Alexander Choi

Betterment for Advisors Case Study Q&A: How Truepoint lowered the cost of serving more clients Founded in 1990, Truepoint Wealth Counsel is an independent and nationally-recognized RIA based in Cincinnati, managing over $3BN in AUM and voted among the 2020 Top Workplaces by the Cincinnati Enquirer. Betterment’s Alex Choi recently sat down with Brad Felix, portfolio manager at Commas (formerly RhineVest), a subsidiary of Truepoint Wealth Counsel, to hear about how the firm has successfully leveraged the Betterment platform to grow the practice. Alex: Tell us a little bit about your practice and the factors that have contributed to your success. Brad: When RhineVest started in 2015, I realized how technology was changing the wealth management industry. Betterment was one of the disruptors driving that change, and we saw how the Betterment for Advisors (B4A) platform could lower an advisor’s operating costs. We wanted to leverage those cost savings to serve those who don’t necessarily have a million dollars (and that’s a lot of people).  We've grown from 0 to 338 households since 2015. Growth was supercharged when Truepoint Wealth Counsel acquired our firm in 2016 and there’s been no looking back. Alex: How does Truepoint think about segmentation and where does Rhinevest fit in? Brad: Today, Truepoint’s True Wealth service offering represents our firm’s bread and butter where we provide tax and estate services. But we still want to serve other clients well and do right by them. So segmentation just makes sense, and the RhineVest/B4A combination offers a great solution. B4A and RhineVest started by serving clients with less than $1 million but is now starting to serve clients in the $1 to $3 million tier as well. Alex: What were some of the biggest hurdles you encountered while you were initially growing your business and how did you navigate those? Brad: I think the hardest thing for every new firm is distribution; and with the less than $1 million client segment, it can be a challenge to convince people that they need a financial planner. A lot of people feel like they don't qualify. So the first marketing push was letting people know that they had options beyond an insurance company or a bank, and that fee-only fiduciary advice was available regardless of how much money you have in your investment accounts. We tried to do that in a number of ways: a kind of radical, very transparent website that clearly showed pricing and the fact that we had no minimums. We created an edgy brand to show that we don't take ourselves too seriously and that everyone needs and deserves access to financial advice.  We've also done some work around search engine optimization (SEO), focusing on keywords like “financial planner” and local searches in our Cincinnati geographic area. We like to rank well in those local searches and believe that our memorable brand and website helps us attract new clients. I think there's an advantage to being different when compared to lots of financial planners that kind of look the same. I would encourage others to define a unique message and lead with that because it does help you stand out. Although things were slow at first, at some point it just clicked. Delivering on your promises and serving clients well will get that flywheel going where they're telling their friends about the good experience they've had at your firm. Alex: Betterment has always been a big fan of your firm’s website. Can you talk a little more about your process for building that out and why you chose to include what you did? I think a lot of our clients aspire to build similar type sites and would appreciate how you went about it. Brad: I appreciate that. We worked with a really good local designer who pushed us to come up with a very simple message about why we were unique, why we were different.  Our biggest goal for building out our site was transparency. We know that consumers are tired of landing on websites and still not being able to understand how much they would pay for something. We’re very clear, very upfront because in our minds this is the first stage of trust. We want people to talk to us, so our “let's talk''' button is all over our website. If the website conveys enough trust to get them to have a conversation, then we can be successful in moving them to the next stage to be a client. We're actually in the process of rebranding RhineVest and designing a new website. So, be sure to check it out - we think it's going to be even better than what we have now. We felt that Betterment had an attractive product so any chance we had to note our decision to utilize Betterment’s B4A offering and also to highlight how we're providing value to the client seemed to resonate with people. Alex: So how does RhineVest position Betterment for Advisors to its clients?  Brad: We describe Betterment as our technology partner. Given Betterment’s increasing brand awareness, we talk about Betterment alongside Fidelity and Schwab, and people are comfortable. It’s part of our tech stack just like anything else. In addition, we're in the business of financial planning. It's what we do. In that vein, we've always viewed Betterment as a complementary partner, not a competitor. Alex: How do you price your offering, and how do you communicate your firm's pricing to clients? Brad: Our financial planning fee is $65 a month, but we also believe investment management is an essential part of the whole package. Our investment management fee is 80 basis points, which includes the Betterment fee. Alex: Does RhineVest leverage some of the client behavior functionality like goals-based planning modules and behavioral guardrails? Brad: Well, to be honest, the advantage of partnering with Betterment is that it also has a retail product and you put in the research to know what's a good feature, what's a good design choice, how do you get a better outcome, better behavior, etc. We honestly try not to interfere with the work you all do there and really just let the platform guide our clients and focus them on what we do best. We really spend most of our time on financial planning and just working through all the goals a client has set up in the Betterment system. Alex: Can you tell me some ways your practice has become more efficient?  Brad: Very simply, the Betterment platform significantly lowers our cost of doing business. So account sign up, trading, cash management, those are all ways that we're not spending money on labor.  We’re maybe unique among the firms that are using your platform in that we never intended to use Betterment as a solution only for children of our clients, but we now find that we can serve as many people as possible. Automation and efficiency are key to our profitability, because we provide great service at a higher client to advisor ratio vs. the industry. Alex: Could you just kind of take us through what the experience would be for a new client from when they hit your website to you guys actually opening and transferring their assets and where Betterment may fit into an onboarding workflow? Brad: The Betterment technology helps us to compress our onboarding cycle considerably, sometimes to as little as a day. At the end of an introductory client meeting, we send a welcome email that has a link to the questionnaire that helps us learn more about them, a link to open a Betterment account, and a link for our financial planning fee. The client signs our agreement as part of the automated Betterment signup process. Depending on what they fill out in the questionnaire, there may be additional automated follow-up. For instance, if they have certain held away assets, another email asks for more information. Once all the information is received, the advisor can then get a good look at their entire financial picture so that at the first financial planning meeting the conversation can focus on what's important to the client, rather than all the administrative details. Alex: What additional tools and automation do you employ along with Betterment?  Brad: We subscribe to the “low code” or “no code” technology trend. The whole idea is that you don't have to be a developer to create automation between different systems. And that's really the whole premise of what we started experimenting with three or four years ago. We started using Zapier to tie together different pieces of our software. We use Typeform for our initial client questionnaire that we send out and that questionnaire is delivered by Mailchimp, which is a common email service. We also had a CRM at the time, so linking all those together. The basic discovery workflow started when a client booked a meeting through Calendly and then received the questionnaire. Ultimately that information would flow back into our CRM without our advisors doing anything. We were focused on determining how we can spend more time talking with clients and thinking critically while automating everything where human interaction doesn't add value. Alex: So it sounds like you’ve compiled a pretty big tech stack. Do you still find from a unit economics perspective that all those monthly subscriptions are saving you money? Brad: Yes. Our tech stack is not your typical financial industry tech stack. We're bucking the trend on what people say we should use and looking at other industries to find different, innovative tools. We’ve found that pricing for these non-industry tools is dramatically lower. We got rid of our CRM and now use Airtable, which I think everyone should check out. We use a client-to-advisor ratio to help us guide profitability. In a standard firm, this ratio is roughly 100 to 1. Even at 200 to 1, we would have profitable outcomes, but at 300 to 1, we’d feel really confident that creating business in this segment can deliver industry-like margins. It's just a different type of model. It's higher volume, perhaps less complexity, but requires a lot of efficiency to get there. The other metric of course is average account size, but the more efficiency you can create, the lower your average accounts can be. In full transparency, our first business plan assumed an average client balance of $100K. Over time we have far surpassed that. And I think it's only going up from here as we've realized this platform can be used to serve not only clients below a million, but in the $1 to $3 million range. Our average balance is only going up and we're only getting more efficient. Alex: What recommendations do you have for others thinking about how to build out their tech stack? Any resources you’d recommend? Brad: I typically recommend that before people look at available technology solutions, that they start with a whiteboard and draw what they need the technology to do. Then find the tools that fill that need.  As far as resources, I’ve scooped up tons of information from #fintwit on Twitter. I think in this new economy that you don’t have to be a developer. For instance, you can build a website yourself much more cheaply than you could 10 years ago. And with subscription-based tech, you can find solutions that allow you to connect everything together yourself. The reality is the operating cost of running a business like ours over the last decade has declined substantially. But not everyone knows or realizes that yet. Alex: What would you tell advisors who might be skeptical of using a platform like a Betterment or someone else's? I think there's always skepticism around whether an algorithm can perform certain activities such as trading, rebalancing, and asset location. However, the contributions of an automated platform with impressive technology and execution can really shine during a situation like COVID, which came upon us so fast, but was met with industry high records of near-daily rebalancing of client accounts on certain high volatility days. Most human trading teams probably couldn't keep up with that pace. The other concern that advisors may have would be working with a lesser-known custodian. In my mind, custodians are more of a commodity at this point. It becomes a non-issue for most people once you educate them on what a custodian does, what they don't do, and what it really means to be somewhere else, while also articulating the advantages that they can give you. Finally, the Betterment UX provides people a clear, visual representation of their whole financial picture in a way that I don't think anyone's ever gotten with other online platforms or traditional custodians.  Alex: Any parting comments? Brad: The one message I would like to tell everyone is don't just think about Betterment as a way to serve one segment of your existing high net worth business. Go out and build a business to serve the broader population because the market opportunity there is huge, there's no competition, and millions of people need financial advice. We hope that other advisors can learn from our experience in their consideration to utilize automated platforms and other tools.   Disclaimer: This case study was conducted as a Q&A in 2020 and is not reflective of all client experience, which may vary depending on individual circumstances not considered herein, and is not indicative of future or similar outcomes.

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 can save an average RIA firm up to $3,100 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 3100 USD is an estimate of the maximum amount saved on the annual cost for combined subscription fees across all four services. Calculation assumes the average of weighted monthly rates offered across all four services, inclusive of onboarding fees and then applies a 15% discount from each. Discount rate of 15% per company is activated upon engagement of a minimum of two companies. Actual dollar amount saved may vary.

Betterment for Advisors Case Study Q&A: How AdvicePeriod creates space and time to better serve clients We recently sat down with Steve Lockshin, Founder of AdvicePeriod, to hear more about his firm and his perspectives on the benefits of working with Betterment for Advisors. AdvicePeriod is dedicated to focusing clients on the important decisions necessary to manage their wealth. With billions of dollars under management, the firm has repeatedly been recognized as one of the best places to work. In 2019 AdvicePeriod was named "Thought Leader of the Year" and in 2020 Steve Lockshin was named “Innovator of the Year” by WealthManagement.com. We recently sat down with Steve Lockshin, Founder of AdvicePeriod, to hear more about his firm and his perspectives on the benefits of working with Betterment for Advisors.  Could you give us a little summary of AdvicePeriod?  We're an RIA that believes most investments are a commodity and what matters most is planning and taxes. Our focus is on tangible results and leveraging technology.  What have been some of the biggest hurdles or challenges that your firm has faced?  I think it always comes down to people: getting the right people in the right seats. At the end of the day, this is still a service business. What are the key traits you look for in partner firms?  Our partners are not firms but individual advisors at firms that often aren’t keeping up with technology or who don’t believe in active investing anymore. But the number one trait is they believe what we believe. They opt into our philosophy that investing is becoming more commoditized, with planning and taxes being more important. And then culturally, it’s important that they're a fit.  How have you been able to use technology to help streamline your operations?  For clients where Betterment fits, it’s super simple: account opening is simple, all the rebalancing is done, the tax loss harvesting is done. Opening an account takes less than two minutes at Betterment, so that really minimizes the intake process.  At other firms, account opening can take 20 minutes. The workflow hasn't changed, largely because custodians remain the weakest link in the chain. It's still paper. It's still, “You need these forms for this account and these forms for this account. Oh, we gave you the wrong answer. You have to redo the forms.” Some will allow electronic signatures, some won't. It's just a nightmare trying to figure out how to open accounts.  Why were you early adopters of Betterment’s platform?  It's because we saw the ability to create time. In fact, as one of my good friends always says: “In sports, when you're on offense, you're supposed to create space and when you're on defense, you reduce space.” And if we're theoretically on offense, trying to grow our business and help more people, then creating time and creating space is of tremendous value. And that's what the platform did for us.  I think that the tax loss harvesting feature is capable of being a big benefit to our clients. I’m still amazed at how few people understand the benefits of tax-loss harvesting. I show clients how they didn't just get the stated investment return. A client could get an additional 50-100 basis points per year from tax loss harvesting. I think it's also important in a rapidly changing environment that advisors remain on the cutting edge. Utilizing a more forward-thinking company like Betterment that is constantly deploying new technology to improve the client and advisor experience is extremely valuable.  For which kinds of clients is a platform like Betterment a good fit?  For us it’s a good fit where estate planning is not a key focus. It's typically super easy for smaller accounts, but there’s no size limitation. I think our largest account on the Betterment platform is $40 million, so it works just fine for large accounts where we don't have estate planning complexity.  How have you helped advisors you partner with get over any skepticism they might have about Betterment?  The biggest issues are inertia and the fear of being marginalized. But advisors who are open to new technology and who are looking for efficiencies have no problem. Betterment is all about simplicity and creating time that the advisor can use more productively for the benefit of clients. Advisors have to have confidence in what they’re doing and believe that they’re adding value in different ways. I often use a gym analogy. Clients can get in shape on their own for cheap. But if they want a personal trainer, they know it’s going to cost more. That's similar to our role as advisors, and we shouldn’t feel defensive about trying to justify that.  Have you ever had a client leave your firm to do it themselves on Betterment retail? Never, not one. It's actually been the opposite. People will say, “Oh, I have a Betterment account, can I move it over to you guys so you can oversee it?” So we've had a lot of Betterment retail accounts come on to AdvicePeriod, but we haven't seen it the other way around.  Besides Betterment, what other technologies are you using that others may not be? I remain amazed at how many firms deploy portfolio management systems and performance measurement systems and still crank out PDF reports when they can just give the client a portal. We’ve organized all of the important documents and give clients 24/7, transparent access to everything so they can see what’s happened over time from both the planning and portfolio perspectives. Our rollout of Vanilla is a big tech change. Even someone like me, who's super planning focused, had overlooked some very important aspects to being fully prepared with things like healthcare and financial powers for my adult children. Are you seeing an uptick in ESG or SRI requests from clients?  No, but I did read one of the big reports that basically said that something like 60% of people are asking about ESG right now. But we’re not seeing it. And the challenge I have with ESG is it reduces predictability because you increase tracking error. So I've always encouraged people to take the extra money they earn from their high confidence of having a properly allocated portfolio and apply it directly to the charities you care about. But we'll see where things go. There's certainly more social awareness today than there was five years ago.  Are there any specific areas that you think custodians should be focusing on for the next few years?  People should be able to move their accounts like they change their cell phone numbers. So I'd love to see custodians do that. Also: access to data. But instead of opening up data access, they're starting to close it down again. Ease of account opening. I mean, Betterment's been around since 2010 for retail customers, so online account opening in less than two minutes has been around for some time. We're going on the 10th anniversary of being able to open your accounts online and the major custodians still can't do it. So is it that they can't or they won't or both?  One last question: any pearls of wisdom for new advisors who are just starting out?  There’s an old saying in counseling that “you can't be a guide to a place you've never been.” So I would tell everyone to open an account with your own money—not just $10 that you ignore, but enough money so that you pay attention to it. If you're not using the system yourself, then it's hard to say it's good or bad.  Don't be afraid that engaging a platform like Betterment may lose you clients. Find things that make you look better and do a better job for the client. And if you're not using tax loss harvesting in your practice, you're not doing the best job you can for your taxable clients.  Disclaimer: This case study was conducted as a Q&A in 2020 and is not reflective of all client experience, which may vary depending on individual circumstances not considered herein, and may not apply to all clients, as past experience is not indicative of future or similar outcomes. 

Using Technology when Working from Home If your organization has implemented or is preparing to implement work from home (WFH) policies, technology can help you maintain close relationships with your clients and colleagues. Here are a few suggestions for how to keep your business on track.  Get comfortable with video chat. Since face-to-face meetings may be put on hold for a while, video conferencing can be a great solution. Whichever software you choose, be sure to test it before using it with a client, and know that you may need to invest a few minutes at the start of every meeting getting clients comfortable with the technology.  Keep your appointments (even with prospects). Especially given all that’s going on in the markets, clients need to know they can count on their advisor. Reach out well in advance of upcoming meetings to let them know that your organization has implemented WFH policy and provide the dial in information (preferably with video chat).  Don’t hide behind a blank screen. Even if your clients choose to have their camera turned off, yours should always be on so they can see your body language, know that you’re not distracted, and see your passion and commitment.  Match the communication format to the issue. For unscheduled conversations, consider the best communication format based on factors such as the sense of urgency or the complexity of the topic. Long email chains can be frustrating for everyone involved. Picking up the phone is often the speediest course of action, and having a video component can be helpful.  Make your presence known in group meetings. In group meetings, be sure you remain present and are actively listening to the discussion. Participating in meetings via video helps ensure you remain focused, allows you to raise your hand if you have a question, and helps others know you are engaged.  Create an environment at home that is conducive to work. Try to set up a quiet, dedicated workspace and consider how you'll take calls. Keep to your normal business schedule as much as possible. Shower, get dressed, and take a short walk to “commute” to the office before settling in for the day.  Minimize distractions. Distractions can be a major issue, so be ready to make adjustments to avoid them. If you have others in the house, talk about 'office etiquette' including when it is appropriate to interrupt, what it means when you have headphones on, etc.  Keep teamwork and collaboration alive. Allow for time for collaboration and relationship-building, even if you have to schedule it. Make full use of any collaborative tools you have access to. Google Docs, for example, are a great way to get clarity, gather input, and gain consensus without an in-person meeting.  Communicate more frequently with your team. Don’t ignore the need to keep in close contact with your team. Check in with one another at the beginning and end of each day so everyone knows when you're on- and offline. Being less visible to one another makes it even more important to keep each other in-the-know. Maintain a sense of transparency by discussing what you're doing, sharing your work-in-progress, and keeping everyone in the loop before they wonder how you’re spending your time. 

More Billing Flexibility For Advisors Betterment For Advisors has listened to advisor feedback and is now offering new Billing Plans that will provide more flexibility for how advisors can charge their clients. We value the feedback our advisors provide, and one thing we’ve heard is that they want more flexibility over client billing. Our three new Billing Plans will allow advisors to set fee structures that fit the needs of both their advisory firm and their clients. Under each plan, advisory fees will accrue daily and be assessed quarterly as usual. Advisors who have admin privileges can create new Billing Plans and set the default Plan for their firm, which will be used for new households moving forward. Any advisor can choose from the list of available Billing Plans—which are created by admin advisors—and assign any Plan to their clients. Below, we’ll outline how each Billing Plan works and give examples of how fees might look for households of varying asset ownership levels. Asset-Based Billing Fixed Fee Billing Tiered Billing Note that regardless of which Billing Plan is chosen, each advised client pays a percentage fee directly to Betterment for portfolio management. The fees represented in each Billing Plan below are additional fees (on top of Betterment's wrap fee) that are collected by Betterment on behalf of the advisor and sent to each advisory firm on a quarterly basis. Asset-Based Billing In the past, the only billing option for advisors was to charge basis points (bps) on a client’s assets, regardless of account balance. We’ll still be offering this asset-based billing option, however, it must now be applied to a total household rather than separately across a household’s legal accounts. As a reminder, legal accounts include individual taxable, joint taxable, trusts, and each type of IRA. A household consists of all legal accounts owned by one person, as well as all the accounts owned by anyone that person shares a joint account or trust with. Households can also be created by explicitly associating two or more people. Example of Asset-Based Billing Plan at 50 bps Balance Annual Fee Approx. Quarterly Fee Household 1 $50,000 $250 $62.50 Household 2 $500,000 $2,500 $625 Household 3 $3,000,000 $15,000 $3,750 For an advisor's existing households, we will automatically carry over their existing asset-based billing plan. The advisor will be able to make changes if they would like, but otherwise, there is nothing further they'll need to do. Fixed Fee Billing The ability to charge a flat annual fee is something advisors have asked for—so we’ve added it to our Billing Plan options. Advisors can now choose a fixed annual fee for their services, and apply it to households regardless of balance. The most important thing to know about this plan is that a household’s balance must be above the fixed fee amount in order for fees to accrue. For example, if the fixed fee is $5,000, a balance of $4,999 would not accrue fees. Because fees accrue daily, if a household’s balance is below the set fixed fee amount at the close of market on any given day, no fee will accrue on that day. Since fees are assessed quarterly, the annual fee will be prorated across each calendar quarter. Tiered Billing Tiered billing allows for ranges to be set for both asset-based fees and fixed fees. The tiers work similar to tax brackets, in that only the assets held within each tier’s range are charged with that tier’s rate. Below is an example of what an asset-based tiered structure might look like. Example Tiered Billing Structure: Asset-Based Asset Range Rate $0 to $100,000 100 bps $100,001 to $500,000 75 bps Over $500,001 50 bps Households under the above tiered billing structure would be charged as follows: Balance Annual Fee Approx. Quarterly Fee Household 1 $50,000 $500 $125 Household 2 $225,000 $1,937.50 $484 Household 3 $2,600,000 $14,500 $3,625 Setting A Minimum Fee Advisors can utilize the tiered structure to set a minimum fee by setting a fixed fee for the lowest asset tier, and then applying an asset-based fee for the higher subsequent tiers. Just like under the fixed fee plan, a household’s assets must be higher than the lowest fixed fee rate in order for fees to start accruing. Example Tiered Billing Structure: Fixed Fee + Asset-Based Asset Range Rate $0 to $100,000 $1,000 per year $100,001 to $500,000 75 bps Over $500,001 50 bps If you have any questions about how Billing Plans work, head to our FAQs to find answers to the most commonly asked questions. If you still need help, our Advisor Support Associates can help you find the right billing solution that works for your firm. Lastly, keep the feedback coming—we value the voices of our advisors and we will continue to make improvements to meet their dynamic needs.

Advisor Spotlight: Paul Sydlansky, Lake Road Advisors For our second Advisor Spotlight, we welcome Paul Sydlansky, founder of Lake Road Advisors, an independent, fee-only financial planning firm. Advisor: Paul Sydlansky Firm: Lake Road Advisors Bio: Paul Sydlansky, founder of Lake Road Advisors LLC, has worked in the financial services industry for over 20 years. Prior to founding Lake Road Advisors, Paul worked as a relationship manager for a Registered Investment Adviser. Previously, Paul worked at Morgan Stanley in New York City for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018, he was named to Investopedia's Top 100 Financial Advisors list. Paul received a Bachelor's degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network (XYPN). Firm Bio: Lake Road Advisors LLC is an independent, fee-only financial planning firm, specializing in working with mid-career professionals to help make sure they are making the right decisions to live a smart financial life today as well as tomorrow. Why did you decide to become an advisor? There are really 3 main reasons why I decided to become a financial planner. First, I work in a field I have been interested in my entire life (finance/business/markets). Second, I get tremendous satisfaction from helping people feel confident in their own financial lives. Third, it allows me the flexibility to build my own schedule and spend time with my family. What are some questions that you wish more clients would ask, and why? I would like to see more clients ask about systems and techniques for developing better financial habits. There are no secrets or shortcuts to building wealth; it happens over time due to consistent and disciplined action. What do you think is the biggest mistake people make with their money? Having no financial plan at all for spending, saving, or investing. What is the biggest money mistake you’ve ever made? Too much Real Estate exposure in 2008-2009 as a percentage of my net worth. What does your current technology stack look like? Betterment & Vestwell for Investing, MoneyGuidePro and The First Step Cash Management System for Planning, Riskalyze for Risk, Wealthbox for CRM, and Calendly for scheduling. How is technology impacting the way you and your clients interact? Technology allows me to more efficiently and cost effectively serve my clients. Which do you prefer: Billions, Wolf of Wall Street, or The Big Short? Billions. I spent the first part of my career working with hedge funds and they do a tremendous job of putting you into that world. If you won the lottery, what would you do with the money? Definitely complete my current financial goals but I would absolutely need to sit down and reevaluate my personal goals. I wouldn't just retire because I really enjoy what I do. What do you think is the biggest opportunity for advisors today? Changing the way we are viewed as an industry. Often advisors and brokers are viewed as predatory and untrustworthy. We have a chance to really change the landscape and make the business more about helping people figure out their financial lives and have a plan, and less about selling products. If you could only give one piece of financial advice, what would it be? Start investing as much as you can as a percentage of your income as early as you can (I would aim for 20-30%).

Betterment for Advisors Now Offers Dimensional Funds Advisors who have access to Dimensional funds will be able to design and manage Dimensional fund-based portfolios directly on Betterment for Advisors. Betterment for Advisors announced the addition of a new fund family that advisors can use to manage their clients’ investments, Dimensional Fund Advisors (Dimensional). Advisors who have access to Dimensional funds are able to design and manage Dimensional fund-based portfolios directly on the Betterment for Advisors platform. With a 37-year track record and $576 billion in firm-wide assets under management, Dimensional is a leading global investment firm that translates academic research into practical investing solutions that are widely recognized in the financial services industry. “We’ve long been admirers of the strong community that Dimensional has built among financial advisors,” said Jon Stein, Founder & CEO of Betterment. “Dimensional has been on the wish list since the early days of our advisor platform. We’re excited to deliver Dimensional funds in an efficient and low-cost way.” With this new launch, advisors with access to Dimensional funds can leverage Betterment’s core technology around integrated, automated portfolio management with Dimensional funds, saving advisors time and greatly improving the experience for their clients. Dimensional funds are available on the Betterment for Advisors platform with no additional per transaction trading fees. “We are constantly looking to help the advisors we work with deliver outstanding client experiences by providing them with solutions and access to value-added services,” Dimensional Co-CEO Dave Butler said. “We believe Betterment for Advisors has a strong track record of delivering innovative tools and technology. We’re excited to work with Betterment to help advisors advance their businesses.” Since its launch, Betterment for Advisors has continuously evolved its platform based on the feedback of advisors. The introduction of Dimensional funds follows a series of improvements and enhancements made to enable advisors to tailor investments for their clients on the Betterment for Advisors platform. These enhancements include improvements to its allocation advice, access to additional portfolio strategies including Flexible Portfolios, SRI Portfolio, BlackRock Target Income Portfolio, Goldman Sachs' Smart Beta Portfolio, and the Vanguard model portfolios. More broadly, other developments include a new robust advisor dashboard experience, access to commodities, a trust account opening feature, an ACATS tool, and much more. About Betterment for Advisors Betterment for Advisors is a leading digital-first wealth management platform. By combining our technology with an advisor's personal touch, we are reimagining what's possible in wealth management. Our automated, tax-efficient portfolio management, paperless back office, and intuitive user experience empower advisors to grow their businesses and build deeper client relationships. Hundreds of firms trust Betterment for Advisors to custody and manage client assets. For more information visit www.betterment.com/advisors. About Dimensional Fund Advisors Dimensional Fund Advisors is a leading global investment firm that has been translating academic research into practical investment solutions since 1981. Guided by a strong belief in markets, they help investors pursue higher expected returns through advanced portfolio design and careful implementation. With clients around the world, Dimensional has 13 offices in nine countries and global assets under management of US$576 billion as of March 31, 2019. Learn more at us.dimensional.com.

5 Ways to Make Small Clients More Profitable As a financial advisor evaluating the future of your firm, it's time to think more expansively on the potential of small clients and accommodated accounts. This article was originally published on WealthManagement.com. If you’re like most advisors, you focus most of your time and energy on your “A” and “B” clients—those with large investable assets and who represent the “bread and butter” of your business. The smaller accounts (“C”s) are often viewed as requiring too much time relative to the revenue they generate—time that could be better spent developing new A and B clients and increasing their assets under management (AUM). Rather than ignore these clients (or cut ties with them altogether), it’s time to think more expansively about the potential of smaller accounts. Much of their value to you as an advisor is the high potential of these often younger clients to grow into traditional clients. Furthermore, working to build long-term relationships with the next generation of wealth helps “future proof” your firm. Allowing junior advisors at your firm to manage these small clients benefits your firm, too, as it gives them important client-facing experience. Remember, too, that small clients may be your biggest, most loyal fans: they trust you, are often a source of referrals, and appreciate that they’ve been well-served even though they’re not a great source of revenue (yet!), so efforts to nurture them can be very productive. Here are a few steps you can take today to make them more profitable: 1. Be selective about the small clients you advise. Look beyond a client’s investable assets to understand their underlying investing philosophy and their mindset regarding saving. With time, does the client have the potential to become more like your traditional clients? If they’re a DIYer and not likely to accept a broader spectrum of guidance, or if they’re highly sensitive to fees, it’s unlikely that the client will be profitable (or even advisable) in the long term. Similarly, if their occupation and career path do not suggest upward mobility and increasing assets, they may not be a good fit. The best investors are those who understand, value and are comfortable taking your guidance, and who are willing and able to pay for it. Tip: Don’t summarily reject DIYers if you can determine that this person is someone who’s realized they can no longer manage their investments well on their own. These can be great clients who ask good questions, understand the investment process, and who aren’t reactionary when the market dips. 2. Consider outsourcing your investment management. A study by Cerulli (Cerulli Associates, US Advisor Metrics, 2016) found advisors spend nearly 20% of their time on investment management (half of that on portfolio-related tasks like research and due diligence). Advisors who outsource spend 12% of their time meeting prospects and 37% meeting existing clients, compared with 6% and 20%, respectively, for advisors doing their own investment management. More time with prospects and clients has a huge payback: outsourcing investment management, on average, added an additional $14.5 million to advisors’ assets annually – twice the amount of those who managed investments in-house. Tip: While clients might initially be resistant when you explain you’re relying on outsourced expertise for managing their portfolios, positioning it as a strategic move that allows you to serve them better will help allay any fears they may have. 3. Invest in technology to support administrative needs. The right technology can streamline operations and reduce overhead, and, more importantly, make it possible for advisors to expand their reach, targeting more and different types of clients. There are a number of tools available, including those that allow you to hold virtual meetings, eliminating travel expenses and making meetings more convenient for you and the client. Virtual meeting tools also minimize the effects of a client moving out of your area. Other tools include visualization software like Tableau that improve client interactions by enabling you to present powerful visual analytics, and calendaring systems that take the hassle of scheduling routine appointments off your plate. Not only do these tools relieve you of many of the time-consuming (and relatively low-value) tasks, they address millennials in the way this demographic prefers and expects. According to a Deloitte report, millennials are digital natives who embrace technology and consider online platforms an important aspect of financial advice. In fact, 57% percent even say they’d change their banking relationship for a better technology platform solution. Tip: When implementing new technologies, start with existing clients first – and don’t overlook older clients; they may appreciate tools that make engagement with you easier and more productive. Once you have evidence that the technology adds value, introduce it as a valuable part of your service offering. 4. Leverage a virtual assistant (VA) to do routine tasks. By turning over low-value work to what’s essentially a freelancer (or, in some cases, automated intelligence “bots”), you’re able to spend your time on higher-leverage activities. Websites like upwork.com connect you with virtual or AI assistants who can schedule appointments and referral dinners, find contact information for prospects, send thank you notes and similar work. Unlike salaried or hourly employees, you pay only for the actual time a VA spends working, making him or her a more flexible resource whose usage can easily be scaled depending on need. Tip: To work effectively with a virtual assistant, you must view him or her as another employee. Set your VA up to succeed by clearly outlining processes and providing specific instructions for each task. Send a test project to gauge the quality, expediency and overall cost-effectiveness before you commit. 5. Rethink pricing. Today, many advisors are still pricing their services based on assets under management, typically at 1%. The failure of this method is that it keeps clients with less money from investing – or, if they do invest, keeps the advisor from being profitable. And, when the market declines, fees decline, yet advisors are offering the same level of service to their clients, regardless of the market environment Though asset-based fees remain the most common fee structure, according to Cerulli the number of advisors charging fixed fees for financial planning continues to rise, increasing from 33% in 2013 to nearly 50% in 2017. Interestingly, far more millennial advisors are charging fixed fees (62%), suggesting that as younger generations become increasingly willing to pay for financial advice, younger advisors are aligning with the trend by implementing this model. It could also be a reflection of that generation’s familiarity with and use of subscription-based services, like Netflix and Amazon Prime. A close look at how much time you’re spending on small accounts might reveal an opportunity to structure your pricing differently. Conduct a simple time study: assign a dollar value (e.g., $200) to the hours you’re spending and determine what margin you want. If the results show that you’re not making the margin, you may want to consider implementing a flat-fee based structure to achieve this. There are a number of structures that could work, like monthly/quarterly/annual retainer, project-based and others. The structures vary and depend on many factors, including the advisor’s client base, what they’re willing to pay, and the goals of the advisor, both financially and in terms of who he or she serves. Tip: Do some legacy client testing on implementing such an idea, and position it as a test to gauge a reaction before rolling it out more broadly. You may also decide to set up two service level offerings — it doesn’t have to be a one-size fits all. If you’re not working to build long-term relationships with your small clients today, you risk losing out on what could be very profitable relationships in the future. The pervasive perspective that these clients “aren’t worth the effort” is short-sighted. By being selective in choosing clients, leveraging technology to optimize interactions, outsourcing tasks that don’t require your skills, and pricing your services for profit, you increase the likelihood that these once-small clients will develop into some of your most profitable.