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Oh the Capabilities! FPA launches Professional Development Center

PDC_Guide.inddMany of us might not know the full capabilities of our smart phones, then we discover a cool, new-to-us feature that we’re over the moon about. “Wow,” we might think. “I didn’t know my phone could do that!”

Having a smart phone that you don’t use to its full capacity is kind of like being a member of a professional association and not utilizing all the educational and professional development features it has to offer you. Until now, finding all those features may have been difficult for Financial Planning Association members.

But it shouldn’t be difficult anymore.

FPA recently launched the Professional Development Center, an integrated learning environment with the highest-quality live, virtual and self-study content curated for you. FPA put in one place everything you’ll need to learn your way.

“This is the beginning of shifting our educational focus from primarily offering continuing education credits to being the most valuable continuous learning resource for all CFP professionals,” says George Bradley, director of professional development at FPA. “We are already hearing that our message and our integrated solutions are resonating with members.”
0115JFP PageSuiteCvr.inddThat message perhaps hasn’t been articulated well in the past, writes Journal of Financial Planning Editor Carly Schulaka in the Journal’s September issue.

“FPA has been delivering top-notch professional development to members since our inception,” Schulaka writes. And now FPA is articulating that message to make it easier for members to find educational and professional development opportunities. “The learning is in print, it’s live, it’s virtual. More importantly, it’s continuous and integrated.”

In your September Journal, you will find your Professional Development Center Guide, which will highlight all the features of the FPA Professional Development Center and guide you to its very own webpage, where you can find the latest professional education, community discussions, career development, the Journal, and practice management content and resources. Under those umbrellas are a number of other features including FPA Knowledge Circles, valuable webinars and MentorMatch, among others.

For all things learning and professional development, visit www.OneFPA.org/PDC. Download your Professional Development Guide here.

After reading the guide, you might say: “Wow! I didn’t know my association could do that!”

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Everybody Calm Down: 4 Tips to Navigate the Market Correction

This hasn’t been the best week for investors. Many of you probably got calls from scared or frustrated clients wanting to do irrational things—like sell stocks—to make themselves feel better.

And fielding these calls might not be easy, but we’ve got four steps for you to help you navigate the market correction and comfort your clients.

No. 1: Make Sure Clients Don’t Panic, Don’t Flee
It’s our natural instinct to want to flee a painful or uncomfortable situation and while that may work in life, it doesn’t work in the stock market.

Steve Sanduski, president of Belay Advisor in Mequon, Wisconsin, told U.S. News that the biggest mistake investors can make is fleeing the market at the wrong time.

“We know getting panicky and selling after stocks have already nosedived is a pretty lousy investment strategy, but investors do it anyway,” said David Greene, host of NPR’s Morning Edition.

And many investors did that, said Nigel Green, CEO of deVere Group. “The sell-offs were considerable on so-called ‘Black Monday,’ and the volatility continued in Tuesday’s and Wednesday’s trading,” Green said in a news release.

Boulder, Colo.-based adviser Trent Porter told NPR he’d advised this to his clients: that the stock market is like a roller coaster, “The only time you get hurt in the stock market…is when you get out,” while it’s still running and you’re still strapped in.

“Sometimes doing nothing makes more sense than throwing in the towel,” Brian Jacobsen, CFA, CFP, Ph.D., wrote in a Wells Fargo blog post.

But you, advisers, shouldn’t let your clients be those investors. In order to keep them from panicking, be empathetic, understanding, and (which leads us to our next tip), engage in active listening.

No. 2: Engage in Active Listening
Suppress the urge to launch into a monologue about the market and how it will be OK—let your client talk. Let them vent and say what they need to say. Chances are they’ll be upset and emotional, but once they have the opportunity to get it off their chest, you can swoop in and comfort them.

Psychologist Jack Singer, author of “The Financial Advisor’s Ultimate Stress Mastery Guide,” told Financial Planning that most likely clients aren’t going to be immediately reassured but active listening will help clients feel confident in the financial plan you’ve laid out for them.

“When you initiate active listening, you first just take a breath and just listen to the position of the client without judging it,” Singer told Financial Planning. Put yourselves in their position and say things like, “I understand you’re frightened that you may outlive your wealth because of the value today of your portfolio.”

When clients realize you’re on the same page and that you understand what they’re feeling, they’re open to objectively listening to you.

FPA published an article, “5 Steps to Calming Upset Clients,” that reinforced Singer’s conclusions. Author Barbara Kay noted the five steps are to listen, acknowledge, agree, add your perspective, and resolve.

“These five steps, employed with skillful diplomacy, build a foundation for resolution,” Kay wrote.

But note that if your client is still stuck in an emotionally charged state, it’s best to tell them you’re going to explore options for them while they take a little time to calm down.

No. 3: See the Opportunity
There’s always a silver lining.

With these reduced prices, there’s a buying opportunity, Scott Wren, senior equity strategist for Wells Fargo told Financial Planning.

“You should be buying the sectors that have been hit the worst,” Wren said he advised clients.

Plus, the Fed and the Bank of England are less likely to raise interest rates this year like they’d planned, Nigel Green said. When they do raise them, they’re likely to be more cautious.

“Fortunately the Fed and the Bank of England now have time to evaluate if an imminent interest rate rise is necessary,” Green said in a news release. “If the Chinese stock market had fallen after any interest rate rises, the fallout could have been much, much worse.”

No. 4: Be Comforted by History
We were overdue for a market correction, experts say.

“We have not seen a correction for a while,” Joe Davis, chief global economist at Vanguard told Financial Advisor Magazine. “If the catalyst had not been China, it would have been something else.”

Jacobsen wrote in the Wells Fargo blog post that historically for corrections since December 1949, the average gain is 47 percent (a median of 32.4 percent) and the average duration from trough to the next peak is 495 days (a median of 289 days). The first peak in this correction occurred on May 21, 2015, when the S&P 500 was at a high $2,130.82, and as of today (Aug. 27) we are 96 days into the correction zone.

Plus, Jacobsen said, advances are longer and more powerful than corrections.

“The current correction, I think, will rebound more quickly than 2011’s or 1953’s [corrections],” Jacobsen reassured readers. “Growth is more robust than market prices are suggesting.”

So just like you tell your clients not to panic, we tell you not to panic. As FPA members, you have many resources at your disposal to help you through this correction. Check out our Knowledge Circles, discuss the current market and how you’re handing it with clients on FPA Connect, and stay connected with your local chapter.

HeadshotAna Trujillo
Associate Editor
Journal of Financial Planning
Denver, Colo.

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When It Comes Insurance Planning, It’s OK to Pass the Baton

Life InsuranceLife insurance isn’t sexy. It’s kind of like the orthopedic shoes you should wear when you’re doing something that requires walking all day long—not sexy but probably a good idea.

According to a 2013 survey by Saybrus Partners Inc., less than half of advisers surveyed said their efforts to provide life insurance and pertinent advice were successful. Mostly, Financial Advisor Magazine reports, because they feel it detracts from their “regular” business—like the business of investment management.

Clients of all ages may be reading about life insurance and misunderstanding the specifics so they either forego it or make costly mistakes. So brush up on your life insurance knowledge and figure out the best way to address the topic—even if it means passing the baton to a more knowledgeable professional.

Clients Need Help, Are Underinsured
Many articles out there are telling consumers what they should be getting from financial advisers, and one of the most consistent things on those lists is insurance planning.

Unfortunately, the insurance business is complicated and with potential mistakes lurking—like rate increases that come as a surprise, lapses in updating beneficiaries on the policies and missteps with estate taxes—clients need help.

And many clients are underinsured. According to data from the insurance industry association LIMRA, more than 50 percent of consumers ages 25 to 64 are without life insurance coverage. About 44 percent of those have a real need for it, says Kellan Finley, the managing director of the insurance consultancy firm Insurance Decisions.

“The gap between service models can be maddening for clients,” Finley says in an op-ed she wrote for Financial Advisor IQ. “It also elevates the risks that clients face when preparing for retirement or a serious life event.”

Life Insurance at Any Age
It’s time for the youngsters to start thinking ahead also.

Here’s a tip courtesy of Yaron Ben-Zvi, the co-founder and CEO of Haven Life, an online insurance provider: direct your young millennial clients to get life insurance. Sure he may be biased, but he brings up a good point: millennials have debt of all kinds from student loans, mortgages and car loans. If they co-signed for any of those with a partner or a parent, those folks will be saddled with a heavy burden should the millennial client die.The Journal’s September issue will be all about the next generation of planners and clients, and the issue (look out for the link on our Twitter page come September) is chock full of tips for working with millennial clients.

“Though death and debt aren’t typically dinner table conversations, it’s important to understand your financial obligations and how they impact your family,” Ben-Zvi said in a recent interview with Cheat Sheet.

Also, he says, millennials are probably healthy, which could lead to lower premiums. And he’s advocating for planners in the piece, noting that the process is complicated and the choices are many (think term life, whole life, permanent life, etc.)

“You can also go through an agent or a financial planner if you’d like someone to take you through the process,” he advises.

What Can Planners Do?
But if you’re not into the unsexy insurance—or you don’t have the resources for it—then you can partner with an insurance-consultancy firm or work with an objective insurance professional, Finley advises.

Finley notes that advisers should understand the ongoing service that term-life and long-term care policies need and be prepared to be updated with them. She advises to use a CRM system or an Excel spreadsheet to keep tabs of the policies.

“Whether it’s underwriting or explaining insurance jargon, those advisers who use unbiased resources can offload unprofitable work while helping secure the client’s future well-being,” she writes.

HeadshotAna Trujillo
Associate Editor
Journal of Financial Planning
Denver, Colo.

Editor’s Note: For an FPA webinar on how your high-net worth clients may be overpaying to be underinsured, click here. Conducted by Annmarie Camp, senior vice president of national sales and distribution leader of ACE Private Risk Services, and David Spencer, senior vice president of premier client services at ACE Private Risk Services, the webinar offers 1 CFP CE credit.

Also, the August issue of the Journal has more pertinent information on insurance, including life insurance and long-term care insurance. To download the digital edition, click here

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Use Silence to Invite Clients to Share Valuable Information

SilenceDuring a seminar on communication I conducted a few months ago, I posed a question to my audience. No one was able to provide an immediate response, so I had to wait for a while until someone offered an answer.

At the end of the seminar, one of the attendees asked me how I could have remained so unperturbed by the nearly five minutes of deafening silence that followed my question. In my answer I explained that the silence lasted less than a minute—not five, as this individual and perhaps the rest of the attendees felt—and that learning to be at ease with silence can empower us to make effective use of it.

In our daily interactions with clients, occasionally we find ourselves in situations when there is silence in the conversation and the pause(s) feel agonizingly lengthy. Silence can make anyone awfully uncomfortable, coercing people to fill the air with words. Silence often frightens us because its emptiness feels idle, boring, unproductive and scary. Especially in our Western culture we are prone to think of silence as the absence of something, a gap that needs to be swiftly filled, as it feels odd and empty.

Contrary to our perception, silence is instead very rich with meaning once we let it speak to us. Think of the last time you experienced a period of silence during a client meeting. Recall the uneasiness you faced and the quick dash you made to fill the silence gap with words. You are not alone. Industry research revealed that just after 2 to 3 second after posing a question, the average individual engaged in some sort of client sale/interaction, restates her question and proceeds to answering it herself or changing the topic. This is due to the fear of facing a silent pause.

Let silence become your powerful ally, not your enemy. Silence temporarily quiets our ego enabling us to focus on the core of our issues in the present moment. It fosters introspection, which in turn leads to clarity of mind and to a mental expansion that enables ideas to spring within us and come to life. During a client meeting, silence can provide a golden opportunity to mindfully listen and wordlessly invite that person to fill “your silence gap” with valuable information that may enable you to get more business or assets. Remember that your client or prospect may loath silence as much as you do. Consequently, when facing your silent pause he or she may volunteer information that he or she would have otherwise kept to himself.

Silence can make you more effective, as it forces you to implement mindful listening, the foundation of effective communication, which nourishes both the speaker and the listener. During the course of a conversation with a client or prospect there are opportunities when you can strategically use silence to your advantage. For example, after posing the question, “What are the most important challenges our firm could help you address?” keep silent for a couple of moments to allow the prospect time to answer. After the answer, extending your silence a few more seconds will likely prompt her to further articulate on her answer and provide additional important information.

A well-placed silent pause can enable your clients to experience some specific insights, understanding or revelations that may not manifest during traditional verbal exchanges. In life, the answers to any of our questions always dwell within us, and most of the times silence rather than ongoing chatter is all we need to find an answer.

Claudio PannunzioClaudio O. Pannunzio
President and Founder
i-Impact Group
Greenwich, Conn.

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5 Key Elements to Deliver Empathetic Service and Gain Client Loyalty

Customer ServiceHow important is quality service? Vanguard and Spectrem determined in a 2014 study that the top four causes for adviser terminations were communication or service related; other studies put service failures second behind investment performance as leading dissatisfaction sources. Given the importance of client retention in building a vibrant practice, losing a client due to poor service must be prevented.

In a professional services business like that of financial and investment advice, service is not a thing to do, but rather the foundation of the business. Vertically and horizontally in the organization, every person in an advisory firm is on call to serve directly or serve the server.

The Veneer of Service
Service is focused on doing something—action—for another person by lifting a burden.

Recently, I had a service experience with my wireless carrier in which a problem was 100 percent a result of their process failure. A surface analysis of my service experience would check many boxes: letting me know when an attendant would be available; confirming who I was; ready access to correct account information; a pleasant person taking the call.

The crux of my dissatisfaction was the veneer of service. For example, the attendant would say reflexively, “I apologize for the inconvenience you have experienced,” but it was clear this was no real apology rather an apology to check a box off a to-do list.. What was missing was the idea of service being a helping function, but I kept getting that I had to do the work to resolve the problem.

Empathy is a Core Service Attitude
Empathy begins with consoling words that make a personal statement instead of a script:

“I see why you’re frustrated with [the specific issue], and I would be too. I want to help you.”

Just saying a canned expression like, “I apologize for the inconvenience,” completely misses that a call for service is for something specific. Repeating the specific issue—the burden—demonstrates an engaged conversation, but stating a desire to help cuts to what service truly is.

Actual empathy shows with an action that supports the words. Since service seeks to alleviate a burden, empathetic words come alive when associated with action.

“I see why you are frustrated with [the specific issue], and I would be too. I want to help you. Let me take charge from here and get this resolved.

In this regard, the server’s action becomes an investment of him or herself in the client’s burden.

A Service Infrastructure
There are five key elements required to deliver empathetic service that, in turn, grows the business by engendering client loyalty.

  1. Putting Honor in Service. If a firm’s business is delivering services, then it must be that those in service roles have a place of honor at the firm. Giving recognition (e.g. performance bonuses, awards, website visibility) reinforces that top service wins in every regard.
  1. Authority to Act. “Let me get this resolved for you,” defines action that releases a burden. Giving a service person the authority to make this statement brings the resources of the firm at hand, even escalating to the firm’s leadership.
  1. CRM for Workflows and Tracking. A workflow (a facility common to CRM systems) defines tasks for continued process replication that standardizes “best ideas”; workflows similarly eliminate mistakes that devalue clients (e.g. missing deadlines, forgetting tasks).
  1. Client Feedback. Many companies follow up a service instance with a client survey. This is useful and encouraged, but it’s best done with a phone call. Valuable ideas resulting from the feedback are inserted into the associated service workflow for continuous improvement; this ensures delivery of the firm’s “best.”
  1. Service Reporting. A burden that is lifted is certainly appreciated, but it can also be forgotten or diluted as time passes. Each service instance, when completed, should have an outbound client email summary of the issue and outcome. Then, on a periodic basis, the firm can summarize to each client all these service instances provided in a single document. Doing so gives tangible evidence of the services provided for the fees paid.


Action-Based Service a Precursor to Client Loyalty
A client changes from a revenue source to an asset when loyalty sets in. The experiences a client has in being released from big and small burdens become stories that are retold. When this happens, each story told by a loyal client becomes a market force many times greater than the initial cost undertaken to install an empathetic service system.


Kirk LouryKirk Loury
Wealth Planning Consulting Inc.
Princeton Junction, NJ

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Anticipating Change in Your Business

Nothing is predictable—in life, the financial markets or our industry—except, of course, change itself. Let’s explore a few somewhat predictable events that tend to bring change, for better or for worse, to advisers’ practices.

“Man, Woman, Birth, Death, Infinity”
If you recognize that quote, you’re probably in your 60s and remember the popular TV show Ben Casey. The series opened with the elder professor teaching his physician protégés about the path of human existence. From the birth of a child through adulthood, procreation, health issues and ultimately death, the trajectory of life is fairly predictable.

Whether they happen to you or a family member, colleague, employee, client or friend, these life events can have an impact on your business. For example, the birth of a child may prompt a young employee to quit work or ask for paternity leave. The 60-year-old adviser may take time off when her first grandchild is born, while the 40-year-old might buckle down and focus more than ever in anticipation of college expenses ahead. When you think about it, the path of human existence is constantly affecting your practice in some way, shape or form.

Leases, Partnerships, Growth, Industry Evolution
You haven’t heard that list on any TV show, but these factors also lead to change at regular intervals throughout the life cycle of a financial advisory business.

  • The end of a lease. I’ve noticed that a lease coming up for renewal can be a crossroads for many advisers. For one, it may present an opportunity to buy the office building; another may see it as a chance to gain space for targeted growth over the long term. One adviser will simply renew the current lease, while another may take the opportunity to minimize office expenses.
  • A shift in a partnership. Partnerships evolve, too. As one partner experiences change due to personal factors such as those mentioned above, it can be like shifting tectonic plates in the partnership. Say one adviser has a health scare and the more reticent partner takes the helm of running the business. The emotional dynamic caused by the shift is palpable. At such junctures, lifelong relationships between colleagues can unravel or thrive.
  • Business growth. Whether an adviser’s success is due to skill, geography, luck, inheritance, passion, the market or other factors, at some point, it becomes clear which firms are consistently growing and which level off. In either case, inertia kicks in; the business in motion tends to stay in motion.
  • An evolving industry. Like individuals, industries are born, change and pass away. Time will tell how long the financial advisory and planning industry endures. Advisers who joined the profession 40 years ago, 20 years ago and today will face very different circumstances to which they must adapt.

What Changes Will Your Practice Confront?
Change is constant and often predictable. But it’s easier to see that when you’re looking in the rearview mirror—just ask any adviser in the second half of his or her career. For those still in the early stages, it’s worth keeping an eye out for all the predictable changes down the road. As the saying goes, we don’t get hit by the things we see coming!

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management

Commonwealth Financial Network

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JOBS Act creates lucrative opportunities for financial advisers

Financial leaders and advisers should brainstorm in the firestorm of the  sweeping changes that include the democratization of capital that are being ushered in by the 2012 JOBS Act and its new Reg A crowdfunding possibilities.

As CEO of a commercial real estate asset management firm with a billion-dollar portfolio, I know firsthand the importance of delivering value and solid returns to investors. I also work with and talk extensively to financial advisers and here’s my message to them: don’t miss out on taking advantage of the new wave of raising funds that can transform and ease businesses’ access to much-needed capital and boost the American economy.

Earlier this year, the Securities Exchange Commission approved the new rules for Regulation A as part of the 2012 JOBS Act. Essentially, companies can now raise through a public securities offering $50 million a year—way up from the previous limit of $5 million—and allow non-accredited investors to invest.

For financial advisers, now is the time to get focused and establish your expertise as billions of dollars in fees can be earned by the financial industry. Not to mention the trillions of dollars in new wealth and GDP growth that can be created by the new financial opportunity.

Not only will your clients be investors in these JOBs Act deals, your clients will be raising capital and bringing these deals to market. Don’t think it will be only the other guy that gets cut out. If you are not adding tangible, measurable and meaningful value, it will be you who gets left out in the cold.

Let me give you an example of how helping a client commence a new Reg A deal can pay off. Let’s say you as an adviser has a client who has a company and wants to grow. The client can’t get money from a bank without signing off on a lien of their house—so they look instead to harness the power of the new Reg A to raise $30 million and pull $5 million off the table. If the adviser introduces him to the right people and helps the client do a new Reg A deal, a 1 percent fee of $300,000 can be earned.

That’s a pretty good payday, right? Well, we’re not done yet.

Then the client also needs to invest the proceeds. The adviser can help with that by investing the $5 million in assets under management, again at a 1 percent fee that translates to $50,000 a year.

If the client wants to diversify into other growth companies, the adviser can get paid 3 percent to 5 percent for counsel. Which translates to another $50,000.

Do you see why embracing new the Reg A deals is an easy call?

Keep in mind also that there’s an estimated $30 trillion wealth transfer moving from boomers down to gen Xers and millennials. It’s literally a land of opportunity.

We all know that there are tremendous pressures to reduce costs and improve investor returns—from both institutional and individual investors. In this environment complacency kills, as does disintermediation.

So it’s time to choose: who do you want to be in this new world?

Steve SadlerSteve Sadler
Richmond, Va.


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