Nerd's Eye View blog

Weekend Reading For Financial Planners (September 21–September 22)

September 20, 2024 02:00 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that the North American Securities Administrators Association (NASAA) released the latest edition its annual survey outlining the state of state-registered RIAs, showing that the number of state-registered firms and their assets declined slightly in 2023 (perhaps due to many firms seeing their AUM hit the $100 million mark amidst strong market performance and organic growth and moving up to SEC registration, or being acquired by an SEC-registered firm). Further, the survey showed the continued predominance of the AUM fee model amongst state-registered firms (at the same time, more than half of firms said they charge on a fixed-fee or hourly basis, suggesting many firms utilize multiple fee models) and identified the most common areas of regulatory enforcement during the year, with failure to register as an investment advisor or investment advisor representative and fraud topping the list.

Also in industry news this week:

A coalition of organizations representing financial advisors is pressing Congress to include tax breaks for financial advisory fees amidst expected negotiations to address the pending expiration of several provisions of the Tax Cuts and Jobs Act
A recent survey indicates that client referrals remain the chief source of new clients for many financial advisory firms, many of which have expanded their client geographic footprint during the past few years

From there, we have several articles on investment and tax planning:

As the cost of implementing a direct indexing strategy continues to drop, financial advisors can play a valuable role in helping clients determine whether it is a valuable opportunity
How considering the transition costs involved in moving to a direct indexing approach can help advisors avoid creating a potentially costly tax bill for certain clients with significant embedded gains
Why a "segmented ETF" strategy could be simpler and less expensive to implement than a direct indexing approach

We also have a number of articles on advisor marketing:

A research-backed list of potential opportunities for advisors looking to attract next-gen clients, from encouraging online reviews and testimonials to crafting a consistent message to deploy through digital marketing channels
Why assessing (and potentially adjusting) a firm's client value proposition could drive more client growth than additional marketing spending in isolation
How firms can craft an effective client survey to reveal the firm's strengths and potential areas to improve to promote client retention and referrals

We wrap up with 3 final articles, all about books:

8 tips to make it easier to read more books, from creating a more conducive home environment to establishing accountability measures
How to decide whether to move on from an unfinished book or whether to see it through until the end
Why it's often hard to retain details when reading non-fiction books and how including opportunities for regular, interactive feedback could lead to greater comprehension

Enjoy the 'light' reading!

Kitces & Carl Ep 147: Preparing An Advisory Firm For The Risk Of A Market (And Revenue) Decline

September 19, 2024 07:02 am 0 Comments CATEGORY: Kitces & Carl Podcast

Given the general trend of advisory firms charging on some percentage of assets under management, market growth can also be a strong indicator of advisory firm growth. For firms with revenue tied to portfolio performance, the additional income that can accompany a healthy market outlook allows firms to dedicate more resources to marketing and other processes to help grow the firm. However, while this business model has worked well with the strong markets that have dominated the last 15 years, there is also an inherent risk that comes with inevitable market corrections, bear market years, and recessions, which poses the question: How can advisors structure their firms to protect against market corrections?

In the 147th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how advisors (especially those who joined the industry after the last correction) can protect their business against the market volatility risk inherent to a business model that uses AUM fees.

As a starting point, a firm's profit margin is usually the first line of protection against a bad market. The average established firm has a profit margin of 20–30% after employee, technology, and operational expenses during 'good' market years. During bear market years (or quarters), any AUM-correlated profit margin will have a corresponding drop, and that profit margin may then drop to 0%. However, unless the profit margin drops below 0%, an advisory firm will likely be able to remain operational as is, without being forced to make difficult decisions to shrink the business. While maintaining a 0% profit margin for a quarter or few may not be pleasant, the advisory firm that is aware of this 'feast-and-famine' cycle and is prepared for it can situate itself to pull through bear markets with minimal business adjustments.

To better visualize how a recession would impact a firm's long-term growth, advisory firm owners may want to model how their business would be affected by several quarters of 'bad markets' and consider how they would need to answer these questions: How would payroll get impacted? What expenses would need to be adjusted? How would several quarters of bad markets impact the firm owner's ability to pay themselves and maintain their lifestyle? These considerations can help advisors better understand their options and the adjustments that would need to be made in the short- and long-term.

Importantly, it's essential to be mindful of the emotional toll along with the logistical side of bracing for a recession. In a bad market, advisors are constantly required to absorb client uncertainty and fear – often while they are equally unsure of what will happen. And, for advisors who are also firm owners, the toll grows as employees are also emotionally stretched to absorb the chaos of an uncertain market – and even more so if owners need to let an employee go to keep the business afloat. Emotional preparation usually poses a different challenge than reviewing a business plan. However, much as how a firm needs a certain level of profit margin to ensure that it will have the resources it needs during tough times, so too can advisors ensure they have the resources they need to maintain their own emotional wellbeing. Even basic self-care practices like maintaining a healthy diet, getting enough sleep, and exercising can provide a crucial barrier against the emotional and physical strain of stress.

Ultimately, the key point is that market corrections, slow years, bear markets, and recessions are inherent risks for firms with revenue models that rely on assets under management. However, advisors who are mindful of the effects of these trends can proactively make small adjustments before an emergency strikes – better protecting their clients and their firms in the long run!

AI May Transform Your Advisor Practice In 10 Years, But It Still Won’t Do Much In 2 Years

September 18, 2024 07:03 am 0 Comments CATEGORY: Technology & Advisor FinTech

In the nearly 2 years since the launch of ChatGPT, there has been an explosion of new technology solutions incorporating Artificial Intelligence (AI). Today, AI is now almost ubiquitous across many of the tools that we use, from smartphone cameras to search engines to office productivity software. For financial advisors, too, a ballooning number of new advisor-focused AI tools has appeared over the last 24 months, purporting to save advisors' time and staffing needs by automatically performing previously manual tasks like creating meeting agendas, generating marketing materials, and even analyzing and recommending financial planning strategies.

And yet, despite the flood of new AI tools and the assurances that advisors hear from software providers and AI proponents that AI will soon prove to be life-changing in its ability to 'intelligently' perform any task that the user asks of it, the impact that AI will have in the long term is still unclear. Much like how other forms of technology in the past 30 years (such as online shopping in the early internet era and blockchain solutions in the late 2020s) went through early hype phases only to have the bubble burst when many of the business models based on the new technology proved to be unsustainable, AI is going through its own speculative phase where new AI solutions are popping up for nearly every use case imaginable – except, as the lessons from previous technology bubbles have shown, many of the use cases currently being offered for AI won't actually prove valuable enough to build successful solutions.

But the likelihood that many of today's AI solutions may fall flat in the short term doesn't necessarily mean that AI won't ultimately bring significant benefits for advisors; it just means those benefits may take a long time –possibly a decade or more – to become evident. At least to some extent, this will be the result of generative AI's ability to grow over time, as AI technology itself becomes more reliable and capable of a broader range of functions. Additionally, as it becomes clearer which AI use cases provide real value, those applications will gradually gain traction among advisors and may even become integral to how they serve clients and manage their businesses.

For the time being, however, it may be helpful for advisors to take a realistic approach to the value that AI tools will provide, especially in an environment where technology providers often make bold claims about their solutions' ability to save time and reduce costs. Some of the capabilities of today's AI tools (e.g., automating workflows or retrieving client information using a chatbot) may be useful to some extent, but if the processes that they replace don't take that much time to begin with, then the tools' benefits may not justify the additional cost to implement them. On the other hand, if the tool really does help advisors meaningfully cut the time they spend on inefficient tasks – such as client meeting preparation and follow-up – then they're more likely to be worth the cost outlay.

The key point is that, like any technology, AI itself isn't the solution to making advisors better and more successful; rather, it's a foundation on which solutions can be built to help advisors address specific challenges while maximizing the technology's current capabilities. For now, getting the most out of AI may mean focusing on more narrowly targeted AI solutions (rather than those offering a mosaic of tools, only some of which may hold real value) – as these are more likely to address the advisor's actual needs, instead of trying to be the "One Solution" for everything, regardless of whether the problem truly needs solving!

#FASuccess Ep 403: Carving Your Path As An Investment Nerd By Building A Fractional CIO Solution For Other Advisory Firms, With Eric Stein

September 17, 2024 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome everyone! Welcome to the 403rd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Eric Stein. Eric is a partner at East Bay Investment Solutions, a firm that provides fractional Chief Investment Officer services based in Charleston, South Carolina, that supports over $6 billion in assets under advisement across 26 advisory firms they serve.

What's unique about Eric, though, is how he has chosen not to utilize the investment expertise he's built throughout his career to gather individual clients and manage their portfolios as a 'traditional' financial advisor with investment expertise, but instead to really stay focused on being an "investment nerd" by landing his current role as a partner with East Bay, where he gets to serve as a fractional Chief Investment Officer for multiple advisory firms and all of their clients instead.

In this episode, we talk in-depth about how it works when advisory firms hire Eric's fractional Chief Investment Officer service offering, including conducting investment research, designing model portfolios, and producing written market commentaries for advisors to use with their clients, how Eric's firm differs from the Outsourced Chief Investment Officer (or OCIO) services that have emerged for institutions, and how a fractional CIO also differs from a TAMP by still leaving the actual portfolio implementation responsibilities up to the advisor (which allows Eric's firm to charge a flat fee as a fractional CIO rather than a basis point charge based on client assets that allows it to serve mid-sized independent advisory firms in a cost-effective manner), and Eric's suggested considerations for advisors considering working with a fractional CIO, including most importantly finding a fit with respect to the firm's investment philosophy.

We also talk about Eric's own unique career journey, which started in commercial banking with stops along the way that included a variety of roles at Goldman Sachs Asset Management and working as an internal full-time Chief Investment Officer for a large national RIA before starting his current fractional CIO role, how Eric has leveraged recruiters over the years to both discover new opportunities and to quickly find a new position after being unexpectedly let go when large-firm investment departments go through downsizing (which is more of a hazard for those in investment roles than traditional financial advisor roles), and how Eric went through a metaphorical 'dating' process in approaching his current business partner and why their open discussions of business management contingencies before partnering up ensured their visions were aligned and has allowed the business to now grow and thrive for years.

And be certain to listen to the end, where Eric shares his views on working in massive national businesses versus smaller local firms, including balancing the opportunity to explore multiple positions within the same company with feelings of being 'just' a cog in a much larger system of gears, how Eric's experiences as a manager and the journey he went through in learning how to start letting go and not micromanage team members, and how it was a tennis coach who ultimately taught Eric the value of remembering to pause from time to time to celebrate successes while also learning and moving on quickly from failures, that helped Eric navigate the ups and downs of his own career in financial services.

So, whether you're interested in learning about navigating a career in the financial services industry as an "investment nerd", what it means to hire a fractional Chief Investment Officer, or how to successfully create a business partnership that meets both partners' visions, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Eric Stein.

7 Lessons Learned Launching A Sustainable Business Model To Serve (And Attract!) Profitable Millennials And Gen Z Clients

September 16, 2024 07:01 am 0 Comments CATEGORY: Practice Management

The business model of many financial advisory firms revolves around serving clients who are able to pay a certain minimum in annual advisory fees, which reflects not only the value that the advisor can provide for the client, but also the amount that the advisor must charge in order to provide the level of deep planning and investment management that higher-net-worth clients expect (while also earning enough profit to make the venture worthwhile).

However, because many next-generation clients such as those who are Millennials and Gen Zers are still building their assets up, paying $10,000 or more in advisory fees each year may not be feasible for them… at least not yet. This can create tension with the traditional advisory firm business model, because that minimum fee is often necessary for the firm to break even. As a result, serving next-generation clients may require adjustments to the firm's business model to deliver the services younger clients need while also remaining profitable.

In this guest post, Stacey McKinnon, Chief Operating Officer and Partner at Morton Wealth, shares a new business line her firm developed to serve younger professionals, the challenges that the firm faced in developing a sustainable business model to serve next-generation clients at lower cost than retirees, and some of the lessons her team learned from the experience that could be valuable for advisors who want to develop their own next-generation offerings.

At a high level, the challenge of serving next-generation clients is that, although they may not be able to afford higher fees, their financial needs are just as complex – if not more so – than those of retired clients. Importantly, serving next-generation clients effectively doesn't mean just offering fewer or more automated services (e.g., robo-managed portfolios) at a lower fee. Instead, it involves focusing on what clients value most and delivering that value efficiently, without adding unnecessary services that the client may not need or want. For example, most Millennial and Gen Z clients can open their own investing account and buy index funds online with only minimal guidance from their advisor, so full-service investing might not offer enough value to a next-generation client to justify an ongoing planning fee.

However, many next-generation clients have their own unique planning needs – ranging from equity compensation and tax planning to managing debt and even addressing ongoing anxiety about money and wellbeing. Advisors who can focus on and help resolve these issues for clients can prove incredible value to their clients. This, on one hand, requires deep expertise, meaning the firm may need to ensure its advisors have adequate experience and training to handle complex planning strategies that may be beyond the capacity of a relatively junior advisor. On the other hand, by focusing on a few key planning areas, the firm can deliver value more efficiently than one that tries to be "everything to everyone".

The key point is that while serving next-generation clients profitably may be more challenging in the short term, there's significant long-term potential in working with clients who are still accumulating wealth – and who may eventually inherit wealth from their parents. Because ultimately, many of today's high-net-worth retirees were once part of the 'next generation' themselves. Which means that advisors who can deliver value, build trust, and maintain strong client relationships today are positioning themselves to serve the high-net-worth clients of tomorrow!

Weekend Reading For Financial Planners (September 14–15)

September 13, 2024 02:00 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" - this week's edition kicks off with the news that the SEC this week fined 4 RIAs for violations of its marketing rule related to their claims that they offered 'conflict-free' financial advice. Which means that while many fee-only RIAs use the reduced conflicts that come with the fee-only model (as opposed to firms that receive compensation from commissions and other sources) as a key marketing talking point, the fact remains that being truly 'conflict free' is nearly impossible and such claims (which are hard to substantiate) appear to be a step too far when it comes to advertising under the SEC's marketing rule.

Also in industry news this week:

A CFP Board study indicates that financial planners with the certification earn 10% more than other advisors and show very high levels of career satisfaction
A Morningstar study has identified 4 main areas where investors find value from their financial advisors, which might not match an advisor's own list of top ways they add value for their clients

From there, we have several articles on behavioral finance:

The behavioral biases that can lead retired clients to over- or underspend and how advisors can support clients in each of these positions
Why feelings of "disempowerment" could lead retired clients to spend well below their means, and how advisors can help them have more fulfilling retirements
Why many seemingly wealthy retirees can sometimes have a hard time spending money, from the 'money scripts' they learned as a child to previous bouts of acute poverty they experienced earlier in life

We also have a number of articles on practice management:

Why creating clear lines of communication among management, compliance officers, and firm staff is an important step to ensure employees understand their compliance responsibilities while not feeling overly restricted by compliance requirements
The key traits of an effective chief compliance officer, from the knowledge needed to identify potential compliance concerns to the communication skills needed to train employees and effectively deal with potential violations
How (solo) advisory firms can use an annual compliance calendar to organize the many compliance responsibilities they face throughout the year

We wrap up with three final articles, all about college planning:

5 common college planning mistakes and how advisors can help clients avoid them
While they offer a range of tax benefits and, recently, more flexibility, 529 plans continue to only be used by a limited number of Americans, creating an opportunity for financial advisors to discuss their benefits and create a savings plan with clients
Why a 4-year college degree remains a good deal for many students, with the benefits not necessarily accruing only to those who go to the priciest schools, but rather to those students who make the most of their college experience

Enjoy the 'light' reading!

New RMD Rules For Spousal Beneficiaries Of Retirement Accounts With SECURE 2.0’s “Spousal Election” Option

September 11, 2024 07:01 am 0 Comments CATEGORY: Taxes

Among all the different types of retirement account beneficiaries, those who are the surviving spouse of the original account owner receive the most preferential tax treatment when it comes to distributing the account's assets after the owner's death. While non-spouse beneficiaries face strict timelines – either starting Required Minimum Distributions (RMDs) the year after the original owner's death and stretching them over their remaining life expectancy (if they were considered Eligible Designated Beneficiaries), or fully distributing the account within 10 years (if they were Non-Eligible Designated Beneficiaries) or 5 years (if they were Non-Designated Beneficiaries) – surviving spouses have more flexibility. They can delay their RMDs until the original account owner would have reached the required age for starting RMDs if they were still alive.

Furthermore, surviving spouses also have the option to roll over the inherited account into an account in their own name, allowing the account to be treated as if it had always been theirs. Meaning that the surviving spouse can wait until their own RMD age to start distributing from the account; and when RMDs do begin, they're able to use the more favorable Uniform Lifetime Table to calculate the RMD amounts (rather than the Single Life Table that's generally used to calculate the RMDs of account beneficiaries).

Prior to 2024, however, spousal beneficiaries faced complex tradeoffs when deciding whether to leave the account as an inherited account or to roll it over into their own name. For example, a surviving spouse under age 59 1/2 may want to do a spousal rollover to take advantage of the more favorable distribution schedule; but if they need to access any of the funds in the account before age 59 1/2, withdrawing them from the rollover account would incur a 10% early distribution penalty (which they wouldn't have incurred if they had left the account as inherited). And a surviving spouse who is older than the deceased spouse may want to leave the account as inherited in order to delay RMDs until the decedent's RMD age, but then they'd be subject to the less-favorable distribution schedule using the Single Life Table.

But the SECURE 2.0 Act created a new option for surviving spouses (effective starting in 2024) that changes the calculus for deciding which option to choose from. The new rule allows spousal beneficiaries who leave the account in the decedent's name to elect to use the Uniform Lifetime Table to calculate their RMDs rather than the Single Life Table as was required under the existing rules. Which means that spouses who choose to keep the account in the decedent's name for any reason will no longer be forced to take higher RMDs for doing so.

Notably, there may still be reasons to complete a spousal rollover in spite of the new Spousal Election rule. For instance, surviving spouses who are younger than the decedent can delay RMDs for longer after rolling the account over; additionally, rollover accounts generally have more flexible and favorable options for the surviving spouse's own beneficiaries (especially if the surviving spouse later remarries). Meaning that, in many cases, the best option might be to keep the account under the decedent's name until RMDs begin and then roll it over into the spouse's name thereafter.

The key point is that even though the new Spousal Election may seem to complicate the planning picture for surviving spouses by adding yet another option, it actually serves to benefit surviving spouses by reducing the tradeoffs between inherited account and spousal rollover options. And while different spousal beneficiaries may have a different 'optimal' choice depending on their own circumstances, the consequences of making the 'wrong' choice are now much less than they were under the old rules!

#FASuccess Ep 402: Accelerating Early Advisor Growth With A (Federal Employee) Specialization That Evolves Over Time, With John Mason

September 10, 2024 07:03 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome everyone! Welcome to the 402nd episode of the Financial Advisor Success Podcast!

My guest on today's podcast is John Mason. John is the President of Mason & Associates, an RIA based in Newport News, Virginia, that oversees $370 million in assets under management for approximately 390 client households.

What's unique about John, though, is how joining a firm that served the niche of Federal government employees allowed him to quickly accelerate his own learning curve and demonstrate his expertise early in his career as a 20-something, ultimately enabling John to more quickly begin bringing in his own clients (which also came about faster because he was able to plug his newfound focused expertise into the firm's existing marketing strategies).

In this episode, we talk in-depth about how John and his entire firm serves the Federal employee niche, with a particular focus on the areas that make their clients' situations different from others, such as the Federal government's unique retirement system that includes both defined-benefit pension and defined-contribution plans, how John finds that specializing has allowed him to serve them with greater efficiency because he doesn't have to 're-learn' the ins and outs of each client's unique employment and retirement benefits (which in turn provides more time and capacity to forge deeper connections with clients as well), and how John was able to build credibility with clients as a very young advisor early in his career by demonstrating his deep knowledge of the particular financial planning issues faced by the Federal employees that made up his firm's client base.

We also talk about how John's firm's marketing specifically emphasizes how Federal employees are unique (and thus why his firm is better suited than more generalist advisors to meet these clients' planning needs), how John's firm long used a radio show to demonstrate their expertise and encourage prospects to attend an in-person seminar put on by his firm, with about half of seminar attendees eventually scheduling individual introductory meetings to become clients, and how John evolved the approach to now attracts clients through a podcast targeted at Federal employees, which similarly both educates listeners… and also directly highlights how his firm does its work with Federal employee clients.

And be certain to listen to the end, where John shares how transitioning his firm from a broker-dealer platform to the RIA model has allowed it to generate more revenue per client while still bringing down the all-in fee costs for clients (thanks in large part to the lower platform fees paid as an RIA), how John handled the challenge of letting go of unprofitable clients during this transition, including by calling each one personally and trying to find those not-a-good-fit-anymore clients a new home with other advisors who would be a better fit, and why John thinks fee-only advisors sometimes underrate the importance of insurance planning, which he believes is a way for advisors to make a life-changing difference in their clients' lives.

So, whether you're interested in learning about how serving a niche can help a newer advisor gain credibility with clients, using a podcast to generate new client leads, or how to profitably transition from a broker-dealer platform to the RIA model, then we hope you enjoy this episode of the Financial Advisor Success podcast, with John Mason.

Why Service Advisors Who Obtain CFP Marks Are Making More Money For Themselves And Their Firms

September 9, 2024 07:01 am 0 Comments CATEGORY: Practice Management

While the share of advisors with the CFP marks has risen steadily over time, today, about 2/3 of financial advisors are not CFP professionals. This means that, for most advisors, the decision to obtain this designation remains an open one. A crucial factor in an advisor's decision to prepare for the CFP exam – often requiring them to sacrifice evenings and weekends to complete the requisite coursework (which can take more than a year), and spending many thousands of dollars – is whether they will actually earn more as a result of doing so.

According to the 2022 Kitces Research Study on Advisor Productivity, CFP professionals take home more money per hour worked than non-CFP professionals, with this gap being substantially larger for service advisors than senior advisors. The typical service advisor without CFP certification earns $48.83 for every hour that they work, compared to $86.30 for service advisors with the CFP marks – a difference of $37.47, or a whopping 77% boost in income per hour! The typical senior advisor without the CFP marks earns $112.47/hour, compared to $120.00 for CFP professionals, a far more modest difference of only $7.53.

In this article, Michael Kitces and Mark Tenenbaum (Director of Advisor Research) explain this disparity in earnings per hour – dubbed the "CFP Productivity Gap" – and how it appears to be driven by explanations stemming from both the skills that CFP practitioners develop and deliver (supply-side explanations), and the preferences of clients – especially more affluent clients – when selecting an advisor to work with (demand-side explanations).

Specifically, service advisors with the CFP marks appear to spend more time on key revenue-generating activities such as meeting with clients and prospects and generating financial plans, and that these hours are put to good use because those CFP professionals both offer financial plans that are more comprehensive and update clients' financial plans more frequently than non-CFP professionals. As a result, teams with service advisors who hold the CFP marks tend to attract significantly more affluent clients than teams with non-CFP certificants, with a median client AUM of $1,000,000 AUM versus $250,000 AUM, respectively.

These wealthier clients also tend to pay substantially higher fees, which has a key implication for firms looking to attract and retain affluent clients: hire CFP professionals or help existing employees who have yet to earn their CFP marks obtain them. The knowledge obtained through CFP certification can forge a more planning-centric practice, offering financial plans that are more comprehensive and updated more frequently – which are clear value-adds for high-net-worth households who often have complex planning needs. Crucially, the research shows how the cost of employing CFP professionals (who command higher salaries than their counterparts without the CFP marks) is substantially lower than the revenue firms generate by employing them.

The CFP Productivity Gap also has profound ramifications for the income growth of service advisors throughout their careers. While senior advisors tend to see income growth over time regardless of their CFP certification, non-CFP professionals fall farther and farther behind their counterparts who are CFP practitioners over the course of their careers. Indeed, for service advisors, the CFP Productivity Gap grows from an earnings difference of $8/hour for those with less than 8 years of industry experience to over $50/hour (which adds up to $100,000+/year in greater earning potential) for those in business for 20 or more years. Hence, CFP certification appears to be a crucial vehicle by which service advisors can experience continued income growth over time without stalling out.

The key point is that service advisors earn substantially more by obtaining the CFP marks and firms are likely to benefit from supporting them in doing so. This helps the firm expand its teams of service advisors who can take on and support the firm's most high-dollar clientele. Which, in turn, frees up the capacity of senior advisors to continue to bring in clients and grow the firm further!

Weekend Reading For Financial Planners (September 7–September 8)

September 6, 2024 02:00 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that the Treasury Department has finalized rules requiring most SEC-registered RIAs to implement risk-based Anti-Money Laundering and Countering the Financing of Terrorism programs, including a requirement to report suspicious activity to Treasury's Financial Crimes Enforcement Network, with firms having until January 1, 2026 to comply with the rule. Notably, while the rule will create an additional compliance burden, the due diligence advisers offering comprehensive planning services (as well as their investment custodians) are likely already conducting on their clients to create an effective financial plan could be a 'defense mechanism' for these firms against criminals looking to take advantage of their services.

Also in industry news this week:

A probe by the Government Accountability Office found that the conflict-of-interest disclosures offered by many firms offering financial advice are often inadequate or confusing, making it hard for consumers to understand whether and when a financial professional is operating in their best interest
A recent study has found that accountability for business development within a firm as well as its marketing spend can be catalysts for organic growth

From there, we have several articles on tax planning:

How financial advisors can help clients prepare for the potential sunsetting of key Tax Cuts and Jobs Act (TCJA) measures today, even though their ultimate status likely won't be determined for many months
How the state and county where a client lives will help determine the net financial impact they will experience from the potential expiration of major TCJA provisions
An analysis of the impact of extending provisions in the TCJA that are due to sunset at the end of 2025 shows the various tradeoffs policymakers will face, such as balancing a desire to boost taxpayer income without creating a severe fiscal burden on future generations

We also have a number of articles on practice management:

11 factors to consider for RIAs thinking about adding a custodian to their lineup
Why adding an additional custodian can be a form of "overdiversification" for an RIA
How taking a strategic approach to asset splitting among custodians can ensure that an RIA receives high-level service without sacrificing business goals

We wrap up with three final articles, all about time management:

Why aiming to put in "85% effort" can both prevent burnout and lead to time savings without necessarily sacrificing work quality
How using a "backlog", combined with "timeboxing", can help advisors ensure that their most urgent and important tasks are completed efficiently
Research indicates that time flexibility is a key factor in driving employee job satisfaction, suggesting that firms can promote staff retention by offering flexible work hours, even if employees are expected to be in the office on a daily basis

Enjoy the 'light' reading!