Weekend Reading For Financial Planners (February 3-4)

Why Do Investors Keep Their Financial Advisors Around?

(Danielle Labotka | Morningstar)

Financial advisors tend to enjoy high client retention levels (an average of 97% of their clients on a year-to-year basis, per the latest InvestmentNews Advisor Benchmarking Study), often thanks to the high level of client service provided (though perhaps client inertia can play a role as well). Nevertheless, given the potential loss of revenue that can come when a client departs, taking a step back to consider whether they are providing the types of services and communication methods their clients seek can help advisors keep their retention rates as high as possible.

According to a recent survey by Morningstar of 620 financial advisory clients, the most common reason cited by respondents for sticking with their advisor was discomfort handling their own finances (with 37% of respondents saying this is the case), the quality of financial advice (22%), and behavioral coaching (16%). Notably, investment returns were only cited by 12% of respondents, indicating that advisors likely need to do more than simply generate strong returns to promote client retention (though solid portfolio performance almost certainly does not hurt!).

These findings suggest that advisors can potentially improve their client relationships (and promote retention) by ensuring that their clients trust them to handle financial issues that the clients might not feel comfortable handling themselves, including by demonstrating care for the client's future and acting in their best interest. In addition, Morningstar found that clients did not just want 'good', but general, advice (e.g., when it is generally advisable to contribute to traditional versus Roth retirement accounts), but rather 'good' advice based on their unique needs (e.g., helping them decide whether to contribute to a traditional or Roth account in a given year). Taking an approach tailored to a client's unique situation also can help clients better understand how the different pieces of their plan to each other (e.g., how their asset allocation relates to their goal to retire early). In addition, while very few clients approach an advisor explicitly looking for behavioral coaching, giving clients the confidence to make better decisions can lead to more effective plan implementation and client satisfaction.

In the end, while advisors often spend significant time prospecting for and onboarding new clients, taking a purposeful approach to client retention can pay dividends as well for the health of their business. And the Morningstar research suggests that spending more time working with current clients on the emotional side of planning rather than focusing primarily on returns could be a key to keeping clients with the firm for the long run! 

Study Finds SEO, (Quality) Email, Video Boost Advisor Digital Marketing Effectiveness

(Snappy Kraken)

In decades past, financial advisors often relied on analog forms of marketing, from in-person seminars to mailed flyers. But amidst the broader information technology revolution (where nearly everyone uses the internet and email), digital marketing has become increasingly popular (and important) for advisors. Nonetheless, given the wide range of potential digital marketing tactics (and the time and dollar cost involved in implementing them), it can be challenging for advisors (who typically are not marketing professionals themselves) to choose the most effective approach for their needs.

To support advisors in making these choices, advisor digital marketing company Snappy Kraken analyzed 250 million data points from campaigns sent by 10,000 advisors on its platform to determine which methods are most effective. In a forthcoming report (set to be released February 5), the company highlights the importance of Search Engine Optimization (SEO) in attracting new website visitors, as advisors who invest in SEO saw a 94% increase in unique new visitors to their websites and a 93% increase in the number of visitors who initiated sessions (indicating greater engagement and interaction with the site). Within the broader umbrella of SEO, the company found that particularly effective tactics include the use of long-tail keywords (i.e., keywords that are less frequently used because they are more specific, for example, using "financial advisor in Reston Virginia" rather than just "financial advisor"), maintaining an up-to-date Google Business profile, and adding a "text me" widget to drive email opt-ins. 

Overall, the study found that email remains the top-performing marketing channel for advisors (with advisors on the Snappy Kraken platform reporting that 55% of their website and landing page traffic is driven by email marketing). Further, the company found that the most effective email campaigns had high-quality subject lines (to get recipients to open it in the first place) and had a consistent cadence (at least once per week). Another way to boost the effectiveness of email marketing was the addition of video content, as emails with embedded videos had a 117% better open rate and a 120% higher click rate than text-only emails. Nevertheless, while email was the top-performing channel, text messaging was found to be the most efficient mode of communication, with a 97% faster response rate than email (with shorter, more straightforward texts being the most effective). 

Altogether, this research indicates that enhancing the way current content is discovered and distributed (from improving website SEO to the cadence of marketing emails) can be particularly effective in helping financial advisors win more prospects. Which suggests that advisors do not necessarily need to take on a brand-new marketing strategy (and the time and money it entails) but rather can see significant gains from making the most of the content they already produce! 

CFP Board Publishes Technology Guide For CFP Professionals

(CFP Board)

While face-to-face interactions remain at the center of financial advice engagements, advances in advisor technology have allowed advisors to provide a higher level of service for their clients, from offering more comprehensive plans with more detailed analysis (e.g., advanced Monte Carlo functionality) to leveraging tools that enhance client engagement. Nevertheless, while the increasing popularity of AdvisorTech tools (and the sheer growth of available tools and categories!) can potentially improve advisors' ability to serve their clients (and grow their business in the process), it remains important for advisors to fully understand how these tools work to ensure they are producing accurate outputs for their clients. 

With this in mind, CFP Board includes a section on "Duties When Selecting, Using, And Recommending Technology" within its Code of Ethics and Standards of Conduct. These standards require CFP professionals to "exercise reasonable care and judgment when selecting, using, or recommending any software, digital advice tool, or other technology while providing professional services to a client", to "have a reasonable level of understanding of the assumptions and outcomes of the technology employed", and to "have a reasonable basis for believing that the technology produces reliable, objective, and appropriate outcomes". In sum, while AdvisorTech tools have the potential to improve client service, CFP Board highlights the importance for advisors of understanding not only how to use such software, but also whether it will lead to useful outcomes for clients.

To help advisors navigate these guidelines and the growing AdvisorTech landscape, CFP Board recently published a guide to its technology standard. For instance, the publication includes a questionnaire to help advisors perform vendor due diligence, not only to identify potential opportunities from using the software, but also potential risks from using the tool (e.g., how does the vendor identify and resolve defects in the software). Another list of potential questions can help an advisor decide whether a tool's default assumptions are appropriate and understand how they are modified or updated. The guide also highlights the need not only for firm owners and lead advisors to have a firm understanding of technology being used, but also to ensure that those performing tasks on their behalf using the software (e.g., a paraplanner) also have a firm grip not only on how to use the software but also how its functionality and built-in assumptions affect its analyses and output.

Ultimately, the key point is that while technology has revolutionized the way advisors do business and serve clients, CFP professionals have a responsibility to ensure that these tools are being used in a way that ultimately benefits their clients. And with the Securities and Exchange Commission (SEC) taking a closer look at investment advisers' and broker-dealers' use of technology (particularly artificial intelligence tools), this issue could become increasingly salient for a broader range of financial advice professionals going forward!

A Step-By-Step Guide To Understanding RIA M&A Transactions

(Richard Chen | Advisor Perspectives)

The acquisition of one RIA by another can be beneficial to both parties. Buyers can use Mergers and Acquisitions (M&A) activity not only to grow their client base, but also to gain the talent of the selling firm (which has become a particularly valuable proposition in the current competitive environment for advisor talent), while owners of selling firms can monetize the investment they've made in their firm, and perhaps benefit from potential economies of scale available by joining a larger firm (e.g., centralized compliance). Nevertheless, given the gravity of M&A deals (from the potential for a buyer to get little value from the firm they buy to the fact that the firm might be the largest asset on a seller's personal balance sheet), the process of completing a transaction typically involves many steps and significant due diligence on both sides. 

After preliminary discussions between the 2 parties (perhaps over drinks at a financial advisor conference), they will typically sign a mutual Non-Disclosure Agreement (NDA) to allow for more in-depth discussions and due diligence of each firm to determine whether a deal might be a good fit. If the parties are then able to come to a preliminary agreement on the terms of the transaction (including the valuation of the firm to be acquired), they will enter into a Letter Of Intent (LOI) or similar document that outlines the tentative terms of the deal. Notably, while these deal terms typically are not binding, an LOI can also include a binding "no-shop" provision restricting the seller's ability to negotiate with other parties until the provision expires (which protects the potential buyer from expending effort on due diligence at the same time the seller is also negotiating with another firm). Once both parties have satisfactorily completed their due diligence of the counterparty, legal transaction documents can be prepared including, among other items, key terms (e.g., the purchase price) as well as representations from the seller to assure the buyer that its business has been run in compliance with relevant laws and regulations. After these documents are signed, the parties may then publicly announce the deal and notify their clients.

While the signing of a deal might be cause for celebration for both parties, there is still significant work to be done. For instance, the seller's investment advisory contracts will need to be reassigned to the new firm, requiring the firm to gain their clients' consent to do so (in some cases positive consent [i.e., having the clients actively agree to move to the new firm] will be required, while in others negative consent [i.e., the clients merely have to not object to moving to the new firm] could be sufficient). And even after a deal is subsequently closed, buyers will need to work to integrate the seller's staff and clients into their firm while sellers might need to complete regulatory and tax filings to reflect the sale of the business.

In sum, the (sometimes lengthy amount of) time it takes to complete an RIA M&A transaction reflects the high stakes for both the buyer and the seller (and each side might have experienced multiple failed deals as well). Which suggests that firm owners looking to build through acquisitions or those seeking to sell their firm will want to be prepared for a potentially lengthy and detail-filled process (on top of managing the ongoing operation of their respective firms!). 

DeVoe: Minority Deals On The Decline

(Diana Britton | Wealth Management)

RIA M&A deals often involve the sale of an entire firm, perhaps because the firm owner is retiring (and does not have a suitable internal successor) or perhaps because they anticipate being able to grow their book of business more effectively within the umbrella of a larger firm. Nonetheless, an alternative for firm owners is to sell a minority stake in the firm to an outside investor, perhaps to partially monetize their stake or to gain capital to pursue client growth.

This investment model has gained traction in recent years, with new firms (e.g., Rise Growth Partners and Constellation Wealth Capital) looking to take minority stakes in RIAs. However, amid a downturn in the number of total RIA M&A deals in 2023, the number of minority investments fell as well, from 28 in 2021 to 23 in 222 to 20 in 2023 (minority deals also fell as a percentage of total annual transactions), according to DeVoe & Company's 4th Quarter 2023 RIA Deal Book. Despite this downtick, CEO David DeVoe expects minority investment activity to expand, in part because while many RIA founders are nearing retirement, younger generations within the firm often cannot afford to buy them out in full (DeVoe's latest M&A Outlook survey found that only 18% of RIA executives are confident that next-gen advisors could afford to buy out the owners, down from 38% 2 years ago). Another potential accelerant is the potential for minority investors to also contribute intellectual capital to a deal that could help the advisory firm operate more efficiently (though the 2 sides can negotiate whether this input is strictly advisory or whether the investor has the right to request certain changes, even though they only hold a minority stake). 

Altogether, while the introduction of new firms looking to make minority investments in RIAs has brought fresh capital to the RIA industry, there has yet to be an explosion of deals. Nevertheless, this presents an additional opportunity for advisory firm owners without an established succession plan (and staff that might not be able to afford to buy them out in full) or those looking for outside capital to grow their firm to do so without having to sell their firm in whole to an outside buyer!  

Why PE Can't Get Enough RIAs

(Emile Hallez | InvestmentNews)

Over the past decade, Private Equity (PE) firms have shown increasing interest in investing in RIAs, thanks in part to the high retention rates and recurring revenue they enjoy. Notably, these investments appear to be driving a significant percentage of RIA M&A activity, as PE-funded buyers scoop up smaller firms.

According to data from Fidelity, there were 178 PE-backed RIA deals in 2023, up from 171 in 2022 and 61 in 2020, accounting for 78%, 75%, and 47% of total M&A for those years, respectively. Further, all 20 of the RIAs that engaged in 3 or more deals in 2023 were backed by PE (and 60% of all firms that made an acquisition were PE-backed). Notably, while PE firms often make investments in distressed firms and try to rehabilitate them, the RIAs taking in PE investments frequently have strong operations and are looking for outside capital to support further growth. Which can be beneficial for both sides, as the PE firms can take a more hands-off approach and the firms do not necessarily have to make major changes sometimes demanded by PE investors. In fact, while PE firms often cash out their investments after several years, some investors in the RIA space are reinvesting in these firms thanks to the success they have experienced and the potential for future profits.

Ultimately, the key point is that while PE investments have sharply disrupted other industries (e.g., through massive layoffs or asset sales), these firms appear to be taking a more passive approach to their RIA investments, to the mutual benefit of both parties (as well as to the owners of firms acquired by PE-backed RIAs, who are able to benefit from additional capital looking to buy out smaller firms). And so, while there are some headwinds to further growth in PE-backed deals, including the relatively elevated interest rate environment (which could constrain PE firm borrowing needed to support certain investments) and the potential need for serial acquirors to 'digest' their recent deals and integrate acquired firms into the larger RIA, the profitability of the RIA space as a whole makes it an attractive recipient for these external investment dollars!     

Trying Out The IRS' New Free Tax-Filing Tool

(Richard Rubin and Ashlea Ebeling | The Wall Street Journal)

Advances in software have made it increasingly easy for individuals to file their own taxes. Rather than rely on paper forms and lengthy tables, consumers can now prepare and file their taxes using step-by-step guidance provided by various software products. The downside, though, is that this assistance often comes at the cost of purchasing the software (on top of the taxes owed!). And even for those for whom the software is technically free (whether because they have a relatively simple return and/or meet certain income limits), the software providers often try to upsell these consumers on higher-end tax products. 

These tax preparation costs led to calls for the IRS to create its own tax filing software, which consumers could use to file their own taxes without paying any fees or being subject to upselling pitches. And while such proposals languished for years due in part to opposition from private tax-preparation companies (who stand to lose business) and some legislators (who questioned whether such a program was an efficient use of government funds given the available alternatives), the IRS this year is finally debuting its Direct File online portal to allow (a relatively small group of) consumers to file their taxes directly through the IRS website for free.

While the IRS is looking to expand participation in the Direct File program in the future, it is currently limited to individuals in 12 states (though these include large states like California, Florida, and New York) with relatively simple returns (notably, the program is currently invitation-only but the IRS wants to make it available to the broader public starting in mid-March). For instance, while those whose income only comes from W-2 employment and take the standard deduction might be eligible, the software currently does not support those with self-employment or capital gains income. Further, users of the Direct File service will find that the software has fewer bells and whistles than commercial software (e.g., downloading data directly from a W-2), though the IRS will offer a live chat function for users with questions. While these limits might frustrate some potential users, the IRS has said that it is starting small on purpose to see how the process works and whether returns filed this way are more likely to contain errors. 

In the end, while the Direct File program is currently limited in scope (and relatively few financial planning clients will likely be eligible), it could represent the first step toward allowing a broader swath of consumers to prepare and file their taxes for free. At the same time, taxpayers with more complicated situations might choose to eschew tax preparation software altogether, preferring to work with a human tax preparer given the potential for costly errors or lengthy audits from self-prepared returns!  

A Financial-Aid Form Is Upending College Decisions

(Oyin Adedoyin | The Wall Street Journal)

Each Fall marks the beginning of the college application and financial aid process for students and their parents and for those applying for financial aid for the first time (and some returning filers!), filling out the Free Application For Federal Student Aid (FAFSA) can be an intimidating prospect. And so, to help alleviate some of the confusion related to the FAFSA form, Congress in late 2020 approved changes to the FAFSA, as well as the formulas used to determine financial need, which are set to take effect for those filing the FAFSA this year.

Several of the changes to the revamped FAFSA could increase students' eligibility for aid, depending on their circumstances. For instance, while distributions from grandparent-owned 529 plans were previously reported as untaxed income for the student (reducing their aid eligibility by as much as 50% of the amount of cash support), they will now low longer impact a student's eligibility for aid. In addition, the federal financial aid formula will become more generous to lower-income students, allowing an additional 1.7 million students to qualify for the maximum Pell Grant (which is worth $7,395 for the 2023-2024 school year). On the other hand, certain changes could reduce students' eligibility for federal aid; for instance, families will no longer receive a break for having multiple children in college at the same time (and this could impact many middle- and higher-income clients, who are expected to contribute to college costs according to the new "Student Aid Index" calculation).

Notably, given the changes to the form, the FAFSA filing season started later this year (for those applying for aid during the 2024-2025 school year), with the new form coming online in late December, rather than the customary October 1 start date (the Department of Education has said that it plans to revert to an October 1 start date next year). Further, colleges were set to wait an additional month (or more) for this data, which, combined with the later start date for students, is likely to lead to significant delays (compared to previous years) for students to receive financial aid offers. And while students who apply by the non-binding Early Action or regular application deadlines typically have until May 1 to tell a college whether they are coming (and will hopefully have financial aid offers in hand by then), those who were accepted to a college through the binding Early Decision pathway (under which students can only get out of the commitment if they cannot afford to attend) might not receive their aid award before the deadline to accept the offer of admission (though many schools are either extending their deadlines or are using other forms to calculate aid awards).

In sum, while the revised FAFSA form could make the financial aid application process simpler for future classes, its rollout has led to increased anxiety for college applicants and their families this year. And while financial advisors might not be able to speed the financial aid process, they can help their clients understand how different college contribution amounts would affect their financial plan in order to help inform their (and their students') decision-making when admissions and aid decisions (finally) arrive!

The 529 To Roth IRA Rollover For 'Excess' College Savings (Or A Mega-Delayed Backdoor Roth?)

(Jim Dahle | The White Coat Investor)

529 plans offer a tax-efficient means of saving and paying for college expenses. Notably (among other benefits), distributions from 529 plans are tax- and penalty-free to the extent that they are used for the beneficiary's qualifying education costs. Nonetheless, some families interested in saving for college hesitate to contribute to these plans because they are concerned their child will not use all of the funds, and the parents will be subject to taxation and a 10% penalty on the earnings in the plan if they have to withdraw the funds for non-qualified purposes because there was 'excess savings' beyond what was actually needed for qualified higher education expenses.

Although in reality there are several other potential 'outs', given this lingering concern, a portion of the "SECURE Act 2.0" law passed in late 2022 allowing (limited) transfers from 529 plans to Roth IRAs received significant attention (as savers might feel more comfortable funding a 529 plan if they knew the excess/remaining balance could be transferred to a Roth IRA without incurring a tax burden). However, this opportunity comes with several restrictions; for example, the 529 plan must have been maintained for 15 years or longer (so it's not a quick backdoor Roth IRA contribution strategy), the annual limit for how much can be moved from a 529 plan to a Roth IRA is the IRA contribution limit for the year, less any 'regular' traditional IRA or Roth IRA contributions that are made for the year (i.e., consumers will not be able to 'double dip' by making both a 529 plan-to-Roth IRA transfer and a 'regular' contribution in the same year, they'd simply be funding their annual Roth IRA contribution from their 529 plan instead of their personal savings), and the maximum amount that can be moved from a 529 plan to a Roth IRA during an individual's lifetime is $35,000. In addition, ambiguity in the text of the law raises a variety of questions that have not been clarified by the IRS (e.g., whether the lifetime limit applies on a per-beneficiary basis, or to each funding taxpayer).

Of course, these restrictions and lingering questions do not take away from the primary purpose of 529 plans (to save for qualified education expenses). Nonetheless, some individuals have explored a potential strategy of treating the 529-to-Roth rollover as a kind of delayed mega-backdoor Roth IRA, where they fund their own 529 plan, allow it to grow over the 15-year 'seasoning' period (with the goal of it reaching close to $35,000 in value), and then plan to make regular transfers to their Roth IRA subject to the annual limits (thereby allowing for the possibility of eventual tax-free withdrawals from the Roth IRA of the gains accrued in the 529 plan that would have otherwise been subject to taxation and the 10% penalty). Yet even as Dahle recognizes the potential gains from this approach, he suggests the effort required to do so might not be worth the benefits (particularly given the $35,000 maximum). When comparing such an approach to funding a taxable account and paying tax on the long-term capital gains when it is liquidated, he estimates a benefit of $5,000 (or $10,000 if both spouses take this approach). While that might not be an insignificant amount of money for many taxpayers, those engaging in this strategy would not only have to deal with the 'hassle' of handling extra accounts and the eventual transfers but also the possibility that future interpretations or revisions to the law could reduce the effectiveness of this approach.

In the end, 529 plans remain a tax-efficient way to save for qualified higher education expenses, and many families who contribute to these plans will find that they have no problem using up the funds (whether for their own children, or perhaps creating a "Dynasty 529 Plan" that could last for generations). To that end, having the additional ability to roll over 'excess' 529 plan savings into a Roth IRA provides yet another reason to comfortably fund (even at the risk of slightly "overfunding" a 529 plan). Still, though, for more proactive advisors and clients, some appeal remains to take the tactic even further, as a delayed version of another backdoor Roth tactic, where one potential use case would be to fund the 529 plan for a child soon after they are born, allowing the balance to grow and eventually be transferred to the child's Roth IRA tax-free once the child has earned income.

Your Healthspan Is As Important As Your Lifespan – And It's Declining

(Alex Janin | The Wall Street Journal)

When longevity is discussed, it usually is in terms of an individual's lifespan, or the years they are (expected) to live. However, this data point does not tell the full story of how one might enjoy their life (or be able to spend their money during their later years); instead, healthspan, often defined as the number of years an individual is healthy and able to do the activities they choose, can show how well a person is living rather than just whether they are alive.

According to researchers at the University of Washington, the estimated proportion of life spent in good health among Americans fell to 83.6% in 2021 from 85.8% in 1990. And even though average life expectancy rose in this period from 75.6 years to 77.1 years in 2021, the number of healthy years declined slightly from 64.8 years to 64.4 years, so that the average estimated gap between Americans' overall years and good-health years expanded from 10.8 years to 12.7 years during this period (meaning that Americans are spending more time in an unhealthy state).

Researchers cite a couple primary reasons for the growing lifespan-healthspan gap. On the more positive side, Americans' increasing lifespan means that there are more opportunities to develop an age-related condition (whereas an individual might have died quickly of heart disease or cancer in previous years, they could live longer now). On the negative side, other conditions, such as diabetes, obesity, and substance-use disorders are becoming more prevalent at earlier ages in the United States and can also lead to a shorter healthspan (27% of U.S. adults had multiple chronic conditions in 2018, compared to 22% in 2011, according to a Centers for Disease Control and Prevention study). Notably, these chronic conditions not only can affect the physical health of those who suffer from them, but also their overall wellbeing; a 2022 study found that having a substantial health problem reduces life satisfaction more than losing a job or becoming widowed, divorced, or separated.

In sum, the concept of healthspan suggests that 2 individuals could have the same lifespan but very different experiences within it. In a financial planning context, while knowing a client's estimated lifespan can help with planning projections (to ensure they do not run out of money), understanding their healthspan can help inform their potential future spending trajectory (and income needs) as well (e.g., while clients in good health might have significant spending on travel, those with a chronic illness might have fewer lifestyle expenses but higher medical bills)! 

How To Keep Muscles Strong As You Age

(Lauren Young | Scientific American)

Many teenagers and young adults spend significant time in the gym trying to build and tone their muscles, whether for aesthetic or health purposes. But as we age and responsibilities build, there might be fewer hours available for muscle-developing exercise. At the same time, research suggests the importance of maintaining (or even building) muscle mass is no less important over time, as those who are able to do so frequently live longer, healthier lives.

While an individual might be pleased with their current strength, everyone faces the specter of age-related muscle loss, with one study suggesting that muscle mass decreases by about 3% to 8% per decade after age 30 and at higher rates after age 60. Which means that in the absence of muscle-building exercise, individuals could become weaker over time. And even if an individual is not focused on how much they can bench press as they age, muscles can play a pivotal role in maintaining health; for instance, muscle loss is a common contributor to severe falls and accidents that can lead to severe injury (or even death) in older adults.

While the prospect of strength training might seem intimidating to those who haven't been to the gym in a while, researchers suggest that making a commitment to relatively simple movements (as well as a healthy diet) can help defray the effects of age-related muscle loss over time. To start, muscle mass can be built by walking or riding a bicycle regularly. To take it up a level, high-velocity resistance-training programs that target both muscle power (i.e., lifting weights quickly) and strength (lifting heavier weights) can help adults better perform daily life activities. 

Ultimately, the key point is that without regular movement, our muscles will tend to atrophy as we age, increasing the risk of falls and potentially slowing the recovery from health events like surgeries. Nonetheless, individuals at nearly every fitness level can take steps to combat this phenomenon, whether it is getting up and outside for an active walk or picking up a set of dumbbells or resistance bands to work specific muscle groups! 

Happiness Is A Warm Coffee

(Arthur Brooks | The Atlantic)

According to one study, about 85% of Americans consume caffeine each day, whether in the form of coffee, tea, soda, or caffeine-infused energy drinks. And while the immediate effects (e.g., increased alertness) of caffeine intake tend to be clear to users, those whose daily routine includes a significant amount of caffeine might wonder about the overall health effects of this habit.

Luckily for those who enjoy a morning beverage, some research has found a variety of benefits to caffeine intake, including a significant increase in happiness and calmness and a decrease in tenseness. In addition, combined with exercise, caffeine can improve cognitive performance as well as enhance reaction times and logical reasoning abilities (which might explain why many individuals need a cup of coffee before their morning commute or first meeting of the day!). However, it is worth noting that as an individual consumes more caffeine over time, their body can eventually develop a state of tolerance to it, thereby requiring more caffeine to get similar benefits (which is why some individuals might need multiple cups of coffee to get the same benefits that they did from 1 in the past). Further, ingesting too much caffeine could cause jitteriness and potentially disrupt one's sleep. 

Altogether, research suggests that a cup of coffee is not just good for a morning pick-me-up but can provide a range of other benefits for daily living. That said, knowing one's caffeine tolerance can help determine a 'normal' amount of caffeine to consume to avoid any potentially negative side effects! 

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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.