The implementation of the Economic Growth and Tax Relief Reconciliation Act of 2001, which both increased the Federal estate tax exemption and more importantly eliminated the state estate tax credit, started the process of "decoupling" between the Federal estate tax and various states. As the years moved forward, many states retained a $1 million estate tax exemption amount, decoupling their exemption from the Federal amount that has ultimately risen to its current $5 million level. However, the reality is that a second decoupling just occurred in 2011 - the decoupling of state estate tax exemptions from the Federal gift tax exemption. As a result, a new state estate tax planning "loophole" has opened up, creating a planning opportunity for many clients... but only until the states close the loophole.Read More...
In the early years of my career, I genuinely hated the concept of marketing. I had learned about the powers of persuasion in school. I was taught during an internship that the success rate of closing a client was x times greater if you can stir up emotions like fear and uncertainty. I understood the role of marketing in the world of widget makers as a way to introduce their commodity to the market, but struggled to reconcile the use of these forces when dealing with individuals and families, many of which have little to no education around money and investing.
In recent years, however, I have made a few discoveries that have completely reshaped my viewpoint on marketing. And while I may still not have all of this figured out, it has become painfully clear to me over the last several years that marketing our services and our value is something we, as a profession, are absolutely horrible at doing.
In recent years, as more and more planners have shifted their businesses to an AUM model, it has become increasingly popular for the media, when quoting planners, to note the firm's AUM. In response, a backlash has also begun to emerge, as many planners justly point out that the magnitude of the firm's AUM does not necessarily correlate with the quality of the firm's financial planning advice or how "good" the planner really is, and consequently suggest that the media stop quoting AUM statistics in articles. Yet while I agree with the criticism - AUM is not likely a very effective measure of how good a planner's advice might be - I still think it's highly relevant. Not because I'm trying to understand the quality of the planner's financial advice, but because it provides immediate insight into the nature of their financial planning practice and the relevance of the challenges the planner may face.Read More...
Enjoy the current installment of "weekend reading for financial planners" - this week's edition highlights a recent development on the regulatory front regarding the SEC's implementation of a fiduciary standard for brokers, and some sharp criticism of FINRA and whether it should even exist from the Journal of Financial Planning. We also look at a few technology pieces, on the rise of Salesforce for CRM, and the emerging use of online scheduling programs to set up client meetings. There's also a great piece from the Journal of Financial Planning on the next generation of Modern Portfolio Theory and portfolio design, and two good investment pieces by John and John (Hussman and Mauldin). We wrap up with an interesting article from Advisor Perspectives on how much of the financial press is misinterpreting and misapplying the Reinhart and Rogoff research about the implications of high debt-to-GDP levels. Enjoy the reading!
As the popularity of tactical asset allocation and using market valuation to inform investment decisions rises, so too do the criticisms to such methodologies. In the long run, this is part of a healthy dialogue that shapes the ongoing evolution of how we invest. But much of the recent criticism to being tactical in particular seems to suggest that if we can't get the timing exactly right, or calculate a valuation that works precisely to predict returns in all environments, that it should be rejected. In reality, though, even just participating in a few booms, or avoiding a handle of extreme busts, can still create significant long-term benefits for achieving client goals. Which raises the question - if we're really focused on the long term for clients, are we expecting too much from market valuation in the short term?Read More...
What one skill (above all others), if you developed and did it in an excellent fashion, would have the biggest impact on you as a financial planner?
This is the question that was posed to the leaders in the financial planning profession. Initially, the plan was to elicit feedback as to where to focus energy in the new year to become a better advisor, but after receiving so many excellent responses I wanted to share the common themes. What is the most important skill? There is always a big focus on the technical side of planning (which is obviously very important), but is it that the most important? Or is it empathy, communication, or relationship building?
The answers varied by the leaders that responded, but the common theme was clearly that in the end, the interpersonal trumps the technical.Read More...
