From this challenge has emerged a new crop of alternative financial planning business models, including income-and-net-worth-based annual retainer models and most notably the rise of the Garrett Planning Network and the hourly fee middle to reach these underserved groups. Meet Our Team - XY Planning … Just as with the AUM model, this allows advisors to grow their business and income over time by growing a base of clients who pay an ongoing fee for the relationship service (perhaps even supplemented by AUM in the future as those clients eventually do begin to grow their assets and net worth!). That said, XYPN does “offer investment solutions alongside … other back-office services,” he noted. Michael E. Kitces, MSFS, MTAX, CFP®, CLU, ChFC, RHU, REBC, CASL, is the Head of Planning Strategy for Buckingham Wealth Partners, a private wealth management firm located in … ), an AUM-centric model may be fine for those it serves, but there are many it doesn’t serve at all. Last week, platform provider XY Planning Network hosted its national conference, drawing about 500 advisor members and other guests. I write about financial planning strategies and practice management ideas, and have created several businesses to help people implement them. That doesn’t necessarily mean that broker-dealers and custodians, or the associated product-based or AUM-based business models, are going to go away anytime soon. Notably, the goal of the XY Planning Network is not “just” to bring financial planning to the underserved Gen X and Gen Y at an affordable cost, but also to support a new career path for entrepreneurial young advisors who want to build an advisory firm by working with their own natural network in the first place: their Gen X and Gen Y peers. “We’re looking at more direct administration [services], like virtual assistants and paraplanner solutions,” he said. XY Planning Network. Instead, the long-standing “dirty secret” of financial planning is that the bulk of it is paid “indirectly” through the products or services that are used to implement the plan. XY Planning Network co-founder Michael Kitces. The group recently announced new services for members, such as a three-week intensive sales and marketing program as well as advanced coaching; compliance coaching and reviews of compliance programs; more financial planning and process consulting; and white-label tax services. To help meet this need, this past week witnessed the launch of XY Planning Network – a new network for Gen X and Gen Y advisors who wish to work with their Gen X & Y peers offering this kind of monthly retainer model. By going from a $100 million minimum down to $5 million, the asset manager aims to “broaden” retirement plan access to these funds. Advance your career with an FPA membership. The TFPP provides the tools, templates, technology, and other support necessary to deliver a particular type of planning to a particular audience with a particular business model; the more specific it is, the more efficiency there can be, the leaner the support business model is, and the more inexpensively it can be delivered to support the growth of financial advisors. “We are making different arguments against Reg BI than what the states are claiming,” Kitces said. RECEIVING OUR LATEST RESEARCH AS IT IS RELEASED! While the AUM model just “doesn’t work” for much of the middle class and younger folks, it’s still a remarkably good business model for those who really do have the assets and need for an ongoing financial planning relationship (e.g., retiring baby boomers). Attention Premier Members! Advance your career and take your firm's production to the next level with FREE practice-management tips. Your article was successfully shared with the contacts you provided. My passion is serving young professionals, entrepreneurs, and small business owners. All Other Questions, The organization, which also is suing the Securities and Exchange Commission over Regulation Best Interest, says it has more growth plans on the horizon. And what might change about the platform itself? Get the latest best practices, relevant stats and industry trends - quickly and easily. Our November CE Quizzes are now available in the Members Section. Become a … XYPN says it expects to prepare about 1,000 2019 tax returns for clients of advisors using its network. It’s a top priority to not let our standards slip.”. Michael Kitces, co-founder of XY Planning Network, says the group is mulling its options after a federal court struck down the organization’s lawsuit against the SEC rule. Not all the Democrats' tax plans are negative for wealthy clients, Levine says, but several available planning opportunities are likely to go away. In the case of the TFPP, though, the focus is – as the name suggests – not just on making the asset managment process turnkey, but the whole financial planning business. The Rise of TFPPs And The Evolution Of Broker-Dealers & Custodians, the popular financial planning industry blog, FPA’s Practice Management Solutions survey a few years ago, an AUM-centric model may be fine for those it serves, makes it difficult for clients to properly compare and keep the cost in context, the next major business model in financial planning will be the, for whom the greatest investments they can make may not be in their building portfolios at all, but growing their human capital instead, the purpose of XY Planning Network is to provide the tools, templates, and access to technology necessary to let advisors operate the model on a near turn-key basis, Turnkey Financial Planning Platform (TFPP), financial advisors are experiencing a crisis of differentiation, focus on a niche where the business can be both highly efficient, and highly differentiated, it’s still a remarkably good business model for those who really, SECURE Act And Tax Extenders Creates Retirement Planning Opportunities And Challenges. Multipliers: How the Best Leaders Make Everyone Smarter, “Top 10 Influential Blog for Financial Advisors”, “#1 Favorite Financial Blog for Advisors”. Whether it’s the “middle class” in general, middle-aged workers who may have some assets but they’re “tied up” in retirement accounts, or younger folks who simply haven’t accumulated much of any assets at all (or worse, are simply trying to pay down debt and keep their net worth from being negative in the first place! 163; Alan Moore, who we chatted with way back in Ep. “We see that as fundamentally anticompetitive and in violation of the Investment [Company] Act and Dodd-Frank and are challenging the SEC on that basis.”, The blogger also wrote about the matter extensively, Ultimately, though, the purpose of the XYPN lawsuit against the SEC is not to undermine the ability of broker-dealers to engage as such; instead, the issue is simply that Congress has repeatedly prescribed that the delivery of financial advice, be delivered under a fiduciary standard of care, either by lifting the standards for brokers when providing such advice, or by requiring such advice to be delivered as a registered investment adviser in the first place.”, suing the Securities and Exchange Commission, How Did Advisor Portfolios Perform After COVID-19 Hit? Co-founders Alan Moore and Michael Kitces … Attention Members! The XY Planning Network and its co-founder, financial advisor Michael Kitces, are among the plaintiffs in a federal lawsuit that is attempting to … Despite the labor intensive nature of building financial plans, the median comprehensive planning fee from FPA’s Practice Management Solutions survey a few years ago was still only $2,250, despite the fact that 40% of planners reported spending more than 15 hours to construct a plan (and 75% of those surveyed were taking at least two weeks to deliver the plan back to the client). As financial planning continues its evolution towards getting paid for advice – and not ‘just’ for the sale of insurance/investment products, or the management of investment portfolios – a new type of advisory support structure is emerging: the Turnkey Financial Planning Platform (TFPP). Nonetheless, the bottom line is that as financial planners do continue the slow and steady evolution towards trying to get paid for financial planning advice itself – reducing or total eschewing their reliance on traditional insurance and investment products – an opportunity is emerging to both reach new audiences that the traditional models don’t, open the door for young advisors to serve them without a sales/product agenda, and there will be a growing need for TFPP solutions that support advisors as they build such business. April 7, 2014 07:01 am 10 Comments CATEGORY: Practice Management. The network now has about 1,020 advisor members, it says. “Our members are at a capacity crossroads. “We’ve been on a deliberate path of reinvesting for sustained growth … since day one,” Kitces explained. To some extent, broker-dealers have managed to shift their models to support fee-based investment advisory business to accommodate this shift, but many broker-dealers still struggle with their legacy infrastructure trying to facilitate what ultimately appears to be a leaner and more focused model. My passion is helping divorced women take control of their financial situation and create a realistic plan to achieve their goals including rebuilding their wealth, sending kids to college, and planning for retirement. While this is not inherently bad as long as the costs add up reasonably for the services provided and the recommendations are in the clients’ interests, the sad reality is that financial planning can actually be so effective in building trust with clients that it can also be used (or rather, abused) to facilitate the sale of far less appropriate and more costly products as well. Meanwhile, XYPN is suing the SEC over its issuance of the Regulation Best Interest rules. XY Planning Network (XYPN) follows in the footsteps of the Garrett Planning Network as another advisor network built to bring financial planning to those who wish to work with advisors on a fee-only basis but do not have assets to invest – especially the middle class and those younger consumers whose advice needs revolve around cash flow, debt management, and for whom the greatest investments they can make may not be in their building portfolios at all, but growing their human capital instead! In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession. Winding Trail Financial Planning, LLC was founded as an independent, fee-only, fiduciary financial planning firm in order to provide objective advice to … Kitces’ XY Planning Network in September 2019 filed suit in the U.S. District Court for Southern District of New York, contending that the Securities and Exchange Commission’s Regulation Best Interest rule gives broker-dealers an unfair competitive advantage. ), Quantifying the Value of Financial Planning Advice. XY Planning Network founders Alan Moore (left) and Michael Kitces at the 2019 XYPN Live conference. Unfortunately, though, this shift towards AUM-centric business models for delivering financial planning has a significant caveat: it doesn’t reach those who don’t have assets available to manage! “We fielded these questions,” Kitces said, “and as one of, Meanwhile, XYPN is suing the SEC over its issuance of, Asked why the firm chose to make this legal move, Kitces said: “At, the end of the day, we think Reg BI is just fundamentally not consistent with the Investment Company Act of 1940 and Dodd-Frank [legislation].”, “lets brokers continue to deliver financial planning without being subject to the advice standard,” he explained. Together with XY Planning Network co-founder Michael Kitces, Alan Moore will explore the future of financial planning and how a growing cohort of professionals is joining the movement to make financial advice and service more accessible to the next generation of clients. About Michael Kitces, CFP Michael E. Kitces, MSFS, MTAX, CFP®, CLU, ChFC, RHU, REBC, CASL, is a co-founder of the XY Planning Network, the practitioner editor of the Journal of Financial Planning, and the publisher of the e-newsletter The Kitces Report and the popular financial planning industry blog Nerd’s Eye View. Last week, platform provider XY Planning Network hosted its national conference, drawing … Free unlimited access to ThinkAdvisor.com which provides advisors, like you, with comprehensive coverage of the products, services and trends necessary to guide your clients in making critical wealth, health and life decisions. Michael Kitces is Head of Planning Strategy at Buckingham Wealth Partners, a turnkey wealth management services provider supporting thousands of independent financial advisors. In a world where broker-dealers try to make a percentage of the “grid” (of Gross Dealer Concessions) and custodians try to profit from revenue-sharing (with advisors or through the 12(b)-1 fees of the funds they use), TFPPs are operating on a drastically lower cost flat fee service; by focusing on a specific business model and/or niche, TFPPs are creating value for their advisors at a fraction of the cost of larger platforms. And as the industry is shifting towards providing more planning services to clients, don’t get left behind! As you look for new ways to boost your bottom line, re-centering your business on planning can make a big difference. The group also launched some new services to help members of its network grow their practices. To address this challenge, this month marks the launch of XY Planning Network, a new Turnkey Financial Planning Platform (TFPP) designed to help younger Gen X and Gen Y advisors who want to deliver financial planning to their Gen X and Gen Y peers, with a monthly retainer fee model that allows them to actually get paid for the advice itself and supports an ongoing financial planning relationship, without the sale of products or requiring AUM. XY Planning Network founders Alan Moore (left) and Michael Kitces at the 2019 XYPN Live conference. Its case is separate from that of several states. ... XY Planning Network has launched its own compliance archiving solution. Michael Kitces, co-founder of XY Planning Network, wrote that his group continues to object to the NAIC model update. Copyright © 2020 ALM Media Properties, LLC. XY Planning Network is the leading organization of fee-only financial advisors who specialize in working with Gen X & Y clients. Unfortunately, for most new planners entering the industry today, there have only been two paths: taking a job at a firm that requires them to sell insurance and investment products to their peers; or working at a larger firm that serves wealthier clients and has (AUM) minimums that prevent young planners from working with the peers they often wish to serve. The video for this month’s live Office Hours, Best Practices in Hiring: Making Sure Your Next Employee is the Right One Who Stays, has been posted in the Members Section! In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In fact, ultimately the launch of XY Planning Network may just be the next step in a long line of turnkey financial planning platforms that emerge, as advisors increasingly shift away from product- or asset-centric business models, towards ones that seek to get paid for financial planning itself. The blogger also wrote about the matter extensively online this week, explaining: “Ultimately, though, the purpose of the XYPN lawsuit against the SEC is not to undermine the ability of broker-dealers to engage as such; instead, the issue is simply that Congress has repeatedly prescribed that the delivery of financial advice must be delivered under a fiduciary standard of care, either by lifting the standards for brokers when providing such advice, or by requiring such advice to be delivered as a registered investment adviser in the first place.”, 5 Worst States for COVID-19 Hospitalization Rates, Why Raymond James' Purchase of $35B Retirement Plan Firm Is a 'Strategic Fit', Bitwise Launches First Cryptocurrency Index Fund, Harry Dent: Market Crash Coming in 2-3 Years; Economy ‘Already Dead’. “We fielded these questions,” Kitces said, “and as one of Inc.’s 5,000 fastest-growing firms are very cognizant about growth and service. In point of fact, the TFPP concept is not entirely new; arguably, the first pioneer in this approach was Sheryl Garrett with the Garrett Planning Network, and the Alliance of Cambridge Advisors (ACA) is another (and XY Planning Network will be a third). In other words, one virtue of the AUM fee is that it’s automatically  compared to the portfolio from which it comes, which makes even a multi-thousand-dollar fee seem ‘reasonable’ relative to the good stewardship of a portfolio worth 100x that amount; writing a check for some hourly fees (or in the extreme a full-sized annual retainer fee) from a checking account just accentuates all of the other personal expenditures that might have occurred with the money in the checking account instead. Exclusive discounts on ALM and ThinkAdvisor events. Michael Kitces, CFP, a Financial Planning contributing writer, is the head of planning strategy for St. Louis-based Buckingham Wealth Partners; co-founder of the XY Planning … In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. XY … Since my own divorce, I have been committed to helping others navigate this difficult time through education and planning. While this has allowed for the growth of many successful financial planning firms, it also opens the door to the risk that the plan will lead to the sale of inappropriate products, and limits access for financial planning to those who have assets to manage or need to buy insurance or investment products in the first place. How modern organizations are growing brand value, operational efficiency, and business impact with social media. The Pandemic Hits the Housing Market. Although the distinctions between a monthly retainer versus an annual retainer or an hourly fee are nuanced, they are nonetheless significant and have the potential to help financial planners finally get paid for what they actually do, especially for those consumers who don’t have the AUM or don’t need those financial services products through which financial planning has traditionally been indirectly paid! As criminals get smarter you must take extra steps to protect both your clients and your firm. In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. Very Well, Says Invesco, Wells Fargo Raises Monthly Comp Hurdle for 2021, Jeffrey Levine: 5 Tax Tips for Wealthy Clients to Consider Before It's Too Late, Vanguard Slashes Investment Level for Institutional Target Date Funds, Sign Up for the Career Advantage Newsletter, Sign Up for the Inside Wealth Management Newsletter. They can’t do it this alone … . ), similar to how Garrett Planning Network facilitates the same thing for those who wish to do hourly planning. News > Industry XYPN Advisor Network Files Lawsuit Against SEC to Stop Reg BI Specially, members voiced concerns about the firm’s growth pace, if it might need outside capital or possibly risk letting service standards weaken. XY Planning Network will not be pursuing its case against the SEC’s Regulation Best Interest in the U.S. Supreme Court, co-founder Michael Kitces announced during a … Asked why the firm chose to make this legal move, Kitces said: “At the end of the day, we think Reg BI is just fundamentally not consistent with the Investment Company Act of 1940 and Dodd-Frank [legislation].”, In addition, Reg BI “lets brokers continue to deliver financial planning without being subject to the advice standard,” he explained. In fact, arguably the TFPP may itself be a direction and vision towards which many broker-dealers should evolve to survive in the future; just as financial advisors are experiencing a crisis of differentiation, so too are broker-dealers (and even custodians are struggling to avoid commoditization as well), and the solution is the same for all: focus on a niche where the business can be both highly efficient, and highly differentiated! In our 48th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss why goals-based financial planning puts the proverbial cart before the horse, the importance of exploring the possibilities first, strategies to dig deeper with clients to create frameworks from which realistic and meaningful goals can be developed, and why iterative planning … “We see that as fundamentally anticompetitive and in violation of the Investment [Company] Act and Dodd-Frank and are challenging the SEC on that basis.”. 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