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Advisors Lovin’ Their Virtual Practices

Jerilyn Klein Bier with Financial Advisor Magazine interviewed Lazetta on the benefits of a virtual firm.

It’s hard to say how many virtual financial advisors are out there, but more advisors are launching virtual-only practices and brick-and-mortar firms are also delivering more advice remotely to clients they may rarely or never see.

Virtual advisors range in age from baby boomers to millennials, said Michael Kitces, a partner and director of wealth management with Maryland-headquartered Pinnacle Advisory Group and co-founder of XY Planning Network. Virtual advisors span from larger firms (such as Vanguard Personal Advisor Services and Personal Capital) to solo firms (including XYPN members), he said.

Lower operating costs are one attraction. According to McKinsey & Co.’s 2015 report “The Virtual Financial Advisor: Delivering Personalized Financial Advice in the Digital Age,” a successful virtual model can deliver cost reductions of as much as 40% to 50%.

“But that varies wildly by firm depending on size and location,” said Kitces. “And for many firms, it’s more about being able to serve clients anywhere than cost savings of an office.”

Flexibility enticed Lazetta Rainey Braxton, an MBA and CFP, to adopt a virtual model in 2008 when she launched Financial Fountains, her fee-only comprehensive financial planning firm that serves mass-affluent clients and works on retainer.

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