Process


Technology is advancing faster than many of us can keep up with. While I am undoubtedly a big advocate of using technology, I do believe there is such a thing as being overloaded. We are beginning to see the use of financial software such as eMoney and MoneyGuidePro becoming more pronounced. Instead of relying on the latest application to crunch numbers for you, I suggest creating a personal balance sheet for yourself and your clients. There are multiple ways in which you can create your balance sheet, either with a pen and paper or simply by using a spreadsheet. One of the significant benefits of having a personal balance sheet is that it is quick to implement and allows you to regularly update your clients. It also enables you to become more aware of your client’s net worth and more importantly, what impacts it. I personally use a balance sheet to monitor where I am going and how I can increase my wealth by adding more assets. There are two ways in which you can do this. The first is to save more money from your income. The second method is to invest in items that increase in value over time. Lessen Your Debt to Increase Your Assets There is; however, a third way to increase your wealth. This can be done by paying off debt. Reducing your debt has two positives. Not only does it minimize the led weight that is dragging down your net worth, but it lowers your monthly interest payment, allowing you to save more in order to help increase your assets. As a sales trainer for financial advisors, I am a big advocate of helping clients determine their net worth, which is calculated by subtracting liabilities from assets. Simply put, your net worth is how much you own minus how much you owe. Liabilities include unpaid credit card balances, automobile loans, student loans and home mortgages. Your assets are broken down into current assets, long-term securities (retirement accounts), real estate, personal business (if you are a business owner or entrepreneur) and personal property (jewelry, art, and cars). Your personal balance sheet should be updated once a year. When updating my sheet, I track two things: net worth and assets growth. Net worth is the remainder after subtracting liabilities from assets. If this number continues to rise, I know my wealth is growing. The second item I monitor is the value of assets or assets growth. This helps to show if what I am investing in is maturing. Tracking these two things over time has provided me with a picture of where I’m currently at...

Read More

To influence change is the edict of any financial advisor … or at least it should be. As advisors, our objective is to guide clients and create value for them. In other words, we want to sell to them. However, when it comes to selling, we often fall into the habit of trying to instruct our client on what to do. Now is the time to think about that approach — how often have you changed what you were doing simply because someone else TOLD you what to do instead? In the World Presidents Organization (WPO), Young Presidents Organization (YPO), and Entrepreneurs Organization (EO), there is a language protocol called Gestalt. This protocol provides a framework wherein members discuss their experiences rather than give advice to one another. Essentially, members share stories based on their own account of something. These stories help make the topics more relatable to others and opens up communication for all members which aids in allowing change to occur. In a previous article, From High to Goodbye: Are You and Your Clients’ Finances in Line?, I reviewed the power of storytelling through the eyes of Chanel Reynolds. She was happily married until her husband, who was out for a bike ride in July of 2009, was killed after being struck by a vehicle. The event sent her into a state of panic and prompted her to organize her financial situation. Chanel’s story — including the actions she took and the tools that helped her – is featured on her site, http://getyourshittogether.org/. The most valuable aspect of her site; however, is not the insight into financial planning she shares, but rather the STORY she provides about how she got to her end result (finding financial stability and managing a successful website). We all can think of similar stories, either our own or from someone we know, that link us to Chanel’s story—a once-removed subject that evokes emotion and personal interest. Success in Storytelling Storytelling is a terrific art form, but what does it have to do with your financial advising business? The takeaway is simple: stories sell. In the book Influencer: The Power to Change Anything, authors Kerry Patterson, Joseph Grenny, David Maxfield, Ron McMillan, and Al Switzler describe how changing behavior is really about creating a vicarious experience. As advisors, we do not necessarily have the time to take clients or prospects through an experience. However, telling a story like Chanel Reynolds has done enables us to provide our customers with a tangible concept they can make their own. Storytelling does not come naturally for everyone though. If you’re unsure how to lead your clients on an experience through the use of words and feelings, don’t fret....

Read More

Disclosure: For investment professional use only. This is not intended as investment advice, but rather to provide an opinion by a financial professional to other financial professionals about a type of investment product. Earlier this year, the Department of Labor (DOL) issued a final rule requiring new fiduciary responsibilities for advisors who manage 401(k) plans and individual retirement accounts (IRAs). When it comes to the best interest of clients, undoubtedly one of the leading financial items being sold by advisors today are variable annuities. While there are many benefits this retirement vehicle offers, variable annuities can be difficult to decipher. It is therefore critical to understand the multitude of options that accompany variable annuities in order to know what is best for your client. Creating Profit from Projections Getting the most out of a variable annuity requires extensive research in order to understand exactly what is in store. The guarantees from variable annuities are favorable compared to what the S&P 500 has provided over the last 14 years. In recent years, the stock market has fluctuated in both directions, yet the S&P 500 has only returned a total of 34.8% since September of 1999 to March of 2016. Put simply, this is a 2% return each year. With numbers like these, it is no wonder variable annuities with guarantees of 5% and 6% returns are selling well. You may be wondering why not everyone is jumping in? When I was 22 and beginning my position as a research analyst at the Gartner Group, a broker for Northwest Mutual came to my office and delivered a pitch on buying life insurance. At the time, I had no concerns and certainly no beneficiaries that I needed to take care of. I couldn’t imagine what I would need life insurance for. I told her I would look at the numbers. As any analyst would, I dove into the numbers and calculated what the expected returns would be versus investing. I compared the outlook I had for investing against the idea of putting my money in the Northwest Mutual policy. I concluded that the policy would not begin generating money for three years and at the time, I had a host of solid investments that were significantly undervalued. Even after taking into account the tax benefits I would receive with the life insurance policy, it was evident that the cost outweighed the returns and therefore, I took a pass. Looking back, I am pleased with my decision, as my investments in Gartner Group, Coca-Cola, Dairy Queen and Gen Re far surpassed the S&P 500 and certainly the life insurance policy. Comparing Variable Annuities In order to provide your...

Read More

In part one of our series, we discussed how having an organized team of employees and established procedures in place can turn your small business into a money-making empire. While implementing policies and procedures into the workplace can help keep employees on track and unify team efforts in order to reach goals, there are other pieces of the puzzle needed to increase productivity and generate profit. More and more small businesses are looking to improve opportunities for growth by outsourcing day-to-day back office tasks. The right approach to outsourcing often varies from business to business. Some small businesses may have an adequate number of in-house staff responsible for handling daily administrative tasks; however, the time may come when such employees begin to seek outside help to undertake new projects that don’t necessarily require another full-time employee. Recruiting Contractors to Eliminate Back-Office Burdens When it comes to project delegation, almost any task can be outsourced. Because of the abundance of qualified professionals leaving structured companies to work as independent contractors or freelancers, many more activities are needing assistance from outside individuals. Tasks that may easily be outsourced to save the company time and money include contracting: Web designers Virtual bookkeepers Ghost writers Graphic designers Executive assistants and/or a project manager Optimal Outsourcing: Increase Productivity While Maintaining Authenticity With daily tasks continuously growing, many small businesses opt to hand over activities that are of little to know interest to employees; however, this can be problematic for anticipated growth as many assignments that appear unimportant or minimal in nature have a considerable impact on the strength and progression of the company. There are a number of key areas that are essential to business management and therefore, must remain under the responsibility of the employees. Areas such as human resources and talent management must remain authentic in order to drive business. Outsourcing such areas would hinder a business’s ability to promote a service that is both unique and attractive to clients. Instead, focus on the areas and tasks that exhaust employee time and money and interfere with the achievement of company goals. Such opportunities include: Accounting – By connecting with a skilled accountant, you can save valuable company time and have the certainty that your company’s financials are in the hands of a professional with the skills and knowledge to keep your small business afloat. Banking – As a small business owner, it’s important to manage finances with an institution you trust. Enlisting in the help of a specialist can assist companies in making smart decisions about loans, grants, and the general cash flow of the company. Editing and Social Media Management –...

Read More

When it comes to financial advising, there is nothing stronger or more productive for a financial planning business than to have a dynamic team of employees and established procedures in place. Procedures can take your practice from a hobby to a business and is often the key ingredient needed for you to transition from an employee to a successful business owner. It’s no secret that having a team of well-organized and motivated employees builds a better business, but how can you be sure your employees are up to speed on the daily tasks and future goals of the company? It all boils down to the implementation of policies and procedures. In part one of our three-part series, we will discuss the importance of developing an efficient team and the benefits of enforcing procedures in the workplace. Empower Your Employees with an Organized Outline Not only are procedures effective for the owners and clients, but having valuable processes in place helps company employees as well. While some workers may feel restricted with procedures, implementing policies can create a sense of empowerment and also helps to identify important job responsibilities, as well as anticipated outcomes that the company wants to achieve. Creating a positive workplace takes careful consideration when assigning roles to company employees. Designating certain tasks and projects to the right people on a team can increase individual productivity, thereby allowing the company as a whole to generate higher profits in less time. Eliminate Interruptions and Propel Your Practice into a Business By having all the pieces and a process in place, you as a financial advisor are building a rewarding, meaningful business for yourself. You are in the position to create a transaction and have the ability to maximize your time and focus. By enforcing procedures and delegating specific roles to employees, you can increase profits without back office interruptions and setbacks that occur as a result of disorganization and poor instruction in the workplace. The benefits of having the right people in the right place are endless. Not only are you able to spend less time training and more time creating profits for your company, but you are allowing your employees the ability to become self-sufficient, quick-thinking and highly productive when supervision is not available. Stay tuned for part two on how operational outsourcing can positively impact employee productivity and build a better business. photo credit: Kittikun Atsawintarangkul via...

Read More

The financial advising world is continuously changing; however, one topic of concern seems to remain on everyone’s mind: how can the accessibility of financial planning become more apparent to consumers? Marcio Silveira, financial planner and founder of Pavlov Financial Planning believes that Americans are not in the best financial situations, as many companies no longer provide pension plans and benefit packages. Yet, clients do not have to fend for themselves. It was through Implement Now, the next generation practice management virtual summit that I first learned of Marcio and his unique approach when it comes to coaching clients. Marcio is holding off on the assets under management model, and is steadily evolving towards the idea of receiving payment for financial planning advice. In addition, he is eschewing his reliance on traditional insurance and investment products and consequently is opening the door for younger clients by offering them help in this “do it yourself” culture. It is important to note than this transition does not simply suggest that Marcio and other younger advisors will renounce its product-and implementation-based services. While the AUM model just “doesn’t work” for much of the middle class and younger folks, it is still a good business model for many advisors. Financial planning provides advice for a wide range of insurance and investment products, and many people do need or want help implementing them. The Age of Innovation – A New Approach to Financial Advising As his financial planning continues its evolution towards getting paid for advice, Marcio is among a new wave of advisors supporting a different model – building a business that advocates the delivery of financial planning advice for a fee. Given the unique needs for Marcio to operate under this monthly retainer business model (obtaining CRM for workflows, payment mechanisms, oversight software, etc.), organizations are collaborating to help young advisors with tools, templates and access to technology to help support new models. The XY Planning Network  is a prime example of an original model. XY Planning Network’s model contains a convenient month-to-month payment structure and a recurring revenue model. This allows advisors to grow their business and increase their income over time by developing a base of clients who pay an ongoing fee for advice. Michael Kitces, partner at Pinnacle Advisory Group and founder of Kitces Report, along with fellow financial advisor, Alan Moore, created XY Planning Network to support fee-only CFPs who use the retainer model. So far, more than 35 firms have joined and the network continues to grow, with 72 current members. For just $397 a month, financial firms receive marketing and technical support, low-cost compliance services, and coaching on business development. The primary goal of XY...

Read More