Shorts: On Rules, Rhoades and Referrals


If you follow me on Twitter, you know that I spent the weekend on a bicycle with 600 or so of my best friends. Our two-day, 110-mile ride (from Arlington Cemetery in D.C. to the Gettysburg battlefield in PA) was for and with disabled and adaptive veterans. It was a truly memorable experience for everyone who participated.

I learned a few things on the road this weekend:

  1. I am not a biker (never have been, never will be).
  2. There was a lot of time to think out there, but you can’t necessarily write a blog post while peddling.
  3. I will be back riding again for my 5th year in 2018.

So this week, we are dusting off the “shorts” format. Shorts is a recurring feature on Practically Speaking, featuring items that I thought were important, but didn’t warrant a full article. In other words, too long for a tweet; too short for a full post.

Shorts: On rules, Rhoades and referrals Click To Tweet

Banks Rack up Advisory Fees as Fiduciary Rule’s Future Hangs

One of the least discussed areas of the proposed DOL rule is that it actually be better for the bottom line of your business. The banks and wirehouses know this and have been trying to drop the “sales first” culture for years, but as the implementation of the DOL rule nears (yes, it is still a thing and yes, it is still happening), the numbers are starting to show the benefits.

This article, as well as LPL Awaits Fiduciary Rule ‘Disruption,’ After Profit Drop (also from the Wall Street Journal), both mention that fee-based business is up and transaction business is down – but I think they fail to tell the whole story. Remember, when charging on a transaction basis, the fee is received immediately, thus when transaction business is down, it is felt immediately. But on a fee basis, the income is typically charged in arrears, at a smaller increment and over time. It is the engine that keeps on going. Independent advisors have been saying for years that fee based (or fee only) business are more stable and profitable; the DOL is only helping firms get there faster.

June 9th: Strict Fiduciary Obligations to Arise?

Speaking of the DOL rule, Ron Rhoades put together a great summary of the delay notice. In, as he calls it, a “brilliant” move, the DOL basically reconfirmed almost the entire rule in its postponement to June 9. For those of you who think the DOL rule is dead, or will be slowly walked into oblivion, Ron does a great job of outlining what is and what isn’t delayed and also advises what firms and advisors should be doing now.

#FASuccess Podcast Ep 003: Julie Littlechild On Becoming A More Referable Advisor

Full disclosure – I am typically not a podcast guy. For years, people have discussed books on tape or podcasts, but I always reply:

  • I am too distractible (some colleagues have suggested it’s adult ADD)
  • My commute is too short (only 25 minutes) to get through a whole podcast
  • I work on planes, rather than listening to my phone or device
  • I can’t do it while I am running; I would get too bored and I need to keep focus away from what I am doing
  • How do you download these things so I don’t have huge data charges?

But two weeks ago, I did it. I listened to my first podcast featuring Julie Littlechild and Michael Kitces. I picked this one primarily for the subject (referrals) and that I have known and worked with Julie for years. Frankly, I was not disappointed.

Besides getting to know Julie and her story better, the discussion about her research was fascinating. Get this – your clients don’t sit around all day and talk about you! Clients get together and discuss issues, real issues and commonalities – but their financial advisors’ names, model portfolio returns or economic update meetings aren’t on the tops of their minds. So how do you get referrals? Julie shares some good ideas.

One podcast under my belt and I have actually started a new one. Who knows, this may be a turning point for me. Read/hear anything good? Send it along; maybe we can do another “shorts” soon.

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John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

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