Outsource Financial Planning

by

How We Work to Benefit You

As an advisor, you guide your client through the planning process.
Outsource Financial Planner assists you in the process by:

• Allow you to spend more time working in your area of core competency
• Add an experienced team member on-demand without salaries, benefits, training, etc.
• Enhance the depth of expertise you offer clients by adding a CFP® designee
• Maintain the latest financial planning software without licensing, fees, etc.
• Access our expertise in a variety of complex client planning scenarios:

  1. Equity compensation (restricted stock, stock options, non-qualified deferred compensation)
  2. Taxation: Projections and year-end planning
  3. Graphics to compare multiple eMoney scenarios side by side
  4. Pension considerations

by

Tech Can Help to Keep Up With the Big Money

By FRAN HAWTHORNE FEB. 11, 2013. The New York Times

ONE of the tax-fairness controversies in the presidential campaign last year grew out of the news that 33 of the wealthiest Americans paid little or no income tax in 2009, in part because they probably applied stock market losses to counter capital gains.

If they did, they now have plenty of less exalted company.

That tactic, called tax-loss harvesting, is one of several sophisticated financial techniques no longer confined to the ultrarich — say, those making more than $200 million, with the means to deploy family offices or personal bankers to the task. Because of a combination of technology and entrepreneurship, people a rung or two down the wealth ladder — with perhaps $250,000 to $10 million in investable assets — can avail themselves of similar tools. Partly this is because technology has simplified and sped up the work for all income levels.

“Before, if you had a lot of money, you could have analysts doing all your calculations in a manual way, in Excel,” said Mike Paulus, president of Addepar, a three-year-old firm based in Silicon Valley that offers digital sophistication in portfolio aggregation. “Due to technology, we can democratize it,” he said.

The new products are a cut above the mass-market, do-it-yourself budgeting and retirement planning tools available online, often from mutual fund houses. Financial experts say the new approaches allow users to include more personalized and complex factors, like itemized tax deductions or the types of cars they hope to buy in retirement.

The techniques have grown over the last five years and now include comprehensive digital portfolio aggregation, a service offered by Addepar, and access to sophisticated investments, along with tax strategies like loss-harvesting.

They are usually marketed to financial advisers and planners, rather than to the investors themselves.

The tax strategies, in particular, will become more important than ever, proponents say, now that, under new fiscal cliff legislation, capital gains taxes have risen and deductions have been scaled back for the better-off.

But the reliance on technology worries even some people who market the tools and advisers who use them. “What’s important is the conversation with the adviser,” said Linda Strachan, senior vice president of product management for financial planning products at Zywave, a financial software provider based in Milwaukee. Zywave’s clients are financial advisers whose clients, in turn, typically have $200,000 to $2 million in assets.

The new products are most prevalent in the areas of financial and retirement planning and are becoming more common in investment strategy.

Jacque LeFore, president of LeFore Consulting, a financial advisory firm in Portland, Ore., is using a Zywave program to adjust the tax and spending strategies of a pair of retired technology managers from Idaho, with about $800,000 in liquid assets, as they start collecting Social Security next year. He also uses a cloud- based product called eMoney for cash-flow planning and for aggregating investments and liabilities.
TECHWEALTH

People with $50 million or $100 million in net worth have “ hired C.P.A.’s and attorneys to do more proactive planning like this,” Mr. LeFore said.

Those in his clients’ income range — about $200,000 to $8 million in liquid assets — cannot afford that kind of personalized advice, he said. Yet earlier planning tools were not sophisticated enough to handle all their investments.

Joel P. Bruckenstein, a consultant and newsletter publisher who specializes in the technology of financial planning, said a financial plan that took eight hours to produce five years ago could now be done in two or three.

Technological innovation has also made some of the most exclusive investments — like hedge funds or their near equivalents — available to smaller accounts.

In theory, hedge funds typically demand a minimum investment of $1 million, although even that amount cannot guarantee access to the best managers, who may be so popular that they have shut their funds to all but their close friends. But Maz Jadallah, a money manager in San Franciso, said he had built a portfolio that “clones” the strategies of top-performing hedge fund managers by tracking their

specific holdings, which they are required to file with the Securities and Exchange Commission every quarter.

The minimum investment in one of his AlphaClone accounts, which began in 2008, is $100,000, and his clients have $500,000 to $5 million in investable assets.

Of course, markets change, so planners must constantly readjust. That is where strategies like tax-loss harvesting come in.

In 2005, three financial advisers from different firms created an automated market-monitoring tool, which they later sold to TD Ameritrade, called iRebal, short for Intelligent Rebalancing. Rebalancing means that iRebal — and rival products like Tamarac and RedBlack — constantly buy and sell holdings to ensure that each person’s account maintains its desired overall allocation to various asset classes, even as markets shift and particular stocks and bonds gain and lose value.

This strategy becomes even more complex when programs aim to do it in the most tax-efficient way.

Before these automated products were available, said J. D. Bruce, president of the wealth management firm Abacus Wealth Partners in Los Angeles, the process was so labor-intensive that his firm could handle only a monthly rebalancing for most clients. Now, it is done at least twice a week.

True, that still may not be up to the standards of the superrich. A family office “has a team of people that’s watching your portfolio every day, looking for rebalance opportunities and tax-loss harvesting,” said Christopher J. Cordaro, one of the creators of iRebal and chief executive of RegentAtlantic Capital, a wealth management firm in Morristown, N.J. Perhaps a more automated tool will eventually help less wealthy investors catch up to that.

Most of these new tactics would not be possible without advanced technology, including crowdsourcing, cloud computing and ever-faster database analysis. In creating Addepar’s framework, Mr. Paulus, the president, said, “We borrowed how Google looks at the world and how Facebook looks at the world.” In addition, the company collected ideas through open-source Web communities.

But many experts caution that personal, professional advice must still accompany such tools.

Mr. Bruckenstein, the newsletter publisher, said that even the snazziest computer programs were no better than the assumptions put into them regarding inflation, investment returns, interest rates, taxes and future earnings. “Garbage

in, garbage out,” he said.
Mr. Bruce of Abacus, though, said that technology like iRebal actually

improved the conversation with clients. Because what he calls “the arcane

underpinnings” are so smooth, he said, “now we can talk about the things that

really matter, which are people’s feelings around their money.”

A version of this article appears in print on February 12, 2013, on page F3 of the New York edition with the headline: Tech Can Help to Keep Up With the Big Money.

 http://nyti.ms/V05ZWp

by

Efficient Execution of a Financial Plan

 A Formal Process…

We’ve all heard that systems increase a practice’s efficiency. But there never seems to be enough time in a day and often the principals are the ones who guide the system so their input is needed in the creation of any formal process. If financial planning is a core offering in your practice and you do not yet have a formal process, make it a priority to create one.

Start off with the key players. Who is it that is involved in the client’s plan and how high-touch are they? One or more principals? A junior associate? An assistant? All of you? Next review your current process and pricing. Should you use this opportunity to create a more efficient process? Should you evaluate what other planners or advisors are offering? Are you plans profitable? Do you know how many hours it typically takes to execute a plan?

If you have been offering plans, you are likely to have a data-gathering system that you utilize on the initial meetings. Does your staff know specifically what you need to collect? Do they follow up with the client to collect the data or does a principal take it in from a client? Are your initial meetings with a lead advisor or do you have an assistant in the meeting as well?

Tailoring your plans…

Offering financial plans, especially ones which are tailored to a high net-worth clientele are typically much more time consuming than offering investment advice. Studies show that clients of investment advisory firms want holistic direction and advice from their advisor. If you are new to offering financial plans, then you have a clean slate. Pricing your plan becomes the challenge as you do not yet have data on the time it will take.

If offering plans and charging for them have become part of your standard practice, do you know if they are priced appropriately and are they profitable? You may want to look back through your CRM (contact relationship manager), your calendar or whatever other tracking tools you use to see how much time the last plans you executed actually took your entire staff. It is often difficult to add up the quick email communications, the short phone conversations over small details, the staff’s interaction for follow up, rescheduling, copying data, storing data and more.

One suggestion for tracking is an application on your smart phone to capture your time even if you set flat billing. If you have your smart phone handy it is easy to record a phone call, email, visit or planning meeting with your staff regarding a specific client. By tracking the data over a period of the course of producing a formal plan, you will get a sense of whether you are charging appropriately for your time.

Tracking your staff’s time can be done via your office’s CRM and added up on a quarterly or annual basis per client. You may be surprised to find out how time consuming a financial plan really is for your entire office.

However, building a solid relationship with your client and getting to know all of their present and future personal objectives and financial needs is a great way to bring in additional business. You may get rewarded by managing assets, new referrals or compensation from insurance if you are licensed. Most financial planning clients also need referrals to trust & estate attorneys, new CPA’s, possibly business valuation firms and a host of other specialists. These specialists may also be able to refer business back to you.

Document the process…

Outline the process from the initial meeting, creation of a proposal, the follow up closing meeting, initial data gathering, projections and recommendations for action steps. Depending on the sophistication of your practice and your clientele, it can make sense to bring in an outside planner to assist in execution, especially if you have a complex client situation.

The more systematic your data collection this will lead to a better process and greater efficiency of delivery. Some planners expect the client to fill out the data worksheet by themselves. This may seem efficient but my experience is that you will only delay execution as the client procrastinates. Provide a list of documents for the client to bring in and collecting the data in person is much faster in most instances.

Having an assistant or junior planner in the initial meeting is cost-effective. You have a second team member who is privy to the client’s concerns who can also recap the meeting formally afterwards. The second person can also collect the documents which need to be copied or stored in your system themselves or delegate to another assistant. But you need to spell this out in your process so everyone is clear on their role and the replication of the process follows.

After data gathering, you should formalize recording the client’s overall situation, concerns and major goals. This helps to allow other team members to execute with knowledge. Data now needs to be entered into whatever planning software you utilize. This is where an outside resource can play a role. With data captured, documents stored and a recap executed, an outside experienced financial planner can enter the data and be ready to launch a webinar to allow the client to see the results. The outside planner does nothing but enters data and run scenarios so they are very efficient. They provide and maintain their software and are very familiar with how to enter data and project scenarios so you do not have to spot check entries as you may with less experienced internal staff.

A launch of a webinar allows the clients to focus on their future. You and they likely planned on an initial scenario with timelines and costs for major events. By launching a webinar with an experienced planner, you may make changes and run other scenarios for the future to allow the client more options.

Do you wish to print the results of this webinar or do you want to offer the client more flexibility and re-run those scenarios later in the year? Are you and the client ready for action steps? Will you interact with the attorney, CPA, business coach, valuation specialist or any other professional to assist the client in executing action steps? Or would you print the plan, provide the list of required action steps and expect the client to implement? All of your preferences should be documented in a system.

How will you follow up to see if the client executed your recommendations? Other than asset management and insurance, the advisor may not have control of the rest of the process. Each practice varies in their approach to planning. But the key to success is having a documented execution strategy which you entire team knows about and is following and amending needed. This will increase efficiency, allow you to measure results, track the time needed to execute and therefore price the plan appropriately.

by

Adding Capacity without Increasing Staff

There are real benefits to adding virtual team members. A lot of energy and time are spent in interviewing, educating, training, and managing fulltime employees. Then there’s the money part. Competitive salaries, paid vacation and sick time, health insurance, payroll taxes, bonuses and more add up to a pretty big number in many investment advisory firms and financial planning firms.

Time and money….seems we never have enough. Adding an on-demand Certified Financial Planner as a seasoned professional to execute your financial planning needs can be a win-win. You have major talent with a wealth of knowledge that you might not be able to afford in your practice. And you may not engage enough financial plans to keep a full-time planner busy to justify the expense.

On-demand planners bring experience, maintain their own software, add updates at their own cost, pay for continuing education credits on their own dime and are often flexible about when they are available. In addition, they work with other advisory practices so they can add input on better strategies, ways to execute and present plans to your client base.

Depending on the sophistication of your staff, you may be able to share online files that the planner can access. Once the outside planner becomes familiar with your routine and typical documents collected, they can focus on inputting data, identify key missing information, and model multiple scenarios, etc.

Because it is all virtual, your clients do not have to be physically in your office. You could have one partner in your downtown office, the other in another State with your planner in yet another state. If you do this regularly, it is executed with ease. Since presentations are online, you are not scrambling to print and bind bulky plans just before the client arrives. If the client wishes to run various scenarios, the planner can do this right then and there in the online webinar meeting. You can build in multiple sessions with the client and planner and all you are paying for is their time. If you build in a good estimate for the hours needed for a typical plan in your office, you should be able to effectively price in the planner’s fee and be very profitable.