Archives Of Weekend Reading For Financial Planners

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with new research showing that average asset-based advisory fees increased from 2020 to 2021, suggesting that the phenomenon of “fee compression” from low-cost competition like robo-advisors not only is failing to play out, but may be entirely reversing itself as human advisors create even more value on top of their portfolio management services by offering more and deeper services (and justify charging the same or even higher fees).

Also in industry news this week:

• Massachusetts Secretary of State William Galvin is pushing broker-dealers and RIA custodians to increase the interest rates paid on cash sweep accounts in response to the Federal Reserve’s recent rate hike
• Despite the popularity of the idea of replacing twice-per-year time changes with a permanent daylight savings time, many sleep scientists believe that such a change could be even worse for our bodies than the current system

From there, we have several articles on retirement planning:

• How part-time retirement programs from employers are increasingly available, and how advisors can support clients interested in a phased retirement
• How Social Security claiming strategies are becoming more important amid a wave of pandemic-related retirements
• Why a 401(k) ‘bridge’ could be a useful strategy for retirees to cover their expenses while delaying Social Security and allowing their benefits to grow

We also have a number of articles on advisor training:

• How firms can design training programs that employees will actually implement in their daily work
• What goes into effective advisory firm training programs for junior employees, and why consistency is one of the most important elements
• How external training programs provide structure and fresh ideas that are more difficult to generate through internal firm training programs

We wrap up with three final articles, all about the way we set and perceive our expectations for the future:

• How even the most optimistic predictions sometimes underestimate the eventual outcome of a situation (or vice versa in negative situations), since our tendency to think in linear terms undershoots exponential events
• Why people often feel emptiness when they achieve a long-awaited goal, and how focusing on progress towards that goal (and when achieving a goal, setting a new one that can be progressed towards) can lead to greater happiness in the long run
• Why setting reasonable expectations is key to maintaining happiness (especially when working toward ambitious goals with a low probability of success)

Enjoy the ‘light’ reading!

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Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news of the Federal Reserve’s long-anticipated interest rate hike – the first of what will likely be a series of increases to combat the current spike of inflation – and a look at the wide-ranging effects it may have for consumers and investors, including volatile markets and higher debt costs (in addition to the already-existing effects of inflation).

Also in industry news this week:

• FINRA has issued a regulatory notice on the ability of retail investors to trade options and other “complex products” on brokerage platforms, which stops short of proposing new regulations but suggests that broker-dealers may need to do more to affirm the suitability of options trading for their retail customers
• A new report from Cerulli suggests that firms should focus on a target niche (or more generally, the advisor’s “ideal” clients) to increase their efficiency (a finding that echoes previous Kitces research as well)

From there, we have several articles on ways advisors can help clients maximize their cash flow:

• Why it is important for clients who are planning to leave their job to create a strategy to maximize the financial benefits from their employer before they go
• How advisors can support clients in appealing a college’s financial aid offer
• Why now is an opportune time to use airline miles and hotel points, and how advisors can support clients in earning and using travel rewards

We also have a number of articles on marketing:

• How advisory firms can make the best first impression with their websites using a few best practices (like making it clear who the firm serves, what makes it different, and what visitors are expected to do next in the first five seconds of viewing the site)
• How firms with limited resources to put towards their website can focus on their most-visited pages to maximize the return on their investment
• How advisors (even those with limited web design knowledge) can improve the search engine optimization of their website content to draw in more visitors

We wrap up with three final articles, all about productivity systems:

• How using a ‘productivity funnel’ can help advisors organize and execute on, but first and foremost select, the right projects
• Why advisors might consider different productivity systems for projects with a set deliverable and timeline, versus those that are more intangible in timeline but still ‘need’ to be done
• A look at a number of popular productivity systems that can help solve a range of challenges, from Getting Things Done to Zen To Done and more, supporting everything from tackling projects that require a consistent effort to organizing the firehose of information that advisors face each day

Enjoy the ‘light’ reading!

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Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news of President Biden’s executive order creating a “Whole-of-Government” policy on digital assets, which (despite its high ambitions for protecting investors, the financial system, and national security) contains few specifics other than setting high-level objectives and ordering over two dozen government agencies to collaborate on filling in the details…. Meaning that concrete regulation on cryptocurrency (and how financial advisors can incorporate it into their services) may be even farther off than hoped.

Also in industry news this week:

• The SEC examined 16% of the approximately 15,000 SEC-registered RIAs last year, but it may have trouble continuing that pace as RIA firms continue to grow in number while the agency’s examination staffing levels remain flat
• A new research study from Vanguard shows that over 90% of clients of human advisors would not consider switching to a robo-advisor (though there may be future advantages for advisors who integrate digital investment management with human advice)

From there, we have several articles on investments:

• Why TIPS funds do not necessarily go up in value during periods of high inflation, and alternate inflation hedges advisors can consider for their clients
• The tax implications of investing in cryptocurrencies, and how advisors can help ensure their clients’ gains and losses are reported correctly
• How direct indexing has transitioned from a tool of the ultra-wealthy to a strategy available to a wider range of advisors and their clients

We also have a number of articles on practice management:

• Why companies are finding new ways to show their appreciation to employees (and to customize that recognition in a way that will resonate best with each employee)
• Why advisory firms should focus on encouraging and rewarding their ‘star’ performers in proportion to the value they bring to the company (and not necessarily try to treat every employee equally)
• How moving talented employees to new areas or roles within an organization (rather than keeping them in one place) can help organizations better retain top performers as well as attract and breed new talent

We wrap up with three final articles, all about how to live a better life:

• How a ‘reverse bucket list’ can help advisors and their clients discover what is most likely to lead to a lifetime of happiness
• How advisors can help clients better relate to their ‘future selves’ in order to encourage better financial habits today
• The seven books that changed one author’s life, and their lessons on how to become a better person

Enjoy the ‘light’ reading!

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Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that, in response to Russia’s invasion of Ukraine, the United States and the European Union are preparing sanctions on the Russian central bank, which could cause a severe financial shock to the Russian economy… and raises concerns about how the impact of sanctions could ripple back to US investors. But while the war in Ukraine has created a major geopolitical shock (and a humanitarian crisis), historical data show that similar events in the past have not necessarily caused a major decline in the U.S. stock market (at least, not for any sustained period of time).

Also in industry news this week:

• Despite ‘SECURE Act 2.0’ stalling in Congress, another potential bill has emerged that would enhance consumer protections and options in workplace retirement plans
• While the Biden administration will not halt the upcoming overhaul to the Department of Labor Fiduciary Rule, a pending proposal likely would increase the number of financial professionals who must provide a fiduciary standard of care when providing investment recommendations for 401(k), individual retirement accounts, and other plans

From there, we have several articles on financial advisory industry trends:

• A recent study shows that the vast majority of advisors who outsource their investment management are happy with their decision
• Why the uptake of model portfolios has stalled out among advisors who are still predominantly focused on making portfolio construction their own value proposition instead
• How firms are increasingly trying to expand the number of services they offer to attract clients in a world where more and more advisors are converging on the assets-under-management model

We also have a number of articles on cash flow and budgeting:

• How a new database that ranks colleges based on their return on investment can help advisors and their clients determine which college is likely to pay off financially for a given student
• How saving on big items (e.g., cars and houses) is important, but spending prudently on the ‘small’ stuff still matters, or it can add up and undermine the big savings
• The wide range of ways couples can organize their finances, from a shared household account and separate guilt-free side accounts for spending, to simply splitting every couple’s expenses down the middle to pay from their own assets

We wrap up with three final articles, all about when and how to say ‘no’:

• Why the decision on whether to say ‘yes’ or ‘no’ to opportunities can depend on what stage of life an individual is experiencing (and how problems emerge when we start out saying ‘yes’ to everything and fail to realize when it’s time to start saying ‘no’ more often)
• How saying ‘no’ to some prospective clients can actually increase a firm’s efficiency and profitability
• How using a ‘positive no’ can make saying 'no' a better experience for both the individual saying 'no' and the person who made the offer

Enjoy the ‘light’ reading!

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Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the release of the IRS’s long-awaited SECURE Act regulations, which clear up many questions advisors had about how the law’s provisions will apply to IRA beneficiaries after the original owner’s death in numerous scenarios (such as what to do when the original IRA owner was taking RMDs before their death, what options spouses of deceased IRA owners have for distributing the IRA’s assets, and which distribution rules apply to “See-Through” discretionary trusts).

Also in industry news this week:

• The IRS has reversed course on its plan to require users of its Online Account feature to submit to facial recognition to verify their identities after blowback from numerous sources (though the agency has yet to announce what will replace the facial recognition process and is still processing facial recognition through its website even after the announcement)
• A new report from McKinsey shows that the fastest-growing category of investors are “hybrids” (i.e., those who have self-directed brokerage accounts in addition to a traditional financial advisor), underscoring the opportunity for advisors who can provide financial planning for clients beyond their (increasingly self-managed) investment portfolio

From there, we have several articles on education planning:

• How ‘merit aid’ is lowering the cost of college for many families… and increasing the importance of getting strong grades in high school
• How to navigate the rules for determining whether a college student is eligible for in-state tuition benefits
• How to ‘superfund’ a 529 plan, and when it might (or might not) be a useful strategy for financial planning clients

We also have a number of articles on practice management:

• How advisory firm owners can use the “Entrepreneurial Operating System” to systematize organizational meetings, identify and solve issues, and stay focused on the firm’s long-term goals to overcome the challenges that come with being an “accidental business owner”
• Why businesses are increasingly considering offering more frequent pay raise schedules in the face of a hot labor market
• How realizing the potential of the remote work environment to give employees more flexibility and control over their lives (and make them happier and healthier in the long run) may depend on replacing constant “pings” and meetings with more asynchronous forms of communication like task boards that give employees information when they need it (but don’t interrupt them when they don’t)

We wrap up with three final articles, all about the benefits of learning to become a (better) writer:

• How strong writing skills can help advisors refine their ideas, and better communicate with prospects and clients
• Strategies for overcoming writer’s block, and how advisors can leverage their clients’ questions to generate content
• How writing can turn ideas from raw building blocks into a well-reasoned and coherent discussion with clients and prospects

Enjoy the ‘light’ reading!

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Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that, according to population and moving data with increased relocations during the pandemic’s era of remote work, the states that lost the most population in 2021 were those with the highest personal income tax rates (and likewise, the states that gained the most population were those with the lowest tax rates), which, while not definitively proving that tax rates were a primary factor for remote workers taking advantage of the freedom to live and work anywhere, does show that Southern and Western states (which make up the majority of lower-tax states) continue to hold allure for workers seeking a lower cost of living or better economic opportunity.

Also in industry news this week:

• The CFP Board issued new guidance and case studies focusing on satisfying their “fiduciary-at-all-times” duty of care, navigating the seven-step financial planning process as a solo advisor, and managing conflicts of interest in compliance with the Code of Ethics and Standards of Conduct that has been in force since June 2020
• A new research study from TIAA concluded that high school coursework on personal finance has no impact on a student’s likelihood to eventually save for retirement or own a home (though previous research has suggested that financial literacy education can at least improve young adulthood credit and debt behavior)

From there, we have several articles on client communication:

• An extensive new study from FPA concluding that advisors may overrate their own communication skills, as compared to how clients view them, suggesting the need for a more systematic approach to gathering both quantitative and qualitative client data to understand clients’ personal and financial priorities in more depth
• Why, when clients of financial advisors fail to act on recommendations, it may not be a sign of their being unwilling to act so much as not (yet) being ready to act – and how pushing the client to take the “right” action can actually have the opposite effect (and cause the client to even further delay a needed course correction)
• How the nature of financial advice is expanding beyond the strictly financial aspects of clients’ lives (although clients may not yet be willing to go too far beyond the boundaries of their financial lives)

We also have a number of articles on retirement:

• How data from both the United States and United Kingdom show that average annual spending after inflation declines throughout retirement, and the implications for creating financial plans
• Why mini-retirements can not only be relaxing, but also create significant tax planning opportunities in the low-income years (that can even help to offset the long-term cost of taking extended time off from work!)
• How advisors can apply the lessons of those pursuing financial independence at an accelerated pace, not just in terms of savings habits, but the mindset it takes to FIRE early (from ignoring social comparisons to getting clearer about what is ‘Enough’)

We wrap up with three final articles, all about how negative emotions can actually lead to self-improvement:

• How experiencing sadness, anger, and anxiety can actually make you happier and smarter in the long run
• Why learning to get comfortable with the loss of the known (as opposed to reducing future uncertainty about the unknown) may be the key to getting comfortable with change
• How addressing, rather than avoiding, regrets can lead to self-growth, and perhaps fewer regrets in the future

Enjoy the ‘light’ reading!

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Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that the Financial Planning Association, under new Executive leadership and a renewed Board focus, is now explicitly stating that its ‘core member’ will be a CFP professional. In addition, leaders of the organization reiterated the importance of the FPA’s local chapters, which had come under threat in a proposed 2018 restructuring plan. Together, these measures signal a return to the organization’s roots as a ‘home’ for CFP professionals with strong local chapters, as the beleaguered membership association tries to reignite its growth against a backdrop of strong and steady growth of CFP professionals themselves.

Also in industry news this week:

• The SEC has proposed a new rule that, if it comes to pass, would require investment advisers to significantly beef up their cybersecurity planning and reporting
• More than a year after Regulation Best Interest was implemented, a FINRA report has found that many broker-dealers are failing to live up to many of its requirements designed to protect consumers

From there, we have several articles on broker-dealers:

• How FINRA will start to identify “high-risk” broker-dealers under its new Rule 4111 after June 1, 2022, providing the first significant test of whether it will truly incentivize firms to rid themselves of their problem brokers
• How major independent broker-dealers like LPL Financial and Commonwealth Financial Network have changed their recruiting incentives to align with the industry’s broader shift to advisory services over product sales (by providing forgivable loans based on AUM, not the advisor’s trailing-12 GDC)
• How the headline payout rate offered by many independent broker-dealers often obscures hidden costs paid by both advisors and clients, and can frustrate advisors who want to offer more fee transparency and keep a higher percentage of the revenue they earn

We also have a number of articles on investing:

• Why investors are pouring money into ultra-short-duration bond funds in anticipation of the Federal Reserve’s expected interest rate hike
• How ETFs in model portfolios that are affiliated with the model portfolio provider themselves are likely to have higher fees and lower performance than those that are not similarly conflicted
• How Legos as an asset class outperformed the S&P 500 over a nearly 30-year period (at least for those who managed to hold on to their original, unopened sets!)

We wrap up with three final articles, all about attracting and retaining talent:

• How the current tight labor market has led to a ‘Great Upgrade’ in which many employees are leaving their current jobs… for new ones that offer better pay and work-life balance
• Why the recipe for happiness on the job goes beyond quantitative measures such as compensation and into qualitative aspects, including a feeling of earned success and being able to serve others
• How to identify the ‘Non-Fungible People’ in a company, and why these employees are the most important to retain

Enjoy the ‘light’ reading!

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Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that the Department of Labor has (at long last) begun enforcement of its Fiduciary Rule, and how (despite multiple pandemic-related delays in the rule’s implementation) many broker-dealers (and even some small RIAs) may still not be in compliance – perhaps because of confusion over how the DOL’s rule differs in practice from the SEC’s already-in-force Regulation Best Interest, but ultimately exacerbated by the DOL’s failure to set a clear framework on how to handle conflicted compensation in the context of a fiduciary standard for everyone who gives financial advice on retirement rollovers.

Also in industry news this week:

• M&A activity in the RIA industry continued at its record pace in 2021, and an increasing supply of funds from private equity firms continues to drive deals with a focus on building and acquiring in-house wealth technology solutions
• A new AdvisorTech Directory launches to allow advisors to search for and browse the full range of advisor technology solutions, and create their own personalized tech stack.

From there, we have several articles on practice management:

• How compensation costs rose for RIAs between 2016 and 2020, particularly amongst experienced employee advisors, and why it takes more than a strong salary to motivate and retain top advisor employees
• Why outsourcing certain tasks to contractors can be more cost- and time-efficient than hiring a full-time employee
• Why cultivating next-generation leadership is an important part of succession planning for RIAs, and the emergence of new training programs to help develop next-generation leaders

We also have a number of articles on taxes:

• Why it may be a good idea for taxpayers to file their 2021 tax returns early, both to receive refunds earlier, and to avoid the processing delays that have plagued the IRS since the start of the pandemic
• How the IRS’s new process for creating an online account is causing a backlash due to its stringent identity verification process and use of facial recognition technology
• Why Vanguard came under criticism after its Target Retirement fund share classes generated a higher-than-expected capital gain distribution in 2021 (though the risk is far from limited to Vanguard funds, as all mutual funds distribute their capital gains each year, especially when faced with net outflows in or after a bull market)

We wrap up with three final articles, all about the benefits and challenges of remote work:

• Why workers are craving flexibility in their work location and hours, and how managers can help promote transparency and equity
• How remote work has blurred the lines between home and work life, and how you can maintain boundaries between the two
• Why a challenging role at work can be superior to having an ‘easy’ job

Enjoy the ‘light’ reading!

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Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that the SEC is considering updating several of its regulations regarding cybersecurity to address modern threats and vulnerabilities, which for SEC-registered investment advisors, could lead to increased preparedness and reporting requirements (though it remains to be seen whether any new rule would constitute a more clear and comprehensive policy than the current patchwork of cybersecurity regulations that RIAs must follow).

Also in industry news this week:

• The SEC has started sending deficiency letters to broker-dealers who fail to comply with Reg BI’s requirements to assess and document rollovers to ensure they are in clients’ best interests – which portends even greater issues with the DOL set to enforce its own rollover rules starting February 1
• The Public Investors Advocate Bar Association (PIABA) is lobbying the SEC to prohibit forced arbitration clauses in RIA advisory contracts and require firms to cover more of the costs of arbitration (which currently can run upwards of $30,000 for clients just to start the arbitration process)

From there, we have several articles on Medicare strategies:

• How advisors can help their clients select the best Medicare agent
• Why it is important for clients to look past the premiums and consider the total potential costs when selecting Medicare plans
• How Medicare’s general enrollment period, which runs through March, is an opportunity for eligible clients to sign up for Medicare if they missed their initial enrollment period (but still comes with late enrollment penalties)

We also have a number of articles on advisor-client communication:

• A new study assessing the role of qualitative data gathering in developing client trust and commitment shows that most planners overestimate how much effort they’re really putting in to learn about their clients (at least when compared to their clients’ perception of those efforts)
• Why financial advisors often cost themselves business by focusing more on themselves and their expertise in conversations with prospects, when in reality most prospects are more interested in what the advisor can do to make them feel important
• Why the phrase “financial planning” itself can cause resistance to financial planning conversations by conjuring unpleasant feelings about change, aging, and death; while reframing those conversations around “investing” (e.g., in oneself for the future) can make clients feel more positive about planning and saving

We wrap up with three final articles, all about self-improvement:

• How you can more effectively ask for feedback
• How we can combine seemingly unremarkable skills to produce extraordinary outcomes
• Why creating a ‘personal monopoly’ of leveraging your best personal properties is a better option than trying to win the ‘metagame’ by chasing the latest advisory industry trend

Enjoy the ‘light’ reading!

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Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that subscription-based advisory firm Facet Wealth has raised $100 million from venture capital firms in a Series C funding round. At a time when private equity firms are buying up AUM-based RIAs for their current income generation, the venture capital firms’ huge investment in Facet suggests that they see the real potential for Facet’s subscription fee model to become the next big business model for financial advisors in the future.

Also in industry news this week:

• Advocates for the fiduciary standard have sent a letter to the SEC requesting that it adjust its guidance to allow RIAs to specifically use the word “fiduciary” on their form CRS to better differentiate themselves from broker-dealers who are not full-time fiduciaries
• A study finds that higher-income individuals have better investment returns in their Roth IRAs, suggesting that they (and their advisors?) are more often leveraging best practices in asset location to use the tax-free accounts to hold assets expected to appreciate the most

From there, we have several articles on advisor technology:

• Cryptocurrency exchange Gemini’s acquisition of digital asset portfolio management platform BITRIA will give advisors a new way to invest client assets directly in cryptocurrencies (not just crypto futures) via SMA or TAMP structures
• Fidelity plans to introduce a direct indexing product for retail customers with a $5,000 minimum investment, in a sign of the strategy’s growing popularity not only for tax benefits but also for allowing investors to adjust indexes based on ESG/SRI or other preferences
• Four years after acquiring Junxure CRM, AdvisorEngine has released AdvisorEngine CRM, an upgraded cloud-based offering that perhaps signals a bet on the growing importance of CRM at the center of the advisor tech stack

We also have a number of articles on advisor marketing:

• Why specializing in a niche can help an advisory firm overcome many of the challenges of marketing to prospective clients
• How serving a niche can help advisors focus their communications, be more intentional with their marketing budget, and scale their practices more effectively
• Why being bold in marketing may seem scary but ultimately helps advisors stand out from the rest in a crowded marketplace

We wrap up with three final articles, all about how to enhance your lifestyle:

• The steps you can take during the daytime to sleep better at night
• How to design a home gym that is both functional and aesthetically pleasing
• How living a ‘rich’ life does not necessarily involve significant assets or material possessions, but rather features the experiences that are important to you

Enjoy the ‘light’ reading!

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