Category Archives: Book Review

The Future Of Financial Planning Is Not What You Expect – Interview with Bob Veres #FearlessFinancialAdvisorPodcast

A wide ranging interview with Bob Veres about the future of financial planning. Bob Veres is the former editor of Financial Planning Magazine and creator of the Insider’s Forum conference and Inside Information newsletter. He has been commenting and contributing to the industry for over 30 years. He recently released a new book called the New Profession, which we also discuss.

In This Interview We Discuss…

0:34 – Why is financial planning an “Emerging profession”? Hasn’t it already emerged?

2:45 – Making financial planning a true profession.

08:15 – What is the single biggest determinant in a financial planner’s success?

10:22 – Future of AUM business model

13:20 – How to develop a flexible “change agile” mind as an advisor.

14:20 – How to market your financial planning firm.

17:00 – How should advisors manage client behavior as markets move up and down?

22:00 – What advice would Bob Veres give to his 30 year old self?


Bob Veres InterviewLearn more about Bob Veres

New Profession Book

Interview MP3


Harold Evensky’s 5-step client on-boarding process

Harold Evensky On-boardingSuccessfully on-boarding new clients is a common concern of financial advisors. As you know, those first few experiences a client has with your practice will color the relationship you have for years to come. Failure to understand your client, set expectations and begin on a positive note will lead to dissatisfaction and churn.

 When advisors talk to me about their existing risk profile questionnaire they are often looking to revamp their entire on-boarding process. I wanted to speak and learn from the best in this area so I turned to the “dean of financial planning”, Harold Evensky. Evensky outlines his approach in “The New Wealth Management: The Financial Advisor’s Guide to Managing and Investing Client Assets.” The 480-page book goes into detail about how advisors can ensure the success of their clients and their business through a thorough investment management process. Today, I am going to focus on the client onboarding process, which is essential to setting the right tone for your relationship.

Evensky’s process can be broken into five main steps. Client relationship, client goals and constraints, risk, data gathering and client education.

 1.    Client Relationship

Evensky begins where you would expect. He states “because everything is client driven, developing a strong relationship with the client is critical”. A solid relationship must be “built on communication, education and trust”.  So why is the relationship so important?

If we look at the Evensky’s wealth management process diagram below, you can see that the client relationship is essential to gathering the data you need to service your client. Without a good relationship it will be challenging to identify the “unique characteristics” of each individual. Evensky goes on to state that a “deft” wealth manager learns his or her clients traits and biases and develops tactics to address them so as not to sabotage the client’s end goals.

Wealth Management Process

 2.    Client Goals and Constraints

“Goals must be time and dollar specific and prioritized”. Evensky refuses to accept simple goals such as “having enough to retire” or “paying for my children’s education”.  Since goals are the “foundation on which all subsequent work depends” a considerable amount of time and effort must be spent to get them right.

However, it’s not enough for advisors to simply ask a client for their goals. An advisor must look for “hidden goals” especially relating to risk management, cash reserves and anticipated large case expenses that a client may have.

Evensky then takes pains to always consider the impact of inflation on any goals, the limitation of mortality tables when retirement planning and the importance of educating the client on goal prioritization.

Beyond goals the constraints of the client also have to be considered. This typically means time horizon and liquidity needs. To avoid selling a volatile asset when the value is low Evensky and Katz have developed a cash flow reserve account system to meet the short-term cash needs of their clients (typically two years of cash flow needs). Any investment funds (excluding the cash) should be committed for at least five years.

In fact the mantra of the firm is “Five years, five years, five years!” By ensuring a client has sufficient cash on hand they avoid a client’s impulse to sell at the bottom. There is an opportunity cost to having that much money in cash but Evensky thinks it is fair price to pay given the overall benefit to the portfolio.

3.    Risk

Evensky states that risk is a responsibility of the advisor. Not just to manage it but to educate clients about it. The first step for an advisor is to get the definitions correct. They must balance a client’s risk tolerance (willingness to risk) with their risk capacity (ability to take a risk). Someone with a high-risk tolerance but little capacity should not be in an overly aggressive portfolio. Conversely someone with a low risk tolerance but a high capacity could invest more aggressively if it is necessary to meet their goals.

However, understanding risk does not stop there. Evensky thinks it is prudent for advisors to become familiar with the common behavioral finance missteps all investors are liable to make. These include availability bias, overconfidence, panic, confirmation bias, mental math, framing and others. By going through this checklist Evensky believes advisors are less likely to make mistakes on behalf of their clients.

4.    Data Gathering and Analysis

Data gathering is about capturing your client’s circumstance and looking for any inconsistencies or unrealistic expectations. Evensky captures his client’s risk tolerance, risk capacity, capital needs (typically short term) as well as the standard fact finding information (e.g. name, age, current assets etc.). This is then discussed with the client.  The goal is to ensure the advisor has the right information to conduct their analysis.

5.    Client Education

“A better educated client is a better client.” Before Evensky asks clients to fill out a risk questionnaire he gives them a 30-90 minute mini educational program. The goal of the program is simple. To explain certain investment fundamentals so they can make informed decisions.

The program covers modern investment theory (asset allocation, types of risk), vocabulary (covering terms like volatility, style, risk), information on the firm’s biases (e.g. being against market timing) and an overview of the financial planning process. When a client has this information an advisor can better manage their expectations and ensure their satisfaction.


So as you can see Evensky has developed a thorough on boarding process for his new clients. It’s all about educating the client and getting the information you need to give the best advice.

What other steps would you include in your client on-boarding?

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What Tony Robbins REALLY Says About Financial Advisors

Tony RobbinsTony Robbins needs little introduction. The personal development guru has touched millions of lives around the world through his ability to “awaken the giant within”. He released his first book in 20 years – Money: Master The Game which tackles the issue of financial advice.  To summarize the book in a sentence Robbins advocates becoming an investor instead of a consumer, paying yourself first, having winnable goal, avoiding fees, choosing the right advisor, knowing your risk tolerance and learning from experts money makers (e.g. Icahn, Buffet, Bogle, Templeton, and others).

You can find a great summary of opinions on the book here.

So why does this matter to you? Robbins’ 600+ page tome is already an Amazon Bestseller and NY Times Bestseller. It will be a favored holiday gift and some of your clients will undoubtedly come across it.

Isn’t it useful to know what one of the most respected life and business coaches is saying about you? Here is a short summary.

1. Don’t Trust Brokers – If there is one rallying cry from the book regarding financial advice it is that you should not trust brokers. They often funnel you into expensive actively managed mutual funds, that don’t beat the market (over a sustained period), don’t perform as advertised and favour their own interests.  Robbins’ goes on to say the suitability standard is “pre-engineered to be in the best interests of the “house”” and what individuals need is the fiduciary standard.

2. You Can Trust A Fiduciary or Can You?  –  Robbins’ says the best way to “solidify yourself as an insider” is to “align yourself with a fiduciary”. However, he goes on to say, “not all advice is good advice” and a fiduciary may not be “fairly priced”.

 He recommends individuals find advisors from NAPFA and ensure they are…

a)    Registered with the SEC.

b)   Compensated as a percentage of your assets under management.

c)    Not compensated for trading stocks and bonds.

d)   Not affiliated with a broker-dealer. Robbins says “This is sometimes the worst offense when a fiduciary also sells products and gets investment commission as well!”

e)    Ensure your investments are custodied with a third-party like Fidelity, Schwab, or TD Ameritrade.

Robbins then goes on to make a final point….

“The added cost of a fiduciary may only be justifiable if they are adding value such as tax-efficient management, retirement income planning, and greater access to alternative investments beyond index funds.”

This aligns with a consistent theme throughout the book that individuals should avoid fees at all costs unless they are justifiable and most fees are not justifiable. However, Robbins falls short of calculating the value of a fiduciary.  After all it’s not a simple calculation and depends on the skill of the advisor. To wrap up, Robbins somewhat disappointingly champions his own financial advisor’s robo-advice platform Stronghold Financial in which he is in talks to become a partner.

3. Conclusion – Overall Tony Robbins is a supporter of fiduciary financial advisors. He believes they can make investors insiders and give them the advice they need to meet their goals. However, more than a supporter of fiduciary financial advisors, Robbins hates fees including expense ratios, transaction fees, cash drag, soft dollar costs, redemption fees, and countless others.

The book gives a lot of mathematical examples of how fees can eat into your returns but it does little to show how a fiduciary’s fees can help you. If you are fee-only financial advisor this book is generally supportive of your work. If you are not, I’d be wary.

Educate Your Clients About Risk. Free 6-Part Email Course.

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