Enjoy the current installment of “weekend reading for financial planners” – this week’s reading kicks off with an interesting article about a new research study on the online algorithm-based advice startups, suggesting that ultimately the role for many of them may turn out to be more like a “second opinion” platform than a primary advisor.
From there, we have a couple of practice management articles, including one about how to hire and train your client services team (hint: don’t use your junior financial planners!), and the importance of going through an annual process to update your firm’s strategy and why it matters.
We also have a number of advisor technology-related articles this week, including reviews of financial planning software Omyen, the latest cloud-based version of Junxure CRM, and online form and document signature platforms Laser App and DocuSign. There are also articles on how to create a digital/virtual business card that clients can access by text message, some ideas on how to integrate video into your marketing (and what, exactly, you should talk about in your videos!), and a review of some tools advisors can use to speed up their writing and note-taking (from voice-recognition software to mobile dictation services).
We wrap up with three interesting final articles: the first is from Philip Palaveev, suggesting that perhaps the difficulty of larger advisory firms financing successors is less about the actual affordability and financing of the practice and more about training future owners to be ready and willing to take the entrepreneurial risks involved; the second is from financial planner Ronald Sier about the importance of niches, and the idea that perhaps the best niches are not about what you do or who you work with, but the kinds of feelings you try to evoke in your clients; and the last is from practice management consultant Abby Salameh, who notes that while the productivity benefits of various technology-enabled communication (from social media to email to text messages) is great, that advisors still need to be certain to just pick up the “old-fashioned” telephone and call their clients from time to time as well! Enjoy the reading!
(Editor’s Note: Want to see what I’m reading through the week that didn’t make the cut? Due to popular request, I’ve started a Tumblr page to highlight a longer list of articles that I scan each week that might be of interest. You can follow the Tumblr page here.)
Weekend reading for September 21st/22nd:
Advisor ex Machina: The Rise of Algorithm-Based Advice – This article discusses the release of an upcoming research report from Corporate Insight on the rise of the online algorithm-based investment advice startups. The report notes that while it may be difficult for the online providers to replicate the traditional advisor relationship, the reality is that they’re not trying to; in fact, the platforms instead are trying to find their own balance between how many questions can be asked online to get to know the “client” better, and what are so many questions that people just won’t follow through and actually sign-up. As a result, the platforms rarely gather the kind of comprehensive information that a “traditional” advisor would, and thus far most offerings have focused on retirement savings, and not all the other goals that people common save towards (college, a house downpayment, etc.). There’s also a wide range of business models, from straight-AUM offerings, to entirely free versions, to “freemium” models that provide basic services for free but more sophisticated solutions for an upsell cost. Overall, the research finds that the free services tend to focus on fees and costs to grab consumer attention, while the paid services are more similar to traditional models of trying to function as an advisor. Accordingly, the paid services are notable for how actionable their recommendations tend to be, with precise buy and sell recommendations, while the free services may function more as a “second opinion” tool to review the portfolio the client already has or perhaps that the advisor has recommended. Ultimately, the report notes that many of the providers are looking at B2B opportunities instead of just going directly to consumers, in part because of the potential for more stable revenues than being dependent on retail investors not to panic in a down market.
Six Steps to Train Your Client Services Team – From Investment Advisor magazine, practice management consultant Angie Herbers takes a dive into the best practices in training a client service team, the key support staff necessary to ensure that the firm’s advisors can maximize their own time and value to the firm. Herbers starts out with an example of what not to do – the perhaps all-too-common path of training new advisors by making them to paperwork and clerical work that can be unmotivating of them and underutilizes their talents. Instead, Herbers suggests that new advisors should be spending time in client meetings from the start, and the centralized client service teams that handle the bulk of client contact and virtually all clerical and back-office functions should instead be handled by a trained, dedicated staff… not (junior) financial advisors. The benefit of hiring dedicated client service staff isn’t just to avoid having unmotivated professional advisors in the role who would rather be learning the actual tasks to become good financial planners; it’s also important because treating your client service team like a new advisor training ground ensures a never-ending stream of untrained new recruits, and the quality of client service itself declines as they are continually serviced by new employees because the “old” clients service team is either promoted or quits by the time they actually learn their duties! Structurally, Herbers suggests that there should be at least one client service team member for every $750,000 of revenue, and that by the team there are three service team members one needs to be designated the supervisor (with a dedicated manager by the time there are six of them). Ultimately, though, Herbers states that the real key to getting value from a client service staff member is training, and the articles wraps up with a recommended 6-week training process for onboarding new team members.
Sharpen Strategy to Fulfill Your Firm’s Vision – In this article, practice management guru Mark Tibergien advocates on behalf of the importance of regularly reviewing your business strategy. As the business grows (or doesn’t) through the year, the reality is that the landscape is always changing, as not everything expected to be done get finished, new competitors arrive, and new opportunities emerge. Sometimes a focus on growth also sows the seeds of destruction, and other times a focus on growth in one area causes another opportunity to be neglected; the only way to be certain nothing important is missed is to take the time periodically to do an overall strategic assessment of the firm. If you’re only focused on the short term, any growth might feel fine, but Tibergien notes that in the long run this can cause a material deviation in the course of the firm, such as the company that gets a big inflow of assets from foundations and retirement plans and hires up accordingly, without acknowledging that the original vision of the firm was to be a recognized leader in offering wealth management to local business owners; actively pursuing the new path might seem appealing, but it’s as much a deviation from the business as buying a hot new investment can violate an investment policy statement. You wouldn’t let clients deviate so far (or implement a portfolio without a policy statement in the first place), so don’t let it happen in your business, either. Ultimately, Tibergien suggests that every firm should have the core elements of a strategic plan, including going through a process, determining where you will focus, assessing your strengths and weaknesses and opportunities and strengths, and coming up with a 12-month operating plan to execute (the strategic plan is where you want to go, the operating plan is how you’ll get there). Once the plan is in place, be certain you know how you’ll measure success as well, whether it’s revenue, profit margins, client averages, or something else, or your plan may as well (and probably will) just sit on the shelf gathering dust.
Tech Review: Omyen Planning Software – On the Financial Planning magazine website, technology consultant Joel Bruckenstein reviews the financial planning software tools from Omyen (an anagram of “money”). Unlike more “comprehensive” planning solutions, the Omyen tools are more modular (albeit extensive), from a Savings Plan tool for younger clients building a nest egg to a Retirement Savings Plan for those focusing solely on retirement to a Risk Capacity Index for assessing suitability to an Asset Allocation tool. Of particular note is the Retirement Health Planner tool, which provides a significantly deeper dive into the likely health care costs a client might face during retirement, including running Monte Carlo simulations on life expectancy against targeted health care savings and potential health care costs. There is also a “Personal Financial Index” (PFI) tool, that allows consumers to enter some of their own information about their financial information, and then see a “score” that lets them know how they’re doing (similar in concept to a FICO score). Advisors can purchase Omyen in three segments: their PFI module (for advisors who want to use it as a part of their consumer marketing, though consumers who find PFI on their own will be referred to advisors who license the software in the client’s area!), the Retiree Health Care Planner, and the Wealth Planner that includes the rest of the modules. Any one segments is $99/month, the second is an extra $50, and all three are $199/month (with an add-on for online client vault storage as well). Overall, Bruckenstein is upbeat about the uniqueness of the health care tool, but notes that more comprehensive planners may find the overall series of Omyen tools to be disjointed, as each – for better or for worse – is designed to stand on its own, and it’s a better fit for those who do more limited and modular planning in the first place.
Tech Review: Junxure Cloud Reaches for the Sky – In a second Financial Planning magazine website tech review, Joel Bruckenstein reviews the upcoming launch of the cloud version of Junxure CRM (expected to be available in final form by the end of the year), the rather popular advisor CRM that now has more than 10,000 users with a healthy 96% retention rate. The new Junxure Cloud offering has gone through a total re-design; the home screen upon logging in has adopted a Windows 8-style appearance (tested in Chrome browser but anticipated to be viable in all the standard browsers), using tiles populated with dynamic content (such as recently accessed clients, urgent opportunities/actions, etc.) as well as an easy link to the “dashboard” screen that provides widgets on how the firm is performing (e.g., AUM, top clients, AUM by advisor, etc.). As Junxure Cloud builds an increasing number of integrations over time, there will be more and more data that can be brought into the home screen and dashboard; initial integrations will likely be portfolio management products (e.g., Orion, Envestnet, PortfolioCenter, Advent/Black Diamond) and document management (e.g., Laserfiche and Docupace), followed by financial planning software and custodial interfaces. The layout of client records has also been redone, and Bruckenstein states that they are logically laid out and easy to navigate. In fact, Bruckenstein overall declares that Junxure Cloud at this stage appears to be a success from an interface and user experience perspective, along with the dashboards, and the promise of strong integrations (which Bruckenstein believes will be executed smoothly) are appealing. Notably, Bruckenstein says that while Junxure Cloud will be appealing for advisors new to Junxure (and at $75/month/user pricing, pricing is not the cheapest but is “fair”), existing Junxure users may have to consider more carefully the complexity of transitioning and adopting a system that feels so new (especially since a few features of the current Junxure desktop will not be available at launch for the cloud version).
Say Goodbye to Signatures on Paper Forms – In Morningstar Advisor, technology consultant Bill Winterberg looks at the current world of electronic document and e-Signature providers, noting that while major financial institutions have made electronic paperwork an option for years, independent advisor firms have tended to lag on the transition aware from paper-based processes. One solution to this challenge for advisors is Laser App, which has historically focused on larger enterprises (read: big broker-dealers with a high volume of paperwork), but has now rolled out Laser App Anywhere, an entirely online version of their enterprise software that can run on virtually any device and operating system (both Windows and Mac OS supported, in addition to mobile devices running iOS and Android), and independent advisors can access the software through the TD Ameritrade Veo platform (perhaps a sign of coming integrations with other independent custodians in the future as well) and have forms prepopulated using source data from CRMs also on Veo (like Redtail, Junxure, or Salesforce). Electronic forms prepared by Laser App can then be either printed for signatures, or routed directly to an electronic signature application like DocuSign (also integrated with Veo). While Laser App may not be available to independent advisors outside of TD Ameritrade, Winterberg notes that obtaining client signatures electronically is now becoming feasible through multiple providers and platforms, from DocuSign to Adobe EchoSign, SIGNiX, RightSignature, and more (though DocuSign is by far the most common). Ultimately, the goal of all these efforts is “Straight Through Processing” (STP), where paperwork is prepopulated in a CRM, completed and signed electronically on the spot, and then submitted directly (electronically) to the financial institution to complete the process, all done nearly instantaneously and without ever printing a page.
How To Build A Mobile Business Card – From the Investment News TechTalk blog, advisor Ted Jenkin provides a nice overview of some of the technology tools available to create mobile, electronic business cards. Jenkin starts by giving an example of how he does this himself; take out your phone, and send the message “TedJ” to the number “90210” and you’ll see that in response you get a text message with a link that shows Jenkin’s business card and more information about his business. Solutions to do this in your own practice include iZigg and Contxts. Alternatively, you can give clients a QR code to scan to get your business information using JumpScan. Another technology for sharing business information is Bump, where literally information is shared by bumping two (mobile) devices together. You can also electronically capture business cards that you receive using Google Goggles or an outside service like CardMunch. The bottom line is that, especially if you’re trying to convey that your practice is on the cutting edge of technology, consider taking a step up in the technology you use for sharing your business card and business contact information.
12 Ways To Integrate Video Into Your Marketing – In the Journal of Financial Planning, this article by marketing consultant Kristen Luke gives some concrete advice on how advisors can incorporate the use of video into their own websites and marketing, as online video becomes more and more popular and the costs to produce a video have fallen from thousands of dollars to just hundreds now. So what exactly should you record and video if you want to? Luke suggests an overview video of the company as a first introduction for the prospect to the firm (this will be your first impression, so make it good!), producing video bios of the advisors and staff, a short educational/explanatory video on a particularly complex issue/topic relevant to clients, a training “how-to” video for clients (e.g., how to navigate to their client vault on your website), a video press release of big news, an FAQ (Frequently Asked Questions) video about your business and services, and more. While ultimately video may increasingly become the standard, at this point it’s still in the early stages, which means having video may not be a “must” yet but it can be an effective differentiator now.
How Advisors Can Write More, Better and Faster – From Research Magazine, this article by Bill Good puts forth some helpful tips about how to improve speed and productivity for one of those major blocking points for many advisors: the time it takes to write, whether it’s emails, letters, proposals, or perhaps articles for your website or outside publications. Good recommends using dictation and/or voice recognition programs to help, given that most of us can dictate far faster than they can type (even if you’re a pretty fast typist). His tools of choice are Dragon Naturally Speaking for voice recognition (he recommends premium edition, which can read the text back to you, and is helpful for error checking and proofreading your own material), and Copytalk for dictating documentation of phone calls and meetings from a mobile device (useful when you’re out of the office; Copytalk discount for FPA members here). Of course, a major challenge with dictation and voice recognition programs is still dealing with potential errors; in the case of CopyTalk, the material is transcribed by real people, which helps to cut down on the error rate, while in the case of Dragon Naturally Speaking you can spend some time practicing and “training” the software with a few tutorials up front, which cuts down on the error rate and improves accuracy. Buying a higher quality microphone than the one that ships with the program (Good recommends this Andrea Electronics headset) will help too. For additional productivity, Good also suggests Text Lightning, a free add-in for Outlook that lets you quickly add stored text and attachments to an email (e.g., for things you commonly send out over and over again to prospects and clients, though Good warns there are a few quirks to the software). For simpler shortcuts, Good recommends the AutoText feature in Microsoft Office as well.
Making A Note Of It – In Financial Advisor magazine, practice management consultant David Lawrence looks at some technology tools that advisors can use to better capture notes, especially those crucial notes related to client meetings that must ultimately be recorded in the advisor’s CRM. Of course, if the advisor has an associate/assistant who can be present in the meeting to capture everything, that’s great, but if you must debrief afterwards, Lawrence recommends Dragon Naturally Speaking (which can be used for composing emails and other documents, in addition to capturing client notes). Alternatively, as a less expensive solution, Lawrence notes that there’s actually a voice-recognition tool within Microsoft Windows 7 as well. For advisors that want to jot notes down to capture them, Lawrence suggests Evernote, which runs on smartphones, tablets, and desktops/laptops providing better cross-platform capabilities than Microsoft OneNote, though unfortunately Evernote does not have voice recognition tools built in. For mobile dictation, Lawrence suggests either CopyTalk, or Mobile Assistant. The upside of mobile dictation over voice recognition is that you won’t have to go through the time to train both yourself and the software to maximize the productivity, and the accuracy may be better as well, but the cost can be higher too, so you’ll have to weigh the trade-offs for yourself based on how much you anticipate using the service(s).
Victims Of Their Own Success – In Financial Advisor magazine, practice management consultant Philip Palaveev looks at the all-too-common challenge of advisory firm owners who become victims of their own success, growing their businesses so large that their hand-picked and well-groomed successors can no longer afford to buy the practice. However, Palaveev suggests that if new owners are well trained in how to develop business, take risks, and make collaborative decisions, the financing arrangements can be managed; in other words, current owners need to develop their successors not just into future owners, but successor entrepreneurs, and if that’s done and the sellers are willing to take payments financed over time, the transition can be done. In fact, when business valuations are expressed as a multiple of profits, it becomes clear that internal succession plans can succeed, as a business selling at 5-8 times profits simply means that the new owners must forgo profits for 5-8 years to finance the transition (which simply means drawing salary only and forgoing compensation increases for a period of years, with a big jump in income after the sale is complete). Of course, there’s a risk to that scenario, but that’s the point – if successor owners want to buy, the deal can be internally financed, but the new owners have to be willing to bear the risk and opportunity of sustaining the profitability of the firm for at least 5 years to cover the purchase price. Of course, future growth of the firm makes the numbers work even better, but in turn that’s why “sales training” – often a bad word to many young advisors – is absolutely crucial to ensure a long-term succession goes smoothly, especially in the area of lead generation where (new) advisors tend to struggle the most. In addition, giving future owners the chance to work together – including on messy issues where they will disagree and must learn to work through those disputes – is crucial, and future owners should have the opportunity to take risks and learn from them as well. The bottom line, though, is that Palaveev suggests the real succession planning issue for the industry is less about the financing, and more about really training and developing future leaders who are ready and willing to take on the risk and opportunity of an internally financed deal.
Why Every Financial Planner Ought to Serve These Almost Unknown Niche Markets – From the blog of Dutch financial planner Ronald Sier, this article looks at the importance for advisors to have a niche, as an increasingly competitive environment means it’s no longer feasible to just cast a wide net across the masses. Instead, it’s necessary to go more narrow and deep; while planners may fear how to get their services noticed if they have a narrower offering, Sier notes that the reality is businesses that are more specific can connect more directly with their target audience, which is more crucial than ever given how much consumers are bombarded with information today. When people really “get” your advisory business, they can connect, clients can be attracted, and the referrals can flow. So what niche should you have? Sier notes that many planners focus by what they do (retirement planning, estate planning, etc.) or who they do it for (airline pilots, new parents, etc.), but ultimately the best niche may be about how you make clients feel instead. For instance, consider a niche where you work with people who want to feel more responsible (help teach them to be more responsible), or those who want to feel more at ease, or those who want to feel more secure, or in control, or important, meaningful, or excited. The fundamental point is that emotions and feelings are ubiquitous, which means ultimately these “niches” can actually be very broad with a large number of potential clients, yet still specific and emotionally-rooted enough to make a real connection that drives prospective clients to engage in the first place.
One Thought For Advisors With Stagnant Practices: Pick Up The Telephone! – On RIABiz, consultant Abby Salameh looks at how in the age of rising technology tools and efficiency, firms are at risk for losing their human connection, in a business where the human touch can be absolutely crucial. The point is not that using technology to systematize a lot of advisory firm communications is bad, but that advisors increasingly seem to be using the telephone to make a real connection for two purposes: when something really bad has happened to the client, or when they’re prospecting for new business. Anecdotally, the trend seems even more prominent amongst younger advisors, yet it risks setting an awkward precedent where ongoing clients rarely ever get to actually talk to their advisor. So Salameh recommends that while we shouldn’t shed our technology tools entirely, remember how crucial it is to pick up the phone from time to time and just really talk to clients; otherwise, you may miss out on the discussions that really help you keep a pulse on the issues and concerns in the lives of clients, the kind of stuff that people don’t just spontaneously volunteer in an email or text message and only divulge in the midst of a productive real voice-to-voice human-to-human conversation.
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. You can see below his new Bits & Bytes weekly video update on the latest tech news and developments, or read “FPPad Bits And Bytes” on his blog!
I hope you enjoy the reading! Let me know what you think, and if there are any articles you think I should highlight in a future column! And click here to sign up for a delivery of all blog posts from Nerd’s Eye View – including Weekend Reading – directly to your email!