RIAs Face Disruptive Trends in Finding New Clients

FANG, RMDs and other Game Changers

There’s a change afoot in the way successful RIAs are finding new clients (see Bob Veres’ Your Next Wave of Clients).

There are 2 schools of thought on new sources: one group says more DIYers will begin to choose to use an advisor and the second group says clients will switch from other advisors (see Michael Kitces’ Death of Referrals). Your approach to each of these segments will be different.

Articulating and delivering on what makes you different and valuable to those prospective clients is a key first step. When over 80% of independent RIAs recently self-described themselves as holistic fiduciary planners, you know something has to change in the sea of sameness.

When you look at the money-in-motion from wire houses to independent RIAs over the next 5 years as independent RIAs increase their market share from 41% to 50% by 2020; selling your competitive value prop will become job #1.

You need to get on the new train along with the other successful advisors. Learn more about how to execute these changes on our next webinar with Stephanie Bogan. More on that later.

Seth Godin offers some key insights about how to accomplish these objectives.

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The Death of Referrals and the Birth of Digital Marketing for RIAs

As always, the early adopters will reap the benefits.

What’s Next on the Marketing Horizon?

Bob Veres is one of our favorite thought leaders and he recently weighed in on the future of marketing for RIAs:

”This was before my time, but they tell me that cold calling was once a very effective marketing strategy — until, of course, it wasn’t. I remember when advisory firms routinely attracted dozens and sometimes hundreds of prospects to cheesy prepackaged seminars, until attendance gradually began to slip away.

Now I’m hearing that the most recent marketing innovation, client appreciation events where clients are invited to bring along their friends, is starting to lose its effectiveness, either because clients are no longer bringing their friends, or because their guests are too far outside the advisory firm’s target market.

Marketing trends come in and go out with the inevitability of sunrise and sunset. The question is: What’s next on the marketing horizon? How will advisory firms reach beyond referrals to attract the next wave of clients?”1

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The Wealth Manager’s Perfect Storm of Risk (Part 2)

If you missed Part 1 of The Wealth Manager’s Perfect Storm of Risk, click here.

One of our biggest jobs as wealth managers is to protect our clients from unnecessary risk. The tools we use to diversify, allocate, rebalance and tax harvest have radically evolved in recent years.

In Part 1 of this blog series about risk, we talked about the “Perfect Storm” created by 3 intensifying risks that will impact your aging clientele’s retirement outcome:

  1. The 8-Year-Old Bull Market
  2. The End of the Bond Bull Market
  3. The Hidden Risks of Longevity

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The Wealth Manager’s Perfect Storm of Risk (Part 1)

This month the bull market marked its 8th anniversary. But as the Wall Street Journal reported March 8th, “Stocks Have Tripled Since Crisis, but Low Rates Are Still Squeezing Savers.”

Retirees have reacted to low interest rates by opting for higher-risk investment strategies, exposing themselves to volatility and sequence risk in an effort to make sure they don’t outlive their assets.

This week the Fed began to ratchet up rates. This might mark the end of the bull market in bonds. The Fed’s actions expose those retirees’ remaining fixed allocations to risks associated with rising rates.

And on top of sequence and interest rate risks, longevity risk may be the most difficult to communicate and manage.

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Turn 4% Systematic Withdrawal Challenges Into New Clients

Last week we hosted an extremely well received webinar featuring Warren Wall, CFP® and Dave Vick, advisor and noted author. Most of the webinar dealt with the challenges with using a 4% systematic withdrawal plan with your retiring clients (click here to watch a replay). Warren and Dave did an excellent job of explaining how they address key risks like sequence of returns and longevity. Dave’s ABC Planning Model is an excellent starting point for advisors who are transitioning into the RIA space. Many seasoned advisors on the webinar were impressed by how Retirement Alpha can help them achieve better outcomes for their clients.

 The question several attendees asked was: How do I turn this knowledge into new business?

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The People Least Concerned About Outliving Their Savings May Be Most at Risk Financially

For many of our clients, longevity risk causes a lot of heartburn and sleeplessness. As one advisor put it:

“It’s not that clients have a tangible lack of wealth – it’s that they have an intangible fear of outliving their assets.”

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Give Clients Guaranteed Income in a Post-DOL World

The future keeps a lot of people awake at night: 56% of Americans lose sleep thinking about retirement.

– Ramsey Solutions, Stress and Anxiety Surrounding Retirement An In-Depth Look at What Keeps Americans Up at Night, Aug 10, 2016

The search for solutions that fit into the fixed income bucket or address longevity risks, the list gets pretty short. Scott Martin from The Trust Advisor does a nice job of reporting on recent changes that make annuities an attractive option for investment advisors.

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A Not So Obvious Choice for Income

Dr. Wade Pfau’s research helps us understand that systematic withdrawal plans do not obviously outperform annuities as a way to meet retirement spending goals as well as providing support for contingencies and legacy. He adds:

“Advisors with aversion to income annuities think carefully about whether their advice is serving the best interest of their clients.”

– Dr. Wade D. Pfau, Retirement Income Showdown: Risk Pooling vs. Risk Premium, 2016 Professor of Retirement Income at The American College

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Leadership is the Best Marketing Strategy

When 1/3 of the largest RIAs lost AUM in 2016, alarms should have gone off.

“In all, 11 of the top 25 firms on this year’s ranking shed assets. By comparison, just one firm in the top 25 did last year.” – RIA Leaders 2017: Is this decumulation? Financial-Planning.com, January 3, 2017

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It’s a Process

You hear top tier athletes and business people say it all the time: It’s a process. Now is your chance to go beyond credentials and master the process of fiduciary-based retirement planning. RIAs: Transform your business into a powerful magnet for ideal clients and meet ERISA Prudence and DOL Best Interest Standards.

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More RIAs Face Declining AUM

In 2013, Mark Hurley projected that RIAs would face a season of slower growth and decumulation. It looks like that season has begun.

Remember that 2017 marks the first year that the oldest baby boomers will experience required minimum distributions.
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