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Practice Management

The best practice management ideas you may never have seen, from top practitioners

This Practice Management article is intended for financial advisors only (registered representatives of broker/dealers or associated persons of Registered Investment Advisors).

The financial advice industry is changing rapidly, and advisors face an array of new competitive pressures, compliance challenges, and potential threats. Just to keep up, you may need to shift gears, scale up, shift focus, or otherwise change your firm’s status quo.

We find many of our best practice management ideas often don’t get published in print—they come from blog posts, conference coverage, webinars, and other online offerings. So we pored through Financial Planning’s digital content to find the best tips and tricks that our print readers might have missed. By all means, steal a few of these ideas and start putting them to work for you.

Redecorate your office—Want prospects to take your advice and make a move? Reducing clients’ stress and increasing their physiological well-being will make them more likely to take action, said planning professor John Grable at the Financial Planning Association (FPA) Insight conference this spring. “If you want to manage stress, remove your desk,” he says— particularly if clients are mostly below 50 or primarily female. “And don’t have CNBC running in your office”—or Bloomberg or Fox Business, he adds.

Partner with another CFP—Rather than going solo, team up for client meetings, suggests Melissa Joy, director of wealth management at the Center for Financial Planning in Southfield, Michigan. Familiarity can lead to blind spots, she says: “In our firm, that second team member has uncovered estate-planning opportunities, suggested novel Social Security-claiming methods, and uncovered unknown client goals.”

Start to step back—“One primary reason why advisors have not established a succession plan is that they lack the ability to release control,” says Jason Card, VP of advisor solutions for J.W. Cole Financial. “The more systems, processes, and controls you have in place, the better.” Can you restructure an office visit so another advisor could step in and perform the technical aspects of the role without affecting the client experience?”

Run a cyber-attack drill—As more complex cyber-attackers target sensitive financial data, one of the most important things advisors can do is to test themselves to see how they would handle a breach, says Preparis CEO Armistead Whitney. “It opens the eyes on a senior level...to the role of the employees, which is what the SEC wants,” he told an audience at the “Technology Tools for Today” T3 conference. A test allows a firm to identify the weak links in its system.

Create family “boot camps”—Set up retreats and seminars to encourage families to discuss their finances in the context of their values, says Stacy Allred, managing director of Merrill Lynch’s Center for Family Wealth Dynamics and Governance. She cites one family whose daughter came back from a boot camp convinced of the need for a family meeting. Her father opposed it at first, but the boot camp gave her the tools and motivation to push back. “She got fired up and she was persistent,” Allred says. “She wanted to change the culture of not talking about these things.”

Don’t e-mail like a robot—“Since e-mail remains one of the most effective marketing tools in your arsenal, it’s important to send it off well equipped,” says Kellie Gibson, marketing writer at Advisor Websites. A human-sounding, content-filled message with a well-thought-out subject line is more likely to get attention.

Know all the goals—“It’s important for an advisor to understand where prospects see themselves in the short, medium, and long term,” says Drew Horter, founder of Cincinnati RIA Horter Investment Management. “After our advisors determine and record personal and financial goals, we set actionable steps—such as saving more money or shifting investment strategies.”

Try the canoe test—Relationships matter, says Nathan Mersereau of Planning Alternatives in Bloomfield Hills, Michigan. As you’re assessing a potential relationship, he says, ask yourself: “Would I want to spend a day in a canoe with this person?” Administer the “canoe test” whenever you are acquiring a firm, adding a new executive (or even a client) or vetting a key vendor, he says.

Separate your web presence—Think about developing your own brand online, “separate from what you’re doing with your firm,” says Sabrina Clark, director of marketing and corporate communications at BrandYourself. At the T3 conference, she suggested creating a good domain name, becoming active on social media and focusing on search engine optimization (SEO).

Build rapport with a seller—Although nearly half of all financial advisors are at least 55 years old, according to a Cerulli Associates study, most are not ready to sell, says Card. “Acquisitions frequently fall apart because a buyer never took the time to get to know the seller’s underlying motivations and desires,” he says. “It’s become clear to me that building a rapport is critical.”

Stop using revenue multiples—Multiples can be an easy way to rough out valuations on a golf course, but they’re less useful for M&A calculations, says David DeVoe, managing partner of DeVoe & Co. “Unfortunately, it is not uncommon to hear of advisors asking their employees to risk their savings—often their life savings—to become a company shareholder based on cocktail napkin math,” he says.

Calculate your net new AUM—“Metrics are essential for the vision of the company,” said Paul West, managing director of Carson Wealth Management, “and firms have to make sure there is accountability and responsibility for tracking, performing and implementing those metrics.” Net new AUM is “one of the healthiest things” a firm can track, West told advisors at TD Ameritrade’s national conference. “It’s a high-quality reality check and the best way to track growth.”

Use Google Analytics—Why don’t more advisors use Google Analytics to understand their audience? “Our best guess is that it’s jargon-rich, confusing, and overwhelming,” says Craig Faulkner, CEO of FMG Suite. But advisors only need to know three things about their site, he says: how much traffic comes to the site; who makes up that traffic; and what visitors are actually doing.

Work smarter with other pros—Find the right way to work with other professionals, says Steve Dudash, president of Chicago-based IHT Wealth Management. “First and foremost, be respectful of the other pros in the room,” he says. “Don’t make someone else look bad. It will only come back to hurt you.” But that doesn’t mean you shouldn’t question opinions or plans, he says. “In fact, with attorneys, make it a point to find something to challenge them on, politely. It helps show that you are their equal and not just a guy looking to flip stocks or sell a big insurance policy.”

Watch for abuse signs—Advisors who deal with elderly clients need to watch for signs of diminished cognitive abilities and potential elder financial abuse. “The most important thing is for people to be trained to spot problems,” says Betty Malks of the National Adult Protective Services Association. “And they need to be trained to know where to go for help.” 

Master the sound bite—Advisors looking for publicity often have a hard time getting their point across. When speaking with a journalist, keep it short, says Impact Communications CEO Marie Swift—know how to make your point in a couple of sentences. Other tips: Be specific, have a strong point of view, and make it understandable to the general audience.

Rework your bio—“Your biography or ‘About Me’ section is one of the most-read pieces of content on your website,” says Gibson. “Select the experiences that shape your success [and] form your advisor identity, and package them in a way that prospective clients will buy.” Avoid corporate-speak, and make sure you sound like you: “It’s nearly impossible [for prospects] to pick you when you sound like everyone else.”

Make exclusion gifts early—Even with very high federal estate-tax exemptions, annual exclusion gifts can still make sense, especially for clients in states with their own estate tax, says Mirick O’Connell estate-planning attorney Tracy Craig. Make these gifts at the beginning of the year, she says—so if something were to happen to your clients during the course of the year, the value of the gift would already be outside of the estate for estate-tax purposes.

Pick up the phone—To grow your business, get out of your comfort zone, says John Anderson, managing director of practice management solutions for the SEI Advisor Network. “Is there one prospect that you have targeted but haven’t found that perfect moment to connect with?” he asks. “Forget about trying to find the right time—just find it. Don’t send an e-mail or a letter—pick up the phone and call. Ask him/her out for coffee or lunch. Pick neutral ground.”

Watch for family bullies—To manipulate older parents, adult children may threaten not to visit or call. But when family members are the bullies, advisors must have the tools to ensure that clients get help. “In those situations, I’ll say to the client, ‘I know you love your son, but, frankly, you should not give the house to him before you pass away because it’s not a good decision,’” suggests Stephen Lovell, an advisor in San Francisco.

Be strategic about 401(k) plans—Many RIA firms are in the retirement plan space as an accommodation to a couple of clients, says Meg Kelleher, an executive VP at Fidelity Institutional Wealth Services. She suggests firms be more deliberate: “We’ve seen the RIAs we work with thrive in the small-plan market—their average plan size is about $2 million in assets. A truth about small plans is that they often require customization, and RIAs are in a unique position to customize.”

Get it right on Form ADVParts 1 and 2 of your Form ADV are the first things regulators look at, says compliance consultant (and former advisor) Cindi Hill. Review both parts annually and make any necessary changes, she said at The National Association of Personal Financial Advisors (NAPFA) spring conference. And remember to give ADV Part 2 to every new client within 48 hours, she adds: Clients get five days to change their minds and get all their money back.

Estate-Planning Specifics

Don’t bet on an inheritance—Don’t let your baby-boomer clients rely on an expected inheritance as a retirement plan, warns Atlanta estate-planning attorney Jeff Scroggin: As their parents live longer, that inheritance may be minimal—if there’s any at all. In fact, some clients may have to support parents who are living longer than expected, he noted during a session at the FPA Retreat in April. Moreover, 24 states have enacted filial support statutes that might let creditors go after children for the cost of a parent’s care, with possible criminal penalties for noncompliance.

Try a “foundation lite”—Set clients up with donor-advised funds to get their children, grandchildren and other beneficiaries involved in long-term charitable giving as part of their estate planning process, says Kyle Brownlee, CEO at Wymer Brownlee, in Enid, Oklahoma. “One good way to start is by helping clients articulate the core values they hope to pass on,” he says.

Beware of troublesome bequests—Some assets could prove problematic in a bequest, says Scroggin. A firearm could be a liability if the weapon is prohibited or if the heir has a felony offense, he told a crowd at the annual FPA Retreat. Some airlines—he cited Delta—restrict an individual’s ability to bequeath frequent-flier miles or perks. Stored reproductive assets can also create a minefield for planners: What would be a child’s rights if he or she were born using frozen sperm after a parent’s death? Finally, for some celebrity clients, Scroggin suggests a key issue might be the valuation of the “right of publicity.”

Begin after the wedding—Newly married couples should start thinking about estate planning sooner rather than later, advises Craig. First-time married couples should change their beneficiary designation, review life insurance policies, attain durable powers of attorney and health advance directives, execute a basic will and discuss the planning ramifications of home ownership by one or both partners.

Find the right attorney—Ask questions to ensure you have the right estate planning attorney, say Premier Trust co-founder Robert W. Bruderman and Triad Advisors Executive Vice President and Chief Marketing Officer Jeffrey Rosenthal. Hypothetical case studies will help you assess attorneys’ competence and understand their potential fit. Asking about various trust strategies might help determine philosophical alignment. And “Can you explain ...” requests will help you determine whether the attorney can break down complex concepts in relatable language for your clients.

Connecting with Millennials

Re-price for younger clients—Advisors shouldn’t just want to work with Gen Y clients because they will be wealthy someday, says Bozeman, Montana, planner Alan Moore. “You want them because they’re profitable today,” says the co-founder of XY Planning Network, an organization supporting fee-only advisors who serve Gen X and Gen Y clients. Moore and Minneapolis-area planner Sophia Bera suggested the following pricing during a NAPFA conference panel: $1,000 upfront, a $150 monthly retainer and 1% of AUM.

Think globally —Connected to the world through technology, millennials are the first generation to be truly global, says David Thompson, managing director of the Phoenix Marketing International Affluent Practice. “This mindset is reflected by their willingness to seek employment in foreign countries, balance their portfolios with greater exposure to foreign or global securities, or to hold money in offshore accounts. Wealth management firms must demonstrate a global perspective in asset allocation and diversification, communications, and portfolio planning with these clients.”

Engage on social media—“Some advisors are still stuck in the late 1990s, when social media didn’t exist and websites were seen as an extension of a company’s marketing brochure,” explains Matt Matrisian, senior vice president and director of practice management at AssetMark. “Advisors today must speak to their target market through an engaging website and, to a lesser degree, social media sites such as LinkedIn or Twitter.”

Revamp your website —Meagan Hency, director of product marketing at Hearsay Social, says most advisor websites are in need of a revamp. “Make sure your site isn’t frozen in time,” she said. “It’s far easier to update content regularly to demonstrate that you are in touch than it is to make up for lost business as prospects move on to the next advisor that popped up in their search results.”

Tips and Tricks from the Dream Team

Create your niche, know your value proposition, and be sure to write it all down clearly.

In a Financial Planning webinar earlier this year, listeners got some great ideas from a team of practice management experts: Joni Youngwirth, Commonwealth Financial Network’s managing principal for practice management; Fidelity Investments executive vice president David Canter; and Christine Gaze, president of Purpose Consulting Group. Here are a few of the most interesting suggestions they offered up:

Pick your ideal clients—Advisors need to be clear about who their ideal clients are, says Canter. He suggests that advisors should identify their 15 best clients—and then try to replicate them. The parameters can vary, he says—advisors can base it on who can serve as a referral to other clients, or even just who the advisor enjoys working with, he says. Either way, Canter says, advisors should then be able to articulate the value they bring to this specific group of clients.

Many of the best advisors specialize, Gaze adds: “They’re known for something.” Advisors should identify a specific area—whether geographic, sociographic, or even employees of a specific company—then research everything they can find on the topics relevant to this group. For advisors targeting a single employer, for instance, she suggests a deep dive into the company’s benefits plan.

Zero in on revenue —In addition to identifying your favorite clients, Youngwirth also suggests ranking clients on the revenue per household each generates. Advisors often encounter an “aha” moment when they realize they’re actually losing money on some clients, she says: “When they see this, they see their business in an entirely different light.” While advisors are often reluctant to prune their client list, a revenue-per-household gauge can be the catalyst for action, she says.

Become an elder care resource —A 65-year-old couple can expect to pay 67% of their Social Security benefits—hundreds of thousands of dollars—on health care, Gaze notes. So it’s a part of their financial life that is ripe for advice. She suggests that advisors offer seminars or a list of local eldercare resources; she also recommends the eldercare.gov site as a resource. And talk to clients before they’re actually facing these situations, she adds: “Have these conversations during ‘peacetime.’ ”

Write down your business plan—Advisors wear multiple hats, not the least of which is that of CEO, says Youngwirth, and most advisors are always looking to improve, she says. To balance all this, she argues that planners need to create a documented plan. Brevity is crucial, she says: Having two or three lucid pages is better than a “big huge plan full of gobbledygook.” She also encourages advisors to share their plans. But just writing it down is a beneficial first step.

“Some advisors tell me, ‘I created a plan a few years ago, but it’s sitting in a drawer and never been used,’” she says. “But even that is better than never doing a plan in the first place.”

Experiment with Gen Y clients—Advisors should develop a test kitchen to offer advice to the “emerging affluent,” Canter says. “If you’re working with clients who are boomers, find a way to engage with their kids,” he says. First, just ask for an introduction, he says. Or have a forum specifically for these clients—bearing in mind that they’ll be in a different life stage than your existing clients. “Maybe they need to begin saving for retirement or a new home,” he suggests.

Coach your staff —There can be a big disconnect between next-gen advisors and established advisors, says Gaze. Senior advisors need to do a significant amount of coaching—she suggests five or six hours a month—to close the gap. Formalize meetings to make them a priority. “Create time to connect instead of relying on ad hoc drive-bys.” she says. And develop assignments that will allow junior advisors to create value for the team and develop their own skills. Have them research a topic that’s relevant to clients, for instance, and present the findings to the team—which allows you to coach them on presentation skills as well as analysis.

Gaze also offers advice for those younger advisors, whom she says should take ownership of their development plan. “If you’re not being given the time, ask for it,” she says. “In the words of my grandmother: Make yourself useful.”

—Andrew Shilling and Rachel F. Elson


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