Month: June 2017

1. A Misaligned Business Model:

Advisors serve client niches and don’t try to be all things to all clients, as do firms. More and more Financial Advisors are serving client niches and finding a great deal of success in being a specialist to their clients. Some Advisors cater to small business owners setting up for a liquidity event, while others serve neurosurgeons and not physicians as a whole. The advanced planning a neurosurgeon requires is different than that of a college professor.

Many firms are also going after a specific segment of the Advisor population and have created elaborate infrastructure to provide the highest level of support. This support is necessary to not only provide the means for the Advisor to run an efficient practice, but to be able to spend more time growing their niche, and less on the minutia of running the business. For example, Advisory teams should seek a multi-custodial RIA, Retirement-Plan Advisors should have access to an ERISA attorney and bond traders should have access to a capable desk.

If a firm is currently serving Advisors with similar client needs, business mix, and practice size, they could potentially be a good fit. Additionally, have they transitioned other Advisor teams from your current firm successfully, and do they have the tools and human capital in place to help you get to the next level? After all, you are making the change because you feel that you have outgrown your current firm, probably for a few different reasons. This alone warrants the effort in identifying a firm whose team who has been in your shoes before.

2. The Smoke and Mirrors Behind Payout and Transition Capital:

The economics of making a change are an extremely important part of the conversation and factor in your ultimate decision, but there is more to the story. Payout is far more important than “up front money” in the long-term relationship between an Advisor and his/her firm and really, they shouldn’t be in the same conversation. Understand variable and fixed costs that will be part of the equation, in addition to trading and platform fees, and add-on costs for items that otherwise may be included elsewhere.

Transition capital can be beneficial as income replacement while you are moving clients, especially during the first 30-60 days. Understand the parameters of receiving this capital, which is usually in the form of a note. Revenue or asset retention targets may also play into receiving the full amount. If this is the case, it means 100% of your capital will not be delivered up front.

If you are currently under contract you may be on the hook to your current firm if you leave them. Know what you are walking into and equally important, away from. The proper legal and/or compliance resources and experts exist to provide this critical guidance.

3. Is the recruiter paying you lip service or does that steak have some meat?

Any firm that you speak with will tell you they are service driven and have industry leading technology. Dig in deeper to understand the service model so when you or your staff has questions, or need trouble shooting you will receive the correct answer on the first try. Basic needs like knowing how to access client-account paperwork or more sophisticated needs such as who to contact to evaluate your top client’s advanced planning needs, are essential.

An important conversation Advisors breaking away from a wirehouse or regional firm must have is office space. Access to expertise in this field will guide you through the identification, negotiation and build-out of your new office. If a build out is involved, you want experience on your side. If a firm is large enough, there may be an existing Advisor or team within your area that has available office space.

If the firm’s dedicated technology team isn’t properly credentialed or funded, the tech needs will not keep pace with your business. Or worse, do they not even have a dedicated tech team? If you do not have full access to a wealth management team who can provide sound strategy and guidance to assist in your own portfolio management or provide turnkey model portfolios on your behalf, you are not leveraging resources that should be in place. Ask if the firm will provide complete financial planning services, and if so, are those preparing the deliverable, CFP’s®?

Avoiding these 3 top land mines will help you successfully transition your practice. Being aligned with a firm more closely interested in partnering with you will help ensure long-term success.

Securities offered through IFP Securities, LLC member FINRA and SIPC Investment advisory services offered through Independent Financial Partners, a Registered Investment Adviser.

Comfort – it’s what happens when you stop showing up to your not-so-new-anymore job 30 minutes early. It’s what happens when you start letting yourself eat in the car because the new car smell has worn off. It’s even what happens when you decide to pass a little gas on the couch next to your significant other because you both have been dating for months now and you’ve got that on lock.

In this industry, comfort is what happens when financial advisors move to the independent channel and rely more on client referrals than active cold calling and aggressive marketing. It’s also when they realize they can work Monday through Thursday, 9 a.m. to 4 p.m., make a decent living, and have the oh-so-coveted “work-life balance”.

In case the sarcasm isn’t registering, comfort is NOT good. In my opinion, comfort is one of the biggest reasons most independent financial advisors fail to reach their full potential as business owners and entrepreneurs. Now, I’m not saying that advisors don’t want to evolve and grow. However, many advisors easily maintain enough fee-based assets to generate recurring annual net incomes north of $150k. For many, this means that there’s a sort of safety net hampering any motivation to evolve their practice. The two examples below illustrate the negative side of comfort.

Example 1: Branding

For the most part, advisors are the worst when it comes to branding. Many of them don’t even want to discuss it because they don’t see how it will get them new clients. To add to it, the ones that do attempt to brand themselves will pay some outdated marketing firm too much money for a blurry logo and a website that’s full of what I call Viagra pictures – random people positioned awkwardly in a meadow or conference room. They do this because they’d rather go with the cheapest option since they’re unsure of the actual ROI and they’re too comfortable to research further.

Example 2: Learning New Things

Comfort seems to prevent advisors from continued learning. Early in their careers, advisors are soaking in all kinds of knowledge and seek to understand the products and services they need to offer clients. However, as they gain experience, many of them become less and less willing to learn new things and adapt to changes in our industry. For instance, take the idea of multi-generational planning. The need is greater than ever for advisors to leave transactional business in the past and embrace planning, not only for a client, but also for a client’s children. This means pro-actively connecting with those children, and it could also mean learning how fixed insurance fits into a client’s overall estate plan; both of these would require LEARNING and EVOLVING as an advisor.

Comfort Affects Your Bottom Line

I suppose many independent advisors fail to evolve or don’t want to learn because they see retirement for themselves 5 to 10 years down the road. Sure, it’s nice to run a cash flow analysis based on recurring revenue at a 2x multiple and imagine a nice liquidation event that can fund a life of Mai Tais and couples’ massages. Even if that were the case, why wouldn’t you want to maximize that liquidation event? Consider this: 66% of heirs change financial advisors upon inheriting their parent’s wealth. Let’s say I, as a millennial advisor, am looking to purchase a practice from a retiring advisor. You better believe I’m going to discount my offer price if I see no effort by the advisor to cultivate relationships with the next generation or provide estate and insurance planning for his or her clients. If anything is going to motivate an advisor to get out of his or her comfort zone, I would think a hit to their bottom line would do the trick.

Final Thoughts

It amazes me how many people in life become comfortable with their situation and lose the desire to constantly strive toward greatness. If you’re a business owner of any kind and you’re not constantly paying attention to shifting trends in your industry and evolving your business as necessary, you’re robbing yourself and the world of your full potential. I’m sure as parents you wouldn’t tell your children that it’s ok to be comfortable with B’s and C’s, so why do so many of us settle for less than we’re capable of? Do more. Do better. Constantly evolve. If just one person hears this message and embraces it, then it’s been worth my time crafting it.

Want to get out of your comfort zone or talk about IFP? Send me an email and we can chat.

Securities offered through IFP Securities, LLC member FINRA and SIPC Investment advisory services offered through Independent Financial Partners, a Registered Investment Adviser.

It’s 2017 and at the time of writing this blog post a new administration is heading into the White House. No matter your political preference, there will be no end to the ‘noise’. There isn’t a doubt in my mind there will be countless other interesting issues and events unfolding as the year moves forward – even more of that ‘noise’ we mentioned. All piled on to the demands of daily lives, jobs, children, et al. Regardless, clients are in significant need of quality information that helps them make informed decisions about their finances. That’s the role of a good advisor; translate what your clients learn from their endless hours on the internet into information that is useful to their specific situations. In the realm of insurance planning, that person is YOU! Let’s take a look at an example from our books.

Be the One They Call

Back in December we received a call from an IFP advisor that was referred to us from one of his contemporaries who was already doing business with the IFP Insurance Group. He believed he had an opportunity for a reasonably nice case but, as an advisor that focuses on retirement planning, he had done very little in the realm of long-term care with plan participants. He had considered walking away without another thought. His past experience was that insurance was too much of a hassle. Between getting the paperwork together, submitting everything to the insurance companies, and the long waits and poor communication, it wasn’t worth his time. His fellow advisor said, “Don’t worry. Just call the IFP Insurance Group – they know what they’re doing and they will help you!” Despite his hesitation, he carefully listened as we explained how we operate and can help his firm. By walking him through the plan design and the next steps in the process, the advisor was on his way to building a stronger relationship with the client and saving otherwise lost revenue.

The Lesson

Don’t let past experiences drive your behavior going forward. If you do, everyone loses. Insurance might be a different business, but it’s a far cry from having a dentist work on your teeth without Novocain. We assure you, the tools of the trade have changed! Products have multiple uses and make premiums work harder than ever. In addition, modern marketing support tools are first class. Today, we have accelerated underwriting, electronic submissions, and the IFP Insurance Group’s Kelle App service to make it easier than ever to facilitate the process. Our team is credentialed and constantly working to keep up with the latest changes to insurance products. While it’s your job to offer insurance, it’s our job to stay current and relevant on your behalf.

What Are These Tools?

While some tools may be familiar, others have been introduced in the last few years. Don’t worry, there’s nothing to be afraid of.

Marketing Tools to Help Start the Conversation

Life Happens

Life Happens is a nonprofit organization created to help Americans take control of their finances through life, disability, and long-term care insurance. Use their calculator app on your smartphone or desktop to determine how much coverage your client needs through a few easy steps.

Principal’s Informal Business Valuation

Through Principal’s Informal Business Valuation service, 3 years of tax returns and a very minimal amount of information can get you a business valuation prior to having a buy/sell conversation.

Retire Stronger

AIG has created Retire Stronger to provide advisors with consumer-facing, visually appealing marketing materials to help clients see the value in insurance products.

Tools to Make Life Easier

Accelerated Underwriting

The accelerated underwriting program offers fast underwriting decisions by eliminating lab testing, paramed exams, attending physician statements in 65% of cases. It’s that simple. If your clients do qualify, it’s a free opportunity to under-promise and potentially over-deliver, which makes you look like a rockstar.

Electronic Submissions

By using an electronic submission process, it takes less time to submit applications, signatures are obtained electronically, and needed evidence is ordered locally. The faster this process is completed, the better you look. Electronic submissions are also a great way to minimize the amount of human error that contributes to Not in Good Order (NIGO) applications.

The Kelle App

The IFP Insurance Group offers a proprietary application process, internally referred to as the Kelle App, for all financial advisors offering insurance products. If a case’s premiums exceed $2,500, our very own Kelle Schnabel will work directly with the client to complete and submit the insurance app on your behalf. She is an extension of your team.

Bringing it to You

While you are certainly welcome to sell insurance on your own, our team can help cut through the noise and keep you up to date with current and relevant information. Start building a complete financial plan with risk transfer products and generate more revenue for your firm. Everybody wins! What hurdles are you facing when selling insurance? Let us know in the comments.

Securities offered through IFP Securities, LLC member FINRA and SIPC Investment advisory services offered through Independent Financial Partners, a Registered Investment Adviser.