Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts out with some new research from the CFP Board about why it is that so many students who go through financial planning programs don't sit for the CFP exam... and find that the sheer cost of both the exam itself (at $595) and the typical exam review class along with it, may be a key impediment, especially given that so many young planners still have limited income and may be digging out from their student loans; students who ended out at firms that paid for the test on their behalf were significantly more likely to follow through on the exam and become CFP certificants.
From there, we have a few practice management articles this week, including: an overview of the latest results from the FA Insight practice management study showing that advisory firms are enjoying record productivity and profit margins but may be too complacent about future growth challenges; a good overview of the challenges to consider for advisors who are thinking about "breaking away" from a broker-dealer (considering everything from needing access to capital, to complying with the Broker Protocol); and a good overview about how to get started in building a social media following once you've set up your initial accounts.
We also have several investment research articles this week, from a look at the value of continuous tax loss harvesting (which may be far less valuable than commonly believed, over just executing loss harvesting transactions once a year when rebalancing), to a discussion from Vanguard about whether indexing is getting "too big", and a look from Morningstar's fund flows finding that actively managed funds are only seeing inflows in a few specialized areas (international funds, allocation and target-date funds, and alternatives) with 2/3rds of all net flows going to index funds.
There's a trio of retirement-related articles too, including the upcoming launch of a big Federal government program to encourage phased retirement (which could become a template for the private sector as well), some tips for advising clients on Medicare decisions, and a good discussion by retirement researcher Wade Pfau about the circumstances in which the "4% rule" may be too high, or too low.
We wrap up with three interesting articles: the first raises the question of what it means to fulfill an investment adviser's fiduciary duty when there is no human advisor relationship and the portfolio is implemented by a "robo-advisor"; the second looks at the various threats that have been a danger to advisors over the decades (including most recently, the robo-advisors) and concludes that the natural outcome of these threats is not the 'death' of advisors but their forced evolution to continue higher up the value chain; and the last is an in-depth article looking at the severe racial diversity problem in the world of financial planning, and some of the efforts that are slowly getting underway to try to tackle the issue.
Enjoy the reading!