The explosion of social media as a means of communication has been stunning. And while those in professional services are just trying to keep up with the change, today's younger generation (and frankly, more "older" people that you might suspect) has already fully embraced the change. What this means, though, is that social media is not just about some new way to do marketing and develop new clients. Instead, it means that financial services needs to figure out how to handle social media - and fast - to even remain relevant and appealing to the future generation of financial planners themselves!Read More...
What Happens If You Outlive Your Safe Withdrawal Rate Time Horizon?
Although the research on safe withdrawal rates has been replicated many times by various researchers to substantiate a safe, sustainable spending level that can withstand at least anything that history has thrown at a retiree, one significant challenge has always lingered: a safe withdrawal rate recommendation is only as good as the time horizon it's associated with. In other words, while the research may support a 4.5% safe withdrawal rate, it's predicated on a 30-year time horizon. If the client planned to retire over a 35- or 40-year time horizon, the safe withdrawal rate would be different. Unfortunately, though, the client may not know that a 35-year time horizon is needed until it's year 31 and there are still a few years left to go! So what's the outlook for a safe withdrawal rate approach if the client outlives the original time horizon?Read More...
Are You Going To "The Most Interesting Conference In The World" With FPA This Fall?
The FPA Annual Convention every fall is arguably the biggest event in financial planning each year. Typically drawing upwards of 3,000 attendees, it is certainly by numbers one of the largest conferences by far; although some of the custodial conferences (e.g., Schwab Impact) are competitive, FPA's is focused more directly on financial planning. This year, though, the FPA has rebranded the conference as FPA Experience, and conference chair Evelyn Zohlen is trying to take the event to a whole new level, with a huge focus on building community, and an effort to make it "the most interesting conference in the world" starting with a phenomenal promotional video!
Are Annuities Really Expensive, Or Could They Actually A Cheaper Option?
There is way too much dogma surrounding annuity commissions. The commission argument against annuities is most often posed by registered reps, or investment advisor reps who stand to gain by keeping money out of annuities. In the spirit of fairness, I compared the commissions for annuities in general against the fees that would be earned by an advisor charging an AUM fee and came to a simple conclusion: the "annuities are bad because they pay high commission" argument simply needs to be retired.
Does Financial Planning HAVE To Be A Relationship?
As is often said, "financial planning is a process, not an event" and therefore is predicated on an ongoing relationship between the planner and the client. Yet the in-depth nature of a financial planning relationship presents challenges as well; it takes more time, it costs more money, and it becomes less accessible to many who either can't afford or don't want such a 'deep' relationship. But does it have to be this way? Could financial planning still deliver value even if it's NOT an ongoing relationship with an individual financial planner?Read More...
How Might Big Brokerage Firms Transition In A Fiduciary Financial Planning Future?
There is a prevailing view in the independent financial planning community that when financial planning is ultimately recognized as a profession, and is regulated on the basis that advice must be delivered in a fiduciary context, that the independent planning community will take the center stage, as big brokerage firms will be afraid of the fiduciary liability.
But what happens if the opposite occurs - if a major firm steps forward to embrace fiduciary financial planning and seeks to pose a credible challenge to the independents? How might big brokerage firms transition in a fiduciary financial planning world, and can them stem - or reverse - the current rising tide of defections out of the brokerage world?Read More...
How Do You Systematize Financial Planning When Every Client Is A Unique Snowflake?
If you've been to any session delivered by a practice management consultant in the past several years, you've probably need that to grow your business further, you need to standardize and systematize. In other words, you can't do everything differently for every single client and expect to keep growing much, because at some point your practice is so complex delivering 100 different services to 100 different clients that you just can't absorb the 101st without having your head explode (or alternatively, you couldn't possibly find the time to meet with the 101st prospect to try to get him/her as a client anyway).
In response, planners tend to complain: "But financial planning must be tailored to each individual's situation; and since every client is a unique snowflake unlike any other, so too must their financial planning experience/products/deliverables each be individualized, unique, and customized one client at a time."
Are there still ways to run an efficient practice in a world like this?
I Hate Capital Gains Taxes – Except When I Don’t
When it comes to my personal taxes, I am a chronic late filer. In my own defense, it is usually because some partnership or another could not get me my K-1’s by the deadline, so I go ahead and file the extension. Or maybe it’s because the pain of actually seeing my tax bill is too great and I find a way to defer that decidedly unpleasurable experience to a later date. This year I had a large tax liability associated with capital gains in my managed accounts, and since 100% of my money is invested in the Pinnacle DMG portfolio, I couldn’t help but think of other Pinnacle clients in the same boat. Since cutting a check to the IRS has the remarkable ability to focus my thinking about tax planning, I thought I would share a few of the thoughts that crossed my mind at the time.Read More...
Being A Fiduciary Is About More Than Just Doing What You THINK Is Right For The Client
As the fiduciary tide rises, and more and more financial planners choose to be recognized as fiduciaries (either by choice of regulator, or the various fiduciary oaths taken under the CFP certification, NAPFA or FPA membership, etc.), there seems to be an increasing casualness towards what it means to be a fiduciary. The basic refrain seems to be "Sure, I'm a fiduciary, I only do what I think is in my client's best interests."
But the reality is that being a fiduciary is about more than just doing what you THINK is in the client's best interests; it's about having a process to reasonable ensure that what you do actually IS in the client's best interests!Read More...
Schwab Launch of Franchise System for Independent Advisors to Open Local Branches Looks Like Good Opportunity
The big news this week is that Schwab has announced plans to allow independent advisors to franchise a local Schwab branch, receiving support from Schwab in the form of a (small) starting book of clients, financial support, a turnkey system with the latest Schwab technology, and perhaps most important: the Schwab brand name. Although the early response form some is that this will potentially disrupt existing Schwab Institutional relationships, I have to admit: to me, it sounds like a great opportunity for some entrepreneurial advisors - especially breakaway brokers.Read More...
