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Summer Reading List Of “Best Books” For Financial Advisors – 2021 Edition

June 14, 2021 07:09 am 2 Comments CATEGORY: Personal/Career Development

As the vaccination count continues to rise and the new case count for the coronavirus continues to decline, more and more people – including financial advisors – are beginning to emerge from the shutdown and return to ‘life as normal’, which means a return to school, a return to the office… and now that summer is arriving, a return to the family trip and summer vacation. Which means some downtime for rest and relaxation. And for many, that includes finding some time to read and catch up on a few good books!

For those who love a good book, though (and especially for those who have limited time and will only get to read a few), the question quickly becomes “what’s a good book worth reading these days?” As a voracious reader myself, I'm always eager to hear suggestions from others of great books to read, whether it's something new that's just come out, or an "old classic" that I should go back and read (again or for the first time!). And so, in the spirit of sharing, a few years ago I launched my list of "Recommended (Book) Reading for Financial Advisors", and it was so well received that in 2013 I also started sharing my annual "Summer Reading List" for financial advisors of the best books I'd read in the preceding year. It quickly became a perennial favorite on Nerd's Eye View, and so I've updated it every year, with new lists of books in 2014, 2015, 2016, 2017, 2018, 2019, and a fresh round last year in 2020.

And now, I'm now excited to share my latest Summer Reading list of top books for financial advisors in 2021, including some suggestions from our growing ‘team of nerds’ here at Kitces.com, from a deep dive into how helping clients with their money psychology can impact their wealth more so than ‘just’ the technical financial planning advice, why it’s so important to create time and space for the “Deep Work” that adds the most value, what the financial advice business can learn from the restaurant hospitality business, why the long-term key to building a successful business is not about maximizing your own skills and productivity but in finding the “Whos” that can help turn your ideas into reality (and then how to get the most out of the people on your team), what it takes to be more relevant for prospective clients and how to get them to actually see your value as a financial planner (hint: stop telling them about the value of your financial planning advice, and just start giving them financial planning advice that they’ll only want more of!), and some great guidance on how to not just have more answers for clients but how to ask better questions (replete with a list of actual questions to try out with your clients!).

So as the summer season gets underway, and summer vacations return, I hope that you find this suggested summer reading list of books for financial planners to be helpful… and please do share your own suggestions in the comments at the end of the article about the best books you've read over the past year as well!

Weekend Reading for Financial Planners (June 12-13)

June 11, 2021 02:58 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the big industry news that LPL has formally announced the rollout of a 'standalone' RIA custodial solution for fee-only RIAs, promising no asset minimums and a more "high-touch, white-glove" approach than its larger competitors (i.e., Schwab and Fidelity), as the largest independent broker-dealer (and third-largest RIA custody given LPL's hybrid RIA assets) continues its shift from brokerage-based roots to becoming a platform for RIAs as the industry at large continues its own shift from brokerage to advisory and products to advice.

Also in the industry news this week are a number of other interesting headlines:

The latest Schwab Independent Advisor Outlook Study finds that the average advisory firm added more clients in 2020 than prior years, but also is struggling more with new competitors in the advice business
Wealthy investors are increasingly shifting their investment preferences towards a more values-based approach as "purpose-driven investing" threatens to replace "goals-based investing" (at least for HNW clients)

From there, we have several interesting articles on industry regulation:

FINRA withdraws its proposal to modify the expungement rules as PIABA claims it is not stringent enough in limiting such expungements to ensure consumers (and other regulators) have access to information about consumer complaints against problematic brokers
New legislation in Congress is shining a fresh light on whether it's time to end "mandatory arbitration" clauses in broker-dealer and RIA agreements
The SEC is pledging to step up enforcement of Regulation Best Interest, and FSI is pushing back against the potential for "regulation by enforcement"

We've also included a number of articles on the ongoing debates around income and wealth inequality and the broader economy:

A controversial investigative report from ProPublica finds that 25 wealthiest US billionaires paid an average tax rate of less than 16%, as the ultra-HNW increasingly take advantage of ultra-low interest rates to borrow against their assets for spending to avoid the need to liquidate and pay capital gains taxes
A new study suggests that the "global savings glut" may be primarily driven by the concentration of wealth, such that the wealthiest households literally can't deploy their cash quickly enough back into the economy (leading to a rise in savings that is driving down interest rates and fueling low-interest debt in the bottom 90% of households)
The balance between workers and businesses appears to be shifting as wage growth suddenly gains traction while the total number of working-age Americans declines for the first time ever

We wrap up with three final articles, all around the theme of trying new things:

Often the best "crazy new ideas" are the ones that are most widely criticized... until they're accepted and become self-evident
How self-criticism is only constructive up to a certain point, beyond which being introspective can actually become self-limiting
Why in the end, the best way to really learn something is not to study on it and pass a test about it, but to do it and even fail at it (because once you've failed and felt the pain of failure, you rarely ever forget that lesson for the rest of your life!)

Enjoy the 'light' reading!

Maximizing Split-Interest Charitable Deductions With New Pooled Income Funds Over CRTs

June 9, 2021 07:09 am 9 Comments CATEGORY: Taxes

Split-interest gifting has long been a staple of charitable tax planning for affluent individuals, where assets are “split” between individual beneficiaries (e.g., the donor themselves or their family members) and charitable beneficiaries. At its core, the appeal of such split-interest vehicles – particularly the ‘charitable remainder’ type – is the opportunity to claim a current tax deduction now, for a donation that can still generate income for the desired income beneficiaries in the years to come… paired with a remainder that only goes to the charity in the potentially-distant future.

The caveat, though, is that the charitable tax deduction for a charitable remainder trust and similar split-interest vehicles is determined by calculating the present value of the income interest that will be left to non-charitable beneficiaries, and subtracting that value from the upfront contribution to determine the value of the remainder. Which means the lower the interest rate, the higher the value of the non-charitable income interest, and the lower the value of the upfront charitable deduction. Which has diminished the desire to establish CRTs and other split-interest vehicles in the current low-rate environment.

However, Pooled Income Funds (PIFs) operate under slightly different rules, which can make them somewhat more appealing for split-interest giving at low yields. Functionally, PIFs are similar to CRTs, in providing an income interest to some non-charitable individuals (e.g., the donor or their family members) and the remainder to a charity. However, while CRTs typically pay out a fixed stated dollar amount or percentage of the trust, PIFs are assumed to pay out whatever their income actually will be (based on whatever their returns have been for the preceding 3 years). Which means when interest rates and projected returns are low, so too is the assumed payout rate from the PIF… allowing for a larger charitable deduction for the split-interest gift (albeit at a ‘cost’ of not necessarily generating as much income for the income beneficiaries).

For new Pooled Income Funds that have been formed, though, there is no 3-year history to determine an assumed return, and as a result the Treasury Regulations state that new PIFs are expected to use an assumed rate of the IRS 7520 rates reduced by 1%... producing an even lower interest rate assumption in the current environment, and an even higher charitable deduction. Except to the extent that the new PIF – or NPIF – actually earns a higher return in the future, it can pay out a higher rate to its income beneficiaries, even after “locking in” the charitable deduction at the initial lower-interest-rate assumption, allowing for the best of both worlds (a favorable potentially-higher payout rate to income beneficiaries and a favorable lower-interest-rate assumption for the charitable tax deduction)!

In fact, some charities are now establishing NPIFs on a rolling basis specifically to allow a steady flow of new donors to take advantage of the new rules for more favorable charitable tax deductions. And are incorporating other more-flexible provisions into their PIF documents to further attract donors to participate (for which the sponsoring charitable institution hopes to be the charitable remainder).

Unfortunately, though, because NPIFs are so ‘new’ themselves, there is no centralized directory of sponsoring charities and opportunities, requiring those interested to explore with their own charities of choice (and the associated Planned Giving Departments). Nonetheless, giving the substantial additional tax benefits that may be available, those who have an interest in split-interest charitable giving (e.g., via a Charitable Remainder Trust) should at least explore whether their charity of choice may be sponsoring a New Pooled Income Fund to use or a better charitable tax deduction instead!?
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#FA Success Ep 232: Turning Your Personal Passion (For Financial Literacy) Into A Personal Brand, With Jamie Bosse

June 8, 2021 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 232nd episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Jamie Bosse. Jamie is a financial planner at Aspyre Wealth Partners, an RIA in Overland Park, Kansas that manages just under $500m in assets for 275 families.

What’s unique about Jamie, though, is how she’s been able to balance her own responsibilities within a firm that serves affluent clients, with writing a series of children’s books on personal finance and a soon-to-be-published “grown-up” book addressing many of the money issues that young parents face, as she crafts her own personal brand as the “Money Boss Mom”.

In this episode, we talk in depth about how Jamie found that creating content for Aspyre that spoke about financial decisions and issues she was making as a parent resonated with (and began to attract) a younger client base, how a “teachable moment” with her son was the inspiration for her first children’s book, “Milton Brings Home The Bacon”, the mechanics of the publishing process that Jamie had to navigate to bring that book to life, and how Jamie has found that the value of being a published author isn’t in book sales per se, but rather the goodwill that having a book brings to herself as a planner, as well as to the firm she works for, which benefits from the additional reach that Jamie’s brand can bring.

We also talk about how Aspyre charges both an AUM fee as well as a separate financial planning fee for their more ‘traditional’ clients (and how they think about the value they bring to the table when the all-in fee can approach 150 basis points), Jamie’s role in expanding the service model of Aspyre to serve next-generation clients that Jamie has been able to help attract to the firm, the subscription fee business model the firm implemented and the technology it's using to make next-generation client meetings more efficient, and how Aspyre has been testing out a surge meeting structure in order to create space to work on bigger picture projects within the firm (as well as the challenges that they’ve faced as they learn how to make surge meetings work for them).

And be sure to listen to the end, where Jamie shares how her own career journey, from starting at a firm that ended out being too small, to working at a bank that was too big, before settling in at a mid-sized RIA that was ‘just right’, mirrors the career progression of so many young planners as they find their right fit over the span of three career jumps in their early years, the lessons Jamie has learned around the importance of maintaining professional relationships and not burning bridges (because the financial advisor community isn’t all that large, and you never know who you’ll run into later in your career), and why Jamie feels it’s so important for younger planners to get involved in the advisor community as a way not only to give back to the profession, but to stay connected as well.

So whether you're interested in learning about how Jamie balances her personal brand as an author with her responsibilities within her firm, the process she uses to publish her books, or how she helped broaden the focus of her firm to be able to serve next-generation clients effectively, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Jamie Bosse.

The Latest In Financial #AdvisorTech (June 2021)

June 7, 2021 07:05 am 5 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the June 2021 issue of the Latest News in Financial #AdvisorTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors!

This month's edition kicks off with the big news that Zoe Financial has raised a $10M Series A round to accelerate its lead generation service for advisors, as the pandemic accelerates the consumer shift away from finding a local advisor in their area and instead to going online and finding the ‘best’ advisor to solve their particular financial challenges. As the reality is that with an average Client Acquisition Cost of over $3,100 for the typical advisor to get a single client, and a lifetime client value for a mass affluent client that is still 10X that cost or more, there is a significant market opportunity in driving new leads to advisors. In fact, the only real question is how many consumers are actually in the market for an advisor at any particular time, and whether there’s enough room for Zoe (and other advisor lead generation startups entering the same at the same time) to grow and scale.

From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:

Tifin Group pledges to spend $100M acquiring financial media sites to turn self-directed investors into clients of advisors
Altruist raises $50M as it shifts from RIA custodian to the All-In-One overlay that powers one
Vise raises $65M at a $1B valuation as Silicon Valley places its bets on advisor-driven Direct Indexing
InvestCloud acquires NaviPlan for what may become the digital storefront for its own financial products supermarket?

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including:

Skience launches a new centralized workflow platform to overlay any advisor’s CRM
RIA In A Box acquires Itegria to expand into outsourced IT support and cybersecurity
OnRamp launches a new platform to facilitate advisors monitoring their clients’ cryptocurrency investments
FMG Suite and WealthTender roll out new marketing modules for advisors to leverage client testimonials
ScratchWorks AdvisorTech incubator announces Season 4 applications are open through mid-June, with pitches to occur at the fall T3 Advisor Technology conference!

And be certain to read to the end, where we have provided an update to our popular “Financial AdvisorTech Solutions Map” as well!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!

Weekend Reading for Financial Planners (June 5-6)

June 4, 2021 02:56 pm 2 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with a fascinating industry study of more than 70,000 financial advisors showing that 2020 actually witnessed record client retention rates across the industry (94.6%) but also one of the slowest years for new client acquisition (ostensibly at least in part because so few clients were willing to change advisors in the first place?), as the advisory industry at large continues to shift into increasingly stable ongoing fee-based AUM relationships with its affluent clients (though in practice, the majority of affluent clients are also maintaining unmanaged brokerage accounts for at least some of their investable assets as well!).

Also in the industry news this week are a number of other interesting headlines:

A new white paper from Bob Veres and Matthew Jackson highlights how niche financial planning is becoming the new frontier (though arguably, fee-only financial planning already has been a niche for the past 20 years?)
An Arizent study finding that the majority of advisors wish to stay at least partially working from home as the pandemic subsides... although not significantly more than the number of advisors who already worked at least partially from home pre-pandemic!?

From there, we have several interesting articles on cryptocurrency:

The FPA's latest Trends In Investing survey shows a significant spike in the number of advisors looking to allocate more to cryptocurrency in the coming year (at 26%, up from fewer than 1% of advisors just 1 year ago)
Schwab may be gearing up to soon make cryptocurrency investing available on its platform
Why the dominance of cryptocurrency in the consumer media means advisors have to talk to clients about it, even if the advisor's view is that it's not (yet?) worth investing into

We've also included a number of articles on the growing buzz around inflation:

A recent study highlights the investments that perform better or worse when economies transition into higher inflation environments
The heat is coming off forward-looking inflation expectations as investment markets increasingly assume the Fed may act
How to have the 'inflation conversation' with clients by focusing on the Rule of 72 and how long it takes for prices to double

We wrap up with three final articles, all around the theme of adding value in client relationships:

The opportunities for even fee-only advisors to add value to clients with advice about their insurance policies (even and especially if the advisor isn't the one selling them)
Tips on how to have more productive annual client review meetings by breaking them into backward-looking and forward-looking sections of the meeting agenda
How to think about restructuring advice fees into Service Fees and separate Access Fees to better align the interests of the client and their advisor to provide ongoing value

Enjoy the 'light' reading!