Weekend Reading For Financial Planners (April 26–27)

Nest Eggs, Social Security, Inflation Top List Of Retirement "Burning Questions": Survey

(Edward Hayes | Financial Advisor)

Individuals often decide to engage a financial advisor when they feel a financial 'pain point' that they feel they cannot address on their own. For many consumers, a primary pain point is wondering when they might be able to retire, whether they've saved enough, and what their retirement lifestyle might look like. Which presents an opportunity for financial advisors to add value by addressing the key issues on their ideal target clients' minds (and perhaps aligning their marketing efforts to highlight how they can do so as well).

According to a recent survey by Northwestern Mutual, "How much money will I need to retire comfortably" was the top "burning question" of respondents regarding retirement planning (with 43% putting it in their top three), followed by whether Social Security will be there when they need it (33%), and concerns about whether inflation rises when they're retired (30%). On the first question, survey respondents said they expect to need $1.26 million to retire comfortably, which was actually down from $1.46 million in the previous year's survey (perhaps as inflation rates have receded). In terms of Social Security, respondents in Generation X were most likely to put this issue in their top three concerns (47%, while younger respondents in Generation Z were less likely to do so (26%). Interestingly, Baby Boomers (and older individuals) were least likely to cite this concern (with 20% putting it in their top three questions), perhaps because they are already receiving benefits and/or don't expect potential policy changes to affect current Social Security recipients. And while inflation rates have declined over the past couple years, elevated price levels remained a key concern for respondents, with 40% of respondents with at least $1 million in investible assets indicating that their income is growing slower than inflation.

Altogether, these results offer several potential opportunities for advisors to attract new clients and offer value for current clients. To start, while prospects might have a ballpark idea of how much they might need to have saved to meet their lifestyle goals in retirement, advisors can provide much more accurate estimates by taking into account their full financial situation and leveraging planning software (as well as advanced retirement income techniques). In terms of Social Security, advisors can help clients understand the (true) state of the Social Security system (e.g., even if the Social Security trust funds were to run out, the system would still be expected to pay out more than 70% of scheduled benefits), including potential policy changes that could affect their taxes and/or benefits. Finally, advisors can offer guidance on a range of inflation-related topics, from helping clients estimate their 'personal' inflation rate to considering portfolio strategies that could mitigate inflation risk. Which, together, could offer prospective and current clients an attractive value proposition (and greater peace of mind regarding retirement in the process).

RIA Channel Continues To Attract Financial Advisor Movers

(Alex Ortolani | WealthManagement)

Given the potential loss of client assets that can come with advisor departures (as well as the costs of attracting and training new advisors to replace them), advisor retention is a key metric for financial advisory firms (and especially larger advisor enterprises). Which suggests that identifying trends in why and how advisors are moving between firms (or between industry channels) can help firms consider how they might keep their advisor cadre for the long haul.

According to data from AdvizorPro covering the period between October 2024 and March 2025, independent RIAs saw the most net hires (1,860, with 2,158 advisors coming in and only 298 departing) of any channel, with hybrid advisory firms also seeing positive net hires (277). On the other hand, both the independent broker-dealer channel (-480) and wirehouses (-562) both saw net outflows of their advisors during the period. Notably, though, while RIAs and hybrid firms were the beneficiaries of inter-channel movement, most movers (89%) who switched firms remained in the same channel (e.g., from one independent broker-dealer to another).

Amongst those who moved, the movers were more likely to be younger (with nearly 50% of those who moved to a different firm being under age 40, and about 25% being between age 40 and 50), which isn't entirely surprising: advisors who move are typically the ones who see a long enough time horizon to benefit on the other side of the move.

Perhaps most striking, though, is that the hybrid channel welcomed almost as many advisors into the channel as all others combined… and lost as many advisors as all other channels combined. Which suggests that not only is the overall movement of the industry towards RIA, but that hybrid platforms in practice are more commonly waypoints from the way from broker-dealer to independent RIA, rather than a permanent destination.

On the other hand, when it comes to new advisors joining the industry, the bulk of hiring is still occurring amongst broker-dealers, with independent broker-dealers (47%) and dual-registered firms (29%) welcoming the most new advisors during the period, wirehouses attracting another 12.5% of new advisors, and RIAs only hiring 11.7% of new talent.

In sum, these data points suggest that while a significant number of new advisors are joining larger firms as their entry point into the industry (given the established recruiting and training programs at these firms, as well as the willingness of some to accept new advisor turnover given their ability to retain clients new entrants bring on from their personal networks during their [possibly limited] time with the firm), many (particularly younger) advisors appear willing to leave their current firm, whether for another in the same channel or one in a different channel that offers more autonomy (a key factor in determining advisor wellbeing, according to Kitces Research). Which could offer RIAs the opportunity to attract advisor talent with previous client-facing experience (at broker-dealers or wirehouses) and/or to reach out to recent talented graduates and career changers with the opportunity to start their careers in the RIA channel (where they might end up anyway down the line?).

Supreme Court Ruling Puts Retirement Plan Fiduciaries In Legal Crosshairs

(Melanie Waddell | ThinkAdvisor)

One way for financial advisors to offer value for their working-age clients is to help them determine how much to contribute to their workplace retirement plan. However, as advisors quickly recognize, the expenses and investment options available from different retirement plans can vary widely, potentially affecting the value proposition of contributing to these accounts versus other options (e.g., IRAs or other available accounts) as well as the question of what to do with retirement plan assets when a client leaves the employer.

This issue recently reached the U.S. Supreme Court, with the Court ruling unanimously in Cunningham v. Cornell that "plaintiffs alleging prohibited transaction claims under Section 1106(a)(1)(C) of the Employee Retirement Income Security Act of 1974 (ERISA) only need to plead the basic elements of a prohibited transaction without having to address potential exemptions under Section 1108 in their complaint", according to an alert released by law firm Holland & Knight. In the case in question, participants in two of Cornell University's defined contribution retirement plans argued that Cornell and other plan fiduciaries engaged in prohibited transactions for recordkeeping services with TIAA and Fidelity Investments and paid the providers more than a reasonable recordkeeping fee. In practical terms, the Supreme Court ruling is likely to make it easier for plan participants to allege ERISA violations related to supposedly excessive fees and survive a motion to dismiss (which could lead to an increased number of legal actions and, potentially, settlements, including with regard to smaller retirement plans).

In the end, this Supreme Court ruling could impact many financial advisors, whether directly (for those who serve small business owner clients as a retirement plan fiduciary) or indirectly (as clients could see changes to their workplace retirement plans as employers review whether their current fees and structure are reasonable). Which could ultimately lead to more dollars in clients' retirement accounts (though perhaps more legal costs, or at least more time reviewing their plans, for business-owner clients as well?).

Should Clients Make Roth Or Traditional 401(k) Contributions?

(Jim Dahle | The White Coat Investor)

From the moment they were introduced in the Taxpayer Relief Act of 1997, the Roth IRA has been an incredibly popular retirement vehicle, thanks to its 'unlimited' potential for generating tax-free growth. Of course, the caveat is that Roth-style accounts are only tax free because the contributions into the account are made on an after-tax basis – unlike traditional retirement accounts, which enjoy a tax deduction on the initial contribution. Which means in practice, households must make a decision whether to contribute to a pre-tax traditional IRA or a tax-free Roth, based on whether the upfront tax deduction (on the traditional IRA contribution) will be more or less valuable than tax-free growth at the end (on the Roth IRA distribution).

Mathematically, the Roth-versus-traditional IRA decision will actually be the same, regardless of growth rates and time horizon, as long as both accounts remain intact and tax rates don't change (the "tax equivalency principle"). If future tax rates do change, though, the Roth IRA will result in more wealth when tax rates rise in the future, while the traditional IRA will benefit when tax rates are lower in the future. Though in practice, because the tax burden for a Roth IRA is paid upfront – when the (after-tax) contribution is made – there is no future uncertainty with respect to its future tax rate; instead, changes in tax rates primarily impact the future value of a traditional IRA, in particular, making it better or worse off depending on whether or how tax rates change.

In addition to comparing a client's marginal tax rate today to the rate they might experience in retirement, individual client's circumstances can influence the decision of whether to make traditional or Roth contributions. For instance, clients who expect to have significant non-portfolio income in retirement (e.g., Social Security, defined-benefit pensions, and/or rental income) might favor Roth contributions earlier in their career, as the combination of Required Minimum Distributions (RMDs) on their traditional accounts and this additional income could put them in a higher tax bracket. Also, while much of the traditional versus Roth debate focuses on Federal income taxes, state taxes can play a role in this decision as well. For example, if a client currently lives in a high-income-tax state but expects to move to a lower-income-tax state in retirement, they might favor traditional contributions today (as they might avoid paying state income tax on these contributions today and be able to withdraw them at a lower [or even 0%] state income tax rate in retirement). Advisors and their clients can also consider different income-based eligibility cutoffs and phaseouts (e.g., the child tax credit) that could be affected by contributions today (e.g., traditional contributions could reduce a client's income and possibly secure their eligibility for these credits), as well as the potential for higher income in retirement to lead to greater expenses (e.g., RMDs from a traditional account could increase a client's IRMAA surcharges, which would favor Roth contributions today).

Ultimately, the key point is that the decision of whether to make traditional versus Roth retirement account contributions can entail analysis of a variety of factors, giving financial advisors an opportunity to add value on an ongoing basis, including for clients whose incomes vary significantly from year to year (and might choose to make traditional or Roth contributions accordingly) and in identifying opportunities for strategic (partial) Roth conversions, which can allow a client to increase their Roth balances during years with relatively lower income (and reduce their RMD obligations down the line!).

Ed Slott: The Case For Roth IRA Contributions

(Christine Benz | Morningstar)

While they have been available for a much shorter time period than 'traditional' retirement account contributions, Roth-style contributions have become increasingly popular for both financial and psychological reasons and could be appropriate for many financial planning clients (who might otherwise be tempted by the upfront tax savings offered by traditional contributions).

At a financial level, Roth contributions can be particularly valuable for clients who are in relatively lower earning years (e.g., are early in their career or have downshifted to part-time work) and could have a lower marginal tax rate than they might face when they begin making distributions from their accounts. Also, because Roth-style accounts don't have RMDs, clients don't have to worry about RMDs putting them in a higher tax bracket in retirement (in addition, this allows the Roth balances can grow for longer within the tax-advantaged wrapper). And for clients with legacy interests, Roths are excellent accounts to leave to heirs, as they can be distributed without the beneficiary owing taxes and can continue to benefit from tax-free growth for up to 10 years after the decedent's death (whereas the beneficiary of a traditional account might be subject to RMDs during the 10-year period, depending on their circumstances). In addition, Roth accounts can also provide clients with psychological benefits, in particular the ability to 'know' how much money they will have available to them in retirement (as they don't have to worry about what tax rates will be on their distributions).

In the end, Roth contributions (and Roth conversions) will likely be an attractive option for many clients over the course of their lives. Which gives financial advisors the opportunity to identify the best times for clients to add to their Roth balances and benefit from the financial and peace of mind benefits they can offer!

Why Pre-Tax Retirement Contributions Are Better Than Roth In Peak Earning Years (Even If Tax Rates Increase)

(Ben Henry-Moreland | Nerd's Eye View)

Over the last 60 years, the top Federal marginal tax bracket has steadily decreased from over 90% in the 1950s and 60s to 'just' 37% today. However, with the national debt expanding rapidly, observers of U.S. tax policy are predicting that Congress will inevitably be forced to again increase tax rates in order to raise revenue and balance the national budget – and that the current regime of relatively low tax rates will prove to be a temporary phenomenon.

From a financial planning perspective, the seeming implication of a likely rise in future tax rates would be that (given a choice between being taxed on income today or deferring that tax to the future) it makes more sense to be taxed today when taxes are lower than they'll be in the future. For example, if taxes were expected to rise in the future, it would be better to contribute to a Roth retirement account (which is taxed on the contribution, but not upon withdrawal) than to a traditional pre-tax account (which is tax-deductible today but is taxable on withdrawal).

While it's true that the top marginal tax rate has decreased dramatically since the mid-20th century, the difference in the actual tax paid by most Americans has been far more modest. Because not only were very few households actually subject to the 1950s-era top tax rates (which were triggered at the equivalent of over $2 million of income in today's dollars), but the long decline in nominal tax rates has also come with the elimination of many loopholes and deductions that have resulted in more income being subject to tax. Which means that it seems less likely that Congress will simply raise the marginal tax brackets in the future than that they will further reduce the benefits of current tax planning strategies – possibly including those of Roth accounts themselves!

Furthermore, focusing only on tax rates at a national level ignores the fact that an individual's own tax rate is likely to change much more during their lifetime based on their own income and life circumstances. In particular, those nearing retirement may see a large swing from the upper tax brackets as they reach their peak earning years, to the lowest brackets upon retirement, and eventually stabilizing somewhere in the middle once they start receiving income from Social Security and RMDs. Which creates a tax planning opportunity to make pre-tax contributions while in the peak earning years, and then to convert funds to Roth after retirement – and as long as those funds can be converted at a lower tax rate than they were contributed, it still makes sense to contribute them to a pre-tax account.

Ultimately, while the idea that we currently live in an anomalously low-tax environment that will inevitably reverse course has its appeal, basing one's tax planning decisions around that assumption is still risky. Because even if taxes do creep up nationally, individuals who are already in the highest tax brackets today are still likely to be in a lower bracket upon retirement – which could make it more advantageous to contribute to a pre-tax account today and then withdraw (or convert) the funds at a lower rate later on!

How RIAs Are Chasing Growth During Market Uncertainty

(Alex Ortolani | WealthManagement)

During years of strong market performance (such as 2023 and 2024), advisory firms can see their assets (and revenues, if charging on an AUM basis) grow even in the absence of new client growth. However, more challenging years (such as 2022 and 2025 so far) can demonstrate the value of strong organic growth as a ballast against market gyrations.

Notably, periods of market turbulence can bring more prospective clients to seek out an advisor. For instance, a recent survey by The Ensemble Practice found that a recession is the second most common reason for approaching an advisor (after receiving an inheritance). In addition, during volatile periods, some investors might realize that they are positioned too aggressively for their life stage and seek out an advisor to create an appropriate asset allocation. They may also be more attracted to advisors who are able to offer comprehensive planning services (to ensure they are well-positioned no matter how the economy changes in the months and years ahead). Also, while some advisors might think they are too busy for marketing efforts during downturns (e.g., fielding calls from current clients), this activity can actually prove to be a boon for new client growth, as clients who believe they have received excellent service could be more likely to refer friends and family to the advisor.

Altogether, while many advisors might focus on playing 'defense' and spend much of their time helping current clients through a turbulent market and economic environment (strengthening their relationship and hopefully improving client retention in the process), this period could serve as an opportunity for firms to go on the 'offense' as well by making themselves an attractive destination for investors who could benefit from the many ways advisors add value (beyond portfolio management), allowing the firm to better weather a potentially extended downturn in the process!

What To Do When Your Marketing Approach Feels Scattered

(Kristen Luke | Advisor Perspectives)

While financial advisors are experts at the art and science of financial advice, they are not necessarily marketing professionals. And with a wide variety of potential marketing tactics available to financial advisors, it can be tempting to try out a range of tactics to get exposure to the broadest possible audience. However, this can lead to a 'scattered' marketing approach that proves to be less effective than a more targeted strategy.

Luke suggests that advisors consider the "who" and the "how" in order to create an effective marketing strategy. To start, advisors can narrow down the specific group of people they want to serve by considering this group's biggest financial concerns, the life stage they're in, the challenges they face that the advisor can solve, and the common traits they share (e.g., a "who" of 'retirees moving to senior living communities' is better-defined than just 'retirees'). With the "who" in place, an advisor can then move on to deciding "how" they will attract (e.g., through networking, social media, referrals, content marketing, or other tactics), engage (e.g., through blog posts, social media discussions, or videos), and nurture (e.g., through lead magnets, webinars, or drip email campaigns) this group. Notably, the best tactic(s) for each of these categories is likely to depend on the "who" chosen. For instance, tech employees might be more amenable to digital-based approaches, while in-person networking and peer groups might be better tactics to engage local business owners.

In sum, narrowing down both an advisor's ideal target client and the tactics that are most likely to lead them to becoming clients not only can help advisors save on the time and hard dollar costs involved in marketing, but also lead to more meaningful connections with clients who are a good fit for the firm (perhaps ultimately improving client retention rates down the line!).

How Next-Gen Financial Advisors Can Attract Clients In Their Peer Group

(Cheryl Winokur Munk | Barron's)

While pre-retirees and retirees are the target demographic for many advisors, some younger advisors (and others) seek to serve working-age clients. Which can call for a different type of marketing approach than they might use when seeking out older clients.

To start, given that many younger clients are digitally savvy and spend a significant amount of time online, creating content and publishing it across relevant online platforms (e.g., the social media sites an advisor's ideal target client is most likely to use) in different formats (e.g., repurposing a blog post into a short video clip). Once a prospect is in the door, advisors can potentially gain traction by focusing on their unique needs, preferences, and stage of life. For instance, while retirement planning is no doubt an important topic, younger clients' 'pain points' might be more short-term in nature (e.g., saving to buy a home) and these clients might appreciate an advisor who offers creative solutions rather than standard advice (and helps them prioritize their goals). Younger clients might also value an advisor who is willing to have a comprehensive planning relationship with them (perhaps by using a fee-for-service model) despite not having (yet) built up as many assets as older clients (which could be an opportunity for advisors to attract certain younger clients who might be dissatisfied with the level of service they get working with their parents' advisor).

Ultimately, the key point is that attracting and serving younger clients can call for a different strategy than working with an older demographic. Which presents a potential opportunity for advisors who are willing to focus on working with this group, perhaps leading to a multi-decade client relationship!

How To Build Your Own AI Assistant

(Alexandra Samuel | Harvard Business Review)

In the two-plus years since the launch of ChatGPT brought generative AI into the mainstream, a number of use cases for AI have found traction among financial advisors: client meeting note tools can quickly summarize transcripts of client meetings and generate follow-up tasks and client emails; document extraction tools can automatically "read" and pull key data from client documents like investment statements, tax returns, and estate planning documents; and AI-powered compliance tools can sift through reams of trade records, client communication, and marketing copy to flag suspicious activities for compliance review.

Beyond these products available for purchase, advisors can also leverage one of several AI-powered tools (e.g., ChatGPT, Claude, or Gemini) to build "custom GPTs" that can serve specific purposes important to their work. For instance, such "custom GPTs" can help with writing, marketing, and content creation (allowing an advisor to give the AI tool examples and guidelines that they can use multiple times rather than relying on one-off prompts), how-tos and troubleshooting (which could be for the advisor themselves or for their clients), productivity and product management (helping the advisor create an ideal priority list for their day), or serving as a sounding board or brainstorming 'buddy' before presenting new ideas to colleagues (though in all of these cases, advisors will want to be on the lookout for 'hallucinations' or information plagiarized from another source).

Once an advisor has decided on a purpose for their "custom GPT", they can then choose a platform based in part on how they want to engage with it (e.g., ChatGPT allows interactions with a custom assistant via voice, while Claude has a strong grasp on writing style, and Gemini works well with Google Docs of Gmail threads to analyze). Next, experimenting and providing specific feedback to the AI tool can allow it to refine its responses and provide better output. Perhaps the most important step is providing the tool with guidance as to who it is (written in second-person, i.e., "You are a financial advisor working with retired clients"), what it is supposed to do (e.g., "write a series of blog posts outlining the benefits of Roth conversions), and the tone it should take (e.g., "upbeat but professional"). Providing the "custom GPT" with any background files or information (e.g., previous posts the advisor has written to better understand their style) can lead to better output as well.

Altogether, "custom GPTs" offer a relatively simple (no coding necessary) and low-cost (in terms of time and monetary investment) way for advisors to leverage AI for a variety of purposes, from generating new ideas to creating content more efficiently (while still using their discretion to ensure the output is high quality and that they are doing so in a compliant way).

Report Finds AI Reliance Could Lead To Impaired Critical Thinking

(Nicole Kobie | ITPro)

Technological innovations have made many tasks easier for humans, whether it's a dishwasher or a computer. Recent advancements in Artificial Intelligence (AI) go further, though, introducing the potential for humans to increasingly rely on AI systems to do 'thinking' tasks for them as well.

According to a report from researchers at Microsoft and Carnegie Mellon University, generative AI tools have the potential to reduce users' reliance on their own critical thinking faculties, passing some of this responsibility over to the AI platform they're using. The researchers surveyed 319 knowledge workers, finding that those with higher confidence in generative AI was associated with less critical thinking, while higher self-confidence was associated with more critical thinking. Those relying more on generative AI tools still applied their own critical thinking abilities, though this was done more in areas such as information verification, response integration, and task stewardship. Overall, the researchers concluded that "by mechanizing routine tasks and leaving exception-handling to the human user, you deprive the user of the routine opportunities to practice their judgment and strengthen their cognitive musculature, leaving them atrophied and unprepared when the exceptions do arise," suggesting that reliance on generative AI tools over time could reduce individuals' ability to flex their cognitive muscles (perhaps in areas outside of work as well?).

Ultimately, the key point is that while generative AI tools offer the potential to take on 'thinking' tasks from workers, reliance on these platforms could inhibit an individual's ability to leverage these abilities when needed (including in areas where AI might not be as effective). In the financial planning world, these findings suggest that while AI could be helpful for more 'mechanical' tasks (e.g., extracting data from documents) or serving as a thought partner (e.g., helping to brainstorm or refine content ideas), relying on AI to create financial planning analyses and questions could leave advisors less prepared to answer direct questions from clients or to fully understand the implications of different courses of action (perhaps reducing clients' confidence in the advisor in the process)?

Should You Record That Meeting?

(Mark Mortensen | Harvard Business Review)

One of the most popular current use cases for AI (particularly for financial advisors) is to use an AI-powered software tool to record, transcribe, and summarize meetings, which can allow attendees to focus on the conversation itself rather than on taking accurate notes and create a permanent record of what was discussed (which can be shared with attendees or team members who might have been absent).

While AI notetaking tools are no doubt convenient, they also introduce a new wrinkle into meeting dynamics: a conversation that might have been ephemeral (aside from the hand-written notes of attendees) is now made into a 'permanent' record. Further, because meeting recordings and summaries can easily be passed on to individuals who didn't attend the meeting (and might not have been invited in the first place), those who do attend can no longer control who is able to see or hear their comments. Together, these factors could impact meeting attendees' "psychological safety", the "shared belief within a group that it's ok to take risks, express ideas, and make mistakes". For instance, a meeting attendee might hesitate to issue a piece of constructive criticism if they don't know how far it will reach (or whether the AI notetaking tool will record the tone and content of their statement accurately). Which could ultimately lead to less productive meetings if attendees don't feel comfortable sharing ideas they wouldn't necessarily want to go beyond the group in attendance.

In sum, while AI notetaking tools are no doubt convenient, they can expand the reach of what is discussed in a meeting, which could affect the content of the meeting itself. Which suggests that leaders using these tools might consider whether the benefits of doing so for a particular meeting outweigh the potential consequences, not only for themselves, but also for other participants.

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We hope you enjoyed the reading! Please leave a comment below to share your thoughts, or make a suggestion of any articles you think we should highlight in a future column!

In the meantime, if you're interested in more news and information regarding advisor technology, we'd highly recommend checking out Craig Iskowitz's "Wealth Management Today" blog.