While a financial advisor might prefer to manage all of a client's investible assets, when clients participate in a workplace retirement plan such as a 401(k), the assets in the plan typically can't be moved to a new managed account while the client remains employed there. A key moment for an advisor, then, occurs when a client separates from service by retiring or leaving their former employer and becomes eligible to roll their workplace retirement plan into an IRA.

While there are many potential reasons to roll over the plan assets, there may also be good reasons to keep assets within the employer plan, which suggests that clients could benefit from a personalized analysis when deciding whether or not to roll over their employer plan assets. And while a financial advisor is well-positioned to perform such an analysis, the ability to generate additional fees if the client decides to roll over the assets into an advisor-managed IRA creates a significant conflict of interest.

Amidst a fractured landscape of fiduciary requirements when it comes to rollover planning (e.g., different standards for RIAs and broker-dealers), the CFP Board has released a guide to applying its fiduciary duty to rollovers. While the CFP Board's fiduciary standard applies to CFP professionals, it offers a step-by-step framework that could allow all advisors to demonstrate the value of their advice and build greater trust with their clients in the process.

Given the many potential conflicts of interest that could go unmentioned and unaddressed by those without a fiduciary duty towards their clients, CFP Board requires a Duty of Loyalty of its certificants. In the case of rollover recommendations, this means identifying and disclosing conflicts fully, obtaining informed client consent, and managing conflicts with the client's best interest.

CFP Board also offers a seven-step process for applying its Duty of Care, which allows an advisor to take a methodical approach to analyzing a client's unique situation and developing recommendations accordingly. For instance, an advisor will want to understand the full range of options available to a client separating from their employer, as well as the tradeoffs involved in different alternatives (which go beyond costs and fees to include investment options, tax planning opportunities, and other factors). Also, documenting in writing the advisor's recommendations (along with supporting reasoning) as well as the client's ultimate decision can help avoid misunderstandings and provide institutional memory for the firm.

Notably, this analysis can be useful for both a client whose first instinct might have been to roll their workplace retirement plan assets to an IRA managed by their advisor (as they might not be aware of the potential benefits of keeping assets in an employer plan), as well as those who might be skeptical of rolling additional assets into an account managed and billed on by their advisor (as they might not have considered the benefits of unified asset allocation and coordinated tax planning opportunities).

Ultimately, the key point is that while rollover conversations are common among financial advisors and their clients, the decision isn't necessarily simple. From a fiduciary perspective, it merits both a thorough analysis of the available options and their tradeoffs, and the identification and disclosure of conflicts of interest that might be present. By doing so, an advisor can foster a more trusting relationship with their client that will hopefully last well beyond the time of the rollover recommendation!

And if you want to go deeper on this topic, hear directly from the author on the Financial Advisor Technician podcast.

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My guest on today's podcast is Nate Hoskin. Nate is the co-founder of SageContent, a platform that supports financial advisors in creating video marketing content.

What's unique about Nate, though, is how his own experience using video content to generate explosive client growth in his previous advisory firm led him to want to support other advisors in creating video marketing content that actually provides a positive return on investment.

In this episode, we talk in-depth about how Nate decided to found his own advisory firm and started creating educational video content on personal finance topics, how Nate's videos initially generated 80,000 followers in short order (but not necessarily leading to new clients because his relatively younger followers weren't necessarily good matches for his firm's portfolio management focus and AUM-based fees), and how Nate changed his service and fee models (leaning into comprehensive financial planning and changing to subscription retainer fees) and soon attracted 172 clients generating close to $1 million of annual revenue.

We also talk about how Nate experienced serious stress amidst this explosive growth (leading him to raise his fees and trim down his client base), how Nate realized that his passion is in helping other advisors create video content (ultimately leading him to sell his advisory firm), and how Nate's current company offers both lighter-touch and full-service video production services that allow advisors to create effective video marketing content efficiently.

And be certain to listen to the end, where Nate shares how advisors sometimes get trapped in the middle when it comes to the length of their video content (publishing videos that are too long for platforms such as YouTube Shorts and Instagram Reels but are too short for consumers looking for a deeper level of content), how Nate views the difference between "performative marketing" (that focuses on taking action) and "performance marketing" (that focuses on the results of tactics used, and why Nate thinks that even if advisors decide to delegate parts of their video production that it's important for them to be engaged with the content as they remain the visible face speaking to potential clients.

So, whether you're interested in learning about developing effective video marketing content, converting viewers into prospective clients, or what to keep in mind when considering whether to outsource video production tasks, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Nate Hoskin.

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Although many advisors looking to sell their practices are ready to retire and cash in on the enterprise value they've spent their careers building, an increasing number of advisors are selling and staying, choosing to sell either because they believe they can grow faster by joining a larger firm with more capabilities or services, or simply because they want to offload many of the operational or compliance headaches that have taken up so much of their time when operating on their own. And in some cases, the seller is simply so upbeat on the potential of the buyer's continued growth that even though they plan to exit themselves, they want to roll over a portion of their equity into an acquirer for a period of years to have the potential for a second liquidity event (the proverbial "second bite at the apple"), ideally at the acquirer's higher valuation multiple. Taking equity can also be beneficial for advisors looking to defer a portion of the capital gains taxes associated with the sale of their practice (until the acquirer ultimately exits). Yet the reality is that trading an advisor's own equity for potentially illiquid and opaque equity in the acquirer's business presents a unique set of challenges that advisors must carefully weigh, as they can have significant economic consequences for the seller if not everything works out exactly as projected upfront.

In this guest post, Rich Chen, founder of Brightstar Law Group, explores how advisor sellers receiving equity in the acquirer's firm has become increasingly common, often 25%–40% of the seller's exit valuation and sometimes as much as 75%, and what advisors should watch out for to ensure they are getting "fair value" and the bundle of rights they are expecting for the cash they're giving up!

The rising popularity of taking equity in an acquirer's business appears to be driven in large part by the rapid growth of serial acquirers, aggregators, and other industry "roll-up" models, whose growth rates are often far in excess of what the advisor themselves could otherwise invest in. In other words, why sell the firm and reinvest the proceeds into a balanced portfolio of publicly traded securities that might grow at 8% in the long run, when the advisor can roll equity into an acquirer that will also grow with the market (as its AUM fees grow with rising client portfolios) and its organic and subsequent acquisition growth… potentially driving 15%–25%+ growth returns. In what is admittedly a "risky" small business, but one that the advisor-as-seller who ran their own business for decades may be quite comfortable with. Many buyers, in turn, want advisors (especially those who will continue with the firm post-closing) to take equity in the buyer's firm as part of the acquisition, because doing so preserves cash and provides more leverage to fund future acquisitions, while also aligning the interests of the selling advisor with the buyer.

The caveat is that while buyers may scrutinize a seller's firm to determine a value, sellers are often much more limited in assessing the buyer's business to understand whether the shares they're receiving are appropriately valued. Firms often use their own internal valuation formulas, that may truly represent a fair market value, or simply a multiple that the firm hopes to achieve in the future, with the risk borne by the seller if that growth, margin improvement, or other goals don't materialize. Sellers can at least partially protect themselves by asking for more disclosures about the buyer's valuation methodology, and a representation of the buyer's most recent external valuation or comparables (and then monitor financials ongoing by requesting information rights), but the seller's ability to negotiate is often still limited. And even a robust valuation can be undermined by dilution from subsequent acquisitions, management grants, or new capital raises between closing and exit.

In addition, it's important to recognize that not all equity received is necessarily even saleable. In some cases, equity received from the acquirer while the seller remains working at the buyer's firm will still have vesting contingencies (that might not be earned, and the buyer might even still have the right to terminate the advisor and end their vesting period). Even if vested, the shares are typically not liquid, not simply because it's hard to find a buyer for a small minority stake, but also due to the fact that operating agreements often have outright restrictions on transfers, and/or include repurchase rights that themselves might not be the most favorable terms for the seller to be compelled to sell back. And private equity sponsors and other preferred investors often sit ahead of the seller's equity class in a distribution waterfall, so the proceeds ultimately available to the seller's shares may be materially less than the headline ownership percentage implies.

Ultimately, the key point is to understand that taking equity in an acquirer's firm entails a whole separate level of risks and opportunities, beyond 'just' the effort of selling the advisory firm itself for a desirable valuation and with appealing payment terms. And while some provisions may be negotiated (if only by adjusting the valuation the seller receives for the buyer's equity shares), often complex businesses with a wide shareholder base cannot change terms for any one incoming partner… which means sellers must be especially proactive in due diligence to protect themselves and be clear about whether the acquirer's equity is really a good opportunity.

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Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that Anthropic announced an advisor-specific plug-in to its Claude tool, which will incorporate data from many key advisor tech tools. While the new "Claude for Financial Advisors" plug-in offers the potential to solve the long-simmering problem for advisors of integration across tools in their tech stacks, it also raises questions, including how advisors will use any time savings gained from leveraging the tool and whether these activities can create a positive ROI for the usage-based fees Anthropic charges.

Also in industry news this week:

• A survey finds that it's still early innings for many advisors in terms of their AI use, and a strong majority of respondents are seeking more time for prospecting and deepening client relationships despite the tech investments they've made
• Only 3% of clients would replace their human advisor with an AI tool, according to a recent survey, though a higher percentage have considered changing their advisor for other reasons (with communication frequency and digital presence appearing to be key factors for younger clients)

From there, we have several articles on tax planning:

• When comparing the tax benefits of donating appreciated securities versus making a Qualified Charitable Distribution (QCD), the QCD often comes out on top
• Although the IRS's introduction of a new code for custodians to report Qualified Charitable Distributions (QCDs) on 1099-R might make it easier for taxpayers to report QCDs on their tax returns, custodians might not always report those QCDs consistently, meaning it's still up to the IRA owner to make sure that what's reported on their tax return matches the contribution they made in reality
• While many advisors recommend clients convert most or all of their pre-tax retirement accounts to Roth, doing so means losing the opportunity to make Qualified Charitable Distributions (QCDs) from a pre-tax IRA – meaning that if the client has charitable intentions, they end up paying tax on the converted dollars when they could have been distributed to charity tax-free as a QCD

We also have a number of articles on generating client referrals:

• How newer firm owners can move beyond their personal network to create a sustainable referral engine
• Why getting a client to refer a friend or family member is only the first step in them becoming a client, with a firm's online presence potentially playing a major role in the referred individual's decision to move forward as well
• How advisors can generate more unsolicited referrals that actually turn into good-fit clients

We wrap up with three final articles, all about retirement lifestyle:

• A recent study ranks the best and worst states and cities for retirement based on 46 indicators falling within the broader categories of affordability, quality of life, and health care
• How retirement presents an opportunity for individuals to enjoy a slower-paced, more analog lifestyle
• While engaging with the arts can be an enjoyable activity in its own right, a recent study suggests doing so could come with health benefits as well

Enjoy the 'light' reading!

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When a financial advisor engages a new client, they are analyzing a lifetime’s worth of financial decisions that have brought the client to this point. While this often includes many great decisions, it is also likely that a client has mis-stepped along the way… or at minimum, made suboptimal decisions for their goals. Yet these conversations about a client’s past financial decisions are rarely as simple as correcting a mistake or ‘optimizing’ a portfolio – these are often the best financial decisions a client could have made at the time.

In this 199th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how to have a curious and compassionate conversation about a client’s financial past and help them lay the groundwork for the future.

As a starting point, it’s helpful to remember that every ‘less optimal’ decision carries an emotional and logistical history – at some point, that financial decision seemed to be the client’s best path forward. For example, if a client purchased a life insurance policy that no longer seems to fit their goals, the first question the advisor can ask is what problem the client was trying to solve. The advisor’s recommendation will vary widely if a client purchased that policy as an investment vehicle, was based on a friend’s recommendation, or was to lay the groundwork for starting a family.

From there, there may be an opportunity to recalibrate the client’s finances in the light of their current goals. Often, in the light of current cashflow, insurance, and investment needs, the client may be organically inclined towards change anyway. When possible, advisors can use growth-oriented language, emphasizing how they can help clients get from “here” to “there” with these financial changes – which feels more encouraging and less critical.

At times, advisors may need to be more candid about a poor financial decision, especially if it will have an outsized negative impact on their future. When this happens, it is important to be clear but compassionate about the client’s viable steps forward. And the advisor can emphasize where these ‘suboptimal’ financial decisions created good habits and strengths – for example, a whole life policy may not be the best fit for a client’s long-term goals, but it may have helped the client with building initial habits around consistently saving.

Ultimately, the key point is that when it comes to a client’s past financial decisions, it’s best to start with curiosity and the client’s motivations at the time. From there, exploring whether that decision still fits their goals is generally a viable way to help them adjust their financial reality to their current goals… and make more informed and sustainable decisions in the future!

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While financial advisors often have discretionary control over a client's entire investment portfolio, sometimes new clients enter an advisory relationship with large, 'legacy' positions that they do not want (or are not able) to liquidate. For instance, the client might own a significant number of shares in a closely held business, hold a large position in company stock subject to a lock-up period, or have inherited shares of stock from a loved one that hold emotional value. While an advisor might be tempted to view such positions as peripheral (particularly if the firm isn't charging a fee on those assets), they can be subject to regulatory and civil litigation risks if the firm doesn't have a clear process for advising on (or around) them – including thorough documentation and consistent disclosure of recommended actions to clients.

In this guest post, Rich Chen, the founder of Brightstar Law Group, discusses how RIAs' fiduciary obligations apply to legacy positions, common scenarios (and traps) when dealing with them, billing considerations for firms, and best practices for advisors in managing legacy assets.

Under the Investment Advisers Act of 1940, investment advisers, whether or not they are registered with the SEC, owe clients a Federally-defined fiduciary duty comprised of two distinct obligations: a duty of care and a duty of loyalty. Notably, both duties apply to legacy assets; while the scope of an advisor's fiduciary obligations may be shaped by agreement between the client and advisor, the duty cannot be waived completely.

There are several 'traps' advisors can fall into when managing legacy assets, from assuming that limited trading authority means limited responsibility (when it does not), over-reliance on verbal understandings that are never documented (and that a client might remember differently years later), inconsistency across documents (e.g., an advisory agreement saying one thing and billing statements implying another), and arrangements that were reasonable when established but have become increasingly problematic as a client's circumstances have changed. Presenting alternatives (to continuing to own the legacy position) to the client – and documenting this communication – is the advisor's best defense against regulatory examination and civil litigation.

Billing on legacy assets presents another challenge, as regulators will want to ensure that the advisor's fees are reasonable given the level of service they're providing. Firms have multiple options for handling billing around legacy investments, including excluding legacy assets from billing entirely, continuing to bill on those assets while documenting client-imposed restrictions, and adopting alternative fee structures (e.g., charging a flat planning fee plus an asset-based fee on managed assets) designed to better align compensation with services rendered. Importantly, there is no one 'right' approach; a firm might choose a particular approach based on its own service model and the unique circumstances of its clients. 

Amidst this backdrop, several best practices emerge for working with client assets to prevent misunderstandings and mitigate the risk of civil litigation and/or regulatory actions, including documenting client restrictions, clearly defining the advisor's role, evaluating the asset's impact on the overall portfolio, reassessing legacy asset arrangements periodically, ensuring billing practices remain appropriate, and preparing for examination scrutiny in advance. In sum, the most effective firms recognize that legacy assets require more process than advisor-managed assets, not less, because the advisor's limited authority makes documentation and communication all the more important.

Ultimately, the key point is that because there is no universal rule concerning handling legacy investment positions, firms can best serve their clients' interests (and protect themselves) by building a repeatable, consistent framework to deploy when working with a client with such a position!  

And if you want to go deeper on this topic, hear directly from the author on the Financial Advisor Technician podcast.

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My guest on today's podcast is Carolyn McClanahan. Carolyn is the founder of Life Planning Partners, an RIA based in Jacksonville, Florida, that oversees $300 million in assets under management for 65 client households.

What's unique about Carolyn, though, is how she grew her firm to more than 100 clients before deciding to downsize to improve her work-life balance as she also executes a succession plan.

In this episode, we talk in-depth about how Carolyn initially planned to grow her advisor team to handle increased client demand (with her firm closing and reopening to new clients over time), how Carolyn invested significant effort in training new employees on her high-touch planning process (hoping that doing so would pay off by developing potential successors), and how Carolyn ultimately had to face the prospect of departures of younger employees who wanted to pursue different paths (forcing her to start over with new hires).

We also talk about how Carolyn worked with business coaches to ensure that she offered competitive compensation and development plans for employees and to help her and her staff align their life goals with their professional paths, how Carolyn ultimately made the decision to downsize her client base to have more free time for herself and to pursue her goals supporting the planning industry, and how Carolyn has created a new succession plan that allows her to continue serving clients while transferring ownership to employees at her firm.

And be certain to listen to the end, where Carolyn shares how she set criteria to determine which clients to keep at her firm and which to let go, how Carolyn evaluated other firms to help departing clients find an appropriate advisory home, and how Carolyn (who is also a physician) advocates for medical-style residency programs in the financial planning industry.

So, whether you're interested in learning about navigating hiring challenges while also planning for succession, downsizing a client base in a tactful manner, or thinking about what you truly want to get out of firm ownership, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Carolyn McClanahan.

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Heavy turnover leaves advisory firms in a vicious cycle of allocating resources to recruit and onboard new advisors, only to lose them before they generate enough value for the firm to recover its investment. And given that McKinsey projects a shortage of more than 100,000 financial advisors over the next decade, it's never been more important for advisory firms to succeed at attracting and retaining talent.

While attracting new talent and managing turnover are often thought of separately, the two are closely related because not all cohorts of potential new advisors targeted by advisory firms have identical turnover rates. In fact, our Kitces Research data shows new college graduates – a cohort traditionally targeted in recruiting efforts – have far higher turnover rates than those transitioning into financial planning later in their careers. This is for several reasons, including that career changers bring with them both soft skills (e.g., meeting deadlines and managing multiple projects) and transferable professional skills (e.g., analytical experience and managing client relationships) that can help them be – and feel – more effective on the job. These experiences, along with the professional networks developed through prior roles that can serve as an initial source of business, can also better position career changers to grow faster and generate revenue and income more quickly than new advisors fresh out of college.

The end result is an "upfront-cost" versus "attrition-cost" trade-off between career changers and new graduates: Career changers require greater investment to recruit (because they can enter financial planning from virtually any other industry and at any age, making them much more widely dispersed and difficult to target in a scalable way) and are also more expensive to employ, earning 20%–40% higher salaries in their first five years in the profession than new graduates. What firms get from these investments in career changers, though, is 2–5X lower turnover rates compared with new graduates. Which means firms looking to minimize advisor turnover should strongly consider whether the benefits of hiring career changers who are more likely to stick around are worth the higher costs of recruiting and employing them compared with traditional cohorts like new graduates.

Drawing on a conversation with Hannah Moore, CFP®, founder of Guiding Wealth and Amplified Planning, as well as a research report from Amplified Planning on new entrants into financial services, we created a four-step framework for firms interested in hiring career changers. The first step contains tips for the top-of-funnel task of spreading awareness of job openings among career changers, including focusing on industry programs that have historically attracted large numbers of career changers (such as The Externship and FPA Residency), as well as non-industry-specific job boards. The second and third steps include middle-of-funnel recommendations aimed at letting career changers know they're qualified and will be supported, so that those who see the posting will be more likely to apply. This matters because many career changers hesitate to apply for financial planning industry jobs because, first, they worry employers will not value their professional experiences; and second, because they seek assurances that they'll be supported during the jump to a new industry, which can often involve a significant short-term reduction in income. The fourth and final step involves the bottom-of-funnel task of ensuring that those who do apply are fairly considered. This means ensuring that otherwise qualified candidates are not screened out by AI-based application filters (simply because they lack industry tenure or a degree in finance), and avoiding making common assumptions about career-changer candidates.

Ultimately, the key point is that the framework laid out in this article can be a helpful tool for firms to gain advisors who bring diverse experiences, transferable skills, and a greater likelihood of long-term success – making them valuable assets both to their firms and the profession as a whole!

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Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that a recent survey from Vanguard investigates the perspectives of men and women when it comes to investing and working with a financial advisor, finding in some cases that assumptions about these groups might not always hold. Overall, respondents expressed greater confidence in making a range of financial decisions when working with a financial advisor, though women who had left an advisor were most likely to cite the advisor not working in their best interest as the reason for doing so. Both men and women expressed a range of preferences in terms of communication styles from financial professionals, with an educational approach topping the list for women and a data-driven/analytical approach leading for men (though the preference gaps for men and women on individual styles weren't particularly large). Which, altogether, demonstrates the value of exploring each prospect's and client's unique goals and preferences, as they very well might diverge from an advisor's assumptions.

Also in industry news this week:

• An examination of Form ADV filings finds that firms that disclosed AI use actually saw higher staff headcount growth, indicating that for a subset of firms AI adoption is intended to complement, rather than supplant, human team members
• While the SEC under chair Paul Atkins appears to be less interested in pursuing broad enforcement actions related to advisory firms' use of off-channel communications with prospects and clients than in years past, an attorney and former SEC official suggests that implementing and enforcing policies toward electronic communications (and their storage) could help firms avoid client harm (which could make them subject to an enforcement action) or, in the case of broker-dealers, continued FINRA scrutiny of communication failures (even if no client harm has occurred)

From there, we have several articles on retirement planning:

• An analysis of Social Security claims data and self-reported health amongst retirees finds that those who are in poorer health tend to claim Social Security earlier (in many cases, correctly identifying a shorter expected lifespan)
• While wealthier individuals often are able to delay claiming Social Security benefits (to receive their maximum monthly benefit), those who are particularly wealthy might choose to claim earlier to fund insurance policies that could, amongst other purposes, help heirs pay for estate taxes owed
• How the ability to claim six months of retroactive Social Security benefits after reaching Full Retirement Age can both be an opportunity (by giving a client more confidence in delaying benefits) and a potential trap (by having a permanently lower monthly benefit if retroactive lump-sum benefits are taken)

We also have a number of articles on client communication:

• How financial advisors can support clients in riding the 'waves' of emotion (both positive and negative) that can arise during meetings
• A step-by-step framework for working with a client who has recently experienced the loss of a spouse to both give them space to grieve and to prepare them to make key planning decisions
• Strategies for advisors when working with a client experiencing "ambiguous loss", such as a loved one suffering from dementia

We wrap up with three final articles, all about the tradeoffs of being a 'maximizer':

• How certain tax planning strategies could lead to a lower lifetime tax bill but also less enjoyment of one's wealth
• Why much of one's health and financial success is determined by getting the 'big things' right and how trying to optimize for the rest could lead to greater stress
• The value of jumping off the "hedonic treadmill" and taking a step back to recognize when key goals have already been met

Enjoy the 'light' reading!

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When a client asks their advisor to place an investment trade or execute another planning action, it typically comes as a result of a consultation with the advisor (and often reflects the advisor's recommended course of action). However, sometimes a client might request that the advisor take an action the advisor believes isn't in the client's best interests (e.g., moving their entire portfolio to cash amidst a market downturn). Which can create a delicate situation, not only with regard to the client's financial wellbeing and compliance issues, but also for the future of the advisor-client relationship.

The Securities and Exchange Commission's (SEC's) 2019 interpretation of the standard of conduct for investment advisers under the Advisers Act highlights that investment advisers and clients have a principal-agent relationship, under which an agent (in this case the advisor) has a duty to follow the lawful instructions of the principal (here, their client). Similarly, CFP Board's definition of a fiduciary, a CFP professional has a duty to follow instructions (along with a duties of care and loyalty), which includes complying with all reasonable and lawful directions of their client.

Amidst this backdrop, an advisor considering a client request that they believe isn't in the client's best interest is required to follow through on it as long as they determine that the client is able to make decisions for themselves (e.g., isn't showing signs of mental incapacity) and the request is lawful (e.g., they have the authority to make trades on the account in question).

That said, advisors can still first offer their recommendation, based on their professional judgment, that the client not follow through with their request, and perhaps pause before making a rash and impactful decision (fulfilling the advisor's duty of care), as well as confirm that the client is making a direct request and isn't merely expressing frustration (which could avoid a costly misunderstanding). Also, documenting the conversation and the final decision made can create a record describing both the client's request and the advisor's response to help mitigate against misunderstandings down the line (and could include an "Against Advisor's Advice" letter signed by the client acknowledging they directed their advisor to implement an action that the advisor did not recommend or outright recommended against).

While stopping at this point would fulfill the advisor's duty to follow the client's instructions, this scenario also raises the question of whether the advisor wants to continue their relationship with the client. For instance, a client instruction to move their entire portfolio to cash could call for a reassessment of the client's risk tolerance and investment policy statement. Going a step further, an advisor who fields regular trading requests from clients (against the advisor's advice) might prefer to change the scope of their engagement with the client to be planning only. And if an advisor feels their relationship with their client has become particularly misaligned, they might choose to terminate the engagement altogether.

Ultimately, the key point is that a situation where a client makes a request against their advisor's recommendation presents two questions: whether the advisor must comply with the instruction and whether the advisor wants to continue the relationship under its current terms. By separating these questions, advisors can make decisions regarding the request in line with relevant compliance requirements and whether the relationship with the client is likely to be productive going forward.

And if you want to go deeper on this topic, hear directly from the author on the Financial Advisor Technician podcast.

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My guest on today's podcast is Jenna Biancavilla. Jenna is the founder of Pearl Capital Management, an RIA based in Phoenix, Arizona, that oversees approximately $275 million in assets under management for 110 client households.

What's unique about Jenna, though, is how she leverages a ‘scorecard’ that tracks key weekly and quarterly metrics that help keep her on track to achieve company goals, which range from new client growth to days taken off by team members.

In this episode, we talk in-depth about how Jenna’s scorecard starts with metrics that measure engagement with clients (for example, how many client touchpoints an advisor had) and work done to attract new clients (such as meetings with key centers of influence), how Jenna also includes metrics targeted at employee retention (including tracking the number of days team members took off where they weren’t contacted by someone at the firm), and how Jenna tracks other metrics quarterly, including the close ratio on prospects, total AUM, AUM per household, and revenue per household.

We also talk about how implementing practices of the Entrepreneurial Operating System relatively early on has helped Jenna and her team better address business issues that pop up during the week (and run more efficient meetings in the process), how Jenna and her team set and prioritize quarterly "rocks", which typically represent projects that will help the firm grow into the future but might otherwise have been ignored amidst day-to-day responsibilities at the firm, and how Jenna incorporates team member input and the firm’s meeting calendar when setting scorecard targets and rocks to ensure that they are actually achievable.

And be certain to listen to the end, where Jenna shares why she is willing to share planning insights during prospect meetings (rather than waiting for them to become a client), how Jenna’s fee structure has changed over time (including how she found offering a flat-fee model didn’t work well for her firm), and how Jenna has saved time and reduced her stress during her career by recognizing that not every prospective client she meets is the ‘right’ client for her.

So, whether you’re interested in learning about effectively identifying and tracking key firm metrics, using a structured system to organize major firm projects, or how to incorporate team members into the goal-setting process, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Jenna Biancavilla.

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