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5 Ways Financial Advisors Can Use Cash Management to Help Boost Business
5 Ways Financial Advisors Can Use Cash Management to Help Boost Business At Betterment for Advisors, we’ve identified five benefits for financial advisors who offer a cash management solution to clients. The numbers don’t lie. Cash makes up a large percentage of total investable assets, whether you manage it or not. Research from Capgemini reports that cash and cash equivalents have made up about 25% of high-net-worth portfolios from 2018 to 2022. In the wake of a turbulent market, that number increased to 34% in 2023. A survey by Allianz Life found that 61% of Americans would rather have their money sit in cash than have it endure market swings. Yet, 82% of Americans are saving in low-rate savings and checking accounts, missing out on high yield that can help combat inflation. If you’re not managing your clients' cash, you’re missing out on seeing their full financial picture. And seeing that entire picture is key when your firm’s success depends on providing the best, fulsome financial guidance to clients. At Betterment for Advisors, we’ve identified five benefits of bringing cash into focus and offering clients an all-in-one cash management solution. Cash management can: Help you provide better planning services and advice Bring assets into your orbit, serving as a pathway to investing Strengthen your client relationships Decrease risk for your clients (and your firm) Turn your client experience into a competitive advantage The 5 key benefits of bringing cash into focus Let’s explore how a modern cash management solution can help boost your firm’s bottom line and provide your clients peace of mind. 1. Cash management can lead to better advice Gaining visibility into your clients’ held-away cash can help you uplevel and personalize your financial plans. By understanding your clients’ needs outside their investing portfolio, you can better help them reach both short- and long-term goals. Clients may be holding cash for many reasons. They could be saving to buy a home, planning to fund educational expenses, or may simply be worried about the economy. Knowing your client’s goals—and worries—can help you provide better advice to manage their cash and investments. For example, you may be able to advise them to open a 529 account for education expenses or move cash into a high-yield cash account for a mortgage down payment. If you find your client is holding more cash than expected, you can use this as an entry point to discussing why, and exploring your client’s unique needs. You also could be better equipped to respond to sudden influxes of cash such as: Annual bonuses or raises Lump sums in low-rate savings accounts Cash gifts, inheritances, or profits from selling assets These large sums of cash often end up sitting in a checking or savings account earning little interest. You’re in the perfect seat to coach clients on how to make the most of large sums of cash. As your clients’ advisor, you’re committed to your fiduciary obligations, and managing their cash can put you in a better position to serve them. 2. Cash management can be a path to responsible investing Picture this: The stock market starts to rise. Your client has $20,000 that you are unaware of sitting in a savings account at a bank. They get the urge to buy so they don’t miss out. In a hurry, they open a brokerage account one evening and buy some tech stocks. Now what? If you are managing your clients cash, not only will you have more assets under management, but you’ll be able to advise them on responsible investing, helping them manage risk through approaches such as dollar cost averaging. The path from cash to investing can look like this: Understand your clients’ total cash available and their goals for that cash Understand what they are earning on their cash When the time is right, you can invest either the earnings from your clients’ cash or larger portions of the cash While your clients' cash isn’t invested, there is an opportunity to increase their portfolio’s overall yield. With the federal funds rate at its highest point since before the Great Recession and with only 18% of consumers taking advantage of high-yield cash accounts, now is the time to help your clients make sure their uninvested cash earns the highest return possible. By keeping a pulse on your clients’ cash, you can avoid having your clients keep cash at other institutions and potentially make poor investment choices. Most importantly, you can create a streamlined approach to investing clients’ cash at the appropriate time. 3. Cash management can strengthen your client relationships Frequent and strategic conversations about cash with your clients can bolster your relationship. We recommend having “cash conversations” at these three pre-planned moments: Client onboarding: Provide your clients with an intro to cash management, explaining the benefits like the potential for higher yield and more holistic advice. Use it as an opportunity to show how you can bring additional value and how cash management can help your clients reach their short-term and long-term goals. Quarterly or biannual cash reviews: Schedule time when you have your regular meetings with clients to review cash. Make sure you focus on the cash you manage and the cash in external accounts. Ad hoc new cash situations: Coach your clients to contact you when they have increased their cash holdings. This allows you to advise them on what to do with the newfound cash. We recommend the following “Cash Questions” to begin discussing the importance of cash with your clients: Do you have cash at other or new institutions? What rate(s) is your cash earning? What are your goals for the cash? Knowing the answers to these questions can help you in providing options for your clients’ held-away cash that prioritize their financial well-being. 4. Cash management can decrease risk for your clients (and your firm) By offering cash management, your firm can decrease the risk of losing clients to a competing firm, where cash management is provided. By decreasing that risk, you potentially gain: The ability to increase your AUM as you move cash into investments The possibility of additional revenue streams via cash management services Your clients benefit from a decrease in the risk of making uninformed decisions without your holistic advice. Reducing that risk positions your clients to benefit from: Earning potentially higher interest rates to keep up with inflation Your guidance to “stay the course” and take the appropriate amount of risk Bringing cash management under your roof can help demonstrate your value in volatile market conditions, mitigating risk for you and your clients. 5. Cash management can create a competitive advantage with modern technology As we know, people have cash needs. Why not meet those needs while creating a competitive advantage at the same time? New cash management platforms may offer: Modern technology for you and your client to manage and automate savings Higher yields compared to traditional bank savings accounts to earn more from your client’s cash Additional FDIC insurance if covered by multiple program banks Recurring / automated transfers into investing, which can create dollar-cost averaging opportunities Whether your clients hold their cash at banks or other wealth management firms, a modern platform can give your RIA an edge in a world where liquidity, yield, and security are valued by investors. We’ve built a modern cash management solution for advisors At Betterment for Advisors, our high-yield Cash Reserve account lets you offer your clients a competitive cash management solution on our easy-to-use platform. Your clients can set savings goals and use automated tools, all while you guide their financial plan.
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Introducing Mutual Funds in Custom Model Portfolios
Introducing Mutual Funds in Custom Model Portfolios Thousands of mutual funds have been added to the custom portfolio menu. This upgrade gives RIAs even more control in meeting growing client demand for personalization. Betterment for Advisors has been laser-focused on delivering a holistic platform that includes flexible portfolio options for RIAs, across both retirement and wealth management. Today, we’re announcing that thousands of mutual funds have been added to the custom portfolio construction menu for the first time. As roughly $20 trillion in assets are held in mutual funds in the United States today, offering advisors a custodial platform that can manage those funds for clients is essential. This update gives our customers even more control in meeting growing client demand for personalization in portfolio construction. They can now combine mutual funds and ETFs in their custom models on the Betterment for Advisors platform. Options include funds from such firms as Vanguard, PIMCO, T. Rowe Price, Fidelity, with many more to be added in the coming weeks. Derek Tharp, Founder of Conscious Capital, says "I have enjoyed the ease of use and powerful capabilities of Betterment for Advisors since I started working with them, but I appreciate even more that the team continues to enhance the offerings and improve the advisor experience. The addition of mutual funds in custom portfolios allows me to use the full suite of features with even more of my clients.” (Non-paid client of Betterment.)
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How to Start an RIA (A Guide to Going Independent)
How to Start an RIA (A Guide to Going Independent) The process of becoming a registered independent advisor can be daunting. Here’s what you should know as you start your own advisory practice. Congrats, you’ve decided to start your own RIA! This exciting step can grant you the freedom to create a practice that better aligns with your vision, for both your business and your clients. Whether your goal is to provide personalized investment management or to expand your client base and increase profitability, we’ve got the details to help you get started. In this guide, we’ll cover how long it can take to get set up, key questions to determine if you’re truly ready, and the three phases of launching your firm. How long does it take to start an RIA? While it can take a few months to register as an RIA, the bulk of the transition work will take longer. We recommend allowing four to six months for implementing your plan to transition to an independent RIA. This process, however, could take more or less time depending on the complexity of your firm. Are you ready to go independent? At the outset, we recommend taking a thoughtful approach to answering the following questions: 1. How will your current job influence your transition to independence? 2. Are you prepared to cover the costs of launching and running your new firm? 3. Are you committed to the time requirements for starting a new firm? The next three sections in this article provide a more detailed roadmap, broken down into three phases, to fully assess your readiness to make the transition to being an independent RIA. We’ll review how to leave your current job, along with the steps involved in starting a successful firm. Please note that this content is meant to serve as general guidance, and is not legal advice. Phase 1: Leaving your job and laying the groundwork This first phase is all about building the foundation for your success. As a new business owner, you have a critical advantage: your desire to leave your current role and venture into your own firm. This motivation will give you a head start and can lead to a shorter gap between your last paycheck and your new firm’s first client invoice. Obtain legal counsel and tax guidance Throughout the entire transition process, your legal counsel can help provide guidance on specific subject matter. From reviewing your non-compete agreements with your current employer to helping you set up your business entity, your attorney will help protect your interests. If hiring an attorney for certain steps, such as establishing a legal entity, is too expensive, you may want to consider leveraging affordable services such as LegalZoom. Additionally, having access to a tax advisor early on will be convenient for addressing your tax-related questions. Consult with other RIAs who have taken this path Gaining insight from peers who have started their own RIA can help boost your confidence and better plan ahead for unexpected issues. If possible, speaking to RIAs who transitioned from your current firm can provide even greater insight. (Read how Jason Hamilton, founder of Keep It Simple Financial Planning, launched and built his $40 million firm.) Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Obtain necessary certifications You’ll most likely need a Series 65, or similar license from FINRA, to work as an Investment Advisor Representative. However, some states may waive the Series 65 if you hold another designation such as a CFP® or CFA. Find your office space It’s best to think about your office space early on to avoid potential delays later in the process. Before selecting your office space, whether it be a home office, coworking space, or a standalone physical office, remember to examine your firm’s needs. To help determine what is best for your firm, consider your own work preferences, potential growth for your team, and your clients’ desired working style. Budget for personal income and spending As you transition from your current employer to building your own firm, you’ll most likely experience a decrease in income until you rebuild your book of business. Make sure to plan ahead for personal and business expenses. Identify prospective clients While you likely can’t tell your clients that you’re leaving your existing job or starting your own firm, you can start planning. Think carefully about the types of clients you’d like to work with at your new firm. It may be helpful to select a niche you would like to serve. One way to identify a niche is by segmenting prospective clients based on factors such as their profession, age, and interests. By targeting clients who align with your existing book of business or your new firm’s vision, you can more effectively reach your ideal customers. Create a business plan A business plan will serve as a guide for your firm and should, at the very least, explain your target market, outline the unique services you will offer, define your strategies for reaching your key audience, and establish metrics to evaluate the success of your plan. Additional areas to consider including in your business plan are financial projections, competitive analysis, risk management, and a tech stack strategy. Plan your business branding It’s important to choose your firm’s name early on, as you will need it for obtaining a website, registering your business, and developing a marketing plan. Consider whether you want to use your personal name in the firm’s name or choose a new, branded name. Be sure to conduct thorough research on your preferred name to avoid any potential trademark conflicts. If you are a small firm and you are the face of the brand, your personal name can work well. However, opting for a branded name may be a strategic choice if you have a smaller niche in mind, plan to grow into a larger firm, or desire to differentiate yourself from competitors. Use your current job’s benefits While you are still employed, plan to take advantage of all the employee benefits you will miss when you are self-employed. You will have to replace some benefits, like health insurance, but some you may outright lose unless you can afford to pay for them. Maximize your current benefits by fully utilizing your healthcare plan, participating in employee-sponsored training, and acquiring certifications covered by your employer. Phase 2: Starting your business and getting your first client This phase is when the heavy lifting to get your firm up and running kicks in. From legally registering your firm to launching your first marketing campaign, you’ll end this phase with your first few clients, ready to grow. Register your business entity You’ll need to formally create a company by registering in the state where you are located or in a favorable state such as Delaware. RIAs commonly choose to establish their business as either a corporation or a limited liability company (LLC). However, your attorney and tax advisor can help determine the best option for your firm. Set up a business bank account and credit card To set up your bank account, you’ll need to get your EIN from the IRS website. With your EIN, you can go to the bank of your choice and open a business bank account and credit card. While we can’t recommend a bank, a good starting point would be your own personal bank or seeking a referral from a trusted small business. One tip: Avoid fees whenever you can. It’s worth shopping around for a bank account if your current options impose high fees. Select an RIA compliance consultant You’ll need a Chief Compliance Officer for your firm. You can serve in the role yourself, hire internally, or outsource the function to a consultant. Outsourcing can help manage risk and save time upfront during your firm’s registration. A compliance consultant can streamline the registration process with the SEC or state authorities. We recommend working with RIA in a Box, a preferred partner in the Betterment for Advisors’ RIA Tech Suite for new firms. Register your firm with the SEC or state regulators Depending on which state your firm is in and your starting AUM, you may have to register with the SEC or your state regulatory authority. Typically, if your RIA manages more than $110 million in AUM, it is required to register with the SEC. If your AUM is between $100 million and $110 million you may still be eligible to register with the SEC, depending on your state's rules. And if your RIA manages up to $100 million in AUM (or up to $110 million in some cases), it generally needs to be registered with the state securities regulators where you operate or have clients. It's important to note that states have their own specific regulations, so consult with your attorney or compliance consultant to make sure you register correctly and file all necessary forms and documents. Obtain relevant insurance You’ll want to obtain insurance to protect your firm against common risks. Common types of insurance include directors and officers liability, professional indemnity, errors & omissions (E&O), fiduciary liability, cyber liability, employment practices liability, and health/dental/vision insurance. The larger and more complex your firm becomes, the more insurance you may need. Choose an RIA custodian There are many custodian options available for your firm to choose from. If you select Betterment for Advisors, you’ll have access to a vertically integrated solution that allows you to Custody assets Build and manage custom model portfolios Open new client accounts in minutes Control billing Streamline your practice’s back-office operations with cutting-edge features Within portfolio management at Betterment for Advisors, utilize automated trading, rebalancing, tax-loss harvesting, asset location, and more. Set up your tech stack Your tech stack will include many different and often integrated softwares. The four essential pieces of software for RIAs are wealth management, financial planning, CRM, and compliance. In addition, you may also require other tools for tasks such as accounting and invoicing, file management, email marketing, and video conferencing. Create a website and email address While you can use online tools to create your own website, it may be more efficient and produce better results to hire a small, affordable web design agency. In addition to logo and website design, agencies can also provide help with setting up email accounts using Google or Microsoft, if needed. Create a marketing plan and launch your firm Launching your firm is a one-time opportunity, making it crucial to thoroughly plan your marketing strategy for both your current network and your desired target audience. You can leverage a marketing agency, hire freelancers, or choose to market yourself if you have the necessary skills and resources. As part of this initial go-to-market campaign, you’ll also want to incorporate a plan to message your current clients and introduce them to your new firm. Consult with your attorney on all marketing communications to ensure you are compliant. Phase 3: Establishing yourself in your first year Now that you’ve launched your new RIA, your first year is about establishing your firm as a leader within your financial planning niche. Establish your client pipeline Now is the time to implement your marketing strategy to grow your pipeline. Common marketing activities include networking, sharing thought leadership content on a blog or social media, attending events, and utilizing email marketing. Additionally, implementing a robust sales process, can help you move prospects from cold leads to warm opportunities and eventually, active clients. Establish your client experience The initial experience your clients have with your firm is critical. First impressions help drive future client retention and referrals. Ensure that your onboarding processes for new clients are clear and enjoyable, while also building trust both as an advisor and (more importantly) as a person. As a client’s tenure with your firm increases, it’s important to strategize tactics such as video calls, in-person meetings, newsletters, performance reports, and webinars to continue to build a strong client relationship. Establish your operations As a business owner, your operations will need to be evaluated on an ongoing basis. After implementing your tech stack, the next step is to establish processes to efficiently run your business. During your first year, it is beneficial to have monthly or quarterly process reviews to ensure that you are maximizing the potential of your tech stack. Besides managing daily business operations, it is important to plan for accounting tasks, tax filing, and other reporting requirements. Your firm’s long-term success It takes confidence and leadership to start an independent RIA. It’s very hard work. But it can be truly rewarding, and we’re here to support you. Betterment for Advisors is ready to be your end-to-end custodian, supporting your firm with our cutting-edge technology. We’re here to help you grow—you have a dedicated relationship manager who pairs with our operations and customer service teams to help scale your practice. Our platform streamlines onboarding, billing, portfolio management, and reporting to help you deliver a high-quality, personalized client experience. Ready to learn more? Get a demo today.
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Simplifying practice operations and designing a better client experience with the right custodian
Simplifying practice operations and designing a better client experience with the right custodian For this advisor spotlight, we chat with Jason Park about building a delightful client experience and using technology to create more meaningful, human connections. Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Advisor: Jason Park Firm: Margo Park Financial Why did you decide to become a financial advisor? It was more of a natural progression or evolution. I interned at two huge financial firms then became an agent at an insurance company. When that company offered to sponsor securities licenses, I took my exams and became a financial advisor—but the conventional, old-school kind that sells products for commission. The added licenses allowed me to advise on the client’s entire financial picture, but it was admittedly just an extension to insurance sales. Then I learned I could eliminate commissions altogether (and the conflicts of interest they come with) if I were running a fee-only advisory practice. This is the only setup I know of that puts me squarely on the client’s side, by design. If I make an investment recommendation and earn zero dollars in commission, that’s the only way to know for certain that it’s my best, unbiased thinking. Going independent just made sense. When I started my firm, I was so nervous to tell my clients—but every single one came with me. I'm so grateful to my foundation clients for that. I feel very lucky to have evolved into this business model. I believe it’s the most ethical way to be a financial advisor—and my clients feel that, too. Having my own RIA has been extraordinarily rewarding. I never take it for granted. What do you think is the least understood aspect of your job? I think that advisors can sometimes miss out on creating a great client experience. It seems simple to put yourself in the client's shoes and ask, what would I want? and make that happen. But providing a delightful experience to the client is something that I believe is woefully missing in this industry. And I think that clients, sadly, have become accustomed to it. When I meet prospective clients who have worked with an advisor before, they never describe having had an outstanding experience. Nothing stands out. Carefully designing client communication or choosing technology that purposefully offers a great client experience, I believe, can really enhance an advisor's value. Why did you choose to partner with Betterment for Advisors for your practice? Well at first, Betterment scared me. I remember when Betterment came out (only for retail clients) with all its automation and we advisors were afraid of disruption in the industry and wondered, are we going to be put out of business? So when Betterment for Advisors came to market, I was thrilled. I figured I couldn’t beat Betterment’s portfolio automation, so I’d take advantage of it instead. Then additional investment options were added for advisors and custom model portfolios were released. I remember thinking, this is really getting close to unicorn level. Since signing up, I've slowly been using Betterment for Advisors as my core custodian. Aside from one-off, niche situations, I place every client in Betterment. The experience is so simple, fast and easy. The way this platform simplifies onboarding, my day-to-day practice operations and completing any task, Betterment is noticeably different from other custodians. I care deeply about, and am very sensitive to, the client's experience and Betterment really is the best experience I've ever found for clients (and for me as an advisor). Other than using Betterment for Advisors as your go-to custodian, what does the rest of your tech stack look like? I think I’ve tested every tool out there because I’m always looking for anything that might make the client experience better. Even if it means more work on our end, if something makes things easier, simpler or better for the client in a meaningful way, I’ll add or switch to it. Today, my firm’s main client portal is Blueleaf, where you can sync accounts from any custodian. Every week an email is sent to the client that reports on all of their accounts—the client doesn’t need to log into anything, and the emails are simple and clean. I also use Riskalyze because their risk questionnaire is incredibly thought-provoking and practical. I always walk the client through it and I continue to find that, as much as this industry is about quantitative metrics, it's also about feelings and preferences. Aside from this core stack, we’ve built our own household-level asset location calculator and, for very specific client scenarios, we’ll use Pontera to support managing externally-held 401(k)s. Can you walk through what the typical onboarding experience looks like for a new client, and how Betterment for Advisors might fit into that onboarding flow? Onboarding is where Betterment for Advisors excels—it’s truly an order of magnitude better than any existing legacy custodian platform. When chatting with a prospective client, I try to get as familiar as possible, as quickly as possible (I think most people prefer an informal style). After connecting and deciding to work together, onboarding is so simple. I first send the client an invitation from the advisor portal—an email gets sent, from which they can set up their login and verify all the information themselves. The process makes steps that other custodians force you to take look utterly superfluous—Betterment for Advisors is ten times simpler and faster. From there, we sync all of the client's accounts in Blueleaf and use Riskalyze to handle the risk questionnaire. I was reflecting on how onboarding used to be with other platforms and it makes me so tired just thinking about it. As a real-life example, I was guiding a couple through multiple forms at a legacy custodian and it took two full hours—and this was using DocuSign, which is supposed to be fast and easy! They were so gracious and thanked me for my patience and I kept thinking this would literally take 10 minutes with Betterment. With Betterment, it’s just two steps: send the invitation to open up the account, then send a transfer request. At a legacy custodian, you have to find all of the relevant forms and manually type in all the information. It utterly pales in comparison to Betterment. What is one critical lesson you've learned from your clients? Clients are real people, and they like to talk to real people. Often, clients don't even want to discuss business—they want to connect personally and talk about what’s going on in their lives, which is great! And everyone has their own things which are important or significant to them—no one is the same, everyone is an individual. This interests me to no end. So I’ve found that this personal connection is vital in this business—and in life in general. Has a remote or hybrid work environment changed your client relationships? No, not much. I think people underestimate just how much you can get done virtually. If anything, going digital and keeping up with technology has continued to make communication feel real and familiar for clients, which is my goal. What do you think is the biggest opportunity for advisors today? Creating a better client experience. It is such a beautiful thing to be able to connect with another human being. I often think about companies that have exceptional customer service. There’s this adage about Zappos, for instance, that they’re a customer service company that just happens to sell shoes. I feel the same way about this industry. What comes first is the connection with another human being—and that's the fun part. Creating an exceptional, delightful, important experience for the client is the biggest opportunity for advisors today, and for anyone else interacting with the end-client directly. If you could only give one piece of financial advice, what would it be? Time is on your side. Whatever alpha value an advisor might bring, the biggest driver of returns is time. Even my retired clients are often surprised to realize they still have decades left to grow. Realizing time carries so much weight can be calming. With more time, you will have a better investment experience. Obviously, there's no guarantee, but we do have a century of historic data to reference. Taking a step back and focusing on this long term process can help you put things in perspective. It can give you much-needed clarity, and might ease some anxieties about investing or retirement. -
Helping Millennials Match Their Money with Their Values
Helping Millennials Match Their Money with Their Values A conversation between Sophia Bera Daigle and the Betterment for Advisors team about building a goals-driven practice for millennial clients. Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Advisor: Sophia Bera Daigle, CFP® After working in traditional financial planning firms since 2007, I quit my job at a NY start-up to launch my own firm, Gen Y Planning. I now live in Austin, Texas with my husband, Bryan, and our son, Theo, who was born in the fall of 2020. After spending several months living abroad in 2019, we’re excited to share our love of travel with Theo! Firm: Gen Y Planning Gen Y Planning brings financial planning to millennials. We now work with a variety of clients in their 20s, 30s, and 40s who are in the middle of making huge life decisions: navigating a new job, buying a home, merging finances, starting a family, relocating, and pursuing advanced degrees. The Gen Y Planning team believes that the earlier you work with a CFP®, the faster you can build a secure financial foundation for the future. Why did you decide to become a financial advisor? I like to help people use their money to match their values. My clients range from creatives to small business owners to Silicon Valley employees. Whether you plan to retire early, take a sabbatical, or build a career you love, I’m excited to help! What is the least understood aspect of your job? I would have to say the least understood aspect of my job is that financial planning does not just mean managing investments. I offer comprehensive financial planning, which includes all areas of your financial life: paying down debt, protecting assets that have been accumulated, purchasing a home, refinancing a mortgage, reviewing job offers and company benefit packages, reviewing tax returns, and proactively tax planning. My approach is goal-driven with my clients in the driver's seat. I work with clients to co-create their recommendations so that they’re more likely to implement the recommendations. Then my team and I act as their accountability partners to see that they are following through on the recommendations so that they can reach their goals. Why did you choose to partner with Betterment for Advisors? I like that Betterment offers robo-advising, which includes automatic rebalancing, at a low, flat platform fee, and doesn’t charge more for trades. In addition, Betterment has a simple, user-friendly interface that makes it easy for clients to navigate. Betterment also has great features like effortless Roth conversions and tax-loss harvesting. Something small that I love is the ability to set up an automatic investment weekly instead of monthly. It’s a great way to dollar cost average into the market while also smoothing out cash flow. How have you set up your firm's tech stack? And how has leveraging automation impacted your practice? We utilize a handful of low cost tech tools (Trello, Dropbox, Zoom, TextExpander, Gmail, etc.). We have found that our philosophy of “simple over sexy” has a greater impact on our clients than fancy software with charts and graphs. We don’t pay for expensive financial planning softwares that produce twenty-page reports our clients will never look at. The benefit for us and our clients just isn’t there. We like using Trello to track our clients’ financial goals and life changes and to take notes. We have a board for each client so we can easily prepare for our client meetings. We have a Google form we send to clients before their check in meeting and they update their net worth in Excel. We send them a one-page meeting recap after their meeting in a PowerPoint that we print to PDF. It’s efficient, simple, and the action items that came from the meeting are clear. Can you walk us through what the onboarding experience might look like for a new client at your firm – from when they land on your website to your team actually opening and transferring their assets – and how Betterment may fit into the onboarding workflow? An interested potential client starts by scheduling a 30-minute introductory meeting. They would fill out an intake form prior to our meeting. During the meeting we learn more about them, dive into the services we provide, and end with a quote for our services given their financial situation. After, if they decide they want to become a client, they sign a contract, pay their upfront client fee, and schedule their first client meeting. Prior to this meeting they are given a list of documents to gather and upload to a Dropbox folder for us to review. What is one critical lesson you have learned from your clients? My values and priorities are not necessarily the same as my clients. I need to keep this in mind when a client is making a decision that might not be the best financial decision, but may be a really important life decision that deeply affects other areas of their life. In that case, I want to help them figure out the best way to financially navigate through that choice so that they can continue to reach their goals. How has a remote or hybrid work environment changed your relationship with clients and prospects? I have always run my business remotely, which has a plethora of benefits for clients, the business, and my employees. Clients can meet in the comfort of their home or office and don’t need to worry about commuting to our meeting. It also allows me to work with people across the country and travel myself. It opens my workforce options up to the whole country as well since I don’t require my employees to be in one location and come into an office. I can’t imagine having in-person client meetings again. Now, when I get to see my clients in person, it’s only social! It’s way more fun that way! What do you think is the biggest opportunity for advisors today? I think the biggest opportunity for advisors is in working with the millionaires of tomorrow—young professionals who are making good money but maybe haven’t accumulated much wealth yet. They still need planning in many areas of their lives: paying down student loans, purchasing their first home, negotiating job offers, navigating company benefits and company stock options, starting a family, and saving for retirement. If you could only give one piece of financial advice, what would it be? Don’t wait to start. Small steps have a dramatic impact on your overall financial situation. You don’t want to be shoulders deep in a complex financial situation before you seek help. Find a planner who will be your financial partner to navigate finances with you so you can reach your goals and achieve your dreams. -
From $0 to $40MM AUM: Jason Hamilton on Improving Client Service with Technology
From $0 to $40MM AUM: Jason Hamilton on Improving Client Service with Technology We sat down with Jason Hamilton to learn about his personal journey to becoming a financial advisor and launching his own practice—and how Betterment's technology has helped him build a $40 million firm. Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Advisor: Jason Hamilton Jason J. Hamilton, CFP®, CRPC® is a Certified Financial Planner™ and Chartered Retirement Planning Counselor® who helps high-performance professionals and high-net-worth investors create alignment with their abundance so they can live in flow with their wealth and serve their purpose. After coaching clients on their finances for over a decade and over six years as a registered investment advisor, he knows what helps clients go from chaos to serenity with their finances. As a Certified Financial Planner™, he also brings the technical expertise, education, experience, and ethics requirements investors are looking for to help them achieve their goals, lower their taxes, and optimize their income and investment returns. Jason is the founder of Keep It Simple Financial Planning, a fee-only registered investment advisor, managing over $40 million in assets for his clients. He is also the Head of Family Financial Coaching at his family's nonprofit IDEAL, a community development corporation, located in East Los Angeles. Firm: Keep It Simple Financial Planning Keep It Simple Financial Planning (KISFP) was founded in 2016 to help underserved investors receive technical financial advice in a simple and understandable way. Read more about why we believe “Keep It Simple” is the best philosophy. Why did you decide to become a financial advisor? My story originates just before the 2008 financial crisis. Before this, my family owned a small business: An Italian restaurant in a suburb of San Jose. The restaurant's name was Mio Vicino which means "my neighbor." Prior to the financial crisis, my family hired an advisor to help them with their financial and retirement planning. Unfortunately, instead of comprehensive fiduciary financial advice, my family was sold a myriad of insurance products. I believe with better planning, we would have had a much better response and outcome to the economic situation. Before the end of the crisis, we were forced to close the restaurant due to insufficient financial resources. On the bright side of this journey, I saw what my family went through and became determined to not have the same fate for myself. This led me on my journey of financial self-discovery to learn everything I could about financial planning and wealth management. What started as a Google search for "how do people become wealthy?" became an obsession and now a career. Helping clients get into alignment with their wealth has been rewarding in many ways. For years prior to becoming an advisor, I would read online forums, where I found out about advanced financial planning education to become a CERTIFIED FINANCIAL PLANNER™. At the time, I had no knowledge of the financial planning industry. Since my company offered education reimbursement, I decided to sign up for a course at UCLA extensions. This was the beginning of my journey to become a CFP®. I enjoyed the courses. They filled in the gaps from my prior reading and gave me structure to the process of proper financial planning. It was actually fun! In my search to change careers, I found a group called XY Planning Network that was providing the tools and education to help advisors launch their firms, and the rest is history. I hired coaches and consultants to help me start up and learn the business and the compliance aspects of running a registered investment advisor and, in 2016, I launched Keep It Simple Financial Planning. Over time, I have obtained the Chartered Retirement Planning Counselor® and CERTIFIED FINANCIAL PLANNER™ designations. More recently, with the popularity of investing in cryptocurrencies and other digital assets, I completed my Certificate in Blockchain and Digital Assets and became a member of the Digital Assets Council of Financial Professionals. Today, we help clients with flat-fee financial planning advice in nearly 40 states and manage over $40 million in assets under management for our clients. Coming from a lower-middle-class family, we knew how to work but I was never taught HOW to build wealth outside of one day buying a home. Investing was not part of the culture of my family. We all knew how to work hard and sacrifice. But, one thing that I teach now that I didn’t get growing up is how to turn my labor into capital that will work for me. Books also had a significant impact on my journey. Dave Ramsey, Warren Buffet, Suze Orman, and Jack Bogle are a few of the authors from whom I absorbed great insight and knowledge. But the most impactful for me were two books by Thomas J. Stanley: The Millionaire Next Door and The Millionaire Mind. The Millionaire Next Door showed me the path for how to become a first generation millionaire (and that over 80% of millionaires are first generation!). And The Millionaire Mind showed me what it takes to achieve multimillionaire status. Reading these books changed my perspective significantly about what it takes to be successful financially. What is the least understood aspect of your job? The least understood aspect of my job is that many times there is more psychology than technical financial planning in what we do. We are dealing with humans and not machines. Within a number of hours I can tell a client exactly how to optimize their financial situation. The challenge is, what may be optimal financially may not be optimal emotionally. As advisors, the better we are at understanding humans, the more likely our advice is likely to be implemented. What does your firm's current tech stack look like? I am a self-admitted technology addict. While we don't use all of our tools with all clients, there are some great applications for advisors to use when appropriate. We use: Asset Map, RightCapital, Income Conductor, Income Laboratory, Holistiplan, Cash Flow Mapping, Kwanti, AdvicePay, and, of course, Betterment for Advisors. Why did you choose Betterment for Advisors? And how has our technology impacted your business? I have tried multiple custodians since starting my firm but the efficiency, beautiful client portal and app, and the support team I get with Betterment for Advisors is second to none. Because of the digital onboarding and easy digital account transfer process I have been able to scale much faster and serve a more financially diverse client base than I could with a traditional custodian. What is one critical lesson you have learned from your clients? One critical lesson I have learned from my clients is that if you help people get into alignment with their wealth, other parts of their lives will flourish as well. Finances are such an important aspect of living in the United States and, if you can get into flow with your financial wealth interactions, you will experience harmony in other areas of your life typically. How has a remote or hybrid work environment changed how your team works? Our firm has been primarily virtual since our founding over 6 years ago and, since the pandemic, it has tripled in size as many more investors have become comfortable with virtual meetings. In our case, the remote work environment has improved our ability to grow and serve clients. We were ready as more and more clients become comfortable with using virtual communication tools to stay connected to friends and family. Now, it has become the overwhelmingly preferred meeting method and has allowed us to help clients solve the specific challenges they face from nearly anywhere in the nation. What do you think is the biggest opportunity for advisors today? To put themselves out there on social media to discuss and share their expertise. I see so many advisors wasting time and money on paid lead gen services, which if you knew how they worked, are typically a huge waste of money. Maybe not waste but for sure not fully optimized. People in general are desperate for a great advisor that aligns with their personality type. I think if advisors would just put out one educational video per week in their niche, or even general good financial advice, they would never have to struggle for business. If you won the lottery, what would you do with the money? Pay off mom's house and travel a lot. If you could only give one piece of financial advice, what would it be? That if your financial situation is not ideal, DO NOT blame or put any responsibility on anyone outside yourself. If you do not take 100% ownership of your situation you will never be successful. Literally anything you need to know about finances, you can find online in a blog or on YouTube. The challenge is people are typically their own worst enemy when it comes to finances. For this reason, hiring a trusted fiduciary advisor may be the best decision individuals make for themselves.
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Introducing the RIA Tech Suite
Introducing the RIA Tech Suite The RIA Tech Suite brings together complementary technology platforms to help automate critical back-office tasks for advisors. The RIA Tech Suite brings together complementary technology platforms to help automate critical back-office tasks for advisors. Along with RIA in a Box®, RightCapital, and Wealthbox, Betterment for Advisors is excited to introduce the RIA Tech Suite: a set of services and tools that advisors can use to help automate and streamline back-office tasks. Why should firms utilize the RIA Tech Suite? Together, these intuitive and complementary tech tools can streamline everyday practice management, giving you more time to acquire new business and to provide a better experience for your current clients. Additionally, the RIA Tech Suite includes discounted pricing for firms that adopt two or more of the services—a discount that could save the average RIA firm up to $3,200 in their first year.1 Here are the tools available on the RIA Tech Suite: Betterment for Advisors - A leading digital-first wealth management platform that leverages smart-tax technology. RIA in a Box® - Compliance, cybersecurity, and operational software for investment advisors. RightCapital - Wealth planning software that makes planning easier and more powerful for advisors and their clients. Wealthbox - A leading CRM software application that helps advisors manage their clients and collaborate with their team. The RIA Tech Suite can foster growth for tech-centric firms that are focused on efficient client service and expanding their books of business. “Our goal at Betterment for Advisors is to empower advisors to grow their businesses and build deeper client relationships,” writes Jon Mauney, General Manager of Betterment for Advisors. “The four companies that are part of the RIA Tech Suite all share this objective with a common approach to their services: providing beautifully designed, easy-to-use, and powerful tools for advisors and their clients.” The RIA Tech Suite is now available to all registered investment advisors. You can learn more and sign up for this offering by visiting https://riatechsuite.com. Betterment for Advisors is a member of the coalition known as RIA Tech Suite alongside three other platforms: RIA in a Box, RightCapital, and Wealthbox. The four companies are offering advisors who become new clients of two or more members of RIA Tech Suite, discounts on services provided by such participating companies. Betterment and aforementioned firms are not under common ownership or otherwise related entities, and no compensation has been exchanged between the members of RIA Tech Suite for the purposes of entering into this coalition. Terms subject to change. This offering is for investment professionals only and is not intended for use by private investors. ¹ 3200 USD is an estimate of the maximum amount saved on the annual cost for combined subscription fees across all four services noted in this article. Calculation assumes the average of weighted monthly rates offered across all four services plus their onboarding fees, which are subject to change at each service providers’ discretion, and then applies a 15% discount from each. The discount rate of 15% per company is activated upon engagement of a minimum of two companies. Actual dollar amount saved may vary; Betterment makes no guarantee of the specific dollar amount your firm could save. -
FAQ: Agreement Automation Process
FAQ: Agreement Automation Process The Betterment for Advisors Client Agreement Automation function will make onboarding your new clients fast, easy, and completely paperless. Will my firm need to update our ADV and/or Customer Agreement to reflect the incorporation of Betterment for Advisors into my practice? Yes, you will need to update your Form ADV Part 2A and most likely your Customer Agreement to reflect the incorporation of Betterment for Advisors into your practice, including (among other things) how your firm uses Betterment’s sub-advisory and brokerage services, and Betterment’s fees. Since each situation is unique, please consult with your attorney or compliance officer. Can Betterment for Advisors automate the signing of my agreement with my client? Yes, you can provide PDF versions of your client agreement, Form ADV Part 2, and privacy policy to include as part of the electronic signup process a client undergoes with Betterment. We also provide reporting in your dashboard about which versions your clients have agreed to, and when. You can read more about our agreement automation feature, including legal disclosures, here. What relationship does the client have with Betterment? Betterment acts as the sub-advisor to your client. You still remain the primary advisor to your client. When your client goes through the new account opening process, they will sign an agreement with Betterment directly as the sub-advisor, and, if you wish, an agreement with your firm directly as the primary advisor. Describe the process your product uses to convert information provided by the client into a risk profile in the interview process. The platform automatically recommends investment goals and associated recommended allocations for each such goal for new accounts established on the platform using the client’s age, information provided by the client during account creation regarding a particular financial goal, and the type of legal account. Am I able to see an archive of electronically executed client agreements? If so, what does this look like? If you enable the agreement automation feature to deliver a paperless account opening process for your clients, an archive of the date/time stamp and the version of the agreement that each client electronically signed is housed on the “Agreements” tab of the advisor dashboard. To learn more about our agreement automation feature, please see here.
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Training Video: Sync External Accounts
Watch our product training video on how to assist your clients in connecting external accounts to ...
Training Video: Sync External Accounts true Watch our product training video on how to assist your clients in connecting external accounts to the Betterment experience. -
Training Video: Link a Bank Account
Watch our product training video on how to connect a funding account to help your clients transfer ...
Training Video: Link a Bank Account true Watch our product training video on how to connect a funding account to help your clients transfer cash into Betterment.