A view from the other side of the desk

[Scrapr]

I really like Kitces analysis stuff. I was looking for a new podcast and ran across his show. He interviews other FAs about best practices in the FA world. It's interesting to listen in on client development. I have only listened to a couple. It feels a bit like I don't know ...inside baseball maybe?

He had on a FA recently that was talking about changing from the AUM model. The millenials coming in (kids of the parents that have AUM) don't have enough assets. Makes it hard for the hand holding to occur. Also the (flexible) $5000 cost to get set up and do the initial plan is a barrier.

I'll listen to a few more episodes

https://www.kitces.com/blog/category/21-financial-advisor-success-podcast/

 

[USGrant1962]

Agree. I signed up for Kitces' emails as a "investor" and get his stuff on the FA side.

I've always been interested in the business aspects of firms/services that I use. When working I frequently chatted with hotel managers, taxi drivers, airline employees (desk agents, flight attendants, pilots sitting next to me going home, etc.), bartenders, restaurant mangers, etc. to understand how their business worked.

Reading the financial adviser side of Kitces is interesting to me to understand how that business works.

 

[Scrapr]

Mrs Scrapr was in the car today when this podcast was finishing up. An FA was talking about his practice where the FA was talking about closing off for several years to new clients. What's the worst that could happen he says.

She hollered out that's stupid! The economy tanks and 20% of your clients go away. Also the folks on your wait list get nervous and decide to DIY.

Then I explained the cost over 5 years for an AUM fee of 1%. $50,000 vs.....$0

We also chatted about her Mom's use of Fast Eddie. That all because her Mom wants a nice man to come over to the house & talk. She knows that's not what I would do. But it's MIL money and I try to help her where I can. But if that money ever comes our way it will be away from EJ in a hurry. 1.2%!!!

She is liking our plan now. I'm so proud of her. She has seen through my line of BS.....errr patter ;-))

 

[DEC-1982]

Thanks for the post, Scrapr; I will give it a try.

Just found him in Stitcher.

 

[RunningBum]

He had on a FA recently that was talking about changing from the AUM model. The millenials coming in (kids of the parents that have AUM) don't have enough assets. Makes it hard for the hand holding to occur. Also the (flexible) $5000 cost to get set up and do the initial plan is a barrier.

I don't follow this logic. When did young people ever have enough assets for the AUM model, especially in the days of pensions? Seems to me that you want to play the long game, manage whatever assets they have now, and hope you can keep them when they roll out of their 401Ks. And that doesn't have to come when they're 65, it can happen whenever they switch jobs, which is more frequent than in the past.

And are these FAs charging $5000 initially, plus AUM Wow.

In general, I have to say that I've come around on Kitces. There must've been an article or two that put me off when I first saw him referenced here, and he seems to have a bit of a cultish following here like Dave Ramsey or Suze Orman have elsewhere that turned me off. Plus there's the photo on his blog, where it looks like he's smugly flipping me off. But as I've read his insights, I see that he really knows what he's talking about, and explains things well.

 

[jazz4cash]

Didn’t know he had a podcast. I’d like to check that out along with the Hanson McClain podcast suggested here by another poster. Kitces’ office is a few miles from here but he has zero exposure locally (except to the industry, I guess) unlike Edelman (another local) that I don’t care for.

 

[Scrapr]

I don't follow this logic. When did young people ever have enough assets for the AUM model, especially in the days of pensions? Seems to me that you want to play the long game, manage whatever assets they have now, and hope you can keep them when they roll out of their 401Ks. And that doesn't have to come when they're 65, it can happen whenever they switch jobs, which is more frequent than in the past.

And are these FAs charging $5000 initially, plus AUM Wow.

In general, I have to say that I've come around on Kitces. There must've been an article or two that put me off when I first saw him referenced here, and he seems to have a bit of a cultish following here like Dave Ramsey or Suze Orman have elsewhere that turned me off. Plus there's the photo on his blog, where it looks like he's smugly flipping me off. But as I've read his insights, I see that he really knows what he's talking about, and explains things well.

I probably didn't explain the fee structure well. The guy that Kitces was interviewing was a "discount" FA. He was "only" charging $5k/year. No AUM fee. He was truly running a lifestyle business. He had about 80 clients and was managing his backlog list to only take a few on per year. He didn't want his service to suffer so is cautious in bringing more on. So on $1 million portfolio AUM model generates $10k. He is half.

I do that somewhat in our business. Tell someone they can't get in & they want you badly. But we tell them to check back in our slow period and we will get you in. Also helps to support our pricing

The flaw in this model is when you slow down your marketing. Because when any slowdown comes your client list is going to shrink. Your backlog is going to evaporate. And nobody is going to be knocking on your door.

 

[RobLJ]

I've liked quite a few articles on Kitces's website; well-researched, with sources.
Wouldn't listen to the podcast though, but it reminds me to check his site again--I usually do it every 2-3 months unless someone here posts on an article of interest.