Archives Of Weekend Reading For Financial Planners

Enjoy the current installment of "weekend reading for financial planners" - this week kicks off with the news that the Department of Labor will soon be issuing some "follow-up" clarifying guidance about next year's fiduciary rule, as the DoL formulates a response to the most frequently asked questions coming in from advisors and financial institutions (relating primarily to advisor compensation and large-firm financial incentives related to the products they make available).

From there, we have a few articles related to advisor technology, including a good overview of the latest trends and developments in the advisor tech landscape from Joel Bruckenstein, coverage of the major deal announced last month between Vestorly (which provides content curation tools for advisors to drip market to clients and prospects) and Dow Jones (which will provide Wall Street Journal and other content to Vestorly users), and a review of financial planning software provider FinanceLogix.

We also have a few investment-related articles this week, from an analysis of the trends in securities lending by asset managers, to a look at how capital market assumptions for retirement planning projections could be adjusted to account for sequence of return risk, an examination of how mutual funds and ETF providers are preparing for the change in September when REITs will be removed from financial services sector and placed into their own sector instead, and two articles looking at how many of the foundational principles of investing and modern finance are breaking down as government bond yields keep trending lower and the "risk-free" rate on government bonds is approaching zero or even going negative in some countries (leading to strange outcomes where bond returns are primarily driven by capital gains, and investors are buying stocks for yield!).

We wrap up with three interesting articles: the first looks at a recent Capgemini study on the behaviors of young millionaires, finding that they are drastically more likely to hold cash (as much as 1/3rd of their net worth!), are more likely to invest in alternatives and diversify out of just holding 'traditional' stock portfolios, and are less likely than older millionaires to engage with a financial advisor; the second is a review of a few "savings" smartphone apps, like Qapital, Digit, Dyme, and Acorns, which are trying to use technology to make saving easier and more frictionless (the technology equivalent of modern 'pay yourself first' savings strategies); and the last is a fascinating study that finds financial stress and economic insecurity can actually lead to increased feelings of physical pain, which may help to explain the country's rising epidemic of prescription pain medications, and also raises interesting questions about the potential role and value of having a good financial planner!

Also, be certain to check out the video at the end, the trailer of an interesting new "documentary" movie from Mark Hebner of Index Fund Advisors and Robin Powell of Evidence-Based Investor, on the issues with Wall Street and active management and the ever-rising role of index funds (somewhat controversially titled "Index Funds: The 12-Step Recovery Program For Active Investors").

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with an announcement that the SEC will begin to audit RIAs over the use of mutual fund share classes, seeking to verify that investment advisers are really using the lowest cost institutional shares available, and not trying to double-dip into 12(b)-1 or other back-end fees on more expensive share classes. Also in the news this week was the SEC's decision to bar Dawn Bennett and fine her a whopping $4M, for what started out as an investigation into overstated AUM on her radio show and in marketing materials, and then snowballed into a fight over the SEC's use of administrative law judges.

From there, we have a few articles related to how the Department of Labor's fiduciary rule continues to ripple, including a look at the likelihood of the rule being struck down by legislators (virtually impossible) or in the courts (still highly unlikely), how advisor recruiting amongst broker-dealers has fallen a whopping 40% in the first half of 2016 (attributed in large part to uncertainty about how DoL fiduciary compliance will play out), and the ways that broker-dealers are starting to push back on financial services product manufacturers to make their commission payouts levelized and more uniform from one company to the next. There's also an article looking at a new niche RIA custodian called MoneyBlock, which specifically targets advisors who are heavy implementors of options strategies with clients.

We also have a few marketing-related articles this week, including a discussion of how asking clients to send "referrals" is far less effective than specifically asking for introductions, the approach that one start-up financial advisor has been using to achieve a whopping 76% close rate on his prospective clients, and a Journal of Financial Planning cover story that interviewed a dozen financial advisor marketing experts for a wide range of marketing tips and strategies that advisors can implement.

We wrap up with three interesting articles: the first looks at how financial advisors may increasingly play a role in spotting financial abuse of seniors, as legislators change laws to make it easier for (or even require) financial advisors to report potential abuse situations; the second is a look at how the increasing volume of data used to manage an advisory (or any) business is leading to the rise of "business dashboards", central reporting tools that pull together the relevant business data (often from several sources) and make it easier to keep track of the health of the business; and the last is a valuable reminder that as successful advisors, it's important to give back to our communities, which is not only about being charitable but also recognizing that there's a business opportunity to "do well by doing good", too.

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a discussion of the Senior Safe Act, legislation currently winding through Congress that would make it easier for financial advisor to report suspected elder abuse amongst their clients without fear of litigation for breaching client privacy (but sadly, only when reporting to government agencies, and not family members). Also in the news this week is a lobbying effort by the Investment Adviser Association to allow clients of RIAs to automatically be deemed accredited investors, regardless of their actual income or net worth, and be allowed to rely on the RIA's recommendations (subject to fiduciary duty) as protection from overly risky investments.

From there, we have several advisor technology articles this week, including a review of social media management software Grapevine6, the Canadian portfolio management software platform Croesus (now looking to grow its adoption amongst RIAs in the US), a discussion of how technology vendors are trying to step up to help large advisory firms cope with the DoL fiduciary rule requirements, and a look at how the most successful advisors are disproportionately likely to be heavy adopters of technology (but affluent investors are still most likely to choose their advisors for more 'traditional' reasons like years of experience and expertise/capabilities).

We also have a few more technical articles this week, from a look at how the Medicare "Hold Harmless" provisions are projected to strike once again for 2017 (which will limit Medicare premium increases to just 0.2% for most, but spike Medicare premiums for higher-income individuals as much as 22%), to a discussion of the rules for holding foreign stocks and claiming the foreign tax credit, and an analysis of the rules for the Net Investment Income Tax (NIIT) as applied to non-grantor trusts (where the 3.8% surtax can kick in after just $12,400 of income).

We wrap up with three interesting articles: the first is a look at how many parents who take time out of the workforce to care for children, seeing that child care may have consumed most or all of their take-home pay already, may be grossly underestimating the long-time financial impact of staying home with children once accounting for how time out of the workforce can permanently change a worker's income and career trajectory; the second is an analysis of how income inequality may actually be driven less by the concentration of national income in the hands of capitalists or merely going to higher-skilled professions, and more a result of the barriers that many professions have erected in the name of consumer protection that may have (unwittingly or on purpose) limited competition and (artificially) inflated incomes; and the last is a look at Millennials, who are often lauded for having an "entrepreneurial mindset" but are actually forming new businesses at a significant lower rate than prior generations did at the same age, raising the question of whether competition from mega-firms and the overhang of student debt may be permanently impairing Millennial entrepreneurship, or if the reality is just that the Millennial entrepreneurship needs another decade to germinate before it really starts to blossom (given that in reality research shows the peak age for entrepreneurs to start a business is 40-something anyway, not as a 20-something).

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the announcement that after 18 months of development, June finally saw the launch of four states' Section 529A "ABLE" accounts, the new tax-free accounts for disabled beneficiaries that are expected to become popular as a supplement to (or in some cases, a cheaper alternative to) special needs trusts.

From there, we have a few technical articles this week, from a look at how various types of retirement spenddown strategies may be impacted if market returns stay persistently low (hint: even flexible spending strategies may be at risk), to a discussion of the rules on Medicare enrollment and the (potentially adverse) consequences of delaying past age 65, and a look at how to coordinate the rules for contributing to and withdrawing from a Health Savings Account (HSA) after reaching age 65 and Medicare eligibility.

We also have several practice management articles, including: why it's crucial for wealth management firms to evaluate their advisors more broadly than just new client assets and business development; strategies to prevent burnout from your advisory firm staff; how the best path to client loyalty is not about avoiding all mistakes but having a process to promptly and effectively fix mistakes when they inevitably occur; what to be aware of when it comes to the new prohibited transaction rules for the Department of Labor's fiduciary rule; and why success for advisors is not just about doing "what you love" but finding the activities you enjoy doing, are good at, and the ones that actually help to move the business forward.

We wrap up with three interesting articles: the first is a look at Schwab's recent announcement to revive its consumer marketing campaign on behalf of RIAs that use the Schwab platform, and whether it's a real business development opportunity for Schwab-based advisors or just a way to appease those advisors even as the Schwab retail offering increasingly competes with them; the second is a look at how the advisory business is shifting from one where firms simply create something of value and offer it to clients, to instead a world where advisors and (prospective) clients actually 'co-create' the value that is meaningful and personalized for the client; and the last is a look at what advisors should be thinking about if they're considering a coach, and the kind of mindset that is necessary to really get the most value out of a coaching relationship.

Also, be certain to check out the video at the end, an excerpt from a two-part series for advisors from Carl Richards of the Behavior Gap called "Your Manual For Scary Markets" on how to talk clients through times of market volatility and be an effective buffer between them and the "scary markets" that can arise from time to time.

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a few articles on today's big #Brexit news, including a look from the Economist at what the economic ramifications really are (and why the early market decline may be more of a response to the uncertainty caused by the "Leave" vote than the actual economic impact), and a discussion from Vox about how the establishment framed the Brexit Remain vote as being about the economy but the Leave decision appears to have been primarily about immigration - specifically, a backlash against the explosive rise of immigration into Britain over the past 20 years (and especially the past 10) in the European Union.

Also in the news this week was an eye-popping $415 million fine from the SEC against Merrill Lynch, which found that Merrill had used derivatives trades to mask what was actually using the cash in customer brokerage accounts for its own trading purposes... and although it doesn't appear any customers were actually harmed, they could have been severely impacted if Merrill Lynch had experienced financial distress, and the SEC indicated that this punishment against Merrill Lynch for violating the Customer Protection Rule may just be the start of a sweep to investigate if any other brokerage firms were doing the same thing (and the SEC has even offered "cooperation credit and favorable settlement terms" for firms that quickly turn themselves in).

From there, we have several notable news stories regarding the Department of Labor's fiduciary rule, as it's becoming increasingly clear how companies are positioning themselves for a new fiduciary world. It turns out that major wirehouses have so shifted in favor of fee-based accounts that many actually opposed the SIFMA and FSI lawsuit against the Department of Labor (with Wells Fargo at one point threatening to quit SIFMA altogether), indexed annuity providers have discovered they may need to create a broker-dealer to sign the Best Interests Contract when their annuity agents sell into IRAs (as annuity companies don't want to sign on for fiduciary liability for independent annuity agents they can't even oversee), and Jackson National (the country's largest annuity provider) announced it is creating its first low-cost fee-based variable annuity that will include a wide range of living and death benefit guarantees.

We also have a few practice management articles this week, including: how to evaluate whether your advisory firm is growing sustainably or may be understaffed (or overstaffed), a good reminder (especially for young advisors) about how weighty of a decision it really is to become an owner/partner of an advisory firm, and a good framework to think through how to explain your value proposition as an advisory firm and differentiate yourself.

We wrap up with three interesting articles: the first looks at how the rise of machine learning algorithms mean that in the future we may no longer "code" computers but instead just "train" them like animals (which makes the process more efficient than crafting complex code, but may make computer programs so complex that even as humans we can't figure out how they work anymore); the second is an interesting discussion of how clients having a "scarcity" vs "abundance" mindset can significant impact their financial behaviors; and the last is a fascinating look at how the focus of the "income inequality" discussion has centered on the top 1%, but it turns out the "upper middle class" (incomes of $100,000 to $350,000 in today's dollars) is actually the segment with the most explosive growth in the past 35 years (from 12% in 1979 to nearly 30% today), which both helps to explain why there's so much stress about income inequality in the middle class (which is splitting into a "lower" and "upper" middle class with increasingly unequal incomes), and perhaps the rise of financial planning itself (given that advisors today disproportionately serve that upper middle class segment).

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, which this week includes 3 days of video highlights from the recent 2016 Morningstar Investment Conference!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with an interesting recent interview from Vanguard CEO Bill McNabb at the Morningstar Investment Conference, as he describes Vanguard not as an asset manager or investment company but as a "technology company" instead, possibly implying that Vanguard will be rolling out even more technology innovation or more "robo" tools of its own in the coming years.

From there, we have a few technical articles this week, from another reminder/warning that ETFs cannot be any more liquid than the liquidity of their underlying investments (at least not during times of market distress), to a look at the current Social Security "redo" rules for those who wish to withdraw or voluntarily suspend their benefits, and a discussion of the growing momentum for changes to the retirement laws that would make it easier to enroll more/all workers in automatic enrollment retirement plans with automatic escalation clauses, and possibly the advent of open multiple employer plan (MEP) options in the coming years.

We also have several practice management articles, including: a look at how the new DoL fiduciary rules may bring fresh attention to the issue of "reverse churning" in advisory accounts; a review of 'lesser-known' RIA custodians RBC Advisor Services, Trust Company of America (TCA), and Shareholder Services Group (SSG); a review of the new MoneyGuidePro G4 release and its new "Conversations" feature; a look at the iRebal rebalancing software from TD Ameritrade; and a look at the latest version of Junxure Cloud CRM for financial advisors.

We wrap up with three interesting articles: the first is a look at how improvements in health are leading to a growing number of people retiring "early" in their 60s even as they could work into their 70s, which raises difficult questions about whether our current Social Security and Medicare systems are subsidizing "early" retirement more than they were originally intended (and if they're going to be changed, how to do so in a way that doesn't adversely impact less educated workers in physically demanding jobs who really can't work later); the second explores how the traditional mutual fund wholesaler is being made irrelevant by the availability of online information and how wholesalers are shifting to become value-added relationship managers to survive and thrive (an interesting parallel for financial advisors themselves; and the last is a fascinating look at how the rollout of ATMs impacted the jobs of bank tellers over the past 30 years, as it turns out that ATMs made bank branches so much more efficient that banks opened up more branches, resulting in a net increase in bank teller jobs over the past several decades... which implies that, similarly, the end point of "robo-advisors" may not be the death of financial advisor jobs, but an improvement in financial advisor efficiency that allows for more financial planning jobs to be created in the coming years!

Also, be certain to check out the video at the end, a clip from the popular HBO late-night comedy show with John Oliver, supporting the Department of Labor's fiduciary rule and sharply criticizing the financial services industry's lawsuits against it... an entertaining segment, punctuated by Oliver's usual comedic wit.

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a deeper look at the SIFMA lawsuit against the Department of Labor's fiduciary rule, which is looking more and more like an Alamo-style futile last stand, as the details of their legal complaint appear to be little more than rehashing the same arguments they have already presented and lost at each prior step of the rulemaking process.

We also have a few technical planning articles this week, from strategies to plan around maximizing step-up in basis (and especially avoiding a step-down in basis) at death and the new Form 8971 cost basis reporting rules, to tactics that advisors should consider when helping younger clients make good student loan decisions, and a review of a newer company called Vest Financial that is providing an outsourced options overlay service to help design risk management strategies for client portfolios.

From there, we also have several practice management articles, including: looming anti-money-laundering (AML) rules that could hit later this year and put significant new compliance burdens on SEC-registered investment advisers; a list of 13 "true" differentiators that advisors can use to think about what really differentiates their own client services; how to reframe your value proposition to clients by shifting from just talking about your job title and what you do to helping clients understand how you'll actually improve their situation; a review of "startup friendly" RIA custodians TradePMR and Scottrade Advisor Services, which have actually been cracking down a bit on the smallest "hobbyist" RIA firms; and a look at how you can improve your engagement with clients over the next 2 months by taking a one-week-at-a-time fresh look at key aspects of your advisory firm and how your clients experience it.

We wrap up with three interesting articles: the first raises the question of whether our current 'obsession' with the philosophy of "always be your authentic self" may be going too far, because in the end people may care more than we're sincere and do what we say, than whether we authentically share every last thought in our heads; the second is a great reminder that while we're often told to "follow our passion", most of us aren't actually sure what our "passion" really is, and in most cases really understanding that takes years or even decades of a career to find, so the better approach is to try to "foster your passion" and just keep moving in the direction of the work that most inspires you; and the last is an interesting look at how the media views financial advisors and recommends that consumers find an advisor, where consumers are recommended to look at everything from how the advisor is compensated, to whether the advisor has "humility in large doses" when it comes to describing their own abilities.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, which this week includes interviews from the recent Envestnet Advisor Summit on the latest Envestnet Advisor Portal technology developments with Tamarac and Yodlee, along with the new Open ENV initiative!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the news that robo-advisor SigFig has raised $40M of new venture capital, from established asset manager Eaton Vance, in its bid to become a leading robo-advisor-for-advisors solution as the company continues to pivot away from its challenged B2C roots.

From there, we have a number of practice management articles this week, from a brief review of the new retirement income software solution "Income Solver", to a look at what the DoL's "Best Interests" requirement really means (now that it appears the rule is here to stay), tips and best practices for doing client meetings virtually via webinar or video conferencing software, and why it's so crucial for financial planning to be done consistently across an advisory firm.

There are also several technical planning articles, including: a look at how the long-term care marketplace is evolving as long-term care insurance (and Medicare and Medicaid) continue to struggle; how the problems of the student loan crisis may actually be understating, by failing to recognize how often low-income students in particular are enticed into colleges they can't afford, fail to graduate due to the financial burden, and then end out with student loans and no diploma; a discussion of common estate planning strategies and assumptions that are changing in today's environment; and a look at how the rise of indexing may make investments more efficient on a relative valuation basis while still leaving them exposed to potentially extreme absolute valuation distortions.

We wrap up with three interesting articles: the first is a look at how social networking is actually on the decline, as companies increasingly adopt social media for business purposes and drown out the less-and-less-common "personal status update"; the second is a fascinating new study discussed in the Harvard Business Review that suggests the "skills gap" in the U.S. may not be due to a lack of availability worker training and STEM programs, but simply that businesses don't (or can't) pay enough in wages to incentivize workers to go get those skills; and the last is an examination of the growing juggernaut that is Vanguard, now taking in nearly $1B of AUM per day and showing no sign of stopping, due not only to its incredible economies of scale and strong brand, but also its unique structure of being owned by its shareholders and the favorable investor-centric incentives that has created for the company's management and leadership.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, which this week looks at Personal Capital's announcement that it raised another $75 million of venture capital (albeit from an established financial services firm) to expand its tech-augmented-humans advisory service, SigFig's announcement that it also raised venture capital this week ($40M, from another established financial services firm) as it pivots its B2C robo-advisor to become a B2B solution for advisors instead, and a look at a recent FINRA fine on an advisor which was triggered in part because he backdated and altered client notes in his CRM to obscure questionable recommendations.

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the big announcement that UBS is partnering with "robo-advisor" SigFig, which is notable both because it signifies yet another B2C robo-advisor that is pivoting to serve advisors instead, and more significantly because the hunger for better "robo" tools for advisors has now gone all the way to one of the top wirehouses (which may only further accelerate the trend).

From there, we have a number of practice management articles this week, from a look at how advisors can add "student loan planning" as a service to work with younger clients, to tips on how to get a better attendance at your client and prospect marketing events, what advisors should consider if they want to keep working in the financial planning industry but don't want to serve clients anymore, and how even tiny shifts in your advisory business can lead you far off track over time (which is why it's so important to periodically evaluate whether your business is where you want it to be, and if not to reset the path).

There are also several technical planning articles, including: tips on how to broach the long-term care insurance conversation with clients; a cautionary tale on the questionable "PIRAC" strategy to supercharge Roth contributions; how more flexible withdrawal rate strategies make it easier to take advantage of favorable return sequences in retirement (if and when they happen); and a discussion of the rules around the taxation of Social Security and planning strategies to consider.

We wrap up with three interesting articles: the first is a look at the recent research on "grit", which has been celebrated as the new predictive factor that determines success, but in reality may only be relevant in a very narrow set of circumstances; the second is a discussion of how the best techniques to help consumers change their behavior aren't about better disclosures, or education, or giving nudges, but about recognizing that the optimal tactic itself will vary depending on how engaged the consumer is with the decision-making process to begin with; and the last is a fascinating look at how the abundance of information (thanks to the internet and the accessibility of smartphones) is actually bringing an end to the "Information Age" and leading to the rise of the "Experience Age" where the greatest creation of value comes from having the experience to not only gather information but apply it... which means seniors who retire may be stepping out of the workforce at the exact moment that they could actually be contributing the most value of all.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, which this week provides coverage directly from the Envestnet Advisor Summit, including the new "Open ENV" open architecture platform, the announcement that Tamarac is adding integrations to Salesforce CRM, and how Envestnet is starting to capitalize on its Yodlee acquisition with new features for advisors.

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