Financial Advisor Marketing & Technology

Marketing & Technology For Independent Financial Advisors


Archive for April, 2009

Ways RIAs Can Reassure Clients

Five more advisory firm frauds made headlines in the past week. Meanwhile I received two hateful emails about my recent blog posts saying old ways of assuring clients of advisor integrity are no longer enough.

I’m sorry if I stepped on some toes or if you feel I was too harsh with my comments about NAPFA. But unless advisors communicate proactively, candidly, and in detail with clients right now about the trust issue, client assets could start moving away from advisors toward discount brokers.

I’m not predicting a huge stampede. But clients who have seen portfolios slashed in value and who see the string of frauds make headlines need reassurance.

During the last market pullback—the tech bubble of 2001-2002—discount brokers did not have the easy-to-use technology they do today, and only a fraction of the investors used the Internet. It’s different this time. Advisor clients are on the Web and the discount brokers have slick, easy-to-use interfaces.

The history of innovation should make advisors cautious. Disruptive technology systems (discount brokers) are always viewed as crude when introduced. This lulls established market leaders relying on existing technology (traditional financial advice outlets) to believe they will not lose business to the new competitor.

However, incremental improvements in once-crude innovative systems gradually overcome the established regime. This pattern of innovation adoption has been documented extensively.

Advisors would be wise to watch the progress of the major discount brokers in coming months to see how much market share they pick up from the retail flight of assets from Wall Street brokers.

Ironically, advisors are more than ever in need of help from the big discount brokers. After all, these same firms are also the largest providers of custody services to RIA assets. And the custodians can provide advisors with crucial assistance in reassuring their clients of their fidelity and competence.

Perhaps the most important idea an RIA can communicate to assure clients fearful of fraud is that you have an independent custodian. This is a time to emphasize to clients that, unlike Bernard Madoff, you have an independent custodian.

Because of the important role an independent custodian plays in RIA client relationships, I emailed four major custodians a week ago—Fidelity, Pershing, Schwab, and TD Ameritrade. I asked them how RIAs can reassure their clients by emphasizing the role played by a custodian. Only two of the custodians responded.

To me this was surprising. Here’s a chance for the custodians to be on your side and play a valuable role. Your custodial firm can earn its fees by helping you communicate proactively right now. You’d think they would jump at that chance.

Mark Tibergien, who heads Pershing Advisor Solutions, replied within minutes. Brian Stimpfl, a managing director at TD Ameritrade Institutional, responded a day later by spending an hour on the phone with me.

If Fidelity and Schwab contact me after seeing this post and have good ideas to add, I’ll post another entry. Keep in mind, Advisor Products is incorporating these messages into articles we write for RIA client newsletters and websites.

Tibergien says the simple fact that you have a custodian must be communicated to clients. Madoff’s firm was itself custodian of client assets. Almost all custodians mail statements monthly directly to clients. You want to mention to your clients that these statements provide independent verification of their account holdings, transactions, and values.

Stimpfl points out that only about 1,000 of the approximately 11,000 RIAs providing retail investment advice take custody of client assets. You may want to mention to clients that RIAs not holding their assets at custodians require far more due diligence on an ongoing basis.

Clients should understand that portfolio performance reports they get from an RIA can easily be compared against the independent custodian’s statement. This is also a good time to remind clients that custodians will send them notices of trade confirmations whenever a transaction occurs in their accounts. Mentioning that the custodian has its own website where account values are posted 24/7 would also reassure many clients.

You may also want to remind clients of the URL on the custodian’s website where they can sign up to receive the electronic trade confirmations directly from the custodian. Custodians years ago rolled out a feature allowing them to notify your clients of trade confirmations and they can send an email to your clients with the URL where they can download each trade confirmation. They also archive every confirmation for each client. Many clients will appreciate the reminder and your being proactive in disclosing how transparent your business is. It will instill confidence in your firm.

Incidentally, you may want to ask your custodian about its policy on ex-clients. If you move a client’s assets away or if the client fires you and moves to another clearing firm, how long will the custodian keep those old trade confirmations? Stimpfl says they’re archived for seven years at TD Ameritrade.

Stimpfl says several months ago TD Ameritrade produced and distributed a set of materials for RIAs to help them answer questions from nervous investors after the Madoff scandal and market break. The package of materials included a letter that could be copied, pasted, personalized, and mailed out under the RIA’s letterhead.

The letter, Stimpfl says, reminded clients to check their client services agreement with their RIA firm to see exactly what their advisory firm can do with their money. Reminding clients that you have discretion to trade their accounts and how carefully you manage that responsibility would be reassuring. While the majority of RIAs do have discretion of their client accounts, those that do not may want to remind their clients of this fact.

“We live in a transparent society,” says Stimpfl. “And if you're holding back anything, you could unintentionally and unnecessarily put client relationships at risk.”

RIAs who invest in alternative investments should be proactive in communicating about the value of those assets. Advisors who recommend alternative investments should have Investment Policy Statements for each client who holds them. Reminding these clients of the details about holding alternative investments would be wise. Advisors who do not hold alternatives or who hold less than 5% of total client assets in them should consider reminding clients of these facts.

Tibergien says clients should be told about processes and protocols your firm has in place to review investment decisions. If your firm has conducted a “mock SEC audit,” showing clients a report from your compliance consulting firm would be another way to demonstrate your commitment to run your firm with integrity.

You can also remind clients that your custodian has its own responsibilities under the law to ensure client assets are protected. SIPC insurance covers investors in the event of the insolvency of the custodian for up to $500,000 of losses. In addition, a custodian is likely to have separate insurance coverage purchased privately. One custodian has coverage for losses in securities accounts of up $149.5 million and up to $900,000 in cash accounts.

And speaking of cash accounts, Stimpfl says TD Ameritrade has safeguards in place that prevent an RIA from moving cash from a client’s account into the firm account. RIAs can move cash from a client’s account to another account held by the same client, but TD Ameritrade must receive written approval via mail. Similarly, client address changes must be verified via mail.

Finally, both Pershing and TD Ameritrade said they have automated systems in place to monitor RIA client accounts. Software to ensure compliance with anti-money laundering laws and programmatically search for suspicious trading patterns in customer accounts are yet another protection for RIA clients.

By the way, the two hateful emails I received were more than offset by two uplifting messages. I appreciate the kindness and support.

One More Thing:

If you are interested receiving notification of the continuing drumbeat of advisor frauds being uncovered almost daily, I’ve been “tweeting” the headlines about them. Follow me on Twitter to receive these notifications. Here’s the recent crop of those tweets:

· SEC Obtains Asset Freeze of Florida-Based Investment Adviser Defrauding Investors
· SEC Charges Connecticut-Based Hedge Fund in Multi-Million Dollar Fraud
· Hennessee Group, A High-Profile Hedge Fund Research Group, Just Charged by SEC with Failing To Do Proper Due Diligence
· SEC Halts Multi-Million Dollar Fraud Conducted by Philadelphia-Area Investment Adviser
· One-Time Quarterback for Football's NY Giants Confesses to Defrauding Investors @

Online Portfolio Reporting Upgrade

Advisor Products just launched a streamlined interface for firms using AdvisorVault™ to upload portfolio reports from the two most widely-used portfolio reporting systems, Schwab’s PortfolioCenter® and Advent’s Axys®.

The way an advisory firm maps a report containing a client’s portfolio data to the client’s online vault is simple now. Mapping is a one-time procedure for setting up the Advisor Products Online Reporting Solution. It’s also used whenever a firms adds a new client to the system.

Until now, mapping a single client’s account data to the vault was a five-click process that typically took 30-seconds. Now, it’s a two-click, two-second procedure.

Most clients have multiple accounts—five to 10 accounts per client is common—and advisory firms using the system typically have 200, 300, 1,000 or more clients. The streamlined workflow is a big time-saver for advisory firms—literally 10 times faster. While it previously took 16 hours to map 400 clients with five accounts each, it now takes about 90 minutes.

The Advisor Products Online Portfolio Reporting Solution has also been enhanced to allow a client’s account to be mapped to different family members. A father and mother, for instance, can have different log-ins to view their own individual accounts, but they both are also able to see a child’s account.

Advisors can drag and drop files from their computer hard drive to any client’s online vault folder. Having the flexibility to drag a folder from your desktop or network drive to the online vault makes moving files in and out of the AdvisorVault™ fast and simple. Clients also can drag and drop files to the vault.

In addition, a client or an advisory firm can give outside professionals rights to access a specified folder in a client’s vault. For advisors working with estate planners or accountants, collaboration is much easier and totally transparent to clients.

With many clients seeking greater transparency from their advisor, online portfolio reporting is likely to grow in popularity. One of the HTML reports, for example, shows a client all transactions in his account. Since the system is so fast, advisory firms can provide clients a daily list of all transactions in their portfolio.

Advisor Products Online Reporting Solutions are fully-redundant and servers are behind dual redundant firewalls with web, authentication, and database servers in isolated subnets. Applications are monitored 24/7 and data are backed up daily and stored offsite weekly.

Web servers utilized by AdvisorVault™ utilize SSL 256-bit encryption for all activities, including the log-in screen and user interface as well as when uploading or downloading files. Uploaded files are stored encrypted and files are decrypted only when delivered to the end-user. Advisor Products staff can see partial file names residing in AdvisorVault™ but cannot view the contents of any client files.

AdvisorVault™ is hosted at a data center that’s achieved SAS 70 Type II compliance. SAS 70 is an internationally recognized auditing standard developed by the American Institute of Certified Public Accountants (AICPA), which means our hosting facility has had its control objectives and control activities examined by an independent accounting and auditing firm.

The hosting facility requires two-factor authentication, including biometric authentication, for anyone to enter, and all entrances and common areas are monitored 24×7 via closed-circuit cameras. Redundancy is built into the heating and cooling systems to maintain a consistent and optimal environment. The data center has on-site redundant power sources and redundant back-up generators, including a multiple-day fuel supply on-site, and it remained lit throughout the Northeast power outage of August 2003. Connections from Verizon, AT&T, Cablevision Lightpath, and Keyspan enter the building through separate trenches.

The Online Portfolio Reporting Solution represents just one of many applications integrated by Advisor Products into advisory firm marketing websites and client portals.

The Trust Issue

Do advisors understand the extent of the public’s mistrust? Are they doing enough about it?

I don’t think so.

Advisors have failed to embrace transparency as much as they should. Even NAPFA, traditionally the industry’s strongest advocate in the fight against unethical behavior in the financial services business, has missed the opportunity.

Many consumers who trusted advisors during the bull market are now skeptical, and those who were skeptical are now cynical. Worse still, consumers who were cynical of advisors are now in contempt of them.

If you don’t believe it, read the comments from readers responding to reporter Ron Lieber’s article in this past Saturday’s issue of The New York Times, “How A Personal Finance Columnist Got Caught Up in Fraud.” Lieber bravely reported that he—The New York Times’ personal finance columnist—had hired an advisor who is now being investigated by the Securities and Exchange Commission for his connection to irregularities alleged to have been discovered in his clients’ accounts.

From the first reader’s comment (“The lesson I have learned is that you can't trust financial planners.”) to the last (“It is worth the time and effort, obviously, to be in complete control of one's assets.”), the public’s outrage boils over. Yet financial advisor discussion boards, trade magazines, and conferences are not addressing “the trust issue.”

There’s no mad scramble to find solutions, no urgency to address the trust issue. Look at the lack of comments on my blog posts in the past few weeks.

  • On March 11, in Closing A Door On Madoff Opens A New Era, I wrote that a new era for investment advisors had begun. “It’s an era in which trust is founded on undisputable proof presented at repeated regular intervals. Advisory firms must proactively adjust their behavior and business processes to succeed in this fearful new world.”
  • On March 12, a post entitled, “Your House Is On Fire,” chastised advisors for a lack of care in performing due diligence on alternative investments.
  • On March 19, a post entitled, The Elephant Wrecking Your Revenues said it plainly: “If you are not moving toward a more transparent relationship with clients, then you are not changing with the times and will be left behind. You will be crushed by the elephant.”

While this blog now has hundreds of readers every day, not a single advisor commented on any of these posts. It’s as if advisors don’t want to deal with the trust issue.

In my view, transparency through technology is the best hope for assuring clients they can continue trust you with their money and for convincing prospective clients that your firm can be trusted with their money.

I was fortunate enough to begin researching Web 2.0 technology three years ago and saw the beginning of the age of transparency unfold right before my eyes back then. That spurred the reinvention of my company, Advisor Products.

Advisor Products recently implemented a system that automatically records phone calls and automatically deposits audio files in each advisory firm’s folder in our CRM system. Every staff person here knows what he says to our clients is easily retrieved, encouraging outstanding service. I’m hoping to add even more transparency by allowing advisors to rate our performance for every service call we handle.

My research into Web 2.0 also caused Advisor Products to develop a technology platform enabling advisory firms to practice with greater transparency to their clients. The platform extends CRM systems used by advisory firms beyond managing your staff to manage your clients. It integrates a CRM with personal client portals. It also interfaces with performance management software systems, enabling clients to see every transaction posted to their accounts.

We now live in an era of Google Earth, a twittersphere, a place where sophisticated investors will no longer be satisfied with mere promises about your honesty, integrity, and fidelity. They want proof. Either advisory firms reinvent themselves and figure out how to survive in this untrusting, fearful new world or online discount brokers will gain at your expense.

This information is, of course, self-serving. But that does not diminish its value or validity. I’ve aligned my business with my beliefs and values, and my strong desire to be honest. I encourage you to do the same. It also happens to be good for business.

NAPFA Stained By Scandal

It was only a matter of time before NAPFA’s reputation would be tainted in the national media.

Ron Lieber, the personal finance columnist at The New York Times, wrote a story in today’s paper entitled, “How a Personal Finance Columnist Got Caught Up in Fraud.”

Lieber last week received a letter from his advisory firm's custodian, Charles Schwab & Company, saying it “had discovered unauthorized money transfers out of accounts associated with the financial planning firm I use.”

Ironically, Lieber hired advisor Matthew Weitzman of AFW Wealth Advisors after writing a “secret shopper” article about how to pick a financial advisor, which was published by in May 2003 by his former employer, The Wall Street Journal.

A day after receiving the letter from Schwab, Jay Furst, who co-founded AFW with Weitzman, sent an email message to Lieber.

“Matthew Weitzman , one of our partners, has been placed on leave from AFW,” Furst said in the letter emailed to Lieber. “As part of this leave, Mr. Weitzman will have no further contact with any client accounts. We do not anticipate that Mr. Weitzman will be returning to AFW in any capacity.

“We believe that the affected accounts have already been identified and that the total amount of the discrepancy is less than 5% of the total assets under management at the firm,” Furst added. “However, it is possible that additional accounts may be identified during the investigation and that the current estimation may change as a result of the investigation.”

The letter from Furst left little doubt that he blames Weitzman for the wrongdoing. Furst said be notified the Securities And Exchange Commission and that the agency is investgating the matter.

“AFW views these potentially unauthorized transactions as the isolated acts of Mr. Weitzman,” AFW told Lieber in a prepared statement when he asked for the firm to comment. “AFW, its many clients and I are saddened, angered and betrayed by the apparent actions of Mr. Weitzman, Mr. Furst reportedly added. “AFW is sorry for any harm this has caused to its clients.”

And then Lieber brands NAPFA with the black mark that very publicly stains its once unblemished record with the consumer press.

“Mr. Weitzman and Mr. Furst belong to the National Association of Personal Financial Advisors, an organization of financial planners who have sworn off commissions and make money only through fees they charge their clients,” Lieber writes. “Members have made a lot of noise in recent years about ethics and the importance of acting as a fiduciary, in a client’s best interests.”

“I’ve always believed that advisers in the association were plenty smart and morally upright, but it’s hard to recommend them now without at least including an asterisk.”

The consumer press has been infatuated with NAPFA for far too long and it was only a matter of time before one of the group’s members strayed from the lofty principles embraced by the association.

NAPFA members are generally better-trained than the average advisor, and the group has a history of backing ethical practices. But the fee-only compensation model that once differentiated NAPFA members from other advisors has been co-opted by planners who do not practice excellence or are outright unethical. Mode of compensation stopped being an accurate litmus test for professional competence over a decade ago. The consumer press just didn’t know it!

Ron Lieber shouldn’t feel betrayed by NAPFA. He and the rest of the consumer press should have been telling consumers years ago about ways to ensure an advisor is honest. Instead the financial press lazily used the NAPFA membership directory to find the same sources in article after article year after year.

Lieber is now telling readers to read their statements carefully, as if consumers are actually going to do that. He’s a personal finance reporter and didn't detect a problem!

Smart consumers and the consumer press finally have figured out that joining a membership association and networking with ethical financial advisors is no guarantee of integrity and competence.

NAPFA remains a powerful and positive force in the financial advice business. But it needs to reinvent itself and rethink. The same old ideas that used to work are no longer good enough to keep NAPFA in the warm embrace of the press and consumers.

The best way for advisory firms to fight the rising tide of consumer mistrust is by embracing transparency systematically. Transparency must be integrated in an advisory firm’s technology platform and system for client communications.

A Breakthrough In Advisor-Client Communications

Do your clients know all the work you do for them? Do you sometimes wait weeks or even months for clients to send you documents, fill out forms, or provide you with answers to important questions? When a client asks you to work with his lawyer or accountant, do things fall through the cracks?

These common problems create inefficiency and can make your advisory firm look bad to clients. So Advisor Products attacked the problems and we have solved it!

To-Do Manager, a feature in the Advisor Products Personal Client Portal platform, bridges the gap between advisors and clients. Utilizing the power of the Web, To-Do Manager creates more meaningful communication between your firm and your clients to help you both get things done efficiently.

Now, To-Do Manager has been integrated with XLR8, a leading web-based CRM system, to create straight-through processing of client to-dos from your CRM system to your clients.

Whenever your firm has a task a client must handle, you can assign it to the client in the XLR8 CRM system and it is displayed as a to-do in your client’s personal financial portal. You and your client can track the to-do and comment on it until you mark it “achieved.”

For example, if you need a client to send you his will by the end of the month, you can assign that as a to-do for the client in XLR8. When you check off a box designating the task as a client to-do along with the due date, XLR8 programmatically exports the task description to the client’s personal portal. If a client has a question or comment about the to-do, the client’s response is tracked in the client’s portal and also deposited in XLR8 for your records. The entire conversation about each to-do is recorded in both the client’s portal and XLR8 because of this two-way XML integration, and each of you are notified when there’s a communication about the task.(See a one-minute video.)

Asset management fees have been slashed by the bear market while firms still have the same number of clients, making efficiency improvements mandatory. Meanwhile, the Madoff scandal and a slew of other Ponzi has required firms to be far more transparent in the way they serve clients. The To-Do Manager/XLR8 integration accomplishes both of these key goals.

Fewer items will fall through the cracks. Moreover, you are providing a way for clients to achieve near- term tasks that must be handled if they are going to accomplish long-term financial goals. And, by tracking and displaying all of the achieved To-Dos, you help each client through each task, showing them a running list of valuable service items you’re providing.

The interface of the Advisor Products Client Portal system with this XLR8 represents a breakthrough in client communications because it transforms a CRM system in to a client communication tool. While CRM systems have long been used by advisory firms to manage and track their contacts and, to a lesser extent, to track workflows and tasks assigned to staff, this integration transforms the XLR8 CRM system into a tool for managing and tracking tasks assigned to clients.

XLR8 is a customized version of Salesforce, the world’s largest CRM system, which was created by Moulton Strategic Partners (MSP) specifically for advisory firms. MSP is a consulting firm that implements many of the most popular CRM systems used by advisors. It works with many of the largest, most successful RIA firms in the nation.

Salesforce, a web-based system, is best known for its open architecture and flexible configuration tools. Just today the firm announced it was positioned in the leaders quadrant of Gartner's CRM Customer Service Contact Centers Magic Quadrant.

With XLR8, MSP leverages the power of Salesforce to provide most of the functionality advisory firms commonly need in a CRM. MSP consultants further customize the system by documenting an advisory firm’s processes into the system and then embedding those processes into XLR8.

The Advisor Products Personal Client Portals platform is the first web based, open-architecture system dedicated solely to enhancing client communications. The client portal platform provides interfaces with almost all of the leading portfolio management software systems. Integration with other CRM systems and financial planning applications are in development.

The client portal allows your advisory firm to assign other professionals To-Dos for easy collaboration with estate planning attorneys and tax accountants, and you can also enable clients to assign you to-dos. More integrations are on the way and Advisors Products will continue to improve communications between advisors and their clients.

What Advisors Want

In the 2000 romantic comedy, “What Women Want,” after he accidentally sustains an electric shock, advertising executive Nick Marshall (Mel Gibson) finds himself suddenly able to read women's minds. Gibson uses his newfound ESP to create better ad campaigns and make his boss, Darcy McGuire (Helen Hunt), fall head over heels for him.

Apart from the hilarity that ensues, the movie shows how important it can be to get into the heads of the people we care about. That’s what Advisor Products is doing right now with its clients and what advisors must do with their clients.

Advisor Products this morning sent an email to people we care about—advisors that are our clients—inviting them to a webinar where I will speak about marketing opportunities created by using our website services.

The webinar invitation included a link to a survey asking advisors they want from us, and we made the survey findings available. Like Mel Gibson, we now can see into the minds of our clients.

Advisors, to succeed in this environment, must work toward the same transparency, openness, and cooperative communication. How?

Whenever you rebalance a client’s accounts, complete a client’s review, or perform key services to clients, ask the client how you did. Creating a survey and emailing a link to your clients to fill out will take just a few minutes. Ask your clients how you’re doing. Ask them what they want. is great for creating quick surveys on the fly, and AdvisorImpact is the most complete program I know about for conducting comprehensive satifaction surveys of advisor clients.

Please join us for our first MarketingSmart webinar Wednesday, April 15 at 4 p.m when we will address what advisors want.

Making Sense (And Dollars) After The Plunge

“If you go to a doctor because your elbow hurts, the doctor isn’t going to treat you heart or hand,” says Craig Israelsen. “He’ll treat your elbow. That’s what advisors need to do with clients now.”

“It’s not like a client’s entire portfolio is hurt,” says Israelsen. “It’s just part of it.”

Israelsen, an associate professor at Brigham Young University and frequent contributor to Financial Planning Magazine, likens the market crash of 2008 to a client’s elbow that's taken a very unfunny blow to the funny-bone.

Israelsen will speak about how the market cataclysm affects rebalancing at this Friday’s 4 p.m. EDT session of the Financial Crisis Webinar Series.

Israelsen says that advisors who did not have retiree or pre-retirees holding age-appropriate cash positions before the global economic crisis decimated stock prices are vulnerable but have no one but themselves to blame. He has always argued that it was misguided to think of cash as being a drag on portfolios. “No one thinks cash is a drag now!”

Prudent advisors did have retirees and clients over age 55 in a portfolio with a reasonable amount of cash. For retirees, this is the time to draw down on cash. And it is also a time to focus on the performance of their cash position, that is, to focus on what worked in 2008.

“They should be pulling their retirement income from their cash positions,” says Israelsen, who offers advisors a subscription to his research for $350 a year. “That’s what the cash is there for. It’s a pantry.”

“Leave the equity positions alone for now,” he says. “They will come back.”

In client communications right now, advisors should be focusing on the part of their portfolios that have been bullet-proof, says Israelsen, a 50-year old tri-athlete and father of seven. By focusing on what has been working, you make it easier for clients to sit tight and wait for stocks and stock mutual funds to rebound.

“The entire portfolio you manage for a client may show a negative return,” says Israelsen. “But you don’t need to liquidate the entire portfolio. You only need to be sure the client has money for living expenses now, and that is what the cash is for.” Cash is there for a rainy day, and it has been pouring.

Israelsen’s research has long focused on broad diversification. His 7Twelve portfolios use seven asset classes and invest in 12 underlying mutual funds or ETFs. The portfolio is designed to be used as a core position within virtually any portfolio.

While many advisors think of the Standard & Poor’s 500, or perhaps an ETF or fund investing in the total stock market, as their core portfolio position, Israelsen says the core position of a portfolio should be a widely diversified bundle of asset classes.

The core of Israelsen’s 7Twelve portfolio is comprised of equal-weighted positions including real estate, natural resources, commodities and bonds as well as of large-, small, and mid-cap stocks and several other asset classes, including cash.

Using the 7Twelve portfolio as the core holding in a balanced 60/40 portfolio makes sense. For example, a 60% position in the 7Twelve portfolio combined with a 40% position in the Vanguard Total Bond Index lost 12.8% in 2008, but had a 6.6% 10-year annualized return between 1999 and 2008. Alternatively, a 60% position in the Vanguard Total Stock Index combined with a 40% position in the Vanguard Total Bond Index lost 20.2% in 2008 and had a 2.4% 10-year annualized return as of 12/31/08.

Smart Marketing For Tough Times

I received a call from an advisor last Friday that taught me a lesson, one that perhaps many advisors can also learn from.

The call was from a longtime client of Advisor Products. We don’t speak often, but I always enjoy it when we do.

On Friday, she opened my eyes to the fact that Advisor Products needs to do more to educate advisors about what we offer. So I’m going to host a monthly webinar about how Advisor Products helps advisory firms retain clients and gain prospects. Please join me for the first session Wednesday, April 15 at 4 p.m.

Back to the lesson I learned and how you might be able to learn from it.

The advisor who called me is responsible for marketing at the firm, but she didn't know about important ways we could help her firm.

She didn’t know we just completed an interface with the CRM software used by her firm (XLR8) that enables her firm to assign her clients To-Dos in XLR8 and programmatically update them in a client’s personal portal. She didn’t know that Advisor Products 18 months ago more than doubled the number of articles available for newsletters and websites from 20 a quarter to 50. She didn’t know we now provide marketing videos or that we added search engine marketing services.

Advisor Products constantly updates advisors about how to benefit from what we do via:

  • MarketingSmart, an email newsletter with updates on all new services and advisor marketing tips
  • My blog, which I post almost every day
  • The weekly Financial Crisis Webinars Series that helps advisors manage the wrenching downturn
  • A sales team tasked with calling each of our clients every six months
  • A CRM system that records all email correspondence with each client and stores notes by our staff about every phone call
  • A “BackOffice” for each advisory firm to manage their newsletter and website and that prominently displays updates about our products and my blog

The list could go on but there’s no need to beat the point to death.

My point is that advisors are so overwhelmed, they are finding it difficult to know what information is important. You've had to deal with a financial disaster that's devastated client portfolios and slashed your income. You have too much to read, some of your clients have been nasty, and you are working harder than ever but earning less.

It’s no wonder that you cant find the time to read our email newsletters, visit my blog, attend our webinars, or spend time with someone from Advisors Products. It’s no wonder you don’t know where to focus your attention.

And that's why Advisor Products is stepping up. We understand the challenges you face and we will help you respond. Please lean on Advisor Products. Call me, call our staff, and let us know what we need to do to help you.

Advisor Products is a very different company than it was a few years ago. We've got an entirely new staff, are more efficient, and have launched new products like AdvisorVault and Online Reporting for the two major portfolio accounting applications, and we are helping advisors utilize social networking for marketing. We’ve created unique systems to lighten your workload while communicating more often with clients.

Please tell us which marketing solutions you want to hear about at our MarketingSmart Forum.

And think about whether you are doing the same with your clients. Are you doing everything you can to communicate with clients? Are you showing them you care? Are you squeezing all you can from every marketing dollar you spend?

All of the marketing vehicles Advisor Products uses to communicate with advisors are available to you to communicate with your firm's clients—webinars, blogs, email newsletters, and all the other vehicles. Use them!

Allow us speak the words your clients need to hear right now. Let us provide you with technology to save time and money.

We’re here for you. Come to our session Wednesday at 4 p.m. EDT.

Compliance Issues Posed By Linkedin, Twitter & Social Networks

Yes, advisors can use Linkedin, they can blog, and they can even tweet on Twitter. Whether you’re a register rep or an IA rep, you can network online with friends and prospects, but you do have to follow the same compliance rules that govern other advertising materials.

To prepare for a webinar about compliance issues posed by social networking sites, the subject of this Friday’s Financial Crisis Webinar, I interviewed Brian Hamburger and Dan Bernstein of MarketCounsel, a compliance consulting firm serving independent advisors nationwide. (The 4 p.m. webinar on Friday is free but you must register to attend.) Below are some of what these experts said.

With regard to Twitter:
When an IA rep uses Twitter to send a link to an article from an online magazine, newspaper, or other site to clients and prospects "following" him, that communication is subject to SEC advertising rules. However, Bernstein says that merely sending a link is not advertising—as long as you don’t give your opinion.
· If a rep sends links to articles, however, it could be deemed advertising, which means some broker/dealers may require pre-approval of a tweet with a link. It depends on your BD. Many BDs allow reps to re-circulate articles. Most BDs will permit it, so long as the rep does not add content. Your BD may require you to print it out and retain each tweet in hard copy.
· IA reps have it a easier than registered reps. There is no preapproval required of IAs in any of the SEC rules.

On the topic of blogging:
· Yes, advisors can write blogs. Twitter is a microblog. However, a blog is like any other communication, and a rep needs it pre-approved, which makes blogging difficult.
· Some BDs regulations do not allow blogs. But it is a manpower issue and cost issue.
· Blogging is easier for IA reps because they do not need pre-approval of the material.
· A blog from an IA rep can discuss typical clients and situations that are hypothetical. You can “make up” a client and talk about his issues and problems and how you solved them—as long as you disclose that these are hypothetical abstracts and not real situations.
· Blogging about the economy, financial planning, or market commentary is less likely to pose compliance problems, but market commentary must avoid predictions.
· Commenting on your blog is permissible. But any commenting should be screened, so that you can take down a comment or edit it.
· You must be able to remove blog comments that are testimonials from clients.

If an advisor is using Linkedin:
· A "recommendation" on your Linkedin profile by a client does indeed constitute a testimonial and, thus, violates SEC rules prohibiting RIAs from using client testimonials in advertising.
· If a client writes a recommendation praising you as a moral or religious person, it will be construed as a testimonial—even if it does not address your skills as a professional investor.
· The testimonial prohibition is commonly thought to pertain specifically to clients. There is not a lot of guidance about using testimonials from non-clients. But the fact that there has not been many enforcement actions for using testimonials by non-clients indicates that using testimonials from non-clients may be within SEC rules. But the SEC may ask you to remove such recommendations from Linkedin. For instance, if you are on the board of directors at your church or synagogue, another board member could write a recommendation for you in your capacity as a board member and that would probably not be construed as a violation of the rules.

Because social networking is so new, there is no body of enforcement actions and rulings that you can reference. The SEC will be busy in coming months addressing the many issues posed by advisor use of social media .

New PMS System For RIAs!

advisorPMS, a portfolio management software system, is being officially launched today, promising to usher in a a new era for advisors.

advisorPMS costs $1,000 a year for unlimited users, just a fraction of the licensing fees charged by industry leaders Advent Software Corp. and Charles Schwab. The program, which received rave reviews from technology writers at all advisor trade publications, is being offered in a desktop application and also runs on a web server hosted by advisorPMS for $10 a month. In addition, advisorPMS offers a CRM add-on and financial planning module for free.

“We know we will take a loss on the early adopters,” says advisorPMS founder and CEO, Brad Slavemen, who also runs a successful financial planning practice in Angola, Texas. “But we will make it up on volume.”

advisorPMS website

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