Most planning firms pride themselves on providing great service to their clients, which often involves going to great lengths to satisfy client requests. Yet in reality, it seems that a lot of our intensive service efforts are less a function of what our clients asked for, and more about what we thought we should offer them. Perhaps a common example is something like quarterly performance statements; most firms say their clients "want" them, yet in truth most firms started sending them to clients on a quarterly basis before ever asking and surveying their clients about whether it was what they really wanted and needed. Now, of course, clients have an expectation of receiving them regularly, and weening them off of a currently provided service can be difficult. But in the end, did clients really need that service, or do clients only expect because we created that expectation for them, but now will feel like we're taking something away to change it?
The growth of the financial planning profession over the past 40 years is a testament to the fundamental need that it serves; if financial planners weren’t delivering value, firms wouldn’t be growing the way that they are.
Yet for so many planning firms, there is no process to really evaluate what it is that clients want, and whether they’re receiving it. Instead, we craft an offering that we think clients will like, and then try to convince them to hire us to receive it.
But is that really the best way to build a business’ service offering?
Determining whether an active manager is having a positive impact is a difficult thing to measure, without a doubt. Yet before one can even begin to determine if a manager is delivering value, you must first consider what it takes to constitute "value" in the first place. How much does an active manager need to outperform, in order to be delivering value to the client, to be worth the fee that is paid to the manager? Yet for some reason, we scale we use to measure the cost is very different than how we measure (out)performance. Is there a double-standard here?
Once again the charge of being a “market timer” is being hurled at active portfolio managers in a recent discussion thread initiated by Bob Veres on Financial-Planning.com. The term itself seems to get planners into such a tizzy, though, while the actual definition of what constitutes “market timing” is unclear at best; perhaps a new definition of market timing is in order. To say the least, the most common definition of market timing, the one that implies that market timers are similar to “retail” day-traders willing to take their portfolios to extreme asset allocations based on their very short-term predictions of future market behavior, is badly in need of an upgrade.
For much of the past decade or two, one of the most important qualifications for a "good" mutual fund manager was that he/she keep the fund squarely within the constraints of its Morningstar style box, while hopefully generating some positive alpha. Now, however, an emerging group of managers are overtly bucking the trend, with a new approach of "free range" investing.
Noted financial planning writer and commentator Bob Veres has initiated an entry on Change.org, entitled "Fix the financial regulators by imposing a fiduciary standard on all who offer financial advice." Will this be a new way to make the call for fiduciary standards better heard in Washington?Read More...
In a press release this morning, the CFP Board announced the creation of the new "Council on Education" for the purposes of developing a model curriculum, determining continuing education requirements, reviewing course providers, and implementing a peer review process, among other things. Huh? Isn't that what the CFP Board already does!?
Welcome to the February 2024 issue of the Latest News in Financial #AdvisorTech – 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!
This month's edition kicks off with the news that financial planning software platform RightCapital has launched a workflow management tool called RightFlows to help advisors manage and assign steps in the financial planning process to team members and clients – which on the one hand capitalizes on advisor demand for workflow solutions tailored to the financial planning process without using a separate third-party tool, but on the other hand raises questions about how many different workflow support tools advisors will want to manage, given that many already use workflows within their CRM software (and other individual software tools may follow RightCapital's lead by offering their own embedded workflows).
From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:
- Dispatch (formerly OneAdvisory) recently raised $8 million in seed funding as it seeks to provide a centralized data warehousing solution for advisory firms and eliminate the need for point-to-point data integrations between individual software solutions – which although a relatively new category for AdvisorTech, seems poised to pick up steam as advisors increasingly seek better integration among their constantly-expanding tech stacks
- Flourish has launched a new annuities platform, aiming to not only provide a marketplace of fee-based annuities for fiduciary RIAs but also to solve for the operational challenges of implementing annuities (and their notoriously burdensome paperwork) through streamlining and automation of the application process
- Estate planning software provider Vanilla has announced a partnership with Vanguard's Ultra-High-Net-Worth (UHNW)-focused Personal Advisors Wealth Management, as Vanguard seeks to improve its estate planning offerings to better compete with other UHNW-focused firms and shows that the market for estate planning technology remains strong even as fewer and fewer people are actually subject to estate tax
Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including:
- Income Lab has released Life Hub, its holistic "financial dashboard" tool, as a standalone software offering where it will compete with Asset-Map – which underscores the growing popularity of tools that can clearly visualize a client's current financial situation, while highlighting how different software companies have approached the question of whether to split off popular features as their own standalone solutions or to leave them "bundled" with their other offerings
- At the annual T3 Technology Conference, Artificial Intelligence (AI)-related vendors were present, but overall the tone towards AI was more measured than expected given the hype surrounding AI over the past year – suggesting that even though AI may prove transformative for AdvisorTech in the long run, it has a long road ahead for gaining trust and adoption in the advisory industry
And be certain to read to the end, where we have provided an update to our popular "Financial AdvisorTech Solutions Map" (and also added the changes to our AdvisorTech Directory) as well!
*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!
Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that as Millennials grow their wealth, they could be increasingly turning to financial advisors for guidance. But amid competition from large asset managers and broker-dealers, advisors can consider how they can shape their service offerings and fee structures to attract Millennials and build client relationships that could last for decades to come.
Also in industry news this week:
- As broker-dealers increasingly offer fee-based planning services, RIAs are responding by enhancing their own service offerings, and offering alternative fee structures to differentiate themselves from the competition
- More states are adopting continuing education requirements for investment advisers, with three states establishing rules that must be followed by the end of 2022
From there, we have several articles on practice management:
- A new company aims to train the next generation of planners and provide a valuable outsourced service to advisory firms
- Why creating internal career paths and considering fully remote workers could help firms thrive in the current tight labor market for advisor talent
- What advisors are doing to maximize the efficiency of their firms without bringing on additional staff
We also have a number of articles on retirement planning:
- How the introduction of new ‘modern’ tontine products could provide retirees with a new way to mitigate longevity risk
- The options available to clients who want to reverse their decision to start claiming Social Security benefits
- How sequence of return risk can affect accumulators as well as retirees
We wrap up with three final articles, all about time management:
- Why scaling your time can be more effective than trying to stretch or save it
- How exercise can not only extend your lifespan, but also increase the quality of those years
- How the ‘money value of time’ can help explain why certain periods of time are more valuable than others
Enjoy the ‘light’ reading!
Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that the T3 Technology Conference was held last week after a two-year hiatus, drawing a record crowd to see the latest in advisor technology. The event highlighted the growing data management needs of advisors as well as advisors' interest in ways to better scale their practices while continuing to offer individualized planning to their clients.
Also in industry news this week:
- A recent survey shows that the focus of many RIAs remains on attracting ‘mass affluent’ clients through referrals from current clients, perhaps suggesting an opportunity for those willing to break the mold in terms of client wealth or marketing strategies
- With many firms looking to diversify the traditionally male-dominated financial advisory industry, the market for female advisors has become increasingly competitive
From there, we have several articles on tax and retirement planning:
- While the recent market downturn has created opportunities for advisors to engage in tax-loss harvesting in client accounts, there are several potential pitfalls to avoid
- How to find the best solution for clients to make contributions to Roth retirement accounts, no matter their income
- Why a contingent deferred annuity might be an appropriate vehicle for clients who want income protection while keeping their assets invested in the market
We also have a number of articles on advisor marketing:
- Why webinars can be a valuable lead-generation tool for advisors and how to make them more effective
- The key features of advisor websites, from a call to action to credibility indicators, that turn visitors into prospects
- Why advisors might want to avoid using the phrase ‘follow-up’ with prospects and an alternative option that could lead to converting more into clients
We wrap up with three final articles, all about saying ‘no’:
- How to say ‘no’ firmly and gracefully, whether it is to a friend or a prospective client
- Why it is not necessary to make the most out of every minute of the day and how taking time to do nothing and being idle can improve your mental and physical health
- How saying ‘no’ can allow advisory firm owners to set their own schedules and work with their optimal clients
Enjoy the ‘light’ reading!