Archives Of Weekend Reading For Financial Planners

Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with updates on the proposed tax law changes in the “Build Back Better” Act currently being debated in Washington. The latest version of the bill brings back several IRA-related measures that were in the House Ways and Means Committee’s proposal from September but were omitted from the bill when it was introduced last week, including a return of the ban on ‘backdoor’ Roth IRA contributions (beginning in 2022), a prohibition on IRA contributions for higher-income taxpayers with retirement account balances greater than $10 million (beginning in 2029), and Required Minimum Distributions (RMDs) for retirement accounts with balances greater than $10 million (also beginning in 2029).

Also in industry news this week:

• The Public Investors Advocate Bar Association plans to call on the SEC to revise form CRS to add insurance and dispute resolution disclosures, including an explanation of any mandatory arbitration clauses and the amount of E&O insurance a firm is carrying in the event the client is harmed and needs to be made whole
• M&A activity in the RIA industry set a record for an eighth consecutive year in 2021, concentrated among the industry’s largest firms, but some in the industry think the pace of M&A could slow down going forward because even large firms with a lot of dollars available to deploy can only digest and integrate ‘so many’ acquisitions at a time

From there, we have several articles on how advisors can better generate client referrals, including:

• Why advisors are more likely to get referrals from clients when they show empathy for the client’s concerns, and when the client does not feel pressured to provide them
• How generating a clear and specific message of what kind of clients the advisor serves (and what kind of clients might not be a potential fit) can lead to more frequent and successful client referrals
• Why it is important for advisors to position themselves to be able to ask clients for referrals and prepare carefully for the referral request so that clients feel empowered to make referrals

We also have a number of articles on retirement planning:

• Why clients generally make poor predictions about their life expectancy, and the tools that are available for advisors to make better longevity estimates and more accurate financial projections
• How Monte Carlo analysis can be better implemented and the importance of communicating the results of Monte Carlo simulations to clients in a manner beyond ‘just’ a single-number probability of success
• An analysis of risk in ‘buffer’ and ‘floor’ products and why these strategies do not offer a ‘free lunch’

We wrap up with three final articles, all about the theme of being intentional when creating goals:

• Why seeking out fame and fortune for their own sake might not lead to client (or advisor) wellbeing
• Methods advisors and their clients can use to reduce the negative impacts of comparing themselves to others
• How acting with intention can lead to greater client happiness (and results in better financial planning!)

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 a (Twitter-based) breakdown of the final text of President Biden’s latest “Build Back Better” Act, which is perhaps more notable from a financial planning perspective for what parts of the previously proposed tax legislation it doesn’t include (forgoing increases to the top marginal ordinary income and capital gains tax rates, restrictions on IRA contributions and Roth conversions for high earners, and reduced estate tax exemptions), than what it does (such as applying new surtaxes to income over $10 million and $25 million, and subjecting S corporation profits to 3.8% Net Investment Income Tax for high earners)… though still more changes could be in store, as Congressional Democrats debate raising or eliminating altogether the State and Local Tax deduction limit as part of the final comprehensive budget bill.

Also in the industry news this week:

• Democrats introduced the Social Security 2100 Act this week, which would increase Social Security benefits for almost all recipients, while also raising tax revenue by applying FICA taxes to incomes above $400,000, to stave off the projected depletion of the Social Security Trust fund
• The SEC released a Risk Alert highlighting deficiencies regarding everything from fee calculations to marketing disclosures on various ETFs and mutual funds (albeit mostly smaller ones that are marketed toward and used by retail investors, not advisors)

From there, we have several articles focusing on inflation, including:

• Why the U.S. is not likely to be facing hyperinflation, despite increased speculation to the contrary as ‘regular’ inflation has ticked higher
• How today’s economy differs from the high-inflation and low-growth stagflation era of the 1970s
• An analysis of how stock returns have (or, in practice, really have not) correlated with inflation over time

We also have a number of practice management articles, including:

• How ‘scope creep’ causes advisors who charge fixed fees to end up doing more work for the same fee (and what to do to avoid it)
• How client segmentation is often recommended to improve efficiency, but can actually restrict a firm’s growth if there are too many client segments
• A case study of a financial advisor who charges a moderate ($1,000/year) annual retainer fee to provide ‘factual’ financial education on demand (but not more expensive, personalized advice)

We wrap up with three final articles around the theme of financial advisor business models:

• How the increased number of functions that TAMPs perform for financial advisors (and the reality that not all TAMPs perform the same functions anymore) may be making the term ‘TAMP’ obsolete
• Why, despite competition from independent channels and fee-only RIAs, the number of large wirehouse brokers has stayed fairly constant (while their assets under management have actually increased)
• How the SEC has failed to keep up with the “Great Convergence” of the financial product sales and advice industry, and why it needs to clarify who should be permitted to hold themselves out as a financial advisor

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 Charles Schwab CEO Walt Bettinger’s comments at this week’s virtual Schwab IMPACT conference that direct indexing is a ‘freight train’ that is coming for the mutual fund and ETF industry and that advisors can survive and thrive by offering increasing personalization to their clients… just as Schwab has indicated that it is working on its own “Personalized [Direct] Indexing” solution, and signaling that it is hoping and expecting RIAs using its platform to use Schwab’s new Personalized Indexing solution with their own clients (in lieu of ‘traditional’ ETFs and mutual funds?) in the years to come. Which given Schwab’s sheer size and reach, could further amplify the adoption of direct indexing and its likelihood of success in the first place?

Also in the industry news this week:

• A new RIA industry event, Future Proof, is attempting to upend the traditional conference with beachfront stages and a more festival-like atmosphere.
• Reports this week suggested that the size of President Biden’s proposed infrastructure legislation could be shrinking, and with it potentially some of the proposed tax increases intended to pay for it (putting financial advisors on their toes about which planning opportunities will remain on the table, or not, in the final version).

From there, we have several articles on the first Bitcoin Futures ETF that debuted this week, including:

• How the new Bitcoin Futures ETF makes it easier for advisors to get Bitcoin exposure in client portfolios.
• Why some advisors are skeptical of the purported benefits of the futures-based Bitcoin ETF.
• A warning that the structure of the Bitcoin Futures ETF could make it susceptible to destabilizing volatility.

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

• How financial advisors can provide value to clients considering changing jobs during the ‘Great Resignation’.
• Why getting a raise can have dramatically positive compounding effects on an individual’s lifetime financial situation.
• Why people judge other’s budgets, and how advisors can facilitate communication regarding budgeting priorities.

We wrap up with three final articles, all around the theme of managing productivity and stress in the new virtual/hybrid work environment:

• The tactics companies are using to try to manage employee burnout in a semi-virtual world.
• Why companies might need to redefine how they measure productivity in a hybrid office environment.
• How individuals can use mindfulness to recognize the difference between being (dangerously) overwhelmed and ‘just’ being challenged in a more healthy way.

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 announcement from Schwab Advisor Services that it will be requiring the 13,000 RIAs on its platform (including those migrating from TD Ameritrade) to hold at least $1 million of Errors & Omissions (E&O) insurance coverage, in the latest attempt by a major custodian to reduce its own liability risk by requiring its advisors to better protect themselves against money movement errors and wire fraud... though, of course, E&O coverage can also be beneficial to the advisors themselves by sheltering their assets from legal claims resulting from any mistaken advice they give, making E&O coverage a good idea for advisors even before Schwab’s mandate to hold it.

Also in the industry news this week:

• In a reversal of Trump-era regulations, the Department of Labor is proposing a new rule allowing ERISA-covered retirement plan fiduciaries to consider Environmental, Social, and Governance (ESG) factors in their investment selections after all
• SEC Chair Gary Gensler confirms that the SEC will be looking into the psychological ‘nudges’ that online brokerage firms (e.g., Robinhood) use to suggest trades, and when those practices constitute a ‘recommendation’ or ‘advice’ (and trigger a higher standard of care)

From there, we have several articles on different fee structures used by RIAs, including:

• A study showing that fee-only RIAs experienced double-digit percentage growth in 2020, both in the total number of firms and in the total amount of assets under management, higher than any other channel of advisors
• A profile of several firms successfully using a flat-fee model instead of (or in addition to) AUM, and how those firms use the flat-fee model to focus their own value proposition around financial planning
• A commentary on the value of financial planning in the accumulation and decumulation phases of life, and why the increasing complexity of the decumulation phase suggests perhaps advisors should be charging more for their advice to retiring clients in that phase?

We've also included a number of Social Security-related articles:

• A research study showing that the framing of media coverage around the financial health of Social Security can affect individuals’ decisions on when to file
• How to incorporate Social Security into financial planning for clients (particularly younger ones) who are concerned about the long-term viability of the Social Security system
• New research showing that the percentage of individuals filing for Social Security benefits early has declined significantly in the last two decades

We wrap up with three final articles about managing the flood of email in our lives:

• The problems with sending “after-hours emails”, which can stress out the recipient when they mistakenly interpret it as urgently requiring an immediate response, even if the sender doesn’t expect one
• The ways that time spent on email increases our anxiety, and how some ‘hacks’ and the use of other means of communication can decrease our everyday reliance on email in the first place
• Quantifying the time we spend on email every day (particularly the ‘wasteful’ tasks like searching and filtering out irrelevant emails) and a list of practices to increase the effectiveness of the time we do spend on email.

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 global financial services industry buzz of the “Pandora Papers”, the latest leak of the so-called “shadow financial system” used by certain ultra-high-net-worth households (including world leaders, other politicians, celebrities, and more), highlighting the ways the system is used to hide assets (sometimes legally, and sometimes not), and the surprising extent to which the US has actually become the ‘offshore’ haven for those in other countries looking to hide assets in US trusts… which in turn has already spawned proposed legislation in Congress this week to crack down on the unreported flows of assets through certain US trusts and the lawyers and accountants who facilitate them.

Also in the industry news this week:

• As social media becomes increasingly popular for financial services – from meme stocks to testimonials, and the rise of “Finfluencers” – FINRA is taking an increasingly hard look at how social media is used within broker-dealers
• Regulators are focused more and more on advisors getting ‘trusted contacts’ for all their clients to serve as the first line of defense to spot diminishing capacity and financial elder abuse

From there, we have several articles on the ongoing rise of (fee-based) annuities, including:

• A new Stand-Alone Living Benefit (SALB) offering from RetireOne that allows RIAs to wrap annuity guarantees around their existing managed accounts (without actually being required to liquidate and transfer the assets into an annuity)
• A survey from DPL showing that advisors are increasingly looking to use annuities as a bond substitute
• A research study from David Blanchett highlighting the risks of using Fixed Indexed Annuities in particular as a bond substitute, and the hazards of comparing historical FIA returns to those that would be purchased today at current (much-lower-than-historical) interest rates.

We've also included a number of marketing-related articles:

• Tools that advisors can use to expedite email communication with clients, from recording quick personalized videos to easily catching grammatical errors
• The rise of “Local Service Ads” on Google and why they may be better suited than traditional Google Ads for advisors that have a geographic reach beyond their local zip code
• A study highlighting how more and more consumers are vetting their advisors on social media before engaging, with 1-in-5 stating that an advisor’s social media presence was the deciding factor in who to work with!

We wrap up with three final articles, all around the theme of investing in ourselves:

• Why believing in yourself and building your own self-confidence is foundational to career success
• The benefits of hiring a coach, not only when you’re struggling, but whenever you’re trying to get to the next level
• Why it’s better to think of your career as a “call option” than simply a stock, because of the significant upside potential that can come from switching careers, launching a business, or simply reinvesting in yourself to make a stretch for that next job (and the outsized rewards that can come if that leap goes well)!

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 Franklin Templeton is acquiring O’Shaughnessy Asset Management and its ‘Canvas’ direct indexing platform, as yet another traditional asset manager stakes a view that the future will increasingly be built not on mutual funds and ETFs but the use of technology to build more customized portfolios down to the individual stock level (configured via a software interface, and implemented as an SMA that asset managers can charge for?).

Also in the industry news this week:

• An RIA is forced to pay out nearly $1M in restitution as a settlement for charging advisory fees on “house accounts” without assigning an advisor to service those clients
• FINRA institutes a new rule that will allow ex-brokers to reinstate their Series licenses within 5 years (instead of ‘just’ 2 years) as long as they complete their FINRA CE requirement and pay a (nominal) fee

From there, we have tax planning articles, including:

• End-of-year tax planning strategies for the fourth quarter, which are taking on a greater focus with the potential for significant tax law changes that may come into effect for 2022
• A look at how ultra-popular GRATs have become with ultra-HNW clients (with one estimate that more than 50% of the top 100 wealthiest families are using the estate planning strategy)
• The outlook for the Qualified Small Business Stock (QSBS) tax incentive that may be halved (from $10M to only $5M of capital gains that can be excluded) in the years to come

We've also included a number of marketing-related articles:

• How to structure an advisory firm if it wants to serve multiple niches at once (hint: each niche needs its own team of advisors within the firm)
• Why client satisfaction isn’t just a function of the service they receive, but their expectations of those services
• How the future of growth is all about formulating expertise and making it more ‘visible’ to prospects (e.g., through blogging, social media, and other digital marketing channels)

We wrap up with three final articles, all around the theme of how technology is reshaping our world:

• Why the rise of technology platforms for small businesses is making it easier to be a successful solopreneur (despite the calls that firms must achieve greater size and economies of scale to survive)
• The ways that Decentralized Finance (DeFi) and the blockchain could change the financial services industry (by becoming the next generation of broker-dealers and RIA custodial platforms?)
• How the intersection of human and artificial intelligence is proving to be more effective than humans or AI alone… suggesting that the future of financial advice is less about robots versus humans and more that success will be defined by the human advisors who best augment themselves with technology!

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 a look at the recently filed "Petitions For Rulemaking" that XY Planning Network submitted to the SEC regarding the separation of brokers and advisors, which would require brokers offering financial planning services (or delivering financial plans to their clients) to become fiduciary RIAs, along with any brokers who marketed to the public that they offer ongoing (investment) advice to their clients. Though, ultimately, it remains to be seen whether the SEC will act with new rulemaking (or continue to focus on more stringent enforcement of Regulation Best Interest itself) in the coming year.

Also in the industry news this week:

• As the American Families Plan (and separate infrastructure legislation) winds its way through Congress, all eyes are on what provisions are likely to make it through, and which may still end out on the cutting room floor
• Schwab is launching a new "Moneywise America" financial literacy program that aims to provide free financial literacy education to every (!) high school in the country by 2025

From there, we have several investment management-related articles:

• Why risk tolerance questionnaires may be less effective when working with decumulation clients (at least until it's clear whether they want an investment-style or guaranteed-income-style approach to begin with)
• How not in danger Social Security actually is for most future retirees, both because the Social Security trust fund only funds roughly a quarter of benefits in the first place... and in the coming years, the pressure on the government to implement a policy fix will only grow further
• Strategies for Social Security "do-overs" for those who change their mind and want to start earlier, or later, than they originally chose to begin their benefits

We've also included a number of articles on financial psychology and helping clients to implement their plans:

• Why most clients don't actually implement their financial plans (because they didn't really have buy-in to the recommendations in the first place?)
• Consumer research showing that most clients really are comfortable with virtual meetings, and many even prefer them (though some will always still want the face-to-face in-person approach)
• Why framing a lack of savings as a "self-control" problem may be amplifying Americans' low savings habits, and the alternative approaches to help clients save more

We wrap up with three final articles, all around the theme of the power of asking (good) questions:

• Why turning questions inward to yourself can be one of the most powerful ways to gain new perspective
• How leaders asking questions of their teams can promote a culture of greater collaboration and trustworthiness
• A list of 25 "icebreaker" questions for those who want to start more conversations with (good) questions... but just aren't sure what questions to ask!

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 an in-depth recap of this week’s proposed tax legislation, and how President Biden’s tax plan is changing as compromises are made to get it passed, including a reduction in the proposed top capital gains tax rate to ‘only’ 25% (and no longer 39.6%), and not eliminating step-up in basis at death… but with a number of new crackdowns, including the elimination of backdoor Roth IRAs in 2022, and what may only be a few weeks until the demise of popular Intentionally Defective Grantor Trust (IDGT) strategies and the ability to obtain valuation discounts on Family Limited Partnerships that hold “nonbusiness” assets.

Also in the industry news this week are a number of other interesting headlines around proposed tax legislation:

• How the elimination of step-up in basis at death ended out on the cutting room floor of this week’s tax legislation
• A separate tax proposal in Congress that would eliminate the tax-favored treatment for ETFs that adjust their underlying allocations through in-kind redemptions

From there, we have several investment management-related articles:

• A look at the evolution of tools that advisors use to implement client portfolios, from mutual funds to ETFs, SMAs to UMAs, and the looming rise of direct indexing as the next tool for building client portfolios
• How implementing better investment decisions and actually taking action is often about breaking down financial goals into much smaller bites
• Recent research that shows how the biggest impact of investors who ‘freak out’ in market volatility is not actually that they sell at the wrong time, per se, but that they typically wait far too long to buy back in, instead

We've also included a number of articles on refining an advisory firm’s own value proposition, including:

• Why advisory firms serving HNW clients should just accept the consequences of having “custody” of client assets in order to roll out more specialized services (e.g., client bill-pay)
• How to weigh the balance between personalization (which sets value in how every client’s process is different) and standardization (where having a more standardized process that generates repeatable value for every client is the value)
• Why advisors should embrace Client Segmentation as a way to scale their advice for all their clients (and not view it as just a way to do ‘less’ for smaller clients)

We wrap up with three final articles, all around the theme of the ongoing evolution of the work environment:

• How businesses are struggling to fulfill the role of the “Office Mom” in a more virtual environment
• The role of “proximity bias” in hybrid in-person-and-virtual work environments that risks causing virtual team members to fall behind in their career opportunities and growth
• Why virtual can be better for “focus” work but in-office teams are better for “collaboration” work, which means not only can a hybrid approach be the best of both worlds, but also requires a fundamentally different approach to how office space is designed (when it’s ‘just’ about facilitating collaboration)!

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 a look at the latest SEC initiative on the 'gamification' of investing (e.g., Robinhood) to the use of behavioral nudges (e.g., certain robo-advisors), with a new warning that it will be delving deeper into the "digital engagement practices" of broker-dealers and investment advisers that use technology to entice investors to roll over assets and/or trade on their digital platforms... with a particular eye on when a technology-driven investment 'nudge' may turn into investment advice (with the higher fiduciary duty that would attach to such advice).

Also in the industry news this week are a number of other interesting industry headlines:

• A recent survey shows that more than 9-in-10 CFP certificants are strongly satisfied with their choice of career, and that the majority of advisors have seen more prospects and had more communication with existing clients since the pandemic
• FINRA's new Rule 4111 is taking effect, which will make it more onerous for broker-dealers to take on brokers with multiple dings on their on their regulatory record (in the hopes of curtailing the number of brokers that get re-hired after engaging in 'problematic' behavior)

From there, we have several articles on spending and saving, including:

• How to think about the allocation of financial duties within couples (and ways for couples to structure their spending accounts for marital harmony)
• Challenges in home affordability are being driven in part by the reduction in builders constructing "starter" homes, as the number of new homes costing <$200,000 has dropped from 60% in 2002 to <2% today
• Tips on simple "money-saving" phone calls (from cable providers to property tax assessors), and potential services that can make those calls for you

We've also included a number of marketing-related articles:

• The desire of advisory firm marketers to begin using testimonials is creating friction with compliance departments that are still figuring out how exactly to implement the new rules in their own practices
• 13 marketing KPIs that advisory firms should track to monitor the health of their advisory firm's growth path
• The problems with marketing "service" as an advisory firm differentiator

We wrap up with three final articles, all around the theme of maximizing business efficiency and productivity:

• Why it's problematic to simply look at "hours worked" because it rewards the high-hours inefficient worker over the more efficient employee who gets the work done in less time
• The difference between efficiency (doing the same, with less) and productivity (doing more, with the same), and why efficiency drives profits but productivity drives growth
• How companies historically showed their size by their employee counts and why a growing focus on productivity means "revenue per employee" may be a better metric for 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 a review of the latest Social Security trustees report, which shows the Social Security trust fund is set to deplete one year earlier than previously projected (2033), but 4 years further out than was feared (with original estimates suggesting the pandemic could have curtailed it to be as early as 2029), though in the end the real question is simply which of the known levers (between a 21% benefits cut or a 3.6% payroll tax rate increase, or other adjustments to the system) will eventually get implemented... albeit perhaps not until a few months before 2033 when the immediacy of a deadline builds the necessary political will to make changes?

Also in the industry news this week are a number of other interesting industry headlines:

• A Spectrem Research study shows that Millennials are the least satisfied with the responsiveness of their advisors, but are overwhelmingly (nearly 4X) more likely to refer their advisors when they are satisfied
• An Ensemble Practice mid-year study shows rapid growth in advisory firms, with client count up 6%, AUM up nearly 14%, and 63% of firms hiring for a new position

From there, we have several tax planning articles, including:

• How to leverage a solo 401(k) plan to make giant "mega backdoor" Roth contributions
• The resurgence of Private Placement Life Insurance (PPLI) as a HNW tax-sheltered savings strategy after the Consolidated Appropriations Act of 2020 improved cash value accumulation potential
• Other popular HNW tax-planning strategies with a looming Biden tax increase, from IDGTs to tax-gains harvesting

We've also included a number of retirement planning articles:

• A JP Morgan study on how retirees really change their spending and portfolio allocations in retirement
• Do's and Don'ts for those retiring with a 7-figure portfolio (including why it's so important to retire towards what comes next, not just away from what you're leaving!)
• Revelations from recent price data from hospitals on how much - or sometimes, how little - insurers are actually negotiating prices

We wrap up with three final articles, all around the theme of life tips we learn when we're experienced that we can reflect back upon:

• Tips to build your career more effectively in the earlier years
• Suggestions for any 18-year-old getting ready to go to college about how to set a good foundation
• Practical tips for anyone to live a better life, including, invest in the things you spend the most time on or in (your bed and your office chair, which combined consume more than half of your life!), and don't underestimate how much our wellbeing is impacted by the simple things in life (exercise, sleep, light, and nature)!

Enjoy the 'light' reading and the holiday weekend!

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