Trends and Advice for 2015: Sheryl Rowling

By Sheryl Rowling, CEO, Total Rebalance Expert on Wednesday, January 14th, 2015


Looking back, what were your thoughts on advisors’ concern for tax smart portfolio management for this past year?
As clients are becoming more knowledgeable about tax implications of their investments and more sensitive to tax costs, they are beginning to demand a higher level of service in this area. As a result, I’ve witnessed a greater number of advisors seeking to apply tax saving strategies to their portfolio management services. Advisors tend to implement one step at a time, beginning with harvesting tax losses more than once a year (typically at year end). Additionally, since many funds’ capital gain distributions were significantly higher in 2014, more advisors were actively submitting trades prior to posting to lessen their clients’ tax burdens.
Looking forward, what do you see as the emerging trends for 2015?
The demand for independent financial advice is increasing and advisors are having more of an issue with capacity than with marketing. I see a trend of embracing tools for greater efficiencies such as technology and outsourcing. With demand for talent surpassing supply, a focus on efficiency is a must. Even smaller and new advisors need to invest the time and money to put good systems in place. Technology necessities for a well-run practice now include a portfolio accounting system, CRM, secure client portal, updated interactive web site, a financial planning program, rebalancing software, account aggregation software and on-line investment research. Outsourcing opportunities can include billing, reporting and reconciliations; financial planning; personal assistant; and rebalancing.
How should advisors be planning to best position their firms?
To survive and thrive, advisors will need to solidify relationships, provide more personalized services, improve internal efficiencies and incorporate on-line (robo-like) offerings, such as a browser optimized/interactive website, blogs and social media presence, to appeal to more tech-savvy and younger clients. Custodians, brokerage firms and insurance providers are all heavily competing for advisors’ current and future clients. Although personal relationships and personalized services will help, they won’t guarantee allegiance.  Custodians are offering money-back guarantees; insurance providers are giving away steak dinners and brokerage firms are utilizing massive marketing budgets. To counteract that, advisors must add value in tangible and intangible ways. Since asset allocation (or any other type of investment strategy, for that matter) cannot ensure gains every quarter nor can it significantly beat index returns, advisors must demonstrate tangible value through tax savings. (Here is where technology can help – by automating transactions and quantifying the actual tax benefits.) While the larger brokerage houses and custodians might offer slick client interfaces, advisors must offer at least a decent on-line experience. They can differentiate themselves by truly offering personal contact with people the clients know long-term. In the end, it is the combination of best practices that will help advisors compete.

Sheryl Rowling, CPA/PFS is chief executive of Total Rebalance Expert and principal at Rowling & Associates. She is also a columnist for both Investment News and Advisors4Advisors. 

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