Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with a rather scathing article by NAPFA Chairman Ron Rhoades on why FINRA not only shouldn't be the SRO for investment advisors, but is failing its original charter and should be disbanded altogether. From there, we look at two technical estate planning articles - one on the different ways that incapacity is defined for trigger powers of attorney or even the competence to sign a Will or trust in the first place, and the other on how beneficiaries can potentially try to "bust" trusts that are no longer working as desired. We look at three practice management articles this week, including Mark Tibergien's latest offering on the importance of managing expenses as well as revenue growth, reporting on the recent FA Insight study showing firms with more widely distributed ownership are consistently better performers, and results from an Investment Advisor / ActiFi study at what practice management issues are most important to advisors and where they're currently getting help (surprising result - broker/dealers may be stepping up far more than custodians). We also look at an interesting retirement income analysis from Joe Tomlinson suggesting that SPIAs might be particularly effective for retirement portfolios despite - and in fact, because - of low current rates, and an analysis by Geoff Considine about why advisors may be giving short shrift to Master Limited Partnerships in their portfolios. We finish with a sharp analysis by John Hussman about what's really at the heart of the ongoing global economic malaise, an interesting write-up by Bob Veres about several presentations about trust at the recent FPA Retreat conference, and a lighter article by Abby Salameh on RIABiz abuot how to take a breath and relax to avoid being overwhelmed as a busy advisor. Enjoy the reading!
As the financial planning profession continues its inexorable march towards a fiduciary client-centric standard of care that minimizes or outright avoids conflicts of interest, those most passionate about carrying the torch have often been the most vocal in promoting those standards within their own businesses. Yet recent research shows that from the consumer's perspective, "fiduciary" is confusing and the word "fees" evokes an outright negative response; the special meanings we attach to those words inside our industry have translated poorly to the general public. The key, then, is to figure out how to operate in the interests of clients, while communicating a message that is less about the battles being fought inside the industry and more about how the client benefits. Otherwise, while it's true that those firms doing the best job of truly serving clients may be rewarded with the most referrals, they may not be able to convert those referrals to clients and grow their businesses if they have dug themselves a hole they can't climb out of by using consumer-unfriendly terminology in the first place!Read More...
Between FINRA, the SEC, 50 state investment advisor regulators, and 50 state insurance departments, the world of financial advising is highly regulated, albeit in a very piecemeal manner. As a result of this fractured regulatory dynamic, the reality is that it can often be remarkably difficult for a prospective client to really check out information about an advisor, potentially requiring contact to as many as 102 different regulatory agencies just to determine if the advisor has a clean conduct record.
A new company called BrightScope is seeking to change that dynamic. By collecting publicly available data on advisors from the various regulatory agencies and aggregating it together on a single site that is easily accessible by consumers, BrightScope is helping consumers understand the conduct history of their advisors, in a manner better than the problematic FINRA BrokerCheck system.
And in the long run, BrightScope hopes to expand this even further beyond conduct alone by establishing standards and metrics for everything from advisor experience to education and credentials to investment recommendation performance results. But in the end, will BrightScope really be able to clean up the financial services industry - reaching enough consumers to make itself relevant and turn its service into a viable business model - or is this just another short-term fad that will fizzle away?Read More...
While most aspects of the financial planning update are getting easier, especially as account aggregation software becomes more prevalent - allowing the planner to automatically get regular updates from all client financial accounts, including those not under the planner's direct investment purview - the value of real estate continues to be a sticking point for many planning firms. How do you update the client's net worth statement without slowing the process down by waiting for the client to provide an estimate? Will the client's estimate really even be accurate, anyway? And the process can be even more problematic for firms that set fees based not on assets under management but net worth. How do you get a fair estimate of the value of property that relies on the client when the client's fee is impacted by that estimate? In an increasingly technology-driven world, there's now an answer: with real estate valuation services on the web, like Zillow.
As social media continues to rise in the digital age, financial planners are increasingly getting involved on platforms like Facebook and Twitter. However, fears and misconceptions about social media - along with a general uncertainty about exactly what the point is and why planners should get involved - have dramatically slowed advisor adoption. Yet the reality is that there are several simple and clear ways that platforms like Twitter can be used to create value for financial planners - including some easy ways, like helping the news find you and social listening, that pose no compliance hassles or risks, either! Keep reading for some tips about how to get started, what programs to use, and how to get start getting value from Twitter!
Enjoy the current installment of "weekend reading for financial planners" - this week's edition starts off with a quick recap of who said what at this week's Financial Services Committee hearing on the Bachus SRO legislation. From there, we take a deep dive into a long series of articles looking at how financial planning is changing. An interview with Rick Kahler explores how financial therapy is being integrated into his practice, and a Morningstar Advisor article looks at how personality types can help predict which kinds of behavioral biases your clients might exhibit. An article by Paula Hogan in the Journal of Financial Planning examines how to integrate financial planning from the economists' perspective - the so-called Life Cycle finance model - with the current world of financial and life planning, with a rising focus on planning for human capital... followed by another article looking at how several planners are being to incorporate human capital planning in their practices. Bob Veres looks at what we can do to ensure that planners really stay focused on planning, and don't allow themselves to be lured by "easier" business models. A panel discussion in Financial Advisor magazine explores how some executives at companies that serve and support advisors see the trends playing out. At the same time, a recent article on The Economist questions whether clients might sometimes seek advice more than they should, and how much advice we seek is really for practical reasons as opposed to psychological ones. And Dick Wagner raises the question of whether it's finally time to push the profession to financial planning 3.0. On a final note, we include a transcript of a recent speech given last weekend by financier investor George Soros in Italy; although a bit of a non-sequitur from the weekend reading theme of changes in the planning profession, the article provides such an amazing look at what's going on in Europe, that it just had to be included. Enjoy the reading!
