Slashing…….Penalty Box…….Breakaway………..typically these terms are associated with a hockey game, but in this case they relate to what is happening to some experienced advisors in the financial services industry, particularly ones affiliated with the larger wirehouse firms.

These firms are slashing payouts and placing advisors in the “penalty box” prompting many of them to Breakaway.  Some experienced advisors who are considered underperforming (according to wirehouse standards under 400k in production), are seeing their payout cut dramatically, in some cases, as low as 20%.

Feeling the squeeze financially, along with the pressure to increase production within the confines of a wirehouse, puts an advisor in an uncertain and uncomfortable situation.  The good news is that many advisors are finding a safe haven within the independent channel.

In addition to the obvious benefit of an increased payout, advisors who have made the move to the independent channel find it welcoming and supportive. The focus is less on quota and production level, and more on quality of business and client relationships. This shift in culture can have a positive effect on the advisor and their clients.  For those advisors who may find themselves in the penalty box of a wirehouse, having a clear understanding of the options and opportunities available is an important first step in making an informed decision regarding a potential transition to an independent platform.

1. Go Solo: If the entrepreneurial fire is there, advisors producing over $250,000 can consider hanging their own shingle up with an independent broker-dealer or by establishing their own RIA. In order to go this route, it is important to understand that you will be taking on the role of business owner and financial advisor and the  expense and responsibility that goes along with it.

2. Team Up: There is comfort in numbers; consider joining forces with other advisors thinking about taking the independent route as well.  In addition to sharing expenses and business responsibilities, having the ability to tap into other’s skill sets can be beneficial.  Transitioning as a group may also boost negotiating power when it comes to payout and other transition assistance.

3. Join an established independent firm: Growing independent firms are always looking to recruit experienced advisors who want to make a transition to an independent platform. This can be an attractive option for an advisor in the penalty box as it allows an advisor to plug into an existing infrastructure and often involves less of a financial and time commitment for the transition.  Keep in mind that firms will differ in terms of business structure, affiliation models, platforms, methods of compensation and product/service(s) offering.

4. Fill the role of Successor: As the advisor population grows older, many advisors are in need of experienced and qualified advisors to potentially transition their business.  This could be a great opportunity for an advisor looking to grow by being the successor for an established practice.  For the transitioning advisor, finding the right fit is key and often new advisors will need to work within the firm for a certain period of time to ensure that it is a good match.  Many broker-dealers are providing support and have developed programs to help structure and finance deals for transitioning advisors.

5. Take a support role:  You may have come to the realization that being an advisor is not for you, but you enjoy other areas of the industry where you can put your skills to good use.  As independent firms grow, they have a need for experienced support people to fill various roles in areas such as financial planning, operations or compliance support and may open the door for an opportunity to become an integral part of a growing firm.

For experienced advisors who may find themselves at crossroads at their current firm, there are many options available that can improve their bottom line as well as improve their career objectives and quality of life.  It pays to be proactive and explore options on your own terms and not under pressure.

If you are a financial advisor considering making a transition or an independent firm looking to grow, please call us toll free at 855-464-4634 to set up a no obligation, confidential consultation or visit www.GoingIndie.com.

http://www.businessclassinc.com/2010/03/17/business-lessons-from-st-patrick/

“Wherever you see a successful business, someone has made a courageous decision.” – Peter F. Drucker

Starting your own RIA can be both stressful and exciting.  After considerable thought and conducting research and analysis of the pros and cons, you’re ready to take the next step and file your application…but where do you start?

The first step is to establish an IARD account with the Financial Industry Regulatory Authority (“FINRA”) so you can file electronically and pay all required fees.  The next step is to determine if you should file with the Securities and Exchange Commission (“SEC”) or state securities authorities.  Recent changes resulting from the Dodd-Frank Act require that generally, RIAs that anticipate at least $100 million in Assets Under Management (“AUM”) within the first 120 days of business register with the SEC, while anticipation of AUM under $100 million should register with the appropriate state securities authorities.  Although this is the general rule to which most advisors fall under, there are exceptions to this and it is important to determine if any of the exceptions are applicable to your particular firm.  Once it is determined in which jurisdiction to register, it is important to know what documents need to be submitted with the initial application (this varies by State and SEC) and how long this entire process is expected to take for your planning purposes.

Whether or not you are required to submit certain documents at the time of the initial application, firms are required to have complete compliance programs and documents established at the time of bringing on clients.  Registered Investment Advisors are subject to the regulations of the Investment Advisers Act of 1940 (“the Act”), and compliance programs should be designed to reasonably prevent, detect, and correct violations of the Act.  Being responsible for your own compliance program is one of the primary differences between being a captive versus independent RIA.  The possibility exists at any time subsequent to approval for a regulatory examination.  It is critical that marketing and advertising documents, written policies and procedures, disclosure documents, and other required compliance documents meet the regulatory requirements.

In an effort to save on costs, some small RIAs try to handle all of this internally, only to get frustrated when their registration application is delayed due to missing information.  This unexpected time delay can result in lost revenue.  An increasing number of advisors are engaging a compliance consultant to handle the initial registration process and establishment of the compliance program.   For a flat fee in most cases (an hourly fee in other cases) a compliance consultant can help establish your new independent RIA firm and make sure you’re set up properly.  The cost to hire a compliance consulting firm to set up your new RIA typically can range anywhere from approximately $3,000 to $11,000, depending on the number of advisors, types of business, and level of customization of documents.  Outsourcing this leaves more time for you to focus on the planning of transitioning your clients to your new firm and also provides you peace of mind, knowing that you will be covering all your bases.

http://www.rushimprint.com/blog/2011/03/business-lessons-learned-from-dr-seuss/

The marketing function in the typical small to mid-size advisory practice tends to be viewed as a secondary priority.  Some of the reasons given; “No tangible result”, “we’re not marketing people’, “It’s all about performance”, “We do it when we have time” – to name a few.  Further, advisors generally focus on material like brochures and flyers not realizing that there is a bigger dimension to an effective marketing effort. Mathias Hitchcock, VP of practice management at Fidelity Institutional Wealth Services says he thinks many advisors reluctance to embrace marketing is that many of them “are not comfortable with it.”

Notwithstanding the point and counterpoint of an advisory practice’s marketing process, let me outline what I believe to be the critical elements and areas that, if done with relative diligence, will greatly assist in sustaining and growing your business.

1.      Focus

Financial Advisory is no different than most other businesses, there are generalists and specialists – and there is certainly room for both.  From a marketing perspective, it is best to choose which one your practice is. The fundamentals of marketing are consistent messaging and repetition of that message.  Having a focus for you practice, developing the messaging for that focus and communicating that message sets the stage for a successful marketing effort.

2.      Prospecting Communication

There are two types of steams of communication that need to be develop – one for prospects, i.e. future clients, and one for clients – which I will discuss in a short while later.

Essentially, as business people we are always looking for clients.  We hand out business cards, ask for referrals, advertise, promote ourselves, etc.  Unfortunately all those we touch don’t become clients instantly.  Prospects have to be nurtured.  That nurturing can be effectively done through regular communication.

•  That communication process starts with creating a good method to capture and retain contact information.  There is a number of reasonably priced client management software that can simplify this task.

•  Use a source(s) of regular communication:

♦  Monthly/Quarterly Newsletters

♦  Personal quarterly/semi-annual letters/emails (that reiterate your practice’s message)

♦  Personalized holiday greeting and birthday cards

The object is that once you have a potential client’s contact information, stay top-of-mind through regular, tactful communication.

3.      Convey Trust Through A Clear Standard(s) Of Operation

You advise people on what to do with their money.  When you think about it, someone has to really trust you to take that advice.  What better way to convey that feeling of trust than to tell a prospect how you work and what they can expect from you. Tell them things like:

•  They can expect clear – to the point – unbiased information, advice and recommendations.

•  If you are a fee-only advisor tell them that you work entirely on a fee-only basis which means that their situation(s), needs and requirements are your only focus. You work for them and receive no compensation from anyone else.

•  That you are committed to making sure they completely understand all aspects of the work you do for them.

•  And that you will work collaboratively with them and that they can expect consistent communication and a full explanation of choices and options.

4.     Client Communication

As I said earlier, the second form of communication is to your clients.  If they became a client they had to put a high level of trust in you.  That trust must be reinforced.  Performance isn’t the only thing a client cares about; they care that someone they trust is looking out for them and for their money.

•  You can use many of the communications tools for prospects mentioned earlier.

•  Determine – from them directly – how they prefer to be communicated with, i.e. phone, email, letter. Then reach out to them   regularly using that method.

•  Personally calling or having a person from your office call them – to “check-in”.

•  Hand written notes, to follow up verbal communication, are received well.

•  Proactive communication in times of volatility, uncertain times, etc. is very important.

It has been proven time and again that advisors who speak with clients at unsettled times have a high client retention rate – with the opposite (no communication) increasing the likelihood that they will lose clients to competitors.

You don’t have to be a marketing expert to set in motion an effective marketing effort for your practice and that effort does not have to be costly or time consuming.  Next to the actual advice and services you provide to your clients, acquiring and retaining them is a critical to sustaining your business.

Marty Telles is the Principal of The High Tide Group LLC that provides consulting services to independent financial advisors and firms.  Visit The High Tide Group at www.TheHighTideGroup.com .

http://www.e-myth.com/cs/user/print/post/4-systems-to-eliminate-distraction

Scenario

You are sorting out the things you will need so that you can continue doing business while transitioning your practice from ABC wirehouse to the independent model.  One of the top 3 items on that “sorting list” is financial planning software.  Your business relies on providing a formal financial plan to your clients and prospects; that’s the MO you use and has greatly added to your success.  The question is, how will you replicate that part of your business process? …..READ FULL ARTICLE

At this time of year many of us take stock of our business and often make decisions and take some form of action in the New Year. Common thoughts, for Advisors who have built their practices within the walls of a national or regional wirehouse or insurance company, center around, among other things, level of payout, the value of the equity in their practice and flexibility in the way they work with clients.

Transitioning a practice to a more independent model meets many of the tests to a potentially more fulfilling (and lucrative) practice and seeking advice from an unbiased source to assist in investigating what it would take to do it is certainly a worthwhile exercise.  However, there are 4 simple steps you should follow to organize your thoughts and prepare you for launching a serious investigation effort.

Step 1 – Identify Your Goals

Having goals and objectives for making what will be a significant change in the way you make your living and take care of your family – and its future – is a critical step in the process and so an important question to ask yourself at the onset is, “What is it you want to accomplish by making a transition?”

The spectrum of answers is wide and can run from:

• Freedom of product choice

• To succession planning (in terms of who will take care of your client’s needs as well as maximizing the practices value)

•  To the level of fiduciary services that can be offered

•  To setting personal production levels for yourself (and not having them set for you by an employer) ….. And many things in between.

Be introspective about your answers as they will serve as the nucleus of your ultimate goals.

Step 2 – Select a Business Model

The business model selection is arguably the most important decision an Advisor, who is thinking about making a change, has to make. That decision must take into account how you have done business in the past and how you see you’re practice evolving in the future, i.e. what will it look like in 5 years?

An experienced Advisor certainly knows the four primary models – Fee-only, commission, hybrid or forming their own firm. But the crux of the decision lies in how to best maximize the revenue streams of all types of business; past, present and future.

Step 3 – Write a Business and Action Plan

It is often said, “A person that can express themselves in a business plan is the one that is ready to make a change in their business.” The plan does not have to be and epic nor spell out all the details of the transition. However it should have certain content elements:

•  Realistic, functional and operationally well thought out

•  Goals, objectives and expectation should be articulated

•  Provide estimates of:

−  How many of your clients will move with you

−  Cash flow projection

−  Capital requirements to make the transition

−  Time line

Advisors that do well as independents must be great Advisors and great business owners.  To prove that you are both – to yourself as well as to those that you will be working with if you choose to move forward – developing a cogent plan will go a long way.

Step 4 – Be Thorough in the Investigation and Do Your Homework

As you research your options and alternatives, tap into your resources:

•  Recruiters and consultants can be very helpful as sources of information.  Using the services of an independent recruiter or consultant can be helpful in putting an unbiased focus on what is the most advantageous path to pursue.

−  An independent consultant can also provide guidance on what type of independent options (RIA, Independent broker Dealer, Hybrid firm,etc..) would best suit your needs and can assist you in investigating specific opportunities.

•  Speak with advisors that have made a transition to the firms you are considering, (most will supply a list of those open to speaking with you.) A good idea is to have a written list of questions* that can guide the discussion and will make it more productive.

−    * Questions like, “Ease of use and completeness of their product platform”, “How did the ACAT process go?”  and their opinion of “the overall fee retention structure,” etc.

•  Get a good sense of the capitalization, ownership structure, culture and reputation of the firms you are considering.

Because most advisory practices are unique, the process and the type of information required is a little different for each – what worked for one case might not work for another. However, having said that, many aspects of making a successful transition are predictable and can be comfortably managed.  Reaching out to experts, building a support network , having a solid business/action plan and transition time-line will be of great value and make things considerable more manageable.

Considering making a move in 2012?  Contact Victoria at Bowen Enterprises LLC (www.BowenEnterprises) at 617-217-2839 or Victoria@BowenEnterprises.com .

Find out more, by reading this great article  “Gratitude Makes You Healthier and Wealthier, Scientists Say” courtesy of Horsesmouth

Administratively placing insurance for clients – especially those with special underwriting consideration – is a time-consuming task, regardless of the face amount.   You need to viagra the underwriting criteria of each carrier, and try to correctly match the risk to the carrier.  The APS (Attending Physician Statement) can take a long time to obtain, the tests might not be done when scheduled, and new medical facts may surface during the underwriting process (potentially requiring more tests and/or APS’s to be ordered).

For many advisors the time involved is a deterrent to providing insurance as a service.  They are willing to forgo compensation to avoid potential loss of clients.  However, life insurance is the foundation of a solid financial plan and it’s critically important that clients’ and prospects’ insurance needs are met.  Yet, over 42% of “Main Street Americans” do not have life insurance representing more than 52 million American adults with significant household incomes. Many more are underinsured.

To help advisors reach the uninsured/underinsured, insurance carriers and BGAs (brokerage general agencies) are employing software that makes the administration – and getting quick responses about underwriting – available to advisors (the BGAs’ clients).  Two of the software systems are:  1)  XRAE and 2) iGO eApp.  XRAE helps with underwriting, and iGO eApp helps with taking the application.

Here is a profile and some of the characteristics of XRAE (Express Risk Assessment Exchange):

• It is a web-based underwriting tool that assists the advisor in determining the appropriate risk classification for clients.

• It provides on-line questionnaires that guide the advisor for what questions should be asked about their clients’ medical conditions.

• Utilizing the software helps eliminate underwriting “surprises” by gathering proper underwriting information up front.

• It compiles tentative quotes from multiple carriers to determine where to apply; thus, avoid taking an application for a carrier that might not provide or, conversely, help find the most favorable underwriting offer.

Here is a profile and some of the characteristics of iGO eApp:

• It is an online application system for term and permanent life insurance.

• It uses an intelligent wizard that takes the guess work out of insurance paperwork by electronically guiding an advisor through the complete process.

• It is a paperless system which guides the advisor down a path that ensures the application is “in good order” (hence the name “iGO eAPP”).

• Carrier specific rules are embedded in the system to help avoid wasting valuable time.

• E-Submission and E-Signature are generally available to further reduce cycle time.

• It significantly reduces time from the life insurance application process.

• iGO eApp also has a “Drop Ticket” application  which minimizes the process to

• Basic questions such as name, address, telephone number, insurance amount, billing frequency, nicotine use, owner/beneficiary, replacement information and financial information.

o    The BGA and/or carrier utilizes a call center to contact the advisor’s clients for the remaining details of the Part I application and Part II medical, and any supplemental forms.

o    The BGA/carrier will order the APS records, the medical requirements, inspection reports, motor vehicle reports, etc., and inform you of the underwriting decision.

o    An advisor’s job is virtually complete until policy delivery.

Benefits of these new, technologically-assisted methods include that cases are quoted more accurately; cuts valuable processing time; more cases get placed;  you get paid faster; reduces unnecessary client touch points; and allows you to focus on more productive activities.

Make life easier for yourself.  To find out more about how a BGA and their technology can assist financial advisors contact Steve Finkle (sfinkle@nbainc.com) at NBA.