Implementing Technology

Sue BerginSue Bergin, President, S Bergin Communications

You don’t necessarily need the most cutting-edge technology to get to the top of your game. According to a recent study, you can start by leveraging the technology you already have.

Fidelity Institutional Wealth Services’ 2013 RIA Benchmarking Study reveals that high-performing firms—those in the top quartile for growth, profitability and productivity—focused on smart technology and adoption, not getting the latest and greatest. These high-performing firms focus on optimizing their technology in three areas: portfolio management, service, and client reporting.

Here are ten steps you can take to make sure you get the most from your technology.

  1. Make adoption a priority. Commit putting in the time and effort to learn how best to maximize all of the system’s features. If you can’t do it yourself, make someone else in your office accountable.
  2. Plan. Learning a new software program is like learning a new language. It’s hard to know where to start. Your technology provider should be able to give you an implementation guide to show you the steps to follow, and milestones to hit.
  3. Set aside time. If you don’t carve out time on your schedule, it isn’t going to happen.
  4. Network. There are relatively few programs out there that haven’t already been tried and tested by others in similar positions as yours. Talk to everyone you know who has gone through the implementation process and find out what they did and what they wished they had done better.
  5. Gather resources. Request an inventory of the training your technology provider makes available. Once you know what they have for support materials, you can choose the format that best matches your learning style.
  6. Optimize Your TechnologyGet names and numbers. You need to have key information handy in a few different areas. Know the software name, version number, and license holder so that when you call or go online for help you can be sure you are asking about the right program. Also know the names and numbers of customer support persons at your technology provider.
  7. Troll the internet. Use social media find online user groups or other social media sites that could provide helpful implementation hints. For example, there may be a LinkedIn User Group already established for the purposes of optimizing your software.
  8. Monitor progress. Perform periodic self-checks to monitor your progress towards the goals set in your implementation plan.
  9. Celebrate incremental success. Even if you haven’t learned everything there is to know, make note of how the technology improves your efficiency. Success is a powerful motivator and will prompt you to plow through your learning curve.
  10. Provide feedback. Software engineers constantly strive to innovate. If there is something you don’t like about your program or would like to see handled differently, let them know. You may just have a function named after you in the next version!

The views expressed are those of Brinker Capital and are for informational purposes only.

Ten Reasons Why You Should Not Rely on Year-End Statements for Tax Reporting Purposes

Sue BerginSue Bergin

Many investors are confused by discrepancies between year-end figures and those that appear on 1099 tax reporting documents from fund companies. Typically, these discoveries come to light around midnight when it is most difficult to get someone on the phone that can explain the discrepancies.

If you come upon a discrepancy, resist the temptation to jump to the conclusion that there is a problem. Instead, know that discrepancies sometimes happen, which is why experts advise against using year-end reports for tax reporting purposes.

10 Reasons Year-End Statements Should Not Be Used for Tax Reporting

  1. Fund companies explicitly caution against using the figures provided in year-end reports for tax reporting purposes. There is a reason that it has become industry standard to include such disclaimers. The industry is trying to prevent tax preparers from a commonly made mistake.
  2. The gross proceeds amount on the 1099 will rarely match the proceeds amounts show on a year-end statement’s realized gain/loss statement.
  3. Reclassifications often occur after year-end.
  4. RICs or spillover payments aren’t made until January of the next year, but have to be reported for the prior year. These occur with mutual funds, Real Estate Investment Trusts and Unit Investment Trusts that post distributions with record dates in October, November and/or December of the prior year, but make payment in January of the next year.
  5. Payments described as dividends on monthly statements, but paid on shares selected in the substitute payment lottery process are reported as miscellaneous income on Form 1099-MISC.
  6. Income payments on certain preferred securities must be reported as interest, even though they are often shown as payments and dividends on the monthly statement.
  7. Original issue discount (OID) accruals may be identified and processed after year-end.
  8. Reporting on short-term discount securities (like Treasury Bills).
  9. Shares received as part of an optional stock dividend offering are valued and reported as income on the 1099-DIV.
  10. Corporate reorganizations, recapitalization, mergers and spin-offs creating stock or cash distributions are considered taxable events reportable on Form 1099-B.

Your year-end statements provide valuable information, however for tax reporting purposes, your best bet is to use the information contained on your 1099s.

This information represents our understanding of federal income tax laws and regulations, but does not constitute legal or tax advice. Please consult your tax advisor, attorney or financial professional for personalized assistance.

Looking Past the Fiscal Cliff

MagnottaAmy Magnotta, CFA, Brinker Capital

It looks like there will be some deal on the fiscal cliff that emerges from Washington before the end of the year—either (1) a large deal that includes a compromise on higher revenues, spending cuts and entitlement reforms, or (2) a smaller deal that results in a larger fiscal drag than consensus currently anticipates. Time is running out, and the market will likely be disappointed if Congress leaves for the Christmas holiday without a more specific plan in place.

In his research report today, Don Rismiller, Chief Economist at Strategas Research Partners, encouraged investors to look through the fiscal cliff and to take notice of the number of good things that are happening in the U.S. economy. Rismiller provided a dozen reasons for optimism after the fiscal cliff is resolved.

The Other Side

Positives on the Other Side of the Fiscal Cliff:

  1. The Fed has followed through on “QE4.”
  2. Additional global easing is expected (e.g., Abe & BoJ, Carney & BoE).
  3. The bond market has digested additional U.S. debt well (10-yr @ 1.8%).
  4. The U.S. dollar has held value (meaning there’s room for policy to operate).
  5. Housing has bottomed in the U.S.
  6. There’s pent-up demand for household formation (buy or rent).
  7. There’s pent-up demand being created for capex (which has already fallen).
  8. There’s likely some pent-up demand for autos (hurricane replacement).
  9. While small, nonresidential construction could increase with hurricane rebuilding.
  10. Domestic energy production continues to ramp up.
  11. Equity valuations look attractive.
  12. Equity multiples bottom before earnings, which is likely an early 2013 story.

Search and Selection: Finding the Right Hire for Your Firm

Bev FlaxingtonBev Flaxington, The Collaborative

It is often said that this isn’t a numbers business, it is a people business. Understanding the criticality of the human factor, it is interesting how often an advisory firm will simply hire to fill a role instead of putting the time and energy into search and selection to determine the right candidate, for the right role, in the right culture.

Success in a job comes from a number of factors. Let’s touch on a few and then talk about one in more detail, that of search and selection:

  • Behavioral fit – is the employee’s natural style right for the role? If he or she is a deeply analytical person, but the job calls for constant people interaction, will she or he be able to modify for success?
  • Cultural fit – are the values of the company in line with the employee’s values? Does the employee show a willingness to understand and uphold the company’s values?
  • Clarity of job expectations – does the employee know exactly what is expected of them? Has the employer clearly identified what success looks like for this role?
  • Compensation and motivators – are the right ones built in for this person, in this job?

In addition to these factors, advisors must consider where they find candidates (search) and how they determine who they will hire (selection). When looking for a new job, oftentimes people will focus on networking. However, in hiring for a new role networking may not be the best approach. In many cases, a person may get referred to the advisory firm and because they came from someone the advisor knows and trusts, they are assumed to be a good fit. An advisor may not go through as rigorous of a screening process in that case.

When searching for a candidate, ensure that you are pursuing all available avenues to locate candidates. In addition to the traditional posting options, be sure to include posting to groups such as the CFA Institute, or the FPA, or other financially oriented organizations. LinkedIn is growing in popularity and can be an excellent place to find candidates. Interview a minimum of three people for a role just to get an idea of different people.

Finding the Right Hire

Before you begin the interview process, establish how you will select the person. Who will be involved in interviewing? How much weight will each person have? Will you have an organized list of questions for each person to ask, or a matrix to assess feedback? What will be the feedback loop and how will people follow up on their thoughts? You want to establish final criteria for making the decision. In many cases a firm has a set of requirements but makes an exception based on “liking” a candidate. This might be okay, if all other criteria are met. Define this in advance.

Be sure to ask behavioral questions. Don’t just take a person’s “track record” for granted – ask how they found clients, what they did to work with them, how they go about generating referrals, how they work with COIs, etc. Pick those things most relevant to your firm and be sure to dig, dig, dig in your questioning until you really understand the background.

Lastly, be sure to check references. Don’t just do a cursory check-in with the three or four people that were listed on the person’s resume. Instead, try to do some digging on your own and find others to speak to. If the person is on LinkedIn or has relationships at prior firms, see if you are able to use your connections to learn a bit about the person outside of the given references.

It can sound like a great deal of work to find the right person, but the truth is that making a bad hire is costly for any firm.

Giving Thanks to Top Clients & Referral Alliances

Matt Oechsli, President, The Oechsli Institute

Thanksgiving is a time for friends and family, but for forward-thinking advisors, it’s also a time to show top clients and referral alliances just how much they’re appreciated. Show gratitude by giving Thanksgiving-themed gifts such as organic turkeys, honey-baked hams, fruit baskets, desserts, and flowers. Get your team on board to assist you & strengthen your top professional relationships.  To get started, follow these steps:

  1. Segment:   Divide your top clients and referral alliance partners into 2 groups; those that will have gifts delivered from you and your team & those that will have gifts delivered via FedEx.
  2. Review Client Intel:   Personalize your gift by reviewing intel you’ve gathered about each recipient.   (You’ll recall that Mr. Smith loves gourmet cheesecakes from the local baker.)
  3. Organize & Delegate:  Determine which team member will order gifts, who will personally deliver gifts to specific clients & referral alliances, who will manage FedEx deliveries for out of town clients, and when the entire process will be carried out.
  4. Execute:  The senior advisor will visit their top tier of clients, the junior advisor will make their delivery to top referral alliances they want to get to know better, and the remaining clients will receive a special delivery from their favorite assistant.  Ensure both spouses are home at the time of delivery, and extra holiday cheer is extended to the spouse that is less involved in the family’s finances.

Your clients and referral alliances will speak highly of you to their close friends and family, and you’ll see increased client loyalty for months and years to come. There is no question that this will all pay off!

See how an elite team executed this here

Matt Oechsli is the author of The Art of Selling to the Affluent. His firm, The Oechsli Institute, does ongoing speaking and training for nearly every major firm in the US. @mattoechsli, www.oechsli.com

Ten Reasons Why You Should Not Rely on Year-End Statements for Tax Reporting Purposes

Sue BerginSue Bergin

Many investors are confused by discrepancies between year-end figures and those that appear on 1099 tax reporting documents from fund companies. Typically, these discoveries come to light around midnight when it is most difficult to get someone on the phone that can explain the discrepancies.

If you come upon a discrepancy, resist the temptation to jump to the conclusion that there is a problem. Instead, know that discrepancies sometimes happen, which is why experts advise against using year-end reports for tax reporting purposes.

10 Reasons Year-End Statements Should Not Be Used for Tax Reporting

  1. Fund companies explicitly caution against using the figures provided in year-end reports for tax reporting purposes. There is a reason that it has become industry standard to include such disclaimers. The industry is trying to prevent tax preparers from a commonly made mistake.
  2. The gross proceeds amount on the 1099 will rarely match the proceeds amounts show on a year-end statement’s realized gain/loss statement.
  3. Reclassifications often occur after year-end.
  4. RICs or spillover payments aren’t made until January of the next year, but have to be reported for the prior year. These occur with mutual funds, Real Estate Investment Trusts and Unit Investment Trusts that post distributions with record dates in October, November and/or December of the prior year, but make payment in January of the next year.
  5. Payments described as dividends on monthly statements, but paid on shares selected in the substitute payment lottery process are reported as miscellaneous income on Form 1099-MISC.
  6. Income payments on certain preferred securities must be reported as interest, even though they are often shown as payments and dividends on the monthly statement.
  7. Original issue discount (OID) accruals may be identified and processed after year-end.
  8. Reporting on short-term discount securities (like Treasury Bills).
  9. Shares received as part of an optional stock dividend offering are valued and reported as income on the 1099-DIV.
  10. Corporate reorganizations, recapitalization, mergers and spin-offs creating stock or cash distributions are considered taxable events reportable on Form 1099-B.

Your year-end statements provide valuable information, however for tax reporting purposes, your best bet is to use the information contained on your 1099s.

This information represents our understanding of federal income tax laws and regulations, but does not constitute legal or tax advice. Please consult your tax advisor, attorney or financial professional for personalized assistance.

The Seven Deadly Mobile Phone Sins

Sue BerginSue Bergin

Prospects have always looked to attire, office location, furnishings, and framed degrees to get a sense of an advisor’s expertise. While those things are still influential in shaping perception, they are often trumped by the role technology plays in making an impression.

Technology can make you look smart. It gives you access to more information and helps you deliver better service. You can perform research in minutes that used to take you days. You have access to answers and can get those answers to clients quickly. Technology makes you appear progressive. You may have insights into the next cool trend that the client or prospect is eager to learn about.

Turn Off Your PhoneOn the other hand, technology can tarnish your image. Commit the seven deadly mobile phone sins, and you may leave clients with the wrong impression of you.

The Seven Deadly Mobile Phone Sins:

  1. Taking a call or returning a text or e-mail during a meeting with a client or prospect.
  2. Checking your cell for anything other than an update on the client’s portfolio.
  3. Making your digital device the star of your pitch.
  4. Leaving your headset in your ear during any client interaction. It’s distracting.
  5. Taking your device with you during a meeting break. It implies that your return will be delayed because you are too busying doing making a call, returning an e-mail, Tweeting, checking a sports score, or any of the other gazillion things you can do on your phone.
  6. Blaming technology as the reason you failed to respond to an inquiry. Clients buy the “my system crashed” excuse as often as a teacher buys “the dog ate my homework” excuse. Even if it’s true, they just won’t buy it.
  7. Forgetting to shut off or mute your device. There is little more distracting during a meeting than a constantly ringing or vibrating phone.