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Weekend Reading for Financial Planners (Sep 14-15)

September 13, 2013 04:02 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's reading kicks off with several articles related to the fiduciary standard (as the Institute for the Fiduciary Standard has dubbed this "Fiduciary September"), including the announcement from the Department of Labor that it is pushing back (but definitely not abandoning) its new fiduciary rule proposed, criticism from Bob Veres about how the brokerage industry seems to be simultaneously insisting that brokers already act in their small clients' interests even while claiming that those clients can't be served under the standard, and a look from Dan Moisand in the Journal of Financial Planning at how ineffective disclosure alone has been in trying to protect consumers (which, ultimately, should be the role of regulators).

From there, we have several financial planning technical articles this week, including an estate planning checklist after the loss of a client's loved one, how it's going to be harder in 2014 to buy a home due to changes rolling out from the Federal Housing Finance Agency, a look at the LTC insurance marketplace that tries to debunk some common myths, how many variable annuities over the past decade were mispriced (and therefore why clients probably shouldn't be accepting the company buyback offers), how risk management and lower volatility portfolios can result in alpha and higher returns even if they don't participate in the maximum upside, and a great discussion from Texas Tech professor Michael Finke on Social Security retirement claiming strategies for clients.

We wrap up with three interesting final articles: the first is a look at the landscape of advisor designations, suggesting that given the growing complexity of the marketplace and the need for advisors to specialize, there will - and should be - more designations, but it's crucial to have appropriate standards and accreditation to separate the wheat from the chaff; the second is a series of "dangerous ideas" in the investment world, issues that clients and advisors may not be thinking about - often due to behavioral biases - but should; and the last a good reminder that ultimately as financial planners we are all human beings and we, too, aren't perfect and can make mistakes... and suggesting that it's ok to make yourself vulnerable and share that with clients sometimes, too, as it can ultimately make you more human and easy to relate to. Enjoy the reading!

MailBag: Is There A Blueprint For How Financial Advisors Should Go About Using LinkedIn?

September 12, 2013 06:05 am 3 Comments CATEGORY: Marketing

Many readers of this blog contact me directly with questions and comments. While often the responses are very specific to a particular circumstance, occasionally the subject matter is general enough that it might be of interest to others as well. Accordingly, I will occasionally post a new "MailBag" article, presenting the question or comment (on a strictly anonymous basis!) and my response, in the hopes that the discussion may be useful food for thought.

In this week's MailBag, we look at a question about how to get started using LinkedIn to get new clients. Just searching through your connections for people who might fit your profile and then ask for an introduction probably isn't going to work. This is where a content-based marketing strategy can be effective.

Will New Reverse Mortgage Changes Make Them A Better Financial Planning Tool?

September 11, 2013 07:02 am 7 Comments CATEGORY: Debt & Liabilities

In the aftermath of the financial crisis, the decline of real estate prices has been a distress not only to traditional mortgage borrowers and lenders, but also the Federal Housing Administration (FHA) and its reverse mortgage program. As a result, the Department of Housing and Urban Development (HUD) has taken several steps to make the program somewhat more restrictive, reducing borrowing limits and increasing the insurance premiums to borrowers that back the program.

In a big announcement this month, HUD has announced a new round of changes that will consolidate HECM Saver and Standard loans, change the principal limits that impact the maximum consumers can borrow, and generally increase costs once again for reverse mortgages. In addition, the HECM reverse mortgage program will become much more restrictive in how much can be borrowed at once, and early next year will introduce a new financial assessment process to further ensure that reverse mortgage borrowers have the means to maintain their property taxes and insurance to avoid defaulting on the loan.

From the financial planning perspective, these changes are arguably a good step to help curtail some irresponsible borrowing, and ironically may have little impact to the clients of financial planners who already tend to be somewhat more affluent and more proactive in their retirement strategies (while the impact will be more significant for those already in dire financial straits). On the other hand, the new higher costs for many types of loan approaches, and the new limitations on principal limits - which can be particularly constraining to affluent individuals with pricier homes - may make reverse mortgages somewhat less appealing for financial planners, even as the reverse mortgage industry shifts to focus more on the types of clients that planners typically work with.

Why Social Media Is Not An Alternative To Networking And Referral Marketing

September 9, 2013 07:02 am 5 Comments CATEGORY: Marketing

As social media becomes increasingly popular, the financial planning world has struggled to figure out how social media marketing fits into the big picture. Where can an advisor find time to engage in social media amidst other efforts to network, develop business, and drive referrals? And of course, all of that marketing activity has to fit around the time to actually run a business and serve clients, too!

Yet from a best practices perspective, social media shouldn't be viewed as an alternative to networking and referral marketing. Instead, social media is simply another way to do networking and referral marketing in the first place! After all, social media success still ultimately relies upon making personal connections and building relationships to generate new business. Or viewed another way, relationship marketing is all about being social, and social media is just another medium for being social!

The caveat, however, is that while networking meetings and referral marketing are often a slow, one-client-and-center-of-influence-at-a-time effort, time invested in social media is able to be leveraged to reach dozens, hundreds, or even thousands of prospective clients at once. In other words, ultimately social media is not an alternative to networking and referral marketing, it's simply a more leveraged and scalable way to do it! Which also means if you're trying to figure out where to find the time to start getting engaged on social media, you might look to carve the time from some of your other, less efficient and effective marketing activities!

Weekend Reading for Financial Planners (Sep 7-8)

September 6, 2013 01:02 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "weekend reading for financial planners" - this week's reading kicks off with a discussion from Mark Hurley about whether it will soon become a lot more expensive for advisors to acquire clients, whether through popular custodian referral programs or other channels.

From there, we have several financial planning technical articles this week, including a look at whether the shortfalls in the Social Security disability fund may prompt Social Security reform sooner rather than later, whether income-oriented portfolios increase or reduce the safe withdrawal rate, another way to look at why it's beneficial to delay Social Security benefits, a discussion of "DING" and "NING" trusts used to avoid state income tax liabilities for clients in high-tax-rate states, a look at how the new cost basis reporting rules are shaking out after the first several years, and a roundtable discussion from the Journal of Financial Planning about the new health insurance exchanges and how they'll work.

We wrap up with three interesting final articles: the first is a blog from Angie Herbers about whether the tendency for advisors to form 3-person teams may be contributing to young employee turnover (as the saying goes, "three's a crowd" and it may apply in advisor firms, too!); the second suggests that the real problem for many overspending clients is that they're spending too much money having people do things for them; the third is an interesting interview with Vanguard founder Jack Bogle (who is as spirited as ever in criticizing the financial services industry and suggesting reforms); and the last is a good reminder that notwithstanding all the great advice planners give their clients, many could stand to take their own advice a little more often as well, or ever consider hiring their own planner to get a helpful nudge! Enjoy the reading!

MailBag: Introducing Financial Planning Services To Existing Brokerage Clients For The First Time

September 5, 2013 07:03 am 0 Comments CATEGORY: MailBag

In this week's MailBag, we look at a question about what an investment management firm that has only provided investment management services in the past should do when they try to start offering financial planning and clients refuse to provide all of their personal financial information.