Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that a prospective win for presidential candidate Biden may cause regulatory reform of financial advice to become an issue once again in 2021, as a new administration may seek to reign back the expansion of advice at broker-dealers that was permitted by this year’s introduction of Regulation Best Interest (or at least, may more actively enforce Reg BI against broker-dealers that overstep the line when switching their RIA and broker-dealer hats).
Also in the news this week is the announcement that Canadian RIA aggregator, CI Financial, is considering a potential public listing on the New York Stock Exchange in what could become the second publicly traded RIA aggregator (alongside Focus Financial) in yet another wave of new buying activity for advisory firm acquisitions (potentially pushing already-record RIA valuations even higher in the coming years?), and a look at recent InvestmentNews Research data showing just how dramatic the shift to independence has been, as both independent broker-dealers and RIAs continue to gain nearly 1,000 new advisors per year from wirehouses, insurance broker-dealers, and banks.
From there, we have several practice management articles all around the theme of leveraging staff hires, from the importance of creating a vision of the firm’s future org chart when it grows to better visualize what the next hires should be to keep the growth moving forward, to the benefits of hiring service-minded advisors (in lieu of rainmakers) to scale an advisory firm, and some tips on how to successfully transition existing clients to service-minded advisors without undercutting their credibility.
We’ve also included some marketing articles this week: a look at some advisory firms that are doing content marketing well, and what they’re actually doing that makes it work; a review of 10 advisor websites that are especially appealing, and what they are doing to make the content, design, and messaging so effective at connecting with the prospects they’re looking to attract; and some suggestions on advisor marketing strategies that are actually working in the age of social distancing.
We wrap up with three interesting articles, all around the theme of leveraging one’s time and efficiency: the first is a look at why Inbox Zero may not be something to aspire to, as being efficient with email can still misfocus an advisor’s time on the tasks that don’t really matter most; the second explores the challenge of “hoarding” to-dos and the compulsion we sometimes have to keep and check off everything… instead of focusing on just checking off the tasks that truly matter the most; and the last provides some valuable tips to overcome the tendency as financial advisors in a service-minded profession who just want to help people of saying “yes” to everything, because in the end we still only have so much time and have to learn to say “no” to helping everyone in order to have the most positive impact on those we can help the most.
Enjoy the ‘light’ reading!
Election Poses Fresh Challenge For Reg BI (Bruce Kelly, Investment News) – After much industry debate (and legal challenges), the SEC’s new Regulation Best Interest took effect this June 30th, including the rollout of the new Form CRS disclosure obligation, and a higher (albeit still non-fiduciary) standard of care for brokers providing financial advice. Yet, given what has become a partisan divide over fiduciary regulation, particularly after President Obama’s administration first proposed a higher fiduciary standard for retirement advice from broker-dealers via the Department of Labor in 2015 which the industry then sought to water down (even though ironically, it was Republican-selected Supreme Court justice Gorsuch who in 2007 originally overturned the SEC’s first attempt to water down the fiduciary standard for broker-dealers and supported a higher standard for financial advice), the prospect of Joseph Biden winning the presidential election creates the potential that, once again, the regulation of brokers and investment advisers could become a fresh new topic under a new administration. Which, increasingly, is raising concerns not only for the regulation of broker-dealer advice itself but also the ripple effects that new regulation could have on the broader industry, especially given research suggesting the DoL fiduciary rule may have pushed down costs in variable annuities and an ongoing trend of fiduciary RIAs causing a wide range of products to face competitive fee pressures (as RIAs guide their clients to the lowest cost alternatives to achieve any particular investment outcome, and increasingly disintermediate mutual fund managers by using ETFs to manage client portfolios themselves). Though ultimately, it remains to be seen whether there is any real appetite at the SEC to undertake yet another new rulemaking process, or if alternatively the SEC may simply leave Regulation Best Interest on the books but look to enforce it more aggressively (particularly with respect to the hot-button issue of dual-registrant advisors wearing both RIA and broker-dealer hats?).
Big Canadian Buyer Of US RIAs Applies To List On NYSE (Jeff Benjamin, Investment News) – Barely a year ago, Toronto-based CI Financial indicated that it was planning to move into the world of US wealth management by acquiring RIAs. And this week, the firm announced two more large RIA acquisitions for nearly $1.7B of combined AUM, bringing its total to almost $13B of AUM and quickly making CI Financial one of the largest independent RIA aggregators. CI has now announced that it is going to list its own shares on the New York Stock Exchange, leveraging a public offering to raise even more capital to both have the cash to fund more acquisitions, and be able to offer shares of its stock in trade as part of its acquisition strategy (and taking advantage of the difference between the earnings multiples available on publicly traded versus privately owned RIAs). For most financial advisors, the fact that a big RIA acquirer is looking to become publicly traded isn’t necessarily a big deal that impacts them directly, but the significance of the event is that CI Financial would become the second ‘publicly traded RIA’ (or at least aggregator of RIAs) alongside Focus Financial, which is increasingly legitimizing the perceived competitiveness of RIAs in the national (and not just local) marketplace, in addition to the fact that CI Financial raising significant capital which would simply give it even more to spend on acquiring what is still a limited pool of RIAs… suggesting that even as RIA valuations are more and more stretched towards new record highs, an influx of capital from new investors trying to acquire a limited supply of firms for sale could potentially push valuations of advisory firms even higher in the coming years.
How Independence And Especially RIAs Are Increasingly Winning Market Share For Incumbents (Bruce Kelly, Investment News) – One of the most dominant themes in recent years has been the “shift to independence”, as advisors at insurance-based broker-dealers and wirehouses have increasingly moved to independent broker-dealers and the RIA channel. And the latest data compiled by InvestmentNews Research highlights just how dramatic the shift has actually been, with RIAs picking up an estimated 931 new advisors (not just new advisors, but those who changed firms), while independent broker-dealers added 911, and discount brokerage firms gained 170, while wirehouses lost 1,005 advisors, alongside 715 leaving insurance B/Ds and 159 departing from banks. Particular winners have included LPL (up 735), Fidelity’s brokerage services (up 431), Cambridge Investment Research (up 148), and Raymond James (up 114), while the biggest losers seeing net advisor outflows included Merrill Lynch (down 348), Wells Fargo (down 336), Edward Jones (down 281), and UBS (down 254). The trend appears to be accelerating not only due to the compounding of ‘success stories’ of advisors who successfully broke away, but also the pandemic environment that forced even employee advisors out of the office into working more independently from home, both highlighting the feasibility of being successful without being in a big-firm office, and also simply making it easier to plan a potential breakaway transition when working from a home (and not employer-monitored in-office) computer.
Hiring To Achieve Strategic Growth (Scott Hanson, Investment News) – While many advisory firms state that they want to grow, few actually have a clear vision of what it would look like if they did grow bigger. The end result is that even if and when some growth comes, the firm doesn’t make changes and adapt quickly enough when that growth comes – which ends out stunting further growth – or worse, fails to anticipate the pain points that will emerge with additional growth, such that future growth ends out causing a setback for the advisory firm’s infrastructure and capacity. To combat this concern, Hanson goes through an annual process every January of asking, “what people do we need in place to grow from X to 2X in the next three years?” Because the reality is that no matter how large a firm is, more growth always results in an additional layer of complexity, whether it’s being a solo advisor who has to navigate growth when adding the first employee or a few employees (welcome to making payroll and negotiating office leases!), or a billion-dollar firm dealing with the challenges of needing an additional middle-management layer of infrastructure to handle what may be 20-40+ team members. In fact, Hanson goes so far as to suggest building out an advisory firm organization chart assuming the business is 10X(!) its current size, replete with the departments and job titles it would necessitate to lead a much larger business. Of course, for the time being, the advisory firm founder’s name may go in most of those boxes… but that also lays out a clear roadmap of what will shift off the founder’s plate as the business grows and as those seats can be filled with a growing team that helps to continue powering the firm forward to the next level.
Why It’s Time To Hire Service-Focused Advisors (Angie Herbers, ThinkAdvisor) – When advisory firms look to add a new financial advisor, the details of the role may vary, but the main ingredient is virtually always the same: they must be able to generate (or already come with) new clients and revenue. To some extent, the desire for revenue-generating advisors is only natural; if a new advisor can generate their own revenue, it doesn’t even feel like a ‘cost’ to the firm, as the role effectively pays for itself. Yet, as Herbers notes, there is an often-missed tension for firms that hire rainmaker advisors: that rainmaker advisors already have lots of choices about where to go and with whom to affiliate (given their ability to bring or generate new revenue), which gives them the upper hand in bargaining and often pushes down the advisory firm’s ability to generate as much in profit potential. After all, rainmakers who can bring in their own revenue don’t necessarily “need” your advisory firm – they can find another, or use their revenue to hire and build their own – and they’re typically more likely to go out on their own someday anyway (or, alternatively, to insist on having a piece of the equity in order to stay). So what’s the alternative? Investing in the firm’s own marketing and hiring service-focused advisors to tend to those clients instead. The appeal of service-focused advisors is that they can be singularly focused on serving and supporting existing clients, potentially boosting the firm’s retention rate, and even its growth, via inbound referrals. And service-oriented advisors, when they’re not skilled rainmakers, are often more likely to stay with the firm and are more likely to be content with a healthy salary (but may not demand, or be able to demand, more expensive revenue-based compensation), allowing the firm to expand its margins over time as well.
5 Humble Suggestions On Transitioning Clients To Junior Advisors (Nick Defenthaler, ThinkAdvisor) – As more and more advisory firms grow and scale by hiring non-owner employee advisors to focus on servicing existing clients, increasingly, the challenge is no longer teaching and training new advisors how to develop new business, but instead, how new business developers can transition and “hand-off” clients to their service-minded employee advisors. As a new advisor who over the past 7 years has taken over nearly 100 client relationships, Defenthaler offers up his suggestions on best practices in how to transition client relationships successfully: 1) be certain to talk up the ‘junior’ advisor’s skills (e.g., “Jessie is going to be covering several tax planning considerations in our meeting today. She has spent a great deal of time analyzing the new Secure Act and is our firm’s resident expert on this topic”), which is important not only to ensure that the client has confidence in their new advisor, but can also help to bolster the younger advisor’s own self-confidence and thus their ability to serve the client well; 2) recognize that because the younger advisor is younger, it will take longer for them to build credibility, and the path to credibility should start early (e.g., Defenthaler wrote nearly 50 blog posts for the firm in the first two years, so clients would already be familiar with his name and see his expertise so he was deemed credible before they even met him in person); 3) recognize that early in the new relationship with the transitioned client, it’s especially important to build trust by being reliable and exceeding expectations, so be clear what the timeline is to address their concern and then be prepared to exceed the expectation (e.g., if the client emails on Monday, communicate that you’ll have an answer to them by the end of the week on Friday… and then deliver it by Thursday!); 4) build relationships with the client’s family by becoming a trusted resource for their children or grandchildren (who may be easier to relate to at a similar age to the younger advisor); and 5) get to know what’s important to the client in the relationship by asking them why they started working with the firm and the current advisor in the first place and what they valued in the relationship (which will provide you a roadmap of what you should be certain to do in order to continue that service expectation!).
Three Examples Of Great Advisor Content Marketing (Phil Edelstein, Advisor Perspectives) – Content marketing has been a staple of financial advisor marketing for decades, going all the way back to the monthly or quarterly printed newsletter that was mailed out to all prospective clients on a regular basis… which in recent years has shifted to email newsletters instead, but retains the same core principle of “drip marketing”. Yet as Edelstein notes, in practice most advisory firms just focus on putting the content out, without viewing it in the context of the bigger marketing picture, where to produce actual new-client results, the content needs to not just be educational, but specifically to be an engagement tool (that makes prospects actually pay attention to and interact with the brand), act as a lead-generation tool that actually captures contact information from qualified leads who may become clients, and reinforces how the advisory firm is unique and different in the marketplace. So what does good content marketing look like in practice? Edelstein highlights three advisory firms doing it well, including: Brown Advisory, which has a tagline of “Thoughtful Investing”, and created a “Navigating Our World” content series (which originated in 2008 during the financial crisis, and turned into the NOW2020 podcast in the COVID era); Goldman Sachs’ “Talks At GS” which communicates its ‘premium’ brand by going out to get the best and brightest and most successful people in the world in featured interviews (from Deepak Chopra to New York Times CEO Meredith Kopit Levien); and mega-RIA Colony Group, which has a tagline of “Managing Beyond Money” and produces content that connects directly to that theme, going beyond just investment topics into everything from equity incentives that business owners can offer key employees to philanthropy to divorce amongst older couples. The key point, though, is simply that good content marketing ties into a central brand theme – from Goldman’s premium positioning to Colony’s beyond-money approach – and every piece of content checks the box on being relevant, valuable, and differentiating within that theme… with a call to action to help interested prospects to the next step towards becoming a future client.
Ten Advisor Websites That Stand Out From The Crowd (Arlene Moss, XY Planning Network) – With clients increasingly turning to the internet to do due diligence on a prospective financial advisor (if not outright trying to search for a new advisor from scratch), the financial advisor website is becoming a key foundational element of an advisor marketing strategy. Except most advisory firms struggle to figure out what it takes to really make a “good” financial advisor website. Accordingly, Moss highlights a number of firms that have put together a strong website offering to help others ‘see how it’s done’ for inspiration, including: Experience Your Wealth, which distinguishes itself out of the gate with a uniquely focused message for its target clientele: “We help travel-loving young families live a life they never want to retire from”, and a call-to-action that ties to it (“Do you have young kids?”); Greenhouse Money, which follows through on the greenhouse theme by segmenting clients into those looking to either “Plant” (young accumulators), “Grow” (wealth builders), or “Harvest” (retirees), and distinguishes themselves with visual images that communicate who the founders really are so prospects can connect to them (e.g., “Jordan won’t take off the GHM trucker cap, so don’t ask”); 2050 Wealth Partners, which clearly lays out who the firm works with, and provides straightforward pricing information; Highball Advisors, whose homepage “Retirement Planning for Railroaders” speaks directly to its target market, and stays on its railroad theme with its blog the “Learning Depot”; Mana Financial Life Design, which has a unique visual vibe unto itself (again consistent with its brand), and provides a clear pathway in how the prospect is expected to navigate through the website and learn about (and ultimately engage) its services; Ten Talents Financial Planning, which leverages an on-site Chatbot using Drift to immediately connect with prospects; Fyooz Financial Planning, which offers quizzes, checklists, and other ways to engage prospects from the very first visit; Incline Wealth, which focuses on the firm’s connection to the local community, right down to using videos that spotlight clients and local members of the community (not the advisor himself) to support the connection back to the people he serves; True Abundance Advisors, which leverages a welcome video featuring the founder to highlight who the firm serves, and the founder’s own “Why”, to form an instant connection to prospects; 2050 Capital Financial Advisors, which uses its own custom imagery and design to distinguish its visual look; and Gunder Wealth Management, which uses simple explanations and visuals to convey to prospects what it would be like to actually work together both initially and on an ongoing basis.
10 Proven Ideas For Marketing In The Age Of Social Distancing (Maribeth Kuzmeski, Red Zone Marketing) – With the forced shift of marketing in the midst of the coronavirus pandemic and the ‘age of social distancing’, many financial advisors have been forced to reinvent their marketing approach. Kuzmeski sought to identify the emerging marketing strategies that are actually working with an advisor survey over the summer, and found a number of approaches that have been able to work in the virtual environment, including: virtual entertainment events that create opportunities for new introductions, from virtual wine tastings to virtual bingo; conducting a virtual educational seminar (either constructed by the firm, or leveraging third-party providers like Leading Response or White Glove that have advisor webinar packages available); or using LinkedIn Sales navigator (a paid tool that allows you to proactively reach out to targeted connections, or use a provider like Social Advisors who can help run the process for you). Other advisory firms have used the pandemic as an opportunity to pause and reinvest into their marketing, from refining the firm’s value proposition (with a framework like “Any financial advisor can ___________. But I ______________. For example, ______________.”) to updating the firm’s website and adding a (new) call-to-action to engage prospects, refining the firm’s referral strategy (to something more relevant in the current environment, like offering a second opinion for prospects who may be unhappy with their current advisor), or simply reaching out to clients and sharing the firm’s new policies and procedures for managing exposure to COVID-19, so clients and prospects feel safe when it’s finally time to come visit the advisor’s office (again, or for the first time!).
Inbox Zero Is The Pinnacle Of $10 Work (Khe Hy, Rad Reads) – With the never-ending onslaught of email, there is a growing focus on tools and techniques to get to “Inbox Zero”, where all messages have been responded to and accounted for, with new next-generation email clients like Superhuman and fancy inbox assistant plugins like Mailman to help with the process. Yet as Hy notes, while Inbox Zero has increasingly been celebrated as the pinnacle of “being totally on top of everything”, in practice the struggle to reach Inbox Zero in the face of a never-ending stream of emails just ends out tying us to our inboxes in a constant state of distraction to tag, filter, respond to, or delete anything and everything. So what’s the alternative? Instead of trying to manage, sort, filter, and respond to everything… just scan, and focus on responding to the few things that really actually matter. In other words, it’s not necessarily about efficiency (minimizing effort for a given impact), but instead about leverage (maximizing impact for a given effort), and that it’s all about creating leverage (not just efficiency). In other words, managing the constant flow of the Inbox can unwittingly mire us in the $10/hour tasks that often hit our inbox, instead of trying to hunt for the $1,000/hour opportunities and focusing our time and effort there (and just ignoring the rest, because in the end, it’s literally not actually worth the time?)!
Are You A To-Do Hoarder? (Shauna Mace, Advisor Perspectives) – The advisory business can often feel like a never-ending stream of tasks to complete, but in the end, the reality is that when everything matters, nothing matters. Because if we can’t find the clarity to focus our time on the few tasks that matter the most, we’ll simply be reactive to whatever task is tapping our shoulder at the moment. In fact, the irony is that up until recently, the idea of “competing priorities” didn’t even exist; the word was “priority” – singular – because, by definition, there can only be one priority to be a priority! For those who struggle to figure out what should be focused on first, though, Mace suggests that a starting point may be to instead look at what you might be able to stop doing in order to make more space for yourself; in other words, just as de-cluttering a room can give us a greater sense of space and room to breathe, so too can de-cluttering our task list create more space and room to breathe. Accordingly, Mace suggests reviewing all the activities you currently do and breaking them into three categories: Keep (those that are essential to the business and aligned to your purpose and best use); Kill (the non-essential, distracting, or non-productive tasks); and Evolve (tasks that are Essential, but could be improved and delegated, automated, or outsourced). If you’re still not sure what goes in the Keep bucket or not, take a step back and (re-)evaluate your purpose and values, which can serve as a filter to highlight where you really want to focus (or not), or ask for help (from a team member or coach or confidant) who can give some objective feedback about what you don’t really need to do and may just be keeping as a sunk cost. Because in the end, when we can focus on the few things that really matter… progress gets a lot easier. But remember that focus precedes progress.
How To Say “No” For The People Pleaser Who Always Says “Yes” (Meghan Keane, NPR) – As herd animals, human beings are hard-wired to want to be part of (and generally to help) the herd, and especially those in service-oriented professions who often thrive on the positive feelings from being ‘people pleasers’. Yet in practice, the reality is that always trying to help others can have a high price, especially when it results in us suppressing who we really are and our own wants and needs just to please others. In fact, we don’t even realize how often we do this… so the starting point might simply be monitoring and recording for a week how often you actually do say “yes” when something is asked of you… and then consider at the end of the week whether or when it started to feel overwhelming, and why it may have been difficult to say “no” to various requests (which often dates back to bad relationships or challenges even from childhood). From there, consider trying to just say “no” to small low-stakes requests, perhaps with a simple goal of just saying “no” to something once or twice per day (and when it “turns out” that nothing disastrous happens, your brain can begin to reprogram that saying “no” is not really such a threat!). In turn, this may help to feel out when saying “yes” happens because it’s something actually exciting (and worth saying “yes” to), or whether saying “yes” occurs simply because it feels like an obligation (an opportunity to revisit whether it is really an obligation or not?). Or at a minimum, at least build a habit of pausing before saying “yes”, to give yourself a moment to process whether it’s exciting or an obligation, and whether it’s really necessary or just an impulse to say “yes” to please someone else. And at worst, if it’s still too hard to give a hard “no”, consider at least practicing the soft “no” – if you don’t want to say “No, thank you” there’s always the option of “Thank you so much for asking me to do this project. It sounds really exciting, but I don’t have the bandwidth for it at this time.” Especially since that’s likely an accurate reflection of reality!
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, and Craig Iskowitz’s “Wealth Management Today” blog as well.