Displaying items by tag: wealth management

In a piece for AdvisorHub, advisor transition company - 3xEquity - shared some lessons for advisors from Twitter’s rebrand. While Twitter has been on a strange journey over the last few years and is now known as X, there are some important takeaways for advisors who are starting with a new firm. 

For one, the most important task is to introduce the new brand to existing clients and stakeholders. With this, it’s important to be consistent with the new branding to ensure there is no confusion among your clients. 

For advisors who are considering moving to a new firm, they should ensure that the new firm’s transition team is sufficient enough to handle the workload in order to ease the move. Additionally, an advisors’ time should be spent communicating with clients rather than handling paperwork or back office functions. 

Re-branding is also another consideration for advisors who are selling their firm, especially as many advisors now are choosing a hybrid phased selling model. With this model, advisors may work as employees and are slowly phased out of the new firm to maximize client retention. This can also lead to confusion among clients so it requires constant communication about the transition process.

Finsum: The transition process can be difficult for advisors who are moving to a new firm. Here are some lessons from Twitter’s re-branding for advisors on what to do and what not to do.

As the summer ends and fall rolls around, it’s natural to expect a surge in market volatility. This is even more relevant this year given that stocks have enjoyed a period of low volatility and gently rising prices throughout most of the summer despite a variety of challenges such as rising rates, stubborn inflation, and pockets of weakness in the economy.

Further, history shows that periods of sharp increase in rates can often trigger stress in parts of the financial system that can have knock-on effects in the real economy. The most recent example is the crisis in regional banks due to an inverted yield curve which could have negative effects on the flow of credit in the economy.

For ETFTrends, Ben Hernandez discusses how direct indexing benefits from these surges in volatility. Direct indexing differs from traditional investing in funds as it allows investors to re-create an index in their portfolio. 

This allows tax losses to be harvested as losing positions can be sold with the proceeds re-invested into stocks with similar factor scores. Then, these losses can be used to offset gains in other parts of the portfolio, leading to a lower tax bill. 

Finsum: Direct indexing has many benefits but the most impactful in terms of alpha is its ability to generate tax savings for clients during volatile markets. 

For ThinkAdvisor, Jeff Berman reviews some takeaways from the “Future of Practice Management: Boosting Business in 2023.” Overall, the majority of advisors are struggling with growth while a slim minority are accounting for the bulk of growth in terms of clients and assets.

In fact between 2016 and 2022, the average annual growth rate of revenue for registered investment advisors (RIA) was 11.3%. However, this was mostly due to the market appreciating rather than advisor-driven growth.  According to research from Charles Schwab, most advisors see growth between 6 and 7% primarily due to referrals, while they lose around 5% every year due to clients taking distributions.

In terms of growth tips, the panel recommends that advisors start using AI tools especially for marketing and back-office purposes to get more effeicinet. Having an organic growth plan is also essential especially given that most advisor growth is solely due to client referrals and asset appreciation. Part of the growth plan is defining your ideal client and figuring out how you can get in front of them on a regular basis. 

Finally, advisors need to think about thier clients holistically, and how their services will improve all aspects of a clients’ life rather than just financial areas. WIth competition from robo-advisors and other technological solutions, advisors need to emphasize the human touch and become a trusted advisor and source of personalized financial advice. 

Finsum: Many advisors are falling short when it comes to growth, solely relying on referrals and asset appreciation. Here are some tips on how to accelerate your practice’s growth trajectory. 

More than anyone else, financial advisors intuitively understand the value of planning in order to create successful outcomes. Their entire career is built around that concept, and they provide that service for their clients on a daily basis to help them reach their financial goals and attain a comfortable retirement.

So, it’s a conundrum that many advisors don’t apply the same rigor when it comes to their practices especially as it may impact their ability to recruit and retain clients if they are at a more mature age. Succession planning can also help advisors maximize the value of their business when it comes to selling, but it can be overwhelming given the variety of options. 

A good intermediate step for advisors who are just beginning the process is to have a management succession plan and a buy/sell agreement in the event of a death or disability. A management succession plan details who will take control of the business in terms of operations. Typically, it’s an employee or possibly a trusted colleague in the industry. The buy/sell agreement is usually funded by life insurance and is a legal document that clarifies how ownership of the business is transferred if the principal unexpectedly leaves the business. 

Both steps are essential as it guarantees the successful continued operation of the business, while assuring that the interests of the advisors’ heirs and family are also taken care of. 

Finsum: Ironically, many financial advisors don’t take succession planning seriously. It’s understandable given the variety of options and implications, but here are some small steps to get you started.

LPL Financial topped earnings expectations in the second quarter as it reported $3.65 in earnings per share which exceeded analysts’ estimates of $3.47 per share. It was also an 85% increase from last year, primarily driven by higher rates. The company also had another strong quarter in terms of recruitment which the firm expects to continue in the third quarter. 

In total, it added 421 new advisors in Q2 for a total of 21,942. Notably, this is more than a 5% increase on a year-over-year basis as it had 20,811 at the end of last year’s Q2. It saw an 8% increase in total assets, reaching $1.2 trillion with organic new assets of $22 billion and recruited assets of $19 billion. 

According to CEO and President Dan Arnold, the company’s success was due to winning new clients, expanding ‘wallet share’, focus on servicing clients, and a differentiated experience. It also saw a 99% retention rate in the quarter, and the company continues to invest in new technology and new services such as direct indexing. It also announced the acquisition of Crown Capital which has 260 advisors and $5.5 billion in assets. 

Finsum: LPL Financial announced its second quarter earnings results which topped analysts’ expectations in terms of earnings per share and asset growth.