Over the past year at XY Planning Network, we doubled the number of articles we publish for independent financial advisors. As our team grows, so does the expertise we can bring to our audience. In the coming year, you'll hear from at least a dozen contributors on topics ranging from branding to bitcoin.
If you're interested in catching up on some of our most popular blogs that you may have missed, we've put together a top ten list of our most-viewed blogs of the year. It would be easy to miss some of these because many of our most popular blogs are actually from deep within our archives. In fact, our most-viewed blog of 2017 was published nearly two years ago! Happy reading from XYPN. Be sure to subscribe to email updates right here on this page so you never miss another blog.
We talk with advisors a lot about fee-only vs. commission-only vs. fees-and-commission fee structures when they go to launch or transition their firm to working with Gen X and Gen Y clients.
Many advisors that are starting firms have only worked on the commission side of the industry, and aren’t quite sure about going fee-only. Others may have worked for large RIA’s that only charged their clients on an Assets Under Management basis, and are looking for alternative fee structures.
This is the first post in a multi-part series on determining the ideal fee structure for your financial planning firm. We'll start by talking through the different
Read more about choosing a fee structure...
When I launched my RIA in 2012, I was completely overwhelmed by the prospect of being a solo firm owner. I went from being a junior planner, only responsible for working with clients, to being the financial planner, investment adviser, compliance officer, marketing guru, tech-fixer, and bookkeeper.
In addition to wearing all of the hats, I was creating and implementing a process of providing financial planning services, and learning how to actually run the business. Even with all of this, my biggest fear was the investment management portion of the business.
I had always worked in firms that had investment experts, so I was strictly on the planning side of the house. The thought of learning how to manage investments, in addition to everything else, was overwhelming.
“What are my options for investment management?” is a really common question we hear at XYPN. There are actually a lot of different options out there, and choosing one when you first launch can be difficult.
Here are some the options available to you as new(er) firm owners.
Read more about investment management options...
#3 Creating a Business Plan for Your Financial Planning Practice
Starting a business from scratch can be a scary and intimidating undertaking. Mary Beth Storjohann, founder of of Workable Wealth, says she was lucky that she invested in a personal coach in early 2013 to help her through the launch process when she started her financial planning practice.
"What I learned during that time is something that we as advisors tell our clients time and time again," explains Storjohann. "It’s important to break big steps down into little steps! One of the most valuable things my coach encouraged me to do was to create a business plan."
Storjohann knew she needed to get that business plan on paper in order to organize her thoughts and fully understand what she wanted her financial planning practice to look like, stand for, and provide for her clients.
And she was generous enough to share her process and how she built out her plan with XY Planning Network. Using her walkthrough, and XYPN's free business plan template, you have everything you need to create your own business plan to start your firm.
Read more about creating a business plan...
#4: 5 Places to Look for and Find Your First Clients
Starting your own practice comes with a lot of decisions. What CRM will you use? How will you tackle compliance issues? Who’s going to design your snazzy new website? Which company will serve as the best custodian?
These are all questions that need to be answered prior to launching in order to ensure you’re prepared to best serve your clients.
But wait -- what about your clients? How do you plan to actually find them and grow your business?
Kevin Costner’s famous declaration, “if you build it, they will come,” may have worked in Field of Dreams, but it doesn't exactly apply to a new financial planning practice. Unfortunately, clients won’t be knocking down your doors immediately upon launch.
To find your first clients, you’re going to have to take action, get out there, and spread the news about the incredible new business you’re building.
Curious as to how to actually start growing your client base? Read on for an overview of 5 places to look for and find your first clients.
#5 Considerations for Discretionary vs. Non-Discretionary Investment Management
What is Discretion?
Discretionary investment management is a form of investment management in which buy and sell decisions are made by a portfolio manager or investment counselor for the client's account, without the responsibility to obtain client authorization for each transaction. An Investment Adviser must not exercise discretionary power over securities transactions without obtaining the proper discretionary authority from the client.
There are quite a few items to consider for investment advisory firms when determining whether or not advisers will have discretionary authority over securities to be purchased and sold in client accounts. Most notably, is the additional Net Capital Requirements that most States place on firms who have discretion. In some states, the net capital requirement may be met through the purchase of a surety bond. However, some states require that the net capital requirement be met based on assets listed on the firm's balance sheet. This can be particularly challenging for firms that are just starting out.
Read more about discretionary vs. non-discretionary investment management...
#6:Finding Success in Year One of Your RIA
I recently interviewed Shawn Tydlaska of Ballast Point Financial Planning in XYPN Radio Episode #103. Shawn is undoubtedly a success story. Within his first year of launching his RIA he has gone from zero to 38 clients – 26 of which are ongoing retainer clients. Success of this magnitude in an RIA’s first year is rare, but not unachievable. Shawn made some interesting points in our interview, and I wanted to drill deeper into some of them here. We hear a lot of people’s success stories coming from a vantage point where they’re 3-5 years down the line from their initial RIA launch. Having Shawn’s perspective – both the good and the bad – having just launched a little over a year ago in May of 2016 is incredibly valuable.
Let’s get the big question out of the way: where in the world is Shawn finding his clients? Read more about finding success in year one...
#7:Marketing Dollars Well Spent as an Independent Financial Advisor
After boot-strapping your way to wherever your financial planning firm is now, you’ve set aside some money for a marketing budget. But how are you going to spend it?
As a career marketer for start-ups, I’ve lived the dream of building companies (and marketing budgets) from the ground up. After an acquisition of one company, we went from boot-strapping to an open checkbook literally overnight. The new parent company splurged on billboards, radio ads, celebrity endorsements and more. If an advertising salesperson showed up at our door, we became their biggest customer. Spending was excessive and perhaps a bit reckless, but the suits upstairs wouldn’t have it any other way. For me personally, it was a great education. I got to try everything.
Based on my experience, I have a few recommendations for financial advisors on how to spend those first dollars allocated to marketing. Read more about marketing dollars well spent...
#8:How to Convert Prospects into Leads: A 5 Step Process for Financial Advisors
Over the past four months, I’ve converted 76% of my prospects into clients.
It’s been mentioned on XYPN Radio that if you’re converting more than one out of three prospects that you’re probably not charging enough. But I wouldn’t call myself “cheap.” I charge based on a percentage of income, and my hourly rate for those 76% averages $210 per hour.
I don’t say this to brag. I say this because the thinking goes that if your conversion rate is high, then you must be underpriced. That may be true in some cases, but doesn’t have to be.
The real reason I’m sharing this is if talented, honest advisors were able to convert more prospects into clients, we would be able to help more people live the lives they truly want and make the world a better place because of it.
Imagine - how many more lives could you impact if you doubled the number of prospects you turned into clients?
Read more about converting prospects into leads...
#9:Transition: Leaving Your Position with an Existing Firm to Start Your Own Fee-Only Firm
Leaving a position as an Investment Adviser Representative “IAR” for an existing firm can be a scary, yet rewarding, process. Being an IAR at an established firm tends to bring about a level of comfort grounded in the idea that as long as the advisory revenue continues to be generated, then consistent income will follow. As a Registered Representative of a Broker Dealer, oftentimes a rep may be paid a salary that is derived from pooled commissions and sales of insurance products, combined with advisory revenue and sales incentives. Alternatively, in a more traditional compensation structure, a Broker Dealer Rep may be compensated directly from commissions paid on the purchase and sale of securities.
Being an appointed agent with an insurance company, while offering less stability from an income perspective, can still be reassuring from a compensation standpoint. Reason being, stiff competition among insurance companies for sales of annuity and insurance products makes the job market full of sales opportunities across various companies. Still, these compensation methods are generally consistent, and therefore income from these revenue sources is fairly predictable.
Income consistency and job-security are major concerns for advisers leaving their existing position within the financial services industry to start their own firm. Read what to consider when leaving your position to start a fee-only firm...
#10:Developing a Mini-Service as an Independent Financial Advisor
When you are serving a niche as an independent financial advisor, it is in your best interest to have a specific offering that is pertinent to your target market. For teachers, it may be a review of their pension; for startup execs, it may be a review of their stock option grants; and for business owners, it may be a review of their employees’ 401k plan. The mini-service is intended to get both of your hypothetical feet in the door.
One of the first people to come to mind is Daniel Wrenne, who completes a student loan analysis for prospects in his physician niche. Daniel knows that medical school student loan debt is easily one of the biggest pain points for young physicians. Daniel's mini-service offering is a stand-alone service that generates leads without the pressure of continuing into a long-term relationship.
Let me be clear: this mini-service will not be the money-maker for you as an independent financial advisor. It is likely that your mini-service won't even be profitable. It will, however, overflow your pipeline with prospects within your niche and allow you to choose your clients more carefully. By utilizing this mini-service as a lead gen, you are building trust with prospects and providing immense value at a discount of what your normal services cost. I also recommend offering a service that has a tangible and easily quantifiable result (i.e. "look at how much we saved you").
Read more about developing a mini-service...
Thanks for stopping by XY Planning Network! There is a whole lot more helpful, free content for independent financial advisors on XYPN Radio, Michael Kitces' Nerd's Eye View, and the Bean Blog by our friends at FA Bean Counters. Additionally, members of our Network have access to even more valuable resources through our members-only forums, XYPN Academy, and more. Learn more about member benefits.
About Jennifer Mastrud
As XYPN's Director of Marketing, Jennifer Mastrud is tasked with sharing the movement at XYPN. Her expertise is in branding, marketing, and public relations. She’s as passionate about the XYPN message as she is about innovating new ways to share it. Before joining XYPN, Jen accumulated several years of experience representing national brands in diverse sectors including technology, gaming, TV, and education. She’s based in Minnesota, but travels frequently to warm up.