Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big industry news that the CFP Board has decided to delay enforcement (but not the rollout itself) of its new fiduciary standard, allowing brokerage firms another 9 months (from October of 2019 until June of 2020) to adjust their policies and procedures… while reinforcing that the CFP Board’s new fiduciary standard will be enforced once Regulation Best Interest is also effective after June 30th of 2020.
Also in the news this week is the announcement that Salesforce is rolling out a new low(er)-cost version of its Financial Services Cloud, in an effort to reach the small-to-mid-sized independent advisor marketplace that is currently dominated by industry-specific competitors like Redtail and Wealthbox.
From there, we have several articles on regulatory topics, from a look at what’s coming for advisors with the new 2-page Form CRS that must be provided to prospects and clients starting next year (and how hard it may be to fit all the required information onto “just” 2 pages), to a discussion of why it’s so important to read the Privacy Policies of the FinTech vendors that advisors use (some of which actually do share portions of client and/or advisor data with third parties!), some tips on text message compliance, and technology strategies on how best to facilitate file-sharing with clients.
We also have a few behavioral finance articles this week, including: recent research suggesting that the bulk of investors (at least who go direct to Vanguard) actually are relatively patient, prudent, and calm (and that the “dumb money” retail investor may actually be less common than previously believed); research on whether “smart” people with a high IQ are really better investors (or perhaps just better at not making behavioral mistakes); and why it’s important to evaluate your decision-making process properly and not engage in “resulting” that can lead to repeating bad decisions and underappreciating good ones (that happened to not work out as well as anticipated).
We wrap up with three interesting articles, all around the theme of the opportunities of compounding returns (in sometimes unanticipated ways): the first is a fun look at the town of Quincy, Florida, which has the highest rate of millionaires per capita due to the advice of a local banker during the Great Depression that the local community invest in the consumer durable stock of Coca-Cola… which over its lifetime has compounded its original $40 shares into $10M/share (split-adjusted and dividend reinvested back to its original IPO in 1919!); the second looks at the emergence of “non-linearity” in earnings, especially in professional services jobs, such that couples can often earn more by choosing to have one spouse work significantly more hours and the other work part-time or less, instead of a “traditional” dual-income (two-full-time earning) household; and the last explores how the rise of the internet has facilitated the rise of “microbrands,” ultra-targeted niche solutions that leverage social media and digital advertising to not only reach a unique segment of consumers, but to pre-test their business offering to affirm a niche clientele will purchase before the product is ever made (which is increasingly relevant for the rise of niche financial advisors, too!).
Enjoy the “light” reading!