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Top Blog Posts of 2016

Last year, 2016, was a record-breaking year in the number of visitors and views for the Financial Planning Association’s Practice Management Blog powered by the Journal of Financial Planning.

Here are the top 10 most-viewed blog posts of 2016:

No. 10: “Becoming an Authority: Establishing Your Financial Planning Career.” Emily Fisher, marketing copywriter for Advantage Media, gave planners tips on how to put themselves out there and attract new clients.

No 9: “Top Ten Tips to Implement CRM.” Jennifer Goldman, founder of My Virtual COO, gave planners insight into the best practices in order to maximize their CRM.

No. 8: “Fiduciary Rule for the Modern World.” This post covered the key elements from the press conference that announced the Department of Labor’s Final Rule (fiduciary rule and discussed FPA’s resources for its members.

No. 7: “7 Do’s and Don’ts of Collaborating with Estate Planning Attorneys.” Attorney Gary Altman gave planners insight on what you should look for when it comes to partnering with estate planning attorneys. This post was derived from an answer to a member question on FPA Connect.

No. 6: “9 Things Clients Need to Know about an Adviser.” Regular blog and Journal contributor Kirk Loury gave readers an overview of the things you should be communicating to your clients about yourselves.

No 5: “Advising Clients During Turbulent Times.” Professors Kent Baker (0f American University) and Victor Ricciardi (of Goucher College) gave insight into how to best handle clients who may be distressed during market downturns.

No. 4: “You Cannot Do this Alone.” In this post, Daniel Crosby, behavioral finance expert, published an excerpt of his book, The Laws of WealthThis post discussed the value financial planners bring to clients

No. 3: “8 Components of Social Media Policy.” Claudio Pannunzio, president of i-Impact Group Inc., offered planners the elements that should be included in a successful social media policy, including having a purpose, identifying authorized contributors and having an employee code of conduct.

1216JFP_BestOf2016_Cvr.inddNo. 2: “Framing the Conversation: What to Say in the First 60 Seconds.” Regular blog contributor Daniel Finley, president of Advisor Solutions, gave planners an outline for what to say to potential clients in the first minute.

No. 1: “How to Create Your Ideal Client Profile.” This year’s most-viewed blog post, another by Claudio Pannunzio, discussed how to successfully create an ideal client persona to better attract the clients you want to serve.
If you want to know what we determined as being the best of the Journal of Financial Planning, check out our Best of 2016 issue (picture, right) featuring a “2016 Personal Finance Year in Review,”  by the Journal‘s Academic Editor Barbara O’Neill.

Are you interested in contributing to the FPA Practice Management Blog? Email us with story ideas or content.


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


You Cannot Do This Alone

Dr. Daniel Crosby is a behavioral finance expert, frequent FPA speaker and President of Nocturne Capital. In his new book, The Laws of Wealth, Crosby touches on ten laws for managing investor behavior and also sets forth a new paradigm for asset management known as rule-based behavioral investing or RBI. An excerpt of the second chapter of The Laws of Wealth is included below. 

Laws of Wealth

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Law #2 – You Cannot Do This Alone

In an era of seven-dollar trades and fee compression, some have been quick to dismiss the traditional advisory relationship as a relic of a bygone era. Years ago, brokers and advisers were the guardians of financial data, the keepers of the stock quote. Today, investors need only an iPhone and a free online brokerage account to do what just 30 years ago was the exclusive purview of Wall Street. It is worth asking in such an age, “Is my adviser really earning her fee?” An appeal to the research shows that the answer is a resounding “yes,” albeit not for the reasons you might have supposed.

In a seminal paper titled, “Advisor’s Alpha,” the famously fee-sensitive folks at Vanguard estimate that the value added by working with a competent financial adviser is roughly 3 percent per year. The paper is quick to point out that the 3 percent delta will not be achieved in a smooth, linear fashion. Rather, the benefits of working with an adviser will be lumpy” and most concentrated during times of profound fear and greed. This uneven distribution of adviser value presages a second truth that we will discuss shortly; that the highest and best use of a financial adviser is as a behavioral coach rather than an asset manager.

Further evidence of adviser efficacy is added by Morningstar in their whitepaper, “Alpha, Beta, and Now… Gamma.” “Gamma” is Morningstar’s shorthand for “the extra income an investor can earn by making better financial decisions” and they cast improving decision-making as the primary benefit of working with a financial adviser. In their attempt at quantifying Gamma, Morningstar arrived at a figure of 1.82 percent per year outperformance for those receiving advice aimed at improving their financial choices. Again, it would seem that advisers are more than earning their fee and that improving decision-making is the primary means by which they improve clients’ investment outcomes.

Research conducted by Aon Hewitt and managed accounts provider Financial Engines also supports the idea that help pays big dividends. Their initial research was conducted from 2006 to 2008 and compared those receiving help in the form of online advice, guidance through target date funds or managed accounts to those who did it themselves. Their finding during this time was that those who received help outperformed those who did not by 1.86 percent per annum, net of fees.

Seeking to examine the impact of help during times of volatility, they subsequently performed a similar analysis of help versus no-help groups that included the uncertain days of 2009 and 2010. They found that the impact of decision-making assistance was heightened during times of volatility and that the outperformance of the group receiving assistance grew to 2.92 percent annually, net of fees. Just as was suggested by Vanguard from the outset, the benefits of advice are disproportionately experienced during times when rational decision-making becomes most difficult.

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Daniel Crosby speaking at FPA Retreat 2016

We have now established that financial guidance tends to pay off somewhere in the ballpark of 2 percent to 3 percent a year. Although those numbers may seem small at first blush, anyone familiar with the marvel of compounding understands the enormous power of such outperformance. If financial advice really does work, the effect of following good advice over time should be substantial. Indeed, the research suggests that very thing.

In their 2012 ‘Value of Advice Report’ the Investment Funds Institute of Canada found that investors who purchase financial advice are more than one and a half times more likely to stick with their long-term investment plan than those who do not. Because of this commitment to a game plan, the wealth discrepancies between families that receive advice and those who do not grow over time. For those who receive four to six years of advice, the multiple attributable to advice is 1.58. Those receiving 7 to 14 years of advice nearly double up (1.99x) their no-advice peers and those receiving 15 or more years of advice clocked in at an overwhelming 2.73x multiple. Good financial advice pays in the short run, but the multiplication of those gains over an investing lifetime is truly staggering.

Hopefully at this point, there is little doubt in your mind that the cumulative effects of receiving sound investment counsel are financially impressive. But as we look beyond dollars and cents, it is worth considering whether there are quality of life benefits to be enjoyed by working with a financial professional.

After all, many people perfectly capable of mowing a lawn, cleaning a home or painting a room hire those jobs out. While you may have lawn mowing skill equal to that of the person you hire, you may still enjoy peace of mind and increased time with loved ones as a result of your delegation. The research suggests that in addition to the financial rewards that may accrue to those working with an adviser, it also provides increases in confidence and security that are no less valuable.

The Canadian ‘Value of Advice Report’ found that those paying for financial advice reported a greater sense of confidence, and more certainty about their ability to retire comfortably and having higher levels of funds for an emergency. A separate study performed by the Financial Planning Standards Council found that 61 percent of those paying for financial advice answered affirmatively to, “I have peace of mind” compared to only 36 percent of their “no plan” peers. The majority (54 percent) of those with a plan felt prepared in the event of an emergency, versus only 22 percent of those without a plan. Finally, 51 percent of respondents with a plan felt prepared for retirement against a frightening 18 percent of those not receiving advice.

Receiving good financial advice pays a dividend that builds both wealth and confidence. The research is unequivocal that a competent financial guide can help you achieve the returns necessary to arrive at your financial destination while simultaneously improving the quality of your journey.

So, do financial advisers add value?

The research strongly supports that they do, both in terms of improving means and quality of life. But they only add value when we know what to look for when selecting the appropriate wealth management partner. Our natural tendencies will be toward excess complexity and flashy marketing, seeking out those who lead with bold claims of esoteric knowledge. What will add much greater richness is a partner who balances deep knowledge with deep rapport. Someone we will listen to when we are scared and who will save us from ourselves; a simple solution to a complex problem.

Daniel CrosbyDaniel Crosby
Executive Vice President, The Center for Outcomes
President, Nocturne Capital
Atlanta, Ga.

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Focus on Purpose: Getting Clients to Follow Your Best Advice

_MG_5050 -h WEBEmphasizing why your clients need to do something may be the key to getting clients to do what you need them to do to better their financial future.

Daniel Crosby, Ph.D. and president at Nocturne Capital, told attendees at FPA Retreat 2016 that one way to strengthen that relationship is to emphasize your value and get clients to follow your best advice.

Crosby said a study he conducted with an unnamed insurance company found that as ultra-high net worth clients age, they streamline their lives. So instead of having three separate financial advisers, they’ll bring that down to one. So now is the time to emphasize your value and strengthen your relationship with your clients so when they’re streamlining their lives, they keep you around.

“You have to know how to compel people to do what you tell them to do,” Crosby said. “You need to have the skills and the tools to get people to follow your best advice.”

Below are some tips to help your clients follow your advice:

The Four Ps
Crosby explained four points to help entice clients to follow your advice: purpose, proficiency, people, process, and purpose again.

Purpose: Remind clients why they need to follow your advice.

“The human mind is designed to look for purpose and meaning,” Crosby explained. Reminding clients of their goals—like showing them a picture of their children or reminding them of their goal to send their children to college—helps keep them on track.

“Open and close every session with the ‘why,’” Crosby said.

Proficiency: Ensure your clients are aware of your credentials and establish your authority. People look for ways to streamline their decision-making process, and if they see you as an authority figure, they will most likely listen better.

People: Leverage social and peer pressure to encourage clients to do the right things. Give them anecdotal evidence using people who are in similar situations who did what you are recommending and had a good outcome, rather than telling them to stop doing what they’re doing.

Process: Give your clients concrete but limited options to choose from. People get overwhelmed when they have too many choices.

“Exist somewhere between asking and telling people,” Crosby said.

Purpose: Close the session by revisiting the purpose.

View Crosby’s presentation here.

Did you miss Retreat this year, or just want to register for 2017 early? Join us next year at Château Élan in North Atlanta, Georgia April 24-27, 2017. Use the code PARET17 for $100 off if you register before May 31, 2016.


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