In the financial planning world, most firms are small businesses that are struggling to get larger, trying to grow the practice by simultaneously competing for the same biggest clients and at the same time serving anyone who is able and willing to pay for financial planning services while slowly raising minimums to become more profitable. In response, many practice management consultants have suggested that financial planners establish a niche to build their businesses, focusing on a smaller market they can dominate rather than a larger market they struggle in. Notwithstanding this advice, few firms have adopted the niche approach, most commonly out of a fear that if they narrow the focus of the practice it will simply lead to fewer clients. Yet the reality is that in other industries, firms are growing like never before by focusing not on the biggest clients and opportunities, but by capitalizing on "the long tail" of smaller, niche segments that can add up to real dollars, and become accessible because of the how the internet facilitates business in the digital age. Is it time for financial planners to similarly adopt the long tail approach?Read More...
Identifying centers of influence has been useful and effective for businesses and advertisers as long as people of influence have wielded power in their communities. Historically, though, the challenge has been that it's not always clear who is influential, especially in relatively narrow niches. However, as the use of social media continues to grow and evolve, quantifying influence, at least through social media channels, is becoming possible for the first time - and companies are jumping quickly to fill the void.
The current leader in this space is a company called Klout, which seeks to make itself the standard of measuring (online) influence. While thus far the company is relatively new and its impact is limited, it is growing fast. In fact, in some industries, an individual's Klout score is already impacting their ability to get a job, or their opportunity to receive discounts and perks from advertisers. While the time hasn't arrived yet, Klout may soon become relevant in the world of financial planning as well, for everything from increasing the visibility of an influential planner, to identifying centers of influence to contact in a target niche market. Which raises the question: do you have Klout?
As the world moves inexorably forward into the digital age, technology increasingly takes on a role in both augmenting and competing against traditional businesses. The world of financial services is no exception; in recent years, technology has taken leaps and bounds to augment and enhance what financial planners do, but now a new breed of technology firms threatens to challenge advisors as well. The rise of the so-called "robo advisor" - online startup firms that aiming to replace traditional advisors, as TurboTax did to tax preparers - has begun.
But so far, it's unclear whether the current breed of robo advisors will really make a dent in what real advisors do; in fact, the scope of most robo advisors is so narrowly focused on delivering passive, strategic, low-cost index portfolios, that arguably their greatest competition is not from comprehensive financial planners but instead from do-it-yourselfer alternatives like Vanguard and Charles Schwab!
The real test for the robo advisors, though, is the one they have not yet faced - will clients really be willing to stay the course through turbulent markets and change their behavior for the better because a computer told them to do so?Read More...
Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with an interesting article by Bob Veres, suggesting that most advisors may be undercharging their clients, by as much as 50%! From there, we look at a number of practice management articles, including a nice piece from Bill Winterberg about using online video, the shift to a more 'conversational' approach to marketing, a strongly-worded article from Mark Tibergien suggesting that women are NOT a practice niche, and an article highlighting the recently enacted 408(b)(2) fee disclosure rules for retirement plans (is your practice in compliance?). We also look at a number of investment articles this week, including one from Dan Moisand questioning the use of many types of "alternatives", another from Ed Easterling of Crestmont Research suggesting that we may still be in the early stages of the secular bear market (a nightmare for Wall Street and the advisory world?), and an intriguing article in the Journal of Financial Planning showing how guaranteed products may deserve less of an allocation after adjusting for their credit and illiquidity risks. We wrap up with two interesting policy articles - one about healthcare "myths" we must confront to move forward with reform, and another exploring how government policy decisions might be better shaped with input from behavioral scientists - and close with a nice light article from Morningstar Advisor with "23 Best Practices" tips for planners to implement. Enjoy the reading!
Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with an article about the FPA, its declining membership, and prospective organizational changes as the CEO retires in 2014. From there, we look at a number of practice management articles, including an overview of the emerging niche of firms that provide quality lead generation for financial advisors, how to sustain a study group, the importance of e-delivery of documents not only for your firm but for your clients, a new software package to help with investment advisory fee billing, and two marketing articles - both emphasizing the value of being unique and different and having a niche to grow the business effectively. From there, we look at an interesting interview with Jeremy Grantham about investing opportunities, a striking article that suggests the giant pile of cash corporations are sitting on may be a bad sign and not a good sign, an article from the Journal of Financial Planning about a new way to manage tail risk for client portfolios, and coverage of an emerging new product called a "stand-alone living benefit" designed to provide all the lifetime income guarantees contained in today's variable annuities but wrapped around a client's own investment account instead. We wrap up with a slightly more light-hearted list of investing tips and maxims that would probably be a good reminder for almost any planner and his/her clients. Enjoy the reading!
As the visibility of social media continues to grow, many advisors have become skeptical about whether it represents a new trend for growing a business that's here to stay, or simply a fad that will soon be gone. Yet the reality is that when done best, social media isn't really a new strategy for growing a business at all, it's simply a new medium to facilitate the same strategy advisors have always engaged in: to become someone that people know and trust, to whom they would be comfortable to refer, and cultivating a network of prospective referrers. The difference is that with social media, the potential exists to reach both a larger and more focused network of potential target clientele, allowing the growth strategy to be implemented even more effectively. Read More...
As social media continues to rise in the digital age, financial planners are increasingly getting involved on platforms like Facebook and Twitter. However, fears and misconceptions about social media - along with a general uncertainty about exactly what the point is and why planners should get involved - have dramatically slowed advisor adoption. Yet the reality is that there are several simple and clear ways that platforms like Twitter can be used to create value for financial planners - including some easy ways, like helping the news find you and social listening, that pose no compliance hassles or risks, either! Keep reading for some tips about how to get started, what programs to use, and how to get start getting value from Twitter!
Enjoy the current installment of "weekend reading for financial planners" - this week's edition focuses entirely on practice management issues, leading off with a discussion in the Journal of Financial Planning about whether the profession needs to institute a process of peer review to both clean up those delivering poor advice, and to help challenge everyone to deliver better advice. From there, we look at some articles about how to navigate the challenges of being in a small firm, from how to demonstrate that you can compete with the services of larger firms, to supporting the career development of staff in a small firm environment, to managing the challenges when you're both the business owner and the financial advisor driving the firm. We also look at some articles that share how to know whether your website is a clunker, how advisors are adopting video on their websites, and how your marketing efforts should be certain to both capture target clients and allow unqualified clients to slip through your marketing net so you don't waste time finding out you can't work with them anyway. We also look at a good article by Mark Tibergien about the key traits for an enduring advisor firm, and a discussion by Bob Clark of how some independent broker-dealers are stepping up to define a new offering - with remarkably high payouts for the B-D world - to be appealing to the new independent advisor. Wrapping up, we look at an interesting article from the Harvard Business Review about how Gen X and Y are redefining a new, more human definition of what it means to be a "professional" and a nice article from Bill Bachrach reminding us how important it is to take a real vacation - with some concrete tips about how to really do that, especially if you're not good at taking vacation in the first place. Enjoy the reading!
As the financial planning world continues its journey into the digital age, marketing and growing a financial planning practice faces new challenges. Some firms suffer as methods no longer work the way they once did, while others struggle to implement new strategies like blogging and social media without any clear strategy or understanding of how to do it successfully. Yet through it all, recent marketing research on advisory firms has shown a new category of marketing that has quietly emerged as the marketing method with the greatest growth on an absolute and relative basis: online search, where the firm attracts clients through Google, Bing, other search engines, and social media sharing. While the rise of online search is still in a nascent phase, its prospects are bright as the world goes digital. Accordingly, the best firms are beginning to take the key actions now that will be necessary for success, from better defining target clientele, to creating relevant content and distributing it, to beefing up the raw aesthetic quality of their websites so they leave a good impression - so that in the future, they won't have to find new clients, because the new clients will find them!Read More...
Enjoy the current installment of "weekend reading for financial planners" - this week's edition highlights a new analytical tool from Morningstar that can apparently help you to benchmark your (AUM) fees against the industry, an interesting perspective on what really makes clients refer you (hint: it's about what's in it for them, not for you), and a look at how easy it is to build a website these days (yet how many advisors still haven't done so). We also look at an article about how to have difficult conversations with clients, and two industry trends articles about Hartford's departure from the variable annuity space, and Prudential's departure from the long-term care insurance market (with Genworth stepping up to fill the void). We finish with an article about fixed income strategies that advisors are using in today's marketplace, a look at how the term financial planner is being misused around the world and what the Financial Planning Standards Board has to say about it, and a lighter look from the Harvard Business Review at two lists you should maintain every day - what you will focus on doing, and what you will commit to ignoring - to enhance your productivity and success. Enjoy the reading!