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 SEC's announcement this week that it is taking a hard (and not very positive) look at RIAs that have outsourced their Chief Compliance Officer (CCO) role, questioning whether an external CCO can realistically be effective at creating a proper compliance culture. Also in the news this week is the announcement that both MoneyGuidePro and eMoney Advisor are soon launching new tools that will allow (new) clients to directly begin entering data into their financial plans, and a study by Deloitte highlighting that while Gen X and Gen Y wealth is on the rise, Baby Boomers will still be the biggest asset gathering opportunity over the next 15 years for AUM advisors.

From there, we have a few practice management articles this week, including: a look at how to hire for advisory firm job positions without scaring away top talent; the importance of having an effective onboarding process for new clients in the first 100 days to ensure they don't have "buyer's remorse" after deciding to hire you; and a look at the latest in financial advisor "Deals and Dealmaking" about the factors that are really driving advisory firm valuations in the marketplace (and why the largest firms virtually always command the biggest multiples).

We also have a couple of technical articles this week, from a look at the latest research on predicting which actively managed mutual funds really are likely to outperform, to a discussion of the role that annuities can and should (and shouldn't) play in retirement income plans, and the importance of making an appropriate assumption about the future equity risk premium for client portfolios (and how to estimate it).

We wrap up with three interesting articles: the first looks at how even though industry analysts all agree that the RIA segment of financial advisors is growing, there is significant disagreement about how many there actually are, with estimates varying from fewer than 6,000 RIAs really delivering personal financial advice to as many as 17,000+ firms with nearly 50,000 advisors; the second is a discussion of how technology and automation are becoming a threat for a wide range of professional services industries (including financial advisors), and how today's knowledge workers must adapt their valuation proposition to stay ahead; and the last is a discussion of the mega-trends driving the industry in the coming years, from regulatory reform to digital marketing to emerging new revenue models, and what advisors should consider to adapt their own firms to survive and thrive.

And be certain to read to the end and check out Bill Winterberg's Schwab IMPACT 2015 conference coverage, including interviews with Brian Shenson on Schwab's technology roadmap, and a 360-degree tour of "The Exchange", Schwab's massive conference exhibit hall!

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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 "robo" platform Financial Engines is acquired human-advisor-driven RIA The Mutual Fund Store for a whopping $560M, as Financial Engines acknowledges the growth limitations of lacking human advisors and the opportunity of having an in-person human presence with the clients advised on the firm's 401(k) platform.

From there, we have a few articles about looming regulatory reform, including predictions from Fi360's Blaine Aikin about how the Department of Labor's fiduciary proposal will unfold in the coming months (largely intact, but with a few concessions to the broker-dealer industry), a recent study from Morningstar suggesting that while the DOL's fiduciary proposal allows commissions to be paid to advisors who sign a best-interests contract with clients that in practice commissions may soon be dead, and a look at the latest warning shot from Senator Elizabeth Warren who is raising questions about the sales incentives that insurance companies pay out to annuity agents (particularly the non-cash compensation, like lavish trips for hitting big sales targets).

We also have a couple of technical articles this week, including a discussion of the U.S. Treasury's new MyRA accounts which came out of "beta" and into wide release this week, a good reminder that when crafting investment decisions based on views about the market and the economy that advisors should be wary not to make the strategies too complex, and a look at how dollar-cost-averaging is most likely to be an inferior investment strategy to just allocating a lump sum into the markets but may be appealing anyway from a risk-management perspective.

There are also a few practice management articles in this week's reading, including: tips to make your advisory firm more efficient operationally; how to develop a more standardized process for business development; and how to improve client engagement by utilizing a structured approach to crafting an agenda that is shared with each client in advance of a client meeting.

We wrap up with three interesting articles: the first is a review of the recent T3 Enterprise conference, where one of the big themes is whether all the recent FinTech merger and acquisition activity will cause even more companies to sell out and the already-acquired to lose their independent; the second is a look at a concerning new battle emerging between major banks and personal financial management dashboard Mint.com, as JP Morgan Chase and Wells Fargo recently cut off Mint's access to client bank accounts for a week in what may be a troubling "shot across the bow" to account aggregation providers; and the last is a look at how financial planning educational programs are beginning to adapt to advisory firm demands for better-trained students by incorporating courses on "softer" client communication skills and even sales and marketing classes, in addition to the usual content for technical competency.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including his coverage of the big news that Financial Engines has acquired The Mutual Fund Store, the T3 Enterprise conference, and two newly announced integrations - one between ShareFile and Smarsh to allow shared documents with clients to automatically be archived for compliance purposes, and the other between Quovo and Blueleaf.

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Enjoy the current installment of "weekend reading for financial planners" - this week’s edition kicks off with the huge news this week that the budget compromise in Congress will include a "crackdown" that ends the popular Social Security claiming strategies of File-and-Suspend and Restricted Application, with only a narrow period of "grandfathering" for retirees who planned to use these rules in the near future. Also in the news this week was a fresh industry benchmarking study finding that tech-savvy advisory firms are increasing their productivity lead over the rest, with the most tech-savvy firms having on average 40% more AUM and serving 55% more clients.

From there, we have a slew of practice management articles this week, including: the results from the recent FA Insight benchmarking study, finding that advisory firms who pay their employees more end out being more profitable thanks to more productive employees; a discussion of how important it is to have a rigorous hiring process to find the best employees (or outsource to a firm that can do it for you!); the importance (and difficulty) of advisors creating their own transition plan about how they will someday "gracefully" exit their advisory business; the story of how one advisory firm successfully transitioned from AUM to retainer fees; why it's important to change your sales process with prospective clients if you're not closing at least 30% of them; whether advisory firms that pay the ticket charges for trades in client portfolios are introducing untenable conflicts of interest; and the rules for most of the major brokerage/custodian firms about how they handle client losses if a clients' financial accounts are hacked.

We wrap up with three interesting articles: the first critiques some of the "convoluted logic" that brokerage firms and insurance companies have been putting forth as self-interested objections to the DOL's fiduciary proposal; the second looks at some of the "myths" that wirehouses have used to claim why they remain a superior place for their advisors to build a business, even as RIA market share grows and an increasing volume of brokers decide to break away; and the last is a great reminder about the value of establishing a "Mastermind Group" of peer advisors to help you get better ideas to improve your business, have a group to bounce your own ideas off of, and to provide a level of accountability to help ensure that you take the steps you have committed to in order to improve yourself.

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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 eMoney Advisor has developed an integration with MoneyGuidePro, allowing MGP users to adopt the eMx Select advisor dashboard and client PFM portal while continuing to use MoneyGuidePro for financial planning purposes. Also in the news this week was the separate launch of MoneyGuidePro’s new “MyMoneyGuide” digital marketing solution, and a new study from Cerulli suggesting that robo-advisors need to significantly accelerate their ongoing asset growth just to survive (and that other industry studies projecting robo-advisor growth may be unrealistically optimistic).

From there, we have several technical articles this week, from some guidance on how early retirees can aim to maximize their premium assistance tax credits when buying health insurance until they’re eligible for Medicare, to a discussion of why ETF adoption has still been slow in the retirement plan marketplace and what it will take for the trend to shift, and a new study from retirement researcher Wade Pfau looking at various forms of variable spending strategies in retirement and how they line up to each other.

We also have a number of practice management articles this week, including: the growth of technology solutions that allow financial advisors to engage with prospective clients through their website before ever meeting with the prospect; how video conferencing with clients has grown, with almost 70% of advisors using video tools to meet with at least a subset of their clients; and a review of the new financial planning software solution RightCapital.

We wrap up with three interesting articles: the first provides a great reminder (and cautionary tale) of how digitally distracted we’ve allowed ourselves to become, and the importance of periodically “unplugging” to ensure you take time to engage in some critical thinking and strategic planning for your business; the second is a discussion of the ongoing “breakaway broker” trend, which appears to be accelerating into larger and larger teams breaking away from wirehouses and insurance company broker-dealers; and the last raising the question of whether the core topic areas of financial planning are still too rooted in the financial planning products of old, and whether it’s time for financial planning to evolve to the next stage, which might even include coming up with a new or different name for what it may eventually become.

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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 a majority stake in mega-RIA Edelman Financial has been purchased by private equity firm Hellman & Friedman at a whopping $800M valuation, a market valuation that may have been upwards of 3X the $15B RIA's revenue, suggesting that the big money still sees a bright future for RIAs charging AUM fees. Also in the news this week was a final rule from FINRA that will require brokerage firms to include a link to FINRA's BrokerCheck system so consumers can more easily investigate the regulatory history of their brokers... though, sadly, the rule will not require brokers to provide consumers with a link directly to their actual BrokerCheck profile!

From there, we have a few technical planning articles this week, including: a discussion of the new DFA-based ETFs being offered by John Hancock and how they differ from DFA's traditional mutual funds; a new study raising the question of whether high-deductible health plans paired with health savings accounts are just leading consumers to skip out on important health care services (rather than becoming more savvy health care shoppers); guidance on why advisors might want to work with clients to reconstruct the total amount of non-deductible contributions into their IRAs if they haven't already been tracking it on Form 8606; and a recent Supreme Court ruling that opens the door for clients with income taxed by cities and counties across multiple states to file amended tax returns and claim a refund for the past 3 years.

We also have a couple of practice management articles, from a discussion of how the proposed DOL fiduciary rule could introduce significant paperwork and compliance obligations for RIAs as well as broker-dealer firms (for any RIA whose AUM fee is higher than the prospective client's former 401(k) plan), to a look at why it's so crucial to establish clear and consistent messaging about the services an advisory firm provides to its clients, and a reminder that if advisors are going to claim to be the "quarterback" of the client's financial team that they really need to step up and actually be the quarterback that proactively reaches out to and engages with a client's other advisors!

We wrap up with three interesting articles: the first raises the question of whether female-focused advisory firms, like Sallie Krawcheck's recent Ellevest initiative, are really likely to succeed, especially given that several prior high-profile initiatives in the past decade have all quietly folded (or whether the reality is that focused on "women" is still far to broad to be a relevant 'niche' solution); the second is a critique of the recent Elite Daily article that Millennials should just enjoy themselves in their 20s and not worry about savings, pointing out that our 20s are often the best time to work hard and set our careers on a path to success; and the last is a touching offering of financial advice from personal finance writer Morgan Housel to his newborn son, that provides good relevance reminders for anyone and everyone (regardless of age)!

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including why Winterberg is upbeat on the Morningstar acquisition of Total Rebalance Expert (tRx), the announcement that LogMeIn has acquired LastPass, and coverage of the recent LaserApp "AdvisorCon" conference.

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the big advisor #FinTech announcement that Morningstar is acquiring the rebalancing software platform Total Rebalance Expert (tRx). Also in the news this week was the launch of a new advocacy platform (courtesy of TD Ameritrade) to make it easier for advisors to submit comments to their Congresspeople regarding advisory industry regulatory issues, and a new study from Cerulli suggesting that a whopping 25% of wirehouse advisors could leave for independent channels in the next 4 years as post-financial-crisis retention deals start coming up for renewal.

From there, we have a few practice management articles this week, including a discussion of the growing number of younger advisors looking to buy out the advisory firms of retiring advisors, an excellent article by Angie Herbers on the growth barriers that advisory firms face as their size (and complexity) increases, and an explanation of what "distributions-in-guise" are and why the SEC is cracking down on them (highlighted by a recent $40M fine against investment adviser First Eagle Investment Management).

We also have a couple of technical planning articles this week, from a new research study out of the Center for Retirement Research finding that one of the primary reasons people lapse their long-term care insurance policies is due to cognitive decline (a sad reality, as those are also the people most likely to need the coverage!), to a look at the concept of the "tontine" and why it may soon make a comeback as a retirement income solution, and a discussion of how market valuations not only tend to mean revert to historical average valuations to but mean invert to historical valuation lows (which has significant implications for forward market returns from today's valuation levels!).

We wrap up with three interesting articles: the first looks at the world of financial advice in the U.K., which implemented advisor reforms two years ago that included an outright ban on all investment commissions, and is now starting to yield some data about whether low- and middle-income consumers really are abandoned in a no-commission world (the early data suggests they're not abandoned, but advisors may end out needing to charge fees higher than what consumers are willing to pay!); the second provides a good reminder than virtually any business model for advisors presents some conflicts around the advice delivered, as the easiest course of action is always to give advice that rewards the current business model; and the last is a critique from the editorial team at Investment News regarding the recent proposed NASAA model fee disclosure rules for broker-dealers, which ironically would increase transparency of "miscellaneous" broker-dealer fees but require no actual transparency regarding the (typically much larger) fees, commissions, and other compensation that consumers pay to the broker themselves!

And be certain to read through to the end, and check out Bill Winterberg's video coverage of the recent tRx Unplugged 2015 conference as well!

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Enjoy the current installment of "weekend reading for financial planners" - this week’s edition kicks off with the announcement of a new advisor leadership succession training program from Philip Palaveev of the Ensemble Practice, called G2 Leadership Summit, that will train advisors in groups of 50 to handle the real-world challenges of advisory firm ownership and management with a series of mock management scenarios. When viewed alongside a 'similar' training program launched by Schwab last year, the new program underscores a positive broader trend of leadership development efforts in the advisory world.

From there, we have a couple of practice management articles, including: a look at the lessons financial advisors can learn from how TurboTax did and did not impact CPAs (where self-service tax preparation software still only serves about 30% of households!); an interview with Dr. Brad Klontz about the rise of "financial therapy" and advisors incorporating behavior change management into their skillsets in serving clients; how to deal with a "ransomware" virus (and ideally how to avoid it in the first place!); how recent changes to the Facebook API may soon force advisors to adopt Facebook Business Pages instead of using their Personal Profiles for business; and an interview in the Journal of Financial Planning about how advisors can profitably serve Gen X and Gen Y clients but must abandon the AUM model to do so.

There are also a few technical financial planning articles this week, from a recent tax proposal to limit the transfer-for-value rules on life insurance that could create problems for clients transferring life insurance policies in/out/around of their business; a discussion of the common "myths" about bonds, such as the fact that back in the early 1980s bonds had a higher nominal yield but actually produced a lower after-tax after-inflation yield than they do today; and the recent Zahner court case that may help clear the way for short-term Medicaid-compliant annuity strategies.

We wrap up with three interesting articles: the first looks at how not all clients who ask "What do you think I should do?" to their advisor actually want advice about what to do (many are just looking for the advisor to validate their pre-existing idea, or to help them figure out their own solution); the second is a discussion of "The Experience Economy" and how advisors can avoid the commoditization of various parts of financial services by not just giving better service but crafting an experience around the process; and the last is an article by referral marketing expert Steve Wershing about how advisors calling their firms "boutique" may actually be inhibiting referrals, and that if the goal is to convey that the firm provides deep personalized service the best way to convey it is with examples of what the firm actually does, not by using the limiting "boutique" label!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with some notable industry news, including a proposal from the SEC to institute "swing pricing" for mutual funds in times of market stress, to a new series of cybersecurity exams as regulators continue to eye new rules for advisors to protect client data, to the latest series of studies on advisor adoption of social media finding that advisors, finally, are starting to see real business results from their persistent social media efforts.

From there, we have several articles about the ongoing debate of whether advisors should be switching to retainer fees from the currently popular AUM business model, which collectively raise the question of whether the AUM model is too conflicted and it's time to move on, or whether the reality is that advisors are simply succumbing to competitive pressures as the AUM model is no longer the differentiator it once was and too few advisors have really crafted a specialization or niche around which they can demonstrate a unique value proposition for clients.

We also have a couple of technical planning articles this week, including: a reminder of the issues to consider given the likelihood that many mutual funds will be making big capital gains distributions in December for the first time in years; a discussion of the recent proposal from one Fed governor that the Fed may use negative interest rates as a policy tool to stimulate the economy, and how the strategy would work; and a look at how one advisor aims to create alpha for clients not just by trying to pick the best investment managers but considering ways that combinations of investment managers can be more valuable than any one individually.

We wrap up with three interesting articles: the first is a new study from the Center for Retirement Research suggesting that our shift from Defined Benefit to Defined Contribution plans in recent decades may not have been nearly as damaging to retirement savers as previously believed, once accounting for the fact that savers into DC plans actually get the direct benefit of the market returns that grow the account balance over time; the second is another notable study, finding that when it comes to retirement savings, showing people how much their peers are saving can actually backfire, making them feel so far behind that they're actually discouraged and less likely to save; and the last is a fascinating discussion of how success as an advisor can create more problems than it solves as the burdens of the business increase, and how the best solution is to keep raising your fees, to the point that if you're not turning away at least 1/3rd of your new clients and 1/5th of your existing clients every year, you may not be charging enough.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including a fresh push on cybersecurity from the SEC (including a $75k fine against an RIA for not creating a cybersecurity policy), how advisors should handle a "ransomware" demand if their own computers are hacked, and the launch of a new financial planning software provider RightCapital.

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Enjoy the current installment of "weekend reading for financial planners" - this week’s edition kicks off with the recent news that robo-advisor Betterment is now expanding into the world of 401(k) plans, an environment that some argue is especially ripe for technology disruption but due to deeply entrenched players may be especially challenging for Betterment to penetrate at all.

From there, we have a couple of practice management articles, including: a discussion of how advisors can build client loyalty; why asking for referrals is a poor strategy to actually get more referrals; how some advisors are working to build proactive relationships with attorneys to generate referrals; and the importance of hiring people with complementary skillsets to really build a successful advisory firm.

There are also a number of more technical financial planning and investment articles this week, from a look at the rise of DFA funds (now the #10 mutual fund family with almost $300B of AUM!), to a look at some of the recent research on active management suggesting that the search for good active managers may not be as impossible as critics suggest, to a discussion of how some advisors are beginning to do more planning around cash flow for clients, and a research article on how to cut through the wide range of various retirement research studies to figure out which approach is most appropriate for a particular client.

We wrap up with three interesting articles: the first looks at how curiosity is becoming one of the key traits for successful leadership (as it drives leaders to always be seeking new opportunities in today’s ever-changing world); the second raises the question of whether the brokerage industry’s objections to the DoL fiduciary rule are really because they can’t serve small investors, or whether they may be struggling to do so simply because they are operating outdated business models using outdated technology and have failed to stay current; and the last makes the good point that if financial planners really believe that the value of financial planning is more than just delivering technical information and involves providing clients with an outside and objective perspective to reach their goals, that perhaps more advisors should be hiring advisors for themselves, too.

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the latest industry data showing that mergers and acquisitions of financial advisory firms is running at a record pace for 2015, both in terms of the number and the size of advisory firms. Also in the news this week was an interesting new study showing that the bulk of current ETF growth is being driven by independent RIAs, especially firms with over $500M of AUM, that have collectively added half a trillion dollars to ETFs in just the last 12 months!

From there, we have a few practice management articles, particularly focused around the 'necessary' topic of compliance, from a look at the kinds of 'boilerplate' provisions that really are important to include in an advisory agreement with clients, to a discussion of the recent Notice of Proposed Rulemaking from the Treasury's FinCEN division that may require SEC-registered investment advisers to adopt Anti-Money Laundering (AML) compliance rules, to a look at a large RIA that recently received a huge fine from the SEC not because it had significant compliance breaches that harmed clients but because the firm failed to engage in their internal compliance oversight processes necessary to know that employees were acting properly (in other words, it's not enough to be compliant, you need a process to demonstrate that you've confirmed you're being compliant!).

We also have a couple of technical planning articles this week, including: a look at Qualified Longevity Annuity Contracts (QLACs) that were heralded last year as a savior for retirees but thus far have seen very little adoption; recent new research from Wade Pfau, finding that given the impact of investment costs and overpriced stock and bond markets the "safe" withdrawal rate might be under 2%(!); a good article about the key differences between Designated Roth Accounts (the Roth version of an employer retirement plan) and a Roth IRA; and a discussion of the research of Dr. Brigitte Madrian, whose research 15 years ago on the power of automatic enrollment of employer retirement plans indirectly spawned the explosion of the target-date fund industry.

We wrap up with three interesting articles: the first raises the question of whether it even makes sense for financial advisors to retire at all, given how rewarding financial planning is both emotionally (given the deep client relationships) and financially (where it often pays more to keep an advisory firm for several years rather than sell it); the second article looks at the rollout of a new post-CFP designation, called the "Certified Financial Transitionist", originally designed to help train advisors to work with clients who experience "Sudden Money" events, but arguably relevant for virtually any/all advisors (after all, doesn't virtually every client come to us because they need help with some kind of transition!?); and the last raises the question of whether it's finally time for financial planning to shift from an industry where "best practices" are often based on little more than a combined of tradition, intuition, and the school of hard knocks, to a profession where true best practices are established via thorough research and the application of the scientific method to cultivate an "evidence-based" approach to effective financial planning.

And be certain to check out the latest Bill Winterberg video at the end - the latest segment of his FPPad Tech Tour video series for 2015, featuring an interview with yours-truly where Bill reveals, for the first time ever on video, how many blue shirts are actually hanging in my closet!

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