Building a Billion-Dollar Practice…From Scratch

tinyofficeWhen financial advisor Ken Moraif began his career in Dallas in 1988, he had just a handful of clients and an office barely big enough for his desk, three chairs, and a few extra inches to spare.

 

Twenty-six years later, his practice, Money Matters, comprises nine offices in four states, employs dozens of financial advisors, and serves roughly 4,000 mass affluent clients with more than $2 billion in assets.

 

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RIA Central Digests for 07/22/2014

Sales & Marketing

 

Changing the name of your firm can come with a steep pricetag, but the result of rebranding – removing the emphasis on the name of the founder, for instance – can benefit recruiting efforts and firm mergers. Be sure to think it through, however, before you proceed. A story at Financial Planning gives some examples. Also, encouraging clients to create an ethical will, that is, a document that passes on the personal values and lessons of one generation to the next, can help build rapport between client and advisor. Keep in mind that an ethical will (not a legal document) is not for every client. A story at ThinkAdvisor discusses the process of introducing the idea to clients and provides questions for them to mull over as they begin writing. A link to the article follows.

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RIA Central Digests for 07/17/2014

Regulatory/Compliance

 

Four years ago (July 21, 2010), the passage of the Dodd-Frank Act gave the SEC the power to formulate a fiduciary-duty standard of care, and thus, the planning began. Since then, however, things have bogged down considerably, both with proposals from the SEC and from the Department of Labor. An article at InvestmentNews traces the activity (or lack of it) to where fiduciary rule-making stands today. Also, Maxine Waters (D-Calif.) is calling for a full committee hearing to consider proposals to boost the number of advisor exams. One such proposal is her bill that would authorize the SEC to collect fees from advisors to help fund exams. The story is at ThinkAdvisor, below.

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RIA Central Digests for 07/16/2014

Practice Management

 

Clients want holistic financial planning and advisors want to provide it. But there’s caveat for advisors: comprehensive planning requires added resources and personnel. An article at Financial Planning describes the growing interest in holistic planning and gives advice from advisors who have taken that route. Also, growth and profits for RIAs have hit an all-time high, according to Schwab Advisor Services’ 2014 RIA Benchmarking Study. Participants in the study reveal that referrals from clients and businesses are their top strategies for driving organic growth. Read more in the story below from ThinkAdvisor.

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RIA Central Digests for 07/15/2014

Sales & Marketing

 

Means of communication between advisors and clients could change considerably — at least in some areas — in the next five years. Video conferencing, texting, and online services are all expected to become more prevalent, but there’s some discrepancybetween advisors and investors on just how much they expect to rely on these methods, according to results of an InvestmentNews Research survey. Still, both advisors and investors say telephone calls and in-person meetings will remain popular. Keep this in mind as you plan your marketing and sales strategies. See the InvestmentNews story below. Also, summer can be a perfect time for sizzling marketing events, but be sure you’re planning more than just a “party.” You need to have clear marketing objectives — and know how to keep events stress-free, friendly, and lively. See tips from Gail Graham, a chief marketing officer, in a story at Financial Advisor.

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5 Keys to Getting Big Referrals

Referrals

Client referrals are among the most valuable leads your business can generate. They’re more cost-effective than other lead acquisition strategies; they seek you out as a result of providing excellent service to your existing clients. They’re also more qualified than other leads or prospects, because the referrer has instilled in them an important degree of inherited trust, and thus doing some of the selling for you.

 

But while there’s no magic bullet that guarantees a steady stream of qualified referrals, there are several things you can to do to improve your chances of creating advocates who are ready to refer.

 

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RIA Central Digests for 07/10/2014

Regulatory/Compliance

 

Want to know how cyberscammers are targeting advisory firms? An article in Financial Planning magazine gives a lengthy list of examples from advisors who’ve experienced such threats firsthand. In every example, the threats were thwarted by a phone conversation between the client and advisor. In addition, an accompanying article provides tips on how to prevent cybercrime. For example, use multiple sign-offs. Also, be aware that recent federal rules put primarily responsibility for fraud prevention on advisors.

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RIA Central Digests for 07/09/2014

Practice Management

 

Let’s face it, insurance isn’t a glamorous topic, but it is important for an advisor to be able to guide clients through the various types and features of insurance. First, however, keep insurance and investing separate, says Allan Roth, in an article at Financial Planning. He helps simplify the conversation by dividing insurance needs into three categories of protection. A link to the story follows. Also, Michael Kitces takes an opposing view on prevailing advice that advisors should be focusing their attention on the children and grandchildren of clients or risk losing those assets. Kitces argues that most advisors shouldn’t worry about chasing that “pot of money,” but instead simply stay focused on their retiree client base and work on bringing in more retirees as clients. His post is at Nerd’s Eye View.

 

Insurance Smarts: What Clients Really Need
By Allan S. Roth
Source: Financial Planning

 

If you’re like many advisors, talking about insurance may not be your favorite part of the job. Clients don’t love it, either: Insurance is just not as inherently exciting as discussing how to grow their portfolios.

 

Read the rest of the story…

 

Why It’s A Bad Idea For Most Advisors To Pursue Their Clients’ Next Generation Heirs
By Michael Kitces
Source: Nerd’s Eye View blog

 

As the legend goes, when bank robber Willie Sutton was asked why he robbed banks, his answer was “because that’s where the money is.” Similarly, it’s really no surprise that in recent decades, financial planning has become increasingly focused on serving baby boomers as they transition into retirement; once again, “it’s where the money is.” And as the age wave continues and baby boomer retirees will inevitably begin to pass away in large numbers in the coming decades, many industry consultants are already recommending that advisors shift their focus to where the money will be next: in the hands of their clients’ children and grandchildren, with whom advisors had better begin to craft relationships and expand services now, or risk losing their assets as their clients pass away.

 

Read the rest of the story…

 

Breakaways/Aspiring Advisors

 

The breakaway trend seems to be waning. Attrition rates have dropped “sharply” at the four major wirehouses, according to an article at Reuters. One of the reasons cited: Age. Brokers are getting older and don’t want to change jobs when they are so close to retirement. Also, advisor Dave Grant reflects on his first year of running a solo practice, describing the lessons he learned (with regard to time management, technology, emotional support, and more) and how he has stayed true to his goals. His column is at Financial Planning.

 

Top U.S. Securities Brokers Changing Jobs Less Often As Market Recovers
By Elizabeth Dilts
Source: Reuters

 

After years of jumping from one firm to another, U.S. securities brokers are changing jobs less frequently and the largest brokerage firms say they are seeing their lowest attrition rates in years as financial markets strengthen.

 

Read the rest of the story…

 

Solo RIA: Lessons From Year 1
By Dave Grant
Source: Financial Planning

 

A little over a year ago, I left a firm of 12 employees and became a “solopreneur” in a fee-only planning practice, branded to focus on teachers, primarily in Illinois. In the six months of planning before my launch and all the way through, I had to learn that any business decision I made could bring joy or heartache, and I would be the one to enjoy or fix it. If a tech problem occurred, it would be me on the phone to tech support. If a client handed me a stack of paperwork, I would be clearing my afternoon to ensure it was organized and scanned.

 

Read the rest of the story…

 

Retirement Planning

 

Retirement is a complex journey for clients, and advisors need to be aware that one of the most critical aspects of retirement planning is where to live. Financial planner Paul Norr explains some of the financial and emotional concerns involved in housing issues and describes how advisors can add value to the discussion. His article is at Financial Planning. Also, advisors express a strong demand for Social Security support tools, yet most are reluctant to pay for additional support and rely primarily on free tools, a new study finds. In addition, the degree of advice they offer regarding Social Security varies considerably, according to the survey. Read more in an article at InvestmentNews.

 

Retirement Planning Tip: Start With Housing
By Paul Norr
Source: Financial Planning

 

When financial planners help clients with their retirement and Social Security planning, we sometimes have a frozen image of what their future will look like. The industry reinforces this by cranking out images of silver-haired couples in sports cars or strolling along beaches at sunset.

 

Read the rest of the story…

 

Big Demand From Advisers For Social Security Claiming Tools, Training
By Mary Beth Franklin
Source: InvestmentNews

 

Although most financial advisers provide near-retirees with some guidance on Social Security claiming decisions, many need to increase their knowledge and skills in this increasingly important area, according to a new study released Monday by Practical Perspectives and GDC Research.

The report “Social Security Support and Financial Advisors — Insights and Opportunities 2014” examined how advisers typically work with clients on Social Security issues and evaluated the types of support currently provided to financial advisers by product manufacturers, distributors and specialized service firms.

 

Read the rest of the story…

 

 

RIA Central Digests for 07/08/2014

Sales & Marketing

 

Two advisory firms — one new, one established –bravely stepped forward to receive marketing makeovers from two marketing experts in the industry, and their recommendations are shared in the Journal of Financial Planning. Other advisors will likely benefit from the experts’ in-depth advice. Also, as firms grow, the emphasis on “rainmaking” (bringing in clients) decreases, and the importance of quality customer service moves to the forefront, notes practice consultant Angie Herbers. Successful firms should be focusing on a marketing process that “maximizes referrals from their existing clients” and turns a large portion of those referrals into clients, she writes. Herberssummarizes the essential elements of a dynamic marketing process in an article for Investment Advisor magazine.

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