Enjoy the current installment of "weekend reading for financial planners" - this week's reading kicks off with a big announcement from the CFP Board that it will be converting the CFP exam to be computer-based and in the process permanently reducing the length of the exam from 10 hours down to only 6 (and cutting the number of questions by 40% to match it). There's also a striking article reporting on the volume of Roth conversions that occurred in 2010 - the first year it was possible to convert without income limits - as the IRS found conversions increased nearly 1,000% over the 2009 numbers, and were especially concentrated amongst high-income investors (though ironically, they may have benefitted the least from the decision to convert!).
From there, we have a couple of practice management articles this week, including a roundtable interview in the Journal of Financial Planning about technology trends for advisors and the rise of the "robo-advisor", a review of the new financial planning software WealthTrace, and an announcement by financial planning software inStream that it is abandoning its free model and converting to an ongoing subscription model (and rolling out a lot of interesting features as well).
We also have a number of investment-related articles, from a discussion of William Bernstein's new book "Deep Risk" about the unique kinds of long-term risks that can permanently impair client portfolios, to a great summary by Reformed Broker Josh Brown about the current state of affairs in markets (we're somewhat overvalued, but with the animal spirits stirring, there's no reason why the party has to stop anytime soon), to a prediction that the "surprise" event of the year could be a default by Puerto Rico that sends ripples (or shockwaves?) through the municipal bond market as risk is repriced. There's also an article looking at how many elderly variable annuity holders are now having the surprising problem that they can't keep holding their annuity in deferred status and instead must convert it to a stream of income... unfortunately forfeiting what may be a substantial death benefit in the process.
We wrap up with three interesting articles: the first discusses how advisory firms can overcome the "success paradox" where the key things that helped the firm grow to where it is may be the exact factors blocking it from growing further (and the primary issue: usually the bottleneck around leadership at the top); some suggestions from industry commentator Bob Veres about what the top issues are likely to be for advisors in 2014; and a striking internal research study from "robo-advisor" Betterment, that has begun to calculate the behavior gap on its aggregate tens of thousands of customers and found that, through its systems, the average behavior gap is a mere 0.31%/year, barely 1/5th of the behavior gap reported for the typical investor in similar research studies (and raising the question of whether "client behavior gap" is something all advisors and robo-advisors might be expected to start tracking and reporting on in the future?). Enjoy the reading!