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The submission deadline is Monday, January 13th, 11:59 PM EST so if you’re interested, submit via the link below.

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Weekend Reading for Financial Planners (July 4-5)

July 3, 2015 02:47 pm 22 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a look at TD Ameritrade's efforts to expand its Amerivest managed account into a full-fledged "hybrid" advisor solution (robo-technology plus TD Ameritrade retail branch advisors), raising the question of whether, given that Amerivest already has over $11B of AUM, it may become the largest "robo" solution by 2016. Also in the news this week was a discussion of how Schwab and Fidelity have been 'passing through' a portion of the shareholder service fees of certain no-transaction-fee mutual funds to large RIAs on their platforms, and whether doing so creates untenable conflicts of interest for RIAs that will end out being compensated more for using those funds in client portfolios over any others.

From there, we have several practice management articles this week, from a discussion of how to improve client review meetings by systematically implementing a pre-meeting survey to ensure the meeting is focused on what clients want to talk about the most, to the importance of creating standard processes in an advisory firm to cut down on potential advice mistakes, along with an article on how to get more insight from the results of your client surveys by discussing the responses with your client advisory board, and a look at some common 'myths' in web-based marketing for advisors and how to overcome them.

There are also a few more technical-competency articles this week, from a look at whether today's lifetime annuity products should be replaced with a "tontine" structure that was popular hundreds of years ago, to the portfolio design mistakes that some advisors may unwittingly be making (e.g., having clients hold a mortgage paying 4% interest while keeping a portfolio allocation in bonds paying only 2%!), to whether Deferred Income Annuities should have a role not just in planning for extended retirement longevity but also as a pre-retirement vehicle.

We wrap up with three interesting articles: the first is a discussion from industry commentator about why he thinks "the AUM fee is toast" and that advisors will increasingly migrate towards retainer-style fee structures; the second is a retrospective look at the CFP Board as it celebrates its 30th anniversary as an organization managing the CFP marks since it was spun off from the College for Financial Planning in 1985; and the last is a great summary article of "37 ways to upgrade your practice" that has a number of tweaks you could take and implement now in your advisory firm during the slower summer months.

Enjoy the reading, and happy Fourth of July!

Claiming Social Security Benefits And Other New Opportunities For Same-Sex Married Couples

July 1, 2015 07:01 am 14 Comments CATEGORY: General Planning

While the case of United States v. Windsor in 2013 required the Federal government to recognize the marriage of a same-sex couple if the marriage was legal where performed, states were not required to permit same-sex marriage, nor were they required to recognize legal marriages of same-sex couples performed elsewhere. However, with last week’s Supreme Court decision in the case of Obergefell v. Hodges, states are now required to permit same-sex couples to be married, and furthermore must recognize same-sex marriages performed in other states and jurisdictions.

The Supreme Court’s decision creates several immediate new planning opportunities for same-sex married couples, particularly those who were previously married in another state but have been recently living in a state that did not recognize (or one of the 13 that outright banned) their marriage. Those couples will now be able to do everything from filing joint income tax returns, to benefit from the marital deduction for state estate and inheritance tax purposes, to get divorced if the couple decides to separate. In fact, for many such couples, a major planning issue will simply be unwinding the strategies previously in place to handle the fact that their marriage wasn't recognized, but are no longer necessary!

Perhaps most financially significant, though, is that same-sex married couples will now be able to claim spousal and survivor benefits as a married couple, regardless of their current state of residence. This creates both immediate Social Security claiming opportunities for some same-sex couples, and the need to plan more proactively for a same-sex married couples’ Social Security benefits in the future, as all the claiming strategies for married couples – including file-and-suspend and restricted application – are now available.

On the other hand, the Supreme Court decision actually makes financial planning for same-sex couples far simpler in the future – or at least, no more complicated than the conversations that arise when any couple is considering whether to marry, and how it might impact them from income tax planning to financial aid to estate planning and everything in between. In fact, as the legal differences for marriage between same-sex and heterosexual couples shrink to almost nothing, it remains to be seen whether LGBT planning will even remain as a distinct ‘niche’ amongst financial advisors - as while potential discrimination against gays and lesbians remains an issue, equal marital rights appears to be eliminating most of the need or relevance of ‘specialized’ LGBT financial planning in the first place?

Designing The Financial Planning Software Of The Future – Calculator, Collaboration Tool, And Client PFM

June 29, 2015 07:01 am 19 Comments CATEGORY: Technology & Advisor FinTech

As the world of financial planning evolves, so too does the technology that supports it. And in the coming years, nothing may evolve in the world of advisor technology as much as financial planning software, as it continues its transition from simply being a ‘calculator’ to project the impact of financial planning strategies and recommendations, into an entire platform for ongoing collaborative financial planning for clients.

Yet the evolution of planning software is creating distinct new challenges from a software design perspective, as the tools are increasingly used in three distinct contexts: an interactive collaborative planning tool between advisors and clients in meetings, an ongoing monitoring and personal financial management (PFM) tool for clients, and an advisor support tool for everything from complex analyses to tracking and alerting which clients need assistance. Not to mention the increasing amount of ‘meta data’ available about the advisory business and its clients as well.

In fact, going forward financial planning software designers may need to increasingly view the use of the software through each of these distinct lenses – advisor, client, and advisor-client interaction, as well as business meta-data – to advance the efficacy of planning software, as each use case for planning software is creating its own unique needs and challenges for advisors to work with clients and enhance client outcomes!

Weekend Reading for Financial Planners (Jun 27-28)

June 26, 2015 02:01 pm 19 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with the announcement of Schwab's new "Institutional Intelligent Portfolios" solution for RIAs, which will allow advisors on the Schwab platform to provide "robo"-style services for their own clients alongside with Schwab's direct-to-consumer robo offering.

From there, we have several articles on marketing and practice management issues, from a look at the marketing best practices of the "standout" growth firms in the latest FA Insight benchmarking study, to a review of an interesting flat-fee investment model being offered by advisor James Osborne of Bason Asset Management (allowing him to grow $100M of AUM in under 2 years!), a look at the best way that advisors can differentiate themselves (hint: by doing whatever best fits your own personality style and passions!), a discussion of whether adivsory firms should hire a "Director of Client Success" to really aim to improve client retention rates and referrals, and a look at the so-called "pratfall effect" and whether advisors can actually build more credibility by not being perfect and instead committing - and admitting to - making small mistakes with clients.

We also have a few investment articles this week, including: a critique of the validity of smart beta and whether factors can really be anticipated in advance or are nothing more than data-mining; a discussion of the ongoing "buyback extravanganza" and why it may not actually be as problematic as some critics suggest (at least, not right now); and a study of whether the benefits of risk parity strategies have been understated by viewing them as an alternative to a traditional investment portfolio, when instead their greatest benefit may be as a complement to a traditional portfolio for a small slice of the total allocation.

We wrap up with three interesting articles: the first is a review of the recent book "Misbehaving" by economist Richard Thaler, a combination of personal memoir of Thaler's own career and also an interesting historical look at the rise of behavioral economics; the second is an article from the Wall Street Journal suggesting that the time may be coming for the value of financial planning to become separated from the 'traditional' AUM business model; and the last is a fascinating look from the Harvard Business Review as how the doctor-patient relationship is being disrupted by technology, in a manner that may be a harbinger of both the risks and opportunities that could play out in the coming years as technology impacts the advisor-client relationship as well.

And be certain to check out Bill Winterberg's "Bits & Bytes" video on the latest in advisor tech news at the end, including the rollout of Schwab's new Institutional Intelligent Portfolios, the latest advisor updates for Advent's Black Diamond portfolio performance reporting tools, and highlights of the TD Ameritrade Institutional technology summit!

Enjoy the reading!

Understanding The IRD Deduction That Inherited IRA Beneficiaries Often Miss

June 24, 2015 07:01 am 21 Comments CATEGORY: Taxes

Pre-tax assets like IRAs can face a significant income tax burden as their value grows, a challenge that is only made worse for those who are subject to estate taxes on those assets as well. In the extreme, the combination of the two can consume the majority of the value of an inherited IRA bequeathed to a beneficiary.

To help mitigate the combined income-and-estate-tax effect, the Internal Revenue Code allows for an “Income in Respect of a Decedent” (IRD) deduction under Section 691(c). Claimed by the beneficiary of an inherited IRA to the extent of any estate taxes that were caused by the account, the deduction can be material – as much as 40% of the value of the account!

Yet despite its size, beneficiaries in practice often “miss” the IRD deduction, not realizing it was there to claim, or perhaps “losing track” of it when changing accountants or tax preparation software. Fortunately, an amended tax return can be filed to claim a missed IRD deduction from recent years – but only the past 3 years. Which means going forward, anytime an inherited IRA appears with a new client, a good best practice for all advisors is to ask: “did the decedent who left you this account pay any estate taxes?” and if so, be certain the IRD deduction is claimed properly!

And notably, in the end the IRD deduction applies not only to inherited IRA accounts, but also other employer retirement plans, inherited non-qualified annuities, employer non-qualified stock options, deferred compensation, employer NUA stock, and more!

The Ongoing Evolution Of Financial Planning Software – From Calculator To Collaboration To Client Portal

June 22, 2015 07:01 am 17 Comments CATEGORY: Technology & Advisor FinTech

For much of its history, financial planning software was basically just an elaborate calculator. Advisors could gather client data, feed it as input to the calculator tool, and the software would spit out the projected results… which were then used to facilitate the sale of a product.

As financial planning has evolved to be primarily about the delivery of advice itself – not just for the sake of a product sale – so too has the software evolved, from a calculator to illustrate the outcome of a product or strategy recommendation, to a collaborative tool that can be used to formulate the client’s plan itself. After all, given the complexity of an uncertain future, it’s hard to really understand what path to pursue, until the client first analyzes a range of scenarios to understand the opportunities. Accordingly, financial planning software has increasingly become a tool for real-time collaborative scenario planning.

In the future, though, financial planning software can and will progress further, from a tool that supports collaboration at a single point in time, to one that truly supports continuous planning for the reality of continuous change we face in our lives. Imagine a holistic personal financial management (PFM) solution for clients, that simultaneously operates as financial planning software for the advisor, all continuously updated from external data flows, making it feasible for the advisor and client to see the milestones and recommendations that have already been accomplished, and whether the client is on track in progressing towards goals of the future.