Nerd's Eye View blog

Weekend Reading For Financial Planners (July 30-31)

July 29, 2022 02:02 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with a survey indicating that while about 70% of advisors overall feel successful, those who charge fees (and enjoy the stability that recurring fees provide) tend to feel more successful than those who rely on less-stable commissions, with the effect being particularly pronounced for female advisors.

Also in industry news this week:

A survey suggests that consumers recognize that they are keeping more money than they should on the sidelines as they maintain a pessimistic outlook for markets and the economy
Why a recent SEC settlement is a warning that large RIAs need to pay close attention to the revenue sources of an affiliated broker-dealer

From there, we have several articles on advisor fee models:

How advice-only fee models can offer advisors greater flexibility in their service offerings and the clients they serve
Why creating an annual client service calendar is a helpful way to demonstrate an advisor’s value proposition to clients and regulators
How advisors can overcome the “Triple Whammy” of having too much work for too many clients for too little money

We also have a number of articles on mortgages:

How holding on to a mortgage while investing is a form of leverage, and why a mortgage itself is not an inflation hedge
How advisors can add value to clients considering cash-out refinances
Why some clients see home renovations as a way to delay inevitable bad news

We wrap up with three final articles, all about the current work environment:

The best practices, from happy hours to retreats, advisory firms can use to maximize the hybrid work environment
Why co-working space is the new ‘hot’ amenity in apartments and condo buildings
Why the return of in-person conferences is attracting parents who want to get out of the house, and the wide range of upcoming conferences for advisors

Enjoy the ‘light’ reading!

Kitces & Carl Ep 91: Is It Better To Have Clear Goals Or ‘Just’ A Strong Sense Of Direction?

July 28, 2022 07:02 am 0 Comments CATEGORY: Kitces & Carl Podcast

Financial advisors are often innately inclined to set long-term goals and stay on the course to help their clients achieve their goals, as the advisor understands the bigger picture of having a financial roadmap and its benefits. However, when long-term goals in a financial plan are too rigid, many clients may not be naturally inclined to stick with those goals or even with the financial advisor. It can be especially difficult for clients to stick to a strict ‘goals-based’ approach when their long-term goals are likely to change, or when the goals that their financial advisor conveys as important are not clearly connected to the client’s bigger ‘why’.

In our 91st episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss why setting goals overall is an important step in developing a financial plan, but how structuring those goals around a broader sense of direction can guide the financial plan toward achieving more client satisfaction over time.

As a starting point, it’s important to recognize that goals are just guesses that are highly subject to change. Often, goals set in the initial stages of developing the financial plan do not end up being the goals achieved (which is okay!). While it is a good idea to create a roadmap for clients with long-term goals, leaving only a little room for flexibility and change can make it challenging for clients to commit, especially when they are unsure about why the goals are important in the first place. In reality, life will always change and nearly all goals will have to be adjusted at some point in time. A good way for advisors to meet the clients in the middle is to set smaller, more flexible goals that identify the clients’ desired "direction" so that they can set loose, adaptable "goals" and course-correct along the way.

Ultimately, the key point is that a ‘goals-based’ approach is not a one-size-fits-all solution. Because the future is uncertain, goals need to be reevaluated, clarified, and adjusted over time. And goals that are not based on a client’s current reality can be difficult for clients to connect to. Importantly, as the advisor/client relationship matures and goals are clarified, having flexibility allows for a deeper understanding by both advisor and client of why these goals are important. Furthermore, when the intent behind achieving the goals is understood, deeper trust – and longer-lasting relationships! – between the client and the advisor are established, instilling more confidence that goals will be achieved.

Why To Use George Kinder’s 3 Life Planning Questions With Financial Planning Clients

July 27, 2022 07:09 am 8 Comments CATEGORY: Client Trust & Communication

Financial planning is both an art and a science. While an advisor needs technical financial planning knowledge to create and implement plans for clients, soft skills that involve effective communication and relationship building are also crucial to both relate to prospects and clients and to understand their needs. Further, one of the most important qualitative ways an advisor can add value to clients is by helping them identify and select meaningful goals. And so, by asking the ‘right’ questions and building a bond with clients, an advisor not only ensures that their clients select appropriate goals, but also creates ties that will encourage them to remain clients for years to come.

As part of his Life Planning approach, George Kinder developed three questions that probe deeper into a client’s hopes, dreams, and fears, to help advisors develop more complete and impactful financial plans. The first of these questions asks clients to dream about their future and freedom, brainstorming how they would live their life if they were financially secure. The question is open and exploratory, creating the perfect environment for the client to provide more insight into their goals and priorities.

This approach to goal setting relies on social constructionism, a theory that suggests reality can be developed collaboratively. When advisors and clients work together through dialogue to develop a shared vision of the client’s dream life, both parties are better able to understand not only what the goal is, but also why it matters.

Notably, the goal-development process is not a quick one. Often, clients do not know what their goals are, or might struggle to articulate the details of their goals. For example, a client might say that their goal is to retire, but that doesn’t tell the advisor what the client wants their retirement to look like. But by using dialogue and engaging in the process of developing a socially constructed goal, the advisor may uncover what retirement really means for the client – the goals and activities they wish to pursue, how they want to spend their time, and how they envision their future.

Another benefit that comes from socially constructed goals is relationship stickiness. When goals are co-constructed between an advisor and their client, the desired outcomes are something that both parties uniquely and intimately share. And when an advisor co-constructs with clients, no other advisor will do!

In practical terms, while Registered Life Planners typically bring up the Kinder questions with clients without warning (as they have extensive training to handle the ‘shock’ value of the questions), other advisors with no Life Planning training might consider giving clients advance notice so they can start to consider their answers and help both parties be more comfortable with the discussion. During the client meeting, it is important for the advisor to ask several follow-up questions, not only to keep the conversation flowing, but also to help clients clarify their goals. These questions could explore the client’s motivations, who else is with them when imagining their best life, and how their dream differs from their current situation.

Ultimately, the key point is that Kinder’s first question is a valuable tool for advisors to work constructively with clients to help them discover their true goals. Which not only helps clients better understand what they are really looking for in life, but also allows the advisor to create a better financial plan and enhance client loyalty!

#FA Success 291: Managing Fast Growth And Slow Growth Of A Planning-Centric Advice Firm, With Amy Irvine

July 26, 2022 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 291st episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Amy Irvine. Amy is the owner of Rooted Planning Group, an independent RIA based in Corning, New York that oversees $67 million in assets under management for 175 client households.

What's unique about Amy, though, is how she managed the complexities of starting her own RIA focused on Gen X women, and then dealt with unexpected growing pains as her business development worked ‘too well’ and the firm rapidly expanded from nearly 30 clients to over 100 in under 18 months… and then she had to figure out how to service all of her new clients at the same time she was hiring and training team members to help reduce that client workload.

In this episode, we talk in-depth about how after working for years in the financial industry, Amy realized there was a missed opportunity in working with career-driven Gen X women like her and decided to focus on serving that type of clientele she knew so well, how the initial fear of launching a firm on her own initially led Amy to partner with another advisor and try to capitalize on the opportunity to convert his practice from its commission-based roots into a fee-only firm… only to quickly realize they did not share the same vision and that she would be better off as a solopreneur instead, and how Amy’s unique model of charging subscription fees with no asset minimum for Gen X women revealed such an untapped market opportunity in her local area that as soon as she started volunteering for local organizations and providing financial education for non-profits in her community and communicating what she did and who she served, Amy began to spur a generous amount of referrals that led to a rapid growth.

We also talk about how the tragedy of 9/11 (coupled with Amy’s personal loss of friends and colleagues) and seeing how underfunded life or disability insurance can seriously impact people's lives inspired Amy to return to college and get her undergraduate degree just so she could gain her CFP marks and become a financial planner, how even though Amy was grateful for the success of her firm early on, she struggled with the rapid growth as it created pressure to quickly hire employees (and find the time to train them!), and how after seeing her staff reach stages of burnout while dealing with acquiring another advisor’s book of business during the early months of the pandemic, Amy intentionally stopped taking on new clients for 3 months and hired a coach to prioritize the mental health of her staff over the economic growth of her firm.

And be certain to listen to the end, where Amy shares how she wishes she had more confidence in herself at the beginning (and listened to recommendations from colleagues when launching her firm) to grow her firm slowly and charge more upfront for her services, why Amy believes in the value of starting one’s advisory career in an admin or operations role (especially for women interested in becoming financial advisors) as there are more opportunities to attain knowledge and the problem-solving skills that craft a good financial planner, and how Amy has navigated her own shift from the work she enjoyed doing directly with clients, to a role where she is more focused on guiding the strategies her financial planners will implement with their clients so that she can have an even greater, longer-lasting impact.

So, whether you’re interested in learning about why Amy chose to focus her firm on career-driven Gen X women and charges subscription fees without an asset minimum, how niching into an underserved clientele propelled the growth of Amy’s firm and strained her and her firm’s resources, or why Amy feels she is finally in a place where she can delegate responsibilities which allows her more time to develop focused strategies that will further the success of her firm, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Amy Irvine.
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Announcing IAR CE From Kitces And The Mid-Year State Of The Blog

July 25, 2022 07:02 am 0 Comments CATEGORY: Nerd's Eye View

2022 was a year that began with high hopes as households were slowly re-emerging from pandemic shutdowns, markets were reaching new highs, and most advisory firms had growing momentum. Within just a few months, though, Omicron had led to another wave of at least partial shutdowns, inflation began to rear its ugly head in a way not seen in decades, and the market fell to its worst first-half start since 1970. Yet despite this – and perhaps even because of it – advisory firms are putting an ever-greater focus on financial planning in 2022, as a way to both show value to clients in the midst of difficult market returns, and, more broadly, to help clients navigate the current environment. Which we’ve witnessed first-hand here at Kitces.com, as the advisor community has engaged in record numbers with some of our recent articles on how best to advise clients through it all, and capitalize on the opportunities along the way.

And so, as we enter the second half of the year, we want to give all of you, our Readers and Members, an update on what we’re doing to continue to serve and support the advisor community through a challenging year, and some of the new enhancements you’ll see from us in the months to come.

First and foremost, we’re excited to announce that, effective immediately, all of our Nerd’s Eye View blog and recorded webinar CE from 2022 (and all future CE) is now eligible for the new IAR CE requirements. Which is relevant already in 2022 for any advisors who are registered in one of the 3 states (as their home state, or simply a state in which they have more than the de minimis number of clients) that has already rolled out the IAR CE obligation – Maryland, Mississippi, and Vermont – and will be relevant for far more advisors in the years to come as more states implement the NASAA Model Rule for IAR CE (with Arkansas, Kentucky, Michigan, Nevada, Oklahoma, Rhode Island, Wisconsin, and Washington DC already expected to enact their IAR CE requirements for 2023). All advisors in the Kitces Members Section will be able to earn IAR CE in addition to their credits for CFP, CPA, EA, and various IWI and American College designations as part of their ongoing membership fee (though notably, NASAA is imposing a $3/credit, or $36/year, reporting fee that Kitces will also have to collect on behalf of advisors and remit for their reporting).

In addition, we’ve also just launched a major update to our popular Course on “How to Find Planning Opportunities When Reviewing a Client’s Tax Return”, which has been refreshed to include the latest IRS forms and schedules, new educational videos from our very own Jeff Levine, and improvements to the Course navigation and supporting materials (downloadable video transcripts for your highlighting or future reference!). And in the coming month, we’ll be rolling out our newest course on “How To Spot Planning Opportunities when Reviewing Estate Planning Documents”. Because, the reality is, while we may learn about tax and estate planning in our CFP classes, there’s remarkably little to show us as advisors how best to navigate the reams of tax returns and estate documents that we collect from clients to figure out what their opportunities are! A gap our Kitces Courses aim to fill!

We’re also gearing up for our upcoming Kitces Financial Planning Value Summit, after more than 1,000 advisors registered for our first Value Summit last year! This year’s Summit will be held on Thursday, December 8^th – Save the date! – and we’re already accepting submissions for those who have a unique financial planning value-add that they’d be willing to showcase to other advisors. Notably, this is a paid speaking opportunity for advisors whose submissions are chosen to be featured at the Summit!

In the coming months, we’re also looking to make more updates to our popular AdvisorTech Directory that launched earlier this year at FinTech.Kitces.com. Stay tuned for new data on each software provider that shows how often they’re used by other advisors, and the Satisfaction scores that other advisors are giving the software. Along with, in partnership with our Consulting Consortium partner Craig Iskowitz of the Ezra Group, a new “Integration Score” to make it easier for advisors to understand how well various AdvisorTech tools actually integrate with other software solutions!

And given all of this growth, we’re also proud to welcome several recent new hires to the Kitces team – including Director of Engagement Steve Viner, Curriculum DesigNerd Shelitha Smodic, and Education Systems Manager Ryan Taylor – and have announced (or are about to launch) several new openings as well, including Director of Advisor Education, an Instructional DesigNerd, an Associate Financial Planning Nerd, and an upcoming role to become our full-time Director of Research. Those who are interested (or have a friend or family member who might be!) can check out our Career Opportunities page for more!

All in pursuit of our mission – Making Financial Advicers Better, and More Successful – through our ongoing focus on Navigational resources, Educational insights, Research on advicers, and Development of advicer skills. We appreciate the opportunity to continue to serve you within and especially in the midst of a challenging year, and welcome your ongoing feedback about what else we can do to serve you even better!

Weekend Reading For Financial Planners (July 23-24)

July 22, 2022 02:02 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 Financial Planning Association has announced a major new advocacy initiative: to pursue legal recognition of the term “financial planner” through title protection (such that those who don’t meet the competency and ethical standards of financial planning wouldn’t be permitted to use the title). Though in recognizing that the path toward regulation is likely to be a long one, as a starting point, the FPA has simply pledged to begin exploring how to pursue Title Protection, what kind of licensing or regulation it might entail, and whether it should be done at the state or Federal level.

Also in industry news this week:

A Schwab benchmarking survey shows that RIAs had strong top-line and organic growth in 2021 and that a potential talent crunch remains top of mind for firm leaders
RIA consolidation activity maintained a strong pace in the first half of 2022, with large strategic acquirers leading the pace of M&A activity

From there, we have several articles on the value of financial planning:

Why it is vital for advisors to focus on their clients’ understanding of the value they are receiving, as well as what separates the advisor’s value proposition from the client’s other options
Why it is important for advisors to not only consider a client’s financial assets, but also what brings them purpose and meaning, when providing financial planning services
How an advisor’s professional network and industry experience can provide significant value to clients that goes beyond their net worth statement

We also have a number of articles on retirement income planning:

Why simple strategies like a phased retirement and flexibility in spending could trump more complicated retirement income planning techniques
How “buffer assets” could help clients overcome the financial and emotional turmoil caused by bear markets
Why it typically pays for clients to make portfolio withdrawals for retirement income gradually throughout the year rather than as a lump sum in January

We wrap up with three final articles, all about the housing market:

How rising house prices are changing the composition of neighborhoods across the United States and how advisors can help clients navigate these dynamics
Why many Americans, including families and retirees alike, are choosing to move to Europe and how doing so can affect their financial plan
How some cities and towns across the U.S. are providing incentives – from cash to free babysitting – to attract high-income remote workers and why a move could be attractive for advisors and their clients alike

Enjoy the ‘light’ reading!

Sabbatical Financial Planning: Taking Extended Time Off Without Derailing The Career Or Retirement

July 20, 2022 07:09 am 0 Comments CATEGORY: General Planning

For many workers, a typical career entails a series of successive jobs over several decades, with the end goal of retiring and finally being able to ‘relax’. And while most breaks from work on the traditional path are limited to short vacations, there is a growing movement of individuals who want to take extended time off during their working years to take advantage of their health and opportunities that might not be available to them once they reach ‘normal’ retirement age. One way to do so is through a sabbatical, and advisors can play an important role in supporting clients who are interested in taking this step.

A sabbatical refers to a period of time in which someone takes an extended, planned break from work prior to retirement, often as an opportunity to focus on their wellbeing and/or to gain valuable perspectives of life outside of work. While sabbaticals can involve as little as 1 month for some individuals, taking a sabbatical for 6–12 months is not uncommon. However, longer sabbaticals do carry more substantial financial and career ramifications that require careful planning, especially when extensive travel plans are involved.

One of the biggest challenges of planning a sabbatical is enduring a period of little or no income and coordinating job opportunities after the sabbatical is completed. While some employers have formal sabbatical programs that guarantee the individual can return to the same job after their time away, others may be willing to allow a sabbatical on an ad hoc basis. And there are other employers who are less flexible that may require the individual to quit their job altogether in order to take significant time away from work.

With this in mind, advisors can help clients assess how their sabbatical plans will affect their other financial goals. This could include planning for how their expenses will change during the sabbatical as well as simulating how the sabbatical will impact their financial picture going forward. Advisors can also add value by analyzing tax planning opportunities during the sabbatical; for example, having reduced (or no) income during the sabbatical could create unique opportunities for Roth conversions or harvesting capital gains.

Advisors with clients who might be interested in taking a sabbatical can start the conversation at a strategic level, thinking about their goals for the time off as well as how it relates to their other life objectives. For example, some clients might be fine with taking a one-year sabbatical that pushes out their projected retirement date by two years, while other clients might prefer to stick with an earlier retirement date. In addition, advisors can help clients explore contingency scenarios if they do go through with the sabbatical. For example, an advisor can model what the client’s financial picture will look like if it takes 3 months longer than anticipated to find a job after returning from the sabbatical.

Ultimately, the key point is that advisors are uniquely positioned to add significant value for clients who are considering a sabbatical, both in conceptualizing what the sabbatical would entail and how it would affect their other financial goals. In the end, while taking a sabbatical might not maximize a client’s net worth, it could be a decision that maximizes how they experience their life!

#FA Success Ep 290: Serving Neurodivergent Clients As A Financial Advisor With Autism, With Andrew Komarow

July 19, 2022 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 290th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Andrew Komarow. Andrew is the founder of Tenpath Financial Group and Planning Across the Spectrum, a hybrid firm based in Farmington, Connecticut that oversees $100 million in assets under management for 100 client households.

What's unique about Andrew, though, is how he, as a financial advisor with autism, has built a firm with a specialized niche of autistic and other neurodivergent clients, helping them navigate their unique and complex financial planning challenges.

In this episode, we talk in-depth about how being diagnosed with autism as an adult helped Andrew understand himself better and realize he had an opportunity to niche-focus his firm to serve clients who are also neurodivergent adults, how the combination of creating a separate website for Planning Across the Spectrum and leveraging a Facebook group for the special needs community has helped Andrew develop a steady path for growth in his specialization, and how Andrew created an impact investing index that he labeled as a “Neurodiversity Index,” with 79 companies that embrace neurodiversity and inclusion (because on the periodic table, gold is represented by the letters AU, and its atomic number is 79).

We also talk about how, despite never graduating high school (but gaining a GED later), Andrew credits his autism and the hyperfocus that comes along with it for helping him to ultimately earn more than 16 professional financial planning designations, how working at an insurance company early in his career and getting frustrated with adhering to large-firm corporate rules helped Andrew realize he liked giving financial advice to clients but was going to need to be more independent to have the control to serve his unique clients the way they need to be served, and how an unexpected separation from that insurance company ended up being a blessing in disguise as it forced Andrew to find a new growth path that led him to focus into his ideal client type and ultimately fueled the launch his own firm.

And be certain to listen to the end, where Andrew shares how he was surprised by how much he actually enjoyed building his own firm and having the flexibility to decide for himself what procedures and roles are put in place, why Andrew believes we are too hard on ourselves and how important it is to be kinder to ourselves about the challenges we face, and why Andrew feels the best business decision he ever made was hiring his first team member to assist him even before he really had the revenue to afford it… because it was the only way he’d be able to grow and scale further.

So, whether you’re interested in learning about how Andrew took advantage of the separation from his former firm as an opportunity to serve the types of clients he preferred and in the way he wanted, how receiving an autism diagnosis as an adult not only gave Andrew a better understanding of himself, but also how he could help other neurodivergent adults navigate their financial challenges, or how Andrew leverages educational tools on his website, along with Facebook groups, to maintain a steady path of growth, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Andrew Komarow.

CFP Board’s Fee Increase For Workforce Development: More Advisors Or Just More Sales Churn?

July 18, 2022 07:03 am 10 Comments CATEGORY: Industry News

Amid estimates that nearly 40% of all financial advisors are likely to retire in the next 10 years, the need for a new generation of advisor talent is clear. To meet this challenge, CFP Board’s Center For Financial Planning has engaged in fundraising for several years to fuel campaigns that have focused on building the advisor workforce of the future. But a recently announced increase in annual CFP certification fees – shifting the Center’s efforts from voluntary fundraising amongst donors to a mandatory cost for all CFP certificants, as 35% of the fee increase is allocated to Workforce Development efforts – raises an important question: Who actually benefits the most from increasing the number of students pursuing degrees in financial planning?

Insurance companies and broker-dealers in the business of manufacturing products and hiring advisors to sell them often dominate career fairs and job boards, frequently drawing in graduates of CFP Board-approved education programs. But these positions are often tenuous for new advisors, with extremely high failure rates, driven in large part by compensation that is reliant primarily on commissions from product sales. In fact, for decades, approximately 80% of those who take such ‘financial advisor’ sales jobs with product manufacturers leave those companies (and potentially the industry) after 3–5 years! And while CFP Board does emphasize in its Career Guide that commission-based income is lower initially for more upside in the long run, the guide does not acknowledge the drastically higher failure rates that come with commission-based roles.

The added complication is that, while this structure of hiring a large number of new advisor recruits with a high level of churn results in a high volume of aspiring planners potentially leaving the industry altogether, it is quite profitable for the insurance companies and broker-dealers themselves. As from the perspective of the product manufacturer, spending money on recruiting to get new advisors who bring their ‘natural-market’ list of 100 friends and family means that the company ‘gets’ 100 leads at the cost of nothing more than some licensing exams and a recruiter to bring them in – as new advisors who are recruited but don’t sell much of anything don’t get paid much of anything… but the insurance company still gets to keep the list of 100 prospects (and in many cases, the trails from the new advisor’s early sales that no longer have to be paid after the advisor leaves). Which, at scale, can actually be even more cost-effective as a lead generation strategy than simply buying leads from a third-party lead generation service (and thus why such high-turnover recruiting strategies have persisted for decades)! Because of this ‘cost-effective' source of leads via high-turnover recruiting, a number of the industry’s product manufacturers have historically been corporate sponsors of the CFP Board-affiliated Center for Financial Planning’s Workforce Development initiatives in order to build the pool of potential recruits (for those companies to potentially hire as their lead-generation source!).

But now, with its recent increase in CFP certification fees, the Center’s funding appears to be shifting: out of CFP Board’s recent $100 increase to its annual certification fee, $35 is allotted to the Workforce Development program, which means now the Workforce Development initiatives that historically were funded voluntarily by product companies in alignment with their sales efforts will instead be funded on a mandatory basis by all CFP certificants… effectively turning a portion of the CFP Board’s certification fee into a marketing expense for product manufacturers via their high-turnover recruiting efforts (which will simultaneously undermine the CFP Board’s own growth goals as a result of that high turnover).

Given the substantial risk that CFP Board’s increase in certification fees is funding the marketing efforts of product manufacturers, there are steps that CFP Board can take to ensure that fee increases are actually supporting the long-term expansion in the number of financial planners. First and foremost, CFP Board needs to determine and demonstrate that young people who enter CFP Board-registered programs actually do end out becoming CFP certificants in meaningful numbers, and are not just a conduit to high-turnover sales jobs. This could be done through a study working with the largest CFP Board-registered programs to determine whether their students took an industry job after graduating, how many are still in the industry 3 years later, and how many of them ultimately got their CFP marks, among other questions. With this data, CFP Board could then update its Career Guide to reflect the realities of what career choices and starting firm paths really lead to increases in success (or failure) as a new financial advisor.

Ultimately, the key point is that if the CFP Board is going to turn the Center for Financial Planning from a voluntary contributed-income program into one funded by a mandatory portion of CFP certification fees – especially since nearly 50% of all CFP certification fees are no longer for the operation of the CFP Board itself, but for the organization’s own growth initiatives – it needs to do the research and bring the data to show that its initiatives will be a good allocation of capital. And until it can determine whether increasing the flow of students will result in a larger advisor workforce or just a higher volume of advisor churn (and also update its Career Guide to help students navigate those risks), CFP Board should delay the increase of at least the Workforce Development portion of its new certification fee.

Weekend Reading For Financial Planners (July 16-17)

July 15, 2022 02:04 pm 2 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that investors this year have filed 37 arbitration cases with FINRA related to alleged violations of Regulation Best Interest (Reg BI). These come on the heels of the SEC’s first enforcement action related to Reg BI, suggesting that industry participants might soon get more clarity on the regulation’s requirements and the consequences for not adhering to them… and that regardless of how slowly the SEC acts in enforcing Reg BI, the plaintiff’s bar is beginning to take the matter into their own hands by filing complaints against brokers who fail to act in their clients’ ‘Best Interests’.

Also in industry news this week:

Democratic Senators have proposed to extend the 3.8% Net Investment Income Tax to high-income-owners’ S corporation profits as part of broader legislation, but this measure appears to be on shaky ground
Why a recently announced SPAC merger could lead to additional opportunities for breakaway brokers to transition to the RIA model

From there, we have several articles on practice management:

How the use of a tiered fee structure or a retainer model can help insulate advisory firm revenue from the effects of a bear market
At a time when costs are up and revenues are down for many advisory firms, why simplifying the firm’s value proposition and pursuing operational efficiencies can help prevent margins from tightening further
Why bigger isn’t always better when it comes to the number of clients an advisor serves, and why pursuing a niche market can provide benefits to an advisor’s professional and personal lives

We also have a number of articles on advisor marketing:

A recent survey suggests that younger clients are more sensitive to advisory fees and are interested in hybrid solutions that combine human advice with digital tools
Wealthy millennials have a high degree of trust in advisors and are looking for them to be literate in assessing ESG data, according to a recent study
Why investors prefer advisor marketing that asks questions about prospects and avoids industry jargon

We wrap up with three final articles, all about leadership:

What advisory firm leaders can do to help their teams work smarter, not harder
Why ‘unblocking’ might be the most important task a manager can complete during their day
How taking a structured approach can help you become more like your role models

Enjoy the ‘light’ reading!