The Pursuit of Best Interest Advice Requires a Best Interest Process

Published May 16th, 2019 in Blog |

In early May 2019, Alexander Acosta, the Department of Labor Secretary, stated that the DOL is working with the SEC to resurrect the fiduciary rule. This is not a surprise to those of us who follow this ever-changing proposed legislation.

As advisors, we know a best interest standard is a good thing, but what does it mean to our businesses? More compliance, more paperwork, reduced efficiency, lower revenues?

It depends on whether you have a documented best interest process.

So what exactly is a documented best interest process?

Let’s break it down:

Documented is defined as a record (something) in written, photographic, or other form.

Best Interest is defined by the DOL as being required to make prudent investment recommendations without regard to one’s own interests, or the interests of those other than the customer; charging only reasonable compensation; and making no misrepresentations to their customers regarding recommended investments.

Process is defined as: a series of actions or steps taken in order to achieve a particular end.

To summarize, it is a written process one takes the client through to validate how the presented recommendations were determined, and how those recommendations are in the client’s best interest.

How do you ensure you have a Documented Best Interest Process?

The DOL stated that:
“This is not a search for subjective good faith –a pure heart and an empty head are not enough.”

But they did say that:
“…advisers can usually prove they have acted in clients’ best interest by documenting use of a reasonable process and adherence to professional standards in deciding to make the recommendations and determining it was in client’s best interest…”

Regulators and enforcement (attorneys) that find you have followed a documented process with all the evidence on how and why you arrived at your recommendations will likely dismiss the case (unless gross negligence took place). This makes the need to standardize your sales
process, including all steps of data-gathering and justification on the recommendations provided, an absolute essential.

If you do not already have a detailed, documented, step-by-step process, now is the time to put one in place. There are many steps associated with creating a plan and all data-gathering needs to happen in a formalized manner so you can validate, if needed, why recommendations were made with procedural prudence. Producing a written financial recommendation not only provides the documentation needed to cover best interest requirements, but it also provides your clients and prospects with peace-of-mind and confidence in their financial plan and your recommendations. Since market changes and media headlines constantly influence the emotions of investors, a tangible outline can serve as a touchstone to help maintain long-term investment strategies and client relationships while also upholding best interest compliance regulations.

A few of the data-gathering documentation tools recommended and available through Clarity 2 Prosperity include:

  • The Fact Finder: Establish concerns and priorities and identify what planning has or has not been completed
  • Asset Sheet Questionnaire: Systematically collect the comprehensive data needed to create and document a holistic plan
  • Income Gap Assessment: Quickly and clearly identify future investment income needs for retirement and how much of your client’s income gap they would like guaranteed
  • Volatility Tolerance Analysis: Identify and document an in-depth perspective of your client’s true volatility tolerance by individually reviewing each of the three segments of their savings and scoring them separately
  • Packaged Plan Deliverable: A simple way to package your planning and recommendations into an easy-to-understand template
The Bucket Plan® Best Interest Process

The Bucket Plan Best Interest Process is a complete client engagement and educational experience. It can be used as a stand-alone process or as part of a full financial plan. While it does set the stage for retirement income distribution planning, it can be used at any point in a person’s life for financial planning.

The Bucket Plan is not solely meant to “bucket” a client’s money for different types of income or expenses. Rather, it compartmentalizes assets to efficiently ensure liquidity, maximizes potential income distributions, minimizes taxes, eliminates sequence risk, and maximizes growth and legacy planning opportunities, all while ensuring that certain risks associated with behavioral finance are minimized. We accomplish this by establishing three phases, or buckets: the immediate (Now), the short term (Soon) and the long term (Later). The Soon Bucket provides an income source for a person during the earlier years of retirement, buying an income bridge or floor to invest the rest of their money in the Later Bucket so inflation doesn’t derail their long term retirement plans.

The Bucket PlanEach phase has a different time horizon, giving each a different risk profile. By approaching bucket planning with this in mind, you can be truly strategic in advising a client on the financial solutions that will help maximize their income while focusing on minimizing controlled risks such as market volatility, sequence of timing of returns risk, inflation, taxes, longevity, and estate transfer.

The Bucket Plan Best Interest Process has six steps or tools to use with your clients when coming to a final plan and recommendation, including:

  • The Money Cycle: Educate your client on the three phases of the money cycle, along with the biggest mistakes we see clients make – skipping the preservation phase
  • The Bucket Plan Presentation: Package a financial plan in terms a client can understand
  • The Asset Sheet: Gather comprehensive information about their liquid investable assets segmented by tax qualification
  • The Income Gap Assessment: Determine the “income gap” between retirement income sources and retirement income needs
  • The Volatility Tolerance Analysis: Discover the amount of risk a client is comfortable with in each bucket in order to make suitable recommendations
  • The Pyramid of Risk: Educate your client on the level of risk associated with various types of investments and show them where they are with their current allocation

The Bucket Plan Best Interest Process identifies a client’s comfort level of risk in each bucket and gives you a full picture of all their investable assets so you can provide holistic and thorough financial advice with a keen eye towards tax efficiency. It simplifies the client experience through the planning and sequential steps, giving them the knowledge, comfort, and confidence to move forward with your recommendations.

The Bucket Plan Best Interest Process provides a deliverable to the client—further differentiating you from “other” advisors, agents, reps, and planners who are simply selling products.

By implementing The Bucket Plan Best Interest Process, you will have documented the evidence and met the best interest standard while simplifying financial planning for your clients. This simplification, in turn, will lead to more prospects hiring you for plan implementation.

The best part is that this process doesn’t require complex financial planning software or stacks of additional paperwork. We all want to do what is in the best interest of our clients, but just saying it isn’t enough. We need to document the evidence to protect ourselves from the unknown that could come as regulations become more and more complex.

Delve into the Bucket Plan Best Interest Process by downloading the white paper below.


Seven Ways the Right Mastermind Group Can Dramatically Boost Your Advisory Business

Published April 15th, 2019 in Blog |

7 Ways The Right Mastermind Group Can Dramatically Boost Your Advisory Business

What exactly is a Mastermind Group, and why can it be beneficial to your practice?  As a group of like-minded individuals who can exchange ideas and support each other’s plans, a Mastermind Group should have the following three attributes:

  • It must be friendly
  • It must be growth-oriented
  • It must be willing to share information among members

Advantages of Mastermind Groups

More focus – A financial and wealth management Mastermind Group provides a resource for profitable strategies and proven methods that your top-performing peers are using to boost their business.

More solutions – A Mastermind Group creates connections, friendships, and opportunities with other professionals who have experienced similar situations.

More income – You may be able to boost your business without a comparable boost in expenses by using tips you’ll learn from your Mastermind Group.


The right Mastermind Group for your firm should:

  • Align closely with your vision and process
  • Have multiple ways you can connect
  • Be fun and have great people attending with whom you enjoy meeting.

Here are the top seven benefits:

  1. Synergy – You’ll multiply your reach through the power of the group’s ideas and knowledge.
  2. Training – Access to proven leaders, processes, and resources can keep you updated on the latest news in the financial world.
  3. Connecting – One-on-one and group support from colleagues who understand the challenges of a financial advisory firm is immeasurably valuable.
  4. Coaching – The right Mastermind Group will have top coaches everywhere, ready to share their knowledge and expertise with you.
  5. Consistency – A successful advisory practice is built on several processes, communications, and client counsel.  Consistency is crucial.  The right Mastermind Group can help you increase and maintain your consistency factor.
  6. Accountability – With the right Mastermind Group, you will have ample opportunity to not only share your own methods, ideas, and thoughts, but to also receive feedback on them.  Being accountable to peers encourages action and growth.
  7. Inspiration – Mastermind members have often been where you want to go, so learning from their successes and failures can help fast-track your own achievements.

How can you tell if one Mastermind Group will be successful and another won’t?  Here are the three differentiators:

  • Leadership – Superb talent directing the group
  • Agenda – It must be the right one for you and your practice
  • Showing Up – Participants must show up and immerse themselves in everything the sessions offer

A Mastermind Group can be a powerful tool to help you network, learn, grow, create connections and develop friendships with other professionals.  You can uncover solutions that make sense for you and your business.

Delve into these seven ways by downloading the whitepaper below.

7 Ways a Mastermind Group Can Grow Your Advisory Business

Published April 15th, 2019 in Blog |

A Mastermind Group can be a powerful tool to help you network, learn, grow and create opportunities within your financial business.

Uncover the solutions by viewing our infographic and for a complete overview download the whitepaper below.

7 Ways The Right Mastermind Group Can Dramatically Boost Your Advisory Business

Delve into the seven ways by downloading the whitepaper below.

Effortlessly Build a Tax Practice in Less than 1 Year

Published April 10th, 2019 in Blog |

Building a tax practice

The most successful advisors are always thinking about growth.

As a business owner, growth can be divided into two primary categories:

  1. Find new prospects to whom you can sell your existing services, or
  2. Expand your services and sell more to your existing clients.

You can accomplish both at the same time, without adding a lot of personal time and effort, by building a tax practice within your financial services business.

Why start a tax practice?

If you offer both investments and insurance, your revenue probably looks something like this:

Financial Services Revenue

If you serve 100 families and have gross revenue of $300,000, you could have:

  • $150,000 from insurance sales such as life, LTC, DI, and annuities
  • $120,000 from investment advisory fees
  • $30,000 from financial planning fees

You have one support staff and want to hire an associate advisor so that you are not the sole rainmaker. You meet with about 20 new prospects per year and convert about 50% into clients.

Adding a tax practice will add tremendous value to your business within 12 months, with a proven roadmap to grow over the next 3-5 years. Attracting tax preparation clients is much easier than prospecting for financial planning or wealth management clients. Everyone needs to file taxes, but not everyone realizes they need a financial advisor. Your marketing should be very targeted, as we don’t recommend offering tax preparation services to just anyone. Target your tax preparation services to the type of consumers you want to meet for financial services opportunities.

Here are some conservative assumptions to show the progress you can make:

Year 1:

  • 30% of your 100 existing financial clients use your tax preparation service
    • Gross tax preparation revenue $2,970
  • Targeted marketing efforts generate 100 new tax clients (individuals age 50+ with a targeted level of investable assets)
    • Gross tax preparation revenue $9,900

Between existing and new tax clients, about $13,000 additional gross tax revenue is added to your business. After paying for the tax preparer, supplies, and software, you clear a very modest net profit.

But here’s the kicker…

If the new tax clients each have an average of $250,000 of investable assets, you just added $25,000,000 of potential business for your company. If you can convert 5% of that business into a financial client your first year, you just added $1,250,000 new financial business to your firm.

Calculate the amount of revenue you would earn on $1,250,000 of new client assets, and you can see the tax practice pays for itself.

Year 2:

  • Another 10% of your 100 existing financial clients use your tax preparation service
    • Gross tax preparation revenue $990
  • Of 100 initial tax clients (acquired in year 1), 90% return in year 2 (10% attrition).
    • Gross tax preparation revenue $8,910
  • Targeted marketing efforts generate 150 new tax clients (age 50+ with a targeted level of investable assets)
    • Gross tax preparation revenue $14,850

About $25,000 of gross tax revenue has been added to your business. After paying for the tax preparer, supplies, and software, your net profit improves and you now have 250 tax clients with whom to share the other services you offer. If each tax client has on average $250,000, you have $62,500,000 of assets to potentially convert into financial business. If you convert another 5% of that business, you have added $3,125,000 of new assets to your firm. With 250 potential first appointments coming to your office each year to pick up their completed tax returns (which the advisor delivers), you now have a steady flow of prospects for yourself and for that associate advisor you wanted to hire.

Year 3:

  • Another 10% of your 100 existing financial clients use your tax preparation service
    • Gross tax preparation revenue $22,275
  • Of 250 tax clients (acquired between year 1 and 2), 90% return in year 3 (10% attrition).
  • Targeted marketing efforts generate 200 new tax clients (age 50+ with a targeted level of investable assets)
    • Gross tax preparation revenue $19,800

Now you’ve added about $43,000 of gross tax revenue to your business and are experiencing net profit margins of $15,000+. You also have 435 tax clients and a potential asset base of $108,750,000 (using an average of $250,000 per client). A 5% conversion rate results in $5,000,000 of new assets into your company.

The tax practice brings in a new revenue stream and a greater stream of new prospects to whom you can cross-sell financial planning services. This is “Profitable Lead Generation.”

Here is a case study in action:

In 2008, one of our model offices launched their tax practice. By 2018, they accumulated 1,929 tax clients. The total income from tax preparation was $188,196 and they spent:

  • Advertising: $7,366
  • Tax preparers: $92,756
  • Additional staff hours: $15,971
  • Supplies: $11,952

Total expense: $128,045

The business owner had a net profit of $60,151. They also averaged $10m-$12m of new business from their tax clients each year over the last three years. In 2018 alone, they gathered $5.4m of annuity premiums, $5m of AUM, and over $80,000 of target life insurance premium from tax clients who also needed financial services, all without spending a dime on marketing!

After categorizing all the tax clients in their CRM, they now have segmented 384 A-list clients (over $500k investable assets), 681 B-list clients (there is an opportunity for financial business, but not sure exactly how much they have), and 804-C list clients (probably not a financial services opportunity). The amount of activity keeps four financial advisors stacked with opportunities throughout the year.

You can see the massive opportunity, but a tax practice certainly isn’t for everyone.

A tax practice might be a great addition to your business IF you meet the following requirements:

  1. You are entrepreneurial and looking to grow
  2. You are or aspire to become a holistic advisor
  3. You want a lot of prospects coming into your office
  4. You want to provide better advice to your clients by integrated tax planning
  5. You want to add additional rainmakers to your business

If you don’t meet all of these requirements, do NOT start a tax practice!

The one requirement you do not need is a tax background. We have helped many financial advisors who were not initially strong in taxation. The financial advisor is not doing any tax preparation – that’s why you hire a tax preparer. But by having a tax practice, the advisor becomes more competent in tax planning, ultimately adding value to the advice they provide their clients.

If you answered yes to each of the requirements above, your next step is to determine how you will do it, and what resources you need.

Clarity 2 Prosperity has created The Tax Practice Builder®, an eight-step process that gives you everything needed to successfully build a tax practice.

The Tax Practice BuilderIn addition to the online eLearning platform, you have access to subject matter expert advisors and mentors who have already built a tax practice to guide you along the way.

This is just one of our 21 proven processes financial advisors are using every day to increase efficiency, client conversions and retention. Learn more today by downloading our 21 Turnkey Processes Whitepaper below.

Comprehensive Planners & Transactional Advisors

Published March 25th, 2019 in Blog |

Financial services industry and comprehensive planners

The balance between simplicity and sophistication

Historically, the financial services industry has been divided into two camps: transactional advisors and comprehensive planners. To maximize the success we have with our clients, there are important lessons and traits we can adopt from each.

Transactional advisors:

Transactional advisors act as specialists, helping their clients facilitate the purchase of individual products like mutual funds, investment portfolios, or insurance products. These advisors excel at keeping things simple, helping them convert a high volume of prospects into clients, but sometimes they lack a holistic outlook on how their recommendations impact other areas of a client’s financial well-being.

With the rise of industry regulation, ease of access to products, and an abundance of consumer information easily available, transactional advisors are seeing the need to move toward becoming a planner. These advisors can become intimidated with complex financial planning software, they don’t want to spend hours doing data entry, and they don’t have a proven planning process to follow.

Comprehensive planners:

Comprehensive planners bring value to a client by building a sophisticated financial plan using knowledge and expertise obtained through industry designations like the Certified Financial Planner™ (CFP®), Chartered Financial Consultant (ChFC®), or Retirement Income Certified Professional (RICP®), to name a few. These advisors typically solve complex challenges clients face by ensuring that the pieces of a client’s financial life are integrated and efficient. However, recommendations are often presented in a complex manner, confusing the client and resulting in an inability to understand and a reluctance to move forward.

The comprehensive planner may think everyone wants to see a detailed financial plan, but the reality is that most clients struggle to understand the first five pages of such a  report. That confusion can cause them to not implement your recommendations. There is a critical need to deliver a simplified plan that a client understands.

The Bucket Plan Best Interest Process:

Whether you are a transactional advisor wanting to become a planner, or a comprehensive planner looking for a way to simplify your recommendations and plan deliverable, The Bucket Plan® is your solution.

“Simplicity is the Ultimate Sophistication” – Leonardo Da Vinci

                                                    The Bucket Plan

If your business has been transactional and you need to progress into planning to stay competitive, The Bucket Plan® Best Interest Process can help by providing a step-by-step roadmap, with every script, tool, and template necessary to follow throughout the planning process with your client.

The Bucket Plan Best Interest Proces

The process is built so that you are educating the consumer each step of the way. By the end of the process, you will have gathered all the data necessary to deliver a simple plan to implement your recommendations, while ensuring you are meeting the best interest standard.

For comprehensive planners, investments, taxes, insurance, legal, Social Security, Medicare, stocks, bonds, mutual funds, etc., are all complex topics that can quickly overwhelm the average American consumer. We have licenses, designations, and years of experience navigating these complex topics and decisions points, but it is an art form to simplify the plan so your client can understand and have the confidence to move forward with your recommendations. Complex financial planning software is great, but it won’t motivate the client to do business with you.

Planners may associate simplicity with lack of sophistication, but that is far from the truth. At a conference I attended about seven years ago, a very accomplished financial planner, speaking on the main stage, stated that “if the plan can’t fit on two napkins, it won’t work.”  He was being a little overzealous in getting his point across, but his message was loud and clear – simple sells.

The Bucket Plan philosophy simplifies plans in a way the general public can understand. Segmenting money into three buckets based on the time horizon, income needs, tax qualification, and the client’s goals doesn’t take complex software, but allows the planner to layer in as much sophistication as they desire behind the scenes.

When we take our car to a mechanic for repairs, we want a high-level assessment of what is wrong and what is needed to make the repairs.  Unless you are an engineer or interested in automotive repairs, you probably don’t want an entire documented plan on what it takes to perform them. This is no different than how we should deliver our financial plans.


The Bucket Plan takes something complex and makes it simple to visualize. Once prospects understand their plan, the probability and pace at which they act on your recommendations will increase.

For more information about The Bucket Plan, download The Bucket Plan Whitepaper below!