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What Good Planners Need to Do in the Digital Age

The future of finance is a mixture of robo advice and human advice, according to Charles Schwab’s 2018 Consumer Digital Demands survey.

Forty-five percent of those surveyed said they believe robo-advisers will have the biggest impact on the future of finance. The survey also found that Americans say financial planning is as hard as training for a marathon.

Clients will use technology, but they still need you to help them “train” in this digital age.

The Forbes article, “What You Should Expect from Your Financial Advisor in The Digital Age,” gave consumers tips on what their advisers should do for them when it comes to technology. It boils down to this: simplify their understanding of money by using and better explaining tech tools. If your clients are reading articles like the one in Forbes, they may expect you to provide the following:

Tech tools that easily do it all and have fewer steps. The Forbes article noted that advisers should offer technology that allows clients to check portfolios and their savings and checking accounts all in one spot.

Customizable technology. The Forbes article noted that clients should be able to customize their experience. “Don’t merely expect the proper customization—demand it,” wrote Forbes author Alex Chalekian, founder and CEO of Lake Avenue Financial.

A view of the big picture. Clients in the digital age will expect a picture of their total net worth and their progress toward retirement. This ties into having all their information, including all retirement, savings and checking information, easily accessible on a one-stop piece of technology.

Education on how to use the technology. Clients will expect you to show them how to use the software you provide. Take the time to ensure they understand how to use it and all the ins and outs and extra features.

“What a great adviser will do is use technology to be more connected to your life, to be able to comprehensively simplify your financial life and then interact at your convenience when you’re ready,” Joe Duran, founder and CEO of United Capital said in the CNBC article, “Here’s Why Robo-Advisors Won’t Replace Human Financial Advisors.”

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Ana Trujillo Limón is senior editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.


How to Recruit a Gen-X Successor on Your Own

Choosing a successor isn’t the easiest decision. Advisers commonly choose to partner with an RIA rollup or aggregator firm setting them up with a built-in succession plan. Nobody can argue with the convenience, but I’m not convinced this is the best option 100 percent of the time. If you’re looking to find a talented Gen-X successor to take over your business, there are plenty of solid candidates out there and it may give you more freedom and control than an institutional partner. Here’s what to keep in mind if you’re going this way.

Y Does Not Equal X

The financial planning profession and financial services industry is enamored by the “next gen.” While this term is intended to mean anyone younger than the baby boomers, all nex-genners are not equal. Although thought leadership is abuzz with talk of the millennial invasion, I think the best opportunity to find a great successor lies within Generation X.

Generation X is roughly defined as the cohort of people born between the early 1960s and the early 1980s which puts then at about approximately 39 to 59 years of age. According to the Bureau of Labor Statistics, there’s nearly as many Gen-Xers and Gen-Yers in the workforce—the difference isn’t that substantial—and according to Cerulli Associates, Gen X is going to be handed down $68 trillion in wealth over the next two decades or so. I would look for a Gen X-successor, someone who can relate to this population because he or she is a member of it.

Just look at where Gen X is now compared to Generation Y. They’re qualified investors now, have less of a debt abyss to navigate themselves out of, and are ripe for financial advice given that they’re at a more mature stage in their lives.

Yes, we all know that according to the numbers the wealth transfer to millennials is going to be the largest in humankind or however the saying goes. Sounds great! However, we aren’t there yet. At this point it’s all theoretical and the Gen-Xers are the ones upgrading their houses.

What to Look For

How do you know a candidate for a successor is a good one? Look at the adviser’s ability to develop new sales completely from scratch instead of through word-of-mouth or referral. While many advisers will boast that they love business development, the reality is that a small percentage of them actively develop leads. If your ability to retire happily with money to spend on the grandkids depends on another person’s ability to drum up sales, you’d better make sure they have the ability to snag a deal from thin air while the market is crashing down. Elsa, Anna, Olaf and all the rest of the Disney paraphernalia can get quite pricey after all.

Sales ability is the most important thing you can look for in a candidate. All other skills (practice management, technical competency, analytical prowess, to name a few) can be learned or bought. Successors who can sell, no matter what price tag they come with, are inexpensive; successors who can’t sell are one of the most expensive investments you can make in your business.

Questions to ask include:

  • What sales training programs have you completed?
  • How often do you engage in sales training?
  • Pretend I’m a prospect you’re cold-calling and pitch me a seat in your retirement seminar.
  • How many leads a year do you receive from COIs and how do you go about developing those relationships for mutual benefit of both parties?
  • If you had to find 10 new clients in a month from today, where would they come from (if you couldn’t get referrals from your existing base or people you know)?
  • How are you using technology to prospect, pitch and close a sale?

Finding the Successor

Now that we’ve established that you want a lean, mean, Gen-X money-making machine, how do you go about finding one?

Take advantage of your vendor relationships. Here’s where your vendor relationships come into play. Why? If the vendor is selling to you, they’re probably selling to other advisers. And if those other advisers are doing well enough to pay the same bill you pay, they must be doing something right. Call up the sales rep who sold you the product and have a talk. I’ll give you some names of firms who do a lot of business with our industry: Miller Canfield, Deckert, Black Diamond, Vestmark, Riskalyze, Orion and eMoney Adviser, among others.

Target industry organizations that you may be a part of or be able to access as an outsider. For example, the CFA Institute has a member directory and several LinkedIn groups for its local societies and member committees. These groups have tens if not hundreds of thousands of members on LinkedIn. In some cases, you don’t actually need to have the designation to become a member of the LinkedIn Group. For example, I am a member of the Certified Financial Planner (CFP) group on LinkedIn although I do not hold the designation. You never know whom you can meet online—start posting up!

Tap into the power of the network. Some events by the CFA Institute are for members only while others are open to the public. I’ve used these directories several times when I needed to find the right person for a business need I had and met with great success. Crack them open and start talking. If you are a member of CFA Institute or the Financial Planning Association, utilize your time at organization events to make connections with potential successors.

Try communicating with media influencers (or their staff and affiliates). You just never know who brilliant minds are connected with and what they’ll come up with if you ask. Have you ever been interviewed by a reporter? Do you know the editors of any financial magazines or can you get introductions to any? These people tend to know what’s up and know a ton of folks in the business. It’s always good to be in touch with the media anyways, right? I’ve met several powerful people this way.

Getting the Deal Done

On the flip side, what can you do to increase your attractiveness to a successor? Ask yourself if your brand is really friendly to people from the next generation. They tend to favor a less formal dress code and opt for higher work life balance. Are you offering Kashi and granola bars in your kitchen or is it more your style to swing by Dunkin’ Donuts to pick up a stash to share with the office breakfast meeting? Get acquainted with Whole Foods.

And while you’re at it, a healthy diet of social media can’t hurt. A strong digital presence, including a Gen X and Y friendly website, will work in your favor. When was the last time you posted a selfie to LinkedIn? Bring on the blogs and instant messaging.

Think about your office décor as well. Consider some comfy bean bag chairs and a treadmill nook instead of a stuffy mahogany-clad conference room. How Google of you!

This is probably the biggest transaction of your life; but it’s not going to be insignificant for your successor either. So whip out the MoneyGuidePro and create a financial plan for the successor’s next 30 years. Not only will this clear up any fuzzy expectations, it will also reduce uncertainty in his or her mind. Just like all you advisers say on your websites, a financial plan is the key to happiness and peace of mind.

Or however that cliché goes…

Sara Grillo

Sara Grillo, CFA, is a top financial writer with a focus on marketing and branding for investment management, financial planning, and RIA firms. Prior to launching her own firm, she was a financial adviser and worked at Lehman Brothers. Grillo graduated from Harvard University with a degree in English literature and has an MBA from NYU Stern in quantitative finance. See her website at www.saragrillo.com.


What an Ironman Can Teach Us About Financial Planning

It was August 15, 2015 on an already sweltering morning in Mont Tremblant, Canada. I dug my toes into the sand amidst a crowd of 2,700 elite athletes from around the world. As I zipped up my wetsuit, I thought about all my training the past year, my strategy to conquer the day and a slew of what ifs I’d encounter over the next 16 hours stirred excitement mixed with worry. Then BANG, fireworks erupted across the beach and I was off.

I learned a lot from my journey to becoming an Ironman, but it wasn’t until I returned to my office in New Jersey that I thought about my experiences and how they related to my work. As a CFP® professional and author on personal finance, I naturally connected my competition to my clients’ goals and concerns.

Lessons from Setting Goals

This outrageous idea of going from not even having a bicycle—let alone competing in triathlons—to taking on the ultimate fitness test (the Ironman is a 2.4-mile swim, followed by a 112-mile bike, capped off with a marathon) stemmed from another one of my crazy New Year’s resolutions. I woke up on January 1, 2015 and the first thing I did was scour the internet for potential Ironmans. August gave me eight months, what I thought was enough time, and Quebec was not too far away. I immediately registered for the race, paid my $800 entrance fee, and marked the date on my calendar.

Set a goal with a date. As simple as this sounds, this was probably the most important step I took in the whole process. I advise clients all day long who want to reach their financial goals that a goal without a date and commitment is just a wish. Circling 08/15/15 on my calendar instantly set the tone and allowed me to design a training regimen and appropriate diet. I’m not saying a 24-year-old client should pick 08/15/58 as their exact retirement date, but benchmarks penned to paper and voiced aloud are critical.

Seek expert help, educate yourself, and develop a road map. Back to the training and diet—I had no idea where to begin. I still lifted weights as I did for football in college and I ate anything I wanted. So, I went to Barnes and Noble and purchased an Ironman-endorsed training manual. I read it cover to cover and created my own daily workout routine from March 1, 2018 to August 15, 2018, recognizing that I’d burn out if I devoted to any longer of a program. There are two lessons to be gained here: first I sought expert help and became a student of the game. A financial objective is no different in that a client must educate him or herself, furthermore a trainer certainly would have accelerated my development the way a Certified Financial Planner™ will to a client. Secondly, there was a detailed game plan of how I’d be prepared for race day, this is no different than how a family must plan for college, retirement or saving for their first house. A road map towards a defined goal with consistent effort despite ups and downs along the way makes a far-off goal attainable.

Race Day Lessons

Preparation is key. The nerves I felt before diving into the crystal-clear water of Lake Tremblant are not all that different than those clients feel before buying an investment property, sending a child to college or handing in their retirement papers. The fear of the unknown is inevitable and faith in prior preparation is the only comfort.

Breaks help to stay the course. Within the first 200 yards of my 2.4-mile swim, I was booted square between my eyes from the heel of another competitor. I stopped swimming and struggled to gather my senses as everyone pushed past me. I was just a few minutes in to a 16-hour contest and doubt raced through my mind. Plenty of retirees or entrepreneurs can sympathize with this feeling after suffering an early defeat or market setback. Taking a break (perhaps for your clients a vacation, for me 30 seconds of floating amongst adrenaline-filled contestants) and diagnosing the situation from an optimistic viewpoint can help stay the course.

Don’t be on autopilot and risk injury. Next was the 112-mile bike ride through the mountains of Quebec, as the sun raged overhead with 90-plus degree heat. This was the longest part of the contest and most monotonous, yet most dangerous. I saw several cyclists leave in ambulances due to brutal downhill crashes, the result of not paying attention or taking unnecessary risks. Again, there is a perfect parlay to wealth management, a sound financial plan often borders on boring, tempting investors to enter unchartered territory at the risk of the whole strategy. Even though a financial plan may seem to be on autopilot, active oversight is crucial in order to miss an unforeseen trap (tax change, market correction, illness/injury, lawsuit, etc.)

Cheering clients on helps. Then there was the 26.2-mile run. I raced through the dark of night fighting off a roller coaster of emotions. I knew if I could suck it up and stay positive that I would complete my mission. The screaming support of thousands of fans along the race course was also invaluable. A client near the end of paying off college, selling their business or in the last stage of retirement distributions knows what I mean. At this stage, one needs to play it safe (perhaps fixed income or annuities in retirement), visualize the finish line and realize it’s okay to ask for help, be it fans, advisers or family.

Don’t squander your accomplishments. Lastly, sportsmen can’t forget about recovery or their body might not appreciate their accomplishments. Clients must not forget those estate planning documents and business succession plans, or your legacy could be squandered as well. As we now know, athletes and investors alike can enjoy the thrill of a well-deserved victory by following the same tenets.

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Bryan M. Kuderna is a CERTIFIED FINANCIAL PLANNER™, Life Underwriter Training Council Fellow and an investment adviser representative with Kuderna Financial Team. He is a perennial qualifier for the industry’s prestigious Million Dollar Round Table®, Leaders Club and Inner Circle. He is the author of the bestselling book, Millennial Millionaire: A Guide to Become a Millionaire by 30.