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The CEO: A Key to Success for Growing Firms

I recently spearheaded a two-day workshop focused on the intricacies involved in becoming a better businessperson. Eighty advisers participated in this event, and I was fortunate to speak with many of them individually during the event.

Now, it’s second nature for advisers to talk about financial planning and investment management. Many find discussions about asset allocation or strategies to address a client’s personal financial challenges to be fulfilling. But I often find that discussions on how to be a better businessperson are not greeted with the same enthusiasm. That’s understandable—it’s not especially exciting to talk about business plans, job descriptions and policies and procedures. These are all elements critical to running a successful business, however, and so we must talk about them, think about them and write our facts and commitments down.

The responsibilities of a CEO can seem foreign to some advisers and a distraction from doing what they love, but these tasks are a necessity for businesses to thrive. Not everyone is wired to be a CEO, and that’s okay. But in an industry where we see solos turning into ensembles, working on the business has taken on a life of its own, creating the need for more formality within growing larger firms. It’s important to step up and meet this need.

The Keys to Longevity

Here are the lessons gleaned from the two-day workshop that can help growing firms succeed.

Put it in writing. What the owners of thriving businesses have in common is that they put the critical aspects of their business in writing. The business plan, budget, margins and profitability, employee handbooks, marketing and growth strategies (and implementation calendars), disaster recovery plans and, of course, continuity and succession agreements all need to be documented. Not only does this documentation establish a more official framework, but it also helps to create accountability. Keep in mind that these are not “one and done” projects. They need to be reviewed, updated and used regularly to guide and track the implementation of change and improvement.

Formalize your advisory firm. For the crew of advisers who attended the workshop with me—as well as countless others in our industry—formalizing their advisory firm is the path to longevity. And given all the changes in the industry, this task isn’t going to go away. Rather, the opposite will occur as firms continue to grow and merge. The CEO will be a role dedicated to leading the emerging firms of the future. Are you up to the challenge?

Joni Youngwirth_2014 for web

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network in Waltham, Mass.



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Best of 2018: Leveraging Divorce to Maximize College Financial Aid

Editor’s note: Until the end of 2018, we will be revisiting the top five blog posts of the year. The No. 2 spot went to a great piece about how to make the best out of a bad situation. Robert J. Falcon gives readers some insights on how to leverage a divorce to maximize your kid’s college financial aid. Revisit the blog post, which published in February of 2018, below. A version of this post appeared on the College Funding Solutions blog. You can find it here.

Divorce is rarely a positive thing. But when it comes to helping your clients maximize college financial aid for their children, it can be used to their advantage.

There are many complexities associated with clients sending their child off to college. Perhaps the biggest factor that keeps parents up at night is the cost of college. Unfortunately, at $25,000 per year for in-state public institutions to $50,000 a year at private institutions, a four-year education can approximate that of a small starter house. Multiply that by two or three kids, and the cost approximates that of a very nice house. Unfortunately, many students are taking on huge loans without regard to their post-graduate income, and parents are likewise assuming massive amount of PLUS loans and putting their retirement in jeopardy.

Complicating this process is the fact that the net cost students will pay varies significantly between schools. Just as very few people pay the sticker price of their new car, almost nobody pays full price for college. Each college doles out aid in very different ways to reflect their charter. For example, the Ivy League universities give large amounts of need-based aid (but little merit aid), while other schools are more generous with merit-based aid.

Each college accepts one of two financial aid documents as part of the financial aid process. The majority of schools accept the FAFSA (Free Application for Federal Student Aid), and the CSS Profile is utilized by a number of select elite colleges. Finally, 25 uber-elite schools that comprise the “568 Presidents Group” apply the CSS profile data differently to utilize the Consensus approach. The calculation of Expected Family Contribution (EFC) differs significantly between the three. Of the three approaches, FAFSA is the only methodology that takes into account only the income of the custodial parent.

That’s right. If your client makes the same salary as their spouse and they get divorced, the amount of family income that a FAFSA school attributes to the family is roughly half of that if they were married. Families filing FAFSA forms with only one parent’s income reported will likely obtain a greater amount of needs-based aid.

Families with divorced parents need to leverage their situation to maximize the student aid they receive. These families should do the following:

  1. If your client is divorced, their students should focus on applying to schools that accept the FAFSA. They can still apply to non-FAFSA schools, especially if they might get merit-based aid, but they have a better shot to get needs-based aid at a FAFSA school.
  2. Since the custodial parent is defined as the one with whom the student spends the most time during the year, students should spend at least 183 days each year living with the parent who has lower income. Make sure your client plans for this and keeps a calendar if necessary. This point is especially important in families where there are significant income disparities between the divorced parents. If the custodial parent is considering remarrying, they may want to consider delaying the wedding if the impact on college aid is significant.

College financial planning is stressful and complicated no matter your clients’ situation. Divorce adds an extra layer of stress and complexity. Leverage these differences to your clients’ advantage by planning.

Bob Falcon Pic

Robert J. Falcon, CPA/PFS, is a financial adviser with OneSource Retirement Advisors in Malvern, Pa., and the president and founder of College Funding Solutions LLC. A candidate for CFP® Certification, Falcon is a CPA/PFS with more than nine years of public accounting tax experience. He holds a bachelor’s degree in accounting from Villanova University and an MBA from Kenan-Flagler Business School at the University of North Carolina-Chapel Hill.

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Best of 2018: 8 Components of a Social Media Policy

Editor’s note: Until the end of 2018, we will be revisiting the top five blog posts of 2018. The first post is from Claudio Pannunzio and it is the very definition of an oldie but goodie. This post originally appeared in 2012 but continues to be one of our most-viewed posts every year since. This year, it claimed the No. 1 spot on the most popular blog posts of 2018. See this evergreen post on the eight components of a social media policy for your financial planning firm. 

Engaging in social media activities can be a wise and rewarding decision for a large number of advisers. However, many issues need to be addressed prior to deploying a social media communications strategy. One of the most important issues is implementing a sound social media policy that provides a blueprint for interaction and establishes clear rules to ensure proper adherence to compliance.

The goals of a social media policy are straightforward:

  • Establish rules and procedures for all users when using social media sites
  • Facilitate users’ understanding of their responsibilities when engaging in online communication
  • Promote and maintain compliance within all FINRA, SEC and other applicable rules

Let’s now have a look at some of the basic components you should consider when creating a social media policy for your practice:

1. Purpose
State why your firm is engaging in social media and the scope for putting in place a policy governing its use. This will help everybody in your organization attain a solid understanding of the reasons behind the firm’s social media engagement.

2. Definition
Define what you and your firm regard as social media and how your firm will leverage the various social media platforms to communicate with its external audiences.

3. Users
Determine the professionals authorized to contribute to social media sites on behalf of your firm, specify what activities these individuals should be engaged in and establish who will be in charge of monitoring their activities.

4. Ownership
Define the professionals responsible for creating and selecting social media content and establish posting guidelines and schedules.

5. Content
The information you will provide via social media platforms is of critical importance. Clearly spell out the type of information that can and cannot be divulged via social media, unmistakably emphasizing what is considered proprietary or confidential information.

6. Employee Conduct
Establishing a code of conduct will help you achieve two strategic goals:

  • ensure that communication is consistently transparent, ethical, accurate and adheres to compliance rules; and
  • prevent employees in their personal social media interactions from inadvertently or casually stating their affiliation to your firm without your formal approval, knowledge and control.

7. Communication Risks
Establish general guidelines and best practices for the different platforms your firm is planning to use, referring to the FINRA and SEC compliance regulations. Create a list of subjects that should never be discussed and/or posted on social media, such as confidential information, financial details, legal matters and proceedings, as well as libelous or defamatory information, obscene images/content, information infringing third party’s intellectual property rights, copyrights or trademarks.

8. Negative Comments Protocol
We strongly recommend to all our adviser clients to develop a well-defined protocol on how to handle a third party’s negative posts/comments on social media platforms. These can include tactics such as acknowledging the negative comment and offering a solution; immediately deleting inappropriate comments of threatening, profane or obscene nature; or setting up social media accounts to not allow any posts/comments.

Claudio Pannunzio

Claudio Pannunzio is the managing director of Cürex Group Holdings. He was formerly the president of i-Impact Group Inc. in Greenwich, Conn.