Enjoy the current installment of "weekend reading for financial planners" - highlights this week include a few blockbuster articles, from a new call to the profession to adopt a more scientific and evidence-based approach to advancing financial planning, to an incredible new research report on how to develop staff and grow a firm, to a scary warning about the current regulatory winds buffeting financial advisors. We wrap up with three striking-but-bearish articles on the mortgage markets, the stock markets, and the economic situation in Europe and here in the US. Enjoy the reading!Read More...
Every financial planner delivering advice to clients must, at some point, help the client interact with and implement advice with a financial service or product provider at some point. Depending on the planner's business model, the implementation of the advice may or may not directly command a commission, but even a fee-only planner ultimately recommends financial products and services. After all, you can't investment in an IRA without an IRA custodian, you can't buy mutual funds or ETFs inside the account without interacting with mutual fund and ETF product providers, and you can't buy insurance without an insurance company as part of the transaction. In fact, implementation of the advice IS the 5th step of the financial planning process. Which raises the question: given the reliance of financial planning on implementation using financial services and products, why do so many financial planners try so hard to avoid the conference exhibit hall? Are we shirking our professional due diligence obligations, or is there another issue at hand?
From the planner's perspective, the data gathering meeting is a core part of financial planning. As the 6-step financial planning process itself stipulates, you can't begin to analyze a client's situation and formulate recommendations until you have the client's data in the first place. Yet from the client perspective, the data gathering meeting can be an arduous process, and is also easily procrastinated, potentially delaying the entire planning process. It certainly is not something that most clients would describe as a positive or enjoyable experience. So what would it take to re-formulate the entire data gathering interaction, to change it from a planner-centric process into a client-centric positive experience? For starters, it needs lose the name: let the "data gathering" meeting become the "Get Organized!" experience!Read More...
Enjoy the current installment of "weekend reading for financial planners" - highlights this week include an article on the new coming wave of active ETFs, a few practice management pieces, a striking article on insurance companies using social media information for claims and even underwriting, and one of the best pieces I've seen yet on what Occupy Wall Street is really all about. Happy reading!Read More...
Clients who need to improve their prospects for retirement generally have three options: spend less, save more, or retire later. Technically, there is a 4th option - grow faster - but it is typically dismissed due to the risk involved in investing for a higher return. In practice, clients rarely seem to dial up the portfolio risk trying to bridge a financial shortfall in retirement, and taking out a margin loan just to leverage the portfolio to achieve retirement success would most assuredly be deemed imprudent and excessively risky. Yet at the same time, a common recommendation for accumulators trying to bridge the gap is to keep any existing mortgages in place as long as possible, directing available cash flow to the investment portfolio, and giving the client the opportunity to earn the "risk arbitrage" return between the growth on investments and the cost of mortgage interest. There's just one problem: from the perspective of the client's balance sheet, buying stocks on margin and buying stocks "on mortgage" represent the same risk and the same leverage, even though our advice differs. Are we giving advice that contradicts ourselves?
Enjoy the current installment of "weekend reading for financial planners" - highlights this week include two new articles on safe withdrawal rate research, an investment discussion about Europe from John Hussman, a few practice management articles about business development and cultivating relationships (or not!), a controversial piece that 401(k) plans should have no more than 10(!) investment offers, and more. Happy reading!
