Kitces.com - Advancing Knowledge in Financial Planning

Announcing New Members Section Tiers And Re-Visioning Nerd’s Eye View For The 2020s

January 13, 2020 07:07 am 2 Comments CATEGORY: Nerd's Eye View

When the 2010s began, the primary business of Kitces.com was selling $149/year subscriptions to The Kitces Report, our paid monthly newsletter on advanced financial planning topics that provided CFP CE credit. And ‘on the side’ we launched the Nerd’s Eye View blog, as a way to share content on industry trends and practice management – content that might help advisors to be more successful but wouldn’t necessarily be eligible for CFP CE.

Over the past decade, though, the Nerd’s Eye View blog grew exponentially – now to more than 250,000 unique visitors every month – driving a shift of our content to be increasingly available for free through the blog, and The Kitces Report to become part of a broader “Kitces.com Members Section” that offered fewer newsletter issues but also with other ways to earn CE credit (including CE credits for the Nerd’s Eye View blog and a growing library of webinars).

Now, however, the growth of the Kitces.com platform is allowing us to expand the Members Section even further. Beginning in February, our Basic tier will provide a series of new webinars available every month (in addition to CE opportunities for our Nerd’s Eye View blog content), and the Premier tier will gain access to all of our webinar (and The Kitces Report) archives, a new Kitces Graphic Library for advisors to use our blog graphics with their clients and prospects, and a new private Members-Only Office Hours for the advisor community to ask questions of Michael and the team directly. In addition, Kitces.com will soon be part of a pilot program to develop written CFP Ethics CE, which should become available to both Basic and Premier tiers in the second quarter!

To support the growth of the Kitces.com Members Section, we’re also excited to announce a number of new additions to the team, including Erica Crane as our new Senior Technical Editor, Matt Nelson as our new Director of Advisor Education, and promotions for Jeff Levine (now officially our ‘Lead Financial Planning Nerd’) and for Rachel Zeller (from Operations Manager to Managing Director)… with more hires anticipated in the coming year as we continue to expand the Kitces.com services to the advisor community!

As ultimately, the reality is that we’re still just getting started here at Kitces.com. While the decade of the 2010s was about a mission of “Advancing Knowledge in Financial Planning”, in the 2020s we’re expanding our mission further to “Helping Financial Advisors Be Better, And More Successful” – better in the technical knowledge of financial planning and the skills to deliver that advice, and more successful in your career, your business, or whatever it is that ‘success’ means to you. Which means in the 2020s you’ll see not only our ongoing educational Nerd’s Eye View content, but also more Research on best practices in being a successful financial advisor, more Resources to help you be successful in your career or business, and new programs to help you further build your financial planning skills.

I’m so thankful to all of you, our readers, for joining us on the journey this far, and I can’t wait to share more of what we’re working on in years to come!

Weekend Reading for Financial Planners (Jan 11-12)

January 10, 2020 03:02 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the industry news that Envestnet is partnering with Dynasty Financial to create a new "Advisor Services Exchange" (ASx), and in the process is taking a small financial stake in Dynasty, raising questions of whether Envestnet is seeking to evolve beyond its technology core into a broader range of advisor services.

Also in the news this week was the announcement that former Congressman Chris Dodd and Barney Frank have filed an Amicus Brief against the SEC regarding Regulation Best Interest (Reg BI) claiming that as the ones who wrote the law itself the SEC misinterpreted the authority they were granted under Dodd-Frank to issue Reg BI (and that therefore the rule should be vacated), the governor of Massachusetts is advocating on behalf of the financial product manufacturers and broker-dealers that the state should consider walking back its fiduciary proposal, and a coalition of trade associations are coming together to make the case that Congress should allow financial advisors to claim the 20% Qualified Business Income (QBI) deduction in the future (though it's not clear that Congress will take up any tax legislation this year!).

We also have several articles on practice management and succession planning, including: the benefits of deliberately hiring younger and less experienced (but potentially longer-tenured and more creative) advisors into a firm; the common reasons that Millennial advisors quit their advisory firms; how to better promote a culture of positive work/life balance to avoid burning out next-generation talent; the factors to consider (or not) when trying to select a future successor for the firm; and why the development of next-generation successor leaders in an advisory firm requires a fundamentally different set of talents than what the founder needed to learn to grow the business to that point in the first place.

We wrap up with three interesting articles, all around the theme of generalists versus specialists: the first explores how specialists have more opportunities to succeed but are also more prone to being disrupted and unable to adapt, such that it's important to keep some 'generalist' interests as well; the second dives into research finding that generalists tend to be more successful in slow-moving environments while in an increasingly complex world it's actually the specialists with the domain knowledge to spot opportunities in environments of rapid change; and the last introduces the concept of the 'Generalized Specialist', who develops a core competency of expertise but also tries to deliberately maintain a broader multi-disciplinary perspective as well (to be better able to both adapt and integrate new, disparate ideas).

Enjoy the 'light' reading!

How Required Minimum Distribution (RMD) Changes Under The SECURE Act Impact Retirement Accounts

January 8, 2020 07:04 am 23 Comments CATEGORY: Retirement Planning

Last month, the Setting Every Community Up For Retirement Enhancement (SECURE) Act was passed into law, creating the most substantial updates to the laws governing retirement accounts since the Pension Protection Act in 2006. One notable change resulting from the SECURE Act will be the increase in age at which Required Minimum Distributions (RMDs) must begin. Prior to the SECURE Act, individuals with IRA accounts or qualified employer-sponsored retirement plans were required to take RMDs beginning in the year in which they turned 70 ½ with a deadline (for the first RMD only) of April 1 of the following year.

Beginning in 2020, however, the new age at which RMDs must start is age 72 (also with a deadline of April 1 of the following year). Notably, RMDs for individuals who turned 70 1/2 in 2019 are not delayed, and instead, such individuals must continue to take their RMDs under the same rules prior to passage of the SECURE Act. Despite the delay in the starting age for RMDs, though, Qualified Charitable Distributions (QCDs) from IRAs will not be affected by the SECURE Act; accordingly, QCDs may still be taken from IRAs as early as age 70 1/2.

While the same life expectancy factors will continue to be used with no change under the SECURE Act, the IRS has recently (and separately) proposed to update the current life expectancy tables to adjust for longer expected lifespans. The IRS proposal has not yet been finalized, but is largely expected to be effective for RMDs calculated for 2021, and beyond.

Interestingly, for those who were born in the first half of the year (i.e., between January 1^st and June 30^th), the SECURE Act provides a longer delay of the first RMD than for those individuals born on July 1^st or later. Those with birthdates in the first six months of the year reach age 70 and 70 1/2 in the same year (and thus their first RMD is not required until two years later, when they reach age 72), whereas those whose birthdates are in the last six months of the year reach age 70 1/2 in the year they reach age 71 (and thus, their first RMD is ‘only’ delayed until the following year, when they turn 72).

The majority of retirees will not be impacted by the delayed RMD starting age (since most people aren’t able to afford to wait until the age when RMDs must begin), but for those that are, strategically timed Roth Conversions can be an effective tool to accelerate income in a tax-efficient manner, leveraging the additional time that IRA owners are afforded before their RMDs start, thus increasing their annual income.

Ultimately, the key point is that, while the change in RMD starting age won’t impact a large swath of the population, financial advisors are likely to have clients who will be affected by the change and who may benefit from the additional time in which Roth Conversions can be executed. Furthermore, advisors should also review their technology systems and planning processes, specifically for clients born after June 30, 1949 and who will be affected by the new RMD rules.

#FASuccess Ep 158: Leveraging Outsourcers To Go From Employee To Independent Without Building It All Yourself, with Stephanie Bruno

January 7, 2020 07:02 am 1 Comment CATEGORY: Financial Advisor Success Podcast

Welcome back to the 158th episode of Financial Advisor Success Podcast!

My guest on today's podcast is Steph Bruno. Steph is the founder of Sea to Peak Financial Advisors, an independent RIA with offices based in Seattle and Denver that oversees nearly $70 million in assets under management for 45 affluent clients.

What's unique about Steph, though, is that she transitioned to launching her own independent firm only after a 15-year career as an employee in large and mid-sized financial services firms and recognized that she didn't want to manage the infrastructure of actually establishing and running a new firm by herself, so she found an outsourcing partner that from the start would work with her to provide that structure so she could simply focus on what she wanted to focus on, serving the clients she wanted to serve the way she wanted to serve them.

In this episode, we talk in-depth about what led Steph to take the leap and walk away from a stable employee paycheck to build her own firm from scratch. How she initially tucked under another established hybrid advisory firm for support to grow, the realization that owning her own clients meant she'd have to market for her own clients, and now she was going to market herself anyway, she may as well break out entirely on her own, and why Steph decided to hire a personal coach to help her not when many other advisors do, which is once they hit a capacity wall and need to figure out how to best structure the practice going forward, but instead to get coaching support right from the start to help give her the courage and confidence to get through the difficult early years in the first place.

We also talk about Steph's financial planning process with clients and how she starts by creating a money meaning map using mind mapping software to help provide clients a deliverable to demonstrate her value after the very first prospect meeting, the way she integrates life planning conversations into her planning process, the challenge that Steph had in rebooting her marketing after relocating to a new city, and the way she's beginning to further shift her focus towards a niche of working with busy executives to better strengthen and focus her own marketing process, in particular with e-books and networking meetings going forward.

And be certain to listen to the end, where Steph talks about how, if she'd do it all over again, she would have taken the leap even sooner, but how even though it's worked out, the early years are still incredibly difficult. The role that both her coach and advisor-peers' support played in getting her through those challenging years early on, the reasoning she used when she decided to take an early withdrawal from her IRA to invest in herself in launching her new practice a decade ago, and the importance of recognizing the difference between doing work you're good at and being proud of it versus doing the work you really love to do.

The Latest In Financial Advisor #FinTech (January 2020)

January 6, 2020 07:06 am 4 Comments CATEGORY: Technology & Advisor FinTech

Welcome to the January 2020 issue of the Latest News in Financial Advisor #FinTech – 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 and wealth management!

This month's edition kicks off with the big announcement that Fiserv is spinning off its 'tiny' (at least relative to Fiserv’s banking and payments business) investment services unit, valued at $880M, to a private equity firm focused on aggressively growing Fiserv’s presence in the enterprise ‘WealthTech’ space, positioning the company to become an even more direct competitor for large-broker-dealers and large-RIA enterprises with Envestnet, Fidelity, Morningstar, and Broadridge, in what may spur a heavy reinvestment cycle into more capable enterprise systems for large advisor platforms.

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

Invesco acquires RedBlack rebalancing software as asset managers increasingly look to (vertically integrated) model marketplaces as the future of ETF distribution
Pershing launches its own “Subscribe” fee-based annuity marketplace, integrated directly to its Managed Accounts platform, to compete against Envestnet’s own new Annuity Exchange
Merrill Lynch abandons the ‘bring your own device’ approach of the 2010s and stakes its compliance oversight in the 2020s on brokers carrying two smartphones (personal and business)
SEI launches a Developer Portal with new APIs in an attempt to become more of an advisor FinTech platform hub (perhaps eyeing the potential demise of TD Ameritrade’s VEO after the Schwabitrade merger closes?)

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including Envestnet announcing new enhancements to PortfolioCenter (and signaling that PortfolioCenter isn’t ‘doomed’ to be deprecated under Envestnet, and may simply become ‘Tamarac Lite” instead), Schwab launches a robo-for-retirement-income offering that overlays tax-sensitive retirement distributions on top of its robo-investments-plus-human-CFPs offering, Investor.com rolls out a new advisor-vetting platform that aims to present consumers aggregated regulatory data to spot relevant disclosures and conflicts, and Vanguard capstones its 2-year battle with TD Ameritrade over pay-to-play access by dropping stock and option trading commissions to $0 (on top of its already-free ETF trading platform) as TD Ameritrade is queued up for a sale.

And be certain to read to the end, where we have provided an update to our popular new “Financial Advisor FinTech Solutions Map” as well.

I hope you're continuing to find this column on financial advisor technology to be helpful. Please share your comments at the end and let me know what you think!

*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 (Jan 4-5)

January 3, 2020 02:53 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" – this week's edition kicks off with the industry news that the first anti-trust lawsuit has been filed to stop the Schwab-TD Ameritrade merger... and has already been dismissed in what most are simply calling a publicity stunt and not a serious challenge (though it remains to be seen whether more anti-trust scrutiny will still come to the prospective Schwabitrade merger, especially with respect to its RIA custodial business). Also in the news this week is the announcement that Vanguard is cutting stock and option trading commissions to zero for its own direct-to-consumer brokerage platform, matching the spate of similar cuts from Schwab and other retail discount brokerage platforms... and capstoning a 2-year battle with TD Ameritrade's removal of Vanguard from its no-transaction-fee ETF platform that ultimately resulted in a collapse of trading commissions and TD Ameritrade's own demise!

From there, we have several articles on retirement planning this week, from a look at how Medigap supplemental policies are being restructured for those becoming eligible for Medicare in 2020 and beyond (including the elimination of Plan C and Plan F policies and the introduction of a new Plan G), research from Wade Pfau on what the industry is still getting wrong about reverse mortgages, and a look at how, while deferred annuities remain controversial, there is a growing base of research about how effective Single Premium Immediate Annuities (SPIAs) can function as a fixed income alternative to support retirement income.

We also have several articles on financial advisor marketing, including: new Morningstar research about how the top priority for advisors is to grow and gain more clients, yet getting new clients is also advisors' greatest challenge, and despite these woes the majority of advisors are still unwilling to spend on marketing; the proposed new regulations on RIA advertising that could spawn a slew of new advisor marketing strategies in the coming years through the potentially-soon-to-be-permitted use of client testimonials, third-party advisor review sites, and even performance advertising; strategies to get your marketing going even if you don't feel you're "creative" at marketing; and the sometimes-unwitting ways we can turn people off in our marketing and sales activities with prospects because of how sensitive other human beings are to body language and other non-verbal communication.

We wrap up with three interesting articles, all around the theme of forecasting what will (and won't) change in the new decade of the 2020s: the first provides some forecasts about how the financial planning profession will change in the coming years, as financial planning becomes increasingly known as a discipline unto itself (with its own regulatory concerns, oversight needs, and standards); the second looks at the recent 50th-anniversary celebration of financial planning convened by the CFP Board, and how industry organizations are looking to come together to further professionalize financial planning in the 2020s; and the last takes a good look at what won't likely change in the 2020s (that advisors can still safely 'bet' on and invest in growing their own businesses), focused almost entirely around advisors themselves, our ability to communicate effectively with clients and prospects, and the importance of the advisor-client relationship in helping clients to stay the course (because notwithstanding all the changes in technology, clients are still human beings who will behave like human beings!).

Enjoy the 'light' reading, Happy New Year, and best wishes to you in 2020!