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Financial Planning > Behavioral Finance

Devaluing Succession; People And Pay Pay-Off; A Kinder, Softer Planning Process: November Investment Advisor—Slideshow

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What does an advisor have to do to ensure a successful transition with an internal candidate? Angie Herbers, founder and CEO of Angie Herbers Inc., has a few ideas about that. She explains in the November issue of Investment Advisor five steps advisors can take to set themselves up for success.

FA Insight’s Eliza De Pardo and Dan Inveen return for the fifth annual Study of Advisory Firms. This year, FA Insight focused on people and compensation in advisory firms with a special look back at how firms have performed over the past five years. The good news is advisors’ hard work is paying off. The bad news is there are still major challenges all firms face, including the top performing firms.

What if people actually liked financial planning? Sure, everyone wants a successful retirement, but few people actually enjoy the planning process. Michael Kitces suggests that doesn’t have to be the case.

We also present Ave Maria Funds as one of our Overlooked Managers. Ave Maria Funds is a faith based family of funds that exclaim not only is there a difference between socially responsible investing and morally responsible investing, but that it’s just as good for clients as more traditional investments.

Devaluing Succession: 5 Steps for a Successful Internal Succession Devaluing Succession: 5 Steps for a Successful Internal Succession

The scope of the succession problem in the independent advisory industry is well-documented. We’ve known for years now that the baby boom generation of advisory firm owners are on the brink of retiring over the next 10 years or so, with some sources estimating that as many as 50,000 of their firms—and $4 trillion in client assets—will be changing hands or closing their doors. The vast majority of the owners of these firms would prefer to transition ownership to their junior partners in an internal succession. Yet very few have taken steps to make this happen, even at this late date. What’s scarier, many owners have failed to educate themselves and their juniors on how internal successions work. Angie Herbers outlines five actions to keep failure at bay.

Read the full article here.

Advisors, Take A Bow: The 2013 People and Pay StudyAdvisors, Take A Bow: The 2013 People and Pay Study

This year marks the fifth release of the annual FA Insight “Study of Advisory Firms.” The five-year history of the studies underscores the resilience of the advisory industry. During this period, notable for a global financial meltdown that shuttered major Wall Street firms, advisory firms struggled to maintain their footing. Trying times forced firms to tighten management controls with a new level of discipline that appears to have held through a return to stability.

In 2012, the typical advisory firm achieved the highest profitability and greatest level of owner income of any FA Insight study year. While resurgent equity markets deserve a share of the credit for the turnaround, performance indicators also point to improved management practices, especially those relating to controlling costs and the more effective use of people. FA Insight’s Elza De Pardo and Dan Inveen once again break down the results of the survey in this first of a four-part series.

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What if Financial Planning Was More Like Build-A-Bear? What if Financial Planning Was More Like Build-A-Bear?

For most people, financial planning is difficult and complex, which is why they seek out professionals for assistance. Yet while the outcomes of working with a financial planner are positive, the actual experience of going through the planning process is not always pleasant. As one focus group researcher put it, “The financial planning experience is a blend of a dental exam, math class and marriage therapy.” The challenge for growing a financial planning practice continues to become more difficult given an increasing number of financial planning practitioners competing for business, with less and less differentiation from one firm and advisor to the next.

By contrast, the Build-A-Bear Workshop differentiates itself not by the product it sells—teddy bears, a product long since commoditized—but by the experience that customers engage in to get the teddy bear. Children visiting Build-A-Bear literally build the bear from scratch. The children have a much deeper buy-in to what they get (as their tagline notes, Build-A-Bear is not where teddy bears are bought, but “Where Best Friends Are Made”), and customers spend twice as much or more to get the same commoditized product at the end.

That raises the question: What if the client financial planning experience was more like a Build-A-Bear experience, where your clients happily pay twice as much for your services and want to spend hours going through the process and the experience of it? Michael Kitces suggests some ways advisors can offer a warmer, softer planning experience.

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Grace Under PressureGrace Under Pressure

Ave Maria Funds claims investors don’t have to sacrifice returns to invest according to Catholic teachings. They say they’ve outperformed the S&P 500 by 171 basis points over the past five years and 480 basis points over the past three years. Managers George Schwartz and Rick Platte explain to John Sullivan, editor-in-chief of IA, the difference between morally responsible investing and socially responsible investing and how it can benefit clients.

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