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 results of the latest RIA Benchmarking Study from Schwab, finding that business continues to be very good in the world of RIAs, with more than 1/3rd of firms doubling in the past 5 years and profits at all-time highs (since the survey began in 2006). In fact, ironically business for RIAs seems to be so good, that in a separate story Schwab is reported to be expanding their own offering, raising both the pricing (despite the emerging low-cost "robo-advisor" trend) on their internal Schwab Private Client offering up to 0.90% and the depth of advice provided to Schwab clientele, in a move that makes Schwab Private Client look increasingly similar to (and a potential competitor to?) the independent RIAs that custody with Schwab as well.

From there, we have a few technical articles this week, including a summary of what's changed (and what still hasn't) in planning for same-sex couples in the year since the Windsor decision from the Supreme Court, a coming change to the reverse mortgage rules for couples that will protect some consumers but take away planning choices from others, and an interesting look from Nobel Prize winner Robert Merton at the current state of retirement planning in the US and how our shift from defined benefit to defined contribution plans may have dangerously shifted how we think of what's "safe" and "risky" in the world of retirement income in the first place.

We also have several practice management articles, from tips about how to find your first clients if you're just starting your firm as a new advisor, to some "lessons from the trenches" of an advisor who just went through his first year as a solo practitioner, to some recent research about how advisors (and investors) anticipate communication to change in the coming years (think: big rise in video conferencing), and a look at how advisors who are approaching or hitting "the wall" of client capacity can step back and figure out how many clients they really have capacity to handle in the first place.

We wrap up with three interesting articles: the first looks at how we can make better investment decisions by deliberating reading information from and surrounding ourselves with people who disagree with us (forcing more deliberate thought about whether our investment views are really valid or not); the second, in celebration of last week's Independence Day, looks at the story of Haym Solomon, the broker who perhaps exemplified the best of what Wall Street can achieve by becoming the financier that ensured the United States had the funds necessary to field an army and win the Revolutionary War; and the last discusses an interesting new study looking at what does and doesn't lead to greater happiness in retirement, suggesting that the amount of wealth and income really needed for happiness may be far less than most people expect (which means retirement might not be so far off for most baby boomers after all!).

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including a new "Technology Spot Audit" service for advisors who need some help figuring out where they stand with their own software solutions! Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with an interesting new advisor survey showing that the number of face-to-face client meetings being held is already starting to decline, with some meetings being replaced with communication alternatives from larger social events to email and newsletter distributions to regular contact via social media; the end result is client communication that is more frequent and more timely but also more targeted for relevance and allowing the advisor to be more efficient.

From there, we have several practice management articles this week, including a review by Bob Veres of the recent FPA NexGen conference and the major themes emerging from young advisors, a look at what motivates young Millenial employees from the perspective of a "robo-advisor" who hires them to build the company's technology platform, tips from practice management consultant Angie Herbers about how advisors must learn to recognize that what was effective to get them to where they are may not work to get to the next level, a guide from the Journal of Financial Planning about how to actually build a strategic business plan for your existing advisory firm step-by-step, and a great cover story from Financial Planning magazine about the rising trend of wire fraud targeting advisors and what to do about it.

We also have a few investment-related articles, including a discussion of how much advisors and their clients may be giving up (and may have lost already in the past several years) by investing in short-term bonds waiting for interest rates to rise, a study by Wade Pfau about whether it's reasonable to haircut long-term returns when doing straight-line financial planning projections to account for sequence-of-return risk, and some ideas about how to implement a covered call strategy for clients who want to protect against risk or generate more "income" cash flows for retirement.

We wrap up with three interesting articles: the first looks at a recent survey of 700 advisors about how they define success and what it takes to get there (key points include that having the right mindset is essential, but success is most commonly defined by levels of personal engagement, client engagement, and team engagement in the firm); the second is a reminder that while there are clearly many things that computers and robots can do better than humans, there is still a lot that humans do better; and the last is a fascinating look at whether we perhaps don't give enough credence to rules of thumbs and instead rely far too much on impossibly complex analyses that don't actually improve (and may even worsen) the outcome.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end! Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts out with a big announcement by NAPFA that the fee-only organization is capitulating to the CFP Board on the definition of "fee-only" and will be changing its membership criteria to align with the CFP Board's own compensation definitions, eliminating the previous option for members to have an up-to-2% stake in a commission-related entity.

There are also several other regulatory-related articles this week, including FINRA's decision to withdraw proposed Rule 2243 that would have required brokers to disclose to clients the compensation they receive for switching broker-dealer firms (though the rule may be re-proposed later this year), a warning from Laurence Kotlikoff that the SIPC protection consumers rely upon for their brokerage accounts in the event a broker-dealer fails may be less secure than most believe, and a discussion from industry commentator Bob Veres about whether Wall Street has drifted too far away from its fundamental societal purpose of helping businesses to access capital through the capital markets.

From there, we have a few practice management articles this week, including a look at where and how digital marketing fits within the context of a typical advisor's referral marketing efforts, a discussion of financial services technology startup Motif Investing and its efforts to impact the ETF marketplace for consumers and advisors, and a look at how Amazon and Google may start to disrupt the delivery of financial services products by offering basic term life insurance directly to consumers with online portals and local kiosks where medical examinations can be completed on the spot for nearly-immediate coverage.

We also have a few more technical articles, from a discussion of the different ways that advisors are trying to adapt the 4% rule (and some of the caveats of trying to do so), why retirees who think they might ever need a reverse mortgage in the future should consider establishing one now instead, and how the real problem with accumulators trying to save may be less about our spending habits on coffee and brand names vs generics and more about our unrealistic expectations about how much house, car, and education we can afford.

We wrap up with three interesting articles: the first is written by a venture capital firm about how they view the opportunities and pitfalls for creating a company to "disrupt" financial services; the second is a fascinating look at the recent Pew Research study on political polarization that finds the country really is becoming more polarized (though not necessarily more extreme), and that the trend may get worse before it gets better; and the last highlights a series of "TED"-style talks from the recent Raymond James national conference, where successful advisors who have built strong advisory firms share their own insights and experiences.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end! Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts out with a concerning warning that regulators appear to be shifting from "just" fining firms to actually requiring them to admit public guilt and make an example of individuals; while on the plus side, this may be good pressure on some firms to clean up their act, it also raises fears for advisory firms that making (too many) mistakes could cause them to become an example case as well. We also lead off with two interesting articles on the current independent broker-dealer landscape, including the activity of the big firms at the top, and what the small firms are doing to try - to varying degrees of success - to stay competitive amidst a competitive environment and rising regulatory/compliance costs.

From there, we have a few practice management articles this week, including a great reminder from Roy Diliberto of the reasons why some advisory firms have incredibly high (98%+) retention rates, an interview with Financially Wise Women advisor and social media activist Brittney Castro about how blogging and social media have helped to grow her practice, and a look from industry commentator Bob Veres at the emerging new trend in advisory business models: monthly retainers.

We also have a few investment-related articles, from a fascinating look at how in the long-run markets can still have better very-long-term returns in high valuation environments that low-valuation ones (e.g., the 30-year return starting in 1929 was actually higher than the 30-year return beginning in 1980!), to a discussion of whether advisors aren't giving enough acknowledgement to the value of bank CDs as a fixed income investment in today's environment (given the penalties to 'break' a CD to reinvest at higher rates is a much lower effective duration than bonds with similar yields), and some recent research on risk tolerance finding that while risk tolerance is relatively stable, investor perceptions of risk do appear to shift with the market environment in a dangerous fashion.

We wrap up with three interesting articles: the first provides tips from advisor and blogger Barry Ritholtz about how to "curate" your own feed of investment and financial information to manage the firehose of information available today; the second is a discussion from Bob Seawright lamending the lack of clear "best practices" on financial advice and the incredible inconsistency from one advisory firm to the next (which in turn can lead advisors to unwittingly fall back to delivering advice based on their biases); and the last is a look at how the rise of software is beginning to threaten many professions (not just financial planning), and how "robo-advice" of all sorts - from medicine to law to financial planning - may change the role of professionals in the coming years.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end! Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts out with an interesting new industry study, that finds a significant portion of advisors underestimate and/or understate their own costs to clients, focusing solely on their own advisory fee and not on the total cost including underlying administrative, platform, and/or product/fund fees as well. Also in the news this week were lobbying efforts from the Investment Adviser Association down on Capitol Hill; the organization is putting an increasing push on supporting legislation that would increase the frequency of investment adviser exams, but do so via user fees funded by RIAs (and perhaps with an allocation from Congress as well), rather than allow investment adviser oversight to potentially be shifted to FINRA.

From there, we have several practice management articles this week, including a look at Fidelity's "Office of the Future" and how technology will (and will not) change the delivery of financial advice, a discussion of how advisors can combat ongoing compression of advisory fees (hint: go big or go specialize!), a review of how some firms are adopting a "financial planning resident" model to bring in young advisors (with an expectation that they'll only stay for 3 years and then move on and be replaced by the next resident), and a discussion of how AUM advisory firms can use options and hedging strategies to manage the exposure their revenue has to market volatility (rather than trying to convert to a retainer-based business model instead).

We also have a few more technical articles, from a discussion of the pros and cons of Target-Date Funds (while there are some valid criticisms, they are perhaps lambasted too much?), a comparison of the new "simplified" home office deduction to the actual cost method and in what situations each works best, and a discussion of how to properly structure and execute a ROBS (Rollover as Business Startup) plan for clients who want/need to use retirement account assets to fund a new business venture.

We wrap up with three interesting articles: the first is some of the latest research from Julie Littlechild on advisor referrals, who finds that asking clients for referrals may be less effective than asking them for feedback about how to improve your services (which ultimately builds a stronger bond and can lead to more referrals in the end); the second is a discussion from Mitch Anthony in the Journal of Financial Planning about how to reframe "retirement" as a transition to more meaningful work (recognizing that a large number of clients are returning to work after retiring!), and how to facilitate a conversation that balances out the "economic" (money) from the "existential" (meaning and purpose) reasons for work; and the last is a summary of the new book "Keynes's Way To Wealth" which looks at the fascinating investment experiences of the famous economist, that included two near bankruptcies and investment wipeouts before ultimately focusing more on a long-term deep-value stock investing approach that ultimately left Keynes a very wealthy man. Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts out with a cautionary warning from both FINRA and the SEC that this year will be one of heightened scrutiny on cybersecurity issues, and that advisors large and small will be held accountable for the quality of their protections of firm and client data... and that there may even be a few firms that will be "made an example of" with enforcement and fines for especially lax security. On the other hand, a separate article also notes that more generally, FINRA is acknowledging that its regulatory requirements may be getting too burdensome for small firms, and that some kind of relief may soon be coming as the regulator shifts to a more surveillance-based (rather than examination-based) approach.

From there, we have several practice management articles this week, including advice from Mark Tibergien on the importance of trying to control what you can control in attracting and retaining employees (while also recognizing what may be beyond the firm owner's control), some insight from Angie Herbers on the importance of having not only a long-term 'voluntary' succession plan but also a plan in place for how to handle a more sudden unexpected succession event if there is an unexpected death or incapacitation of the firm owner, and a look at the challenges that advisors face when they consider breaking away from a wirehouse and going independent (from the time and stress costs, to the "leap of faith" that if the advisor leaves to go out on their own, that clients will follow).

We also have several investment-related articles this week, from a roundtable looking at strategies to manage against the risk of rising interest rates (and whether it's even necessary to do so), to a second article that looks at whether annuities might be an effective bond substitute to manage a fear of rising rates, to a discussion of whether REITs still have a place in the modern portfolio given their significant volatility over the past decade. There's also an interesting article looking at strategies to manage our behavioral biases, which are a challenge for clients but can be as relevant (and challenging) for advisors in their own investment process too.

We wrap up with three interesting articles: the first is some guidance for advisors who have started a new practice and are struggling to work through "the gap" between where their business is during its initial stages and where they want and aspire it to be (which requires no small amount of patience and perseverance!); the second is an interview with financial advisor Ron Carson about the issues he sees in the industry, from the importance of fee transparency to the concerning lack of succession and continuity planning that advisors have failed to put in place to protect their clients; and the last is some professional and career advice from advisor and blogger Barry Ritholtz about his own unusual path in finance, affirming the importance of continuous hard work and a recognition that "once in a lifetime" opportunities come more often than we may realize, but only help if we're ready to take advantage of them when the time comes. 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 regulatory news from the Department of Labor, that its re-proposal of a fiduciary rule is being delayed once again, and is now expected next January of 2015. At this point, it's still unclear whether the delay is just to build support and finalize a cost-benefit study to get the rule implemented, or if the delay will result in fiduciary opponents building more momentum to try to undermine or change the rule.

From there, we have several practice management articles this week, including: a look at the success that "robo-advisor" platforms are having with young tech millionaires who have money but little desire to deal with 'antiquated' non-tech-savvy advisors; a second article about the growth of online investment platforms amongst older clientele as well (an estimated 40% of investors over age 60 are now 'self-directed' using robo-advisors or online brokerage platforms); a discussion from practice management consultant Angie Herbers about whether advisors should even try to manage people, or whether it's better for the advisor to just stay small and happy; how to categorize clients through your CRM to begin to refine and differentiate your services at varying tiers; and an intriguing article from Julie Littlechild suggesting that the real differentiator of the most successful advisors is not merely their vision of serving clients well and acting in their interests but their ability to operationalize those big ideals into actual tactics to be implemented in the business.

We also have a few technical articles this week, from a look at how the long-term care insurance industry is trying to restructure its regulatory rules to allow for more regular but much smaller premium adjustments, to a review of a new white paper by Cliff Asness and his team at AQR looking at the "myths and facts" of momentum investing, and also a good discussion of the pitfalls of portability of the estate tax exemption that advisors should consider before going with this 'simple' new estate planning technique.

We wrap up with three interesting articles: the first is a review of a fascinating book called "The Great Depression: A Diary" that details the diary entries of an investor who lived through the Great Depression, and consistently observed that at the time many/most investors realized it was the investment opportunity of a lifetime but simply had no cash available to invest at that point (and making the fundamental point that large cash positions are not a "negative real return" drag but funding for future opportunities that may be more than significant enough to overcome the drag of cash returns); the second is a look at the recent white paper issued by the Australian Financial Planning Association as it begins to lobby for new laws and regulations that would make financial planner/advisor a protected term that can only be used by advisors who meet specific education, experience, and other requirements; and the last is a nice discussion of how advisors can use RSS readers as a better means to keep up with industry news and developments in a simple and easy manner.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end! Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a small act of contrition from the CFP Board, which acknowledged this week that it "could have done a better job" in looking at compensation disclosures on its website, and announced that the organization will now begin to do its own "spot checks" on its website compensation disclosures along with making it easier for brokerage firms to ensure that none of their employees indicate that they are "fee-only" in violation of the current rules.

From there, we have several practice management and technology articles this week, including some ideas for new client (or prospective client) events to try out, tips on how to pick a CRM system (either as a change or for the first time), a review at a new all-in-one advisor platform called Advyzon (being built by one of the former architects of Morningstar Office and Workstation), a look at how RIAs now surpass wirehouses in their share of ETFs and long-term mutual funds (if you're an RIA, expect a lot more contacts from product providers trying to reach you in the near future as the industry wholesalers shift!), and a discussion of how to fix (or create for the first time) an incentive compensation system for your employees.

We also have a few more technical articles this week, with a discussion of why SPIA payouts still seem to be given their money's worth despite today's low rates (in large part perhaps because the long end of the yield curve has already priced in future rate increases?), a great analysis from AQR's Cliff Asness of why markets are not rigged (despite the allegations in Michael Lewis' "Flash Boys") and how HFT firms are really just a more cost efficient version of what market makers have always done, and a nice overview of the key points from the new "hot" book on income equality, Thomas Piketty's "Capital in the 21st Century".

We wrap up with three interesting articles: the first is from Jason Zweig of the Wall Street Journal and looks at the rise of the "Robo-Regulator" - FINRA's new CARDS approach to applying big data insights to try to find questionable activity in brokerage accounts; the second is a discussion from industry commentator Bob Veres about how independent firms and fiduciary advocates may be losing the fight against the lobbying dollars of Wall Street and what the next step should be (hint - band together with other organizations fighting the "Bigger Fight" as well); and the last is from Gail Graham of United Capital about how small advisory firms may soon need to get a whole lot more serious about marketing, because some large ones are already beginning to step up. Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a great overview of the current landscape of CFP Board registered programs and the ongoing efforts to raise the profile of financial planning in colleges, from shifting programs into business schools, to boosting funding and alumni/corporate giving, to simply building more awareness of financial planning on campuses. Given the industry demographics, the opportunity for young people entering financial planning today is tremendous, but only if they know about it in the first place! There's also an article looking at how a number of large firms are entirely retooling their advisor training programs to make the entry path for young financial advisors more appealing, and a brief look at some how firms are bringing in junior advisors to work with clients.

From there, we have a long list of practice management articles this week, including: the rise of "bogus" award/recognition programs for advisors and an increasing volume of "advertorial" solicitations (where advisors can pay to be featured in a major publication's "top advisors" list or have a profile article written about them); tips for solo advisors who are looking to sell their practices (from two solo advisors who recently did sell their firms); a discussion of some of the latest advisor outsourcing trends around investment and back-office support; a look at the decision to become a hybrid RIA and when it's better to use a broker-dealer's corporate RIA rather than create an independent one; and a sample template for building your business plan as a new financial advisor (or perhaps an existing one planning on launching a new advisory firm).

We wrap up with four interesting articles: the first looks at the rise of social media in wirehouses and large broker-dealers, who have been 'laggards' with social media in the past, but are now accelerating adoption with some highly capable (and compliant) enterprise social media tools; the second is an RIABiz profile of Motif Investing, which has now raised an astonishing $86M of venture capital, despite having only about $86M in managed assets, raising the question of what the tremendous opportunity really is that the VCs see in Motif's future; the third examines some recent criticism of the famous Dalbar research regarding the investor behavior gap, suggesting that while there are still investors who harm themselves, the Dalbar methodology of calculating returns may be drastically overstating the issue in the aggregate; and the last is an interesting recent interview with Sebastian Thrun, founder of the first MOOC, who has now acknowledged that a purely free technology-driven open education just doesn't work very well because students don't follow through, and that charging a little more to add a human service layer component may ultimately be the superior model... which has very interesting implications for the current traditional-vs-robo-advisor environment as well!

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end! Enjoy the reading!

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Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a fascinating story looking about whether better adoption of financial planners by the military could help stem the pace of military suicides, and help more soldiers get and maintain their security clearances, as financial troubles are actually a leading cause of both military suicides and soldiers losing clearance. Unfortunately, though, thus far the military has been resistant to allowing personal financial advice to be delivered to soliders beyond general financial education, due in large part to an unfortunate history of questionable "financial advisors" taking advantage of and abusing soldiers with high-commission investment products.

This week's articles also include a number of technology-related articles, including two about some of the latest technology and productivity tools for advisors striving for greater efficiency and scalability in their firms or simply running a "pared-down" practice with fewer (or no) staff, a look at some of the "high-touch" technology trends emerging to better engage interactively with clients, a "surprise" announcement by Orion Advisor Services that it is turning the bulk of its portfolio management software platform into open source code to better support integrations from partners and enhancements to its offering, and the announcement that online brokerage platform Motif Investing is rolling out an advisor platform that will allow unlimited client trades for $20-$50 per month (per client) and raised another $35M of venture capital to continue fueling its growth.

We also have a few financial planning articles that are more technical in focus, including a look at best practices in measuring and evaluating risk tolerance, a new software solution called PocketRisk for measuring client risk tolerance, and an interesting discussion of how newly-minted ultra-high-net-worth clients often experience the transition to wealth as though they are "immigrants" in a new land, with all of the challenges common to most immigrants, from how to adopt to a new environment to the difficulty of raising children effectively in a culture in which they did not grow up themselves.

We wrap up with three interesting articles: the first is an interesting look from Mitch Anthony at just how artificial the "retirement" finish line really is, and whether the whole concept of retirement may actually be a relatively limited and short-term phenomenon that is already unraveling; the second is a great overview from technology consultant Bill Winterberg of the major trends in advisor technology, from CRM to rebalancing tools to financial planning software and more; and the last is a fascinating look from Bob Veres at how the next generation of financial planners are beginning to set roots for a very different kind of financial planning world than their predecessors, in everything from how they deliver their services, to what services they deliver, and even how their practices are structured and how their clients pay them 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! Enjoy the reading!

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