How to bubble-wrap, scale and grow your financial advisory business. Practice management tips and advice from a long-time industry coach

In mid-November 2016, just a few days before Thanksgiving, I had the opportunity to “talk turkey” with practice management expert, Nicole Newlin, president of Efficient Advisors, a turnkey asset management platform for independent financial advisors. Click here to listen to the audio recording.
A transcript of the interview is posted below.

MARIE SWIFT: Well hello and welcome back to Best Practices in the Financial Services Industry. This is your host today, Marie Swift. I’m joined today by Nicole Newlin who is President of Efficient Advisors. Nicole began her financial services career at First Union Securities and later in her role as VP at Wachovia Securities she crafted the vision and oversaw the implementation plan for all technology advisor education across the private client group and independent channels.
Prior to joining Efficient Advisors in 2016, Nicole was a partner at Pathfinders Strategic Solutions, a coaching and consulting firm. There she worked with financial advisors to build specific targeted plans for their practices that focused on business development, marketing, client experience, and staff development. Prior to Pathfinders she served in executive roles at both Symmetry Partners and Loring Ward. Today Nicole leads the charge at Efficient Advisors, a turnkey asset management firm that is commitment to bringing proven principles and fresh thinking to the professional management of your client’s wealth.
You can learn more about Nicole and Efficient Advisors at: So Nicole, welcome and thanks for being here.

Thanks Marie.
SWIFT:  Nicole you’ve been working with independent financial advisors for many years now and I’m just wondering from where you sit today, what are some of the greatest challenges and opportunities for RIAs and dually-registered advisors?

NEWLIN: Well, think there are three – which may not come as a surprise but because they are the same three perhaps we need to work harder at supporting our independent advisors.
One, of course, is compliance – managing that and dealing with even a tougher regulatory requirement. I’d say the second has to do with fee compression – something that everyone is dealing with in some fashion. And third, the oldie but goodie still remains: “how do I manage my business, offer superior client service and at the same time run it effectively as I market and grow the firm?” – so sort of the infrastructure. Those three items always seem to be rearing their head in some way, shape or form.
SWIFT: Yes, I agree with you. Could you please drill down a little bit into each of those? Let’s start with number one – the tougher compliance and regulatory landscape.
NEWLIN: Just yesterday I was talking with an advisor; we talking about cyber security. He mentioned he compared cyber security to compliance because he doesn’t know what he doesn’t know and he thinks he’s doing everything right and hope he is until the day comes. We talked a little bit about that and part of what he’s been doing and also what our firm does to really to provide more education and interpreting the new rules that have come down the pike – bringing in expertise. We have quite a few ERISA attorneys with whom we partner closely. We’ve worked a lot around the DOL rule, giving advisory firms support in that fashion. So part of it, I think, is understanding and then interpreting – and then, on the flip side, getting the advisor into an action plan.
For instance, providing them the right verbiage, let’s say in a client agreement, so that they’ve buttoned up and crossed all the T’s and dotted all the I’s.  We’ve helped advisors review their agreements, run them past folks to say, “you’re meeting the fiduciary” or “here are some things you need to adjust.” Some advisors – and I think this is not a bad idea at all – are starting to contemplate this question: “do I want to be an IAR? If I’m really focused in on one investment philosophy and one methodology then maybe I should outsource that to a third-party provider who supports an IAR program. Maybe I want to get out of this whole being on call as the regulatory expert and instead let my third-party manage that for me because I can still brand myself as my own firm but I have compliance support.”
Then there are others that are looking at technology and tools that kind of take some of the steps out of the process so that the advisor doesn’t have to interpret every single component but instead the advisor can work with the client or prospective client in a digital fashion that makes it a little easier to get the right investment solution.
SWIFT: One of the things I have here in my notes to ask you about, Nicole, is around the Smart 401k program.
NEWLIN: Yes. One of the tools and resources that our firm has worked pretty diligently on is around a 401k solution. We have a Smart 401k program that is built to meet the fiduciary standard. That’s been the mode of operation of Efficient Advisors since its inception in 2009 – we try to anticipate advisors’ needs and create solutions before they are commonly in rogue. What I really think is interesting about the Smart 401k dashboard is it helps advisors who are working with qualified plans to not only outsource the 338 responsibilities to Efficient but we give them a four-step process that actually makes it actionable. There is the “plan finder” feature that allows the advisor to research the plan and gather the data they need. There is the “diagnostic step” that really allows them to benchmark a retirement plan against others that they may be competing against. There is a whole “efficiency analysis” as well that really allows them to look at the plan specifications and determine where they can make improvements and then the proposal builder. Now they can go to that business owner / plan provider and say, “here, I can take the worry out of what you are doing day-to-day, I can compliance off of your shoulders. I can do it at a lower cost; it’s a level-fee solution. It’s totally transparent.” And when the advisor walks away they, too, can now know they have a 338 provider that is supporting them. And even through the process of working with that particular perspective client, we work closely with the advisor too, so they know they are staying within the right guardrails.
So programs like that I think are really important, especially in this regulatory world knowing that advisors, need to “bubble wrap” themselves – this isn’t my term, I’m stealing it from someone else, but I think is a great way to describe the Smart 401k program we have.
One other tool I’ll mention as a potentially “bubble wrap solution” is an IRA Rollover tool that we are working on – it puts everything online and helps from the advisor’s perspective. It’s really that end-client making some of the decisions and a very protective rollover program that takes commission-based scenarios into a program with a level fee. It’s something we are in the midst of now and are hoping to roll out in a couple of months. I think those are the things providers who work with financial advisors should be offering and always thinking about so advisors out there know they have places they can get compliance and regulatory help.
SWIFT: Let’s talk a little bit about your second item, the fee compression, particularly dealing with small accounts and managing clients service levels especially for the smaller investor and this whole thing we call “the rise of the robo advisor.”
NEWLIN: The robo advisor is interesting to me and, and my personal opinion is that there is a place for the robo advisor. I think it depends on the client-base you’re looking to work or need to work with. I would argue that there are other ways to outsource a lot of the heavy lifting that goes on with any client of any account size, or needs / desires to get an advisor’s support. I’ve always said if an advisor is spending a bunch of time digging through paperwork, or doing a bunch of research or on the phone talking with a custodian or what have you about where an account is, or even if they have their staff spending a bunch of time doing that instead of doing proactive calls out to their clients, then they are missing opportunities and they are spending a bunch of time in a place where they don’t need to be spending it.
To me, if you are considering outsourcing some of that heavy lifting to a TAMP or an asset management firm or a third-party provider when it comes to putting together the portfolios, then I think you are actually using your time more wisely and can be spending it with the client doing the things you need. Maybe the robo advisor isn’t quite as necessary if you have a good third-party provider like Efficient Advisor. The time you may be spending with that smaller client, for instance, the grandson of the larger client that you need to spend time with, may seem ok to you because its building the relationship with an important existing client. You are not doing all the other account management and marketing things I just described.
Then I think that helps with the fee aspect of it. Tamps and third-parties often, if they are doing their job right, can get pricing that a smaller shop or even an independent IRA can’t get. I would expect any of that lower cost saving. That should be provided to the advisor. So for instance at Efficient, we’ve looked how we run our back office. We thought a lot about how we manage our portfolios, we’ve looked at the pricing we’ve received from our custodians and vendors and in turn we run a lean shop so in turn we can provide the best pricing possible. Often times we’re providing great service at the lowest price compared to a lot of competitors. To me, if I’m an advisor out there, and I can have all of this back office outsourced at a much lower rate, get all the tools, get all of this back office support, now my fees can come down. I can spend my dollars if I want on different kinds of staff instead of staff that’s moving paper around.
SWIFT: You make some really good points there Nicole. The bottom line for me is that outsourcing to a TAMP should really give an advisor that scale in staffing and pricing. It’s just not all about technology. It’s about the right partnerships.
NEWLIN: Oh absolutely! In fact, I was spending some time with an office, a larger RIA that has multiple locations that is trying to make that decision about moving away from just being the RIA they are today with a large operational staff and how can they utilize Efficient Advisors as their outsource solution. At first, and rightly so, there was some fear among the operations team. “I’m going to lose my job” or “what does this mean for me?” And my challenge to the principal was if these folks are great at what they do, well, then just think—you want to keep them, right? You’re going to be saving costs in the long-run with a lot of the ways Efficient Advisor is going to make you more efficient. Maybe some of these folks in turn can be the outreach folks you’ve always wanted. The client service representative you’ve always needed. All the marketing you wished your folks could do, they can now do.
So there are a number of ways you can streamline a team. It doesn’t always have to be people are leaving because you are using a TAMP, it could be just repurposing them into much more critical roles.
SWIFT: Yes, that is really important because as you and I well know many of the advisory firms were built to be family owned and operated. They are staffed by people the principal knows and loves—nobody wants to cut employees, especially family members. So there is an emotional component too and I think your point about repurposing those people and streamlining the team could be very important and help with the profitability and help that firm grow.
Let’s talk about your third point, about the client service and keeping the business running effectively as the firm tries to market and grow.
NEWLIN: It speaks to a lot of what we’ve covered in terms of outsourcing. But I think the bottom line, really, for advisors and their teams, is it’s really really hard to try to run your business and be strategic about your business and then at the same time have some sort of personal life and feel like you are in the role and always running the firm of which you’ve always dreamt. I’ve mentioned this before to a lot of advisors: the E-Myth, the book that I absolutely love and read every single year. Advisors that haven’t read it, I really encourage you to read it because it’s such a good reminder of why you’re the entrepreneur that you are and why you set out to do this. It talks a lot about how you are managing your time. Are you being a technician instead of being the entrepreneur? Are you being the manager and not using the people you have effectively? I think it speaks to that whole, you know what I mentioned, that oldie but goodie: how do I manage my team and run the business effectively?
I think it really boils down to three points. It’s looking at your firm structurally, strategically, and personally. These aren’t new ideas Marie, I think everybody intuitively knows it but I think what advisors forgot is there is a lot of help out there to step in and give them some guidance. When I say structurally, I do mean staff and partners. Are you using a CRM? Sometimes I go into advisors offices and (I’m sure we all do it) there are sticky notes all over the place and paper everywhere and nine times out of ten times there is a CRM but no one is using it, or it’s garbage in, garbage out. Well if you are with a broker/dealer go to them or go to a CRM provider or find a consultant to come in and fix that for you. Anyone listening to this, if you need help I can give you some ideas who to call. People can come in and get you set up so quickly and effectively.
Strategically it goes back to what we were talking about before with looking at your business and asking yourself are you sitting here all day putting together portfolios or are you out meeting new clients? Or are you out strengthening those relationships? How many client events are you having? Are you really setting up those types of opportunities to deepen that connection?
The personally piece is taking a moment to ask yourself if you are happy with how you are spending your time and if you are being effective? I think there are all kinds of help out there. There are online assessments that don’t cost a dime that you can ask questions of yourself. But sometimes you just need to sit down with your team and ask them how they think its going or what could be improved upon or maybe ask your spouse or someone in your life what their impression is of you, when you go off to work and when you come back? All of these things are really telling. I think you need to get help to take a look at how your business is running? I don’t think any of us can do it on our own. I think that’s the tough thing.
I would reiterate that a good partner, a broker/dealer, a TAMP, a third-party or whomever, I would expect them at whatever cost they are to you to be offering good solid practice management support. It’s their responsibility, in my perspective, to support you as much as possible—so reach out to those third-parties or custodians and so forth and ask them what they can do to help you and what support they can provide. Because we all see the studies, and there was even that Schwab Advisor Services independent study that came out a little bit ago talking about how IRAs are spending their time. So these entities are obviously surveying and asking lots of questions of advisors so there is no reason advisors can’t ask for support back.
SWIFT: Nicole before we move on, can you repeat the name of the book? I didn’t catch the title?
NEWLIN: It’s the E-Myth by Michael Gerber.

SWIFT: Nicole you make a really good point about practice management and expecting your third-party providers to provide that for you or at least offers some ideas there. Could you talk to us a little bit about what you offer not for just your own advisor clients but for the advisor profession in general?

NEWLIN: Sure. For our advisors, we do a lot of writing for them as well as creating materials they can then utilize with their clients. We pick every month. So for instance, last month we were focusing on cyber security. A typical routine for an advisor of ours is that they would receive something we call Advisor Insight which is about a couple pages long. Last month I wrote about the cyber security topic with tips, suggestions, where to go for help, etc., and always the offer to call me if they want to talk further. Coupled with that, we write an Investor Connection piece, which is something about the same topic that the advisor can then re-brand and send out to their clients. And then we always have a webinar on the same topic as well in that month, whether it’s me or different experts we are bringing along. Then each week we have an Investor Connection, which goes out on various topics of what’s going on in the world that the advisor can re-brand as well.
But personally, having been a consultant in the past with my own practice management firm for 4 years, and knowing the value and importance of that, I work pretty hard on spreading the message to all advisors in the profession not just those working with Efficient. So a lot of times the same Advisor Insights I write, I might expand on them. I’ve written for other publications, for instance, the Journal of Financial Planning and InvestmentNews, and we are working on an upcoming webinar for ThinkAdvisor on cyber security. We’ve done some work on outsourcing and surveys, so really anything that my team and I can to help and be of assistance. I still have advisors that are not at Efficient that I coached for years that I still talk to, offer advice, and connect them. I think that’s one of the best things we can do in our industry is when you can find someone to connect you to someone with an expertise I think it’s your duty to connect those folks. I’ve done that for many many people. I think that’s how we should all be operating.
SWIFT: Any final words of wisdom for our listeners?
NEWLIN: I would just say that while we are all competitive we are all on the same team as well. We are all trying to do what’s best for our clients and also grow our businesses at the same time. I would just encourage more conversation, more roundtables, and more discussion of advisors. At the Efficient Advisor conference this year we had an advisor panel discussion and all I heard back from the rest of the advisors was we should do more, we should do more—and we should. There are so many ways we could be sharing intel together. There are plenty of clients out there, and if you have a great value proposition, a little competition never hurts anybody. But there is sure a lot we could be doing to help each other maneuver through these challenges that we all facing.
SWIFT: Amen to that. In conclusion, I want to say thank you, Nicole. This has been a great conversation. I always learn so much in talking with you. Listeners, my big take-away here is that working with the right priced TAMP is a great way for smart advisors to scale and grow. Nicole, I will be joining you for some of your webinars because I want to continue that conversation.
In closing that website is Thank you so much Nicole and hope you have a great Thanksgiving.

NEWLIN: Thank you Marie have a wonderful Thanksgiving.

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