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 after several years of scrutiny, the SEC's examination rate for RIAs has risen significantly, up from an average of once every 9-10 years as recently as 2016 to an average of "just" once every 5 years this year (thanks in large part to a reallocation of examiners from the broker-dealer unit into the SEC's RIA unit instead). Also in the news this week is an investigation from the Massachusetts securities regulators into Wells Fargo Advisors, raising the question of whether the firm may be violating the DoL fiduciary rule by switching clients from commission-based accounts into fee-based accounts when it would have been better for them to just continue to pay occasional commissions in the original account. And new legislation has been (re-)introduced in Congress that aims to increase both the number of small businesses that offer an employer retirement plan (with a proposed up-to-$5,000 tax credit to roll out a plan), along with additional tax incentives for employers that create the plan with automatic enrollment provisions.

From there, we have several articles around the theme of marketing and engagement with clients, including a look at how systematically asking existing clients for their input on the agenda for each client review meeting can potentially increase referrals, how to more deeply engage clients by conducting a simple "Hidden Gems" poll with them, and how to reframe the traditional financial planning discovery questions around identifying client goals to more deeply understand what really motivates them and what they really want to work towards in their financial plan (that they may not have even realized about themselves yet).

We also have a few articles on practice management, including the importance of formally articulating the culture of your advisory firm, the issues to consider when it's time to increase the equity stake of next generation advisors who thus far only have a small slice of the business, and the rise of "co-planning" as a means to more deeply connect with clients and provide greater value in a more advice-centric future for financial planners.

We wrap up with three interesting articles, all around the theme of trends in the world of financial planners themselves: the first is a good dive by industry commentator Bob Veres into the world of CPA financial planners, who under the AICPA have their own membership group (now 11,500 strong and up 12% in just the past 2 years alone), their own designation (the PFS), and their own views about the professional status of financial planners; the second is a challenge by CFP Board CEO Kevin Keller on whether CPAs, who admittedly have very in-depth knowledge and training on tax and accounting issues, really have the competency to deliver personal financial planning services without going through training like CFP certification; and the last explores whether the best path forward for the profession is to get away from the rising volume of "disclosures" to address various fiduciary conflicts of interest, and instead establish a simpler system that "grades" conflicts of interest, both to help consumers evaluate which conflict of interest disclosures really "matter" or not, and also to provide a means for advisory firms to want to eschew their conflicts of interest rather than just disclose them (in order to increase their advisor rating!).

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 that FINRA is considering a proposal that would reduce the obligation of broker-dealers to oversee outside RIAs of hybrid advisors... though it remains unclear if that means broker-dealers will finally be more hands-off from outside RIAs (and the revenue they charge for supervising outside RIAs), or simply require their hybrid advisors to either use the corporate RIA or the broker-dealer's custody and clearing services for the outside RIA instead.

Also in the news this week is a new letter from the Consumer Federation of America urging the Department of Labor to step up its enforcement of the now-in-effect Impartial Conduct Standards under its fiduciary rule (given the recent enforcement action by Massachusetts securities regulators against Scottrade), and the announcement that David Lau (formerly of Jefferson National, which launched one of the first RIA-friendly variable annuities) is launching a new company called DPL Financial aiming to bring an even wider range of no-commission insurance products to the RIA community.

From there, we have several articles around the theme of practice management, including a look at the new HIFON study-group-cum-membership-organization for operations staff members in advisory firms, a discussion of how the Super OSJ model in broker-dealers is evolving away from "just" providing compliance oversight to a wider range of back-office support and training and technology for their advisors, and a review of the current wirehouse landscape given the ongoing unraveling of the Broker Protocol.

We also have a few articles on financial advisor pricing and compensation, from suggestions on how to handle the infamous question "How do you justify the value of your advisory firm fees?", to a discussion about how advisory firm business and pricing models tend to change over time for an advisor, and why it's important for larger advisory firms to have a compensation model for advisors that covers all of their needs (following Maslow's hierarchy from covering 'basic' needs, to those for esteem and belonging to a community, and finally achieving greater levels of self actualization).

We wrap up with three interesting articles, all around the theme of getting your financial house in order: the first examines the rising trend of financial advice and financial wellness programs in the workplace, as employers are discovering that financial stress is so damaging to employee productivity that it actually "pays" to help employees get more financially literate and shore up their debt and emergency savings shortfalls; the second looks at new research finding that community involvement shows a strong relationship to one's self-assessed financial well-being (providing yet another example of how giving to others helps fulfill our own happiness); and the last is a great walk-through of all the various financial documents that we should keep, don't need to keep, or can at least scan electronically to help declutter the paper in our lives!

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 news that yet another state, Maryland, has now jumped into the fiduciary fray, with its own version of a rule that would require brokers operating in the state to meet a fiduciary standard of care, given ongoing concerns from state legislators about the potential consumer consequences of President Trump's order to review (and potentially further delay or kill) the Department of Labor's fiduciary rule. Also in the news this week was a discussion from SEC regulators suggesting that they may be focusing less now on creating new rules for robo-advisors, and instead simply looking to apply the existing principles-based fiduciary regulation under the Investment Advisers Act of 1940 to the robo-advisor business model (with a particular focus on whether robo-advisors, or human advisors using "robo" tools, are probably explaining how broad, or narrow, the scope of their financial advice really is).

From there, we have several articles on the new tax law, including how many small businesses are taking a fresh look at the ideal business entity structure (with some pass-through businesses considering whether to become C corporations for the new 21% corporate rate, and some C corporations considering whether to switch to pass-through status to take advantage of the new 20% Qualified Business Income deduction), a discussion of whether some employee advisors at broker-dealers may want to switch to become independent contractors to take advantage of the new pass-through deduction, how some couples may want to use the "Married Filing Separately" filing status to preserve the pass-through deduction where one spouse is a business owner and the other has (even higher) non-business income, and a look at how the change in tax rates from 2017 to 2018 creates interesting opportunities over the next two months for people to engage in "tax rate arbitrage" by contributing to IRAs for the 2017 tax year and then converting them in the current 2018 year at lower rates.

We also have a few marketing-related articles this week, from tips to squeeze more value out of your client communication and events (by focusing on how to expand or better leverage or re-purpose the content), to how having a narrower niche or target market allows you to build rapport faster with clients by getting to know their common needs and issues (which makes you look like a mind-reader when you can tell them what's on their minds before they even say it!), and how clients begin to develop a deeper relationship with a professional in as little as 3 extra minutes of the professional listening and making clients feel like they're heard and cared for.

We wrap up with three interesting articles, all around the theme of selling and business incentives: the first explores a recent research study that finds it's not the lower fees of robo-advisors that are attracting clients, but the transparency of those fees (and their subsequent performance reporting systems), which has important lessons and implications for all advisors; the second looks at how business model incentives may help to contribute to the unique (and not necessarily pro-long-term-investor) way that brokerage firms typically develop their client statements and websites; and the last provides a good reminder that even if we're in the business of advice and not product sales that we're all still selling something to clients, which means perhaps we should focus less on trying to avoid discussions about sales altogether and instead focus more on the most productive ways to ethically "sell" and help clients to reach better financial outcomes!

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 news that the Massachusetts state securities regulator has accused retail brokerage firm Scottrade of violating the Department of Labor's fiduciary rule by holding a series of "sales contests" in the second half of 2017, as even though the full Best Interests Contract Exemption is delayed until the middle of 2019, the requirement to satisfy the Impartial Conduct Standards of the DoL fiduciary rule did take effect last June 9th of 2017... and raising the question of whether Massachusetts will soon be scrutinizing other major firms for similar fiduciary compliance violations. And in a similar vein, the SEC also announced this week  new "Share Class Selection Disclosure" Initiative that will grant amnesty to RIAs (especially hybrid RIAs) that may have failed to disclose that they were using higher-cost share classes that included 12b-1 fees (paid to a related broker-dealer) without disclosing that there were lower cost alternatives available (but only if the firm self-discloses its error, and refunds all excess profits earned from clients).

From there, we have several advisor technology articles, including a brief recap of the latest 2018 Advisor Software Survey from Joel Bruckenstein and Bob Veres, two reviews of the big news and announcements at the recent T3 advisor technology conference, and a fascinating profile of some of the major private equity and venture capital investors that have been putting money into the burgeoning number of new advisor tech startups that are well-funded with outside capital and not merely "homegrown" solutions built by advisors themselves and re-sold to their peers.

We also have a few articles on the ongoing trends of advisors retiring, merging, and being acquired, including tips for RIAs that are looking to sell about what they should do to find the right buyer, a look at the landscape for broker-dealer recruiting (which is especially hot amongst the largest independent broker-dealers, who are attracting reps from both wirehouses and smaller IBDs), and some advice from Bob Veres on how advisors should think through their own potential retirement (which isn't just about the financial matters of selling your practice, but is primarily about finding your own new purpose in a world where your primary focus may no longer be your advisory firm!).

We wrap up with three interesting articles, all around the theme of telecommuting and whether working remotely may not be all it's cracked up to be: the first looks at how working from home is associated with a dangerous rise in loneliness and isolation, which is both leading employees to want to go back and work from an office again, and can even have deleterious health effects; the second examines how working from home also appears to be impairing everything from the innovation to customer service of a number of large firms, which are shifting from telecommuting and remote work policies to more of a "flexible work" policy that allows some work from home but still requires employees to come into the office on most days; and the last explores the rise of co-working spaces, which provide helpful office space and business infrastructure for those who don't have a good setup at home, but are proving to be popular primarily because of the social and community aspects of co-working (as contrasted, once again, with the potential isolation and loneliness of working from home). Which means at a minimum, those who are interested in working from home – including solo advisors who don't have an office – need to be mindful of the need to maintain a social network of friends and colleagues, at least in the form of a co-working space.

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 some potential talking points to clients about the recent market volatility (and a good reminder that while it's stressful, this is a time to reinforce your value with clients, and even encourage them to refer other friends and family who may be nervous as well).

Also in the news this week are some new regulatory initiatives around advisory fee disclosures, including both the latest exam priorities from the SEC that are targeting both advisory fees and any less-transparent behind-the-scenes compensation advisors may be earning, and a new standardized "fee table" that Massachusetts may soon start to require all RIAs to use to clearly (and consistently) disclose their compensation.

From there, we have several additional investment-related articles, including a discussion of the implosion $XIV (the short/inverse VIX fund that may have accelerated/amplified the market decline), a look at why the Shiller CAPE ratio deserves more credit than it has being given in recent years, why the rising interest in using actively managed bond funds to deal with potentially rising interest rates may be misplaced, and a strikingly candid discussion from Morningstar on how its new Analyst Ratings have been performing over the past 5 years (and where they can still be improved).

We also have several articles specifically on marketing and business development, from a look at the research on the psychology of referrals and word-of-mouth marketing (hint: it's all about what the referrer believes he/she can gain in social capital by making the referral, not about helping the advisor being referred!), a good discussion on how closing online prospects who find you via your website is different than the traditional sales process for new clients, and why advisors need to be very careful when promoting any awards or rankings that the firm receives.

We wrap up with three interesting articles, all around the theme of looking differently at common problems: the first looks at how, when we compare income inequality across multiple countries, many of the common explanations for why it is occurring (e.g., decline of unions, rising immigration, etc.) don't hold up, and that instead it may be the rise of regulatory barriers that are actually insulating and compounding income inequality (especially in professional services, health care, and the financial industry); the second explores how becoming an expert may actually make you more referrable than "just" being a specialist in a niche (though becoming a recognized expert is also arguably harder than "just" focusing on a niche); and the last raises the question of whether the traditional industry mantra "life insurance is sold, not bought" may simply be because historically insurance was so opaque and so hard to buy, and whether the rise of "InsurTech" tools will lead even fee-compensated advisors to increasingly implement insurance recommendations directly for clients, as it becomes easier and easier to actually do so!

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 interesting retrospective look at the impact of the Financial Planning Association's successful lawsuit against the SEC 10 years ago, which set in motion much of the past decade's fiduciary rulemaking debate, the rapid rise of the hybrid B/D-RIA movement, and spurred the growth of the independent RIA channel... though, ironically, not the organization's own membership, which remains down nearly 15% from before the lawsuit was first filed.

From there, we have a series of practice management articles this week, including: a look at the challenge in transitioning from a practice into a business (which becomes a virtual necessity as an advisory firm approaches $2M of revenue); the importance of developing talent internally, which in turn requires having a clear multi-step progression of how an advisor can grow over time from a paraplanner to an advisor and even a partner; tips on how to refine your own hiring process (and why it's so crucial to do so); and a warning from Mark Tibergien that while advisory firms are still growing, they're increasingly buoyed by just market returns as organic growth rates are slowing, raising the question of whether it's finally time for advisory firms to begin building more formal marketing processes.

We also have several articles specifically on marketing and business development, from a discussion of the path that prospects go through in considering a financial advisor (and why it's necessary to customize your own sales process depending on what stage they're in), to strategies for improving your new client onboarding process to make people want to refer from the very start of working with you, why an "elevator pitch" is still a necessity in today's world, and why good branding in the modern era of information overload is less about finding a cute or clever way to describe yourself and increasingly about just being really clear about what you do and who you serve (so the prospects who would actually be interested can quickly and easily find you!).

We wrap up with three interesting articles, all around the theme of milestones and personal growth: the first is an excerpt from Daniel Pink's new book "When", looking at how having "temporal landmarks" (from a deadline to a birthday that turns a new decade) can spur us to get things done or take on new challenges; the second is a fun series of "life tips" from someone turning 45 and looking back on all she wish she knew in her earlier years; and the last is an interesting exploration of why it may not always be a good idea to set "SMART" goals (that are specific and concrete), and how setting goals can actually distract us from both enjoying the journey, and missing the new opportunities that may come along the 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 news that the battle over the CFP Board's expanded fiduciary standard is heating up, with both SIFMA and FSI (lobbying firms for broker-dealers) calling for the CFP Board to postpone their fiduciary proposal until at least next year to see what the SEC does, and the CFP Board responding that it still intends to move forward (and putting to rest the criticism that CFP Board is solely beholden to its large-firm broker-dealer stakeholders).

Also in the news this week is the announcement that administration of the Broker Protocol is being shifted to a new law firm called Capital Forensics (after complaints arose that the prior law firm Bressler Amery & Ross sat on the news that Morgan Stanley was leaving the protocol and failed to communicate it to the other protocol participants in a timely manner), and a look at how despite the de-regulatory agenda of President Trump the financial advisory industry is facing a slew of new and additional regulatory activity in the coming year from both the SEC and FINRA (not to mention what is already underway with the Department of Labor's fiduciary rule).

From there, we have a series of practice management articles this week, including: a look at some of the new additions on Form ADV that will be required in the coming weeks as firms do their annual updates; the regulatory and compliance issues to consider when hiring non-advisor employees (who still must be overseen by the firm); why fiduciary compliance does not actually require advisors to always use the absolute lowest cost solution for clients; the rise of the "quasi-independent" model of breakaway brokers who join existing independent RIAs that provide solutions to the advisors who often become partners of the firms; the various Millennial archetypes (beyond the increasingly popular "HENRYs") that financial advisors should consider working with; and how to think about developing a special treatment program to deepen your relationship with your top clients (and what we can learn from the airline industries about how to provide differentiated service to your most valuable clients/customers).

We wrap up with three interesting articles, all around the theme saving and spending habits: the first looks at how, in a world of retargeting ads and email marketing, often the best way to save and buy less is simply... to buy less in the first place (which keeps you from being signed up for all those lists in the first place, and helps you get more comfortable in simply enjoying what you already have); the second is a look at how sometimes the best strategy to succeed is simply by using brute force, which can apply to everything from investing (don't try to pick stocks, and instead just own all of them with an index fund) to accumulating for retirement (if your savings rate is aggressive enough, it hardly matters what you actually generate in investment returns!); and the last is an interesting exploration into what is worth spending a little more money on, particularly for those who may be financially successful (or fully financially independent) precisely because they lived a lifetime of frugality... and now can't find out how to flip the switch and actually try to enjoy the money they have!

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 fascinating letter that Blackrock CEO Larry Fink sent to business leaders, stating that they must make a positive contribution to society (in addition to delivering financial performance) to command Blackrock's interest (as the world's largest institutional investor)... and raising the question of whether SRI/ESG investing is about to make the shift from niche to mainstream (which, ironically, eliminate any potential performance differential for such strategies as they literally become the market!).

Also in the news this week was the first-time-ever release of a FINRA budget, that (finally) sheds some light on how the organization collects revenue and spends its resources... and recognizes that it must be "right-sized" with fewer staff and lower costs to be sustainable in the face of a shrinking base of broker-dealers. And the U.S. Supreme Court has granted certiorari to hear the case of Ray Lucia v. SEC, which may strike down the SEC's current process of selecting its administrative law judges as being unconstitutional (and force the SEC to adopt a more independent and better-reviewed appointment process, instead).

From there, we have several articles on retirement planning and research, including a look at how not to split an IRA in a divorce (and why it's essential to split an IRA after the divorce decree is finalized), why so-called "cash buffer" or "cash bucketing" strategies don't actually improve retirement income sustainability (and can actually harm it), and how the availability of reverse mortgages may change the 4% rule (taking an initial withdrawal rate equal to 1/25th of the available retirement assets) into a Rule of 30 (taking a 3.33% initial withdrawal rate against the combined value of the retirement portfolios and equity in the home, using a reverse mortgage line of credit to tap the equity in the future if/when/as needed).

We also have a few articles on financial advisor marketing strategies, including a reminder that the best way to get fresh new marketing ideas is not to ask other advisors what works but to ask your target clientele instead, a look at how to refine what your firm delivers to clients to truly create a differentiating client experience (beyond "just" trying to deliver better client service), and a great way of thinking about differentiating as a financial advisor by being capable of delivering something that other advisors either can't, or don't deliver themselves (though in the long run, a can't differentiator may be more sustainable).

We wrap up with three interesting articles, all around the theme of personal growth and development in an evolving business or career path: the first looks at why personal progress is all about continuously taking ourselves out of our personal comfort zone (because in the end, "if you want something in life that you have never had, you will have to do something that you have never done"); the second explores the "four elements of entrepreneurship", recognizing that it's more about the mental attitude of being willing to make decisions and attempt new things in the face of uncertainty than any particular skill or ability; and the last delves even further into the steps that successful advisors (and especially advisory firm founders) must take to avoid becoming the bottleneck in their own businesses as they grow.

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 during the lull of the delayed Department of Labor fiduciary rule, the SEC is proactively working on its own version, and a first proposal could be released as soon as the second quarter of 2018. In fact, in anticipation of the coming rule, the CFA Institute has submitted a somewhat controversial comment letter suggesting that as the SEC proceeds, the best solution may not be to just harmonize with a uniform fiduciary rule for all broker-dealers and RIAs, but instead to focus more on the titles that advisors use and simply require those who hold out as such to be registered as investment advisers (and be subject to a fiduciary rule under current law!).

At the same time, this week's news also included newly proposed legislation in New Jersey, that would require brokers who are not fiduciaries to clearly and explicitly disclosure that they are not and have no obligation to act in their clients' best interests, as delays in a national fiduciary rule are leading to a growing momentum for states to take up the fiduciary slack in their stead. And the Wall Street Journal also published an investigative report about how even at discount brokerage firms like Schwab, Fidelity, and TD Ameritrade, which are known for not using commission-based brokers, that their Financial Consultants are still receiving bonus incentives on top of their salaries that introduce problematic conflicts of interest in their recommendations (further supporting the need for a fiduciary rule).

From there, we have a slew of advisor technology articles this week, including: a new cybersecurity platform initiative in the advisory industry called cleverDome; why financial advisors should be concerned about the recent news of computer chip vulnerabilities Meltdown and Spectre (and another reason/reminder of why it's so important to promptly patch your computer with software updates!); how "robo" tools are coming to life insurance now, both streamlining the process of applying for insurance, and even the time it takes to underwrite the coverage (as algorithms and data feeds begin to replace requests for paper medical records and human underwriters); a favorable review of Advyzon (which provides a combined CRM and portfolio accounting/reporting tool for investment advisers); and a look at some of the financial data startups that are trying to compete with Bloomberg in the independent financial advisor community (including YCharts and Sentieo).

We wrap up with three interesting articles, all around the theme of time management and personal productivity: the first looks at what the research tells us about the most (and least) productive times of day for decision-making or creative work; the second provides a fascinating look at how our struggles with time management may simply be a modern-world iteration of the age-old philosophical question about how to find better focus and meaning in our lives; and the last is a simple but effective technique to help avoid distracting "opportunities" that may come along in your business... just provide a quote that is drastically higher than your usual prices, and let the prospective client either say no (but then it was their decision, not yours), or perhaps even yes (and properly pay you for the off-focus work, giving you dollars you can then re-deploy more productively in the business!).

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 both New York and California are now working on plans to convert their no-longer-fully-deductible state income taxes into either a higher state payroll tax, or an option to making a "charitable" contribution to a state fund instead (where the state would offer a dollar-for-dollar credit against taxes, and as a charitable contribution it would remain deductible for Federal tax purposes). Also in the news is the announcement that Citigroup is also leaving the Broker Protocol, but that even as the Protocol unravels, FINRA still doesn't believe there's any reason for the organization to get involved even as the number of temporary restraining orders and arbitrations by wirehouses against former brokers begins to rise.

From there, we have a number of retirement-related articles this week, including a research study that finds what appears to be a significant increase in male mortality rates immediately after early retirement (at age 62), another study showing that mortality rates are rising and that life expectancies in retirement may be starting to shrink (especially as prospective retirees struggle to save and retire later, although ironically shorter retirement time horizons may mean retirees need less to retire than they once believed), a look at all the different types of senior housing arrangements that are emerging as the mass wave of Baby Boomers decide how they want to live in retirement, and why the key to helping retirees be happy may be less about maximizing their retirement portfolios and more about minimizing their regrets in retirement.

We also have several articles on practice management and career development, from tips on how to better navigate your career in an existing advisory firm, to best practices in how to find a mentor, and why truly being a professional financial advisor is about more than just being financially successful but actually committed to being a bona fide professional.

We wrap up with three interesting articles, all around the theme of (non-traditional approaches to) New Year's resolutions and improving your business and life in 2018: the first explores what it takes to have a truly impactful New Year's resolution for your advisory firm (hint: it's about actually establishing a better infrastructure for the firm to be successful); the second explores how it may be better to set goals on how you will allocate and use your time rather than just setting business goals for revenue or growth; and the last looks at how the perennial New Year's resolution of trying to be more productive may just be a mental trap, because the real issue is not figuring out how to be more productive to achieve your goals, but taking a fresh look at why you're pursuing them and whether you're even pursuing the goals that will actually make you happier in the long run!

Enjoy the "light" reading, and hope you had a Happy New Year!

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