Advisor Resources | Betterment for Advisors

What's new from Betterment for Advisors

What's new from Betterment for Advisors Apr 4, 2024 6:55:00 PM At Betterment for Advisors, our customers are our first priority. We’re constantly working to elevate the advisor-client experience, and building scalable technology with your goals in mind. 2024 is off to a great start: Read on to get a sense of what’s new. Table of Contents Portfolio and cash management Mutual funds and more added to custom model menu Simple account migration Bring cash into focus with 5.00%* APY (variable) and recurring transfers Advisor dashboard Co-pilot: Onboarding lockouts and Summary page notifications Client activity reporting Advisor service Get the support you deserve with Transition Services Additional improvements 401(k) matching on student loan payments Editable custom model portfolios Automated 401(k) force-outs Mutual funds, Bitcoin ETFs, and more added to custom portfolio menu This year, we’re increasing our investment choice to give advisors more control in meeting growing client demand for personalization. Take a look at the most recent updates to the custom portfolio menu: Mutual funds: We added over 2,000 mutual funds to the custom portfolio menu, including Vanguard, PIMCO, T. Rowe Price, and Fidelity, in addition to the 1350+ existing ETFs. Stay tuned as we roll out thousands of additional funds in the coming months. Bitcoin spot ETFs: Advisors who want to increase investor exposure to Crypto can now access 11 Bitcoin ETF tickers in custom model construction: GBTC, BITB, HODL, ARKB, EZBC, BTCW, BTCO, FBTC, DEFI, BRRR, and IBIT. Dimensional funds: We offer access to Dimensional funds at a low cost. Now, you can create custom models combining Dimensional funds and other mutual fund families with ETFs, and set custom drift thresholds and capital market assumptions for Dimensional models. Simplify firm-wide portfolio updates with bulk actions Betterment for Advisors’ custom model portfolio builder helps RIAs construct personalized investing strategies at scale. Now, you can move all accounts from one portfolio strategy to another in a single, bulk action. To move accounts, simply: Navigate to the current portfolio assigned to relevant client accounts Select your desired destination portfolio and configure your desired allocation using risk level mapping Choose a tax-aware migration strategy to transition accounts with greater precision and tax-efficiency. You’ll be able to review impacted accounts before submitting the bulk portfolio change request. Bulk portfolio actions power you to make strategic decisions for your clients even faster. Bring cash into focus Managed cash accounts bring more of your clients' assets into your overall orbit, helping you better advise on short and long-term goals, gauge the right amount of risk to take in your clients’ investing portfolios, and open up conversations on investing excess cash. Your clients can now set their own schedule for recurring transfers from Cash Reserve† to IRAs and investing goals—and rest easy knowing there are no overdraft fees. They’ll earn a high yield on cash up until the day it’s transferred (now at 5.00% APY* variable), and you can get the visibility you need to offer more holistic advice. Learn more about Cash Reserve. Streamline client onboarding and the KYC process with Co-pilot Co-pilot is designed to intelligently surface unresolved client tasks, from pending invites and account approvals to failed ACATs and missing beneficiaries. This quarter, we introduced a new section, Onboarding lockouts, to help you quickly surface clients who are blocked from completing their onboarding due to KYC issues. Co-pilot will now signal when clients are actively stuck in the identity verification process, presenting the date of account suspension and the current status of ID review. From the Co-pilot dash, you can quickly unblock clients and streamline your personal to-do lists by: Resending identify verification instruction Uploading your client’s identity verification documents Removing accounts from the list that were already addressed offline. Our product squad is also sprucing up the dashboard Summary page. The new Co-pilot notifications display gives you an overview of active and recently resolved Co-pilot tasks as soon as you log in. Client activity reporting We rolled out a new Clients page experience, with comprehensive search functionality and reporting tools built in. You can now view historical transactions across all your clients from the Activity tab. Sort and filter transaction history by date, account type, and transaction type to get a more detailed view into total weekly flows (no client impersonation necessary). You can also search for an individual client or household by name. When you're ready, export the data you need as a CSV file. We also introduced a recent client transactions display on the new and improved Summary page. Get a detailed summary of the latest account transactions—deposits, withdrawals, rebalances, fees, and more—right from your dashboard. Get the support you deserve with Transition Services Our dedication to independent, small RIAs extends beyond technology. We've long had a human support team in place, and firmly believe that our commitment to service excellence is what sets us apart from other custodians. To that end, we’re actively growing our Transition Services Team. This team works with advisors to minimize disruption to practice operations and clients, from communicating the change, to supporting account opening, facilitating ACATs, and building the new client experience after asset transitions are complete. And the best part: no AUM commitment is required to engage our team. The Transition Services Team has hit the ground running in 2024. See how one $125mm firm with over 300 clients recently made a switch. Gain a competitive edge with 401(k) matching on student loan repayments In January, our 401(k) team introduced a new, bundled solution to help bridge the gap between retirement planning and debt repayment. Student loans are a significant financial obstacle for millions and investors are increasingly looking to their companies for help.1 With this new benefit, your plan sponsor clients can offer employees a 401(k) match on eligible student loan repayments—and gain a competitive edge in attracting top talent. "We know that student debt can be a major impediment to saving for retirement," says Sarah Levy, CEO. "Our industry-first student loan 401(k) matching solution is a compelling addition to our modern 401(k) that will help to broaden plan participation to those whose student debt previously kept them from saving for retirement." How it works: Plan participants can record qualified loan payments on their Betterment 401(k), and employers can then match those payments with a contribution to the individual’s 401(k) account annually or during each payroll period. Edit custom portfolios Managing your custom portfolios is now easier than before. With editable models, you can routinely adjust strategies across accounts to better meet your clients’ needs amidst evolving markets. To edit portfolios assigned to client accounts, simply: Add or remove portfolio holdings Update your desired target allocations Select a tax-aware migration strategy to implement changes across clients. Automated 401(k) force-outs Cut down on time and potential expenses for your plan sponsor clients with 401(k) force-outs. This feature automatically removes former employees' assets from the 401(k) plan, or transitions the assets into an IRA when their total balance is less than $5,000. This automation not only reduces per-participant record keeping fees, but can help keep plans below the 100+ participant threshold for annual independent audits.

5 Ways Financial Advisors Can Use Cash Management to Help Boost Business

5 Ways Financial Advisors Can Use Cash Management to Help Boost Business Mar 25, 2024 5:40:45 PM 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.

Introducing Mutual Funds in Custom Model Portfolios

How to Start an RIA (A Guide to Going Independent)

How to Start an RIA (A Guide to Going Independent) Feb 15, 2024 5:52:26 PM 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.

Marketing for Financial Advisors: Help Grow Your Practice by Growing Your Audience

Marketing for Financial Advisors: Help Grow Your Practice by Growing Your Audience Feb 15, 2024 5:51:44 PM A no-nonsense, practical guide to navigating the world of marketing as a financial advisor. The RIA industry is competitive. There are thousands of firms competing for the same pool of clients. An effective marketing plan can be the difference between a growing and a dwindling firm. But as a leader of an independent RIA, the role of marketing falls on you. We’re here to help. This is your no-nonsense guide to building a marketing plan that can evolve with your firm. We’ll cover basics to consider from social media marketing to pricing strategies. Plus, you’ll learn what might be the most important part of any RIA’s marketing plan. Let's dive in. First, let’s cover marketing 101 What is marketing? It’s more than simply advertising. A framework traditionally taught in business schools called the “4 Ps” can give us a starting point for building a marketing plan. The 4 Ps consist of: Product: What unique good or service are you selling? Price: How much do you charge for your product or service? Place: What distribution channels do you use to make the product or service available to customers? Promotion: How do you communicate your product’s or service's value to your target audience? A fifth P is commonly added: People. This emphasizes the cruciality of the roles the people on your team play in marketing your firm and the importance of understanding the people you serve, your clients. A comprehensive marketing plan balances all 5 Ps, both to attract new clients and retain existing clients. You don’t need to be a marketing expert, but you do need to have a full understanding of what you’re selling, for how much, to whom, and where—all while being very clear in how you communicate the value your RIA firm can deliver. Next, we’ll dive into how you can put all the Ps together to create your own marketing strategy. How to position your product Your product is an intangible service. It’s more than simply the wealth management expertise and advice you provide. It’s the entire differentiated experience that you offer clients. That experience is what sets you apart from the advisor down the street who provides similar advice but fails to engage with clients and build trust. The question is: How do you clearly communicate your differentiated service to the world? The answer is: Write a value proposition. A value proposition is a short statement that conveys the unique benefits of your service to your target market. The statement highlights the problem(s) you solve, the benefits you offer, and how you’re different from the competition. Your value proposition serves as a guiding piece of communication for all of your marketing efforts. In addition to a value proposition, having the following resources will help you communicate and show your value to prospects and clients: Client stories and testimonials: Being able to explain how you’ve helped others in similar situations will build trust with clients. Educational resources: Communication resources like a well-written monthly newsletter or weekly blog can position you as an expert and grow relationships over time. Simple tools: Easy-to-use tools like retirement calculators or a simple online client portal that helps your clients understand their investing plans can position your services as convenient and tech-savvy. The perfect price The reality is that pricing is never perfect. It’s something you should revisit annually to make sure your pricing strategy fits your business strategy. If you’re interested in running a fee-based planning practice, the following fee structures can be applied to meet both the needs of your clients and your business model: Hourly fees: Charging by the hour is typically a good option for investors looking for introductory or circumstantial planning advice, or for those who may not have enough capital for you to consider in an asset-based fee structure. Flat fees: Fees are a flat percentage of the total value of the AUM on a certain date each year. The percentage charged can decrease as the AUM increases. Tiered fees: Charging varying fees as a percentage based on different levels of the portfolio. For example, charging 1.50% for the first $1 million, 1.25% for the next $4 million, and 1.00% for amounts above $5 million. Asset class fees: Charging different fees as a percentage of AUM for different asset classes. For example, charging 1.75% on equities, 1.00% on bonds, and 0.00% on cash. As your firm grows or if you serve different target markets, you may want to evaluate your fee structure to ensure it supports the growth of your business. It’s also wise to research how your competitors are charging to remain competitive while maintaining your margins. How to be in the right place for the right people This may be the most important part of your marketing plan: Identifying your target market and learning where you can reach them. Understanding who you serve, also known as your target market, dictates the development of your strategy. If you don’t know who you plan to serve, you can’t write a compelling value proposition, set appropriate prices, or invest in effective marketing channels. (Stay tuned—we’ll cover marketing channels in the next section.) To begin identifying your target market, consider the following questions: If you have existing clients, who are your best clients? Clients that you enjoy working with and are profitable clients over many years. If you’re just starting out, who would be an ideal client in your network? Many of your clients will come from existing relationships, so understanding who in your network would be ideal to work with may be the easiest place to start. Don’t be afraid to be specific and carve out a niche within your target market. The following data points can be helpful to analyze to determine if your target market is big enough to serve: Geography Age Interests and affiliations Career Once you have a profile of what your ideal client looks like, you can then tailor all of your efforts to their needs. Your target market will drive the creation of your value proposition and pricing to ensure it aligns with their needs. Knowing your target market will allow you to determine how to best “distribute” your services, whether that’s using digital communication tools or holding in-person meetings with clients, or a combination of both. To select marketing channels, you’ll need to research where your target market frequents, whether that’s in-person locations or online platforms such as LinkedIn or Facebook. How to promote your firm For many, paid advertising is the first thing that comes to mind when they think of promotions. However, you can leverage more marketing channels than only paid ads to connect with prospective clients. A marketing channel is any communication method or means of distribution used to get your firm’s services in front of the right people at the right time. Common channels for RIAs include: Social media Platforms like Facebook, TikTok, Youtube, and LinkedIn can be convenient ways to connect with prospective and current clients. As we experience the great wealth transfer from Baby Boomers to their heirs, social media can be an ideal channel to reach a younger audience. Examples of typical social media content may include educational videos and articles, information on events your firm is holding, or photos and stories of your firm’s community involvement. It’s crucial to be genuine and connect on a human level on social platforms. There is a saying about social media that “people follow people, not brands” and that is true for your firm too. Make your content personal by featuring your staff, allowing people to build a digital relationship with your advisors. Events Event marketing provides a wide range of options to get in front of your target audience. You can speak or host a booth at conferences, host a local in-person educational event, or plan a virtual event. An example of a virtual event is a webinar on the topic of inheritance and estate planning. You can even partner with other professionals like estate planning attorneys to expand your networks and increase event attendance. A valuable aspect of virtual events is that the recording can be distributed afterward or even streamed on social media platforms. The key with any event is to make sure you are reaching the right audience or you risk wasting your time. For example, you may want to avoid having a booth at a local expo that has a large, broad audience, and instead opt for smaller events with your ideal prospects in attendance. Email Email may be considered an older technology, but it is still an ideal channel to help acquire and retain clients. To successfully incorporate email into your marketing plan, consider making your messages personalized and relevant using data collected from your prospects and clients. For example, for promotional messages, rather than sending the same email to everyone in your database, take the time to automate campaigns that target specific subgroups with specific relevant messages. In addition to promotional emails, you can leverage emails to promote your events, send surveys to collect client feedback, or send an educational newsletter. If you’re consistent and send valuable content, email can be an affordable channel to build trust with your audience. Word-of-mouth Referrals from word-of-mouth are the holy grail of client acquisition. This results in clients that are so happy with your service, they go out of their way to send you likely qualified business. But how do you go about getting referrals? You have to combine being exceptional at managing your clients’ finances with being exceptional at connecting with them emotionally. They need to trust you and trust that if they refer someone they know to you, you’ll provide the same level of personal service. Once you have proved that you are an expert at managing finances and have a client’s best interest at heart, you can genuinely create opportunities for word-of-mouth business. For example, you can send your client shareable bakery items to their office or invite them to bring guests to a local event. Be creative, thinking of ways that are unique and genuine to your firm that could help put clients in a natural position to refer business. Paid advertising The options for paid advertising have grown tremendously over the last few decades. Before engaging in any form of paid advertising, it is important to understand who you will be targeting with your ads, the cost of running those ads, and the estimated number of clients the ads will drive to your firm. This will allow you to estimate the return on investment of your advertising spend before running ads and compare that to the actual outcome. It can be easy to run untargeted ads that end up costing far more than your firm can afford to bring in one client. Examples of paid advertising channels include print ads in local publications, billboards, website banner ads, and social media advertising. One potential strategy is to combine coordinated organic social posts with paid social media advertising, resulting in an integrated effort between all of your social media content. Before you do any form of marketing, it’s important to remember that all materials should follow your firm’s compliance procedures and be archived, including social media content. Take an inventory of your marketing capabilities As you dive into creating a marketing plan, knowing your strengths and weaknesses will position you for success. Focus first on the areas that you know you are capable of implementing. Use this list of questions to assess your firm’s ability to implement each marketing activity: Communications Writing - Are you able to write a blog or newsletter? Contact list - How large is your email list? Public speaking - Does your firm have the talent to present at events? In-person conversation and sales - Does your firm have the interpersonal skills to have successful 1:1 conversations? Camera presence - Does your firm have the talent to present to a camera for webinars, TV interviews, or social media feeds? Communication norms - Does your firm understand the jargon or “groupspeak” used by different target audiences or used on different marketing channels? Advertising Do you have the budget and/or talent for ad placements, graphic design, and website management? Which marketing channels do you understand or have you used in the past? What channels allow you to reach your target market? How will you measure the success of paid advertising? Do you have a marketing compliance strategy in place? Social media Which social media channels are you or your staff currently active on? Which social media channels are your prospects and clients active on? Who will create your social media content? Word-of-mouth Are you able to create opportunities to position your current clients to send you referrals? If you are already receiving referrals, which clients are sending you business and why? Pricing Does your current pricing structure support the ideal growth of your firm? Do your current systems support the ability for you to easily change your pricing or add a new offering? When assessing the list above, keep in mind your time. The more time you spend on a marketing activity is less time with prospects or clients. You don’t need to become a full-time marketer to be successful. Rather, finding the few marketing initiatives that work best for your firm will allow you to grow and maintain a high level of service for your clients. You don’t need to try to do everything. Steps for creating your marketing strategy The following steps provide a simple guide to get your marketing up and running: Calculate your revenue and client growth goals. Identify the gaps between your goals and where you are today. Research and talk to other successful small business owners to learn what works and to set expectations for what success looks like from your marketing plan. Research your competitors' marketing activities to understand how you’ll stack up in the market. Research and identify your target market. Analyze and determine your pricing strategy. Determine your marketing budget for activities like content production, website management, email marketing, and paid advertising. Write your value proposition to be used across your marketing communications. Select and implement two to three marketing activities that are most likely to succeed in achieving your goal. Review results monthly and quarterly to determine what’s working and what’s not — make adjustments as needed. The steps above can be repeated annually or even bi-annually, allowing you to recalibrate your marketing efforts as your business evolves. Marketing pitfalls to avoid Marketing isn’t easy, but it is easy to make it harder on yourself, especially for smaller businesses with fewer resources. Avoid these common pitfalls to position yourself for success. Don’t focus only on lead generation. Lead generation is the process of generating prospects and turning them into clients. This is important, but if sales becomes your sole focus you lose the brand value that comes with providing educational content and building your brand as a trusted financial expert. Don’t hire family or interns to save money. As we said, marketing isn’t easy. Just like financial advice, not all marketing advice and output is equal. It’s worth investing in a professional to make sure your firm is well-positioned in the market. Don’t lose focus and try too many things. Start small and test what you think will work best. Running too many marketing efforts at once can result in watered-down budgets and difficult-to-measure results. Now you’re ready There you have it, a framework to get your firm’s marketing plan off the ground. Do your research, start small, and remember to evolve your marketing as you learn what works and what doesn’t. We understand that as an RIA, you have a lot on your plate from marketing to every other aspect of your firm. Betterment for Advisors frees you up by providing you with tools to help streamline front-and-back office operations and the investment process. To learn more about how our automated workflows can accelerate your ability to serve existing clients and to engage with prospective clients, get in touch with a member of our team today.

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 Oct 6, 2023 3:04:41 PM 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.