Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the big Advisor #FinTech news that Orion is acquiring financial planning software Advizr for a whopping $50M in an effort to expand its platform towards more holistic wealth management and provide advisory firms a more planning-centric portal for clients to engage with.
Also in the news this week is the announcement that just 3 months after its launch, Schwab's monthly subscription service has raked in a whopping $1B of AUM, and AdvicePay crossed 20,000 advisors under enterprise contract facilitating financial planning fee payments, as consumer interest in the monthly subscription model of financial planning continues to heat up.
From there, we have several industry-related articles, including a surprising call from the FPA that the CFP Board should delay enforcement of its new fiduciary Standard of Conduct (but just until next June, to take effect alongside the new Regulation Best Interest), the announcement from the FPA that its OneFPA Network Plan has been finalized by the Board and will be proceeding forward with a 10-chapter beta test (despite generating positive Public Comment letters from less than 0.02% of its membership), an Op-Ed from former CFP Board chair Ray Ferrara disputing at least some of fiduciary advocate Don Trone's allegations that the CFP Board needs to improve its own fiduciary governance processes, and the news that Fi360 has become (only) the 10th financial advisor designation to earn (ANSI) accreditation for its AIF (Accredited Investment Fiduciary) designation.
We also have a few marketing-related articles this week, from tips on how advisory firms can differentiate themselves on their websites once Reg BI eliminates "fiduciary" as a differentiator, how to improve your Advisor Bio page so it doesn't "suck," and basic tips on how to improve the SEO (Search Engine Optimization) of the articles you do publish to your website.
We wrap up with three interesting articles, all around the theme of figuring out what is really fulfilling and "enough" to make us happy: the first looks at how more and more research shows what really makes us happy in our jobs, yet in practice people are less and less happy at work; the second explores the ways that we tend to pursue money, but when faced with difficult time-vs-money trade-offs (e.g., would you take all of Warren Buffet's money if you also had to take on his current age of 87?) we virtually always choose the time over the money; and the last examines how often the biggest returns we can get on the path to financial success aren't actually about earning money at all, but about getting comfortable that what we have is "enough" (and then saving all the rest).
Enjoy the "light" reading!
Orion Advisor Services Acquires Advizr Financial Planning (Ryan Neal, Investment News) - This week, portfolio performance reporting system Orion Advisor Services acquired upstart financial planning software company Advizr, in an all-cash deal whispered to have been as much as $50M (despite Advizr having only about $3M of revenues). And given that they used a common stack of .Net and SQL, the two are expected to be integrated quickly, with advisors using Orion able to use Advizr's financial planning software for free beginning next month (and a further integration to Orion's new Enterprise TAMP platform by November), which will be re-dubbed as "Orion Planning, powered by Advizr." The Orion-Advizr deal isn't entirely surprising, with Fidelity acquiring eMoney Advisor in 2015 and Envestnet buying MoneyGuidePro earlier this year, in addition to those providers increasingly encroaching into Orion's own core competency of performance reporting. Though ultimately, Orion emphasized that it hopes deeper internal integrations with Advizr will help lift planning adoption for the 70% of firms that have not been linking financial plans to their Orion accounts already, as a way to help advisory firms that aren't doing financial planning for any/every client a faster easier way to do so in order to stay competitive (though Orion has pledged to remain open architecture and keep its existing integrations to other financial planning software as well).
Schwab's Monthly Subscription Advisory Service Attracts $1B In Less Than 4 Months (Bernice Napach, ThinkAdvisor) - Since launching on March 28th, the Schwab Intelligent Portfolio Premium service, which charges $30/month (plus a one-time $300 upfront fee) for a financial plan plus unlimited one-to-one guidance from a CFP professional, has attracted a whopping $1B in new assets under management, which for Schwab Intelligent Portfolios overall (Schwab's "robo-advisor") represents a 25% increase in account openings, a 40% increase in average household assets enrolled, and a 37% rise in new-to-Schwab household enrollments. The significant uptick in growth from Schwab's prior pricing model for Premium - charging a 0.28% advisory fee with a $25,000 minimum - suggests that there is strong and growing consumer interest in the monthly subscription model, and Schwab notes that the service appears to be finding traction in particular amongst new clients who didn't fit any other advisory models (e.g., due to asset minimums or "overly complex" planning from other advisory firms). At the same time, though, the subscription model is also growing rapidly within the advisory community as well, with AdvicePay's subscription payment processing platform for advisors announcing more than 20,000 advisors under enterprise contract since launching earlier this year.
FPA Calls For CFP Board To Delay Enforcement Of New Ethics Standards (Melanie Waddell, ThinkAdvisor) - After news last week that the American Securities Association (representing broker-dealers) had asked the CFP Board to back off its new fiduciary Standards of Conduct taking effect in October (and instead allow brokers meeting the requirements of Regulation Best Interest to satisfy their CFP Board obligations), this week the Financial Planning Association surprisingly stepped forward as well to call for the CFP Board to delay new fiduciary standards. However, while the ASA advocated for the CFP Board to effectively eliminate its fiduciary obligation and accept the lower Reg BI standard instead, the FPA stated that it still supports the CFP Board's new fiduciary standard, and is merely suggesting that the CFP Board delay enforcement of the new standards under June 30th of 2020, when Reg BI takes effect - allowing broker-dealers adapting to the rules to simultaneously rewrite their processes and procedures both for Reg BI (for their brokers in general) and for the CFP Board's fiduciary standard (for brokers who are CFP certificants) and have both take effect at the same time. In response, the CFP Board indicated that it will decide at its board meeting this week whether it will accept the FPA's suggestion to keep the original October 1st effective date for the fiduciary rule but delay enforcement to coincide with Reg BI's effective date next June.
FPA Issues Final Curtailed Plan To Reshape Chapters (Greg Iacurci, Investment News) - This week, the Financial Planning Association announced that it was finalizing the move forward with its controversial OneFPA Network plan, with only a relatively modest set of final changes to the second draft iteration of the plan. Notably, the Final OneFPA Network Plan will not require local chapters to be dissolved and merge, and will retain control of their budgets, sponsorships, and programming. Instead, the OneFPA Network plan will focus primarily on a two-year "beta test" with 10 chapters to determine the impact of centralizing a limited number of key functions around chapter accounting, technology, and staffing/administration. Chapters that are interested in participating in the beta test will be required to fill out an application by September 15th, with the final beta test selection occurring in mid-October, and the beta test itself getting underway in January of 2020, with a final evaluation after the close of 2021 based on a set of KPIs (Key Performance Indicators) to determine whether or how much of the OneFPA Network Plan should subsequently be adopted and implemented by the entire organization (ostensibly beginning in 2022). Notably, FPA National President Evelyn Zohlen has stated that the FPA has made a decision "not to... be wedded to the outcome," and that "at any point if the consensus... was this is a horrible idea, [the FPA] would just stop." On the other hand, given that less than 0.02% of the FPA membership wrote any letters of support during the Public Comment period and the majority of comments were negative in the first place and the FPA moved forward without membership buy-in anyway, and the FPA has still not actually articulated any Metrics for Success to determine whether the beta test is actually working (i.e., what the KPIs must actually be in the end to stamp the beta test "successful"), it's still not clear, in practice, whether the OneFPA Network is really a beta test, or simply a fait accompli to be rolled out in 2022 and beyond whether the chapters want to or not.
CFP Board Rebuts Call To Spend 1% Of Its Budget On Oversight (Ray Ferrara, Financial Planning) - Last month, fiduciary advocate Don Trone suggested that the CFP Board's own Board of Directors governance process did not meet a fiduciary standard, that the Board's staff and directors had faced accusations of conflicts of interest, self-dealing, and other improper behavior, and that accordingly, the CFP Board should set aside 1% of its annual budget to improve the organization's governance and oversight, including a direct hire of independent legal counsel to support the Board, open elections for directors, shifting oversight of the CFP Board's Disciplinary and Ethics Commission back to the DEC, and publishing minutes of the Board's proceedings. In response, former CFP Board chairman Ray Ferrara has stated in this week's Op-Ed response that Trone's proposal is unnecessary, as the CFP Board's Board of Directors already has had outside legal council for the past 12 years (that has, in fact, been periodically called upon from time to time), and that such legal oversight support costs are already budgeted by the organization. Notably, though, Ferrara did not directly respond to Trone's additional suggestions to restore the independence of its Disciplinary and Ethics Commission (a change nearly 10 years ago that led to a mass resignation of the then-DEC volunteers at the time), or that the CFP Board conduct open elections for its directors or publish minutes of the Board's proceedings.
Fi360 Earns ANSI Accreditation Status For AIF Designation (Business Wire) - While there is an ever-growing number of designations for financial advisors, remarkably few have ever been through any kind of accreditation process (besides CFP, CIMA, and just 7 others that FINRA recognizes). In this context, it is notable that Fi360 has now earned ANSI accreditation for its Accredited Investment Fiduciary (AIF) designation, becoming one of just a few designations to achieve the standard. The significance of accreditation, in practice - beyond simply implementing more rigorous educational protocols in the first place - is that accreditation for the AIF makes it far more likely to be accepted by regulators as a legitimate and not “specious” designation, which may both increase overall acceptance of the AIF, and its adoption in larger enterprises (that have more concern about the regulatory risk of a designation being deemed invalidate by regulators). Accordingly, for advisors looking to more deeply implement fiduciary best practices - or in particular, those working in the employer retirement plan marketplace where fiduciary consulting regarding ERISA is common - the AIF seems likely to pull even further ahead amongst fiduciary-oriented retirement plan designations.
4 Ways To Truly Differentiate Your Firm's Website After Reg BI (Samantha Russell & Blair Kelly, Iris.xyz) - For many advisors, especially in the RIA community, it has been common to differentiate the firm (and its website) by stating something to the effect of "I'm a [fee-only] fiduciary advisor who is required to act in the best interests of the client." Yet the reality is that, with Regulation Best Interest allowing (and in fact requiring) brokers to state that they, too, must act in the Best Interests of their clients when providing a Recommendation, being a Best-Interests Fiduciary will no longer be an effective differentiator in the future (as it's impossible to differentiate in something that is a minimum expectation “everyone” must do now!). Accordingly, Russell and Kelly suggest that, while it's not necessary to leave those "Best Interest" (or "Fiduciary" or "Fee-Only") terms off the website, advisory firms will need to focus on new and different ways to differentiate their websites. Potential options include: Create an FAQ (Frequently Asked Questions) page like Life After Grief Financial Planning, ideally directly on the homepage at the bottom of the page (since the homepage is the most visited page on most firms' websites in the first place) that further explains who you work with and what you do; Target a particular Niche, in order to create website messaging that is well-targeted to a specific type of clientele (e.g., Scott Advisory Group operates as a female-owned-and-operated advisory firm that aims to work with young women on their finances); Focus Locally, as the reality is that as long as many clients seek out geographically local/convenient advisors, having a website that highlights your local presence in the community can help to differentiate (e.g., David Walsh, who is born and bred in St. Louis and highlights it on his homepage); and don't be afraid to Brag a Bit (e.g., include a "Featured In" or "As Seen On" section on your website as third-party validation, or outright include links to articles you've been quoted in, copies of video interviews you've done, etc.).
Advisor Bios Stink (Sara Grillo, Advisor Perspectives) - Most advisor bios focus on the accomplishments of the advisor... or as Grillo calls it, "the equivalent of the Miss America pageant" where everyone puts on a fake smile and pretends they're not competing, while trumpeting their own successes like "been in the business for 20+ years" and "worked at [insert name of financial firm that only your competitors recognize] for 10 years before that and were the most powerful person at the place, and ran the whole thing" and "received a Bachelor of Science in Finance and hold the [insert name of financial accreditation that only your competitors recognize] designation," etc. As while it is important to try to establish credibility, in the end, the key to an advisor bio (and advisor marketing in general) is also to give people something they can relate to... which means putting forth information that is likely to connect with them, not just trumpet the success of the advisor. So what might an Advisor Bio look like with a more "Them, Not You" approach? Grillo's suggestions include: make it easier to read by breaking it up (e.g., shorter paragraphs and sections, more bullet points); have someone create a "draw my life" kind of video, or at least have a quick video vignette from each person (even if just to say hello and that you're looking forward to working with the prospect... as video is especially effective in humanizing advisor marketing!); and just focus on making the content itself more engaging (e.g., instead of "I have three kids and enjoy traveling with them and my wife/husband" try, "Over the past 10 years of travel with my family, we have visited all continents beginning with the letter “A” except for Antarctica" or instead of "I hold the <insert boring name designation>" try "I hold the <blah blah> designation, which I chose to pursue because I was inspired by someone I knew who was extremely successful and the utmost professional and she held this designation. I felt that by pursuing a similar course of study I could aspire to achieve the same"). The key point, though, is simply that a little humor and personality goes a long way towards making a connection with a prospect, beyond just trying to put a shine on your professional accomplishments alone.
How To Optimize Your Website Content (Crystal Butler, Advisor Perspectives) - Publishing expert content on your advisor website is a good way to establish credibility, demonstrate expertise, and even provide a path for prospects to your website who may find your articles when searching for the answers to their questions (e.g., via a Google search). The caveat, however, is that not all content is indexed the same by Google and other search engines, and it is actually possible to optimize the content to be especially findable by search engines (a process called "Search Engine Optimization"). Accordingly, some relevant tips for improving the on-site SEO of the articles you publish on your website include: include relevant keywords in the Title tag of your article (e.g., if it's an article about Roth IRAs, be certain to actually include the words "Roth IRA" in the title, so Google will be more likely to match your article to someone using the words "Roth IRA" in their search); wrap your title and subheadings in HTML tags (usually done automatically in WordPress or similar content management systems, as long as you specify the title as "Heading 1", the subtitle as "Heading 2", etc., which puts h1 or h2 tags around the titles and subheaders... indicating to Google that those labels are especially important and relevant in the article, and should be accentuated in the search indexing process); include keyword phrases in the article, ideally in the first 100 words (e.g., if the article is about contribution limits on Roth IRAs, be certain to literally use the words "contribution limits on Roth IRAs" early on in the article); don't be afraid to post longer articles (e.g., 750 - 1,000+ words), as while attention spans are generally short, search engines show a preference for longer well-written engaging content (that actually answers the question someone was searching!); make sure the content is easily readable (e.g., “scannable” content with shorter blocks of text and bulleted lists); include links to other content (whether on your site, or on other sites), as relevant links help to establish the credibility of the content; and consider website tools and plug-ins that can help with the SEO process, such as Yoast SEO, All-in-One SEO, or a Keyword Density Analysis Tool.
Wealthy, Successful, And Miserable (Charles Duhigg, New York Times) - Getting into elite colleges has long been viewed as a path to success, influence, wealth, and ultimately, the happiness of deeply meaningful work. Yet when attending his 15-year reunion from Harvard Business School last summer, Duhigg discovered that, in practice, many of his classmates were miserable in their professional lives, with one running a large hedge fund only to be sued by investors, another becoming a senior executive at a major company only to be pushed out over corporate politics, and another who learned in the maternity ward that her firm was being stolen by a conniving partner. Not that many weren't in fact very financially successful - one investment trader was earning about $1.2M/year of income - but despite the fact that Harvard had been a path to pay and status for many, the work often ended out feeling meaningless. And notably, the phenomenon is not unique to Duhigg's Harvard class; more broadly, the Conference Board finds that back in the mid-1980s, roughly 61% of workers said they were satisfied with their jobs, but by 2010 the number had dropped to only 43%, impacted by everything from oppressive hours and an "always-on culture" driven by the internet, to political infighting and greater competition sparked by globalization. Ironically, the problem seems to be driven in part by the fact that, while research has shown what it takes to improve job satisfaction - basic financial security, and then a sense of autonomy to control your time and the authority to act on your unique expertise - in practice, businesses aren't often implementing such policies and workplace environments. In addition, one of the biggest drivers of satisfaction appears to be not financial compensation at all, but meaningfulness - a sense that the work being done has a positive and meaningful impact - extending even to the point of one study finding that hospital janitors who viewed their work as part of the healing process were more upbeat in their work than those who simply viewed it as work tidying up. Ultimately, though, the point is simply to recognize that, even in our own efforts to improve our standing, we often lose sight of what a "good job" that will make us happy really is in the first place... less about money, and more about meaning and purpose in the world (at least, once basic financial security needs are met!).
The Most Important Asset (Nick Maggiulli, Of Dollars And Data) - Longevity expert Peter Attia presents a fascinating thought experiment in his talk on increasing your lifespan, suggesting, "I would be willing to bet that not one of you, if you were offered every dollar of Warren Buffett’s fortune, would trade places with him right now… And I would also bet, by the way, that Buffett would be willing to be 20 years old again if he was broke." In other words, if you had the choice of wealth, fame, and status... but had to be 87 years old, most people wouldn't make the trade. In other words, notwithstanding the emphasis we place on money and wealth... when the trade is on the table, our choice is usually for time, not money. Thus why people make sometimes dramatic decisions to not work those extra years, and instead spend more time with children, or make the decision to miss a work event or even a big promotion opportunity for the time to go to a wedding or funeral in a moment that will never be back again. And as Maggiulli points out, despite the lament of most that there's never enough time in the day, arguably our society is creating more time for people than ever before, from medical advances that extend our lives, to technology improvements that make us more efficient (no longer spending the bulk of our waking hours just trying to secure food and water as hunters and gatherers!). In this context, Maggiulli suggests that the real key is to know when you should trade time for money (as clearly some money is necessary to support ourselves, but think carefully about what's really a worthwhile task to do, or not), and in particular to be willing to trade your money for anything that you would regret missing on your deathbed. Or for further thoughts on wrapping your head around the value of time (and the fun fiction of time travel), check out Replay, by Ken Grimwood.
The Biggest Returns (Morgan Housel, Collaborative Fund) - The biggest breakthrough in energy over the past 40 years isn't the shift from oil to natural gas, or to wind turbines or solar panels... it's the fact that we've gotten so much better at conservation and efficiency, that we just don't use as much energy as we used to; in fact, while oil and gas production is up 65% since 1975, we now can do more than double what we used to with that energy, as the United States uses 60%(!) less energy per dollar of GDP today than in 1950, and globally, it's down 25% since 1990 (e.g., in 1989 the Ford Taurus averaged 18 MPG, and now even a Chevy Suburban averages 18.1!). And of course, the impact of conservation and efficiency isn't unique to just energy... it's equally true in personal finance, where improving investment returns may help wealth to compound, but it's finance's version of conservation and efficiency - savings and frugality - that really determine the outcome (and more importantly, are more directly in our control in the first place, compared to whatever the markets will or won't deliver). In other words, if Person A grows their portfolio at 8% and Person B earns 12%, but A needs half as much money to be happy while B's lifestyle creeps higher with compounding asset growth, the one with the higher return isn't actually better off. And the distinction is even more striking when considering how often it takes relatively little effort to make a small change to our lifestyle, while it can take dozens or hundreds of hours of research just to add 0.10% in investment returns. The hard part, of course, is in becoming satisfied with spending less in the first place - which is often a psychological constraint more than a financial one. Thus leading even the famous Jack Bogle to tell the anecdote in his book Enough: "At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds,'Yes, but I have something he will never have . . . enough.'"
I hope you enjoyed the reading! Please leave a comment below to share your thoughts, or make a suggestion of any articles you think I should highlight in a future column!
In the meantime, if you're interested in more news and information regarding advisor technology, I'd highly recommend checking out Bill Winterberg's "FPPad" blog on technology for advisors as well.