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The Latest In Financial Advisor #FinTech (November 2019)

November 4, 2019 07:06 am 0 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the November 2019 issue of the Latest News in Financial Advisor #FinTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors and wealth management!

This month's edition kicks off with the news that Schwab will allow fractional share trading in its retail accounts, in what is widely viewed as another jab at Robinhood in the competition for young new investors (who literally might not have enough saved to buy even a single share of Amazon at nearly $1,800/share)… but what may ultimately be laying the groundwork for Schwab to launch its own Direct Indexing 2.0 solution and compete more directly with mutual fund and ETF providers (and the robo-advisor Wealthfront that pioneered the approach for the mass market but never managed to scale it as Schwab may with its national brand reach).

From there, the latest highlights also include a number of other interesting advisor technology announcements, including:

Riskalyze expands further beyond risk tolerance assessment towards becoming an Envestnet competitor by launching Connected Trading to implement third-party models in its Model Marketplace
Broadridge acquires Fi360 in a strong statement that it anticipates the future of financial advice, even in broker-dealers, will be fiduciary
Galileo raises a massive $77M Series A to expand its white-labeled savings, checking, and debit/credit card services (including for advisors)
Cetera launches a new fee-for-service 401(k) offering powered by AdvicePay to allow 401(k) advisors to get paid directly when providing individual financial planning advice to plan participants

Read the analysis about these announcements in this month's column and a discussion of more trends in advisor technology, including the launch of yet another ‘digital’ RIA custodian (Velox Clearing), more tools from Fidelity and Pershing to choose or customize model portfolios, Timeline's integration with Black Diamond and ByAllAccounts to facilitate real-time updated sustainable withdrawal rate projections for retirees, and Whealthcare's announcement of a fundraising initiative to expand its tools for serving aging clients just as regulators increasingly focus on how advisors can better help prevent elder financial abuse.

And be certain to read to the end, where we have provided an update to our popular new “Financial Advisor FinTech Solutions Map” as well.

I hope you're continuing to find this new column on financial advisor technology to be helpful. Please share your comments at the end and let me know what you think!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!

Weekend Reading for Financial Planners (Nov 2-3)

November 1, 2019 03:46 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with a fascinating look at a new CFP disclosure form from Northwestern Mutual, in advance of the CFP Board's new fiduciary disclosure rules, that not only provides a template for what the future of (more thorough) CFP fiduciary disclosure may look like, but also raises questions anew of whether CFP professionals will find it difficult to comply with their fiduciary obligations themselves when working for firms that are primarily in the business of manufacturing and distributing products. Also in the news this week is the official launch of the OneFPA Network "Beta Test", as more than 80% of FPA's 86 chapters declined to even apply but the organization is still moving forward with its test of new staffing, accounting, and technology systems by accepting 11 of the 16 chapters that did request to be involved.

From there, we have several articles on spending and debt, including a look at the common myths of what does (and doesn't) actually increase or decrease one's credit score, the rise of new online installment notes that are replacing payday lending as the new triple-digit-interest-rate high-risk lending program, and how the "old rules of wealth" to save early and often for retirement are falling by the wayside with a Millennial generation that is still struggling to balance the desire to buy a home, start a family, build a career, and save for retirement... on top of carrying a potential mountainload of student loan debt that in some cases may literally take until retirement to repay!

We also have a few articles on financial advisor marketing, including new research on where financial advisors are spending their marketing dollars that work (hint: increasingly on not just social media, but digital advertisements funneling interested prospects to increasingly targeted advisor websites and landing pages), what it really means to pursue a relationship with a "Center Of Influence" (and how to identify such COIs beyond the typical lawyers and accountants), why you should not use a quick auto-responder with every new LinkedIn connection you make, and how Opt-In Text Messages are becoming a new financial advisor marketing channel.

We wrap up with three interesting articles, all around the theme of the growing awareness of the advisory industries' issues with not only gender discrimination but also sexual harassment and sexual assault in the aftermath of the Ken Fisher incident: the first shares the stories of women in finance who have been sexually harassed or assaulted at a financial advisor conference; the second shares stories of women in finance who have faced gender discrimination challenges or similar sexual harassment or assault in the workplace; and the last looks at how advisory industry conferences are beginning to implement more stringent harassment and assault reporting tools, with actual enforcement mechanisms in place, to finally try to change behavior at industry events and hold accountable those engaging in inappropriate behavior.

Enjoy the 'light' reading!

Optimizing 529A ABLE Plan Contributions and Distributions To Benefit Individuals With Disabilities

October 30, 2019 07:06 am 12 Comments CATEGORY: Investments

Planning for individuals with disabilities poses unique challenges when coordinating across the potentially high cost of special care needs, Federal and state assistance programs such as Supplemental Security Income (SSI) and Medicaid, and savings strategies designed to work together with those assistance programs (which themselves can have complex requirements to qualify). For example, in 2014, Congress passed the “Achieving a Better Life Experience” (ABLE) Act that created the tax-favored 529A account, providing tax-free growth opportunities for individuals with disabilities… at least, those with a disability (or blindness) that was diagnosed before the age of 26.

529A accounts allow for annual contributions, from all sources, of up to $15,000/year (the annual gift tax exclusion limit) plus earnings of the ABLE beneficiary, up to the annual poverty limit for a one-person household. They also allow for tax-deferred earnings on contributions inside the 529A plan, and tax-free withdrawals for qualified disability-related expenses. While contributions cannot be deducted from income on Federal tax returns, many states do allow contributions to be deducted on state tax returns. The caveat, however, is that most states also allow state-run Medicaid programs to recover expenses from 529A plans once the beneficiary has died (although five states, so far, have prohibited this, with more possibly to follow), which is important because this recovery-of-Medicaid-assistance provision has been a main reason that many individuals have opted against opening 529A accounts since they were created 5 years ago.

But despite their seemingly complex rules and restrictions – and the potential overhang of state Medicaid recovery at death – 529A accounts can still be used to effectively grow assets in a tax-efficient manner, while serving as a ‘spending account’ for a disabled beneficiary. In fact, advisors can help disabled clients to maximize the value of 529A accounts in light of state Medicaid recovery, particularly since the balance of growth and Medicaid recovery opportunities becomes especially pertinent when the beneficiary is expected to live for at least five more years.

Accordingly, the first step in maximizing the use of a 529A plan, “Contribute, But Don’t Distribute”, is to grow the account balance as aggressively and as quickly as possible in the early years in order to maximize tax-free earnings. However, the balance should be kept below $100,000 if the beneficiary is receiving any SSI benefits (though if the individual does not receive such benefits, the account can be allowed to grow to the maximum account balance as specified by the state, which is often greater than the $100,000 SSI limit).

The second step to maximize a 529A plan, “Earn and Burn”, is to systematically withdraw funds any time the account balance reaches the target threshold (to keep the account balance from exceeding the targeted limit) and to use those earnings to pay for qualified disability expenses.

Finally, the last step, “When In Doubt, Empty It Out”, applies to beneficiaries who live in states allowing for Medicaid recovery from the remaining account balance after their death. In this stage, the account holder proactively spends down and uses the 529A account, in full, if/when the beneficiary’s health takes a turn for the worse or their life expectancy otherwise becomes more limited in time horizon (to ensure there’s nothing left in the 529A account shortly before the beneficiary is expected to die).

Ultimately, the key point is that, despite the complex rules around maintaining a 529A account and the risk of state Medicaid recovery taking away the account’s remaining contributions and growth, the expenses for which a 529A account can be used are broadly defined and thus offer flexible strategies for using 529A plans for the benefit of qualifying individuals who are disabled or blind, ensuring those dollars are fully spent for the disabled beneficiary themselves.

#FASuccess Ep 148: Building A Small-Town LGBTQ Niche While Coming Out To Your Broker-Dealer, With Laura LaTourette

October 29, 2019 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 148th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Laura LaTourette. Laura is the founder of Family Wealth Management Group, a hybrid advisory firm in Dahlonega, Georgia that oversees $45 million of assets under management for 86 client households.

What's unique about Laura, though, is the way she's built her advisory firm to work primarily with the LGBTQ community in her rural Georgia town while navigating her own challenges of figuring out when and how to come out of the closet to her own broker-dealer.

In this episode, we talk in-depth about Laura's financial planning process. The series of four financial planning meetings she goes through with every client that includes a unique draft plan meeting, where she presents a tentative series of recommendations to clients not for their implementation, but simply for their feedback, how Laura sets her minimum of financial planning fee that's separate from what she's subsequently paid to help clients implement, and how in recent years, she's begun to refine everything from her website to her data gathering form to better speak to her core LGBTQ niche clientele.

We also talk about Laura's own journey through the financial services industry and building her firm. The way she started out trying to build a multi-advisor agency with centralized support but ultimately found it just wasn't profitable to do so, the path she took to shift away from the multi-advisor model after 10 years to operate a solo advisory firm that she's enjoyed far more, how a desire to build a succession plan is leading her once again to start building towards a multi-advisor ensemble practice, and why she recently decided to hire a new CEO to support her solo advisory firm, who specifically does not have client relationship or business development obligations.

And be certain to listen to the end, where Laura shares her perspective on why it's so important to be authentic to who you are when you're working with clients to build trust, what she's done to find support for herself through the challenging ups and downs of being a lesbian advisor in both a town and an industry that are still not very accepting of the LGBTQ community, and why she joined the Women in Financial Services organization and is now launching her own Rainbow Network to support LGBTQ advisors.

So whether you're interested in hearing about Laura's challenges (and successes) as a part of the LGBTQ community in a small town in northern Georgia, how she structures her entire financial planning process, or how she's developing a network for other LGBTQ financial advisors, then we hope you enjoy this episode of the Financial Advisor Success podast.

Differentiating Your Advisory Firm’s Brand By Finding The Opposing Category In Your White Space

October 28, 2019 07:12 am 0 Comments CATEGORY: Marketing

In the early years of the financial planning profession, advisors were able to effectively differentiate the brand of their advisory firms by relying on language such as “trustworthy”, “knowledgeable”, and even “fiduciary”, to distinguish themselves from often-poorly-trained broker-dealer and insurance company salespeople. But with the rapidly growing number of CFP professionals who provide fiduciary best-interests advice for their clients, built on their years of experience in providing customized financial planning advice, these terms no longer differentiate a financial advisor, and instead simply describe ‘table stakes’ – bare minimum requirements that any financial advisor is expected to possess. Which raises the question of how, with more and more financial advisors joining the industry or continuing to pivot away from products and into fiduciary advice, do talented advisors cope with this rising ‘crisis of differentiation’ and actually brand themselves in a way that stands apart from the rest?

In this guest post, Amy Parvaneh, Founder and CEO of Select Advisors Institute, explains the process she uses to help advisors develop an effective brand for their firm by identifying the valuable, qualitative factors that make an advisor (or their practice) unique, and targeting the right (not already overly saturated) client segment. By delving into these two key branding strategy elements, a financial advisor can create a strong, relevant message that can promote an individual (or their firm) and elicit client engagement from the exact type of clientele they’ve chosen to serve.

The first of these key branding elements is the firm’s "Opposing Category", which consists of the firm’s qualities that go beyond the mere ‘table stakes’ that all advisory firms must have, and distinguishes the advisor as unequivocally unique from others, such as a unique financial planning process that the firm uses or a specific field of expertise the advisor has.

The second key branding element is the firm's "White Space", which includes any client segments that are underserved by other competing advisory firms, which, by definition, means there would be little competition to serve such clients (and ideally, will include clients with whom the advisor would enjoy working in the first place!).

While Opposing Categories can be identified by an introspective assessment of services offered and qualities that an advisor feels are special, White Spaces are best determined by examining current client characteristics, such as demographic criteria and less frequently examined psychographic traits (which describe a client’s habits, beliefs attitudes, and values), to spot where the advisor may have already found some White Space that can be delved into further. Once the Opposing Categories and White Spaces are identified, the advisor can then create an appropriate, personal, and impactful brand, and then use the brand to synchronize the business image, marketing messages, and operations processes.

Ultimately, going through the process of developing a brand message is crucial for advisors who want to hone their existing client segment (or shift their focus to a different segment altogether). By investing the time and effort needed to develop a relevant, genuine branding message, financial advisors will find their marketing efforts are more effective, as they highlight their specific value proposition to a specific (White Space) clientele to grow a successful practice in an increasingly competitive marketplace.

Weekend Reading for Financial Planners (Oct 26-27)

October 25, 2019 03:35 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the announcement that Charles Schwab will allow (free) fractional share trading on their platform, which not only fires a shot back at upstart stock trading platforms like Robinhood that also allow fractional shares, but raises the question of whether Schwab is positioning itself to compete against mutual funds (and ETFs) more directly by facilitating Indexing 2.0 solutions that allow investors to buy the stocks underlying an index fund directly in the exact (fractional) amounts and avoid the cost of the mutual fund or ETF wrapper altogether.

From there, we have several articles on spending advice for clients, from tips on how to help clients who are spending "like mad", a study finding that it may be easier to help clients actually change their savings behavior by engaging their emotionality rather than just trying to make them behave more rationally, understanding the limits of trying to be ever more frugal (or balancing out financial frugality with time frugality), and whether and to what extent advisors have a "moral obligation" to help clients that are on an unsustainable spending path towards portfolio depletion.

We also have a few articles on the trends of advisory firm mergers and acquisitions, including a look at whether the typical deals for RIAs are getting bigger or smaller (hint: it's both bigger over $5B, and smaller under $500M, that is seeing an uptick in deal activity), what to consider when trying to value your own advisory firm, whether advisory firms should be concerned that publicly traded RIA consolidators like FOCS and AMG are lagging the general stock market, and what prospective sellers should be thinking about if they're considering whether to sell their firms (and don't want to botch the deal in the process).

We wrap up with three interesting articles, all around the theme of how shifting generational preferences and experiences are changing consumer behavior: the first looks at the rise of 'group trips', which are going from large guided tour groups (that leave group members unduly beholden to one another) into premium small-group experiences that have become particularly popular with affluent individuals in their 50s and 60s; the second looks at overall Consumer Expenditure Survey data on how Millennial spending compares with Baby Boomers (and Gen X) in their mid-20s to mid-30s, finding that, overall, Millennials earn more and actually don't have to spend as much on 'luxuries' in clothing and entertainment... or can't afford to, because of their substantially higher student loan debt overhang that averages nearly 10X (even after adjusting for inflation) that of the Boomer generation; and the last looks at how Millennials and the subsequent Gen Z now entering the marketplace, are beginning to disrupt the nature of what it means to work in an office, as work changes from a 'place' you go, to a 'thing' you do (from wherever it happens to be convenient to do that work, which may or may not include a lot of physical office time).

Enjoy the 'light' reading!

Kitces & Carl Ep 19: Is Any Financial Advisor Business Model Truly Conflict Free?

October 24, 2019 07:35 am 15 Comments CATEGORY: Kitces & Carl Podcast

In any business relationship, there is a desire of the seller to convince the buyer to purchase their product or service, which presents a fundamental conflict of interest for the seller’s objectivity about whether his/her products or services are really in the buyer’s best interest. But beyond the inevitability of some conflict of interest simply by virtue of the seller/buyer relationship itself (which can never be fully eliminated), there lies a wide spectrum of how manageable (or unmanageable) additional conflicts of interest may be, which is influenced not only by the actual product or service being offered, and how it is compensated, but also by the stories that are told to justify the value of what is being offered.

In our 19th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards talk about these conflicts of interest, and the dilemma that financial advisors face when determining where to draw the line between a ‘manageable’ conflict of interest and one that is ‘unmanageable.’

Advisors whose livelihoods are based on the commissions they generate by selling financial products are often held up as a case-in-point example for such ‘unmanageable’ conflicts of interest. For instance, it may be difficult for an advisor to avoid recommending an annuity with a higher commission payout rate, or the company product that counts towards a year-end bonus. This is not to say there is anything wrong with salespeople, as they do play an important role in facilitating the purchase of products for those who want to purchase one; however, consumers themselves can help manage this conflict with a clear understanding of the customer-salesperson relationship in the first place. It is clearly recognized from the start that the salesperson has very little, if any, stake in the customer’s best interest, and is simply trying to make a sale, and the prospective customer can judge accordingly.

Yet the reality is that sales-based compensation isn’t the only fee structure where conflicts of interest exist. For example, an RIA and its advisor’s compensation is typically based on the amount of assets they have under management, which can present a significant conflict of interest when advising a client to use some of their assets to pay down their debt (or not). Perhaps such conflicts are more manageable for an advisor who “simply” manages investments (since the relationship is generally clear – the asset manager’s objective is clearly to manage the client’s money, and earn the fees being charged accordingly). However, for the financial advisor who offers “comprehensive” financial planning services, the nature of the conflict of interest becomes more problematic. Because now, along with the advice that’s being provided comes the implied understanding that such advice will be in the client’s best interest (by definition of being ‘advice’). Which in turn can complicate the story advisors need to be able to tell their clients, because the asset management fees earned may not seem to reconcile with the financial planning advice they’re being asked to provide. Yet fiduciary advisors need to be comfortable with explaining that apparent gap, in the interest of honest, full disclosure.

Ultimately, the key point is that conflicts of interest will exist regardless of the models or methods financial advisors decide to use. But not all conflicts of interest represent the same depth of conflict, with some more easily managed than others. Which means it’s most important to determine whether the conflict of interest is manageable and still reasonably aligned with the fiduciary responsibility of the advisor, or not. Particularly as both practice models and fiduciary standards evolve, the discussion of what it means to do the right thing as a fiduciary is an important conversation for the financial services industry as a whole to have.

The ‘Behaviorally-Enlightened’ Fiduciary’s Dilemma In Serving Clients Best

October 23, 2019 07:04 am 1 Comment CATEGORY: Client Trust & Communication

While there has been ongoing discussion at both the Federal and state levels of how a fiduciary standard should be defined from a legal perspective, and to whom those standards should apply, there has not been much discussion on what it means to be a fiduciary from a moral perspective. Furthermore, this discussion has not addressed the ways in which acknowledging behavioral insights has complicated determining how a fiduciary ought to act, because, it’s actually simpler to determine the ‘best’ advice for a professional to give a client when the only considerations are financial in nature. If financial advisors, as fiduciaries, wish to incorporate behavioral considerations into how they advise clients, determining which course of action to suggest as ‘best’ becomes more complicated.

In this post, Derek Tharp – lead researcher at Kitces.com, and an assistant professor of finance at the University of Southern Maine – discusses his January 2018 Journal of Personal Finance research paper, “The Behaviorally-Enlightened Fiduciary: Addressing Moral Dilemmas Through a Decision-Theoretic Model of Moral Value Judgment”, where he examines whether a fiduciary has a duty to advise clients from a “behaviorally-enlightened” perspective (reaching a conclusion of ‘yes’), and explores some of the underappreciated moral dilemmas that result from advising clients from a behaviorally-informed perspective.

Why would a behaviorally-informed approach lead to an increase in moral dilemmas? Most importantly, advising clients based on something other than objective financial facts necessarily opens the door to acting paternalistically. Should a financial advisor tell a client about an ‘optimal’ solution if they think the mere process of doing so might lead to a worse outcome than just presenting a ‘realistic’ solution? What if they are just trying to nudge clients in the right direction? Where do advisors draw the line, or should they even be worrying about this in the first place?

Nevertheless, there are some circumstances where advisors are perhaps justified in acting paternalistically, but those circumstances are probably fairly rare and advisors should take seriously their duty of disclosure to clients. Specifically, if the potential upside of a non-disclosed strategy to a client is small, the potential down-side to a non-disclosed strategy to a client is large, and a fiduciary is reasonably justified in their beliefs regarding potential outcomes, then a fiduciary may be more likely to be justified in advising a client from a “behaviorally-enlightened” perspective.

Ultimately, the key point is that financial advisors, as fiduciaries, are faced with new moral dilemmas that arise from attempting to incorporate behavioral insights into how they advise clients. While much of the prior focus has been on the legal responsibilities that fiduciaries have to serve their clients, we need to spend time wrestling with moral considerations as well!

#FASuccess Ep 147: Developing Next-Generation Advisor Talent With An Internal 2-Year Mentoring Program, with Jeff Dobyns

October 22, 2019 07:09 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 147th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Jeff Dobyns. Jeff is the founder of Southwestern Investment Group, a hybrid advisory firm based in the Nashville area that oversees nearly $3.5 billion of assets under management.

What's unique about Jeff, though, is the way he's been able to develop next-generation talent in his firm, with a deliberate focus on not hiring experienced career changers or advisors with an existing book of business, but instead bringing in new advisors in their 20s and giving them the opportunity to learn alongside experienced advisors from day one in a 2-year mentoring program.

In this episode, we talk in depth about the two-year mentoring program that Jeff's firm has built. Why Jeff views it as so critical for new advisors to spend the bulk of their time sitting alongside a senior advisor in every client meeting. How they compensate their new advisors while they're effectively being paid to learn, how they split the cost of talent between the firm itself and the senior advisor who's being supported, and the tasks that they ultimately hand off to the new advisor to create value for the firm while the learning process is still ongoing.

We also talk about the marketing approach that Southwestern Investment Group has used to grow to nearly $3.5 billion of assets under management over the past 17 years. The way the firm got so deeply involved in Dave Ramsey's Endorsed Local Provider, ELP program, the effective return on investment that Jeff's firm has gotten by proactively spending money to get leads, and how Jeff handles the concern that Dave Ramsey is viewed as somewhat controversial by some within the advisor community itself.

And be certain to listen to the end, where Jeff talks about the way he structured leadership within the firm to handle the load of managing more than 100 employees, the way he involves senior advisors of the firm in leadership decisions by creating a Leadership Board, and why he continues to be so focused on attracting and retaining even more next-generation talent into the firm.

Scaling The Efficiency Of Comprehensive Financial Planning By Creating Repeatable Expertise

October 21, 2019 07:48 am 3 Comments CATEGORY: Practice Management

In the early days of being a “financial advisor” at a broker-dealer or insurance company, having ’expertise’ meant being well-trained on the company’s products and their features and benefits. ‘Training’ at large financial services firms was primarily focused on product training (and perhaps training in how to sell those products), with the benefit that when the scope of required knowledge is fairly understood – just the features of a handful of the company’s most popular best-selling products – it takes relatively little time to train in the first place. In other words, training up an advisor’s expertise was rather simple and speedy, because the advisor just had to master the inner workings of a few select products.

In the modern era, though, as financial advice is increasingly comprehensive and holistic, the breadth of what it takes to have ‘expertise’ goes far beyond what was required in the product-centric world of 20 years ago. Yet unfortunately, the reality is that the minimum bar to become a “financial advisor” – generally, a Series 6 and 63, 7 and 66, or a Series 65 exam – is largely unchanged through this shift, built around 3 hours of regulatory exams that most can study for and pass in just a few weeks. The end result is that ‘advisors’ are licensed to provide comprehensive financial advice, with no actual requirement to have any training, education, or experience, in personal finance or advice itself.

On the one hand, a voluntary desire to improve financial planning expertise has led to rapid growth of CFP certification in recent years, with more than 5,000 CFP candidates completing the exam process in 2018, up from approximately 3,000 in 2013. Still, though, the total penetration of CFP certification is still less than 86,000 out of approximately 311,000 financial advisors (or barely more than 25%). Which makes it incredibly difficult to deliver financial planning advice efficiently… when the advisor has to research any and every question the client asks, because they lack the depth of expertise to actually know those answers offhand in the first place.

In fact, recent Kitces research on “How Financial Advisors Actually Do Financial Planning” finds an emerging “Experience-Expertise” gap, where having CFP certification reduces the time it takes to complete the first-year financial planning process by 22%, and that amongst the most experienced advisors, having CFP certification reduces the time of the financial planning process by a whopping 44%. As the more experienced the financial advisor, the more confident they tend to be, and the more affluent and complex clientele they tend to attract… which means advisors with more experience actually end out spending even more time to get through the financial planning process (despite the availability of technology, and their years or decades of experience doing it!).

Similarly, more experienced financial advisors also tend to increasingly struggle with the time efficiency of financial planning, because an increasingly complex range of clientele means an ever-widening range of complex situations that the advisor must provide advice on. Notably, though, the real challenge isn’t that more experienced advisors tend to have more sophisticated clientele with more complex needs, but that their needs are differently complex. Which means formulating a niche or more specialized expertise for a particular target clientele can not only be effective for marketing purposes, but also becomes a substantial efficiency improvement, as once the advisor researches and ’learns’ how to handle a particular complex situation, it becomes repeatable expertise for the future as well.

In addition, crafting a more repeatable financial planning process also makes it possible to improve the efficiency of financial planning by leveraging paraplanners who can do not only a portion of the back-office work in financial planning preparation, but even limited-scope portions of the financial planning meeting process as well. Such that, in practice, solo advisors who leverage a paraplanner are able to service an average of 64% more clients and generate 80% more take-home pay by better aligning the tasks being done to the skill and experience (and compensation) level of the team member.

The bottom line, though, is simply to recognize that the majority of the time spent in the financial planning process isn’t actually in the phases of Analyzing and Developing the financial planning recommendations themselves, but also in Establishing the relationship, Gathering data, Presenting the plan, Implementing it, and the ongoing Monitoring process (and the never-ending stream of financial planning questions that crop up from clients along the way). Most of which are human-to-human interactions and communication (either in-person, by video, or via email)… which means the key to improving their efficiency is not necessarily investing in the technology to better automate those processes, but instead investing into the human capital of advisors themselves with deeper and more focused expertise, and a wider range of skill levels to which various financial planning tasks throughout the process can be appropriately (and cost-effectively) matched.