Why It’s Important to Talk to Your Children about Your Financial Plan

As my children grow older, I grapple with a mix of emotions — some sadness and nostalgia for when they were small enough to sit on my lap, but above all, excitement for them to learn and experience life on their own. Both of my sons are in college now, and a large part of the transition they are making to adulthood is related to how they engage with and take responsibility for their finances.

SEE ALSO: 5 Financial Challenges Your Kids Will Face With Your Estate

As a second-generation financial professional (my father also worked at Charles Schwab), my wife and I have talked with our sons about saving and investing since they were young — including a lot of discussions about our financial plans for their college educations. Over time, the conversations have evolved, and a few months ago, my wife and I talked with our sons about our long-term financial plan — that Dad wants to retire eventually and we’re both looking forward to the opportunity to spend more time on other things we are passionate about.

If you’re feeling unsure how to get started with conversations like this, you’re not alone. In fact, according to Schwab’s 2017 Modern Wealth survey, 58% of Americans would rather talk about politics than finances with their friends and family. That said, April is Financial Literacy Month and I want to encourage all of you to take the opportunity to start a conversation about money with your family. Keeping those closest to us in the dark about financial matters is almost always a mistake, especially as we get older and estate and retirement planning become more immediate financial concerns.

If your children are young, Schwab MoneyWise.com has some great ideas and resources for talking with kids about money. If your children are grown, consider starting a conversation about these three critical topics:

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1. Retirement Goals

For most people retirement is an exciting time but also a time of significant transition, and it’s important to be as transparent as possible about your plans and circumstances with your family. Do you plan on spending everything in your retirement accounts, or should your children expect a modest inheritance? Conversely, are you worried about being able to retire or needing financial help later in life? The answers to these questions may impact your children’s lives, and it is important as parents to prepare children to make informed financial decisions.

2. Debt

Debt is an uncomfortable topic, but it directly informs the rest of any financial conversation. A study in 2018 found that 68% of American households headed by someone 55 or older currently hold debt. That’s more than two-thirds of Americans nearing retirement age. It’s important to explain to your children the entirety of your liabilities — and to qualify the types of debt you have as well — to give them a full understanding of your financial picture.

See Also: When Should Your Children Get Their Inheritance?

3. Estate Planning

The estate planning conversation can be a tough one to begin, but it’s critical that everyone — regardless of assets — draft an estate plan and share it with their children. Conversations about beneficiaries (i.e., who will inherit what), medical directives (i.e., how you want to be cared for if you can no longer make medical decisions) and power of attorney (for financial and other decisions) may be daunting, but not having the conversation leaves your children ill-prepared for these challenging situations. If you are in a position to leave a legacy for your children, it’s also smart to discuss steps for money preservation and transfer, such as trusts and asset titling. And finally, you should explain to your children where important paperwork and records are kept. For more information on how to do this, review this guide to estate planning.

Open, honest dialogue is crucial. If you need help, consider reaching out to a financial consultant. A candid conversation with a knowledgeable outside party may be just what is needed to help you organize your thoughts for these important conversations with loved ones.

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See Also: A Unique Estate Planning Idea: How to Write Your Memoir

Charles Schwab Co., Inc. Member SIPC

(0419-93BA)

Joe Vietri has been with Charles Schwab for more than 20 years. In his current role, he leads Schwab’s branch network, managing more than 2,000 employees in more than 300 branches throughout the country.

Comments are suppressed in compliance with industry guidelines. Click here to learn more and read more articles from the author.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.


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SEC Commissioner Jackson calls for stricter Reg BI

The SEC shows every sign of moving ahead with its proposal for new rules governing brokers and advisors, but Regulation Best Interest will need substantial revisions before it wins the support of the one Democrat currently on the commission.

Commissioner Robert Jackson appealed for significant reforms to Reg BI at the annual SEC Speaks conference this week, saying he is “very hopeful” that the commission can finalize the rule on a unanimous, bipartisan basis.

“I voted for the proposal because I thought it was the right step forward for the agency to take,” Jackson says. “I said then and I believe today that there are significant changes we should make to the proposal before it goes final.”

In separate remarks at the conference, held in Washington, D.C., Chairman Jay Clayton says that finalizing the rule is a “top priority” for him. Clayton previously indicated that he would like to put the measure to a vote later this year.

Bloomberg News

“My view is these standards should reflect what retail investors would reasonably expect of these financial professionals,” he says.

But Clayton also stressed the importance of preserving investor access to a variety of business models and fee types. Many in the brokerage sector have cautioned that a strict, advisor-like fiduciary rule for brokers would effectively regulate the commission model out of business, cutting off access to basic financial advice for lower- and middle-income investors.

For Jackson, however, the proposed rules come up short because the term “best interest,” the cornerstone upon which they are built, is left undefined.

“What I’ve advocated for is that we clarify the standard with respect to what exactly are the obligations a broker owes to their customer,” Jackson says. “To the degree that we call it ‘Regulation Best Interest,’ the standard doesn’t need to be especially ‘lawyered’ or especially long. We can and should just say in my view that the obligation of the broker is to put the client’s interest first.”

Jackson also takes issue with the absence of specific provisions to bar some of the most egregious advisor conduct — conduct that leads to hopelessly conflicted or self-serving advice. The rule would be much improved with the addition of provisions that “limit or ban compensation practices that lead brokers to engage in conflicted activities,” he says.

“[Y]ou can expect people in the marketplace to do that which they’re paid to do,” he says. “If you pay them extra to put people in in-house products that are bad for the people, you can expect that there will be conflicts that will be difficult to mitigate, so I’ve urged for changes there as well.”

Whatever form the final rule takes, it will inevitably have its critics. Jackson is looking ahead not only to a potential legal challenge, but to how the marketplace will digest the rules, which could dramatically reshape compliance and enforcement in the brokerage sector.

Still, he sees the proposal as a potentially historic step forward given the longstanding debate and general inaction on new rules for broker conduct. In advancing such a consequential regulation, he argues, the commission should make every effort to craft a set of rules that can pass with a unanimous vote.

“The reason I think that’s so important is that a rule like this is going to be long litigated — not just in the D.C. Circuit, but in the marketplace for years,” Jackson says. “I think this is a unique moment in which we can and should speak with one voice, and I certainly hope we do.


For reprint and licensing requests for this article, click here.


Ask your folks about their financial plans

Parents are often more than happy to offer financial advice to their kids. They like to feel needed and want to make sure you’re on solid financial ground. But it’s important to turn the tables and ask about their financial plans, too.

Are they saving for retirement? Have they updated their will? What’s their plan for long-term care, should they need it?

It doesn’t matter if you’re living on ramen or running your own business, asking your parents about their financial future can feel odd. But life moves fast. And your parents’ financial plans can and will affect your own, eventually. So it’s important to talk early and often about how they’re planning for retirement and the often high cost of aging.

“It’s never too soon to have this conversation,” says Greg Young, owner of Ahead Full Wealth Management LLC in Rhode Island. “If something happens to your parents, not only there goes your safety net and a key part of your support network, but their affairs will likely pile onto you.”

Tact is everything when talking about money. Show them you want to learn and you want to help. Use your own life events, like a new job, a new house or an expanding family, as an opening to talk about their plans.

THE TOPIC: RETIREMENT

It’s important to know if your parents are saving, but this conversation isn’t just about money. It’s also about their dreams for retirement.

THE TALK

Your first real job (or any new job) is a good chance to ease into the conversation. Ask your parents for advice as you navigate 401(k) contributions. A simple “What did you do?” gives you insight without being invasive.

House hunting? That’s another opportunity to check in with your folks about their retirement plans. You know, in case you need to add “in-law suite” to your wish list.

THE TOPIC: LONG-TERM CARE INSURANCE

The cost of extended care is staggering — assisted living carries a median price tag of $48,000 per year, while the annual median cost for a nursing home is nearly $90,000 for a semi-private room, according to an annual survey by Genworth, an insurance company. In-home care can be just as costly, depending on the services needed.

Long-term care insurance helps offset the cost of nursing care and help with routine activities like eating, bathing and dressing, whether at home or in an assisted living or nursing home.

THE TALK

Long-term care insurance gets more expensive with age, so most people who buy it do so in their 50s or 60s. It’s good to start the conversation early to have the topic on your family’s radar.

“‘Do you have long-term health care insurance?’ That’s a specific question that is pretty palatable,” says Thayer Willis, a wealth counselor. “If they say yes, the follow-up question is: ‘How does it work exactly?'”

If the direct approach doesn’t jibe, try backing into the conversation. Use someone else’s experience as an example and ask whether your parents have considered assisted living in the future and how they would pay for it.

THE TOPIC: ESTATE PLANNING

Sorting through an estate without clear directives can tear families apart. That’s the last thing your parents want. Talking openly about things like wills and trusts, life insurance and advance medical directives can help you understand what they have in place, and give you insight into their intentions, Young says.

“Knowing what to expect from them, or that they’ve done some planning, will certainly make an emotional eventuality a little easier,” he says.

THE TALK

Starting your own family, and setting up your own estate plan, is a great opportunity to ask your parents what they have in place. You can also use someone else’s experience to start the conversation.

“Ask questions like: ‘A friend from work had a parent pass and they could not find any paperwork. … Do you and Mom have all your paperwork together in one place? If you were to pass, who has access to it?'” says Mark Struthers, owner of Sona Financial, a wealth management firm.

Your folks might not be comfortable talking about their finances. That’s OK. Don’t push them. Instead, make it clear that you’re ready and willing to talk another time, Willis says.

“You might need to take the approach of planting a seed, and that’s all you do in the first discussion,” she says. “Which is another reason for beginning early.”

 

FEDweek’s Retirement & Financial Planning Report

Now that stocks have lost value, you might be thinking of investing your IRA in real estate. If you buy …More

April Is Financial Literacy Month | News, Sports, Jobs

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Financial literacy is defined as possessing the financial expertise needed to make healthy financial choices. April marks financial literacy month, and whether you’re money-savvy or looking to learn more, this month can be used as a springboard to get involved and take action.

“Financial literacy is extremely important for all ages and is a topic we take seriously at Community Bank N.A.,” said Jamestown Branch Manager Kathy Bemus. “We offer financial literacy classes for young children all the way up to adults. We want to help our neighbors make sound financial decisions through all stages of life.”

To help promote financial literacy throughout Western New York, Bemus recommends community members engage in these four actions throughout April.

COMMIT TO LEARNING ABOUT A FINANCIAL TOPIC

Financial literacy is all about having the knowledge and understanding to make informed and effective decisions about your finances. This month commit to learning more about a financial topic that interests you. From mortgages and insurance to credit and investing, the options are endless. The goal isn’t to become an expert on the subject, but by the end of the month you can feel more confident the next time you have to make a decision.

TALK WITH YOUR LOVED ONES ABOUT MONEY

It’s important to engage in conversations about responsible saving, spending and planning with your family. Together, you can take stress out of a situation by regularly discussing household finances and financial planning. Take time to speak with your children about the value of a dollar, ways to start saving and the difference between want and need. It’s never too early for children to learn about responsible financial decisions.

MOVE TOWARD FINANCIAL STABILITY

Use financial literacy month as an incentive to plan your journey to reach your financial goals. Take a moment to sit down and assess your current financial situation, and then work to create a personal budget with a step-by-step plan for saving and spending. Doing this simple task will help you act rather than avoid financial situations due to stress. Your budget should allocate your future income toward expenses, savings, and debt repayment. Be sure to evaluate your budget regularly to adjust for new situations and goals.

TAKE A CLASS TO LEARN MORE

Improving financial literacy starts with education and every class or workshop makes a difference. This is especially true when it comes to children. Financial literacy programs for students are an important tool to improve the financial capability of our youth and communities. This is one of the many reasons Community Bank N.A. frequently partners with schools to help educate students in varying grades on making spending decisions, the value of money, and the difference between want and need. During April, consider partnering with a local organization to either host or attend a financial literacy class to further yours and your family’s financial education.

In financial planning, are you passed the halfway mark?

Editor’s note: This is part of a series of commentaries comparing financial planning to Mr. Silverman’s training for a marathon.

Passing mile 13, I was almost half-way done with my marathon. Things were going well. Tulsa is known as a hilly course, especially the second half with its rolling hills steadily gaining elevation.

This is what I trained for. Wichita Falls is not known as a hilly area, but if there is a hill around town you probably saw me running up it at some time in the months leading up to the race.

Six weeks before the marathon I took on a greater challenge. Muenster has a nice half-marathon race built around their Octoberfest. It’s a great time even if you don’t run because of the festivities. I was there to get some more miles under my belt but for another reason as well…the countryside around Muenster is hilly…very hilly. It would give me experience running long over hills in a race environment.

I learned a lot in that race. That knowledge helped me tweak the pace I’d be taking up and down hills, gave me a lot of practice in foot placement and body movement on some of the steeper ones, and showed me that some of my fueling (snacks while running) needed to change. I performed very well. I earned first in my age group! (Full disclosure: I was the only one in my age group.)

Two weeks later (four weeks before the marathon) I did my long run. Now, I agree that a mile is a long run. But in most marathon training plans, including mine, there is THE long run. Mine was a 20-mile beast I did on the outskirts of Wichita Falls and the hilly areas around Tanglewood and The Bluffs. 

That’s where I learned about pain. 

Reading about running on hills is a lot different than experiencing it. Reading about runners “hitting the wall” is certainly different than experiencing it. And like any experience, it only does you good if you remember it and modify your behavior based on the lessons learned.

I was honestly surprised in 2008 when I was told by people that they had no idea the market could be so violent and unforgiving. After all, most of these people were around for the Tech Bubble Burst, the market shut-down and crash after 9-11, and the recession of 2002. In those three years the stock market went down about as much as it did in 2007-08. They just forgot about the lessons they learned.

Life lessons often involve pain. It might not be physical but watching your nest-egg drop 50 percent is not what most would call fun. Take the events you paid for with blood, sweat, tears, and money and learn from them. Then modify your behavior based on the new knowledge you have. Then remember the lesson.

As far as my marathon run, all was going fine. My training and experience on hills were paying off. Then shortly after mile 16 my lessons on pain would be put to the test.

Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing (available at amazon.com). Contact him at www.PersonalMoneyPlanning.com

    

 

Ask your folks about their financial plans

Parents are often more than happy to offer financial advice to their kids. They like to feel needed and want to make sure you’re on solid financial ground. But it’s important to turn the tables and ask about their financial plans, too.

Are they saving for retirement? Have they updated their will? What’s their plan for long-term care, should they need it?

It doesn’t matter if you’re living on ramen or running your own business, asking your parents about their financial future can feel odd. But life moves fast. And your parents’ financial plans can and will affect your own, eventually. So it’s important to talk early and often about how they’re planning for retirement and the often high cost of aging.

“It’s never too soon to have this conversation,” says Greg Young, owner of Ahead Full Wealth Management LLC in Rhode Island. “If something happens to your parents, not only there goes your safety net and a key part of your support network, but their affairs will likely pile onto you.”

Tact is everything when talking about money. Show them you want to learn and you want to help. Use your own life events, like a new job, a new house or an expanding family, as an opening to talk about their plans.

THE TOPIC: RETIREMENT

It’s important to know if your parents are saving, but this conversation isn’t just about money. It’s also about their dreams for retirement.

THE TALK

Your first real job (or any new job) is a good chance to ease into the conversation. Ask your parents for advice as you navigate 401(k) contributions. A simple “What did you do?” gives you insight without being invasive.

House hunting? That’s another opportunity to check in with your folks about their retirement plans. You know, in case you need to add “in-law suite” to your wish list.

THE TOPIC: LONG-TERM CARE INSURANCE

The cost of extended care is staggering — assisted living carries a median price tag of $48,000 per year, while the annual median cost for a nursing home is nearly $90,000 for a semi-private room, according to an annual survey by Genworth, an insurance company. In-home care can be just as costly, depending on the services needed.

Long-term care insurance helps offset the cost of nursing care and help with routine activities like eating, bathing and dressing, whether at home or in an assisted living or nursing home.

THE TALK

Long-term care insurance gets more expensive with age, so most people who buy it do so in their 50s or 60s. It’s good to start the conversation early to have the topic on your family’s radar.

“‘Do you have long-term health care insurance?’ That’s a specific question that is pretty palatable,” says Thayer Willis, a wealth counselor. “If they say yes, the follow-up question is: ‘How does it work exactly?’”

If the direct approach doesn’t jibe, try backing into the conversation. Use someone else’s experience as an example and ask whether your parents have considered assisted living in the future and how they would pay for it.

THE TOPIC: ESTATE PLANNING

Sorting through an estate without clear directives can tear families apart. That’s the last thing your parents want. Talking openly about things like wills and trusts, life insurance and advance medical directives can help you understand what they have in place, and give you insight into their intentions, Young says.

“Knowing what to expect from them, or that they’ve done some planning, will certainly make an emotional eventuality a little easier,” he says.

THE TALK

Starting your own family, and setting up your own estate plan, is a great opportunity to ask your parents what they have in place. You can also use someone else’s experience to start the conversation.

“Ask questions like: ‘A friend from work had a parent pass and they could not find any paperwork. … Do you and Mom have all your paperwork together in one place? If you were to pass, who has access to it?’” says Mark Struthers, owner of Sona Financial, a wealth management firm.

Your folks might not be comfortable talking about their finances. That’s OK. Don’t push them. Instead, make it clear that you’re ready and willing to talk another time, Willis says.

“You might need to take the approach of planting a seed, and that’s all you do in the first discussion,” she says. “Which is another reason for beginning early.”

By Kelsey Sheehy

NerdWallet

On The Move for April 21

New hires and promotions in the metro Augusta business community

Dr. Daren Timmons

Employer: University of South Carolina Aiken

Title: Provost and executive vice chancellor for academic affairs

Responsibilities: Managing all academic programs and academic support services including enrollment management, admissions and financial aid

Experience: Has previously served as the university’s interim provost and was dean of its College of Sciences and Engineering; was head of the chemistry department at Virginia Military Institute; earned doctorate in chemistry from Texas AM University

 

Walter H. Massingale

Employer: Queensborough National Bank Trust

Title: Senior vice president and commercial lender

Responsibilities: Commercial lending activity at the bank’s Martinez branch

Experience: Has worked for Augusta-area banks since 1976, including Georgia State Bank, Regions Bank and Georgia Bank Trust; is a graduate of the University of Georgia’s Banking School and Commercial Lending School

 

Clayton Quamme

Employer: AP Wealth Management

Title: Certified financial planner

Responsibilities: Providing personalized financial planning and investment management solutions for clients to attain their financial objectives

Experience: Has more than a decade of experience in financial planning; previously served with Calvary Wealth as a financial planner and as an intelligence officer in the U.S. Army; earned bachelor’s degree in economics from Appalachian State University

 

Clay Blanton

Employer: Johnson, Laschober Associates PC

Title: Electrical engineer

Responsibilities: Electrical design, power distribution plans, indoor and outdoor lighting, emergency lighting design, controls, communication and emergency stand-by power

Experience: Was previously employed as a manager and electrical engineer for Pollard Lumber Co.; earned undergraduate degree at Georgia Southern University

 

Travis Ward

Employer: Johnson, Laschober Associates PC

Title: Designer

Responsibilities: Design in AutoCAD and Revit modeling

Experience: Is a U.S. Air Force veteran currently enrolled at Augusta Technical College as an architectural/engineering design drafting student

 

Dr. Lee Ann Merchen

Employer: Medical College of Georgia at Augusta University

Title: Assistant dean for clinical curriculum

Responsibilities: Oversee school curriculum to ensuer continuity between undergraduate and graduate medical education

Experience: Was previously director of the school’s Internal Medicine Residency Program; served as chief of the Department of Medicine’s Division of Internal Medicine from 2009 to 2014; earned medical degree at Wright State University Boonshoft School of Medicine

 

Dr. Tiffany Hall

Employer: Aiken County Board of Education

Title: Principal of Leavelle McCampbell Middle School

Responsibilities: Overseeing all school administrative functions, including academic performance, budgeting, counseling and disciplinary/safety activities

Experience: Began her career in education in 2004 as a social studies teacher at Mullins High School; was previously assistant principal at Jackson STEM Middle School; earned doctoral degree in educational administration from the University of South Carolina

 

Submit your news: Send in On The Move and Biz Bits items to augustachronicle.com/send-us-your-news

The Power of Financial Advisory Teams

The movement is industrywide, which hasn’t been lost on Barron’s. In the 16th year of our Top 100 Financial Advisor rankings, we’ve added a new category: The Top 50 Private Wealth Advisor Teams—our acknowledgment that, for most wealthy clients, teams have become more important than individual advisors.

Building teams addresses a pair of pressing issues within the industry, both of them related to demographics. The first is the aging population of elite-level advisors. The average age of a Barron’s Top 100 Advisor is now 57, up from 52 in 2012. In one respect this is a big positive, as investing perspective and experience with a variety of market conditions are exactly what clients demand from an elite advisor.

What’s alarming, however, is how few advisors have installed any plans to replace themselves in the event of a tragedy or retirement. According to a 2018 study from the Financial Planning Association and Janus Henderson, 73% of financial advisors lack a written succession plan. Even among those advisors who do have one, 39% failed to include details about how clients would be transitioned to a succeeding advisor.

“Our industry is facing a succession planning crisis,” says Ray Sclafani, founder and CEO of ClientWise, a wealth management consultancy in Mount Kisco, N.Y. “It’s about integrity and alignment. It’s about the nobility of our profession and not simply having the right legal documents signed.”

And it isn’t something that can be fixed overnight. It takes seven to 10 years to build an orderly succession plan between founders and next-generation leaders within a team, says Sclafani, who has decades of experience coaching high-end advisory teams at firms like
Morgan Stanley
,
UBS
,
and Merrill Lynch.

Adds Merrill’s Sieg: “Clients worry about, what if something happens to my advisor. What if they leave the business, become ill, what have you. With a team, they feel like the family’s well-being is being looked after by a group of people.”

Building a team lays the groundwork for addressing this crisis, by creating redundancies and processes that can live past the departure of an important advisor. It also helps address a second demographic issue: the growing diversity of clients.

Put bluntly, the business of financial advice is overwhelmingly white and male. At the same time, there’s a rising tide of clients who don’t identify closely with that group. The best teams are adding staff from a variety of generational and cultural backgrounds to make their practices more appealing to the next generation of clients.

In short, the expansion of teaming is good for clients, and it is also good for the business of wealth management.

“Larger, growth-oriented firms have bought in to the idea of true ensembles, rather than solo practices,” says Mark Tibergien, CEO of BNY Mellon Pershing’s Advisor Solutions business. “Solo practitioners are ubiquitous, but advisors with teams probably control 75% of the assets.”

Our 2019 ranking package features the Top 100 and the Top 50 Institutional Consultants, in addition to the Top 50 Private Wealth Advisor Teams. We discussed individual practices with advisors from three top private-wealth teams in this issue: Richard Jones and Reza Zafari of Merrill Lynch’s Jones Zafari Group, Lyon Polk and Deborah Montaperto of Morgan Stanley’s Polk Wealth Management Group, and Elaine Meyers of J.P. Morgan Securities.

Together, the three rankings highlight advisors who are the very best at serving individuals, families, and institutional clients, such as pensions and endowments.

Our Top 100 ranking spotlights the leading individual financial advisors from across the U.S., and from diverse firm types, ranging from practices within Wall Street brokerage firms to independent advisories. It’s distinct from our Top 1,200 ranking, published last month, which looks at advisors state by state.

The Top 100 is based on assets under management, revenue generated for the advisors’ firms, and the quality of practices. Investment performance isn’t an explicit factor because clients have varied goals and risk tolerances.

The Top 50 Private Wealth Advisor Teams ranking is based on advisor responses to the same 102-question survey used in the Top 100. It uses data elements that speak to a team’s ability to effectively attract, retain, and service individuals and families. These include the size and makeup of the team, the experience levels of key members, the growth of the team’s assets and revenues, the credentials and ongoing education of members, and the regulatory records of the team’s partners.

The Top 50 Institutional Consultant ranking is based on a separate survey, designed specifically for advisory teams that serve large, complex organizations, such as pension funds and college endowments.

Our average Top 100 team oversees about $10 billion in investments. Total assets under management are an important factor to consider, in part because they reflect investors’ satisfaction level. If an advisor’s clients aren’t happy, they’ll take their assets elsewhere, and they won’t refer their friends to the advisor. Client turnover among our Top 100 advisors is just 1.5% per year.

The teams of the Top 100 advisors average about 17 people. Good ones have a balance of client-facing advisors, experts in financial planning and investing, and client-service professionals. This mix has gained traction as a standard for professional financial stewardship. It has replaced the traditional stock-tip and sales-commission arrangement, says Tibergien. “I think what really transformed the business is when the advice model started to replace the brokerage model,” he says. “People realized the business of advice is not sales, but service, and that meant they had to create a real structure.”

Financial advisory practices increasingly resemble law and accounting practices, with clear career paths leading from entry-level to intermediate to senior advisor and on to partner. Older, wiser advisors win new business, push work down the ranks, and mentor junior colleagues who will succeed them. “The concept of teams really is also a concept of career-pathing,” Tibergien says.

Sieg and Merrill Lynch are high on teams because they believe in their benefits for clients, but they’ve also seen a powerful business case: The business growth of teams is about double that of individual practitioners, Sieg says.

For these reasons, firms are increasingly using financial incentives to nudge lone wolves into teams. Under Merrill’s pay formula, every advisor on a team is paid at the same rate as the senior-most advisor, says Sieg.

Merrill also uses what it calls its Client Transition Program to facilitate the transfer of customers from a primary relationship manager who is approaching retirement to another advisor on the team. To participate in the program, advisors must be part of the team. “That’s another very powerful driver of team structure,” says Sieg.

Over the years, Merrill has tightened the definition of team to ensure that the advisors are truly working in a coordinated fashion for clients’ benefit. “Fifteen years ago, I might say I’m on a team, but really we just happened to have lunch together once a month,” says Sieg.

Merrill gives teams as much leeway as possible in determining how to structure themselves, and it supports them with a corps of specialists around the country who help advisors establish and manage teams, and institute best practices.

As teams take hold, and as older advisors retire, the industry faces a long-term challenge in bringing in fresh talent.

Team leaders say many of the best and brightest high school and college students believe that the profession is full of back-slapping and hard selling. But that image is increasingly becoming outdated in the new era.

Top teams have gotten creative at keeping the talent pipeline full: They sponsor internships, recruit from other professions, and hire smart, talented job seekers, even if they don’t yet have a ready position for them.

As the financial advisory industry evolves, one trend to keep an eye on will be the proliferation of family-office-style offerings. These organizations do everything from paying a family’s bills to helping create a family “mission” and estate plan. Technically, teams are migrating—gradually—toward a multifamily office approach, Tibergien observes. “There is movement toward it as high-end wealth managers start to attract more ultrahigh-net-worth clients of $50 million and above.”

A ranking of “N” indicates the advisor was not ranked in the specified year. HNW=high net worth; UHNW=ultrahigh net worth.

Barron’s

The Top 100 Financial Advisors

Email: editors@barrons.com

FPA, CFP Board Open 2019 Financial Planning Challenge for Undergrads

(Image: Shutterstock)

The Financial Planning Association, Ameriprise Financial and the Certified Financial Planner Board of Standards on Thursday invited undergraduate students from CFP Board-registered universities to sign up for the 2019 Financial Planning Challenge.

The challenge is a three-stage competition designed to engage students and academic advisors in the financial planning community, raise awareness around career opportunities, and encourage students to learn and connect with financial planning professionals.

Students have until May 24 to register.

For their participation in the challenge, students can receive up to 80 hours of CFP continuing education credit toward their experience requirement leading to certification.

“As the professional home for financial planners, FPA is committed to helping members achieve professional excellence to boost their careers to the next level,” FPA executive director and chief executive Lauren Schadle said in a statement.

“The Financial Planning Challenge is an amazing opportunity for the next generation of financial planners to deepen their financial planning skill set, demonstrate their knowledge and expertise, and become a rising star in the profession.”

Eight student teams will advance to the competition’s final stage at the FPA Annual Conference 2019, which will take place Oct. 16 to 18 in Minneapolis. The teams will demonstrate their knowledge of the CFP Board Financial Plan Development Course requirement, and interact with practitioners and thought leaders from around the world.

Besides earning CFP CE credit, finalists will also be awarded a complimentary one-year FPA membership, and the top three teams will receive a monetary scholarship for their schools.

The competition criteria were developed in part to illustrate potential avenues for satisfying the CFP Board Financial Plan Development Course requirements for both students and faculty, according to the statement.

— Check out CFP Board Releases Career Best Practices Guide on ThinkAdvisor.