Archives Of Weekend Reading For Financial Planners

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a great exploration of why, in these times of market volatility, investors continue to give such credence to pessimists and view them as sages.

Continuing the theme of recent market volatility, other articles this week include: a reminder of the ways to talk with clients about market volatility and reassure them; the latest investment commentary from Howard Marks of Oaktree about the dynamics of investor psychology; a caution from John Hussman that while market volatility has picked up the leading economic indicators are also turning down (and the combination of both can be especially concerning); and a reminder of tax planning opportunities that emerge in a down market, from tax loss harvesting to Roth conversions of IRAs while they're down to Roth recharacterizations of last year's conversions that have declined in value since the original conversion.

We also have a couple of practice management articles this week, from a look at why more clients don't provide referrals (hint: it's not that they don't want to, but that they're not sure how to describe you or to whom), to a look at the ongoing rise of salary-based advisor compensation models and whether they can be successful without fewer business development incentives, a discussion of the importance of engaging both members of a couple (as most advisory firms are at more risk to lose assets when a widow leaves than when the money flows to the next generation), and an important reminder that the SEC is scrutinizing the Chief Compliance Officer role in advisory firms (and warning that it should not be fully outsourced)!

We wrap up with three interesting articles: the first is a review of a recent SEC report on the credit rating agencies, which finds that they are still engaging in many of the questionable practices that led up to the 2008 financial crisis; the second is a discussion of Bitcoin, which appears to be in the midst of a systematic collapse as it reaches capacity limits (and is controlled by a small number of influences who are preventing the capacity from expanding, for their own financial gain); and the last is a great reminder that we all need to say "no" more often, not just to avoid over-committing ourselves in general, but because saying "no" more often ensures that you'll have the time and capacity to say "yes" when it really matters.

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 mega asset manager Invesco has bought "robo-advisor-for-advisors" platform Jemstep, in yet another example of an investment company acquiring a robo technology platform to use as a distribution channel for advisors.

From there, we have a number of technical financial planning articles, including: a look at why most retirees really go broke (hint: despite our focus on Monte Carlo analysis, it's not actually from market volatility, but spending shocks instead); how to proactively use the Roth recharacterization rules for various Roth conversion strategies; a discussion of recent research examining why corporate bonds don't seem to provide the risk premium over government bonds that would be expected given their default risk; and a look at the ongoing rise in various "values-based investing" approaches from SRI and ESG to impact investing (to the point that even regulators and the IRS are making it easier to pursue such strategies).

We also have a few practice management articles this week, from the ongoing decline of client referrals (as affluent clients seem to be increasingly concerned about the "social risk" of making a referral), to a reminder of the importance of updating your LLC operating agreement for your advisory firm (or more importantly, creating one if your LLC doesn't have one already!), the liability issues involved if an advisory firm employee makes a trading mistake, and some reminders of what not to do as you complete the annual Form ADV update process in the coming weeks.

We wrap up with three interesting articles, all focused on the topic of personal productivity: the first is a look at why you might consider getting a personal assistant to help you be more productive in business (even if you have to pay for it out of your own pocket); the second is a reminder of how helpful it can be to create a structured weekly routine for yourself (where client meetings are only scheduled on certain days of the week); and the last is a powerful reminder of the difference between just being "busy" (even if you're very efficient at getting things done!), and truly being productive.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including a discussion of the Invesco acquisition of robo-advisor Jemstep, social media platform Snapchat is rumored to be working on its own robo-advisor offering, BBVA Compass is announced as the first financial services firm to be linked up to FutureAdvisor since Blackrock acquired it, and Wealthfront announced its own Portfolio Review service to analyze fees and performance of a prospect's outside portfolios in an effort to try to amplify its own lead generation.

Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the latest release of FINRA's regulatory and exam priorities in 2016, where the organization has indicated its leading target is "broker-dealer culture" around compliance and the way that conflicts of interest are handled.

From there, we have several practice management articles this week, including: the ongoing rise of social media adoption by advisors (and that the highest adoption is amongst the most financially successful advisors); how despite the rise of social media, "old-fashioned" email remains a remarkably effective marketing strategy; tips on how to manage advisory firm staff members, particularly regarding setting and then monitoring/managing employee goals; a round-up review by advisor tech guru Joel Bruckenstein of leading RIA custodian technology platforms including Fidelity, TD Ameritrade, and LPL; and an article providing a great reminder that the real key to time management is not getting more efficient about what you do but getting better about deciding what not to do in the first place.

We also have a couple of technical articles this week, from a look at how "stress testing" portfolios with tools like HiddenLevers is becoming a popular alternative to analyzing traditional portfolio risk metrics like standard deviation or value-at-risk (VaR), to a discussion of how the structuring of irrevocable trusts has changed in recent years (from the separation of administrative and investment trustees to the rise of distribution committees and trust protectors), and a review of the data on what the true odds really are that a 65-year-old will need long-term care.

We wrap up with three interesting articles: the first is a discussion of the rising battle between banks and other financial institutions, and the account aggregation and personal financial management tools that draw upon and use that data (and potentially overload bank servers in the process); the second is a look at how economics research has been undergoing a significant shift in the past 30 years, from research being dominated by pure theory to increasingly focusing on real-world empirical data (supported by the availability of the personal computer and the rise of the internet and its data accessibility); and the last is a great reminder of the perspective that can be gained when a financial planner actually becomes a financial planning client, and sees the financial planning experience (and how it can be improved) from the other side of the table.

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 scathing investigative report from Ann Marsh at Financial Planning magazine, highlighting how brokers guilty of consumer harm are obtaining settlements in FINRA arbitration and then getting their records expunged on the basis of not being found guilty (due to pre-empting a guilty finding with the settlement!). Also in the news this week was an SEC report reviewing the ETF "flash crash" from August 24th, which disturbingly finds the problem was so widespread that it's still not clear why it happened, nor is it clear what needs be done to prevent it from occurring again in the future.

From there, we have a few practice management articles this week, including: a Bob Veres discussion of whether the typical advisory firm's efforts to impress prospective clients are actually just intimidating them; the first of what will likely be many stories looking at how the Department of Labor fiduciary rule may change the industry; a controversial suggestion from practice management guru Mark Tibergien that perhaps the industry's "talent shortage" problem is actually a shortage of skilled advisory firm management capable of attracting, developing, and retaining Millennial talent; and a profile of Live Oak Bank, which has burst onto the scene in recent years to become one of the primary lenders financing advisory firm succession plans, with more than $250M of loans funded since 2013.

We also have a couple of technical articles this week, from a look at how the recent spending legislation's extension of the solar investment tax credit may spur an explosive boom in solar energy, a discussion of how traditional portfolio metrics fail to capture the benefits of downside portfolio protection (and an alternative way to better measure the impact), and an analysis of why most people should actually consider funding an HSA first for retirement (in some cases even before a 401(k) plan with a match) given that virtually all retirees will have at least some medical expenses in retirement which can be funded tax-free from the HSA.

We wrap up with three interesting articles: the first is an interview with John Thiel, the head of wealth management at Merrill Lynch, who discusses how the firm is preparing itself for the looming Department of Labor fiduciary rule (and that it would rather comply with a fiduciary obligation to clients than walk away from $2 trillion of AUM); the second is a nice turn-of-the-new-year reminder that it's a good time to de-clutter (whether it's your desk, your business, or your clients); and the last is a Wall Street Journal highlighting recent research into consumer spending behaviors, and why the traditional advice to just budget and monitor spending is so often ineffective in practice.

Enjoy the reading, and Happy New Year!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a newly proposed SEC rule to curtail the use of derivatives in mutual funds and ETFs... which could potentially impact a wide range of funds, from those using derivatives to hedge risk to those using derivatives to 'leverage' and amplify risk (e.g., 3X index funds). Also in the news this week is a discussion that the recent surge of broker-dealers for sale may just be the onset of an even bigger wave of selling for broker-dealers unprepared for the looming Department of Labor fiduciary rule and the ways it may reshape the world of financial advice.

From there, we have a few technical financial planning articles this week, from a look of how advisors can work with clients to "plan" for black swan events, to a discussion of whether retirement planning is akin to chaos theory (which implies our models aren't nearly as accurate as our probabilities suggest), to a recent study finding that the investment performance of those with defined contribution plans is actually remarkably close to defined benefits plans after all (where the primary difference is just that DC plans tend to be smaller and have higher costs), and another new study finding that giving Social Security beneficiaries their delayed retirement credits as a(n actually fair) lump sum may be a better incentive to encourage them to continue working (as opposed to just giving higher retirement benefits for waiting).

We also have a couple of practice management articles this week, including: a template on how to create content for your advisor blog by talking (constructively and anonymously) about the mistakes your clients make (which should give an endless supply of ideas to write about!); a review of the new (to the US) financial planning software platform Figlo (from Advicent, the company that also makes Financial Profiles and NaviPlan); and the last is a profile of physician-turned-financial-planner Carolyn McClanahan, and the success of her retainer-based financial planning practice that serves at the intersection of clients' financial and health-care-planning issues.

We wrap up with three interesting articles: the first is a Journal of Financial Planning contribution looking at the convergence between the research on Positive Psychology, and the evolution of financial planning, suggesting that ultimately the financial planning ideal may be the intersection between the two (the world of "positive financial planning" that aims to help clients use money as a tool to improve their psychological well-being); the second discusses a coming new book called "Radical Candor" that looks at how managers and business owners can help their businesses excel by giving the right kind of guidance to employees (and encouraging an environment where they can give that constructive feedback to each other as well); and the last is a look at how the accelerating pace of regulatory change, from the DoL fiduciary rule to the possibility the SEC will take up its own fiduciary rule in the coming years, and the CFP Board's own newly announced Commission to update its Standards of Professional Conduct, suggests that financial planning may finally be on the cusp of emerging as a true profession!

Enjoy the 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 of this week's "Tax Extenders" legislation that not only reinstated popular provisions like Qualified Charitable Distributions from IRAs but makes most of them permanent so advisors and their clients won't be in tax-extender-limbo in the future.

Also in the news this week was the announcement from the CFP Board that it is beginning a process of updating its Standards of Professional Conduct, including both public forums and a public comment period scheduled in 2016, to address both any appropriate updates given the changing regulatory environment, and also perhaps its controversial "fee-only" compensation definitions. And given the outcome of this week's legislation - which did not include a debated provision to limit the Department of Labor's fiduciary rule next year - there's a discussion of what the final rule will likely include, as it is expected to be released in early 2016.

From there, we have a number of technical financial planning articles, including: a discussion of whether the Barclays Aggregate Bond Index is "broken" as a bond benchmark; a critique of a recent Wade Pfau study suggesting that whole life might actually be a better retirement accumulation vehicle than buying term and investing the rest; a look at how "positive feedback loops" (that amplify negative outcomes) can occur in retirement, especially for those who lack spending flexibility; tips for financial aid filings, from FAFSA to CSS/PROFILE, as the annual financial aid process gets into full swing; reminders of common IRA distribution and RMD-related mistakes to avoid; and a discussion of how for most clients still working, their most valuable asset to "manage" is not their retirement portfolio or their real estate, but their own individual earnings ability (which means their best path to greater wealth is not through earning better investment returns but getting an increase in their salary/income from working!).

We wrap up with three interesting articles: the first is an Investment News feature on the financial advisory industry's ongoing diversity problem (where only 20% of financial advisors are African-American, Hispanic/Latino, or Asian, while even financial analysts and CPAs have a 27% minority representation); the second is a Harvard Business Review article about disruptive innovation and what it really is (and is not), and why Uber is not actually true disruption at all (but robo-advisors might be); and the last is a fascinating look at the ongoing demographics "problem" emerging in both the U.S. and developed nations around the world, that may explain everything from sluggish U.S. growth to low interest rates, and why the dynamic may not change anytime soon.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, featuring his 6th annual take on the "Best Technology Of 2015" in the categories of Best Back-Office Technology, Best Clint-Facing Technology, and the Best Overall Innovation of the Year!

Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the announcement of the CFP Board's new Chair-Elect Blaine Aikin, a long-standing CFP certificant who has spent the past decade not working as a practitioner but in a leadership position with fiduciary training program Fi360, and raising the question of whether it's a problem for the CFP Board to have a "non-practitioner" Chair, or a positive for it to have a fiduciary leader at a time of potentially significant fiduciary regulatory change (with the Department of Labor fiduciary rule anticipated in early 2016). Also in the news this week was the decision of high-yield bond fund Third Avenue Focused Credit to not only shut down, but suspend redemptions to 'ensure it can liquidate in an orderly manner', raising both concerns about how severe the stress in the high-yield bond market really is, and questions of whether more bond funds may soon limit their redemptions given the illiquidity of their underlying bond holdings as well.

From there, we have a few technical financial planning articles this week, from a discussion of whether advisors need to give a fresh look at the uses of reverse mortgages, to year-end planning strategies to optimize FAFSA reporting for those looking to qualify for financial aid, and a review of the rules and requirements for clients to hold investments of gold within an IRA and avoid disqualifying the account (given that IRAs normally cannot invest in "collectibles", which includes some forms of gold).

We also have a couple of practice management articles this week, including: the value of adding a virtual meeting with clients between the data-gathering process and the plan presentation meeting, to review and reaffirm the data and make sure it's accurate before crafting recommendations; how defining a niche for an advisor is about more than just targeting a certain level of wealth; how the real challenge for succession planning is not actually selling the business, but transitioning the founder's role from advisor to business leader; and some tips for young advisors looking to be a successor about how best to prepare themselves for the transition from their end.

We wrap up with three interesting articles: the first is a Reuters investigative report about whether the explosion of share buyback activity is no longer just enhancing returns for investors but may be overdone to the point of threatening American innovation and even exacerbating income inequality; the second is a discussion of upcoming regulatory trends in 2016, including not only a looming DoL fiduciary rule, but also new anti-money laundering rules for RIAs, an expansion to Form ADV, and a new regulatory fight about whether the SEC should use third-party reviewers to increase the pace of RIA exams; and the last is commentary for RIABiz founder Brooke Southall about whether the vendors serving advisors (particular the RIA community) today are still operating too much like the 'traditional' Wall Street firms that advisors are increasingly running away from.

Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the latest 2015 Financial Advisor Tech Survey from Financial Planning magazine, highlighting the latest in advisor technology trends, from the most popular CRM and financial planning software, to which advisor channels (and age demographics) are adopting new technology the fastest. Also in the news this week is another discussion of the Vanguard whistleblower suit, suggesting that Vanguard really is facing the possibility of being forced to increase its internal pricing by as much as a factor of 4X (and potentially pay billions of dollars of "evaded" taxes as well).

From there, we have a few technical financial planning articles, including: Social Security planning tips from Larry Kotlikoff in the aftermath of the recent Bipartisan Budget Act crackdown on File-and-Suspend and Restricted Application; a summary of the upcoming rules changes next year on money market funds, including which types may face a 2% redemption fee and have a floating (not-fixed-at-$1) NAV; a discussion of looming Medicare changes, from rising healthcare inflation impacting premiums, to new income threshold for the Medicare surtaxes in 2018 and changes to Medigap supplemental policies in 2020; and a look at "swap powers" and their relevance in income and estate tax planning (especially to get a step-up in basis on certain appreciated assets) for various types of irrevocable grantor trusts.

We also have a couple of practice management articles this week, from a review of the latest technology enhancements at broker-dealers like Cambridge, Commonwealth, and LPL, to a look at how advisory firms are adopting virtual part-time paraplanners and interns, and a discussion of the "pricing trap" that many advisory firms are facing as growth rates slow and firms (wrongly?) try to cut prices to compete instead of getting more focused on really crafting a unique value proposition for a clear target clientele (because in the future, it's really going to matter!).

We wrap up with three interesting articles: the first is a look at the recent FINRA initiative to reshape the Series 7 exam and/or to introduce a new "general knowledge" exam, which in turn has kicked off questions about whether the Series exams are even still relevant in today's financial advisor (and not-stockbrokering-centric) world; the second is a discussion of Facebook founder Mark Zuckerberg's announcement to donate 99% of his Facebook stock (about $45B) for philanthropic purposes, but to not use a private foundation and instead contribute to a for-profit LLC instead (possibly a newly emerging philanthropic trend?); and the last is a touching discussion about the "real" value of the home, as told by the Wall Street Journal's Jason Zweig when he had to move his 87-year-old mother out of the family home that they had owned for more than 50 years.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, featuring his own take on Financial Planning magazine's 2015 Advisor Technology Survey results, from what is still poor adoption of advisor CRM (the most common advisor CRM is "none"!?), but rising technology spending budgets as advisors look to step up in the future!

Enjoy the 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 now Fidelity is throwing its hat into the "robo" ring, with a new automated investment advice solution called "Fidelity Go" that, like Schwab's own effort, will function as a distribution channel for Fidelity's own proprietary mutual funds for a portion of the investment assets. Also in the news this week was a settlement between Vanguard and the state of Texas driven by a whistleblower allegation that the company may be setting its costs at a below-market rate as a tax avoidance scheme (and raising the question of whether further tax-related lawsuits may eventually force Vanguard to raise its fees).

From there, we have a few technical financial planning articles this week, from a look at the ongoing rise of Deferred Income Annuities (also known as Longevity Annuities) and why advisors should consider them, to a discussion of why factor investing strategies (e.g., a value-tilt or a small-cap tilt) continue to persist despite the fact they are "known" and theoretically should be arbitraged away, a look at the "investment portfolio of the future" as advisors increasingly shift to "core" investing with index funds and "satellite" positions with an ever-widening range of alternative investments, and discussion of a recent EBRI study that found while retirement spending declines by more than 20% for nearly 1/3rd of retirees in the first 6 years of retirement, a material number of retirees increase their spending early in retirement (and not just those who are affluent).

We also have a couple of practice management articles this week, including: the latest Cerulli data, which finds that despite prior predictions, the number of financial advisors actually increases last year (albeit by just 1.1%) as large firms increasingly hire junior advisors to deepen their teams and formulate succession plans; a look at the importance of really asking your clients what they truly value, recognizing that what we think clients appreciate may not really be what they value most; and the last looking at how financial planning may change in the coming decade as technology increasingly impacts the way advisors do business and serve clients.

We wrap up with three interesting articles: the first looks at how the coming Department of Labor fiduciary standard could actually become a disruptive threat to RIAs (even as it benefits consumers), as RIAs simultaneously lose their differentiating fiduciary factor and face an onslaught of new competition from sales-oriented fiduciary advisors who may prove more capable at gathering clients and assets; the second is a cautionary note from former SEC Investment Management Division director Norm Champ about the problems that may arise if the SEC proceeds with its anticipated proposal to outsource RIA exams to a third-party examiner; and the last raises the interesting question of whether the entire retirement paradigm of "work now for financial freedom later" is the wrong approach, and whether a series of periods of work followed by periods of "mini-retirement" may ultimately be the more fulfilling "retirement" approach of the future.

Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the launch of the CFP Board's new Center for Financial Planning, which will pursue the laudable goals of attracting more young financial planners to the profession, improving advisor diversity, and lanuching a new academic journal for financial planning research, but in the process is increasingly putting the CFP Board into conflict with the FPA with overlapping membership initiatives. At the same time, the CFP Board also announced this week that for the first time in a long time, the average age of CFP certificants has begun to decline, and dipped below age 50 this year, as the organization's ongoing efforts to attract young new talent is beginning to show signs of progress.

From there, we have a few technical financial planning articles this week, including: the final announcement that Medicare Part B premiums will rise "only" 16% next year for those not eligible for Hold Harmless (albeit with a $3/year surcharge to last the next decade or so); a look from retirement researcher Wade Pfau at how Social Security compares to investment alternatives (particularly if you want to spend down your portfolio while delaying Social Security benefits); an announcement from the Department of Labor to expand state-run IRAs and employer retirement plans (including the potential for automatic enrollment with payroll deduction); the news that next February the NYSE will stop allowing Stop orders and Good-Til-Canceled orders (in acknowledgement that investors are improperly using them as risk management tools when they're not); and a look at the new Actuarial Guideline 49 that rolled out this fall to limit the "over"projections of indexed universal life policies (and whether the AG49 rules still don't go far enough to limit overly optimistic policy illustrations).

We also have a couple of practice management articles this week, from the importance of hiring an Operations Manager or Chief Operating Officer for your advisory firm if you're finding yourself at/past capacity (and especially if client service and/or business growth are starting to suffer!), to a discussion of the pros and cons of trying to hire a "permanent" financial planning associate who is not seeking a career track of personal advancement, and a look at how a typical advisor "Mastermind" or group operates (and how to take the steps of forming your own).

We wrap up with three interesting articles: the first explores the research of how we typically judge people (including ourselves) based on how hard the person works and how much time they put in, even though the reality is that the most creative and productive people usually limit how much time they put in (otherwise the brain just gets too tired!); the second is a look at the new Gino Wickman book "Rocket Fuel" which highlights how the most successful businesses are the ones that pair together a visionary and an "integrator" who is capable to putting the visionary's ideas into practice; and the last is a great reminder that just as fitness tracking devices like the Fitbit are successful because they take long-term health goals and break them down into daily bites, so too must advisors break their long-term goals down into daily bite-sized activities that can be tracked and measured to help reinforce success (and it's not a bad idea to try with clients, too!).

Enjoy the reading!

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