The Importance of Technology for Succession Planning

Technology for Succession Planning

Today's post takes a look at the importance of technology for succession planning and helping manage large family relationships for your clients.

The post The Importance of Technology for Succession Planning appeared first on Orion Advisor Services.


Good Impressions

Content provided by Robyn Murray, Freelance Writer

Four years ago, Sean Hollingshead was traipsing around the campus of Brigham Young University with celebrity media pundits from CNN and MSNBC and journalists from little-known publications around the world. It was in the midst of Mitt Romney’s bid for the White House, and everybody wanted to know what Mormons were all about.

“The first couple hours were always the most fascinating,” Hollingshead said. “Everyone had preconceived notions.” Hollingshead, who worked as a lead contact in BYU’s public relations department, was responsible for introducing the campus to the media and making sure reporters got a good impression. “It was pretty fascinating,” he said, “I met some remarkable people.”

Today, Hollingshead lives in Omaha, NE and works in an entirely different industry. After two years in a position he never thought he’d have, he made a move for love. He met a girl from Omaha, and her father convinced them both to move back to her home. That father was Todd Clarke.


Hollingshead, who grew up in Salt Lake City, Utah, says his favorite experience as a PR point-person at BYU was walking the halls with Richard Quest, the host of CNN’s “Quest Means Business” and a flamboyant personality, asking students what they thought about the election. His best moment, he recalls, was watching Quest’s preconceptions puncture when, out of the first six he talked to, only one student said he was supporting Romney.

Hollingshead was a good person for the job. He’s open, unafraid to express his opinions, and as an inadvertent representative of the Mormon faith, doesn’t portray his church as superior or others as worse off for not believing. Basically, he makes good impressions — which is how he got the job in the first place.

As a business major at BYU, Hollinghead was looking for work. His brother, a spokesperson for the university, helped find him a position as a “paper pusher” in the PR department, and by his senior year, Hollingshead had made a good enough impression on his boss to get promoted to lead the PR team and guide the influential media tours. Hollingshead credits hard work for the step up. “Whatever I was doing, I was trying to do it well and exceed the standard quota,” he said. He also wasn’t afraid to speak his mind, and he made himself available to help out with whatever was needed. “Being reliable and having a consistent work record always has an effect on people,” he said.

Six months later, Hollingshead made another — even more consequential — good impression. He met his future father-in-law, Todd Clarke, formerly the CEO of CLS Investments who took over the company his father founded, in Salt Lake. Clarke was attending a meeting at the Montage Deer Valley Resort, which Hollingshead describes as straight out of Hollywood high life. “Picture ‘The Shining,’” he said, “but with more opulence.”

Hollingshead drove his beat-up ’99 Honda Accord to the hotel’s valet-only entrance, handed his keys to the reluctant keeper, and headed to dinner. After getting past the server’s first question of “What kind of water can I start you with?” with a confident “Ice water,” Hollingshead started to get more comfortable as he chatted with Clarke about his business and efforts to build CLS’s parent company, NorthStar. By the end of the dinner, Hollingshead felt a little better about his plans to ask Clarke for his daughter’s hand in marriage.

But before the wedding bells had even begun to ring, Clarke started working on him to get them both to Omaha. He first found a position for him in inside sales at Northern Lights Distributors, but it wasn’t a fit and Hollingshead turned it down. So Clarke came up with another plan — a sales and marketing liaison at CLS that would bring the two departments together. That sounded intriguing, and Hollingshead agreed. “He gave me a chance,” Hollingshead said, “which was enough.”

Today, Hollingshead is the director of CLS’s Investment Advisor Division where he directs CLS’s Autopilot program that offers low-cost tools for financial advisors and investors to access professionally managed accounts. It’s quite a change from working in PR, but Hollingshead has always been interested in finance, and he’s enjoyed learning a new industry. He also serves on CLS’s Culture Committee, a role he finds interesting and a way he can bring his PR skills to the table. He wants to help break down institutional barriers at CLS and sees potential for more collaboration between departments as well as between the subsidiaries of NorthStar.

Hollingshead enjoys the role and sees opportunities for growth within the company, which appeals to his entrepreunarial zeal. He dreams of growing businesses, in the mold of his father-in-law, who he autodescribes as having achieved the quintessential American dream.

While he’s now a long way from Utah, Omaha is home. His wife is happy to be back with her family, and they’re expecting their first child in January. “We’re happy,” he said. “But the road map hasn’t been completed yet.”



President-Elect Trump and the Fate of the DOL Fiduciary Rule

Hammers's judiciary with dollars on wooden background.

Content provided by Mike Forker, CLS Chief Compliance Officer

How will the election of Donald Trump as President impact the Department of Labor’s (DOL’s) Fiduciary Rule? The answer is no one knows for certain. While Mr. Trump has not taken a position on the rule, a few members of his transition team have indicated that the rule will be repealed.

While advisors are not subject to the new definition of investment advice until April 10, 2017, the new rule was technically effective on June 7, 2016. Rules that are in effect are much harder to change than proposed or pending rules. Still, there are three ways the rule could be repealed or amended.

  1. Modify or repeal the rule.

The Department of Labor could modify the rule to eliminate some of the more onerous compliance obligations, or fully repeal the rule all together. However, since the rule is already in effect, repealing the rule or making modifications will require the DOL to undergo the formal rule making process. The rule making process to enact the rule took six years. It is hard to envision a timeline where modifications are made through the rule making process by April.

  1. Decline to enforce the rule or delay it.

President-elect Trump could instruct the DOL to disregard or delay enforcement of the rule until a future date. This would prevent the Department of Labor from bringing an action against an advisor for not complying with the rule. However, this would only impact the government’s enforcement of the rule. These actions would not have an impact on the private right of action mechanisms within the Best Interest Contract Exemption. So a client could still bring a lawsuit against their advisor for failing to comply with the new rule.

  1. An act of Congress.

Congress could pass a bill amending ERISA to define what is considered investment advice and how to handle conflicts. There are a few hurdles to consider with this approach. To overcome a Senate filibuster, the bill would need support from at least 60 members, which means at least eight Democrats would have to support the bill.  The bill could also be a tough vote for politicians eligible for re-election in 2018 in competitive districts. Nuance aside, voting to strike down a rule that requires Wall Street to act in the best interest of their clients could lead to some nasty political ads. Will the Republican leadership be able to keep all of their members on board in both chambers and persuade eight Senate Democrats to join them?

When Mr. Trump is sworn in on January 20, advisors will have 80 days before the rule is effective. While the conventional wisdom is that there will be changes to the rule, these changes likely won’t come until the eleventh hour, if at all.

At CLS we’re preparing to be in compliance with the rule on April 10, 2017. If the rule does or does not change before then, either way we will be ready.




Plan Ahead for Your 2017 Tech and Check Out New App Updates

Watch Kyle Hiatt's Schwab IMPACT interview to plan ahead for 2017 in advisor tech, and see some great new Orion Connect enhancements.

The post Plan Ahead for Your 2017 Tech and Check Out New App Updates appeared first on Orion Advisor Services.


The Winding Roads of Wichita

Content provided by Robyn Murray, Freelance Writer

There was nothing on the radio in Wichita. No good music stations or public radio options. So Cale Beyer tuned into a talk show he’d never listened to before: The Dave Ramsey Show.

Beyer had been in Wichita only a few months working as a distribution manager, which required a lot of hours on the road. He began his career as a writer and liberal arts major, but knew he was ready for something new – he just didn’t know what it was yet. That day, listening to Dave Ramsey, the broadcast guru of personal finance, Beyer starting thinking of a new path — one where he believes he’s finally found his niche.


Beyer grew up in Elkhorn, a quiet suburb of Omaha, NE. He always enjoyed reading and writing essays, and after high school moved west to Fort Collins to attend Colorado State University. There, he majored in liberal arts and minored in English. “I’ve always liked biographies and learning about people,” Beyer said, “I enjoy reading because it lets you transport yourself into different people’s lives.”

Beyer decided to stay in Colorado after college. He loved skiing and living in the mountains and was, in his words, a “ski bum” for a few years. But mountain living was expensive, and after a time, Beyer got “sick of being poor” and was ready to begin a new phase in his career. He moved back to Nebraska and applied for a distribution manager position at a local company. After a year, he was transferred to Wichita, and that’s when he was introduced to Dave Ramsey.

“It was common sense type of stuff that I think we inherently understand,” he said, “but it helped to hear him repeat that and then hear the stories of people who follow his program.” The message clicked for Beyer. It was the first time in his life when he was making good money and watching his savings grow. He started to think about settling down and investing in his future.

Beyer moved on from distribution management to a position as a claims adjustor for an insurance company in Omaha. After about five years, he decided to make a move into finance and took a position at CLS as an internal wholesaler. Today, he works with Myles Bozinovski, an external wholesaler, at CLS whose sales territory covers nine states in the Southwest and Rocky Mountains.

It’s rare to find someone in the financial industry, on either the sales or portfolio management teams, with a creative background, and Beyer says it differentiates him from his colleagues. “They say I ask a lot of questions,” he said with a laugh. “I like to get the full story: the who, what, and why of everything.” Beyer says he looks beyond the surface of things and being inquisitive helped him adjust when he came into the industry with no financial background. He said, “Being willing to ask the questions and understand where people are coming from has helped me in this position and helped me build relationships.”

The position has also brought out a competitive side of Beyer, one that was previously dormant. “I think the older I get, the more competitive I get,” he said. That’s clear in Beyer’s professional goals, which he says includes vying for a presidency one day. But it also applies to his personal goals. Beyer says while he’s a long way from his initial path, learning to set financial goals, and now working within the industry where he helps people do the same has allowed him to focus on what’s important: doing the best he can to provide for his family, his wife and two daughters, and apply the lessons he’s learned from a winding journey to invest in their future.



App Updates: Trends, Client Portal, and New Account Center

We made some changes to some of Orion's most popular apps in our latest update, and you can read all about them in today's blog.

The post App Updates: Trends, Client Portal, and New Account Center appeared first on Orion Advisor Services.


Cyber Security

Security & privacy concept

Content provided by Nate Wattier, CLS Project Manager

At CLS we take the security of your information seriously.  CLS, our parent company Northstar Financial Services, and its affiliates have all adopted the Information Security Management System (ISMS).  This is in compliance with ISO 27001 which is regarded as the highest security standard in the technology industry.  The ISO certification verifies that an organization possesses the required internal controls to operate, monitor and maintain an ISMS that meets all necessary guidelines.

Also, you may notice the padlock icon and https prefix in the URL of your browser.  These both indicate that the information being transmitted from the website you are logged into to your browser (and vice versa) is using an encryption system called Secure Sockets Layer (SSL).  SSL uses a two part encryption system that not only makes it very difficult to un-encrypt but also allows users to verify the site they are entering is genuine.

Cybersecurity is important. Understanding how CLS protects you can give peace of mind. If you have further questions or inquiries, please feel free to reach us at (888) 455-4244.



DOL’s Fiduciary Rule Impact on Fund Managers

The December issue of The Exchange is online now! This month we are highlighting conference trends, the DOL Fiduciary Rule, Blue Sky Services, Managed Futures and more!

To read the latest issue of The Exchange, click here.


7063 GFS-12/12/2016


Reducing Volatility in an Uncertain Environment

Chart with graph, three gears and calculator

Content provided by Case Eichenberger, CIMA, CLS Client Portfolio Manager

As portfolio managers, we are often questioned by clients about expected volatility and how we manage risk. This year is no different. Whether it’s nerves around the outcome of the U.S. presidential election, a perceived global growth slowdown, or dropping oil prices, volatility is all around us. When it shows up in the markets, investors often wonder if this time is different. But the truth is that volatility rarely differs from past shake-ups. Here at CLS, we expected volatility to increase this year, and as the chart below shows, volatility was likely to revert back to average in 2016.



So, what should investors do when volatility is on the rise and markets are unpredictable? Go to cash and wait it out? Get defensive with gold or long-term Treasury bonds? Dump international in favor of U.S. stocks? No, no, and no. Keep the Risk Budget in line to accomplish long-term goals? Bingo!

In fact, recommendations to decrease international in favor of domestic stocks come up more often than investors may think. It may make sense that lowering allocations to international stocks would lower volatility. As the chart below shows, international stocks (emerging markets included) are historically more volatile by measures of standard deviation.


However, that is not the case. We are missing one important aspect of portfolio management: correlation. Not all of the equity markets above are perfectly correlated, meaning they don’t always move in perfect unison. Below are historical correlations of equity (and bond) markets relative to the U.S. large-cap space. These show developed international stocks (EAFE) and emerging market stocks (EME) are not perfectly correlated with U.S. large-caps.


OK, so what? The whole idea behind global asset allocation is to lower volatility beyond U.S. stocks and allow for a better investor experience. By including assets that are not perfectly correlated, investors can lower the volatility of the portfolio. Does it work? A short and simple answer: yes.

Below is a chart from Vanguard, via the CLS: Why International white paper and our Quarterly Reference Guide. As it demonstrates, by investing upwards of 30-40% in international stocks, investors can lower overall volatility more than through U.S. stocks alone.


One last chart and we will put this one to rest. Below is an expansion of the second chart, with the inclusion of a few other asset classes, bonds, cash, and a globally balanced portfolio. Not only does the globally balanced allocation have less volatility than U.S. large-caps, it also has higher returns.


In short, the risk-adjusted returns are superior, and clients who are invested in globally balanced portfolios experience smoother rides and are much more likely to stay the course. Clients who are looking to reduce volatility would be better served by continuing to be globally diversified (or become more so) and paying attention to correlations of different asset classes. By decreasing international stocks and increasing domestic stocks, investors are likely to add volatility by increasing correlation.

CLS is a strategic risk allocator that makes active asset allocations depending on changes in risk and opportunities among asset classes. Here at CLS, we work hard to manage risk through our methodology of Risk Budgeting. We continue to be a global manager for strategic reasons (managing volatility) and for active reasons (finding opportunities). CLS is currently emphasizing international over domestic stocks.



JP Morgan on Correlations (Slide 54 of their guide to the markets)

CLS Global Balanced Whitepaper Callan chart (page 7)

CLS Reference Guide on lowering volatility with international stocks (page 13)

CLS 1st Q 2016 QMO on market volatility (attached)

CLS November 2016 monthly perspectives (page 4 and 5)


The graphs and charts contained in this work are for informational purposes only.  No graph or chart should be regarded as a guide to investing. Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. A perfect positive correlation means that the correlation coefficient is exactly 1. This implies that as one security moves, either up or down, the other security moves in lockstep, in the same direction. A perfect negative correlation means that two assets move in opposite directions, while a zero correlation implies no relationship at all.



A Lesson in Stepping Up

Content provided by Robyn Murray, Freelance Writer

When Ryan Byrne was 21 years old, he met his future wife. They were on a camping trip with friends, and Byrne was two years into college, studying management at the University of Nebraska at Omaha. His wife, Angie, was working full time, getting her degree, and raising a child. Dating would mean taking on a family, but there was no turning back; Byrne knew she was the one. Besides, he says, two years was enough bachelor life for him. So he concentrated on school full-time and worked three jobs to pay bills and help support his new family. He held an internship at ConAgra, waited tables at Outback, and delivered for Nebraska Furniture Mart. For Byrne, it was a pretty simple equation. “I did what I had to do,” he said.

That simple phrase is the motto Byrne lives by. He learned the importance of taking responsibility from his father, who learned it from his own. So when it came time to step up for his new family, he was ready. “I’d had plenty of time to goof around,” he said. “When I met my wife, I was ready to settle down.”


Byrne grew up in Millard, a sprawling suburb of Omaha, Neb. The youngest of four children, he was never coddled like a typical baby of the family. His father was conservative, tight with his money, and expected his children to distinguish between wants and needs. “I started working when I was 14, sacking groceries at Baker’s,” Byrne said, “and there hasn’t been a time that I didn’t have a job.”

It was a lesson his father had learned from his own father, who owned a moving company while he was growing up. Money wasn’t always plentiful, but he had worked hard to instill the importance of taking responsibility, while ensuring his children received top educations to set them up for success.

After high school, Byrne enrolled at UNO thinking he’d get into business with a background in technology. But after graduation, a friend got him an interview at Qa3 Financial Corp., and his career in the financial industry began. Byrne started there as a cashier, working on checks, wires, and other incoming funds. A few years later, he took a job in commission research at Securities America. But after working in the back office at two firms, he knew he wanted to be out in the field selling.

When a friend told him about a job opening in sales at CLS Investments, Byrne decided to go for it. That was 10 years ago. Today, Byrne is Vice President of Qualified Plans, working primarily in the defined-contribution space.

It’s a good fit; Byrne enjoys meeting advisors and presenting to clients, and the company encourages people with ambition. Byrne says he gravitated towards sales because that meant an opportunity for higher compensation and a path upwards in the company. But what really motivates him is what the money represents: the ability to support his family.

Today, Byrne’s step-daughter is in her first year of college. She’s studying pre-health at the University of Nebraska—Lincoln, and she’s got her future pretty well figured out. On a recent trip home, she told Byrne she felt sorry for her friends who were spoiled growing up because they are totally unprepared for the real world. “I told her that’s why I make you do what you do,” Byrne said. “I don’t try to make it hard on you, but I don’t try to make it easy on you either.”

Byrne has had two more children with his wife, an eight-year-old daughter and a three-year old son. They both already have savings accounts, and while they’re too young to start earning their own money, he encourages them to split their birthday or special occasion cash into spending and savings.

It’s never too early to start passing down those lessons Byrne has lived by: work hard, take responsibility, and do what needs to be done. “My dad was a hard worker, his dad was a hard worker,” Byrne said. “It’s something ingrained in our family blood.”