Tag: CFP

CFP Board To Proposed New Revisions To Conduct Standards With Second Comment Period

CFP Board To Proposed New Revisions To Conduct Standards With Second Comment Period

After taking in feedback from more than 1,300 public comments, plus 8 public forums with CFP certificants, the CFP Board has announced that it will be releasing a second draft version of its proposed changes with a second comment period. The decision to issue a second draft proposal isn’t entirely surprising, as both advocacy organizations like the FPA, as well as the comment letter submitted by yours truly, suggested that there were enough substantive changes needed in the first draft to merit a revised proposal with a second comment period. The second draft itself is anticipated to be released before December 25th, with the second comment period to open for 30 days running from January 2nd to February 2nd; the CFP Board has indicated that it aims to complete the process and publish the final conduct rules by the end of the 1st quarter of 2018, with the new standards to take effect at the beginning of 2019. Thus far, the CFP Board has not indicated which areas in particular will be modified, beyond noting that “the board really looked hard at the practicalities of how the proposed standards would apply to different business models”, an apparent nod to the challenges of how the CFP Board’s fiduciary requirements – including new notification and disclosure documents – might apply in the broker-dealer community in particular. Though in public comments at this week’s Schwab IMPACT conference, CFP Board CEO Blaine Aikin maintained that the second draft will have “meaningful” changes but won’t dilute the principles-based fiduciary focus of the rules.

Financial Planning Research Highlights From The 2017 Academy of Financial Services Annual Meeting

Financial Planning Research Highlights From The 2017 Academy of Financial Services Annual Meeting


From October 1st through October 3rd, the Academy of Financial Services’ annual meeting was  in Nashville, TN – partially overlapping with the FPA’s BE Annual Conference. The event brought together many academics and practitioners to share and discuss research, with the intention of increasing academic-practitioner engagement by holding two of the largest conferences for both researchers and practitioners in conjunction.

In this guest post, Derek Tharp – our Research Associate at Kitces.com, and a Ph.D. candidate in the financial planning program at Kansas State University – provides a recap of the 2017 Academy of Financial Services Annual Meeting, and highlights a few particularly studies with practical takeaways for financial planners.

The 2017 Academy of Financial Services (AFS) Annual Meeting showcased research from scholars at a wide range of institutions – with first author affiliation on paper and poster sessions representing roughly 40 institutions. As expected, the core financial planning programs had a strong presence, with scholars from just seven of those institutions serving as lead authors for more than 50% of all research presentations and poster sessions.

The AFS annual meeting featured research on a number of different topics. Some notable sessions for practitioners ranged from topics such as whether having resources from friends and family reduces a household’s willingness to establish an emergency fund (not as much as you might expect!), how bull and bear markets impact the subjective assessments of portfolio risk, the links between certain types of personality traits and likelihood of financial stress, and quantifying the financial advisor’s value when it comes to making efficient investment decisions (and how that value varies depending on the investor’s existing capabilities in the first place).

Overall, holding the AFS Annual Conference and FPA BE Conference in conjunction appeared to be successful in creating greater engagement between practitioners and researchers (with some research presentations filling large rooms at standing room only capacity!). As both the AFS Annual Conference and CFP Board’s Academic Research Colloquium strive to create more robust platforms for sharing and engaging in academic research, the future appears bright for financial planning researchers (and research that can really be used by financial planning practitioners)!

2017 Academy of Financial Services Annual Meeting

Though perhaps lesser known among many financial planning practitioners, the Academy of Financial Services has a long history of promoting academic research within the area of financial services. Dating back to 1985, the AFS has aimed to promote interaction between practitioners and academics. One way the AFS pursues this objective is by publishing an academic journal, the Financial Services Review (FSR). In recent years, AFS began to publish FSR in collaboration with the Financial Planning Association, and as a result, FPA members receive digital access to the current volume/issue of the journal.

Another way the AFS encourages interaction between practitioners and academics is through holding their annual meeting. This objective was given even greater focus in 2017 as the AFS held its Annual Meeting in conjunction with the FPA BE Annual Conference, conducted as a “pre-conference” event of its own but with one day of overlap to the main FPA conference agenda (which allows practitioners to come early and participate in the AFS event, and for academic researchers to stay beyond the AFS meeting and participate in the FPA annual conference as well).

Academic Representation At The 2017 AFS Annual Meeting

The 2017 AFS Annual Meeting drew researchers from a number of academic and professional institutions. In total, roughly 40 institutions were represented as first authors on research presented in either poster or oral sessions.

For those who haven’t attended an academic conference before, academics generally present their research at conferences in one of two ways. The first is the poster session, which is a more informal presentation where a researcher stands in front of a large poster summarizing their findings. The second are oral sessions, where researchers deliver a more formal research presentation to an audience. Researchers must submit their sessions in advance for consideration to be selected for presentation.

Several of the well-known financial planning programs had a strong showing at the 2017 AFS Annual Meeting. Texas Tech led the way with scholars serving as first author on 9 oral session and 2 poster sessions. Kansas State ranked second with scholars serving as first author on 5 oral sessions and 2 poster sessions. Other schools with a strong presence included The American College, University of New Orleans, University of Georgia, Ohio State University, and the University of Alabama. In total, these 7 schools accounted for 54% of the first authors of research selected for oral or poster sessions.

Portfolio Gamma Framework By Investor Type

As is indicated in the chart above, Blanchett and Kaplan conclude that different levels of financial advisor value are experienced by different types of investors. And of course, different levels of value are delivered by different types of advisors, as not all financial advisors are going to fully deliver gamma in each category.

Specifically, their results suggest that when consumers receive average or high levels of benefit from working with a financial advisor (and when the advisor can actually deliver the value), the gamma that can be added from efficient investment strategy selection is significant enough to justify a typical AUM fee. However, when consumers receive low levels of benefit from working with an advisor (e.g., because they are already capable of self-implementing a long-term diversified portfolio), it may be hard to justify a typical AUM fee based on investment gamma alone.

And while this insight may seem somewhat self-evident, Blanchett and Kaplan provide some concrete estimates of the value that may actually be received by various types of consumers. Further, evaluating the different categories can help advisors see where they can generally add the most relative value. For instance, while asset class selection is important, helping clients to decide to save and invest in the first place is relatively more important for each type of consumer.

Blanchett and Kaplan’s study is a big step forward in terms of addressing the “compared to what” problem and many of the limitations of prior studies attempting to quantify the value of advice. By providing a framework that spans multiple dimensions of potential value-add, their quantification of value becomes much more meaningful. If a particular investor is “low” on questions 1-3, “average” on 4-6, and “low” on 7, a customized value-add unique to their circumstances can be calculated. While it may not be perfect, the benchmark in this study is beginning to look much more like a real person.

Example 1. John is a consumer who has a very good understanding of the importance of investing, appropriate risk levels, asset allocation considerations, and how the risk of his retirement goal affects a portfolio allocation, but he only has an average knowledge of what types of accounts to use, what investments to implement with, and when he should revisit his portfolio. Therefore, assuming John’s prospective financial advisor is of high competence in all areas, John’s benefit of working with an advisor (or developing the skills and knowledge on his own) could be estimated as 1.4% per year.

 Of course, this study doesn’t even attempt to quantify the value of financial planning gamma(meaning the true potential value-add would be even higher), but Blanchett and Kaplan have provided a solid foundation for beginning to more precisely quantify the value-add of an efficient portfolio.


While the importance of maintaining an emergency fund is no secret amongst financial planners, understanding the relationships between household characteristics and emergency fund preparedness can help financial planners identify situations in which extra precaution should be taken to ensure client households are prepared to face financial adversity.

Unmarried parents with children—i.e., “fragile families”—are one group that is particularly at risk of needing to rely on an emergency fund. Because non-married households are more prone to breaking apart than married households—a process which can create a shock to income while simultaneously increasing expenses (e.g., needing to make two rent/mortgage payments instead of one)—an emergency fund is even more important for fragile families.

The Two-Income Trap by Elizabeth Warren and Amelia Warren TyagiAs Elizabeth Warren and Amelia Warren Tyagi have noted in their book, The Two-Income Trap, these dynamics are not unique to low-income households. In fact, in some respects, fragility can be even higher for young, affluent, dual-income households, as an unexpected drop in income may result in larger month-to-month deficits with fewer options to offset that decline (e.g., public support or a non-working spouse entering the labor force).

In an effort to examine emergency fund preparedness among fragile families, Abed Rabbani, an Assistant Professor at the University of Missouri, and Zheying Yao, a Ph.D. student at the University of Missouri, analyzed data from the Fragile Families and Child Wellbeing Study.

In an SSRN article, Rabbani and Yao report their findings. While not all of their findings are particularly surprising—e.g., higher income, saving behavior, and homeownership were all found to increase the likelihood of having an emergency fund (defined as two months’ income in savings)—the authors also examined whether the likelihood of having an emergency fund was impacted by the gender of the individual who controls household spending, or whether the family could obtain financial support from other friends or family members.

The authors expected that financial reliance would be negatively associated with having an emergency fund (as having an emergency fund may be less crucial when households can access resources elsewhere) and that households where a female has financial control would be more likely to have emergency funds. However, the authors found that neither exhibited a statistically significant relationship with the likelihood of having an emergency fund after controlling for factors such as debt, saving, income, employment, and homeownership.

In a practical context, this study can provide a few different insights—particularly for advisors who may specialize in working with younger, non-traditional families. First, some objective factors that we would expect to be correlated with the likelihood of having an emergency fund were found to be. While this finding isn’t groundbreaking, it is good to check that professional intuitions align with empirical findings. Second, the findings suggest that neither gender of the financial decision maker, nor the availability of family/friend financial support, were significant predictors of the likelihood of having an emergency fund.

In the case of the latter, this may suggest that merely having access to funds through friends and family does not sufficiently disincentivize creating an emergency fund for one’s own household. This is actually an encouraging finding, as it may suggest that households are looking to be self-sufficient even when other friends-and-family resources may be available as a last resort. This may be particularly relevant for financial planners given that our clientele—even in the case of non-traditional clientele served through retainers and other business models—does tend to be more affluent, and likely has more affluent social networks as well. Additionally, this finding may lessen the concern of parents that serving as a financial backstop could undermine their children’s willingness to develop their own emergency funds and fiscal responsibility.


Misalignment between perceived and actual risk is a genuine threat to sticking with a financial plan, as it means that even if a client does have the “right” portfolio consistent with their risk tolerance, if they misperceive the risk of their own portfolio, they may try to make inappropriate portfolio changes anyway.

Xianwu Zhang, a Ph.D. student at Texas Tech University, explores whether subjective risk perceptions influence portfolio choices, in his paper, Do Investors’ Subjective Risk Perceptions Influence Their Portfolio Choices? A Household Bargaining Perspective.

In general, Zhang finds that investors perceive the stock market to be riskier than objective measures suggest it is. However, what is particularly interesting about Zhang’s research is his examination of the role that household bargaining plays in portfolio selection.

Traditional models of households assumed that all members of a household act as a team—altruistically putting the interests of the family ahead of their own. However, household bargaining models acknowledge various individuals within a group have different preferences, and, as a result, conflicts of interest arise within the household. Thus, households can act either cooperatively or competitively as individual members seek to maximize their own satisfaction.

When analyzing the different ways in which families can act cooperatively or competitively, bargaining power is an important concept to acknowledge. In the context of household portfolio selection, disproportionate bargaining power can mean that one spouse dominates decision making.

Zhang utilizes several proxies of bargaining power—such as gender, education, income, and hours worked—to see how risk perceptions (measured as perceived likelihood that a mutual fund invested in blue-chip stocks would experience a 20% decline over the next 12-months) of a spouse with more bargaining power may influence the percentage of risky assets in a household’s portfolio. Utilizing data from the HRS, Zhang finds that, all else equal, the subjective risk assessments of females, spouses with more education, and spouses with lower income have a greater influence on risky asset investment.

One interesting aspect of Zhang’s findings is that it is not always the household member who is assumed to have more bargaining power whose subjective risk assessment seems to influence portfolio holdings. For instance, spouses with more income are assumed to have greater bargaining power, though Zhang finds it is those with less income whose subjective risk perceptions have a greater influence on portfolio allocation. Zhang notes that this may be because the higher earning spouses may have higher opportunity costs, and thus delegate this decision making to a lower earning spouse.

Zhang does note some important limitations to this study (e.g., it is only based on one point in time rather than evaluating behavior over time), but it is certainly a fascinating and important topic.

From a practical perspective, these findings reiterate the importance of engaging both spouses in the financial planning process. And this is particularly true in light of our industry’s historical neglect of the female members of households, as even if it is the case that a higher-earning male possesses more bargaining power within a particular household, it may actually be the lower-income female’s risk assessment which is driving portfolio risky asset investment decisions of the household!

Further, this type of analysis raises all sorts of important questions. How do couples delegate portfolio decision making between themselves? How do they delegate portfolio decision making when an advisor is involved? If an advisor is struggling to get buy-in from a couple, who should they try and influence and how should they do so? It’s unlikely that any of these questions have simple answers, but they are the types of research questions that fiduciary advisors who want to help their clients fulfill their goals must consider.


In another paper examining risk preferences, David Blanchett of Morningstar, Michael Finke of The American College, and Michael Guillemette of Texas Tech University examine the effect of advanced age and equity values on risk preferences.

Utilizing a unique data set of risk tolerance questionnaire (RTQ) responses from participants in a defined contribution managed account solution offered by Morningstar Associates, the researchers are able to analyze how RTQ responses from January 2006 to October 2012 were associated with age and equity values after controlling for other factors such as account balance, annual salary, and savings rate.

The researchers find that as the S&P 500 increases, workers become less risk averse, and vice-versa. Additionally, participants who were older, had lower income, and had lower account balances were found to have higher levels of risk aversion.

Blanchett et al. note that the higher levels of risk aversion among older participants provides justification beyond time-horizon considerations for reducing equity allocations with age. Further, these findings suggest that annuitization should be more common than it is, though the authors note that several factors may decrease the attractiveness of annuitization, including mortality salience and framing effects.

The authors also note that an interaction found between age and S&P 500 levels suggests that risk preference assessment of older individuals may be influenced by stock market valuations. Specifically, if risk preferences were assessed when market values are high, respondents exhibited more desire to take on risk. But, of course, investing more in stocks because they’re up only makes investors more at risk of losing money in the next bear market! Fortunately, target date funds and other strategies can take the rebalancing responsibility out of the investors hands, which may help shield the investor form losses due to changes in shifting risk preferences.

From a practical perspective, financial planners should consider that risk tolerance assessment should not just be a one-time occurrence. A growing body of research suggests that investors exhibit time-varying risk aversion. Of course, this too raises questions.

If risk aversion is not stable, then how should it be used in practice? Does behavior change as stated risk preferences change, or are people were changing the way they answer questions related to risk preference (perhaps driven by risk perception instead)? Does a one-dimensional measure of risk aversion even tell us much in the first place? And to what extent should retirement strategies be designed differently if there’s an anticipation up front that retiree risk tolerance will decline in their later years?


As financial planners shift from simply thinking about the quantitative aspects of financial planning to helping clients achieve more holistic financial health, understanding measures of financial stress and well-being will be increasingly important.

In their presentation, Multidimensional Financial Stress: Scale Development and Relationship with Personality TraitsWookjae Heo of South Dakota State University, Soo Hyun Cho of California State University Long Beach, and Phil Seok Lee of South Dakota State University, presented their work in developing a multidimensional measure of financial stress.

In an SSRN paper covering a similar topic, the researchers provide a glimpse into some of the topics which are important in developing a more comprehensive measure of financial stress. The authors note that there are affective (i.e., how people feel), psychological (i.e., cognitive and behavioral), and physiological (i.e., bodily responses) dimensions to stress. As a result, they aim to bring these different dimensions together into a single scale that can be used to assess financial stress.

Further, the researchers used this measure in a survey of 1,162 respondents to examine its potential use and possible relationships between Big Five personality traits and financial stress. Those who exhibited the highest level of financial stress were moderately extraverted, were low in agreeableness, low in conscientiousness, high in neuroticism, and high in openness. Conversely, those who exhibited the lowest levels of financial stress were highly extraverted, highly agreeable, highly conscientious, low in neuroticism, and highly open to experience.

From a practical perspective, gaining a better understanding of what types of clients are more or less likely to experience higher levels of stress can help advisors manage client comfort and look out for various behavioral tendencies. Research in this area still has a long way to go before advisors can use such findings with confidence, but this is one area where the importance of basic research is highlighted—even if the immediate applications are limited. If we don’t even truly understand what financial stress is, we will struggle to effectively help our clients alleviate it (or identify the clients most prone to financial stress in the first place)!

Overall, the 2017 AFS Annual Meeting was successful in bringing together a wide range of scholars to share their research in personal financial planning. And hosting the conference in conjunction with FPA BE provided an excellent opportunity to increase the interaction between practitioners and academics as well.

The AFS Annual Meeting will be held in conjunction with the FPA Annual Conference in 2018—again providing an opportunity for greater engagement between financial planners and researchers. So, if you would like to stay on top of some of the latest ideas in academic research, would like to consider possibly getting involved in research yourself, or simply just want to experience an academic conference first hand, attending the AFS Annual Meeting and FPA Annual Conference in 2018 may be a convenient opportunity to do so!

So what do you think? Did you attend the 2017 AFS Annual Meeting? Do you have plans to attend in the future? What else can be done to help further engagement between practitioners and academics? Please share your thoughts in the comments below!

IMCA Rebrands To Attract A Broader Audience

IMCA Rebrands To Attract A Broader Audience

The Investment Management Consultants Association (IMCA) announced this month that it is rebranding to the “Investments & Wealth Institute” (IWI), recognizing that as financial advisor business models in the investment world have expanded far beyond just (institutional) investment consulting, so too has the IMCA membership base, which now includes a wider range of financial planners, private wealth advisors, and bank trust officers, in addition to investment consultants. Notably, IMCA-now-IWI emphasizes that its rebranding is occurring because it is growing beyond its original focus (not shrinking from it), as the organization’s membership and certificants are up a whopping 44% since 2012 (to 11,877), but believes the “Investments & Wealth” label better reflects its focus on advanced investment and wealth management education, as the organization grants both the Certified Investment Management Analyst (CIMA) and the Certified Private Wealth Advisor (CPWA) certifications (both credible post-CFP advanced designations that have expanded into both in-person and online offerings). In addition, IMCA-now-IWI also announced that it has acquired the Retirement Management Analyst (RMA, now being rebranded as Retirement Management Advisor) designation from the Retirement Income Industry Association (RIIA), and going forward will begin to offer an online advanced certificate program in retirement planning as well as the RMA certification itself (which requires additional education and passing a comprehensive exam).

The 13 Best Conferences For Financial Advisors To Choose From In 2018

Executive Summary

Michael Gerber’s famous business book “The E-Myth” points out that most small business entrepreneurs struggle because they spend all of their time working in their business, and too little time working on the business itself. Any small business owner who has a unique and valuable personal skillset – from a pie-maker to a doctor to a financial advisor – is particularly prone to this challenge, as almost by definition what gets them paid is the work they do in the business. And accordingly, to the extent they take time off to go to a conference once or twice a year, they tend to go to events that help them improve their skills in the business (i.e., continuing education), particularly since most regulated professions have CE requirements anyway.

To break the cycle for financial advisors, I’m declaring 2018 as “the year of the practice management (or career development) conference” instead. Because the reality is that there is an ever-growing number of choices on how to fulfill your annual CE requirements online, from conferences that are live-streamed or recorded for subsequent purchase, to an abundance of webinars on demand, and even the Members Section of this blog (and CFP professionals only need to complete CE requirements every other year anyway!). But the opportunities for good practice management content that actually helps you work on the business more effectively, or career development content that helps you grow to the next level, are few and far between. And when it comes to working on the business, it’s especially important to actually physically leave the business and go to a conference, as you have to get beyond your own four office walls to get a fresh perspective on your business or career.

Unfortunately, though, going to a conference is a major investment – with conference registration fees that can run $1,000 or more, plus the cost of airfare and hotel accommodations – which means it’s especially important to pick the right conference to get value. In fact, given that in recent years I’ve been speaking annually at nearly 70 conferences myself, and have presented at virtually every major conference in our industry, from the various membership association events to custodian and broker-dealer and even media publication conferences, I’m often asked for recommendations of what I think are the “best” conferences for financial advisors based on what I’ve seen.

Accordingly, in 2012 I started to craft my own annual list of “best-in-class” top conferences for financial advisors, based on my own travels and experience, and divvied up into categories that would make it easier for advisors to select what matches their own needs at their current business or career stage.

And now, I’m excited to present my newest list of “Top Financial Advisor Conferences” for 2018, all with a focus on practice management and career development. Of course, given that we’re all at different stages of our businesses, some events are much better suited to certain types of advisors, and accordingly I’ve tried to delineate which are the best depending on your size of business, industry channel, and/or career stage.

So I hope you find this year’s 2018 financial conferences list to be helpful as a guide in planning your own conference budget and schedule for next year. And I hope you make the investment – because the truth is that you just need one major takeaway to materially change the trajectory of your business or career in the coming years!

It has long been lamented by advisor conference organizers that Practice Management sessions tend to have far lower turnout than “technical” topics eligible for CFP CE credit. The presumed reason was simply that as financial advisors, we want/demand CE credit, and therefore won’t attend practice management sessions that (rightfully) aren’t eligible. The reality, though, is that practice management content for advisors doesn’t tend to get a low turnout because it’s not eligible for CFP CE credit. Instead, practice management sessions tend to get a low turnout because they simply often aren’t relevant in the first place.

After all, if there’s a major tax law change, or the rules of Social Security change, or a new retirement strategy emerges, almost every financial advisor will need to know about it. Because whether you’re a paraplanner or a lead advisor, under a broker-dealer or an RIA, an employee advisor or an owner, you need to understand the (latest) rules when it comes to tax law, Social Security, retirement, and other core knowledge areas (unless you have an incredibly specialized niche where it truly isn’t necessary to know).

On the other hand, when it comes to practice management, advisor circumstances are far more varied. If you’re a paraplanner employee, you need help with career development, but not necessarily business development (yet). If you’re an employee lead advisor, you may need to learn about business development as well, but not necessarily about business management. On the other hand, if you actually do own the advisory firm, you need to understand a wide range of business management issues, from HR and recruiting to operations and bookkeeping. Yet even those issues vary depending on whether you’re building your advisory business under a broker-dealer or on an RIA platform.

As a result, what’s “relevant” for financial advisors in the realm of practice management tends to be much narrower than it is for technical topics. Which means the practice management topics themselves are almost by definition more “niche” and targeted, as are practice management conferences themselves.

Of course, the reality is that all the advisors on a common platform share a lot of common experiences, from the tools and technology made available to them to use, to the fact that other advisors on the platform tend to have a similar business model and therefore often similar challenges. Which helps to explain why major custodian and broker-dealer conferences, from LPL Focus 2018 to the Commonwealth National Conference, Cambridge Ignite, and the Raymond James Elevate 2018 event, to TDA LINC, Pershing INSITE, and the Schwab IMPACT 2018 conference, tend to be some of the largest in the industry.

Yet while I highly recommend that all financial advisors attend their platform’s national conference at least once every 2-3 years, even advisor custodian and broker-dealer platform conferences tend to be overly broad, and don’t necessarily provide sufficient coverage and depth regarding the key issues that are really relevant for advisors at the various stages of their career and business growth.

Accordingly, this year’s list of “Top Conferences for Financial Advisors” is specifically organized by the type or career stage of advisor – from newer versus experienced advisors, to those running practices versus those trying to build advisory businesses, those looking for technology versus those who need help with business development and client acquisition, and those who are Next Generation (G2) advisors versus those who are trying to attract and grow with Next Generation (Gen X and Gen Y) clientele.

Hopefully at least one category is relevant for you! (And if not, you can always go to your platform’s national conference, and come back to revisit this list for 2019!)

Best Conference For/In: New Financial Planners | Next Generation (G2) Advisors & Successors | Serving Next Generation (Gen X/Y) Clients | Blogging & Digital Marketing | Regaining Control Of Your Advisory Business (& Time) | Transitioning From Practice To Business | Refining A Lifestyle PracticeLooking To Acquire (Or Sell) An Advisory Firm | Practice Management For Larger Independent Advisory Firms | Advisor Technology | Rapidly Growing Advisory Businesses | Business Development & Client Acquisition | Experienced Advisors Looking To Re-Energize And Find “What’s Next?” | Plugging The Hole For CFP CE Credits

For Conference Organizers: For the embed code to post a “Top Advisor Conference in 2018” badge to your own conference website, click here or scroll to the bottom of this page.

For Vendors/Exhibitors Considering Sponsorships: Hopefully this list will be helpful to you in deciding what conferences to potentially attend and exhibit at. For further ideas, please see our prior-year 2017 “Best Conferences For Financial Advisors”, which includes a number of other more ‘traditional’ advisor conferences. I also have limited availability to consult directly with companies seeking further guidance on distribution and go-to-market strategies to reach financial advisors.

Best Conference For New Financial Planners: FPA NexGen Gathering 2018

Financial Planning Association NexGen GatheringThe emerging shortage of young talent makes financial planning an especially appealing career opportunity in the coming decade. The caveat, however, is that it’s still an incredibly challenging profession to get started in, as it’s difficult to even find the “right” financial advisory firms to work for that have good training and career track opportunities, most new “financial advisor” job openings are really just sales jobs, and even when you do find a good firm, the role of a paraplanner or employee advisor can be a relatively isolating experience. Which isn’t necessarily aided by going to a financial advisor conference where most of the other advisors are in their 50s and 60s.

To fill this void, NexGen was born. Now part of the Financial Planning Association, the FPA NexGen community includes more than 2,500 financial planners who are age 36 or under (an actual requirement for membership), who share their experiences and provide support for each other through a combination of a private message forum and an annual conference called the FPA NexGen Gathering.

In recent years, the NexGen Gathering has used an “open agenda” format, where the participants themselves spend the first general session in a large-group discussion voting on the most pressing and/or appealing topics for young advisors, which then become the breakout sessions to be covered throughout the remainder of the conference.

In 2018, though, the NexGen Gathering is shifting back towards its “roots” from a decade ago, with a somewhat more structured format that will combine career development presentations and group discussion in a more formal agenda established in advance (including some sessions available for CFP CE credit). Which may be a bit more appealing for those who really want to know and understand what they’re getting in to with the conference for the dollars they’re going to spend (and to be able to provide a clearer explanation to the boss/owner who may need to sign off for them to attend!).

The FPA NexGen Gathering is a “must attend” for all those new financial planners who are trying to survive and thrive in their early years, and want to find a community of like-minded peers all looking to build long-term successful financial planning careers. In fact, the bonds formed in NexGen are so tight that many members stay connected to their NexGen peers years later by forming study/mastermind groups (once they “graduate” of the community after age 36).

Who Should Attend: While the NexGen community itself has an age required of being 36-or-under, the NexGen Gathering historically has not had any age limit. However, from a practical perspective, the conference is best suited for younger financial advisors, as that’s the focus of the community – ideally, those who are still in the first 10 years of their career (or as little as 0 years of experience!).

Details: June 24th to 26th at the University of California, Santa Barbara (UCSB) campus.

Cost: Not yet announced, but last year was an intended-to-be-affordable $229 for FPA members ($255 for non-FPA-members), with a $30 early bird registration discount, plus a separate discounted onsite lodging option (cheaper than local hotel costs for the multi-day event).

Conference Website: FPA NexGen Gathering 2018

Best Conference For Next Generation (G2) Succession Planning: AICPA PFP Summit

AICPA Personal Financial Planning Summit 2018With the average age of a financial advisor in their early-to-mid-50s, an estimated 40% of all of today’s financial advisors are expected to retire in the next 10 years, succession planning has become an increasingly hot topic at conferences. The challenge, however, is that most events just offer a session or two on the topic… which simply isn’t even to really delve into the real issues and complications that arise in trying to transition the ownership, management, and client servicing of an advisory firm.

The Enduring Advisory Firm by Mark Tibergien and Kim DellaroccaWhich is why the AICPA PFP Summit has scheduled its entire 2018 conference agenda around the theme of G2 (2nd/Next Generation) succession planning, including sessions on practice management and industry benchmarking gurus Mark Tibergien and Philip Palaveev (who recently published “The Enduring Advisory Firm” and “G2 – Building The Next Generation” respectively), industry commentator Bob Veres, practice management coach Tracy Beckes, and advisor business management and succession planning success stories like Cheryl Holland of Abacus Planning Group.

Notably, the format of the AICPA PFP Summit is unique as well. The event is being hosted at the posh Terranea Resort in southern California, with an agenda that is designed from the start to facilitate in-depth networking time with colleagues, including multi-hour afternoon breaks to allow time for activities like hiking, biking, and kayaking (for those less outdoors-inclined, last year’s event also included a group session on making your own guacamole!). Though again, the point is not just to have a conference that mixes in some fun activities as well, but specifically a structure that allows time for colleagues to have casual conversations to discuss the weighty practice management topics of the day.

G2: Building the Next Generation by Philip PalaveevFor those who may have attended the AICPA’s PFP Conference every January in the past – a 2.5-day technical content extravanganza that has long been recognized as one of the best Technical conferences for financial advisors – in 2017 the AICPA moved the PFP conference from January to June to become part of the larger AICPA Engage event. Accordingly, the PFP Summit was created to replace the former conference in the January time slot. Although while the AICPA PFP technical conference has historically attracted a large 1,000+ audience, the PFP Summit is intended to be much smaller and more intimate (apropos for the succession planning topic!), with a likely attendance of just 150 – 200 advisors or so.

Who Should Attend: Experienced advisor founders and next generation G2 advisor successors who want to really focus on succession planning issues and the long-term future of their advisory firm. In fact, the PFP Summit may be an especially good fit for both a founder and successor to attend together to begin tackling their succession plan, although either attending alone will likely have substantial takeaways to bring home to the succession planning discussion.

Details: January 8th to 10th (with a pre-event reception on Sunday January 7th) at the Terranea Resort in Rancho Palos Verdes, CA (a suburb of Los Angeles)

Cost: $2,095 for non-members of the AICPA, $1,795 for members. Registrations by November 24th are eligible for a $75 Early Bird discount, and non-members may receive the $1,795 base rate by the Early Bird deadline. AICPA Tax or PFP Section members (or PFS credential holders) save an additional $100. Nerd’s Eye View readers can receive an addition $125 off with the KITCESPFP discount code!

Conference Website: AICPA PFP Summit 2018

Best Conference For Serving Next Generation Clients (And The FinTech To Help): XYPN LIVE 2018 & FinTech Competition

XYPN Live 2018The XY Planning Network is a turnkey financial planning platform created to support financial advisors who want to deliver financial planning to Gen X and Gen Y clients for an affordable monthly fee (i.e., a “monthly retainer” business model). And to support its mission, the XY Planning Network conference brings together financial advisors who are currently executing the model successfully (along with those who want to learn) to share ideas and best practices with each other.

Accordingly, the XYPN LIVE 2018 conference is especially well suited to financial advisors who are trying to expand their services (or go independent and launch a new firm from scratch) to serve Gen X and Millennial clients. Tracks are focused on how to Start (launch), Run (operations), and Grow (marketing) a next-generation-client-focused financial planning offering, covering everything from how to structure and communicate your ongoing financial planning services, ways to structure a combination of monthly retainer fees along with upfront, hourly, or AUM fees to meet revenue goals, how to launch a Next Generation client offering as an “intrapreneurship” initiative within an existing advisory firm, and even ideas for how to bridge the income gap when starting out (via “side hustles”).

Also notable at the XYPN LIVE 2018 conference is its (now 3rd annual) FinTech Competition, which provides a platform for emerging financial advisor technology solutions focused specifically on helping advisors to serve younger clientele more efficiently (as technology efficiencies are crucial to being profitable when serving a younger clientele with a lower average revenue per client). Prior XYPN FinTech Competition winners include Snappy Kraken (which recently raised $1M of venture capital after its success at the FinTech Competition), and Vestwell (which also just raised venture capital a month after its FinTech Competition victory). In addition, the XYPN LIVE exhibit hall features a wide host of financial advisor technology solutions and practice management consultants, with fewer than 20% of exhibitors directly related to insurance or investment products.

Who Should Attend: Financial advisors who wish to either start their own practice serving Gen X and Gen Y clients, or who wish to launch a “firm within a firm” offering to serve Gen X and Gen Y clients within an existing larger advisory firm. The conference is open to advisors of any age, as long as they’re focused on serving a younger clientele.

Details: September 23rd – 26th at the Union Station Hotel in St Louis, MO.

Cost: $299 for XYPN members and $499 for non-members. An early bird discount of $100 for members and $200 for non-members is currently available through December 31st. Nerd’s Eye View readers can get a further $25 off at any time using KITCES discount code!

Conference Website: XYPN LIVE 2018

Best Conferences For Advisor Blogging And Digital Marketing: FinCon and the Traffic & Conversion Summit

The emerging rise of national RIA firms, from large institutions like Vanguard Personal Advisor Services and Schwab Intelligent Advisory, to independent firms including Creative Planning, Edelman Financial Services, United Capital, Aspiriant, Wealth Enhancement Group, and more, is creating a form of “marketing inequality” between large and small advisory firms. The national firms have the financial means and dedicated marketing talent to establish recognized brands and engage in outbound marketing. Which means smaller independent firms, and the mass of solo advisors, face an ongoing crisis of differentiation to distinguish themselves from their larger peers, necessitating a shift to niches and specialization and the rise of “inbound” digital marketing techniques to attract a more targeted clientele.

Unfortunately, though, the financial services industry is so new to the world of digital marketing, that there aren’t really any existing conferences providing real depth on the topic. However, beyond our industry, the reality is that digital and inbound marketing has been established for years, and as a result, there are several good conferences to consider… albeit not necessarily specific to financial advisors.

Accordingly, those newer to digital marketing, blogging, and social media, should consider the Advisor Track at FinCon, while advisors more established with digital marketing should look to the more advanced Traffic & Conversion Summit.

FinCon (Advisor Track) 2018

FinCon LogoWhile financial advisors can get a taste of digital and inbound marketing at broad-based marketing conferences like Hubspot’s INBOUND 2018 or Social Media Marketing World (SMMW), the appeal of the FinCon conference is that it was designed for the start for financial bloggers (albeit primarily the types who write on personal finance topics directly to consumers, not financial advisors in particular).

To get even more relevant for financial advisors, in 2015 the FinCon conference offered an “Advisor Symposium on Social Media and Blogging”, and in the years since the “Advisor Track” at FinCon has gained substantial momentum as the go-to event for financial advisors trying to get up to speed on the best practices in social media marketing and blogging, and learn from fellow advisors who are actually doing it successfully about what really works (and what doesn’t).

Who Should Attend: Financial advisors who are looking to get started with advisor blogging and social media, or those who are a few years down the digital marketing path and want to find colleagues to learn from and share best practices.

Details: September 26th to 29th in Orlando, FL

Cost: TBD, but last year was $469, with a deep early bird discount of $270 for those who registered shortly after the prior event ended. Nerd’s Eye View readers get an additional $25 off with the KITCES18 discount code!

Conference Website: FinCon 2018

Traffic & Conversion Summit 2018

Traffic and Conversion Summit 2018The world of digital marketing is full of self-professed “marketing gurus” who unfortunately are a lot better at promoting themselves than actually teaching effective marketing techniques for those who follow them. A notable exception is Ryan Deiss of Digital Marketer, whose platform has a strong reputation for “Digital Marketing Strategies that actually work”, anchored by their legendary long-form guide on maximizing customer value through digital marketing upsells of multiple tiers of products/services (which works in any business/industry).

Building on their success in digital marketing, the Digital Marketer team launched “Traffic & Conversion Summit” in 2012 to build an entire conference event around the theme, and it is now recognized by industry experts as one of the leading events for more advanced techniques in digital marketing and traffic acquisition strategies (more so than Hubspot’s INBOUND, which is viewed as a more basic digital marketing event).

The caveat, though, is that Traffic & Conversion Summit (TCS) is not targeted in any way to financial advisors in particular. Which means it’s really only suitable for those who are already very experienced in social media, blogging, and digital marketing, who are looking for deeper expertise to take their success to the next level. Those who are newer to digital marketing may find the depth overwhelming, though, and the strategies too complex to apply (and thus would be better served to start out at the FinCon Advisor Track instead), especially since it will be up to the advisor to figure out how to apply non-industry solutions to the financial advisory business world in particular.

Nonetheless, for those who have already had some traction, and want to figure out how to take their digital marketing game to the next level, TCS is worth checking out, especially if you’ve never attended a non-advisory-industry digital marketing conference in the past.

Who Should Attend: Advisors who are already engaged in financial advisor blogging and social media, and having some success and traction, but want to figure out how to amplify their results with more advanced techniques and are ready to reinvest the time and effort it takes to refine their digital marketing process.

Details: February 26th to 28th at the Marriott Marquis Marina Hotel in San Diego, CA

Cost: $1,495, with an Early Bird discount of $500.

Conference Website: Traffic & Conversion Summit 2018

Best Conference For Regaining Control Of Your Business: Strategic Coach

Strategic Coach LogoOne of the biggest success points for most advisory firms is our incredibly high client retention rates – which means if we can just get the clients in the first place, and survive long enough, most financial advisors will be financially successful in the long run. Even if it’s just slowly accumulating a few clients a year until the advisor reaches a critical mass.

Yet the challenge of having an advisory business with such high retention rates is that, if the advisors sticks to it long enough, it’s a virtual certainty that the advisor will eventually reach capacity, and then hit “overload” – where there are suddenly “too many” clients, not enough time in the day to manage the business, and growth hits a wall.

And while technology tools and some hiring can help once advisors hit the wall, the reality is that the biggest change that’s necessary to get past the wall is a mental one – it’s a mindset change, which ultimately leads the advisor to change his/her own role in the business, figure out what to delegate, and where to focus time and attention. Except unfortunately, this doesn’t come naturally to most of us; in fact, it’s almost impossible to get the perspective necessary to change your mindset, without literally having someone else to provide that outside perspective!

Enter Dan Sullivan of the Strategic Coach. The Strategic Coach program is designed for any/all entrepreneurs, and is not specific to financial advisors, but remains relevant because the core challenge of financial advisors is really the same as most entrepreneurs: changing your role to work less in the business, and more on the business, and figuring out what, exactly, is your “unique ability” that contributes to the growth of the business. So that you can re-shape both the business itself, and your team and role, to fit your highest and best-use skills.

Technically, the Strategic Coach is not a conference – it’s a coaching program, that’s built around quarterly in-person workshop meetings with your Strategic Coach and a small group of fellow entrepreneurs. Advisors must generate $100,000 of personal income to qualify for the program, and entrepreneurs are divided into cohorts for those earning up to $500,000/year, and those generating $500k+ of personal income, given that the needs and challenges of the entrepreneur do vary a bit by size and complexity of the business.

The cost of the strategic coach program is not trivial, though the Strategic Coach has a long history of transforming advisory firm (and other) businesses with a significant rise in income that more than pays for the program, along with increases in free time and quality of life as an entrepreneur by regaining control of your business!

Who Should Attend: Advisory firm business owners who feel like they have hit a personal wall in their growth and productivity, and feel like they are no longer in control of their time and business. Of course, the biggest challenge of fixing the problem is that you may not feel like you have the time to take off to make the changes. Do it anyway.

Details: Various Strategic Coach programs are regularly launched, each with their own coach and planned schedule of quarterly workshop meetings. See here for the upcoming workshop availability.

Cost: $10,000 as an annual fee to participate in the 4 annual workshops, plus receive access to the rest of the Strategic Coach online and supporting materials.

Conference Website: Strategic Coach

Best Conference For Transitioning From Advisory Practice To Business: Carson Excell 2018

Carson ExcellWhile most financial advisors proudly celebrate the fact that they are small business owners, the reality is that most advisory firms aren’t really “businesses” in the truest sense – because they wouldn’t be capable of surviving beyond the owner’s lifetime, and in most cases aren’t capable of even growing or sustaining revenue beyond the owner’s personal capacity. In other words, most advisory firms are more of a “personal practice” than a standalone business.

Of course, “just” being an advisory practice isn’t necessarily a bad thing at all. Solo advisory firms can be phenomenally lucrative, and standout advisory practices are netting more than $500,000/year in advisor income (and even partners at $1B+ AUM ensemble firms struggle to generate higher take-home pay than that!). As a result, many financial advisors are quite happy to simply refine their “lifestyle practice” to support a healthy income, while maximizing their work/life balance and ability to take time off.

However, a subset of financial advisors really want to transition from a practice to a bona fide advisory business, which entails hiring both operations and advisory staff, and transitioning the role of the founder themselves to be less of an advisor and more of an advisory business owner. Which for most advisors, is a very difficult transition – but one that legendary financial advisor Ron Carson’s “Peak Advisor” coaching program (recently rebranded to the Carson Group Coaching platform) has been training for nearly 20 years, with a semi-annual conference for its coaching clients called Excell.

In 2018, though, the Carson Group has announced that it is opening up the Excell conference to any/all advisors who want to attend, with a stated focus of trying to make Excell one of the industry’s all-around leading practice management conferences for those trying to make the transition from practice to business (typically advisors generating between $250k to $750k of revenue, who have “hit the wall” on personal growth, and need to transition the business to reach the next level). In fact, recognizing that a successful transition to a business involved both a change for the advisor, and a change and deepening of the staff that supports the advisor, Excell is unique in offering dual tracks for both advisors and their support staff.

Notably, because Excell is still part of the Carson Group Coaching platform, expect that the conference itself will likely still be at least a soft pitch for their Executive Coaching service as well (the original Peak Advisor program) and the Carson Institutional TAMP platform. Nonetheless, the reality is that many advisors going through the practice-to-business transition actually need coaching support to make the transition, and outsourcing investment management is increasingly common, so getting to understand Carson’s related services may be helpful for many! And the Carson Group maintains that it is focused on keeping the conference itself pure with practical takeaways.

Who Should Attend: Advisors (regardless of RIA or B/D) generating between $250k to $750k of revenue who want to make the transition from being an advisor to being an advisory firm business owner, either out of a desire to grow or the struggle of having “hit the wall” on personal capacity. Given the dual-track nature of Excell, advisors should consider bringing their support staff/executive assistant/operations manager as well.

Details: May 30th to June 1st at the ARIA Resort in Las Vegas, NV

Cost: $999. Nerd’s Eye View readers can receive a $100 discount with the code KITCES if you are not already a Carson Coaching Group member!

Conference Website: Carson Group Excell 2018

Best Conference For Refining A Lifestyle Practice: Limitless Adviser Coaching Program

Limitless Advisor LogoWhile some advisors who run an advisory practice are trying to transition to a business – with all the hiring and growth and the opportunities and sacrifices that come with it – others really prefer to “just” stay a practice, and try to optimize it to maximize net income and personal freedom and flexibility. Which is quite feasible, given that the top solo advisory firms are netting more than $500,000/year in advisor income serving mass affluent clients.

However, unfortunately most solo advisors do not experience such financial success. Instead, they hit a capacity wall, where all of their time is consumed by serving a wide range of accumulated clients with a wide range of needs, such that there’s no longer any time to even find more new clients (much less do the intensive upfront financial planning work for a new client), and sometimes there’s barely enough time to ever serve existing clients well. Suddenly, you no longer control the advisory firm you “own” at all; instead, the advisory firm controls you, and your time.

To help advisors stuck in this “trap”, Stephanie Bogan (a practice management guru who sold her first practice management consulting business and is now building a new firm) has paired with Matthew Jarvis (who built a highly successful $1M+ revenue practice with >50% profit margins while taking nearly 100 days of vacation per year by the age of 35!) to create a new coaching program they have dubbed “Limitless Adviser”. The idea of the Limitless Adviser program is to pursue what Stephanie calls the “5 Freedoms” of Limitless Advisers, to regain control of your advisory business if you find yourself in the challenging situation where it feels the business controls you… but you want to get back to a world of growing revenue while regaining that feeling of freedom and flexibility that the practice once had (and perhaps even a little fun!?).

Notably, though, the Limitless Adviser program isn’t simply a “conference” – it’s actually a full-year coaching program, that includes two retreats (in March and September), monthly “Strategic Learnings” calls for 2 hours with Stephanie and Matt (where they take deep dives into the mindsets and methods that it takes to hit $1M of revenue and maintain a healthy lifestyle balance), monthly “Practice Learnings” calls to explore the “how’s” to apply the teachings, an Advisor Forum to ask further questions (with set Office Hours to access Stephanie and Matt’s expertise), and further tools and resources. The coaching delves into everything an advisory practice needs to refine itself, including how to position the business, branding and sales, marketing, HR and people, operations and processes, and finding the right systems and platforms.

Of course, the irony is that many of the advisors who most need the help that the Limitless Adviser Coaching Program provides may feel daunted by the substantial time commitment it will take to go through it. Fortunately, though, the whole point of the exercise is to free up far more of your time in the business than “just” what the coaching program will take – and the improved trajectory of the business is something you can take with you long after the year-long program is done.

Who Should Attend: Advisors with $200,000 to $500,000 of revenue who feel “stuck” in their practice, with too much to do for too many clients to the point that it’s no longer “fun”, and want to regain control of their practice… and are ready to make the personal commitment to change.

Details: Retreats are on March 6th to 8th in Dallas and from September 12th to 14th in Las Vegas (both part of the program); remaining calls and other participation is virtual on your own time.

Cost: $12,000 for the full-year program. Nerd’s Eye View readers can get $2,000(!) off with KITCESCONF discount code! (Note that the 2018 program is expected to be ‘full’ by the end of November 2017; those reading this in 2018 who are interested in the 2019 program can view the website below.)

Conference Website: Limitless Adviser

Best Conference For Advisors Looking To Buy (Or Sell): Echelon Deals & Dealmakers Summit

Echelon PartnersGiven the aging of the average financial advisor, and the ongoing shortage of young advisor talent (as there are more CFP professionals over the age of 70 than there are under the age of 30!), the reality is that many or even most financial advisors will not be able to complete an internal succession plan as they won’t be able to find a successor (or won’t have the time or inclination to train and develop them). As a result, more and more advisory firms are being sold instead, with some estimates that there are as many as 50(!) interested buyers for every advisory firm seller!

In turn, the rise of advisory firm dealmaking has led to the rise of advisory firm deal-making platforms, consultants, and investment bankers, including FP Transitions, DeVoe and Company, Succession Resource Group, Advisor Growth Strategies, and Echelon Partners. And it’s Echelon Partners that ultimately decided to go one step further, launching its own “Deals and Dealmakers” semi-annual conference, to both provide a forum for the leading acquirers (and consultants and platforms that work with them) to discuss the latest trends and best practices in advisory firm mergers and acquisitions.

The conference agenda includes the latest industry statistics on deal-making from Echelon’s own CEO Dan Seivert, along with sessions from leading advisory firm acquirers about what’s working (and what’s not) when integrating an acquired firm, to how to complete advisory firm acquisitions successfully (from deal terms to negotiating tactics).

Notably, the Deals and DealMakers (DDM) Summit is also an opportunity to actually meet potential acquirers, for those advisors who are actually looking to sell. Although in practice, the focus of the conference agenda (and the majority of attendees) are acquirers looking for insights on trends and best practices, which means firms looking to acquire should attend for the content (and not just in search of on-site deals). And may be interesting perspective for advisory firm owners who plan to sell in the future, and want to get some better insight into how buyers might be looking at the deal.

Who Should Attend: Advisory firm owners that are involved in acquiring other advisory firms, or who would like to be, and want to understand M&A trends and best practices, and network with consultants and platforms that may be available to support them. Or potential advisory firm sellers looking for buyers, or at least looking for perspective on what buyers want (if planning for a future sale).

Details: September 12th and 13th at the Island Hotel in Newport Beach, CA

Cost: $795 for financial advisors (and $995 for non-advisors), with no Early Bird discount. However, Nerd’s Eye View readers get a $80 off with the discount code KITCES up through August 1st!

Conference Website: Echelon Deals & Dealmakers Summit

Best Conference For Larger Independent Advisory Firms: Bob Veres’ Insider’s Forum 2018

Bob Veres Insiders Forum LogoBob Veres is the former editor of Financial Planning magazine, and for the past 20+ years has been the publisher of Inside Information, the longest-standing (and highly recommended!) newsletter for financial advisors on practice management. And after years of writing about practice management and speaking at conferences, Veres decided to produce his own conference, originally dubbed the “Business and Wealth Management Conference” and now simply titled “Insider’s Forum”.

The content at Insider’s Forum best suited for mid-to-large sized independent advisory firms (e.g., “ensemble” firms that have at least $2M of revenue, 10+ staff, and multiple partners) that are running as bona fide businesses and feel they have outgrown the practice management content of other conferences… as in advisory firms of this size, that are growing beyond their founders, the business faces unique complexity challenges that emerge.

Accordingly, Insider’s Forum offers separate tracks for advisory firm Executive leaders (e.g., Founders, CEOs, etc.), and for advisory firm Operations leaders (e.g., Chief Operating Officers, Operations Managers, etc.), with content tailored for each. The latter includes sessions on designing processes, adopting technology for operational efficiencies, and managing compliance issues, while the former covers topics like finding and developing advisor talent, marketing and business development strategies, and the evolving landscape of advisory firm business and pricing models.

Also notable at Insider’s Forum is its “invitation-only” exhibit hall, where vendors are hand-picked by Veres (along with all the speakers) to ensure appropriateness and relevance for the independent advisory firm attendees.

Who Should Attend: Advisory firm owners/founders and key personnel at mid-to-large-sized growth-oriented independent firms (typically $2M+ of revenue and multiple staff and owners). Ideal attendees include founders/partners, CEOs, and COOs and Operations Managers.

Details: September 24th to 26th at Hotel Del Coronado in San Diego, CA

Cost: TBD, but last year was $975. Subscribers to Veres’ Inside Information receive a $150 discount (which itself is available at a discount for first-time subscribers to the Nerd’s Eye View Member’s Section!), and Nerd’s Eye View blog subscribers can also receive a $75 discount with KITCESBVIF discount code! (Not stackable with Inside Information subscriber discount.)

Conference Website: Bob Veres’ Insider’s Forum 2018

Best Conference For Advisor Technology: Technology Tools For Today (T3) Advisor Conference

Technology Tools for Today (T3) LogoStarted more than 10 years ago by advisor tech consulting pioneers Joel Bruckenstein and Dave Drucker, the Technology Tools for Today (T3) advisor technology conference is the largest event focused solely and directly on “Advisor FinTech” and WealthTech tools.

From the advisor’s perspective, the challenge with the typical custodian or broker-dealer conference is that only a small subset of industry technology is ever showcased – in part because not all technology tools are approved for all platforms, but more commonly because all of the investment and insurance product solutions simply crowd out the technology providers from the exhibit hall (as a startup software company simply cannot afford to pay the same exhibit fee as a multi-billion or multi-trillion dollar asset manager).

By contrast, the T3 Advisor Technology conference really showcases the full landscape of what’s available in advisor tech tools in all the major categories (e.g., CRM, financial planning, portfolio accounting and reporting), along with newer categories like risk tolerance tools, client PFM portals, cybersecurity tools, and even IT outsourcing providers. Which is helpful for advisory firms looking to add new technology, or switch to another solution in the category (that might not already be on their custodial or broker-dealer platform but could be), but also for advisors looking to switch platforms and/or go independent (who need to make a whole slew of technology decisions when they switch).

For advisor tech companies, the T3 conference is also an important “place to be seen” in the broader advisor technology landscape. The event is very well covered by the industry media and pundits, and consequently most companies time major software or product releases (last year’s event included the launch of Riskalyze Premier and its Autopilot Partner Store and a major advisor software survey), and many advisor tech companies have launched/debuted at T3 over the years, including CRM provider Wealthbox, advisor PFM portal WealthAccess, and portfolio risk analytics tool RiXtrema.

Notably for tech vendors, though, the T3 conference is still not a “huge” buying audience for companies looking for new users (as almost half of the 600+ attendance is typically fellow software vendors, media, and industry consultants), and those looking for big “deal” opportunities would be better served by the T3 Enterprise conference in the fall (which specifically targets large broker-dealer and RIA enterprise decision-makers), or showcasing their solution in the XYPN LIVE FinTech Competition. Nonetheless, the T3 conference is valuable for most vendors, both for the opportunity to gain at least some advisor users, a chance to network with industry media and advisor tech pundits for visibility, and the potential to establish relationships with other tech vendors that might be future integration partners (or even strategic acquirers!).

Who Should Attend: Independent advisory firm owners (or those looking to go independent), and/or whichever staff member in the advisory firm is responsible for technology decisions. Companies looking to provide tech solutions for advisors should also aim to attend, both to showcase their solutions, and also for networking opportunities.

Details: February 6th to 9th, at the Marriott Harbor Beach Resort in Fort Lauderdale, FL

Cost: $599. Early bird discount of $100, ending October 31st. Nerd’s Eye View readers get an additional $75 off with KITCES discount code!

Conference Website: T3 Advisor Technology Conference 2018

Best Conference For Rapidly Growing Advisory Businesses: Scaling Up Summit & User Conference

Gazelles LogoFor advisory firms that want to run as businesses (and not simply lifestyle practices), growth is an imperative – because without growth, the business cannot great opportunities for its people that are necessary to attract and retain the best talent. Ideally, an advisory firm should be sustainably growing its revenue by at least 15%/year – allowing the business to double in size every 5 years – to create the kind of job opportunities that attract the top young talent.

Except the caveat is that if the business really continues to grow at a 15% compounding rate, it quickly becomes a very sizable business. An advisory firm with $2M in revenue and 8-10 employees that can grow at 15%/year will become a $4M revenue firm with 15-20 employees in 5 years. And an $8M revenue firm with 35-40 employees in 10 years. Which suddenly requires a substantial amount of management infrastructure to actually oversee so many employees, and makes it far more challenging to keep everyone on the team focused (when there are far more employees than what the founder alone can manage).

And ironically, in this context, growing even faster can make the process of managing growth even harder. An advisory firm that grows at 25%/year will nearly double every 3 years. 40% annual growth doubles the firm every 2 years, potentially catapulting a business from 10 to nearly 40 employees in just 4-5 years. Which is important, because as Dave Packard (co-founder of Hewlett-Packard) famously noted, “more companies die of indigestion than starvation”. In other words, for growing companies, often the greatest risk is not that the growth stops… but that the growth continues, and the business compounds past the ability of the founders to manage it effectively (as they can’t “digest” the growth fast enough).

While this problem isn’t terribly common in the advisory industry – where high growth rates are especially hard to sustain as the firm grows – managing rapid growth is a real challenge, and one that today’s industry benchmarking studies and practice management consultants are often not well equipped to handle. Instead, it’s necessary to look beyond the industry.

Fortunately, though, the reality is that when a business is growing rapidly, the pain points are actually quite common to most businesses, regardless of the industry. As it’s no longer an “advisory” business challenge, but simply a “business” challenge of how to manage the people, the strategy, the execution, and the cash (which in a rapidly growing business, proves to be remarkably scarce, as the business must reinvest into hiring more people as quickly as it earns cash from recent new clients).

And one of the leading experts in the domain of scaling up small to mid-sized businesses is Verne Harnish, author of “Scaling Up” and the founder of Gazelles consulting, which has been recognized around the world as a leading program in helping teach rapidly growing firms how to actually manage and “scale up” in the face of rapid growth.

In addition to its robust Coaching program, the Gazelles organization also sponsors a series of conferences, including its ScaleUp Summit, and subsequent “User Conferences” for those who have gone through the Scaling Up program and want to put its tools into action. The Summit and User Conferences are run in immediate succession to one another (although business owners can select one, the other, or both), where the Summit focuses on high-level keynotes, and the User Conference focuses on breakout sessions to put the tools into action.

For rapidly growing advisory firm businesses, that are struggling to figure out how to manage the actual business as a business – with all the complexity that come from a deepening organizational chart, hiring mid-level managers, needing to get everyone on the same page to execute the business’s strategic plan – the Gazelles program and Scaling Up are real training in how to do it right.

Scaling Up by Verne HarnishInterested advisors should start by reading Harnish’s “Scaling Up” book before attending, to have better context for the Gazelles tools and business management philosophy.

Who Should Attend: Advisory firm business owners with at least $2M of revenue who are struggling to manage the continuous hiring and rising complexity of 15%+/year annual growth (and especially firms growing at 25%+/year). Notably, the Gazelles program is viable and relevant all the way to $100M+ of revenue, and thus should be considered for very large independent advisory firm leadership as well.

Details: Gazelles actually runs two sets of annual Summits and User conferences. The Spring event is in New Orleans from May 22nd to 24th, and the Fall event is October 16th to 18th in Denver.

Cost: $1,995 per person for the Summit, and a separate $495 for the User Conference.

Conference Website: Gazelles Growth Summits

Best Conference For Business Development & Client Acquisition: Bachrach or SalesPro Insider

Virtually every financial advisor who has been in the industry for more than 15 years started out the same way: they sold insurance or investment products to start, and if they were successful enough, eventually they went back to get CFP certification and migrated to focusing more on financial planning (and perhaps switching firms or starting their own) after already proving they could survive the initial years and get clients. The end result is that almost every advisor with 15+ years of experience already had sales and business development skills, or learned them quickly… or they’d already have long since left the business.

By contrast, with the rise of employee advisors over the past decade, a growing number of financial planners start out with their CFP marks – either directly out of college, or in the initial years of their career – mastering technical competency skills, and then learning the relationship management skills necessary to handle clients (who may be handed to them from the firm’s marketing efforts, or as more senior advisors reach capacity and need to hand clients off). Yet after several years, a new challenge emerges: the advisory firm has a wide base of high-quality financial advisors, none of whom has any skill at business development or acquiring new clients!

This dearth of sales training and business development skills for experienced advisors becomes a significant blocking point – both for the firm that cannot sustain its growth rate on a limited number of founders doing “all” the business development, and because the advisors themselves reach a cap on their careers where their compensation cannot rise higher because they cannot assume a “Lead Advisor” role (and certainly can’t become a Partner) until/unless they learn to help grow the business.

And the challenge is made worse by the fact that financial-planning-oriented “advice” firms tend to have a very non-sales-oriented culture that repudiates the industry’s traditional sales tactics. Which means it’s especially hard to even find sales and business development training that fits the financial planning firm’s client-centric mentality.

Fortunately, though, several “sales and business development” training programs, with an advice- and advisor-oriented focus, have emerged over the past decade, and offer their own conferences and events!

Bill Bachrach’s Advisor Roadmap and Client Acquisition Mastery Workshop

Advisor RoadmapBill Bachrach is a coach and consultant for financial advisors, best known for his “(and associated training program) from the late 1990s, which was subsequently followed by “Values-Based Financial Planning” a few years later. The essence of the approach was that, rather than “just” trying to sell a financial services product, or even financial planning advice, that the starting point is to really delve into understanding a client’s core values, both as a means to build better trust and rapport, and ultimately to deliver more relevant advice.

Values Based Selling by Bill BachrachIn the years since his Values-Based Selling and Financial Planning success, Bachrach has spoken at advisor conferences across the US and around the world, and in recent years has been developing a new program specifically on client acquisition and business development. The end result is an online training program called “Advisor Roadmap”, and a 3-day Mastery conference focused on further developing your People Skills, offered in partnership with Financial Advisor Magazine.

The Client Acquisition Mastery workshop is specifically focused on teaching – and practicing – the skills necessary to build rapport with clients and prospects. As a result, advisors who go through the program will actually practice their skills in paired sessions with other advisors in the workshop, honing everything from the delivery of how you explain what you do (in a way that makes prospects interested in learning more) to how to have effective “values” conversations (without making it awkward and prying), talking through goals, and articulating your value as a financial planning and the implicit promise you make to clients.

For many financial advisors, the idea of “paired practice” of what you would say to a prospect or client may feel canned or awkward, but the reality is that the only way to get good at client conversations is to practice them. Better in a controlled environment, with a supporting colleague and coaches to facilitate, than trying to figure it out the hard way as you lose out on valuable prospects!

Details: August 8th to 10th in San Diego, CA.

Cost: $2,500, but also requires already being a member of Bachrach’s Advisor Roadmap virtual program (which itself costs $900/year if paid all at once, rising to $1,200/year in January). Workshop registration is discounted by a whopping $1,000 (to just $1,497) for those who register by Super Early Mover deadline of November 30th, and the price rises to $1,750 on January 31st, and $2,000 on April 30th.

Conference Website: Bachrach’s Advisor Roadmap And Client Acquisition Mastery Workshop 2018

Nancy Bleeke’s SalesPro Insider

Sales Pro Insider LogoMost “sales training” programs are challenging for financial advisors, because they’re predicated on traditional sales tactics that may work relatively well for traditional product sales, but are poorly suited to financial advisors who are selling themselves and their advice. Even though the reality is that being a fiduciary advisor is still ultimately about sales – because you can’t help anyone as a financial advisor until you convince them to hire you in the first place!

Conversations That Sell by Nancy BleekeNancy Bleeke’s “Genuine Sales” program is different, though. As framed in her book, “Conversations That Sell“, the focus is not really about selling, but simply to have genuine conversations that connect with prospective clients, understand their problems, and explain how our advice solutions legitimately solve their problems.

Bleeke’s program builds around a core 5-step process of WIIFT – an acronym for both focusing on “What’s In It For Them”, and also  a process of Wait (do your background work and prepare in advance of a meeting), Initiative (to find connection points with clients and set the stage), Investigate (to really learn about them and help them understand the risks and rewards of working with you as a financial planner), Facilitate (to make it easy for them to find out how what you do actually helps them), and Then consolidate (bring all the key themes together to help them understand how to proceed).

Because the reality is that good sales and business development doesn’t have to be “salesy”, nor is it something that is just for extroverts. Instead, the reality is that sales is really just a process – not a script, but a process – of having a conversation that connects with prospective clients, understands their real issues, and positions your services to solve their problems. Bleeke provides the process.

Details: Genuine Sales workshops occur quarterly. There’s also a “Virtual” Genuine Sales program occurring throughout the year, for those who want to try out the training without traveling!

Cost: $2,995 for the workshop and supporting online tools. Nerd’s Eye View readers receive 10% off with the KITCES discount code!

Conference Website: SalesProInsider Genuine Sales Training

Best Conference For Experienced Advisors Who Need A Recharge: FPA Retreat

FPA Annual Retreat 2018For very experienced advisors – those with 15+ years of experience – it’s not uncommon to have a “mid-career crisis”. By this point in your career as an advisor, you likely have most/all the clients you need to be financially successful, are only adding a handful of new clients a year (to replace the few that leave or pass away), and are basically in the “maintenance mode” phase with virtually all of your clients. A phase that will likely last the rest of your career.

The problem with this phase of the financial advisor’s career? It can get boring. Having few new clients means there are few new opportunities to dive in to, few new interesting scenarios to analyze, and not as much intellectual challenge. Client conversations can become remarkably mundane, as the same clients as the same questions and raise the same neurotic concerns they’ve been expressing for 5-10+ years. The same questions and concerns they’ll likely be raising for the next 10+ years of working together as well.

So how do you overcome the mid-career crisis? Take a pause to recharge and re-find your purpose and a new direction… by going to the FPA Retreat.

The FPA Retreat has long been recognized as one of the leading “advanced planning” conferences, but the truth is that it’s more about advanced plannERS than advanced plannING. With a focus on both the “art” and “science” of financial planning, the conference tends to attract very experienced practitioners who attend seeking the opportunity to share best practices and find a community of experienced colleagues. And although it’s not openly stated, many are facing their own mid-career crises.

In point of fact, the “What’s Next” nature of FPA Retreat has led the conference to have a major role in a number of “cutting edge” developments in financial planning. It’s rumored that the birth of Morningstar style boxes came in part from a panel discussion at Retreat decades ago, and it has also been the place where “life planning” was discussed long before it became popular, where the potential shift from AUM to retainer fees has been discussed for a decade already, where the NexGen young planner movement was birthed more than a decade ago, and where advisors continue to push the envelope with tools like using Mind Mapping to better engage clients in meetings.

Simply put, for experienced advisors trying to find their own “What’s Next” in their career, FPA Retreat is the best place to try to figure out the answer to that questions for yourself. (And talk to some other advisors who may be struggling with the same feeling!)

Who Should Attend: Financial planners with 15+ years of experience working with clients, who are struggling with their own mid-career crisis of comfortable business income but stagnant client meetings and flat growth, trying to re-find their purpose and figure out “What’s Next?”

Details: April 23rd to 26th at The Wigwam in Phoenix, Arizona

Cost: $1,549 for non-members of FPA, and $1,349 for FPA members. $100 discount for Advance registration by February 26th, and an additional $100 discount for Early Bird registration by January 29th. Nerd’s Eye View readers can save an additional $50 off with the KITCES discount code!

Conference Website: FPA Retreat 2018

Plugging The Hole For CFP CE Requirements

Notwithstanding that 2018 will hereby be known as the “Year of Practice Management Conferences”, some advisors need to get continuing education credits as well. And given that practice management content is (rightfully!) not eligible for CFP CE credit, those who do need CE credits may need to look to alternatives.

Notably, though, a few of the conferences listed here do at least have “CE tracks” as a part of their agenda, including Veres’ Insider’s Forum, XYPN LIVE, and FPA Retreat.

In addition, there are a wide range of other industry conferences with CE credit available. Of course, the unfortunate reality is that many of those events simply load up the CE with sponsored sessions of poor quality – in point of fact, the original reason we created these annual conference lists was to help financial advisors identify the best conferences that had bona fide educational content!

Accordingly, those looking to plug a hole of CFP CE (or related designations like IMCA’s CIMA or CPWA) should look to our prior “Best Conferences” list for 2017, which was comprised almost entirely of CE-eligible conferences. Of particular note is the FPA NorCal regional conference (a perennial “top conference” for advisors based on its high-quality advanced content), and the AICPA’s PFP (Personal Financial Planning) conference which is now part of the broader AICPA Engage event (although given conference execution challenges at last year’s inaugural event, advisors would likely be better served attending FPA NorCal in 2018 and planning for AICPA Engage in 2019). In addition, many FPA chapters offer local 1- or 2-day chapter symposia that can help fill the void for advisors who are a little short on CFP CE credits.

Alternatively, for those advisors who need CFP CE credits, but still want to attend one of the listed practice management conferences, consider purchasing a “virtual pass” for one of the other more technical events. Video of last year’s AICPA PFP Engage sessions are available online for $459, while NAPFA National sells recordings for its great lineup of technical sessions for just $279, the Financial Planning Association sells its FPA Retreat session recordings for $369 (or its full Annual Conference lineup for $965, with substantial discounts for FPA members), the IMCA Annual Conference is available for $595 (discounted lower for IMCA members), and the CFA Institute actually makes the recordings of its annual conference content available for free! And of course, the Nerd’s Eye View offers IMCA and CFP CE credits for many of these blog posts, along with additional white papers and webinars, in its Members Section, too!

The bottom

: By all means, get the CFP CE credits you need to maintain your designations. But don’t let the need for CE credits take away from the time you need to invest in yourself to work on your business, too!

So what do you plan to attend? Do you have any conference favorites that I didn’t include in the list? Please share in the comments section below!

Why Is it So Hard to Ask For Referrals As A Financial Advisor?

Why Is it So Hard to Ask For Referrals As A Financial Advisor?


Growing a client base and acquiring more ideal clients is a challenge all advisors face, regardless of how successful they currently are. And although almost everyone in the industry has heard that asking for referrals is an important way to grow a business, many advisors struggle with this. Which raises the question, as recently posed by Ron Carson at a recent keynote presentation: “Why don’t more advisors ask for referrals? Are advisors afraid to ask for referrals because they’re not proud of their own services?”

In this week’s discussion, we talk about why it is so hard to ask for referrals as a financial advisor, and how the many barriers – including our pride (or lack thereof) in the company or products we represent, our confidence in our own value, or even shame about the industry we are in – can make it hard to ask for referrals.

Of course, when financial advisors get started, it isn’t feasible to ask for referrals, because you don’t have any clients yet to refer you; instead, the only choice is cold calling, “cold knocking” (walking the streets and knocking on the doors of small businesses), or some other cold prospecting strategy. In fact, arguably for newer advisors, the whole appeal of being able to ask for referrals to generate new business is the opportunity to get away from cold calling and other types of prospecting!

Yet the caveat is that it’s difficult to ask for referrals, if you’re not actually proud of your company and its products. Because if you know, deep down, that your solutions aren’t really the best for your clients, you’ll likely self-sabotage your own behavior – as I experienced myself when starting out as a life insurance agent, struggling to prospect and ask for referrals because I was embarrassed about the sales tactics my company was using at the time!

Of course, ultimately becoming a real financial advisor is not about getting paid for your company’s products, but getting paid for your own advice, knowledge, and wisdom. But that still means it’s hard to ask for referrals until you’re actually confident in yourself, and your own knowledge. And here, too, many struggle, because if we don’t actually know anything about financial planning, and we know that we don’t, then we can’t confidently convey our value. Which is why professional designations like the CFP marks are so helpful… because often it’s only after completing a designation that many will really start to feel confident that they can bring value to the table, and ask for referrals.

Although even once advisors have expertise and can truly add value as a financial advisor, it can still be hard to have confidence to ask for referrals, when telling people “I’m a financial advisor” risks making you a social pariah because so many consumers have had bad prior experiences with advisors! That’s the challenge of trying to do business in a low trust industry. When metrics like the Edelman Trust Barometer finds that fewer than 50% of all consumers trust financial services companies, it’s literally an odds-on bet that if you say “I’m a financial advisor” and ask for referrals, that the person’s first and immediate impression of you will be negative!

The bottom line, though, is just to recognize that there really are a lot of barriers that make it hard for us to ask for referrals, all of which are built around our own fears and discomfort in what we do, the value we provide, or the company/industry we represent. Our fears hold us back. And often our fears are quite well-founded. It really is uncomfortable asking for referrals when you’re not proud of the company and products you represent. Or you’re not confident in your own value. Or you’re ashamed of the industry you’re in. So, if you find yourself at one of these blocking points, figure what do you have to do to grow past it – whether it’s leaving your company, reinvesting in yourself and your education, or differentiating yourself from the rest of the industry – or you won’t have the confidence you need to ask for referrals!

Asking For Referrals To Sell Investment And Insurance Products

As most of you know, I started my career in financial services, working in a life insurance company, straight out of college, into a life insurance agency. It was the year 2000, so the hot product at the time was variable universal life insurance. Buy life insurance. Invest the cash value in the stock market.

Now, back then, the only way you could get started was you had to go out and prospect. You could do cold-calling, or you could walk the streets and cold-knock on the doors of small businesses. There were some long-term career life insurance agents in that office who built their whole careers knocking on the doors of people’s homes, like, literally selling insurance door-to-door, cold-knocking, back in the 1960s and 1970s.

But ideally the goal for most advisors is to get away from that as quickly as possible, by getting some clients and then asking those clients for referrals to new clients and prospecting your way forward from there. It’s basically the…Asking for referrals was the pathway from cold-calling and cold-knocking.

Frankly, compared to cold-calling and cold-knocking, proactively asking for referrals seems like a pretty good deal. But here was the thing. I couldn’t do it. I just couldn’t do it. I couldn’t bring myself to ask clients and prospects I was talking to if they knew anyone else who might benefit from our company’s products and services. It was what I was trained to say, and I couldn’t do it.

Deep down, I think the reason why is exactly what Ron said. I wasn’t proud of the company and the products that I represented. Because at the time at least, it really felt like the company was solely focused on one product, a variable universal life, at least in our branch, where it was all the managing partner wanted us to talk about with every prospect we met.

Even as a novice agent at the time, I knew deep down that not everybody on the planet needed a VUL policy. What’s worse I knew we didn’t even have the best VUL policy on the market, because we got trained in how to overcome objections, including the objection of outselling competing products that illustrated better than ours.

So I was in a position where the company was pushing me to sell a knowingly inferior product to a wide range of people, who often didn’t even need the product. Lo and behold, I didn’t want to ask for referrals. I just couldn’t do it.

To be honest, it…Well, I guess as Ron’s question suggested, it wasn’t that I was afraid, per se. It was frankly that I was kind of ashamed of what I was selling, what I was doing. Ultimately there’s only one good way you ever really deal with that. You have to leave, and that’s what I ended up doing. It basically becomes a self-fulfilling prophecy. I wasn’t proud of my company’s tactics and the product I represented. So I didn’t ask for referrals, and I didn’t get much business, which meant I couldn’t qualify my contract, which means the discomfort with the company and its products eventually meant that I no longer had a job selling that company’s products. Funny how these things work out.

But I think it’s a good reminder for all of us that you can’t stay at a company where you aren’t proud of what they do and their solutions that they provide. As Ron had put it, if you wouldn’t knowingly, willingly, and happily recommend your mother and your grandmother to the company that you’re working for, you need to find a different company. You need to go somewhere else because, otherwise, it will become a self-fulfilling prophecy. You won’t be comfortable asking people to do business. You won’t be comfortable asking for referrals, which means you will self-sabotage your own success, and it’s not going to work out anyways.

So save yourself some time and extended, but inevitable, demise. If you aren’t able to ask for referrals because deep down you’re ashamed of the company or products you represent, find a new company to represent, and get over this hurdle.

Asking For Referrals Requires Confidence In Your Own Value [Time – 4:50]

Now that being said, the truth is that even if you want to ultimately become a financial advisor, where your primary job is actually not selling the company’s products, but selling your own advice and knowledge and wisdom, then what you really need to become proud of, so that you can represent confidently, is yourself and your knowledge.

Here too, I’ll admit that this was actually a huge struggle for me in the early years, even after I left the insurance company. I switched to working in a much more financial planning-oriented independent broker-dealer, but I still had to struggle. I didn’t really know anything about financial planning. I was about 23 years old, with a bachelor’s degree in psychology, and I knew I didn’t know much of anything about financial planning. It’s hard to confidently ask people to work with you and pay you for your advice, when you know you don’t actually bring much value to the table and give very good advice.

For me, that was the primary motivator to go out and get my CFP marks and ultimately continue on with a lot of additional post-CFP designationsfrom there, because I couldn’t confidently convey my value and ask for their business until I knew, for me personally, that I had the knowledge and value to convey in the first place.

So for me, it was only after completing some of those designations that I felt confident enough that I knew my stuff and felt I really brought value to the table, that I finally started to get comfortable asking prospects for their business, asking for referrals and introductions, and actually started doing business development. And that was a good 8 to 10 years into my career, because it’s a lot easier to ask for referrals when you’re truly confident you actually add value and help people. I mean why would you not ask for referrals at that point? You have the knowledge. It helps people. Why do you not want to help more people by telling them what you do?

In fact, I find that’s one of the key differences between advisors, not product salespeople, but actual advisors who are good at business development and asking for referrals, versus those that aren’t, is that the ones who are good at it mostly just comes from their confidence in their own value. They feel it’s only natural to share their expertise with more people, to help more people. Why wouldn’t you if you have the expertise?

Asking For Referrals In A Low Trust Industry [Time – 6:59]

Now, really, there actually is one reason why you probably wouldn’t, even if you have the expertise. It’s because even if you have the expertise to add value as a financial advisor, it’s still hard to actually tell people you’re a financial advisor, because so many consumers have had bad experiences with advisors. I’m sure all of you who are advisors listening to this, you have experienced this. Right? You’re at a social event, and someone asks you what you do, and you say, “I’m a financial advisor,” and they say, “Oh, yeah. I have a financial advisor. He helped us with our life insurance a few years ago,” because they think comprehensive financial planning is getting a life insurance policy.

Or you say, “I’m a financial advisor,” and they take a step back and start looking for someone else across the room to talk to, “Oh, hey, Johnny,” because they’ve clearly had some bad experience with a financial advisor or salesperson in the past, and now they’re assuming that when you say, “financial advisor,” you’re just there to sell them something, and they didn’t feel like buying anything today. It makes it really hard to ask for people’s business and ask for referrals as a financial advisor, when so many people have been stung by a bad financial advisor in the past. It feels like you’re not telling people about this great service you deliver. You’re confessing you’re a financial advisor and hoping it doesn’t make you a social pariah.

This is the challenge of doing business in a low-trust industry, with low barriers to entry. The Edelman Trust Barometer, which is kind of the leading global survey that measures consumer trust, finds the financial service industry as the least trusted industry there is. We are dead last. Fewer than 50% of all consumers actually trust financial service companies, which means it’s literally an odds-on bet that when you say, “I’m a financial advisor,” and ask for referrals, that the person’s immediate first response of you will be negative, because fewer than 50% of consumers trust financial services in the first place.

Like it or not, as financial advisors, even as we try to become our own profession, we’re still representatives of the financial services industry. I think that makes it harder for all of us to ask for referrals. When you know the odds are that bad, it’s hard to want to be productive. It’s easy to be afraid that the reaction when you’re going to ask for referrals will be negative. So you just don’t want to do it at all.

Frankly, I think this is one of the main reasons, as financial advisors in the past couple of years, we’ve been evolving our titles and labels. You know? Financial advisor is associated with financial services industry, but wealth manager feels more aspirational, as though we’re trying to separate ourselves out. I’ll admit it at least, I’m often ashamed of the industry I represent, even as someone that’s trying to help improve it, because I also know the bad stuff that happens in our industry.

Asking For Referrals When Clients Don’t Know Who To Refer [Time – 9:29]

Of course, even when you do actually ask for a referral, there’s still the awkward reality that, often, when you ask someone for referrals, the person responds, “Um. Can’t think of anyone offhand.” Now it feels even worse to ask for referrals. What are you supposed to do at this point? Drill deeper? “Are you really sure you don’t know anyone who might want to work with me?” Because that doesn’t sound desperate.

Indirectly, I think this is one of the many reasons why having some kind of niche or specialization is so important. Think of it in the context of another profession. Imagine you’re an orthopedic surgeon. Most doctors get their business by referrals. They get business from patients who refer them. They get business from other doctors who refer them, but you don’t see a lot of orthopedic surgeons going to networking meetings saying, “Do you know anyone who’s blown out their knee lately?” because they don’t have to. They’re an orthopedic surgeon. If you have knee problems, you already know you need an orthopedic surgeon. If I have a friend who has a knee injury, then I refer him to an orthopedic surgeon I saw a couple years ago, because I’m trying to be helpful.

In other words, when you have a niche or a specialization, you don’t have to go out and ask for referrals. You establish your expertise and become known for what you do, and people refer the business to you. Think about it from the other end. If you had a friend who was having knee problems, and you knew a great orthopedic surgeon, why wouldn’t you make the referral to help your friend? It doesn’t matter whether the surgeon asks for referrals or gives me a pen and paper to write down the names of three knee-injury people I know. Frankly, it wouldn’t even help, because if none of my friends just had a knee injury, I wouldn’t know anyone to refer.

I’m not going to make that referral until I actually connect with the friend who just had a knee injury, and then I’m going to make the referral, which means what really matters isn’t that the surgeon asked me for referrals at all. It’s that I know his specialization is orthopedic surgery and that he fixes knee injuries. Then he just has to wait because the next time I meet someone with a knee injury, my brain is probably instantly going to make the connection because that’s what our brains do all by themselves. Oh, you tore your ACL? I know a surgeon who does great work on ACL injuries. Let me introduce you.

What Does It Take For You To Ask For Referrals?

But the bottom line here is just to recognize that I think there are a lot of barriers that make it hard for us to ask for referrals, as financial advisors. I think Ron Carson was right here. It’s our fears that hold us back, but they’re well-founded fears a lot of the time. It really is uncomfortable asking for referrals when you’re not proud of the company and the products you represent, or you’re not really confident in your own business value, or you’re ashamed of the industry that you’re in, or your clients never seem to come up with a name when you do ask for referrals. So what’s the point? You just stop asking.
So if one of these are your blocking point, what do you have to do to grow past it? Do you need to change the company you’re representing, to one where you’re actually proud to ask for referrals because you believe you bring a good solution to the table? Do you need to reinvest in yourself with CFP certification or some other post-CFP designation? So that you’re confident enough in your own value to proudly ask for referrals, because you just want to help more people with the expertise you have.

Do you need to find a way to market and position yourself so the value is unique enough that you’re clearly differentiated from the rest of the bad people in the industry? Or do you need to refine your specialization or niche some way, to make you so referable that you don’t need to ask for referralsbecause people naturally think of you when they’ve got a particular problem or challenge, where you have the niche expertise to solve it, and they say, “Oh, I know a person that can help you.” So what’s holding you back from asking for referrals?

So what do you think? Why is it so hard to ask for referrals as a financial advisor? Is it due to the companies we work for? The industry? Our lack of confidence in ourselves? How have you overcome the barrier to asking for referrals? Please share your thoughts in the comments below!

Replacing The Data Gathering Meeting With A “Get Organized” Client Experience

Replacing The Data Gathering Meeting With A “Get Organized” Client Experience

Executive Summary

Creating a financial plan starts with gathering the client data, which many advisors request by providing clients with a “data gathering form”, typically structured in a manner that makes it easy to input the data into their financial planning software.

The caveat, however, is that in practice clients often don’t fill out the data gathering form. For some, they feel it’s too much work. For most, the problem is simply that they aren’t organized enough to provide all the requisite information. And may even feel guilty or embarrassed about the fact that they’re “failing” in the very first step of the financial planning process.

So what’s the alternative? Ditch the data gathering meeting, and have a “Get Organized” meeting instead. In other words, make the first meeting with the client about getting them financially organized in the first place. Have them bring in their jumbled files, and give them a file box with sorted folders to organize the information. Scan the key documents and statements and put them into a newly created client vault. Set up a client PFM portal, show them how to use it, and help them to begin connecting their accounts on the spot.

By having the Get Organized meeting, the financial planner still has the opportunity to collect all the data that’s needed to move forward with the financial planning process – but done in a client-centric manner that recognizes the client’s challenges and provides them an immediate, tangible benefit. In fact, for some people, a “Get [Financially] Organized” service might be so valuable, advisors could even charge for it separately and get paid to market and demonstrate their value to prospective clients!

The Problem With The Data Gathering Meeting

The 6-step process of financial planning starts with establishing the client-planner relationship, and then immediately proceeds to gathering client data. This natural sequence forms the basis for all the actual financial planning “work” that will follow – after all, it’s impossible to analyze a client’s situation, make recommendations, and implement them, if the advisor doesn’t have the underlying data in the first place.

Unfortunately, there’s a major problem with the typical data gathering with clients: many clients don’t actually have the data in the first place, or at least don’t have an easy way to put their hands on it. Their financial lives are not well organized. “Important” documents like Wills and life insurance policies are stashed away in a filing box… somewhere. There are paper statements for a few of the investment accounts, but the rest require an online login… using a password long since forgotten. Sometimes clients aren’t even certain exactly where all their assets are. “I think there’s still some money left in that old 401(k) from my job back in 2007?”

Which means when the financial advisor asks a new client to fill out a data gathering form and bring it to the first meeting to start the financial planning process, the process hits an immediate wall. The client doesn’t know all the details to fill out the form! Even the thought of getting the data together may seem daunting, as it will clearly require a lot of work. In other words, the desire to “do” financial planning with the advisor has turned into a giant homework assignment for the client on Day 1!

And sadly, the implicit pressure from the financial advisor can even make the situation worse. Clients who aren’t organized enough to comply with the “simple” advisor request of “fill out this form and bring us all your data so we can begin the process” may feel guilty or inadequate.

 “Does everyone else have this information put together except for me? My planner seems to expect that I should have all this material at my fingertips. I feel like I’m failing and I haven’t even started yet!”

And then the natural human responses start to kick in.

“This is going to take a ton of time and effort. I’ll just put this off until later.” (Procrastination)

“Ugh, I’m realizing now that I don’t even know where some of this stuff is! I’m going to have to reschedule the meeting. It’s too humiliating to go into the advisor’s office and have to admit my financial house is in such disarray.” (More procrastination, rescheduled meeting)

“I’m so embarrassed I don’t have all the data my advisor needs to start the process. If I ignore the advisor and how awkward this whole experience has become, maybe it’ll just go away.” (Client never agrees to reschedule)

Of course, many experienced advisors have long since “learned” that asking clients to bring in all their data up front rarely works, precisely because clients usually don’t have the data handy and available. So instead, we just say “bring in what you can” and try to flesh out the rest of the rough details verbally in the meeting.

Yet in practice, this still drags out the financial planning process. The initial analysis turns out to be ‘wrong’ because crucial information was accidentally left out, or turned out to be incorrect based on subsequent details that changed the client’s original foggy recollection. The subsequent implementation stalls, as the final steps can’t be taken because some key data and materials are still outstanding.

The fundamental problem: starting financial planning with a data gathering meeting implicitly assumes that clients are organized enough to provide that data, even though we know the reality is that many people aren’t actually that organized. We’re trying to solve “our” problem as advisors – gathering the data – rather than truly focusing on the client’s problem of being financially disorganized (and the feelings of shame that can arise from “getting [financially] naked” in front of an advisor and admitting to being so disorganized).

Introducing The ‘Get Organized’ Meeting

So if the reality from the client’s perspective is that they often aren’t financially organized enough to begin the financial planning process with data gathering, then why not make the first meeting about getting organized!? In other words, forget the advisor-centric data gathering meeting, and offer a client-centric “Get Organized” meeting instead.

The starting point would simply be introducing the concept to clients, and what they should expect. For example, a prospective new client might be sent the following:

In order to move forward with your financial plan, we need to understand the details of your financial life.

However, we realize that like most people, your financial life probably isn’t in perfect order already. Statements end out buried in drawers and at the bottom of piles. Insurance policies are buried who-knows-where. Sometimes we even lose track of old accounts.

So at our first meeting, we’re going to work together to help you Get Organized. Please bring with you whatever financial information you can easily put your hands on. If you just want to bring in a box full of scattered papers (or even unopened envelopes!), that’s absolutely fine, we’ll work with you to sort through it. If your accounts are mostly set up online, we’ll help you track those down too.

By the end of the meeting, though, our goal is to help you Get Organized. Together we’ll start you on your way to getting your financial information in good order, and set you up with a system to keep things organized in the future. And along the way, we’ll gather the details we need to take your financial plan to the next stage.”

And then in the meeting itself, the goal is to get the client organized – both their physical paper documents, and their online financial world.

Getting Paper Statements And Physical Files Organized

The first step to helping clients to their physical paper statements and files in order is to literally help clients get their statements and files in order.

Accordingly, the advisory firm process would begin with setting up a file box for clients – for instance, a storage box like this with ample room for hanging files – which would be pre-configured with labeled folders for the typical categories of client financial information, including Wills & Trusts, Insurance Policies, Bank Accounts, Investment Accounts, etc. (The box could even be privately branded to the advisor, for additional marketing value.) Keep a label maker handy to add labels to new folders relevant for the client’s particular information.

From there, it’s time to actually go through the client’s piles of files. Having an intern or associate planner involved may help with the process of sorting through all the information and getting it filed properly. (And it’s a good experience and learning opportunity for the intern or newer advisor!) Guide clients about what information really needs to be kept, and what does not. Have a shredder there in the conference room so old information can be trashed on the spot (no reason for the client to carry it back home!).

Once the files have been initially organized, ask the client if there appear to be any significant accounts or insurance policies that are missing. If they are, look up the contact information for the financial services firm on the spot (from the computer in the conference room), and either call the company or submit a request online immediately to request the information. Make an empty folder with an appropriate label so the client knows exactly where to put the file when it arrives. Remember, the goal is to make it easier for the client to be organized, and minimize the post-meeting homework they don’t want to do anyway!

Notably, handling all these key client files and information also provides an important data-gathering opportunity for the advisor. In addition to sorting through all the various historical files, the advisor should have a high-quality portable scanner in the conference room, to allow for the most recent statements and other key documents to be scanned on the spot. This allows the advisor to have as much up-to-date information as possible coming out of the Get Organized meeting to continue the financial planning process!

Configuring The Client Vault And Online Portal

In addition to scanning key documents and recent statements for the advisor’s data gathering needs, the scanning process creates the opportunity for the advisor to set up an online vault for the client’s digitized financial information. Depending on the advisor’s technology setup, this might be done with a standalone “vault” solution like Sharefile or EverPlans, or a client document vault tied to portfolio accounting tools like Orion Advisor Services or financial planning software like eMoney Advisor.

In fact, as the process of organizing the client’s physical files nears its completion (or at least, once your intern or associate advisor is busy going through the rest of the files and sorting or shredding the documents as appropriate), the next stage of the “Get Organized” meeting is introducing your client vault and showing clients how to access and navigate it (including where you’ve already put their initial files).

Once the vault is configured to capture the digital version of paper files, it’s time to get the client fully organized in the digital world as well, by setting them up to use a full Personal Financial Management (PFM) dashboard, such as the one that eMoney Advisor includes with their financial planning software, or a standalone solution like Wealth Access.

As with the organizing of physical files, the goal of configuring the PFM portal is to get clients organized at the meeting – not just give them homework to do later. So if possible, the advisor should actually help the client log into the portal for the first time, and begin connecting accounts on the spot. (Show the client that you’re using the “private browsing” or “incognito mode” for your web browser, to ensure the protection of their private information and that their login details are not saved in the local browser.)

And of course, as with the process of getting physically organized, connecting client accounts through a PFM is appealing for the client because it gets them (digitally) organized, but also for the advisor because it provides a means to get additional data for the client’s financial plan (that will be continuously updated thanks to account aggregation!).

The “Get Organized” Meeting Template – Checklist For Advisors

Benefits Of The Get Organized Meeting

For some advisors, I suspect that completing the steps on the “Get Organized” meeting checklist will feel too “basic” or beneath them. Is it really valuable to spend your time as a CFP certificant helping a client file some documents and scan them? Or showing clients how to log into a website and connect their accounts?

The short answer: Yes. Because the meeting isn’t about the advisor. It’s about what an often-not-very-financially-organized client needs.

After all, consider this experience from the client’s perspective. The data gathering meeting isn’t just a bunch of homework anymore, or a stressful and embarrassing situation where the advisor asks for information the client can’t (easily) produce. Instead, it becomes a meeting where the client is expected to be less-than-completely organized, and has a clear, tangible outcome to become more organized.

This cannot be emphasized enough. The benefit to the client of the Get Organized meeting is that the client will literally be more organized at the end of the meeting, and walk out holding the box of files that makes them more financially organized than they may have ever been in their lives, and set up with a system to maintain that organization in the future. Now the client leaves the first meeting with a sense of accomplishment, that they’re actually taking measurable, tangible positive steps towards improving their financial future!

Along the way, of course, as the advisor you actually did get all the information you would have been seeking in a data gathering meeting anyway. The client did bring in all the statements. You did get to scan all the key documents to reference in the future development of the plan. The client has connected all of their accounts via aggregation so you can get continuously updated client data in the future.

The distinction is that rather than gathering data in a manner that’s focused on the advisor – fill out this ‘data gathering form’ in a format that’s convenient for my financial planning software – it’s done in a client-centric manner, resolving an actual pain point of the client: the all-too-common feeling of being financially disorganized.

What Happens After The Get Organized Meeting?

Of course, one important caveat is that spending this much time on just the raw financial information and data – between sorting out physical paperwork and files, and connecting client vaults and online account aggregation – means there may be little time to do a deep discovery process of talking through the client’s actual goals, and all the important non-financial information.

But this isn’t necessarily a problem. Now that you have the financial information, the next meeting can be spent mind mapping through the client’s non-financial details, and even beginning to use the planning software in a real-time collaborative manner with the client to explore the possibilities and identify potential goals! This second stage “Personal Discovery” meeting should actually be even more effective, because you’ll already have the underlying data in place. And the client will likely be even more interested in progressing to this next stage of this reimagined client-centric planning process… having achieved such a positive tangible outcome from the first Get Organized meeting!

Re-Imagining The Client-Centric Financial Planning Process And Meetings

Skipping The Get Organized Meeting… Or Sometimes Getting Paid For It?

Notably, for that subset of clients who really are financially organized already – and don’t need the “Get Organized” meeting – they may be able to just skip directly to the second meeting and begin exploring their potential goals.

In other words, the point of the “Get Organized” meeting is not to be mandatory for every client, but simply to be available for what are likely the large number of prospective clients who could benefit from it.

On the other hand, you may even find that for some prospective clients – many of whom are likely daunted by how much “work” it is just to find a financial planner and begin the financial planning process – the availability of a “Get Organized” meeting actually turns them into clients. Because they weren’t about to do all the homework required to get themselves organized, and weren’t going to admit to they couldn’t complete the advisor’s data gathering form. But when the data gathering meeting is about the client, and valuable to the client, the process is far more appealing.

In fact, some advisors might find they can even charge for the Get Organized meeting as a separate service for clients! This could become an option for existing clients (some of whom are still not financially organized), or a ‘pre-engagement’ service for prospective clients – a form of getting paid to market by offering a useful and relevant service for non-clients that’s worth paying for and can turn them into full clients.

The bottom line, though, is simply this: the data gathering process is fundamentally broken for many potential clients, who simply aren’t organized enough to provide the requisite data in the first place. So if the reality is that most clients aren’t actually financially organized in the first place, don’t pressure them or make them feel guilty about being unable to complete your data gathering form in a manner that’s convenient for your financial planning software. Have a Get Organized meeting and offer them a service that actually solves their problem… and gets you the data you need along the way!

So what do you think? Do you struggle to get clients to go through the Data Gathering process and provide all their information? Do you think the Get Organized meeting would be a viable alternative? Please share your thoughts in the comments below!

Predicting Wealth Building Behavior With DataPoints Assessment Tools

Predicting Wealth Building Behavior With DataPoints Assessment Tools

Executive Summary

The Millionaire Next Door became a NY Times Bestseller in 1996 by revealing how little we understand about millionaires, and the behaviors that help people to become millionaires. While the traditional view was that wealth comes from an inheritance, or becoming an executive in a major corporation, and that you can identify millionaires by their high-end suits, luxury cars, and large houses in affluent neighborhoods, in reality a huge swath of millionaires become such simply by living frugal lives of cheap suits, practical cars, and modest homes, which allows them to convert a substantial portion of their income into wealth over time.

Of course, having a healthy income, and willingness to take calculated risks for success, do clearly help in the wealth-building process. But the key point was that not only is affluence not necessarily correlated to outward signs of wealth, but in reality some of the greatest wealth-building behaviors come from not flaunting that wealth and being “socially indifferent” to trying to keep up with the Joneses.

Now, a company called DataPoints – founded by Sarah Stanley Fallaw, the daughter of The Millionaire Next Door author Thomas Stanley (and herself trained as an industrial psychologist) – is turning The Millionaire-Next-Door insights about wealth building behaviors into a series of assessment tools that financial advisors can use.

For advisors who are trying to expand their practices to work with “younger” wealth accumulator clients, the DataPoints assessment tools provide a unique research-based approach to actually understand which prospects are likely to be successful wealth accumulators, and which prospects should be avoided because the assessment reveals in advance they will be especially difficult to work with. And for new and existing clients, a rigorous wealth building assessment tool as a part of the discovery process can help the advisor understand where to focus their advice and efforts to help the client actually change their financial behaviors for the better.

In other words, while as financial advisors we increasingly find ourselves talking about the “behavioral” value of financial planning advice, DataPoints is actually creating tools that help to measure what a client’s wealth-building behaviors actually are. Which on the one hand makes it easier to be effective with clients – as we can get a better understanding upfront of the client’s financial tendencies – but also makes it possible to actually measure the success of the advisor-client relationship by the extent to which the advisor actually helps their client (measurably) change their financial behaviors and attitudes!

Building Wealth And The Millionaire Next Door Book

The Millionaire Next Door by Thomas Stanley and William DankoIn 1996, Thomas Stanley and William Danko released the book “The Millionaire Next Door”, which quickly became a NY Times Bestseller.

Stanley and Danko were market researchers who had initially sought – as marketers do – to better understand the tendencies, habits, attitudes, and other psychographics of the affluent (a segment of the marketplace that companies have long wanted to better understand). In fact, Stanley had already published several books on working with the affluent, including “Marketing To The Affluent,” “Selling To The Affluent,” and “Networking with the Affluent”, based on nearly a decade of prior research he had conducted through his Affluent Marketing Institute.

Yet Stanley and Danko aimed to go even deeper into understanding the millionaire mindset. Accordingly, they launched a new comprehensive survey of nearly 1,000 affluent individuals in the early 1990s, and conducted interviews with another 500 affluent individuals via focus groups. And the end result of the study revealed that the typical idea of what a millionaire looks like – living in an affluent neighborhood, driving a luxury car, and exhibiting other similar indicators of wealth – is not actually a fair characterization of a huge segment of the affluent.

Instead, it turned out that nearly one-half of millionaires don’t live in upscale neighborhoods. Nor did they commonly inherit, as (at the time) the researchers found that 80% of America’s millionaires are first-generation “rich”. A wealthy individual was simply someone who was able to earn a solid income, and exhibited certain “wealth-building” behavioral traits along the way, that made it especially likely they would be able to convert that current income into long-term wealth.

Specifically, the researchers found that “Prodigious Accumulators of Wealth” (PAWs) tended to have 7 core traits:

– They lived well below their means

– They allocated their time, energy, and money efficiently, in ways conducive to building wealth

– They believed that financial independence is more important than displaying high social status

– Their parents did not provide economic outpatient care

– Their adult children were economically self-sufficient

– They were proficient in targeting market opportunities (i.e., finding/creating wealth-building business opportunities)

– They chose the “right” occupation (one with good income-earning potential)

Of particular note at the time was the recognition of the first three points – that wealth builders tended to be frugal (i.e., live well below their means, and save 20%+ of their income every year), tended not to pursue social status symbols (i.e., are more likely to wear inexpensive suits and jewelry and drive non-luxury American-made cars), and that to the extent they did spend they tended to allocate their dollars differently (e.g., buying cars for the long-run instead of leasing them, owning homes instead of renting them). In other words, being a millionaire wasn’t about inheriting wealth or just earning the big bucks; millionaires were also a sea of frugal tightwads living in modest homes in non-affluent neighborhoods (the very antithesis of the “traditional” view of a millionaire at the time!).

In addition, though, the research did find that millionaires were more likely to proactively create opportunities for themselves – at the time, self-employed people made up less than 20% of workers in America, but accounted for 2/3rds of millionaires (either by being entrepreneurs, or self-employed professionals like doctors or accountants). And affluent accumulators did tend to have pursued above-average-income job opportunities in the first place (though not necessarily of the high-visibility variety, as the millionaires profiled included not only doctors and lawyers, but also welding contractors, paving contractors, and even owners of mobile-home parks).

To some extent, it’s perhaps not “surprising” that those who manage to find above-average job opportunities ended out creating above-average wealth. But the key recognition of the Millionaire Next Door was that above-average income alone does not necessarily lead to above-average wealth, because not everyone translates their income to wealth in the same way (or at all)! Instead, it’s the other behaviors – about being able to live within their means (even or especially when their income could afford a much higher standard of living than what they were currently enjoying), allocate dollars to things that appreciate rather than depreciate, and their “social indifference” to keeping up with the Joneses, that resulted in accumulating wealth and reaching millionaire status.

Which, again, was somewhat “surprising”, because it meant millionaires didn’t look like what most people expected millionaires to look like. They often didn’t live in millionaire-looking homes, drive millionaire-looking cars, or buy millionaire-looking jewelry. Which was actually the point. Because those were the behaviors that led them to not spend as much, and be able to accumulate wealth in the first place!

DataPoints And The Further Study Of Building Wealth

After the success of The Millionaire Next Door, Thomas Stanley went on to conduct further research on the behaviors and psychographics of the affluent, further extending the quantitative and qualitative data on wealth building under the Affluent Market Institute (AMI), and publishing “The Millionaire Mind,” “Millionaire Women Next Door,” and “Stop Acting Rich” to help consumers understand how to better adopt the behaviors and mindset of those who successfully accumulated wealth.

And to better put the research to use in application, in 2013 Thomas Stanley’s daughter Sarah Stanley Fallaw (a researcher in industrial psychology with a Ph.D. in Applied Psychology herself, who had joined AMI in 2009 as its Director of Research) founded DataPoints to begin the process of adapting the research into a series of assessment tools that can be used to evaluate someone’s wealth-building potential.

In the years since, the DataPoints researchers have found that beyond someone’s circumstantial factors that lead to wealth building (i.e., having grown up more financially independent, and having a high-income job), there are a series of distinct and consistent factors that are predictive of wealth building. They are:

– Frugality (one’s willingness and ability to spend below their means);

– Responsibility (to what extent does the person believe they have control over their financial [and other] outcomes, versus whether they are externally determined);

– Confidence (does the person have the confidence to believe they’re capable of improving their situation);

– Planning and Monitoring (can you set goals and effectively monitor your progress towards achieving them)

– Focus (do you have the discipline to avoid distractions and stay on track to your goals); and

– Social Indifference (do you feel a need to spend to display social status, or are you socially indifferent to the spending habits of others)

Combined together, these Wealth Factors help to reveal who is more or less likely to actually convert their income into wealth, which is relevant not only to individuals who may want to improve their situation (and need to understand what behaviors to change), but also to financial services firms who may want to understand who is a “good” potential wealth-building client in the first place.

After all, with the growing shift from focusing on baby boomers (who have already accumulated wealth), to Gen X and Gen Y clients (who are still in the wealth-building phase), it’s especially important to understand whether someone already has the right wealth factors in place to be able to accumulate, or whether there are key behavioral areas that the advisor will need to work and focus on in order to help the client achieve financial success.

Datapoints Engage And Advise Assessment Tools

As currently constructed, DataPoints provides a series of 4 “Engage” and 3 “Advise” modules to better understand an individual’s financial attitudes and habits.

All of the DataPoints tools have been psychometrically tested to affirm their validity and realibility, and the questions that DataPoints asks uses a “biodata” approach, where instead of asking people about their personality (e.g., “are you frugal” or “do you like to spend money on social status”) they’re instead asked about their “personal biography” and to reflect on their past behaviors to understand their traits (e.g., “I live well below my means” [agree or disagree] or “Most of the clothes I buy for myself are:” [trendy / practical / etc]).

Engage Assessments For Prospects

The DataPoints “Engage” questionnaires are a series of relatively short screening-style assessments, containing 10-13 questions and taking no more than about 2-3 minutes to complete, that prospective clients can complete. The four Engage assessments evaluate a prospect’s “Spending Patterns”, “Career Fit”, “Wealth-Building” potential, and their tendency to engage in their own “Financial Planning” and self-monitoring behavior.

The brief questionnaires can be sent as a link directly to a prospect, or even embedded on an advisor’s website, as an opportunity to both add immediate value for a prospect (who might be curious to know how their spending behaviors or wealth building potential stack up), and for an advisor who wants further insight into the client’s potential issues and concerns. The advisor might offer one or several Engage assessments for prospects to try out, depending on which one(s) are a good fit for that advisor’s particular type of target clientele

Advise Assessments For Clients

As contrasted with the Engage assessments, the Advise modules are longer (45 – 54 questions) and meant to go deeper (more likely with new or existing clients).

The first is a “Building Wealth” assessment, which directly measures the six wealth-building factors identified in DataPoints’ research (building on Stanley’s original Millionaire Next Door) behavioral habits. The second is a “Financial Perspectives” assessment, which looks deeper at a client’s financial attitudes, for instance their tendencies towards altruism, budgeting, status, spending, and (financial) independence. And the third is an “Investor Profile”, intended to be DataPoints’ take on financial risk tolerance and the client’s propensity to take financial risks (given that Stanley’s original research clearly showed that Millionaire wealth accumulators are significantly more likely to be willing to take at least calculated risks)

To some extent, the idea that “people who are frugal and don’t try to Keep Up With The Joneses” may seem intuitively obvious (especially since The Millionaire Next Door book itself came out, and also from the experiences that most financial advisors have witnessed first-hand with their clients). Yet until now, financial advisors have lacked a systematic process to make this assessment with clients (and prospects).

But with standardized assessments, it becomes possible to really understand how clients’ wealth-building behaviors compare to one another… and to potentially explore issues that may otherwise be difficult to talk about.

Sample Advise Assessment: Building Wealth

For instance, in putting myself through the Building Wealth assessment profile, it turns out that I have a very high level of confidence and personal responsibility – for better or worse, I believe that I am in control of my own destiny, and am confident in my ability to find positive financial outcomes. In addition, I am rather frugal (having long lived on far less than I make), and I have never been one to try to dress in the latest fashion trends. (Thus the Kitces Blue Shirt phenomenon!)

On the other hand, the assessment tool also correctly identified that I struggle tremendously with Focus (a lifelong battle with ADHD), and that I am not actually very strong in planning and monitoring for my own future (thus why I rely heavily on third-party tools like Mint.com to make it easy for me by automating the necessary tracking!).

Michael's DataPoints Assessment


Notably, though, my “Wealth Potential” score is still strong, despite my moderate score in planning and low Focus score… in part because the DataPoints research has shown that one’s wealth-building capabilities are not merely the additive sum of each factor. Instead, the interrelationships are more complex.

For instance, the DataPoints research notes that for more affluent individuals, an inability to focus may not be as critical, as financial management tasks can be outsourced (via professionals like financial planners, or now increasingly via technology as well). And DataPoints has also found that ironically, clients who are high in Responsibility are more likely to build wealth but also can actually be more problematic in bear markets, as their desire to exert control over their situation (which helps them create wealth) also makes it very difficult for them to sit by and do nothing in the midst of market turmoil (and instead feel a strong need to “do something”, given their tendencies, even when they shouldn’t!).

Financial Planning Applications Of Financial Behavior Assessment Tools

Ultimately, financial behavior assessment tools like the ones that DataPoints has created appear to have two primary applications to aid in the financial planning process.

Screening Prospects With Wealth Building Potential

The first is to use DataPoints’ assessment tools as a form of screening process to identify clients who are likely to be wealth accumulators in the first place.

For those advisors who are trying to work with younger clientele who don’t meet the firm’s current minimums – or in particular, are trying to identify young accumulator prospects who may not be profitable clients now but are likely to be in the future – the Building Wealth assessment tool, or even the shorter Wealth Potential engagement tool, can help give the advisor a better understanding of the client’s long-term potential. Or viewed another way, the Building Wealth assessment tools can help reveal which clients are most likely to be effective at implementing the financial advisor’s advice and recommended strategies – as opposed to those more “challenging” clients, who seem to struggle to follow through on ever implementing the advice that’s given to them

In this context, the advisor might, as a part of their initial “Get To Know You” process, send a DataPoints Building Wealth assessment to the prospective client, with a statement to the effect of “This assessment is meant to help you understand a little more about your own financial habits and tendencies. Please complete it before our first meeting, so that we can have a better understanding of whether or how we can best help you.” Or alternatively, the advisor can actually embed the DataPoints Engage asssesments directly into his/her website, and simply make it available for prospects to take themselves (and then the advisor can decide to follow-up on those who show a strong wealth-building potential, to see if they’re interested in working together).

On the other hand, though, the relevance of the DataPoints assessment tool is not merely about identifying young accumulator clients who have a good potential to actually accumulate. It would also be relevant for older and already-affluent clients, as their scores in areas like “Frugality” and “Social Indifference” can provide a valuable indicator of whether their natural tendencies are to sustain their accumulated wealth, or to dissipate it away.

And the assessment may be especially helpful for those who have had “Sudden Money” events, whether an inheritance, divorce (for the spouse who receives the settlement!), business liquidity event, or other surprise windfall… where the client did not necessarily establish their wealth through the usual accumulation-style means, and as a result it’s not always clear whether – once they achieve their wealth – they are likely to sustain it or not. A DataPoints assessment can help provide that information up front, to better understand where the likely challenges will be with the client.

And notably, DataPoints’ own research has found that not all Wealth Factors types are equally likely to engage a financial advisor in the first place. For instance, their research has found that those who already have a high propensity to accumulate wealth are the least likely to hire an investment manager (as they likely feel the Confidence and Responsibility to manage it themselves). Those who have the least propensity to accumulate wealth are the most likely to seek out a financial planner (ostensibly in recognizing that they need help, though obviously not a good fit for advisors using an AUM model!), and those who have “medium” propensity (recognizing some capabilities, but recognizing the need for some hep as well) who are the least likely to eschew a financial planner and use a robo-advisor instead! On the other hand, all the groups are equally likely to leverage personal financial management technology to help them on their path (and drawing an important distinction between the desire for technology to track finances, and the need for a financial planner about what to do about their finances!)!

Use Of Financial Services Providers By Wealth Building Likelihood

Profiling Clients For Behavioral Finance Coaching Needs

With prospects, it’s necessary to keep the assessment brief, and thus why DataPoints makes its short Engage assessments available. On the other hand, the DataPoints “Advise” tools – which are the longer and more in-depth assessments – could actually be used as a part of the advisor’s data-gathering process once the individual has already agreed to become a client, to truly understand what the client’s natural financial behaviors are, and how best to work with the client.

For instance, those who are low in Focus may need regular guidance and nudges to stay focused on their long-term goals. Those who struggle with “Planning & Monitoring” may be especially interested in the advisor’s regular updates (while those who already score high in that area probably have their own systems for tracking, and won’t care about the advisor’s quarterly reports at all!). Clients with a low social indifference will need constant reminders to focus on their own goals and not what others are doing. Those with low confidence may struggle to implement the advisor’s recommendations, because they aren’t confident in their ability to succeed, while those with high confidence and high responsibility may have trouble staying the course in a bear market and want to intervene (because they feel the situation is in their control, even if it’s not).

The process may be especially helpful for working with couples as well, where the reality is that both spouses do not necessarily align on all of these wealth building behaviors and financial attitudes. In fact, major gaps in areas like social indifference and frugality between a husband and wife may help to explain a lot of financially-related marital strife. While gaps in areas like confidence and responsibility will tend to be a guide about which spouse is likely to be the financial decision-maker in the household, and which tends to be more hands-off in the process.

A New Way To Measure Advisor Behavioral Impact “Success”?

A natural extension of how the DataPoints research might be applied is the recognition that not only do the assessments help provide an indicator of who has the behavioral tendencies and attitudes to accumulate wealth, but they can also be used to track the positive impact of the financial advisor over time, and become an alternative way to measure an advisor’s “success” and quality!

Accordingly, DataPoints has introduced a new “Performance Plan” module that monitors how the client’s financial attitudes and wealth factors change over time in working with the advisor, providing both the advisor and client guidance on particular areas to focus on for improvement, and then tracking that progress (by sending the client periodic assessment updates).

DataPoints Image Of Performance Plan

In this context, not only can the advisor avoid being judged based on whether a portfolio happens to hit benchmark returns or not, but instead moves their value proposition away from market returns and goal progress altogether (recognizing that often setbacks to goals are beyond the advisor’s control anyway, from a sudden health event, to a natural disaster, to a job loss or market decline). The focus of the advisor-client relationship instead becomes, as many advisors already espouse, a focus on “behavioral coaching”, with results that can be tracked and measured (via DataPoints), and a recognition that if the right behaviors and attitudes are in place that are conducive to wealth-building, the wealth itself is likely to come eventually (even if the path remains a bit bumpy in the short run).

Ironically, though, some advisors may be wary of going so far as to measure client’s behavioral attitudes and change over time, recognizing that in the end, we are financial planners, and not trained psychologists. And once you begin tracking a client’s financial behaviors and attitudes, you’re truly accountable – as the advisor – to helping to change them!

Nonetheless, with the rise of behavioral finance, the commoditization of financial services products, and an increasing focus on the intersection of technical financial advice and the empathy, coaching, and behavioral-change skills necessary to help clients actually implement the advice, arguably the DataPoints Performance Plan assessment provides a potential framework for whole new ways that advisors can measure their “success” and “effectiveness” in the future.

At a minimum, though, in a world where a person’s income and outward signs of affluent aren’t necessarily very good indicators of their wealth, nor their propensity to accumulate or sustain the wealth they have, DataPoints provides a new way to deepen the discovery process… whether with a new client to really understand their financial attitudes and behaviors… or to be used as a way to engage prospects and identify those whom the financial advisor is most likely able to help and work with constructively in the first place!

In the meantime, for advisors who want to check it out themselves, the DataPoints Engage and Advise assessment are available now. The Advise module (which includes the comprehensive Building Wealth assessment) is available for $59/month for up to 100 clients, the Engage lead-generation assessments costs $109/month, or a “Complete” package is available for $139/month which includes both. Further information is available on the DataPoints website, and pricing details are found here.

So what do you think? Would a solution like DataPoints be helpful to better understand which clients may be more or less effective at building wealth? Would you use DataPoints as a screening tool to understand which clients will be easiest to work with, or as an ongoing advisory tool to understand which behaviors your clients need help with? Please share your thoughts in the comments below!