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 big announcement that Charles Schwab is entering the "robo-advisor" fray, with an offering called "Schwab Intelligent Portfolios" that will be available for consumers (and shortly thereafter as a white-labeled version for RIAs on the Schwab platform), and will be free to use with only a $5,000 minimum (and automated tax-loss harvesting starting at $50,000).

From there, we have a number of practice management and technology articles this week, including a discussion of what to look for when merging smaller advisory practices into your own firm (from the perspective of someone who's done several such deals, both successful and not), tips for advisors who want to get "cyber liability" insurance to protect against the risk of cyber attacks and wire fraud, guidance on how to form a client advisory board, and a look at how an online chat tool on your website can help engage visitors and turn them into genuine client prospects.

We also have a few more technical articles this week, from a Morningstar analysis of the rise of passive investing that finds predictions that consumers are abandoning active management for low-cost indexing may be overstated, to a look at why it's so significant that the Treasury and IRS gave the green light to deferred income annuities inside target-date funds, an analysis of consumer borrowing options that find borrowing from a 401(k) loan may be quite underrated (at least relative to the other borrowing options typically available to consumers), and a good summary of basic strategies and resources to families who haven't saved enough (or anything) for college and are now trying to figure out what to do as the kids prepare to apply.

We wrap up with three interesting articles: the first looks at how not only do many advisors have a problem branding themselves, but that the entire financial planning profession has a "branding problem" due to a lack of clear vision about its fundamental role and purpose in society; the second is a critique by GMO's James Montier of the whole concept of managing companies by trying to "maximize shareholder value" and how the incentives that have been created are actually damaging (long-term) shareholder value; and the last is a fascinating look at how too much positive thinking can actually be damaging to achieving goals, and that balancing optimism with realism is crucial to obtain the motivation necessary to pursue the goal... which has some notable implications for how we as financial planners guide our clients towards retirement! Enjoy the reading!

Read More...

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a new study from the Financial Planning Coalition that finds barely 1/3rd of those advisors who hold themselves out as "financial planners" are actually doing financial planning, and that therefore regulators need to be more proactive in overseeing financial planners and how they hold out to the public to reduce the confusion. Also included in this week's news was a study from Cerulli Associates which finds that while the wirehouses have taken criticism for focusing on high net worth clientele, they really are providing the most comprehensive range of services to those HNW clients, beyond advisors at independent broker-dealers or RIAs.

From there, we have a number of practice management and technology articles this week, including a look at what advisors need to consider when adopting "e-signatures" for clients who want to sign documents electronically, a fascinating look at the challenges that large RIAs (e.g., $1B+) are facing in their efforts to grow to $5B and beyond (and what they need to do to take the next step), a review of the latest release of Redtail CRM, and a discussion of how InStream Solutions is transforming financial planning software from just a tool to analyze client situations to a firmwide tool to manage and oversee what advisors are recommending across all their clients.

We also have a few more technical articles this week, from a review of what "collaborative divorce" is all about and why divorcing clients should consider it (and also how advisors can actually do work as a "financial neutral" in a collaborative divorce specialist!), a study looking at how retirees spend their time in retirement (finding that most of their time is spent doing inexpensive leisure activities, and household activities that could actually reduce their cost of living in retirement!), and a great discussion of how young adults have so much job instability that perhaps they should be invested in an especially conservative manner with their portfolios and not aggressively as the conventional wisdom suggests.

We wrap up with three interesting articles: the first looks at the rising number of CPAs entering financial planning, and whether they could help fill the dearth of young talent in the profession; the second examines the latest benchmarking studies for financial advisors, and suggests that advisors may be too complacent about the potential impact the next bear market could have (and that they're underestimating how reliant they've become on market growth to sustain their current growth rates); and the last looks at how even though all the buzz of the industry is about the threat of "robo-advisors" that the real trend that is currently underway has been the rise of "phono-advisors" - mega financial services firms delivered financial planning through call centers that already have more than 100(!) times the AUM of today's robo-advisor platforms!

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including a recently announced Microsoft vulnerability (don't open any suspicious emails with Powerpoint presentations attached!), and a look at advisor tech consulting firms now offering cybersecurity audits for advisors to identify any risks to client data! Enjoy the reading!

Read More...

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the big announcement that the "robo-advisor" Betterment has launched an Institutional platform that will partner with Fidelity to offer a "robo" solution for advisors to use with their (smaller) clients.

From there, we have a number of practice management articles this week, including a look at new compensation models being explored by advisors who are looking to get away from the AUM model (or serving clients who simply don't have the assets to work on an AUM basis in the first place), examinations from two recent benchmarking studies about what top performing firms do that are different than the rest of the pack (including differentiating themselves with niches and specialization to support their pricing, and using "non-professional" support staff to enhance the productivity of their lead advisors), and an interesting article by Bob Veres looking at the wide range of changes being recommended to advisors and sharing his own take about what is and is not really important for advisors to focus on right now.

We also have a few more technical articles this week, from a review of target-date funds finding that many are becoming increasingly aggressive and equity-centric in the current low bond yield environment (with one fund as high as 94% in equities for someone in their 40s!), to an interesting profile of economic and retirement policy researcher Jeffrey Brown (who may not be familiar to most advisors but probably should be!), to an interview with Nobel price winner Bill Sharpe who has been increasingly focusing his current research time on the complex challenge of retirement planning. There's also an article looking at how, despite all the ongoing fears, health care inflation for seniors appears to be slowing, as the latest announcement of Medicare Part B premiums will be $104.90/month again for the third year in a row.

We wrap up with three interesting articles: the first is a comparison of popular risk tolerance tools FinaMetrica and Riskalyze, finding that one seems to be far better as a sales and prospecting tool for clients but the other may be more defensible in court; the second provides some tips on efficiency and productivity based on the latest research of behavioral finance expert Dan Ariely; and the last is a profile of venture capitalist and technology innovator Marc Andreesen, who created the first popular web browser and backed Twitter, Facebook, and AirBnB, and now sees opportunities for similar disruption in financial services (especially around how big banks charge for facilitating credit card and banking transactions, as "crypocurrencies" like Bitcoin gain momentum).

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including his take on the recent announcement that Betterment Institutional will partner with Fidelity, and how amidst the SEC's push for better cybersecurity with advisors they lost 200 of their own laptops with potential client data (oops!)! Enjoy the reading!

Read More...

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the latest in the ongoing saga of the CFP Board's compensation disclosure woes; the latest news is that another CFP certificant was accused of violating the fee-only rules by also owning an insurance company, but has avoided a CFP Board investigation by dropping his CFP marks, "resolving" the issue but raising questions about how this was even possible (as it violates the CFP Board's own Terms of Service to drop the CFP marks with a pending disciplinary issue) and potentially setting a dangerous precedent that encourages other CFP certificants to simply break the rules and then drop their marks if a complaint is ever filed so they can avoid any public discipline.

From there, we have a few practice management articles this week, including one article that looks at tactics firms are taking to attract talent given the shortage of young advisors coming into the business, another that reviews Fidelity's recent "Recruiting Redefined" study that finds the greatest challenge for bringing in talented young advisors may be the product-sales-centric focus of much of the industry and the fact that most college students aren't even aware of a potential career as a comprehensive financial planner, a third article that provides a good reminder of how establishing a succession plan with an existing staff member can avoid communications breakdowns that damage the firm, and a final article that explores how for firms that have focused on holistic advice and not "sales" the challenge now may be on to shift the firm's culture to promote more business development or face declining growth rates as the founders eventually wind down their own efforts.

We also have a few more technical articles this week, including a tale of woe from the tax court about how not do try to invest in real estate using your IRA, an article about the unique situations where it actually does make sense for a married couple to file tax returns separately and not jointly, a discussion of the importance of not just digital asset planning in general but especially for small businesses where digital assets can have significant value, and a nice retrospective look from the Journal of Financial Planning at the so-called "4% rule" as this month is the 20th anniversary of Bengen's seminal research article.

We wrap up with three interesting articles: the first looks at the rise of "prize-linked savings accounts" that pair together small savings accounts or CDs with a "bonus" lottery ticket for a small monthly prize to encourage savings behavior (as even if the person doesn't win, they still saved!); the second looks at the rise of patent trolls in the context of online financial planning and investment advisory tools and whether the "robo-advisors" may face a patent challenge; and the last discusses why a fiduciary standard is crucial to clean up the industry, as when standards are otherwise too low a few "bad actors" can actually drive away the good and legitimate businesses to the long-term detriment of consumers.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including the announcement that Schwab may soon be rolling out a "robo-advisor" solution of its own (that would potentially be available to advisors using their platform!), a new digital estate planning assistance tool, and more. Enjoy the reading!

Read More...

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with some regulatory announcements, including ongoing efforts by FINRA to implement its "CARDS" analytical tool that would monitor investment activity in clients' accounts across the entire industry looking for inappropriate broker trades and recommendations, and a discussion of the potential paths the SEC may soon take to update the "accredited investor" definitions for the first time since 1982 (and raising the question of whether income and net worth are even appropriate measures to determine an accredited investor in the first place).

From there, we have a few practice management articles this week, including a prediction that the rise of the "mega-advisor" firm may soon present challenges for small independent advisors trying to compete, coverage of the recent buzz at the Deals and Dealmakers Summit that the amount of M&A activity in the industry may be 20X as much as widely reported, and a good discussion of what it really means for an advisory firm to have a true CEO (not just a founder who puts the title on their business card).

We also have a few more technical articles this week, from a New York regulator looking into whether Equity-Indexed Universal Life policies are being illustrated with unrealistically optimistic projections that aren't likely to come to fruition, to a good discussion of the events leading up to the departure of Bill Gross as advisors and clients across the country consider whether it's time to fire PIMCO from their portfolios, to an interesting discussion of the impact of time diversification and how it can legitimately lead clients to owning more equity exposure for the long run, and discussion of an emerging trend in long-term care insurance where carriers are increasingly asking about family history looking for clues about any potentially-genetically-inherited disease factors that would/should impact underwriting.

We wrap up with three interesting articles: the first looks at how to become a "super connector" as a means to build your network and advance your business/career; the second is a look at the "reverse mentoring" program being implemented with the executive committee at Pershing (and the benefits that come from getting a young, fresh perspective); and the last looks at how advisors interact with and communicate with clients, raising the challenging question of whether sometimes the biggest problem is not that clients won't act on advice, but that advisors need to learn better communication skills in how to deliver it in the first place.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including announcement of a high-profile (human) advisor firm that's launching its own online "robo-advisor" solution, to a discussion of the upcoming release of a big new version of Redtail CRM, and more! Enjoy the reading!

Read More...

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the shocking announcement that Bill Gross is leaving PIMCO 41 years after founding it and taking over as the bond manager for the Janus Global Unconstrained Bond Fund, it what appears to have been a "voluntary" departure just days before PIMCO was going to fire him anyway for "increasingly erratic behavior" and threats from multiple PIMCO executives that Gross must be fired or they would leave instead.

In further notable news this week, the SEC announced that it is investigated how PIMCO has been pricing illiquid securities in its BOND ETF and suggesting that its returns may have been overstated (the investigation has also been attributed as a contributing but not primary factor in Gross' departure), an article about a recent NASAA proposal that state-registered investment advisers may soon be required to establish a succession and business continuity plan (public comment period closes on October 1st), a summary of FPA's current membership and revenue situation (declining for several years but now stabilized) as shared with the media at last week's annual conference, and an announcement from the CFP Board that it will be launching a "Career Center" with a job board, internship listings, and more, to encourage young people to enter the financial planning profession.

From there, we have several technology and practice management articles this week, including a discussion of the current technology offerings from the "Big Four" custodians and what they're working on rolling out in the coming year, the increasingly challenging environment for smaller RIAs to find a custodial platform that will work with them after Scottrade Advisor Services recently increased their minimums and introduced a significant platform fee for smaller advisors, a profile of the new management at Scottrade that suggests their goal is to turn the "Big Four" into the "Big Five" with rapid growth for Scottrade, and reviews of the new Junxure Cloud CRM (which advisor technology guru Joel Bruckenstein describes as having been "worth the wait") and also the Oranj practice management and marketing technology platform.

We wrap up with three interesting articles: the first describes the ongoing rise of the "virtual advisor", a human advisor who uses technology and video chat to work with clients efficiently and cost effectively (and remotely) in a "location independent" practice; the second is an "expose" on the too-close relationship between the Federal Reserve Bank of New York and the banks it oversees (especially Goldman Sachs) as illustrated by a "whistleblower" Fed examiner who recorded 46 hours of conversations highlighting the issue; and the last is a look from venture capitalist and Wealthfront founder Andy Rachleff about why VC firms will plow extraordinary amounts of money into companies that are not currently profitable (hint: it's all about the potential of future compounding growth).

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including some highlights from this week's Finovate (financial services technology innovation) fall conference, and the Advicent (maker of NaviPlan) acquisition of Dutch financial planning software company Figlo! Enjoy the reading!

Read More...

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the recent "Fiduciary Leadership Summit" in Washington DC, hosted by TD Ameritrade and the Institute for the Fiduciary Standard, highlighting "war stories" of consumers injured by gaps in the fiduciary duty for brokers and an interesting response by former regulator Robert Plaze that perhaps the best outcome is not a uniform fiduciary standard for all but simply that the brokerage industry needs its own standalone regulatory reforms. Also in the news this week is a new NASAA working group that will look at revising broker-dealer fee disclosures for consumers after acknowledging that today's fee disclosure documents are too long and confusing, and a recent survey by Gallup that finds "creating a financial plan" is one of the few financial issues that consumers consistently do rely on professional advice more than friends and family.

From there, we have several practice management articles this week, including one from United Capital CEO Joe Duran that the golden age for (small independent) RIAs may soon be ending with rising competitive forces putting the big squeeze on profits and margins, a response to Duran's bleak outlook from RIABiz's Brooke Southall who suggests that many of these competitors (from robo-advisors to Vanguard's Personal Advisor Services) are still ultimately just a drop in the bucket compared to the sheer size of the consumer investor marketplace, and a discussion from Mark Tibergien about whether some advisors actually need to get better at having the conversation with clients about raising fees instead.

We also have several more technical articles this week, including: a discussion of what the "true diversifiers" in a portfolio really are, and whether they're even necessary if there's a risk-managed approach to the equities themselves; a review of a recent T. Rowe Price survey suggesting that retirees may actually be more flexible and adaptable in their retirement spending than is commonly believed; and the last looking at the current use of Monte Carlo analysis, suggesting that perhaps one of our greatest problems is not the limitations of the tool itself but that many of today's Monte Carlo software tools do not provide a sufficient range of reporting on the outcomes beyond just the (insufficient) probability of success/failure alone.

We wrap up with three interesting articles: the first looks at how much of the disagreement amongst even the true finance experts may stem from the fact that our experience with investing and the markets can be dramatically impacted by the year in which we happen to be born (and therefore the investment returns and volatility we witness during our early formative years), and that many finance disputes may simply be a representation of two experts whose views are heavily biased and colored by their own (birth-year-sensitive) personal history and experience; the second looks at how the real significance of the robo-advisor trend may not be their actual competitive threat, but simply that they highlight what quality technology and a great client user experience looks like, and how lacking today's tools for advisors really are; and the last is an analysis from Wealthfront about the behavior of investors in active mutual funds versus index funds during market volatility, finding that passive investors are less prone to portfolio turnover during market volatility and suggesting that despite their lack of human advisors to hand-hold clients, many of today's (passively-based) robo-advisors may experience witness less client churn during the next bear market, not more.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including a summary of the first (Orion-Advisor-Services-sponsored) "hackathon" which brought together programmers from numerous advisor tech companies to try and build the best new useful relevant technology tools and integrations for advisors in just 48 hours! Enjoy the reading!

Read More...

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a call for better regulation of financial planning as a distinct calling unto itself, recognizing that in Massachusetts it's harder to get a license to be a cosmetologist than it is to become a financial planner! There's also an article discussing the recent rumored-to-be-on-a-fast-track NASAA regulatory proposal (now in comment period) that may require state-registered RIAs to adopt more substantive business continuity and succession plans for the protection of their clients.

From there, we have a few interesting new studies and articles on the so-called "robo-advisor" trend, including a Gallup poll that finds investors still prefer dedicated human advisors to financial website solutions by a 2:1 margin (and more affluent individuals favor the human solutions even more), a Spectrem Group study that finds for consumers who do plan to work in an online environment that the robo-advisors may actually be slightly preferable to human advisors engaged virtually (though there may be enough interest for both to succeed), and an interesting discussion from Mark Hurley about how ultimately the technology-will-replace-advisors threat isn't really any more dangerous today than it was in 1999 (when similar comments were made) and that ultimately much of the technology that backs today's robo-advisors will likely end out being used by the rest of the financial services industry (rather than continue to compete with it).

We also have several investment articles this week, including: a look at how some advisors are starting to adopt small allocations of Bitcoin into client portfolios; how Bitcoin does not really function (yet?) as a true currency but as a non-liquid investment asset may still improve risk-adjusted returns for portfolios (at least based on the historical track record for the virtual currency, which may or may not persist in the future); a fascinating look from Howard Marks of Oaktree at how true risk is more about the possibility of permanent loss of capital than about volatility, but that the truer measure of risk is also surprisingly difficult to quantify and apply effectively; and a discussion from Jason Zweig of the Wall Street Journal at the behavioral finance phenomenon of "shared attention" and the fact that who you choose to listen to and follow and get your information from can have a surprisingly powerful effect (good or bad) on your (investment) results.

We wrap up with three interesting articles: the first looks at how the only real way to stay competitive in today's environment is to be a continual learner, or else face stagnation and boredom that can undermine yourself and your company; the second discusses the five essential skills that planners must learn (as distinguished from the technical knowledge we must have to be competent) if we truly want clients to implement our financial advice (hint: it's all about the key skills that create true rapport and trust); and the last is a piece by industry commentator Bob Veres that takes an interesting look at the current regulatory environment and suggests that the real problem is not that we need to apply a new fiduciary standard to brokers but simply that the SEC has allowed the brokerage industry to drift too far from where it once was and should just do a better job enforcing the rules that were originally written which require a clear(er) separation of brokerage firms and investment/financial advice in the first place. Enjoy the reading!

Read More...

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the announcement of a series of events by the Institute for the Fiduciary Standard and TD Ameritrade to celebrate (and build awareness for) "Fiduciary September" this month, along with news of the latest in the Camarda vs CFP Board case (including a much-discussed request by the CFP Board for the Camardas' entire client list even though they have not been accused of client mistreatment), and a study from Pershing suggesting that the "fee only" label may not have as much cache as believed and for consumers is analogous to just saying "no commission" instead.

From there, we have a few retirement-related articles this week, including the latest from Wade Pfau and David Blanchett about the use of Monte Carlo analysis and the relevance (or not) of the 4% rule in today's environment, a review of some of the proposals to "fix" Social Security and how it might change in the next 20 years (when the trust fund is scheduled to run out and force at least some change), and a look at how researchers are suggesting that the ideal retirement vehicle of the future really might be a variable annuity (albeit not quite the types available in the marketplace today).

We also have a few practice management and marketing articles, from a look at how the evolution of Google's search algorithms are favoring specialists over generalists in search results, to ways you can actually try to become a "thought leader" (and not just abuse the increasingly overused term) to enhance your firm's appeal to prospective clients and potential referrers, and some marketing tips for those who are specifically trying to reach a younger Gen Y clientele (for whom many "traditional" marketing methods don't necessarily work).

We wrap up with three interesting articles: the first takes a harsh look at what it really means to be client-centric, suggesting that most advisory firms can't possibly be truly client-centric because they're trying too hard to be everything to everyone (which means they can't really center their focus on any particular type of client); the second suggests that financial services firms and software vendors need to stop focusing on individual client products/accounts and come up with a "household" identifier to make it easier to understand and group a client household's entire balance sheet and cash flow activity; and the last is a look from Bob Veres at the ways that advisors are trying to differentiate themselves in an environment where it seems increasingly difficult for many to do so.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including a look at the changing landscape of technology from the major RIA custodians and tips to stay safe online after this week's "Celebgate" hack of private photos! Enjoy the reading!

Read More...

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with an interesting lawsuit that has been filed by "whistleblower" David Danon against Vanguard, suggesting that it is abusing its unique corporate structure to avoid any Federal and state income taxes that should be paid (to the tune of $1B of foregone Federal taxes in the past decade), in addition to implicitly giving it an unfair competitive advantage as a result.

From there, we have a few investment-related articles this week, including a discussion of whether the era of the stockpicker may be definitively coming to an end as Vanguard approaches $3 trillion of AUM and the expansive march of investment tools and technology makes "everyone" such a capable investor that there's not enough alpha left to go around, the emerging price war between established financial services companies (and financial advisors) and technology companies (e.g., robo-advisors) who are driving down the cost of a pure passive strategic portfolio that is regularly rebalanced, and a fascinating article finding that low-cost active managers really may be providing value (including Vanguard's own active funds) and that the real issue is not about active vs passive but simply high-cost versus low-cost.

We also have several technical financial planning pieces, from a great discussion by David Blanchett and Wade Pfau about how most of the criticisms of Monte Carlo are not actually faults of Monte Carlo but simply flaws in how our typical Monte Carlo tools are designed and used (and could be solved with better software tools and assumptions), to a look at the re-emergence of "jumbo" reverse mortgage loans after "smaller" HECM reverse mortgages have dominated the landscape for 5 years (though the new loans may still be too expensive to be competitive). There's also a good summary of the recent Social Security Trustees' Report, highlighting that Social Security is not as bad off as most suggest!

There are a couple of practice management articles as well, including how advisors can take advantage of the "small data" opportunities in their practices along with the "big data" solutions that are being built for them, some tips about processes/procedures to implement to avoid HR headaches as an advisory firm owner, and a nice guide on how to onboard a new employee in an advisory board.

We wrap up with three interesting articles: the first looks at whether the financial services industry needs to get better about communicating more visually and putting some "glamour" into solutions (without being abusive); the second is written by a so-called "0.01%er" about the problems with income inequality and making an interesting case for why a significant increase in the minimum wage could be good for both the middle class and capitalism; and the last paints a sad but disturbingly accurate picture of just how "strange" the financial services industry really is, in a country where doctors must attend medical school and lawyers must pass the bar - and even becoming a taxi driver in London requires passing a test that can take years of practice - but in financial services, "managing money requires little more than a desire to manage money" (and a very rudimentary licensing test)!

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including big changes for online data storage for users of Dropbox and a look at whether the latest Google Apps are making Microsoft Office less necessary than ever! Enjoy the reading!

Read More...