Archives Of Weekend Reading For Financial Planners

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the news that the Senate and House (and imminently, the President) are signing into law the next wave of coronavirus pandemic stimulus, a $484B bill that includes another $310B of funding for the PPP (along with another $60B for the EIDL program) as small businesses continue to seek capital to stay running and keep employees on board.

Also in the news this week is a fascinating study that the coronavirus has driven nearly 1-in-4 Americans to seek out a financial advisor for the first time (resulting in a surge of new client inquiries for many advisory firms), that TD Ameritrade (and Schwab) still see the Schwabitrade deal as being 'on' for the second half of 2020, feedback to a NASAA proposal that all IARs of RIAs be required to earn 12 hours/year of CE credit and that NASAA should permit other types of CE (from CFP to FINRA) to also count, and a FINRA proposal to aggregate the SEC's Investment Adviser Public Disclosure data into FINRA's own BrokerCheck site so consumers can have a one-stop shop at BrokerCheck to see the regulatory and disciplinary history of dual-registered brokers.

From there, we have several articles on investing and retirement planning, including how coronavirus volatility is leading more RIAs to leverage the block trading capabilities of their RIA custodians to reduce trading costs for clients, a Blackrock research finding that advisor portfolios tended to significantly underperform their benchmarks in the market decline (but not due to poor equity selection, and instead due to underweighting government bonds as a safety diversifier against the risk of recession), new research that questions whether there's really any economic value to so-called "bucket strategies", and some guidance about how to think about changing the client's financial plan when an update shows a significantly lower Monte Carlo probability of success.

We wrap up with three interesting articles, all around the theme of our opportunity to (re-)build when/as the country eventually emerges from the coronavirus pandemic: the first looks at how, despite incredible innovation and progress, the country has perhaps focused too much energy on building software and technology and not enough on infrastructure and companies that make things we need (until now, when we realize what we don't have and can't quickly mass-produce); the second looks at how the dynamics of venture capital and its addition to high margins and fast exits may have amplified our lack of building (and what it takes for investors to re-focus on building); and the last looks at how the collective call of the country to fight the coronavirus is itself stimulating a fresh wave of business innovation that may already be creating a lasting positive mark on the country that will remain to our benefit long after the coronavirus is gone!

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 recap of President Trump's three-phase "Opening Up America Again" plan, and the guidelines being put out to states and regions about when and how to re-open their economies (in stages, over time) as the coronavirus spread hopefully crests and begins to decline (with protocols in place to deal with the risk and consequences of subsequent flare-ups).

Also in the news this week is the realization that funds for the Paycheck Protection Program (PPP) have already been committed (all $349B) in less than two weeks (amplifying pressure on Congress to expand the program sooner rather than later as 700,000 applications are currently in limbo), a look at where the SEC may focus on whether/how RIAs are still meeting their own compliance obligations (even and especially in a virtual work-from-home environment), and the news that New Jersey has delayed its state fiduciary proposal (as a part of an overall Executive Order by the New Jersey governor to stay any new rule-making by any state agency of the time being) but may still take up the issue again later this year.

From there, we have several articles on how advisory firms are adapting to the current work-from-home and work-with-clients-virtually environment, including the recognition that "yes" it really is possible to work with at least most clients virtually, how to engage in prospecting via one-to-many webinars in the current online-only environment, other digital/online marketing strategies that advisors are engaging in to adapt to the current environment, tips on how to convince clients to switch advisors (including and especially in the current difficult environment), and a new free tool from advisor cybersecurity provider OS33 to evaluate whether an advisory firm's own work-from-home network and computers are really secure (or not).

We wrap up with three interesting articles, all around the theme of how to handle and manage the emotional turmoil and disruption that the coronavirus pandemic has wrought: the first explores how robo-advisors are adapting by building in various technology 'nudges' to help clients make good decisions (en masse) during these difficult times; the second explores how we can reconcile the balance between being in an industry that by and large has stable jobs and income and an ability to work from home but is still personally disruptive and stressing while also being empathetic to those who are still facing far worse; and the last is a powerful reminder that while it's important to be optimistic to maintain hope for the future (especially with clients) it's still important to be realistic as well, as the consequences of creating unrealistic hope that is later dashed can be even more harmful than simply being realistic with clients about the opportunities and hoped-for outcomes but also fairly acknowledging the risks that do still remain in the current environment.

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, with the explosive popularity of the $350B Paycheck Protection Program (PPP) for small businesses over the past week, Treasury Secretary Mnuchin is already seeking a $250B expansion to ensure that the dollars don't run out. In the meantime, the White House is beginning to craft a plan about how to re-open the economy if/when/as the growth rate of the virus slows, while economic experts worry about what it will take for Americans to actually trust that it's safe to go out again (especially if there's a second resurgence of the virus later this year).

Also in the news this week are efforts by the CFP Board leading a coalition of advisor membership associations asking Congress to reinstate the tax deduction for advisory fees that was eliminated in the Tax Cuts and Jobs Act of 2017 (as more and more Americans are seeking out financial advice regarding their current situation), S&P deciding to delay rebalancing of the S&P 500 index amidst the recent extreme market volatility (and raising questions about what it really means to be a "passive index"), and the IRS officially expanding the delayed July 15th tax filing date to include more related deadlines from estimated taxes to estate tax returns.

From there, we have several articles on how to leverage video chat tools as we're increasingly relegated to using them to stay connected to clients, prospects, and potential referrers, including how to improve video engagement with clients and prospects, how to conduct 'virtual networking' meetings, and how to leverage your smartphone to record and share high-quality video.

We wrap up with three interesting articles, all around the theme of how the internet has become our lifeline (and how remarkably well it is holding up as we depend on it); the first looks at how the very structure of the internet itself was actually built to be stable (a relic of its Cold-War-era respite that was trying to preemptively protect against global disasters); a deep dive into the data of what Americans are actually doing and using online and how our internet habits are shifting; and an exploration of how the coronavirus pandemic may actually end out stimulating a fresh wave of further investments into internet infrastructure that will just further build our internet capabilities for the decade to come!

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Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the news that, even as the country is still absorbing the outcomes of last week's $2 trillion CARES Act stimulus, President Trump has begun to advocate for another $2 trillion round of stimulus, this time focused on major infrastructure spending that both Democrats and Republicans have acknowledged is long overdue, but raising the question of whether the parties can come together to pass such bipartisan legislation on the heels of what has already been the largest economic stimulus legislation in history.

Also in the news this week is a flurry of focus on the new Paycheck Protection Program (PPP) under the CARES Act as it opens its application process today with the potential for small businesses (including advisory firms) to receive up to $10M in tax-free forgivable loans to support their employees (but on a first-come first-served basis and the risk that the $350B allocation will have more demand than dollars to allocate), and the news from the SEC that, despite economic turmoil and business disruptions, it is sticking with its June 30th effective date for Regulation Best Interest (Reg BI).

From there, we have a number of articles about how advisors are managing the current investment environment, including a discussion of how rebalancing software has found its moment to shine amidst the pressure for rapid rebalancing trades where taking days, or even just hours, to queue up trades can result in a material difference in price, and how market turmoil is leading to an uptick of interest in third-party models and even entire TAMP platforms, as small-to-mid-sized advisory firms realize the time challenges of doing both a burst of reallocating portfolios and reassuring clients at the same time.

We also have a few articles on the current work-from-home environment, including tips about how to avoid "Zoom bombing" (where hackers can interrupt your Zoom meeting with offensive material!), tips on how to improve your webcam setup to be a little more visually flattering, and some additional suggestions on how to remain productive when (suddenly) transitioning to a new work-from-home environment.

We wrap up with three interesting articles, all around the theme of leadership in these challenging times: the first explores the importance of developing team members to have their own autonomy to take risks and make decisions (especially in a bear market when there's too much to be done for the firm owner to make all the decisions); the second explores how fear in the midst of business risks can unwittingly cause advisory firm owners to clamp down at the exact moment it's crucial to empower employees more; and the last provides some helpful tips about how to be an effective leader in times of crisis... including recognizing that even if your advisory firm is not in trouble, employees don't necessarily know that, and still need enhanced communication from the leadership, if only to give them confidence that the firm really will be OK!

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 Federal government is officially moving the tax filing deadline from April 15th to July 15th, not only allowing tax payments to be deferred but the entire tax filing process (though it remains to be seen whether/how states will follow suit as well, and those seeking tax refunds to get cash in their pockets now will likely still want to file as soon as possible!).

Also in the news this week is discussion that the U.S. is considering whether to issue 50-year(!) government bonds to finance the looming coronavirus economic stimulus package to take advantage of ultra-low interest rates, and that the economic stimulus package may also include a provision allowing the U.S. Treasury to provide a backstop guarantee to money market funds to prevent the risk of recreating a repeat of the panic run on (institutional) money market funds that happened during the 2008 financial crisis.

From there, we have a number of articles about investor behavior during the current market volatility (and how advisors can help), including a look at the data showing that in reality most investors do not panic sell (but the few that do can be especially poor under-performers as a result), how your brain reacts emotionally to market volatility in a form of fight-or-flight response (for which rational explanations of markets don't necessarily help), and some tips on how to reassure clients during these volatile times (and even remind them that you're available to help their friends and family who may be in search of a financial advisor to help them through the volatility, too).

We also have a few articles on the emerging practice management implications of the recent market decline, including why advisory firms that didn't run 'healthy' 20%+ profit margins may now face forced layoffs to right their expenses relative to their revenue and the fees they charge, how market volatility and potential layoffs may at least create an opportunity for firms to refocus themselves for the future, and why the recent market decline may not necessarily tank the valuations for advisory firms that want to sell (at least, as long as the seller is willing to bear more of the risk by making a portion of their price contingent on the market recovery that's anticipated in the coming years).

We wrap up with three interesting articles, all around the theme of dealing with our own thoughts and personal disruptions caused by coronavirus: the first provides tips about how to get comfortable and find more 'calm' in the face of a pandemic that may feel particularly challenging to fight (given that it's an enemy we can't see, and one that forces us to socially distance and isolate when, as human beings, we tend to come together in times of stress); the second provides a powerful reminder that it's "not crazy" to be fearful of covid-19 and to be thinking about the potentially challenging long-term implications, and the importance of finding others who share (or at least are willing to listen to and hear) your concerns to talk them out; and the last provides an uplifting reminder that the wave of meetings, events, and activities now being cancelled is unexpectedly presenting us all with a "gift of time"... raising the question of what those "if I had more time I'd get around to it" activities and goals we'll all be able to take up, now that the time is being forced on us anyway?

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 industry news that Massachusetts has become the first state to officially put forth a 'final' fiduciary rule for brokers providing investment recommendations in their state... albeit in a form that is significantly watered down from the original, though still higher than the SEC's Regulation Best Interest it sought to supplant, as the fiduciary fight increasingly shifts from Federal regulators to the states (and New Jersey and Nevada working on finalizing their own fiduciary rules as well).

Also in the news this week is a significant Supreme Court ruling regarding fiduciary disclosures, that at least under ERISA, it's not enough to provide qualified plan documents and related disclosures, and that plan sponsors must actually ensure that the participants read them in order to start the statute of limitations clock ticking... or risk facing a never-ending open-ended liability exposure that a plan participant could sue over questionable actions many years later because they didn't have 'actual knowledge' of the problematic issue until they actually read the disclosures for the first time!

From there, we have several articles on this week's hot topic of the investment markets and the coronavirus, including a good reminder of why it's important to send out extra communication to clients during turbulent markets (not to tell them to stay the course, but to show them that you as the advisor are 'on the case' and managing their situation... even if the current decision happens to be to stay the course anyway), a look at the recent yield curve inversion that the coronavirus appears to have spawned, and some interesting data on the coronavirus itself and how even though virus fears are currently routing markets it is actually less communicable and less fatal than many other feared disease outbreaks in recent years (e.g., SARS, MERS, Ebola).

We also have a few articles on recent industry studies and trends, including one that finds the key for 'smaller' advisory firms (defined as <$500M of AUM) will be "growth by specialization" in the 2020s, another study noting an emerging split between the 'big' firms trying to acquire and consolidate to achieve massive scale as one-stop-shops and the rest that will survive and thrive by being 'boutiques' that compete against them for narrow slices of affluent clientele who can pay their premium fees, a look at other industry trends that advisory firms must contend with to succeed in the coming trend including 'operational experience' and the unbundling of fees, and a fascinating look at how, in the end, the opportunities in the 'long tail' of niches are actually far bigger (or at least, far more numerous in actual clients) than where the bulk of the industry focuses today (prospective and current retirees between the ages of 50 to 75 with significant investable assets to manage).

We wrap up with three interesting articles, all around the theme of being more personally productive and focused: the first is an interesting look at how, even 100 years ago when the medical profession was emerging (and smartphones and social media couldn't be conceived of), educators were providing lessons not only in the technical knowledge to learn but how to learn and avoid then-modern-day distractions; the second looks at how nearly 90 years ago, John Maynard Keynes predicted an 8X increase in productivity and the drop to a 3-hour workday on the back of that productivity, yet somehow we succeeded in the productivity but failed in the shorter workday to accompany it; and the last explores how the key to success is not to pursue big goals and perfection but to 'just' be 1% better than the competition (because that's all it actually takes to win the game!).

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 big industry news that wirehouse Morgan Stanley is acquiring E*Trade for $13B, in a major shift for the wirehouse to move (back) towards the mass affluent with a more online digital offering via E*Trade, which opens a new pathway to E*Trade's significant business of administering employer stock plans (that can now be referred to Morgan Stanley's own advisors)... and that raises significant questions about whether E*Trade will even remain in the RIA custody business (and/or whether independent RIAs would want a custodian owned by a wirehouse competitor), and in turn, whether the potential loss of E*Trade as an RIA custody option could put even more pressure on the Department of Justice's view of the prospective Schwab-Ameritrade merger (which may have even been a factor in Morgan Stanley's timing to announce the E*Trade deal in the first place?).

Also in the news this week is a new FINRA exam sweep of how brokerage firms (including the ones serving as RIA custodians) plan to make their money in a zero-commission future and whether the prospective conflicts of interest in their alternative revenue streams are being sufficiently disclosed to clients (and their advisors), and the emerging surge in a new kind of "Registered Index-Linked Annuity" (the "RILA") that is becoming an increasingly popular risk-managed variable annuity alternative to the living benefit riders of old.

From there, we have several practice management articles, including a review of the big themes from the recent T3 advisor tech conference (from more mobile apps and integrations to an outright focus on advisor time efficiency), the ongoing rise of virtual firms (from young advisors to more senior, small firms to large), and a fresh look at other ways to measure what constitutes a "good" advisory firm (beyond just rankings of their AUM and recent growth).

We also have a few investment-related articles, from a look at the new SOFR rate that is expected to replace LIBOR in two years (and the complications that loom between now and the end of 2021 for that transition to happen), the concerns of a recent proposal from the mutual fund industry to shift more of their disclosures to be online (instead of mailed or emailed out directly), and a candid look at whether direct indexing is really a threat to the ETF industry (or "just" a kind of alternative product for certain client needs... albeit one that might still soon become a trillion-dollar AUM opportunity?).

We wrap up with three interesting articles, all around the theme of better communications with clients: the first looks at what it takes to finally see clients who are difficult to schedule for meetings (recognizing that the real problem may be that the advisor's 'check-in' meetings aren't really actually all that valuable to the client and that a better purpose is often necessary!); the ways that advisors sometimes unwittingly damage their empathy with clients in an attempt to prove or defend their own professionalism; and some tips on how to have and get through the sometimes-difficult conversations with clients that arise (and how best to introduce a difficult conversation where there's never a 'good' time to bring it up)!

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 ongoing industry drama of the prospective "Schwabitrade" merger, with a new public "Pledge" from Schwab that it will accept all RIAs regardless of AUM and without any custody fees, buzz that Fidelity will soon require a larger subset of least-profitable RIAs to begin paying a platform custody fee, and Pershing rethinking its prior $250M AUM custody minimum as it too positions to capture potential "NeverSchwab" RIAs that have been rejected by Schwab in the past when they were small and may not want to return from TD Ameritrade to Schwab in the prospective merger.

Also in the Schwabitrade news this week is the fresh revelation from a recent Schwab mid-quarter Business Update to Wall Street that, for the sake of acquisition expediency, they will not likely retain TD Ameritrade's popular (and most open architecture) VEO platform and instead anticipate keeping their own Schwab systems at the core, simply augmenting them with TD Ameritrade technology as it deems appropriate, amidst the latest buzz of what's worrying the advisor community as the Schwabitrade deal continues to ripple (beyond just RIAs themselves on the TD Ameritrade platform, and the broader potential impact to the entire advisor technology ecosystem).

From there, we have several articles on industry regulation, including some pushback from advisor industry associations about the SEC's proposed relaxing of the RIA advertising rules as being a welcome change but one that may put too much compliance burdens all at once on RIAs (as virtually all client communication may be scooped up as being 'advertising' under the new rules), a newly approved model regulation from the NAIC on a "best interests" standard for annuity agents that in practice simply repeats FINRA's existing non-fiduciary suitability requirements, positive progress on NASAA's recent model rule to prevent financial exploitation of seniors (making it easier and safer for advisors to intervene on their clients' behalf), and a new proposal from NASAA to potentially require all advisors under an RIA to obtain 12 hours per year of continuing education credits.

We wrap up with three interesting articles, all around the theme of trying to clean up the advisor industry: the first highlights how lobbying firms representing Wall Street brokerage firms and insurance and investment products continue to drastically outstrip the spending of actual financial advisor advocacy organizations like the IAA, FPA, and NAPFA; the second looks at the emerging regulatory challenge of 'fake comment letters' that create the impression of widespread support or opposition for proposed regulation but in reality are simply fake spam (and may have played a role in the DoL fiduciary rule); and the last is a frustrating profile of an "advisor" who has repeatedly been barred and fined (by both an individual state and then nationally by the SEC), and even convicted of a felony for securities fraud, with an obligation to pay more than $4M in restitution that hasn't been repaid, yet still continues to maintain a state insurance license for the past several years, and holds out to the public as a financial advisor providing retirement income plans to clients to facilitate annuity sales... begging the question of when the various regulators that oversee financial advisors will finally ever get better about coordinating to ensure that bad actors already convicted repeatedly under one regulator don't simply set up shop again as "financial advisors" under a different regulator and continue doing potentially-problematic business with consumers?

Enjoy the 'light' reading!

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