while calling on advisors to conduct proper due diligence and disclosure to clients on any privacy risks associated with them.

Amidst this backdrop, the North American Securities Administrators Association (NASAA), in its role bringing together state securities regulators, has formed a working group to share knowledge and inform the guidance of states who have not yet weighed in on the issue. The latest developments also come as Fidelity has sent notices to certain clients who have used platforms like Pontera, asking them to go through a process to reset their login credentials (which the asset manager says is part of an effort to protect client data, though some advisors [many of whom use Fidelity as a custodian] might wonder whether Fidelity is trying to protect its turf when it comes to offering its own paid advice for 401(k) assets on its platform).

In the end, the fragmented state guidance on this issue makes it important for advisors considering whether to use this technology to understand where their own state regulators' stand, and for those who use it already to explain to their regulators how it allows them to better holistically manage their clients' assets without resorting to collecting client login credentials. Since ultimately, the advisors who use it every day are best positioned to show how held-away asset management technology can truly be used in the client's best interests!

Economic Empowerment, Making A Difference In Clients' Lives Help Drive High Job Satisfaction Amongst Women Advisors: CFP Board Study

(Michael Fischer | ThinkAdvisor)

The population of financial advisors has historically been made up largely of men, with women only representing 24% of CFP professionals today. Nonetheless, a recent survey suggests that a range of factors could drive this number higher in the future (and perhaps represent a potential influx of talent at a time when many older advisors are expected to retire in the years ahead).

According to a study commissioned by CFP Board (which surveyed 1,282 respondents, divided amongst current CFP professionals, other financial services professionals, as well as women career changers and college students), 93% of women CFP professionals surveyed were satisfied with their careers, compared to 88% of men. Current women CFP professionals were most likely to cite renewed passion and energy, making a meaningful contribution, and client impact as the top drivers of their satisfaction. Notably, for firms looking to attract and retain these advisors, the resources, programs, and initiatives these women find most important included compensation and work-life balance initiatives, while certain other features varied with age, with early career advisors in particular more likely to prioritize family-friendly benefits while mid- and late-career advisors were more likely to seek continuing education opportunities.

The study also looked at initiatives that could bring more women into the financial planning workforce. For instance, CFP Board found that 72% of women career changers who have experience with a financial planner are very interested in a financial planning career compared to 41% of women career changers without experience with a planner (perhaps suggesting that some firms might find new advisor talent amongst its client base?). The survey also found that more women might be attracted to the industry if certain assumptions about financial planning were demystified; for instance, more than 80% of women career changers and college students thought that financial planners must have strong math skills, that financial planning is a good career only for extroverts, and that a planner's success is dependent on the market and economy.

Ultimately, the key point is that (as many current advisors can attest to) financial planning can be an attractive career, given the opportunity to make a difference in clients' lives while earning a healthy income and maintaining work-life balance. That said, given certain assumptions about the industry, being proactive about demonstrating these benefits (while perhaps creating structures and resources, from mentorship programs to flexible work policies) could be a key for firms looking to attract more (and better qualified) candidates when building their teams.

3 Ways Clients Can Lock In Lower Mortgage Rates

(Lori Ioannou | The Wall Street Journal)

Given home prices and mortgage rates remain elevated compared to where they were just a few years ago, clients looking to buy a home might seek options that could help them reduce their monthly mortgage payments and/or total mortgage cost. While alternatives to the 30-year fixed mortgage (e.g., a 15-year fixed mortgage or an Adjustable Rate Mortgage [ARM]) could offer lower rates (with tradeoffs in terms of the size of the monthly payment in the case of the former and the lack of long-term rate guarantee for the latter), buyers have other opportunities to reduce their mortgage cost as well.

To start, clients can consider paying points to 'buy' a lower rate on their mortgage. While doing so could lead to lower monthly payments and significant interest savings over the length of the loan, an advisor can help clients determine the 'breakeven' point where the loan is held long enough so that the interest savings from the lower rate exceeds the upfront dollar expense (and the opportunity cost) of the points paid and whether they plan to keep the loan for at least that long (without moving again or refinancing).

Next, buyers of certain new construction homes (particularly where builders are feeling the heat to make a sale) or those in a buyer-friendly market could negotiate a temporary mortgage buydown, where they will pay a reduced interest rate for a certain period before the loan reverts to an established fixed rate. For instance, in a 2/1 buydown, the borrower's rate drops by two percentage points in the first year of the mortgage, and one percentage point in the second year before shifting higher to the original market rate for the rest of the loan (though if rates have fallen, this could be an opportune time to refinance).

Finally, buyers of existing homes might find that the seller has an assumable mortgage (that are associated with loans backed or insured by the Federal Housing Administration, the Department of Veterans Affairs, and the Agriculture Department), which could be particularly attractive if the home was financed when rates were significantly lower than they are today. Buyers looking to take on an assumable loan have to meet certain credit and income requirements and will need to have enough cash to cover the difference between the loan balance and the purchase price (which, given recent home price appreciation, could be significantly higher than the 20% down payment they might have put down otherwise).

Altogether, while mortgage rates today aren't as attractive as they were in recent years, buyers have options to reduce their rate (and payment) from the market rates they might see. Which presents an opportunity for advisors to add value by helping them evaluate the tradeoffs involved with different options and choose one that best fits their unique situation (which may not mean choosing the lowest possible monthly payment).

Using 10-Year Treasury Yields To Better Understand Mortgage Rate Moves

(Sean Jackson | Kiplinger)

Financial markets participants frequently pay close attention to the actions of the Federal Reserve, particularly its decision-making around setting a target range for the federal funds rate. While the Fed's recent rate cut decision brought cheers from equity investors, individuals looking to purchase a home (or refinance a mortgage) might have been disappointed that the rate cut decision wasn't followed by a sharp drop in mortgage rates.

One reason for this phenomenon (which was also seen in 2024) is that mortgage rates are less correlated with the short-term federal funds rate and more correlated with the yield on 10-year Treasury bonds (in part because the duration of these bonds reflects that of the average mortgage). While the Fed's actions play a part in determining the rates on the 10-year (by signaling the future direction of monetary policy), other factors include investor expectations for inflation (with investors typically demanding a higher rate of return if they expect higher inflation going forward) as well as expectations for economic growth (with a high-growth environment making equities look more favorable, potentially leading to higher rates to attract demand for government bonds).

Another key factor in determining mortgage rates is the mortgage 'spread', or the difference between the 10-year Treasury yield and mortgage rates (which has historically been between 0.71 to 1.4 percentage points, though it's about 2 percentage points today). The overall spread is made up of a primary-secondary spread (which factors in mortgage origination fees, other lender costs, and profits) and a secondary spread (which accounts for the risks [e.g., default risk, prepayment risk] that investors in mortgage-backed securities face but Treasury investors do not).

In sum, while clients looking for a mortgage might be paying close attention to Fed actions, advisors might also point them towards 10-year Treasury yields for additional insight into where mortgage rates could be headed in the future (and perhaps keep an eye on the macroeconomic factors that drive these yields).

Why Waiting For An Expected Rate Drop Might Not Be Worth It When Buying A House

(August Saibeni | Journal of Financial Planning)

Given that a mortgage is often the largest liability on a client's household balance sheet, getting a lower interest rate on this loan can often mean significant savings over time. And at a time when many observers expect the Federal Reserve to cut interest rates further in the months ahead, some clients in the market for new home might consider delaying their home purchase in order to secure a lower mortgage rate (even if it means missing out on a desirable house that is available now).

With this dilemma (and its implications for a client's finances and lifestyle) in mind, Saibeni analyzed how previous changes to the federal funds rate affected 30-year mortgage rates. While he found a positive correlation between the federal funds rate and the rate on 30-year mortgages, only about 26% of the federal funds rate change flows through to the change in mortgage rates (e.g., a decline of 33 basis points in the federal funds rate historically resulted in a decrease of about 10 basis points for the 30-year mortgage rate). Further, the size of the potential rate drop in absolute terms is related to the current level of the federal funds rate. For instance, when the federal funds rate was above 9%, the average quarterly decline in mortgage rates after a Fed cut was 1.54 percentage points, but this figure shrinks to 0.29 percentage points when the federal funds rate is between 4% and 5% (where it is today).

Ultimately, the key point is that while further Fed rate cuts could be on the horizon, some clients might overestimate how much mortgage rates will fall in response. Which presents an opportunity for advisors to give a more realistic picture of how much (Fed-related) rate reductions could occur and, perhaps more broadly, help clients balance their goals of finding the best house for their needs (or doing so on a certain timeframe) with finding the lowest rate possible.

Firms Increasing Subscription Fees, With Many Using Multiple Fee Models: Report

(Diana Britton | Wealth Management)

Financial planning firms compensated through client fees have many ways to charge their clients, from fees based on Assets Under Management (AUM, the most commonly used fee model, according to Kitces Research on Advisor Productivity) to fee-for-service models, including subscription fees, one-time project-based fees, and hourly fees. Though notably, firms are not necessarily limited to just one fee model, whether in having an AUM offering targeted at clients with sufficient assets and fee-for-service offerings for clients with fewer assets but whose income can support these fees, or in 'bundling' an AUM fee with a flat planning fee.

According to AdvicePay's 2025 Fee-For-Service Industry Trend Report, diversifying fee structures is popular amongst firms on its platform (which serves advisors charging clients on a fee-for-service basis), as 68% offer AUM fees, 60% have a subscription-based model, 59% charge flat planning fees, and 41% charge hourly fees. Overall, fees rose compared to the previous year, with average monthly subscription fees increasing 4.9% to $278 (notably, monthly fees were the most popular subscription format, used for 89% of recurring invoices) and one-time fees rising 2.9% to $1,624. In terms of fee changes going forward, while 55.8% of firms on the AdvicePay platform surveyed said they plan no changes in the coming year, a minority of firms expect to significantly increase their fees, with 17.8% of respondents planning to raise their fees by 10% or more (and another 8.6% increasing their fees by 6-9%).

In sum, this report indicates overall rising fees for firms charging on a fee-for-service basis and continued use of multiple models. Which could ultimately provide many of these firms flexibility (in raising their planning fees as they offer deeper value) while also insulating against negative market shocks that can impact AUM revenue (while still benefiting from the natural increase in AUM-based revenue that comes during periods of strong performance).

Your Median Fee Is Your Best Capacity Measure

(Jim Stackpool | Certainty Advice Group)

Financial advisory firm owners have plenty of common Key Performance Indicators (KPIs) to track, which target different areas of the business (e.g., profit margins for the business' financial health and organic growth for the growth of the business).

When it comes to measuring a firm's capacity (to grow into the future, or to handle the workload from current clients), Stackpool suggests using the firm's median client fee, or the fee paid by the firm's 'middle' client when all clients are ranked by their annual fee. Using the median fee (rather than the average fee) can be helpful for firms because it removes outliers (e.g., one client who pays a fee that is multiples more than the rest of the firm's clients) from the equation. It can also serve as a useful comparison to the firm's total revenue; for instance, if a firm's median fee isn't growing as fast as its total revenue, capacity issues could emerge as the team will likely be serving more (lower-paying) clients to generate the same revenue (which could lead the firm to hire more staff and cut into its profit margins).

With this in mind, firms facing capacity challenges might examine their median fee and determine a future course of action, which could include increasing this figure (whether by seeking wealthier clients [when charging on an AUM basis] or raising their fees [whether their AUM schedule or flat planning fees]), segmenting clients to ensure the fees they pay reflect the work it takes to serve them, or perhaps making the difficult decision to move on from particularly low-revenue but high-effort clients. Which could ultimately free up advisor capacity to provide a deeper level of service to current clients and/or allow the firm to grow sustainably into the future.

Communicate (The Necessity Of) Fee Increases With A Client-Centric, Value-Based Approach

(Ben Henry-Moreland | Nerd's Eye View)

Recent years have seen an increase in the number of RIAs charging fixed monthly retainer fees, and while retainer fees can have several advantages over other types of fees, one notable disadvantage – particularly as compared to traditional AUM fees, which tend to increase automatically in line with financial markets – is that financial advisors who use them must proactively raise their fees from time to time in order to keep up with business expenses, invest in new upgrades, and increase their own take-home income. The necessity of fee increases entails a certain amount of pain for monthly-fee advisors since each conversation around raising fees creates the possibility of pushback from clients that could put a strain on the client-advisor relationship.

This is all the more true when clients are dealing with cost increases in other areas from high inflation, yet the reality is that many advisors are also facing inflation in the form of higher business costs. As a result, monthly-fee advisors may see a decrease in their take-home income if they don't increase their fees at least enough to keep up with their rising business expenses.

But using business costs alone as a justification to raise fees can backfire on the advisor. For one thing, it limits the amount that an advisor can raise their fees to roughly the rate of inflation in their business expenses, which translates into no net increase in take-home income. And even more importantly, higher business costs as a rationale for raising fees is bound to ring hollow with clients since they are likely to care much less about the advisory firm's expenses than about the fact that they will be paying a higher fee going forward, 'just' to receive the same level of service they were already getting.

A better way to implement and communicate fee increases may be one that is centered around providing more value to the client in exchange for the higher fee. To start, this signifies a client-centric approach, shifting the basis of the increase from the advisory firm and its needs (to maintain its profit margins with higher business costs) to the client and what the fee increase means to them. Furthermore, it increases the potential for the amount that the advisor can increase their fees since clients are more likely to accept a higher increase when there is clearly something in it for them as well!

When communicating fee increases to clients, then, it's important to be concrete and confident about how the advisor will bring extra value to the relationship (which, of course, means having a plan to deliver that value in the first place). Because, while any conversation around fees comes with the possibility of client pushback, that extra value represents a powerful argument for why it's in the client's best interest to go along with the change – and if the client ultimately decides they don't want to accept the higher fee and ends the relationship, it creates a new opportunity to add clients who do see the value in the higher fee.

Ultimately, nearly every advisory firm that charges monthly fees will eventually need to raise those fees to at least maintain a steady take-home income. But advisors who want to grow their income beyond 'just' the rate of inflation in their business cost can do so by stepping up their value to their clients – whether in the form of more services, better technology, or just greater experience and expertise allowing them to go deeper into planning!

6-Figure Losses From Impersonation Scams Targeting Retirees Increase 7X In 4 Years

(Federal Trade Commission)

While scams have been prevalent for centuries, the tactics used by their perpetrators have evolved over time. Which can result in significant losses for the victims of these scams until knowledge of (and defenses against) the latest scam become more widely known.

According to the Federal Trade Commission, impersonation scams have represented a major source of losses over the past several years, particularly for older Americans, with the number of reports from those age 60 or older who lost $100,000 or more increasing seven-fold between 2020 and 2024 (alongside a four-fold increase among those who lost more than $10,000). The FTC said these scams use fake stories to get the victim's attention, including suggesting that someone is using the victim's accounts (e.g., a call from "Amazon" alleging suspicious activity), that the victim's information is being used to commit crimes (which might come from an "agent" from the "Social Security Administration"), or that there is a security problem with the victim's computer, and then indicate that the only way to get out of the (fake) crisis is to send money (to the scammers).

In response to this wave of scams, the FTC suggests a few potential lines of defense, including being suspicious when money supposedly 'needs' to be moved to be 'protected', hanging up the phone and contacting the company or agency directly using a phone number or website that is known to be real (e.g., using the number on the back of a credit card rather than what comes up on a computer pop-up), and blocking unwanted calls to prevent scammers from getting through in the first place.

While impersonation scams can target individuals across the age spectrum, older Americans appear to be victimized at an increasing rate. Which offers the opportunity for financial advisors to remind their retired clients about the range of potential scams that they could face and the defenses against them (and perhaps offer to serve as a second opinion if the client receives a call and is unsure whether it might be a scam?).

Protecting Against ACATS Scams That Can Drain Brokerage Accounts

(Tara Siegel Bernard | The New York Times)

While many individuals have likely experienced fraudulent charges on their debit or credit card, they might not expect to one day log in to their brokerage account and see a significant portion of their investments missing. However, scammers are taking advantage of the convenience of the Automated Customer Account Transfer Service (ACATS) to steal assets from investment accounts without the owner's knowledge.

Under this scheme, a criminal will open a brokerage account under another individual's (stolen) identity (or a combination of stolen and false information) and request to transfer assets from the victim's brokerage account. The latter step is trickier, as the fraudster needs to know the other account's details (though this could come from an online hack or phishing attack). If the information matches up, the firm holding the assets will typically transfer them (to the fraudulent account) within a few days (at which point the criminal can transfer the assets out of the fraudulent account).

Consumers have several potential defenses against being victimized by ACATS fraud, though. First, keeping account information secure can prevent criminals from using it to initiate a transfer. Next, because financial institutions will typically mail a letter to the address of new account owners, keeping an eye on the mail (even if a letter appears to be a solicitation) can give a warning that a fraudulent account might have been opened. Also, regular checks on investment account transaction statements can show whether any shares have been moved out of the account (as criminals will sometimes drain an account slowly so as not to be noticed). If an individual suspects ACATS fraud has occurred, they can contact their financial institution to freeze their account and begin the process of restoring the assets in their account.

Notably, financial advisors are well-positioned to support their clients in preventing ACATS fraud, from encouraging clients to engage in sound cyber hygiene practices (and having strong cybersecurity systems in place themselves to protect client data) to maintaining awareness of transactions out of client accounts and ensuring that they are legitimate!

How To Avoid Getting Scammed As A Busy Professional

(Ally Jane Ayers | Money Changes Everything)

When it comes to individuals being scammed, it's easy to assume that it's always going to be 'someone else', whether an older individual whose trust is taken advantage of or someone who might not be familiar with strong cyber hygiene practices. However, busy professionals can often become victims of scams themselves, with their busyness often playing a role.

For instance, you might receive a call purportedly from the bank you use letting you know that your account has been blocked due to suspected fraudulent activity. While the voice in the back of your head might tell you to take the time to hang up and call the bank back using the number on your debit card, being in a rush (or an overriding concern over not being able to make a payment immediately) might lead you to give the caller account information they could use to take money from your account. In another relatively common scam, the scammers might insist that your identity has been stolen and is being used for illicit activity (with the 'solution' being to wire money or hand cash over to them). While such a scenario might seem far-fetched, the pressure of supposedly being subject to legal action and the scammers potentially being aware of your personal information can break down barriers to fraud you might have built up.

Given the wide range of scams out there, Ayers suggests two rules that can help defend against them. The first is to assume that any request to send cash or a wire is a scam (even if the interlocutor claims to be from the government or other official-sounding organization), while the second is to always talk to a known individual face-to-face. For instance, if a friend or relative reaches out via email (or even on the phone, given advances in voice spoofing) saying they're in trouble, you can insist on initiating a call or, preferably, video chat, yourself (with their known number) to confirm it's really them. And if you are scammed, taking steps to protect your finances (e.g., freezing compromised accounts, placing a fraud alert on your credit report) can mitigate the damage (in addition, reporting the scam to the FTC and warning friends and family about it could help others avoid falling prey to it as well).

Ultimately, the key point is that because it can be difficult to be on guard against common and emerging scams at all times, keeping basic rules in mind (and sharing them with others [including certain clients?] who might be more susceptible to scams) is a key line of defense against falling prey to these schemes.

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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.