Video marketing: The 21st century version of judging a book by its cover

The following blog post was an article I recently had published in InvestmentNews.

InvestmentNews

Videos can provide key details about a financial adviser in an easy–to–consume format that many potential clients prefer

We are hardwired to judge a book by its cover, despite what our parents may have taught us. When it comes to attracting new clients, this is a wonderful truth that very few advisers leverage. In fact, most advisers are marketing their “book” (themselves) without a cover.

The 21st century version of a book cover is an introductory video that enables financial advisers to speak directly to potential clients and communicate what I call the TRICK: trust, relatability, inspirational, credibility and knowledge. The best first impression is all about the TRICK.

First impressions

When you meet a potential client for the first time, how do you introduce yourself?

You probably tell them about your background, your business and, most importantly, what you can do for them. Surely you wouldn’t read them your biography or detail the full history of your company. These same principles apply online.

Trust. Potential clients need to feel comfortable with a financial services company before trusting that company with their money. Gaining the public’s trust remains a key challenge for financial advisers. The 2018 Edelman Trust Barometer continues to rank financial services as the least trusted business sector.

Unfortunately, many advisers are still relying on an “About Me” page to communicate their trustworthiness. This is the online equivalent of handing someone your resume — it’s impersonal and does little to gain the reader’s confidence.

Relatability. Videos provide key details in an easy?to?consume format that many potential clients prefer. But you must be relatable to them. The content marketing experts at Sumo analyzed 650,000 hits on their website and found that only 20% of visitors read articles in their entirety. Your company’s site must compete with an increasing number of distractions, so holding a viewer’s attention is imperative.

Inspirational. Don’t search for inspirational quotes and think this will accomplish anything. You need to inspire viewers to want something you provide. This isn’t always easy in our business.

Credibility. Your video and/or website should position you as a credible authority on the topic of financial planning without your coming across as pompous. This may include leveraging third?party sources for validation (such as articles or books you’ve written, or B?roll video of you on television).

Knowledgeable. There is a fine line between explaining modern portfolio theory and communicating a difficult financial concept through an easy?to?understand analogy. Make sure you know where that line is when you create a video.

There’s a lot that goes into creating the perfect introductory video. Before you grab a camera and start recording, here are a few tips:

1. Keep it short. Your potential clients are busy. Wistia’s research has shown viewers’ engagement with a video drops off sharply after the two?minute mark. Aim for a video between 90 seconds and 2 minutes long.

2. Tell your story. Why are you in this business? What story can you tell that might demonstrate knowledge, trust, and credibility while inspiring someone at the same time? Telling them “what” you do is wasting valuable seconds. Focus on “why” and “how” you do what you do.

3. Speak directly to your audience in their language. Keep the tone warm. Be conversational. Focus on being relatable over being scripted and polished.

4. Focus on quality. Some companies may be tempted to create their own video in hopes of saving money. However, shooting your own video can be very time-consuming. Creating a polished video typically requires multiple takes and meticulous editing. Hire someone who knows what they’re doing.

According to Brightcove, viewers who watch a low?quality video are 62% more likely to have a negative perception of the brand that published the video. A professional video team can help you capture the right message and let you get back to work while they handle the editing and publishing.

5. Offer a next step — a call to action. Set a marketing goal and incorporate it into the end of your video to persuade your viewer to take the next step. Perhaps you want the viewer to schedule an appointment, sign up for your newsletter or connect with your company on social media. Make it easy for potential customers to take action by clearly providing the details and embedding links.

6. Paint a picture. Use this opportunity to paint a picture for your viewer. Whether you are painting a picture of goals and dreams (inspiration) or the picture of what to expect when somebody meets with you, be intentional about your word choice.

7. Get ancillary marketing benefit. Adding video to your site offers important advantages for search engine optimization. By tagging the video with the appropriate products, services, hashtags and, most importantly, location, you can help your video reach the appropriate audience. Also include any products or services that are discussed in the description to ensure the video shows up in search results for that topic for users near your geographical location.

Adding an engaging introduction video to your website is a great way to humanize your marketing. People do business with people. More specifically, they do business with people that are trustworthy, relatable, inspirational, credible, and knowledgeable. Getting that message across is the real TRICK.

USA Financial Trending Report – Second Quarter 2018

On April 1, 2018 we celebrated 30 years in Business at USA Financial. I’m assuming most who are reading this have not spent their career in the financial industry, so rather than focus on the minutia and details of “our” story… I’d like to share a few crucial high-altitude observations I’ve gleaned over 30 years of evolutionary corporate leadership (albeit, my leadership experiences are derived from steering a financial services holding company and its collection of synergistic subsidiaries).

Looking back, our growth falls in to 4 stages:

Cornerstone 1 – Walking Flatlands and Climbing Mountains

Cornerstone 2 – The Corporate Security Fallacy (aka Avoiding Valleys)

Cornerstone 3 – Give ‘Em What They Want, Followed by What They Need

Cornerstone 4 – Moonshots are Crucial

I wrote about each of these Cornerstones and my biggest breakthroughs and learning experiences in the latest USA Financial Trending Report. I invite you to take a look and hope you find the cornerstones valuable and entertaining. Next time I’ll get back on task with my financial writings.

That’s the “30-Year” Skinny,

 

 

 

Are you an Entrepreneur (or are you Self-Employed)?

Target Readers:

  1. Those trying to determine how they want their business to grow.
  2. Those who are not sure if they are an “income earner” or a “business builder.”
  3. Those who have hired staff and/or need to hire staff.

Talking Points:

  1. Most do not understand the difference between self-employed and entrepreneur.
  2. Do you want to build a great career?  Or a sustainable business?  Or both?
  3. Consider the lifestyle you desire before building your business model.

Here’s the Skinny,

Most of the world does not understand the difference between being self-employed and being an entrepreneur.

The vast majority of small businesses are comprised of self-employed individuals as opposed to entrepreneurs.  Yet, in error, many self-employed folks will refer to themselves as being entrepreneurs when they are not.

What’s the difference?  Well, let’s start with the definitions from dictionary.com:

Self-Employed  [self-em-ploid]

Earning one’s living directly from one’s own profession or business, as a freelance writer or artist, rather than as an employee earning salary or commission from another.

Entrepreneur  [ahn-truh-pruh-nur]

A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.

As you can see, there is a distinct difference.

This month, USA Financial celebrates its 30th year anniversary and I’m blessed to have shared in the growth over all 30 years (except for the first 2-3 months anyway).  When I reflect back over those three decades, hindsight 20/20, for the first 2 years of USA Financial’s existence, we ran solo and were undoubtedly self-employed.  For the next 8 years we were a more sophisticated version of self-employed, as we had support staff, but we were not much different than a business manager who has gained success and respect enough to be assigned subordinate staff and/or personal assistants by their employer/boss.

It wasn’t until ten years into the life cycle of USA Financial that I can confidently reflect back and realize we transitioned from being self-employed to being entrepreneurs.  In fact, our turning point was a one-two punch beginning in 1998, when we…

  1. officially killed our business structure that emulated the financial services “external wholesaler” model and then;
  2. launched USA Financial Securities, our broker dealer.

Together, this combination of change required we reconstruct an entirely new business model (and strategy) that took two full years for us to completely re-tool, re-educate and re-deploy.  By year 2000, USA Financial was unrecognizable from its former self.

That was our watershed moment in time.  From 1998 to 2000 we transformed ourselves from being self-employed to being entrepreneurs…  And we’ve been growing ever since.

Someone who is self-employed is simply their own boss, working “in” the business.  Whereas an entrepreneur is building a sustainable business model that is not solely dependent upon them for the entity’s ongoing success – and therefore – they tend to spend more time working “on” the business (versus “in” the business).

In our case, the visual transition from self-employed to entrepreneur was dramatic.  Notice the permanent and dramatic change in our revenue growth line in 2001 vs. previous years.  Prior to 2001, we had minimal incremental increases as we worked hard and performed better at our jobs.  But in 2001, we started running an entrepreneurial organization.  And for us, that was the ticket.

Please understand, that being self-employed is a perfect choice and solution for many business owners.  Not everyone desires to grow an organization and take on the entrepreneurial status.  The key is knowing which you desire to be, considering exactly how you desire to intertwine your work life and personal lifestyle so that they successfully co-exist, then structuring your business model and staff accordingly.

That’s the Skinny, 

Independent Marketing Review: RecommendedExperts.biz

The independent marketing program reviews are designed to provide an overview of a financial marketing program that is available in the marketplace. Over the course of a year, I bet I receive 50+ inquiries from financial advisors asking me my thoughts about certain programs available. Your inbox is littered with these offers every single day. My goal is to help you evaluate them objectively, and share any real-life experiences that I may know of related to the particular program. If you have a program you’d like reviewed, shoot me a note at mark@16waysfromsunday.com.

Financial Advisor Marketing Program being reviewed: RecommendedExperts (www.recommendedexperts.biz).

recommendexpert-logo-white.png

A few weeks back, an advisor asked for my opinion on RecommendedExperts. Essentially, here’s what they offer to do:

  • Draft a press release on a specific topic related to you and your business.
  • Submit the press release to various media outlets
  • Provide you with a graphics pack that includes “As Seen On” with logos and images to add to your homepage and profile.
  • The cost is $397.

To be honest, this isn’t an awful deal. It’s reasonably priced. You’re getting some writing services and a press release submission for $400. But there were a few things that caused me to raise an eyebrow. Here are a few excerpts from the salesperson’s email to the advisor, along with my commentary after each:

“we have just signed a deal with some major authority media organisations, the release we’re compiling will be picked up on the major news networks…”

My reaction: just signed a deal? This is how press release distribution companies work. They distribute the release to dozens and dozens of media outlets and major news networks.

“As we discussed, typically a spot in an announcement like this would cost anywhere between $10,000 to $15,000 and would take at least three to four months to come to fruition but because we’re in beta, we’re subsidizing the whole process… so in return for the guaranteed placement in the major news sites… and the ability to use As Seen On… logos for ABC, NBC, CBS and FOX on your website etc… we are covering everything, other than our basic costs of $397.”

My reaction: $10k – $15k? 3-4 months? Cough, cough… lie. Getting a press release written and distributed is about the easiest thing in the world to do. (We do it regularly, and can have one drafted and distributed in hours. Cost will vary by the service we use and the audience we want to send it to, but it’s nowhere close to $10,000.). I’ll share some links below.

“Lastly we also guarantee exclusivity to anyone we work with… in other words when we announce you in one of our releases you will be the only specialist in your area that we supply the As Seen On… logos to.” 

My reaction: Woohoo. So what? This means nothing. Anybody can send a release in your area on the same topic at any time.

Excerpts from the note I sent back to the advisor about the opportunity are included below. It may be helpful.

I wouldn’t do this with this company for three main reasons:

Reason # 1: They blatantly lied to you about the normal cost of this. The only thing they are doing is interviewing you and then charging you for the write up and the submission of a press release. This is NOT $10,000 – $15,000 (See # 2 below.). Personally, when somebody lies this blatantly to me, I wouldn’t do business with them out of principal (regardless of how cheap it might be).

Reason # 2: You can do this yourself. Simply draft a press release and send it. I’ve shared a few entities that send press releases and you can pay for them. It will be cheaper than what this place is charging. They are only sending it to Baltimore area media. For the price you are paying them, you could send it with a national distribution. Links to some of the places you can use to send press releases are below:

  1. https://newsroom.businesswire.com/faq-item/how-much-will-it-cost-distribute-my-press-release
  2. http://service.prweb.com/pricing/
  3. https://www.issuerdirect.com/order/seo-press-release-distribution/?gclid=Cj0KCQiAiKrUBRD6ARIsADS2OLmF48jwIAfAcNZMT-qOruOM7D8LPXbkld00T_iLKQSDgVM3PTmx0yAaAj5QEALw_wcB
  4. http://www.ereleases.com/hello/?a=3&gclid=Cj0KCQiAiKrUBRD6ARIsADS2OLm7v1ev3qSwNAgFBpXYhQGJ8qOxkgP7rpi2Eng6QjGsJrwp-p0mVQsaAhnfEALw_wcB

The big player in the distribution game is Cision, which owns PRWeb and PRNewswire (if you google around you’ll see this). If you don’t want to write it yourself, you can hire a writer (which is essentially what this company is pitching… they will write the story and then submit it, using one of the above mentioned providers, no doubt). Here’s an interesting blurb about that PR writer world. https://www.writeraccess.com/blog/how-to-set-your-press-release-rates-as-a-writer/ 

Reason number 3: Compliance is compliance. Sending a press release itself will NOT be a problem. Once it is written, you would need to have it reviewed like any other marketing. HOWEVER, the “As Seen On” thing will likely not fly because it’s not EARNED media. This is a fine line and we know that regulators are concerned about this matter. It would be equivalent to creating a 30 second TV commercial, paying to have it air one time on each of the big networks, and then saying “As Seen On…” Don’t take this as direct compliance advice, but that’s my assumption on how it would be viewed.

On a positive note: There is VALUE in doing press releases. Between improving your search engine optimization (SEO) on your website, to showing up in searches for topics that you want to show up for is all good. I just don’t like how this company pitched it. If you weren’t in a highly regulated industry, I’d probably say to go for the whole “As Seen On” thing. If you decided to hire them, you should only look at it for the benefits I mentioned from an SEO perspective, and NOT the “As Seen On” bit. My hesitance with this company is just in the fact that they blatantly misled you. That usually seals the door shut for me.

The Two Issues I Have With Roger Ibbotson’s Research Paper on Indexed Annuities

If you’ve been around the financial industry for any length of time, you likely know the name Roger Ibbotson. He is founder, advisor, and former chairman of Ibbotson Associates, now a Morningstar Company. He is a professor at Yale and is currently the chairman and CIO of Zebra Capital Management, LLC, an equity investment and hedge fund manager. To say he’s accomplished a lot in the finance industry would be an understatement. Perhaps his most well known work was his published research titled “Stocks Bonds Bills and Inflation” (SBBI) which serves as a standard reference for information and capital market returns. You can read more biographical information on the Yale website.

pexels-photo.jpg

In January 2018, Professor Ibbotson published a new whitepaper report titled Fixed Indexed Annuities: Consider the Alternative. I’m sure Ken Fisher (of Fisher Investments and “I Hate Annuities” advertising fame) about had a heart attack when he heard the news. Regardless of how you feel about annuities, this research is worth the read.

I’ll summarize the “fairly” technical whitepaper by saying this:
Given the current interest rate environment, many advisors and their clients will be seeking alternatives to the bond market. A fixed indexed annuity is one of those alternatives you may wish to consider.

You’ll have to read the whitepaper for the technical stuff. However, I have two issues with it (heck, why not be a little critical).

Issue # 1: The research is problematic.

If you’ve read the whitepaper, you know that the research uses simulated growth of a generic uncapped large cap equity FIA. I’m certain that I’m not the only one to point out this concern. In fact, I’ll bet that opponents of indexed annuities will cite the following:

  • This is unrealistic. These products weren’t around then. The options that are purchased to facilitate the existence of these products weren’t available, so how could you possibly know the pricing?
  • There are too many factors and unknowns involved in “backtesting” an FIA this far.

The funny thing is that those points aren’t the reason for my concern. Are they valid points? Sure. But here is what we know to be true – past performance is no guarantee of future results. It does NOT matter whether that past performance is real or hypothetical. That statement still holds true. In fact, Ibbotson’s SBBI chart was the first research of its kind to actually track real historical data on those various asset classes (kind of crazy when you think about it.) So even with REAL historical data, we don’t know what the future will hold. THIS is the point and this is why I say that the research is problematic.

My fear is that advisors will use this research (and more concerning, the person who did the research) to set the wrong expectation for prospective clients. It is my hope that the research is not misused. Bonds and FIAs are two VERY different financial instruments. Features like taxes, liquidity, guarantees, issuing companies, etc. add to the complexity of comparing them with one another.

My interpretation of the indented message of the whitepaper is as follows:

FIAs could be a tool to consider when evaluating alternatives to traditional fixed income options inside of a portfolio. In fact, they should be treated as a different asset class entirely.”

Advisors should be certain to help clients consider all of the factors when evaluating what is best for them.

Issue # 2: It Emphasizes a Solution to the Wrong Problem

Words matter. As a marketing professional, I’m keenly aware of this. As a married man, I’m reminded of it regularly.

There is a statement made within the research that states “As we age and approach retirement, risk is a major consideration. Risk of losses becomes a critical issue and worry.”

The research puts a heavy focus on returns, specifically exploring returns relative to risk. This is not surprising considering the world in which Professor Ibbotson comes from. He’s an academic, an economist, and is now the chairman and CIO of an asset/hedge fund manager. The statement made about risk of losses becoming a critical issue and worry for those in or nearing retirement is certainly true. No one will argue that. This is certainly how someone from the investment world sees the problem. However, there’s a new paradigm shift that has taken place over the past decade.

The “ROI” of greater importance to retirees is “Reliability of Income,” not “Return on Investment.” The statement made about risk of losses comes from a balance sheet perspective. The truth of the matter is that today’s retiree has much more of an income statement perspective. This is especially true for would be clients of annuities. Their chief concern is making sure current and future income isn’t lost. Their secondary concern is making sure they don’t experience significant investment loss. Let’s face it – if you can solve the income problem for clients, the asset management side of the equation becomes much easier.

Many will make the argument that the “balance sheet perspective” and the “income statement perspective” are one in the same or that they are tied so closely together that you can’t really distinguish between the two. As someone who helps advisors market to this demographic, I can assure you that there is a significant difference.

We see major differences in response rates just by reviewing how words and concepts are positioned within your marketing. This is true of every direct mail piece we’ve created for advisors, as well as seminar presentations, and even messages shared on the radio, in person, and on videos.

As you can see, my “issues” with Professor Ibbotson’s research are relatively minor. Here’s to hoping the entire industry is in a better place after this research.

 

Failing the Marketing Sniff Test: the Clint Arthur “Experience”

It took the Wall Street Journal and Barron’s a while to showcase this “epic fail,” but there’s an important lesson from this story for all financial advisors to learn.

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The story/sales pitch goes a little something like this:

“Hey Mr./Ms Advisor, you need to build credibility and trustworthiness. I have an opportunity for you to speak at Harvard or West Point. You’ll be a featured speaker on an important topic to your business! You’ll gain instant celebrity status and prospective clients will swoon over the fact that you were invited to speak at such a prestigious facility.”

Sounds intriguing, right? That’s the short version of “marketing guru” Clint Arthur’s pitch to advisors, insurance agents, and anybody else considered to be an entrepreneur. There’s just one problem. It doesn’t pass the sniff test. At least, it shouldn’t pass YOUR sniff test, and it certainly won’t pass the sniff test of any regulator.

In full disclosure, I’ve never met Clint Arthur nor have I done business with his company Celebrity Launchpad or Guaranteed Celebrity. He could be a stand up guy. However, when this idea was shared with me by a few advisors with whom I work, something about it didn’t sit right with me. As they say, the devil is in the details. In fact, the Wall Street Journal and Barron’s did their best to share some of those details in their stories published earlier this year (Meet the Guy Guy Who Gets Financial Advisers Appearances at Harvard and West Point & Advisors Using Harvard, West Point Speeches as Marketing: Unethical?)

Here’s what I understand about the “opportunity”- you pay a pretty penny for the chance to speak. You deliver a 5-7 minute speech (give or take.) The audience is full of the other business owners who paid to be there. The room at the venue was rented by Clint Arthur and gang. There is zero affiliation with the university/facility, although the marketing and branding certainly positions that to be the case (after all, they want you to be able to say that you were invited to speak at Harvard).

So, what’s the problem? After all, it is technically true that you were invited to speak at Harvard (albeit you weren’t invited by Harvard, and thousands of others were also invited). And you did actually speak on a financial topic at Harvard, right? So telling people that you were invited to speak at Harvard and actually spoke there shouldn’t be a problem, right?

The line is pretty gray here. There are really two parts to this equation – the ethical part and the regulatory compliance part. The Barron’s article focused more on the ethical issue that exists. In my opinion, the real issue becomes one of a compliance issue. Regardless of how you are registered or what licensure you maintain, all regulators have some rules regarding misleading consumers. In my opinion, this is why this marketing/PR activity doesn’t pass the sniff test. The average consumer WILL perceive this to be something different than what it truly is – there’s absolutely no denying that.

In the end, there are far more legitimate ways to build credibility and earn trust with the general public. There’s a big difference between “earned” media and “paid for” media. Some “paid for” media is legitimate, but it requires you to be more careful when scrutinizing and evaluating the opportunity.

 

Important Hiring Perspective(s) as You Grow

Target Readers:

  • Those building their business via staff and hiring.
  • Those struggling to find good candidates. 
  • Those with a poor track record in successful hiring.

Talking Points:

  • How to weed out bad candidates quickly.
  • Understanding what instincts are needed for a candidate.
  • Finding candidates with the right mindset. 

Secure and respected and engaged and risky

Some people want their workplace to be like an artist’s studio. A lab. A dance with the possible. Engaging. Thrilling. The chance to take flight, to be engaged, to risk defeat and to find a new solution to an important problem. 

And some people want a job that’s secure, where they are respected by those around them.

The essential lesson: These are not necessarily different people, but they are very different attitudes. 

It’s a choice, a choice made once a lifetime, or every year, or perhaps day by day…

When you sit with an employee who seeks security and talk to them about “failing fast,” and “understanding the guardrails,” and “speaking up,” it’s not likely to resonate. 

It’s worth finding the right state of mind for the job that needs to be done.

Here’s the Skinny,

An interesting perspective below (from Seth Godin) to keep in mind when managing & hiring…  Not anything we “don’t already know”, but it isn’t always the first thing that may jump-to-mind when dealing with your teams.

Nugget 1: At USA Financial we use a tool called Kolbe in our hiring practice. Kolbe helps identify a person’s “modus operandi” or creative instincts. In my experience, the high Quick Starts (strong with originality, risk-taking, and uncertainty) are usually in the “thrilling group” as described by Seth above, while high Follow Through (provides structure, order, focus, and continuity) tend to be in the “job security group” – high Fact Finder (enjoys complexity and providing the perspective of experience) and high Implementer (provides durability and a sense of the tangible) seem to be about 50/50 in either camp. I’ve found this tool to be very effective at helping us determine if a candidate is a good fit for a particular role.

Nugget 2: At my last Strategic Coach 10x meeting, my friend Dan Sullivan emphasized the importance of the following interview question (especially for weeding out the “wrong kind” of millennial attitude – although its equally important for any potential hire)…  The question is:

“If you are hired by INSERT FIRM NAME HERE, what do you feel you will be entitled to?”

  • Hint:     The correct answer is NOTHING, or a derivative what they will bring to your organization.  Such as, “an opportunity to contribute to the team”, or “the chance to apply my skill set”.  Not any answer along the lines of benefits, tenure, vacation days, or any other unionized or entitlement type response.  I know this is a question the USA Financial team has been using for a while now, but it was a great reminder for me to hear it again from a third-party source.

Nugget 3: God has hardwired each of us differently, and that is highly beneficial to you as an entrepreneur.  The mistake many make is hiring “someone just like them,” where what they most likely need is someone entirely different than them…  Someone who would absolutely love to do the work that you have no interest in doing… The key is to build your team/staff like a snugly fit puzzle.  That is where the magic can be found.

That’s the Skinny, 

6 ways to leverage tax reform in your marketing strategy

InvestmentNews

The following blog post was an article I had published in InvestmentNews:

Changes like tax reform give you an opportunity to educate and provide value to the public.

After months of deliberation, our government passed the largest tax overhaul in over 30 years: the Tax Cuts and Jobs Act of 2017. Whether you agree with the changes or not, the public will need advice on how to manage their finances under the new law. When approached properly, the new legislation should provide financial advisers with the leverage they need to expand and exceed their 2018 marketing goals.

Here are six ways you can use the new tax plan to build existing client relationships and acquire new clients:

1. Hold an educational seminar. Whenever a new law is passed or regulations change, the public will always ask, “What does this mean to me?” This type of uncertainty creates a great opportunity for advisers to offer free seminars addressing common concerns to both existing and prospective clients. Seminars can also be held on a variety of more specific topics to targeted audiences. Since each demographic is affected differently, specific seminars can offer more relevant information to each group, so those in attendance receive personalized direction for their current and future needs.

2. Give presentations to the most-affected groups. Make your practice more accessible to new clients by offering free presentations in your community. This will give you the opportunity to share your specialized knowledge with a group that will benefit from it, while allowing you to build your brand and connect with potential clients in a niche area. The groups that are impacted the most by the new bill include charities, churches, universities, families, business owners and real estate investors. Develop some collateral that positions you as a dynamic speaker on specific topic or specialty within your practice, while keeping in mind that all of this material must speak directly to the interests of your target groups. Some options include a website, video or a simple brochure.

3. Provide existing clients with information. It’s great to bring in new clients, but it’s also important that you keep your existing clients up-to-date on legislative changes that may alter their financial situation. Some changes might affect your entire client roster, while others might just impact a small segment.

One suggestion is to group similar clients together when distributing information, so you can tailor it to their specific needs. Identify the best channels to communicate with each group and create a strategy for reaching them. This may vary from creating a fact sheet or new email marketing campaign to an informational video or social media campaign. Information that is accessible and easy to share will likely bring in more referrals as your existing clients spread the word about your services.

4. Reach out to CPAs and tax preparers. Many advisers struggle to develop meaningful relationships with CPAs. One way to start is by asking your existing clients who will be preparing their taxes this year. With your client’s permission, reach out and mention that you have a mutual client before asking them to a business lunch where you can exchange opinions on how the new bill will impact your clients.

Remember, when it comes to taxes, you are crossing over into their turf. To earn their willingness to provide referrals, you have to demonstrate knowledge, credibility and trustworthiness first. Share a few ideas and strategies that you are looking to integrate with your clients and get his or her feedback on what you’re doing to help people.

5. Reach out to real estate agents. A relationship with a real estate professional can lead the way to receiving referrals, as agents generally work with a wide variety of clients, many of whom are new to the area. First, however, you must establish your worth.

Real estate agents will likely be significantly impacted by tax reform, but they may not understand its full effect. To prove your value, consider creating a personalized seminar or write a short guide on the new tax reform bill’s impact on the real estate industry. With this personalized touch and expert guidance, agents will be more likely to recommend you to their clients. As with CPAs, maintain your relationship by sharing case studies with them in order to continually demonstrate your knowledge and commitment to your clients.

6. Offer a free consultation. With even a limited budget, you can offer free consultations to existing customers and warm prospects. These risk-free meetings are a straightforward way to provide your insights to those willing to listen. The value of your time will likely pay off in the long run when clients decide to sign on with you thanks to the personalized touch.

The best thing that could ever happen to financial services marketing can be summarized in one word: change. Change can provide you with the opportunity to educate and provide value to the public, especially when you’re working in the financial services industry. Potential clients are bound to have questions, and as an adviser, it is your job to market your services as the answer. This new bill gives you the chance to maintain relationships with existing clients and reach new audiences you might not have thought of before.

The 4-Corners of the DOL Fiduciary Rule as things stand TODAY!

Target Readers:

  • Those confused by the DOL Fiduciary Rule and current news.
  • Those in denial and/or not adhering to the current rule status.
  • Those who have received erroneous info from IMOs/FMOs.

Talking Points:

  • Like it or not the DOL rule is already in effect.
  • Advisors are at risk if they are not adhering to the rule.
  • Annuity companies are auditing for PTE 84-24 as of January 2018.
  • The ground has begun shifting again under the DOL rule.

Here’s the Skinny:

As promised, here is my high-level synopsis of what I have been calling “the 4-Corners of DOL status:”

1)  JUNE 2017:  DOL Fiduciary Rule Transitional Relief (currently in effect thru July 1, 2019):

  • Advisors to retirement investors, on all qualified monies and related advice, will be treated as fiduciaries and have an obligation to give advice that adheres to “impartial conduct standards” beginning on June 9, 2017. These fiduciary standards require advisors to adhere to a “best interest standard” when making investment recommendations, charge and/or receive no more than reasonable compensation for their services, refrain from making misleading statements and manage any conflicts.
  • The Best Interest Contract Exemption (BICE) applies only to hierarchies involving a Financial Institution (FI), which the DOL recognizes as a BD, RIA, bank or insurance company. FI’s and their advisors must adhere to that stated above, however, all other remaining conditions are delayed until July 1, 2019, such as requirements to make specific written disclosures and representations of fiduciary compliance in communications with investors (meaning written disclosure and client signature is not required under BICE).
  • The amendments to the Prohibited Transaction Exemption 84-24 (PTE 84-24), which applies only to agents/advisors (not including FIs), relating to insurance and annuities is delayed until July 1, 2019, other than that listed above which is applicable on June 9, 2017. Under the transitional PTE 84-24, the agents/advisors must disclose conflicts of interest plus the sales commission, expressed as a percentage of gross annual premium payments for the first year and for each of the succeeding renewal years, that will be paid to the agent in connection with the purchase of the product. Documentation must be provided to and signed by the client and retained by the agent/advisor for 6 years (meaning written disclosure and client signature is required). NOTE: Many insurance companies announced that they would begin random auditing for PTE 84-24 documentation starting in January 2018.

(for further info and complete footnotes visit https://advisorskinny.com/2017/08/29/did-you-get-abandoned-to-fend-for-yourself-on-dol-pte-84-24/)

Here is a DOL compliance flowchart schematic that may help you visualize the flow and structure that is mandated by the DOL Transitional Relief period under the DOL Fiduciary Rule.

2)  FEBRUARY 2018:  Massachusetts charges Scottrade with the first known enforcement action under the DOL Fiduciary Rule.

“Massachusetts charged Scottrade with dishonest and unethical conduct and failure to supervise, in what is the first known enforcement action under the Department of Labor’s revised fiduciary rule.”

Essentially this was the result of their running two sales contests between June and September 2017.

“The Massachusetts complaint asserts that the Scottrade sales contests encouraged their brokers to put their own interests — winning $285,000 in cash prizes for attaining new assets — ahead of their clients’ interests in building their nest eggs. The complaint seeks an order forcing Scottrade to cease and desist, as well as censuring the firm, requiring it to disgorge ill-gotten profits and imposing a fine.”

DOL officials had previously stated they would not pursue claims against “fiduciaries working diligently and in good faith to comply.”

One would assume, among other allegations, that Massachusetts does not believe that Scottrade was “working diligently and in good faith to comply.”

Massachusetts Secretary of the Commonwealth, William Galvin, further stated, “If the Department of Labor will not enforce its own laws and rules, then the states must do what they can to protect retirees from firms who believe they can play with peoples’ life savings by conducting sophomoric (sales) contests.”[5]

Other States are expected to follow the Massachusetts lead.[6]

Many believe that any (and all) sales contests or sales incentives create a conflict of interest and negate a firm’s ability to comply with the best-interest standard.  The Director of Investor Protection at the Consumer Federation of America said the case “perfectly illustrates the kind of practices that go on behind the scenes at firms that claim to be complying with a best-interest standard.”

(for further info and complete footnotes visit https://advisorskinny.com/2018/02/27/dol-fiduciary-rule-violation-charges-proof-the-dol-rule-is-live/)

3)  MARCH 2018:  The 10th District Court of Appeals upheld the DOL Fiduciary Rule.

It was “argued that the DOL rule treated fixed indexed annuities arbitrarily by forcing the products under the best-interest contract exemption, a provision of the regulation that allows brokers to earn variable compensation as long as they sign a legally binding contract to act in the best interests of their clients.”

Currently, Fixed indexed annuities “operate under the same exemption of federal retirement law as fixed annuities. But the DOL put them under the so-called BICE due to their complexity and the potential conflicts of interest associated with their sales.” 

It was also argued that the “DOL violated rule-making procedures and didn’t do a proper economic impact analysis in promulgating the fiduciary rule.”

“The 10th Circuit judges held that DOL followed appropriate administrative procedure, was fair in its treatment of fixed indexed annuities and that it conducted an appropriate economic analysis.”

(for further info and complete footnotes visit https://advisorskinny.com/2018/03/15/dol-fiduciary-rule-upheld-for-fias/)

4)  MARCH 2018:  The Fifth Circuit Court of Appeals determined the DOL exceeded its statutory authority under ERISA.

The Fifth Circuit Court of Appeals “Held that the agency exceeded its statutory authority under retirement law – the Employee Retirement Income Security Act.

The judges criticized a key provision of the rule, the best-interest-contract exemption. The BICE allows brokers to receive variable compensation for investment products they recommend, creating a potential conflict, as long as they sign a legally binding agreement to act in a client’s best interests.

‘The BICE supplants former exemptions with a web of duties and legal vulnerabilities,” the majority opinion states. “Expanding the scope of DOL regulation in vast and novel ways is valid only if it is authorized by ERISA Titles I and II.’”

(for further info and complete footnotes visit https://advisorskinny.com/2018/03/15/dol-fiduciary-rule-upheld-for-fias/)

What do I think?

My opinion is that the DOL Fiduciary Rule was poorly written, riddled with confusing and fuzzy explanations, entirely underestimated the complexity and economics of the challenge, and shirked regulatory enforcement responsibilities by defaulting to a free-for-all litigious structure.

On the other hand, I believe the industry needs to create a level-playing filed across all licensure so that a customer/investor can understand and expect to experience a professional standard-of-care that does not allow for outlandish claims and sales practices from certain segments of the marketplace as determined by licensure or lack thereof.

Currently, given the existing landscape, I would surmise the odds are in favor of the DOL Fiduciary Rule ultimately being eliminated and/or replaced by a more appropriate ruling from the SEC.  But then again, no one has a crystal ball.

And in the meantime, the DOL Fiduciary Rule Transitional Relief (as described in #1 above) is in force and continues to be the current standard .  As I’ve warned before, advisors must adhere to the DOL rule accordingly (regardless of any ill-conceived advice they may have received elsewhere).

That’s the Skinny,

 

DOL Fiduciary Rule – Upheld for FIAs

Here’s the Skinny,

The 10th District Court of Appeals just upheld the DOL Fiduciary Rule. It was “argued that the DOL rule treated fixed indexed annuities arbitrarily by forcing the products under the best-interest contract exemption, a provision of the regulation that allows brokers to earn variable compensation as long as they sign a legally binding contract to act in the best interests of their clients.”

Currently, Fixed indexed annuities “operate under the same exemption of federal retirement law as fixed annuities. But the DOL put them under the so-called BICE due to their complexity and the potential conflicts of interest associated with their sales.” 

It was also argued that the “DOL violated rule-making procedures and didn’t do a proper economic impact analysis in promulgating the fiduciary rule.”

“The 10th Circuit judges held that DOL followed appropriate administrative procedure, was fair in its treatment of fixed indexed annuities and that it conducted an appropriate economic analysis.”[1]

Oddly, it feels as though the DOL Fiduciary Rule is heating up again given all the recent press and State activities.  If you are not properly adhering to the regulatory constraints of the DOL Fiduciary Rule’s “extended delay” (through July 1, 2019), you are placing yourself in significant jeopardy.

For more information click & refer to these previous Advisor Skinny posts…

That’s the Skinny,