David Lawrence, President of The Efficient Practice LLC, and Bob Curtis, the developer of MoneyGude Pro, spoke today to more than 130 advisors who attended our continuing webinar series on the global financial crisis. View a replay of the session. 
David Lawrence, a consultant who helps advisory firms operate more efficiently, spoke about when, why, and how to communicate to clients amid today’s economic uncertainty. He spoke about the importance of being proactive rather than reactive, and how to use a technology for innovative ways to reach out to clients. View View David Lawrence's Slides. 
Bob Curtis, CEO of PIE Technologies, spoke about retirement planning in turbulent times. He said advisors must show clients why revising their plans may not be as painful as they think. revise their financial plans due to the crisis. While retirees and pre-retirees may need to make sacrifices--working longer, saving more, or cutting expenses--but their plans may already have reflected making such compromises because planning programs nowadays allow for such compromises. View Bob Curtis' Slides.

Michael McGonigle, the head of Investment Grade Credit Research at T. Rowe Price Group, is the featured speaker the next webinar on Friday December 5, at 4 p.m. EST.
Mr. McGonigle will speak about the current market environment's risks and opportunities.   

Register now for that session.

 

 

Bob Curtis' Slides

David Lawrences Slides

When writer Gertrude Stein said that “a rose is a rose is a rose,” she meant that things are what they are.

But sometimes that’s just plain untrue, as in the case of technology companies marketing client portals to advisors.

Many tech vendors serving advisors are marketing client-facing pages and calling them client portals, but they are using the term all too loosely. Portals are supposed present information from a variety of sources on a unified site. Search engine companies created the first portals by presenting email, news, stock prices, as well as search engine access, on a single page. 

When a portfolio reporting application displays performance data on a page for an advisor’s client and calls it a client portal, that’s hard to swallow. Even if the portfolio software vendor brings in some data from an account aggregation system, calling the site a client portal gives a bad name to portals.

At Advisor Products, we’ve been offering our Personal Client Portals platform for a year now, and what we have is truly a portal. We are bringing in data from dozens of sources, including a long list of professional applications, including:

·         Advisor Exchange

·         Albridge Solutions

·         AssetBook

·         Black Diamond Reporting

·         FinanceLogix

·         Laser App

·         Money Tree

·         MoneyGuide Pro

·         Orion Advisor Services

·         PortfolioCenter

·         XLR8

At Advisor Products, we are actively developing interfaces that will allow us to display data from By All Accounts and EZ-Data Smart Office, and discussion with several other firms is under way.

 

Moreover, our client portals bring in RSS feeds from hundreds of websites. Feeds about health, sports, technology, science, weather, and much more are all ported in and personalized to each client’s personal interests--plus we bring in RSS feeds from personal finance websites.

 

In addition, our portals contain content that we produce about personal finance and that is also personalized to each client’s interests. Advisors can securely store clients' personal files in an online vault that is integrated with our portals. They can use the blog to communicate with clients, and they can assign or receive tasks in the To-Do Manager. Outside professionals, such as an estate planning attorney or tax accountant, can also be permissioned to assign and receive to dos. And feeds of market indexes, stock prices, and useful calculators are also provided as resources to clients.

 

Our client portal is truly a portal because we are totally focused on creating the best client portal you can get. We are not making CRM software. We are not making portfolio accounting software or a financial planning application. We want to do one thing great: make the most flexible, complete, and fully integrated client portal system offered to advisors.

 

So be skeptical when firms that make other applications tell you they have a client portal. While it is possible that a planning application or CRM system might create a client-facing application, it is unlikely to truly be a client portal.

Some roses are not roses at all, but are every bit as thorny. Don’t get stuck.

An article in today's issue of Investment News, entitled "Performance Reporting Isn't Cutting It For Clients," contains some good points but also contains some confusing information.

The story is about how important it’s been for advisors to be able to post performance reports online daily. Since the market crisis erupted in early October, the need has become acute.

That makes sense. A small portion of clients are probably looking for daily updates. But the story quotes Celent Communications LLC analyst Robert Ellis saying, "Reporting is the biggest reason for wealth management client attrition." That's ridiculous.

Most advisor relationships fall apart because of a lack of communication. I've never heard of an advisor getting fired because his performance reports were issued too infrequently--never mind because the reports were formatted poorly, difficult to understand, or not available online.

I have no quarrel with the basic premise of the story. More clients want to view performance reports online than a year ago. But only a fraction of clients will check them daily, even in turbulent times.

The story also rightly says that web-based systems make it easier for advisors to provide online reports. But what’s missing from the article is any mention of the fact that the desktop applications are accommodating advisors who want to post reports daily. Which brings me to my next point.

Contrary to the thrust of the article, just because an advisory firm is using a desktop application does not mean it cannot provide online reporting daily. For instance, Advisor Products has developed an interface for uploading PortfolioCenter reports that allows advisors to batch upload client reports. An advisory firm can create an XML extract of its client reports in PortfolioCenter every morning and upload it to our AdvisorVault 2.0 in minutes. The reports are parsed by an application that runs on our server and they are automatically dropped into each client's secure, encrypted vault folder. While the manual upload process surely is an extra step that is avoided if your firm uses an online portfolio reporting system, it is—contrary to the impression you'd get from the article—very doable daily.

Another place where the story goes wrong is in confusing the information contained in the reports with the ability to post reports online daily. Specifically, the story quotes Celent analyst Ellis saying that wealthy clients might get "subpar" performance reports "because their portfolios tend to contain esoteric asset classes and sophisticated securities. In addition, their portfolios are held with several custodians, and assets are denominated in many currencies, a situation that creates a huge reconciliation and reporting nightmare."

The ability to handle multi-currency reporting and arcane securities, however, has nothing at all to do with the reporting application's ability to get reports online daily. Moreover, the weakness of the desktop PMS applications is not in their inability to handle multi-currency portfolios and exotic securities. Few advisors need multi-currency reporting. Even the most sophisticated advisors I know aren't running non-dollar denominated accounts. Plus, many exotic investments are not even priced daily--like oil partnerships and real estate deals. And to the extent an advisor is using an esoteric security, the desktop apps are probably more likely than web based applications to be able to account for them simply because they have had so much more experience with handling Original Issue Discount bonds, Zeroes, and other offbeat securities.

The story confuses the information in performance reports with the ability to post reports online. If the data in the reports are not giving clients what they need, however, the advisor needs to simply change the reports. That's a separate issue from whether it is possible to get the reports online.  

To be sure, portfolio reporting is headed to the web. Advisory firms using desktop reporting applications will be in the minority in five years. But advisory firms have not been ready for online PMS applications and only recently started to warm to them.

Incidentally, I don't like taking a cheap shot at another advisor-technology writer. The author of the article in question is a careful reporter and has been doing a great job. I've read his articles for months and have enjoyed his work. This just wasn't his best story.

David Loeper warned advisors not to rely too heavily on Monte Carlo and to tell clients always to expect that their financial plans will need to be updated. Meanwhile, Tom Connelly said there’s only a 10% chance that the global financial crisis will cause a systemic collapse that leads to a depression but warned that the economy is most likely headed for a long period much like before the crisis erupted, only not as robust. Loeper and Connelly, thought-leaders among independent advisors, offered these thoughts this past Friday during a 90-minute webinar attended by about 125 advisors. If you missed the session, which was part of the Financial Crisis Webinar Series sponsored by Advisor Products Inc., it is available now for replay

Download David Loeper Slides

Download Tom Connelly's Slides

Please join us Friday, November 21, at 4 p.m. EST for another session in the Financial Crisis Webinar Series. David Lawrence, a consultant who helps advisory firms operate more efficiently, will speak about organizing a cost-effective system for communicating regularly with your clients during the crisis. Bob Curtis, the inventor of MoneyGuide Pro, a financial planning application with about 12,000 users, will speak about tradeoffs clients may need to consider in revising their financial plans because of the crisis, including working longer, saving more, or cutting expenses, and how advisors can handle these delicate discussions with clients. Register now for that session. 

During last Friday’s webinar with guest speakers Bill Bengen and Greg Brousseau, we conducted a series of polls. The results are surprising.

Based on answers to our polls, advisors are sticking with the traditional buy-and-hold asset allocation doctrine that has dominated the profession for two decades. Advisors say they have not reduced equity allocations. But they are looking for a less dogmatic approach. Here are the results of the poll from the webinar attended by about 120 advisors.

With 74% of those polled saying they have not significantly reduced equity allocations, the great majority of advisors have adhered to a strict buy-and-hold strategy.

Yet many advisors are questioning the most fundamental precepts of traditional portfolio management. More than a third of advisors say Modern Portfolio Theory and The Efficient Market Hypothesis are not a valid basis for managing portfolios.

While conventional wisdom has been that a buy-and-hold strategy is the best course of action for long-term investing, two-thirds of the advisors polled say it is wise to make judgments about the future direction of the market. I believe we are witnessing the beginning of the end of the traditional buy-and-hold appraoch to asset allocation. My column in next month's issue of Financial Advisor magazine provides a new approach being put forward by one of the best thinkers among institutional money managers. Please see the magazine's website after December 1 to read about a new approach that could be influential as advisors move into the era of "Post-Modern Portfolio Theory." (I've never seen this term used before. Have you?)

Just how pessimistic are advisors? The good news is that a majority (59%) of the advisors we polled believe the economy will remain in poor condition for one or two years, while only 4% believe the American economy will remain in poor shape for more than five years. However, a significant number of advisors polled (40%) said they believe poor economic conditions will plague the nation for a three- to five-year period.

73% of the advisors polled believe now is a good time to buy stocks. Market sentiment polls like this are actually reverse indicators. The optimstic sentiment could mean that too few advisors have capitulated, and that the market must drop further before hitting bottom. Finally, in what may be the most significant finding, last Friday’s poll revealed significant dissatisfaction with the industry’s membership organizations. At the suggestion of one of our guest speakers, Bill Bengen, CFP®, who is best known for his groundbreaking research into “safe” withdrawal rates for retirees, I asked advisors attending the webinar whether they have been well served during the financial crisis by the industry’s educational apparatus. The answer: 48% of the 110 advisors participating in the webinar disagreed. This means that almost half of the advisors at the session believe they’ve not been well served by the industry’s professional educational system.

I don’t understand why the membership organizations have not produced weekly programs to help financial advisors deal with one of the worst financial events in the nation's history and certainly the worst financial crisis since the advent of personal financial planning. These groups have far greater resources than I do, can reach a much larger audience, and are paid by their members to provide this kind of support. Moreover, even though I’ve been conducting these webinars for over a month now, no one from the educational arms of the major membership organizations has called me to ask how they can help, whether they can provide some expert speakers, offer continuing education credits to attendees, or just to say thank you.

I'm grateful for the many kind words of support from advisors who have attended the webinars. Your encouragement is motivating.

Thank you for placing me in a position to be able to help during this difficult time.         

Join Us Friday, November 14 at 4:00 p.m. EST For Our Continuing Webinar Series About The Global Financial Crisis 

Presenters this Friday will be Thomas Connelly, CFA, CFP®, a leading financial advisor who last spring warned of a meltdown, along with David Loeper, CIMA®, CIMC®, the chairman and CEO of Financeware, a goal-based financial advice system.

Mr. Connelly will speak about why, as early as a year ago, he grew increasingly fearful that the credit crisis would trigger severe dislocation in the financial markets, and he will explain his current investment stance and outlook.

Mr. Loeper will discuss how to speak with clients about the changing nature of their financial plans, why the result of Monte Carlo simulations can be misleading, and how to lead clients through financial compromises they must sometimes make. This free webinar is sponsored by Advisor Products Inc. as a service to the independent advisor community. Please feel free to send this blog post to other independent advisors who would benefit from attending.

Our previous webinars about managing client relationships during the global financial crisis received gratifying praise from attendees.

On Friday, November 21, David Lawrence, a practice efficiency consultant, will speak about how you can communicate with clients efficiently.

Bill Bengen and Greg Brousseau spoke today to more than 130 advisors who attended our continuing webinar series on the global financial crisis.  If you missed today's session, you can see a replay.

Download Bill Bengen’s slides.                                      Download Greg Brousseau’s Slides. 

Join us Friday, Nov. 14, at 4 p.m. EST.
Please join us for our next free webinar featuring the wealth management profession’s thought leaders. Presenters will be Tom Connelly, a leading financial advisor who last spring warned of a meltdown, and David Loeper, the chairman and CEO of FinanceWare, a goal-based financial advice system. Tom will talk about emerging from the crisis and Dave will speak about changing clients’ financial plans to respond to the crisis.

More About Today’s Webinar
Bill Bengen, best known for his research on "safe" retirement withdrawal rates, spoke about the market's crash, the economic crisis that precipitated it, and whether the crisis should lead advisors to question conventional wisdom about managing other people’s money. Bengen, in a story I wrote in the May 2008 issue of Financial Advisor, entitled "America's Financial Crisis," said that by last spring he had raised more cash in portfolios than at any other time in his 25-year career because of his discomfort with economic conditions and financial markets.

Greg Brousseau of Central Park Group LLC spoke about opportunities arising from the financial crisis. He talked about how investors in distressed securities have historically profited from periods of dislocation and forced selling. He focused his remarks on the mortgage and financial sector securities. Brousseau is co-CEO of CPG, which distributes alternative investments to independent advisors, and was formerly co-head of UBS’s Alternative Investment Group and a senior member of the firm’s Operating Committee.

The Financial Crisis Webinar Series is sponsored by Advisor Products Inc. as a free service to the advisor community.  

 

Beta testing of the Advisor Products Inc.'s (API) application for Online Reporting For PortfolioCenter has been a great success and we are now focused on improving web reporting for advisory firms using PortfolioCenter.

Beta testers gave API Online Reporting For PortfolioCenter rave reviews and some great suggestions for improving the application. Seven advisory firms participated in the beta test by uploading their client reports to our server, which successfully parsed client reports and deposited them into secure folders accessible to clients. 

A portfolio accounting service bureau also tested the application with multiple advisory firms that use PortfolioCcenter. The service bureau, Back Office Support Service (BOSS),which works with more than 100 firms using PortfolioCenter, is deploying the web reporting system with some of the largest RIA firms it serves.

Online Reporting for PortfolioCenter is less costly, better designed, and easier to use than previous solutions for providing PortfolioCenter reports to clients online. The application is integrated with Advisor Products’ new AdvisorVault 2.0, which is a secure, .NET application built on a Microsoft SharePoint platform. In addition to supporting batch uploads of PortfolioCenter, AdvisorVault 2.0 allows advisors and clients to drag and drop documents from their desktop to the virtual vault. It is hosted at a SAS 70-certified facility and mirrored for redundancy.

Other website vendors are charging $5,000 for the first year for less robust web-reporting solutions, and $9,000 to $12,000 in subsequent years. Advisor Products charges $3,600 a year, and our pricing is good for three years. In addition, since Advisor Products hosts sites for more than 1,200 advisory firms and provides newsletters, brochures, and other products to a total of more than 1,800 firms, we are able to invest in rapid development and improve our systems. Our development plans for 1Q09 include the following improvements to Online Reporting for PortfolioCenter:

• Advisor control of which performance reports are displayed
• Change the names and order of performance reports
• Change names of columns in performance reports
• Drag & drop columns in performance reports
• Match graphic elements in reports to advisory firm’s branding
• Incremental upload (changed data only) to reduce time/cost 
• Automated uploads
• Enable printer-friendly reports
• Allow advisors and clients to permission others to view specified reports
• Additional reports

We cannot promise all of these enhancements will be completed by the end of 1Q09. However, we do expect some of these features to be developed before the end of this year and our development team has been given a schedule that devotes resources to complete these and other improvements to Online Reporting for PortfolioCenter by March 30, 2009.

Frank Maselli and Michael Kitces spoke yesterday to more than 160 advisors who attended our continuing webinar series on Crisis Communications. 

If you missed yesterday's session, you can see a replay.  

Download Frank Maselli's Slides.pdf (2.66 mb)

Download Michael Kitces Slides.pdf (514.66 kb)

Join us this coming Friday, Nov. 7, at 4 p.m. EST, for another webinar. 

Bill Bengen, best known to advisors for his research on "safe" retirement withdrawal rates, will speak about the market's crash and the economic crisis that precipitated it. Bengen, in a story I wrote in the May 2008 issue of Financial Advisor, entitled "America's Financial Crisis," said he had by last spring raised more cash in portfolios than at any other time in his 25-year career because of his discomfort with economic conditions and financial markets. 

Also speaking Friday will be Greg Brousseau of Cental Park Group LLC. CPG distributes alternative investments to independent advisors. The firm's management pulled up roots in the large Wall Street brokerages to provide alternatives to the growing independent advisor market. The private partnerships CPG offers cannot be discussed for regulatory reasons, but the ideas driving them are good to know about. Brousseau will talk about opportunistiic investments in distressed securities, such as mortgage debt trading at deep discounts.    

   

We received so much positive feedback about the webinars we conducted October 10 and October 17 that we are continuing the series and scheduling speakers in advance.

We'll try to put together the industry's leading speakers for these webinars every Friday at 4 p.m. Eastern Time. 

Advisor Products is privileged to be able to sponsor and organize these free webinars.

Here are the dates, speakers, and topics lined up so far for November.

To be sure you receive an email invitation to these free live webinars, please check off "notify me about free webinars."

Topic	Speaker	Company	Date
Capitalize On The Chaos By Getting Referrals	Frank Maselli	The Frank Maselli Company	October 31
Post-Crisis Financial Planning & Portfolio Management	Michael Kitces	The Kitces Report	October 31
What Happens Next In The Markets?	William P. Bengen	Conserving Client Portfolios During Retirement	November 7
Distressed Investing	Greg Brousseau	Central Park Group LLC	November 7
Changing Your Clients’ Long Term Financial Plans	David Loeper	Financeware	November 14
What Just Happened? And Is It Over Yet?	Tom Connelly	Versant Capital Management	November 14