Weekend Reading For Financial Planners (November 1–2)

2026 Social Security Benefits To Get 2.8% COLA Bump, But Could COLA Calculations Change In The Future?

(Jacqueline Sergeant | Financial Advisor)

Social Security benefits are a key piece of retirement income planning not only because they provide a steady stream of lifetime income, but also because they come with annual Cost Of Living Adjustments (COLAs) that are intended to ensure benefits keep pace as prices rise over time (a feature that is harder to find in other sources of guaranteed income, such as annuities). And given that annual price changes can fluctuate significantly, so too do Social Security COLAs.

The Social Security Administration announced last week that Social Security beneficiaries will see a 2.8% increase in their benefits in 2026, up from the 2.5% COLA for 2025 but below the average 3.1% COLA seen during past decade (and much lower than the 8.7% COLA from 2022, when the inflation rate was significantly higher). Also notable for advisors with working-age clients is that the maximum amount of earnings subject to the Social Security tax is slated to increase to $184,500 from $176,100.

While the release of the 2026 COLA could help clients better understand their cash flow for the next year, perhaps a more important longer-term issue is how COLAs might be calculated in the future. Given that the Social Security trust fund is expected to be depleted sometime in the early 2030s (at which point, absent any policy action from Congress, the system would be able to pay out approximately 80% of benefits due to most revenues coming from payroll tax receipts), policymakers have an incentive to shore up the system. One area that could be considered is adjusting the COLA calculation, which could result in higher or lower COLAs for Social Security recipients, depending on which route is chosen.

For instance, a change the benchmark used to determine the COLA from the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the so-called "Chained CPI" (which makes adjustments for changes to consumer spending patterns resulting from price increases in certain goods) would result in lower COLAs over time (thereby saving money for the Social Security system). Alternatively, Congress could choose to change the benchmark to "CPI-E", an alternative inflation metric designed to track the spending of seniors. Such a change would typically lead to higher annual COLAs but put additional strain on the Social Security system (though it could be used as a 'sweetener' in a broader policy package that includes tax increases and/or benefit reductions elsewhere).

Ultimately, the key point is that while the annual Social Security COLA announcement can help clients with their cash flow planning for the coming year, perhaps a more impactful consideration is how COLAs might change in the future (given that they can compound over what could be 30+ years of receiving benefits). Given that a future policy direction is unknown today, this presents an opportunity for advisors to help 'stress test' client financial plans if the COLA calculation were to change (for instance by reducing, or even eliminating, future COLAs and gauging the impact on the client's financial plan).

With AI On The Rise, Cyber Breaches And Wire Fraud Among Top RIA Concerns: Survey

(Alec Rich | Citywire RIA)

While much of a financial advisory firm's time is spent on attracting and serving clients, a range of risks to the business can lurk in the background, from cyber threats to adherence with relevant regulations to ensuring client trades are executed correctly. And given changes in technology as well as the regulatory environment, focus on these different issues can shift over time.

According to the latest biennial risk survey by RIA insurance brokerage Golsan Scruggs (which asked respondents to rank ten of the industry's most pressing risks), cyber and privacy breaches stand out in the minds of those surveyed, with eight in ten respondents listing it first. The next-highest risk was a combination of wire fraud, crime, and social engineering followed by a failure to meet regulatory requirements (though this was slightly down from the previous survey in 2023, perhaps reflecting advisor expectations of a more relaxed regulatory environment ahead). Looking specifically at Artificial Intelligence (AI), approximately four in ten advisors saw the technology as a risk to their firms, with data accuracy and a lack of data training among the areas of concern (though firms have several ways to identify and mitigate several of these risks).

In sum, technology appears to be at the forefront of concerns for many firms, with other potential areas (e.g., adherence to best execution, conflicts of interest, suitability of investments) ranking lower on this survey, suggesting that while AI and broader tech capabilities can be valuable parts of an advisor's practice, they can come with up front and ongoing due diligence responsibilities (in addition to broader cybersecurity practices) to ensure that firm and client data are protected and used appropriately.

Survey Highlights Value Of Professional Financial Advice For Small Business Owners

(Michael Fischer | ThinkAdvisor)

Financial advisory clients come in all sorts of flavors, from pre-retirees and retirees looking to ensure their remaining years are prosperous and fulfilling to busy working professionals who can benefit from support balancing competing financial priorities and handling complicated compensation and tax issues. Another common client type is the small business owner, who faces a range of complex planning issues, from cash flow management to exit planning strategies.

According to a survey of 728 small business owners from financial services firm Equitable and business education non-profit SCORE, respondents on the whole recognized the value of financial advice, with 83% considering it important to work with a financial professional (ranking higher than family and friends). Millennials and those with businesses that have been in operation for two to five years were the most likely to engage with an advisor, potentially offering firms the opportunity to grow alongside these potential clients.

At the other end of the age spectrum, responses from business owners nearing retirement suggest that they could benefit from advice related to retirement and succession. For instance, 59% of business owners said they will find it difficult to completely "retire" from their business (though 42% said they started their business to fund their retirement) and 33% said they don't have a plan to earn income if they become disabled and can no longer run their business (suggesting that cash flow and retirement income planning could be particularly valuable for this group). Also, planned retirement ages amongst respondents varied by age, with Baby Boomers expecting to work until age 74, Gen Xers expecting to retire at 66 and Millennials looking to retire at 61 (perhaps calling for different savings plans for each group).

Altogether, this survey confirms that financial advisors are able to offer significant value to business owner clients and that many business owners recognize this value (even if they don't currently work with an advisor). And given this group's unique needs, taking a targeted approach to marketing (e.g., taking advantage of networking opportunities with current clients) and providing the level and type of services they seek (e.g., strong communication and succession planning support) could help advisors better attract and retain these clients.

A Checklist For Open Enrollment Season

(Christine Benz | Morningstar)

The end of the year brings many opportunities for financial advisors to offer value for their clients, from end-of-year tax planning considerations to charitable giving planning. In addition, for advisors with working-age clients, supporting them during the open enrollment period can also potentially result in significant hard-dollar value, as while a client might be tempted to carry over their elections from the previous year, analyzing the available options for the coming year could result in savings on taxes and healthcare spending, amongst other areas.

One of the biggest decisions during the open enrollment period is the choice of health insurance provider, given the costs involved (e.g., premiums and deductibles) and to ensure clients' preferred providers are covered. Which suggests that reviewing employer-sponsored plans for any changes (as well as considering any changes to the client's family's own healthcare spending) could offer savings opportunities (e.g., comparing the implications of signing up for a traditional health care plan versus a high-deductible health plan). Considering available dental and vision benefits (where coverage limits can sometimes play a role in limiting their value) and determining whether they are cost effective could be a useful service as well.

Next, clients might consider whether or how much to contribute to various available savings accounts. For instance, while those with access to a Health Savings Account (HSA) might choose to maximize those contributions (given that they don't have to be used in the upcoming year), those with only access to a Flexible Savings Account (FSA) might take a more calculated approach (given that these funds typically need to be used within a certain period). Advisors working with clients who have dependent care expenses might also help them consider whether contributions to a Dependent Care FSA might be appropriate (and how they compare to accessing the dependent care tax credit).

Other areas to potentially consider are disability insurance coverage, including determining whether employer-sponsored coverage is sufficient or whether additional coverage options might be explored (which could also be helpful in case the client loses their employer coverage as well as life insurance coverage (including whether the client might find superior coverage outside of their employer). Finally, being aware of employer-specific benefits that might be offered (e.g., transportation subsidies or student loan repayment assistance) could help the client tap into 'free money' they might not have been aware of before.

In the end, given that most clients won't be excited for their annual open enrollment period, advisors have the opportunity to find potential opportunities for tax and cost savings for their clients and to help solve a potential source of stress. Which could ultimately serve as a year-round reminder to them of the value their advisor provides!

Evaluating The Pros And Cons Of HSAs Vs FSAs

(Margaret Giles and Michael Schramm | Morningstar)

The government offers various types of taxed-advantaged accounts, from those used to save for retirement to education savings accounts. During this time of year, many clients will hear about the opportunity to save for healthcare using different available accounts. But given the sometimes-confusing nature of these accounts, some clients might elect to ignore them, potentially missing out on significant tax savings.

When it comes to medical-related accounts, the first one that will come to many advisors' minds is the Health Savings Account (HSA), known for its "triple tax savings" (i.e., tax-free contributions, tax-free growth, and tax-free distributions for qualified expenses). Another valuable benefit of an HSA is that there is no time limit to spend contributions, so a client could maximize their contributions without having to estimate their health care spending for the coming year. Importantly, though, in order to contribute to an HSA, a client has to have coverage under a High-Deductible Health Plan (HDHP), which can sometimes be attractive in their own right (given that they often have lower premiums than traditional healthcare plans), but might not be the best fit for clients with certain health or financial circumstances (even with the potential HSA benefits).

An alternative option for saving for healthcare costs is a Flexible Savings Account (FSA). Contributions to these accounts are also made pre-tax and distributions for qualified expenses are tax-free as well. And unlike HSAs, clients don't need to be on a certain type of health insurance plan to make FSA contributions. However, a key downside to FSAs is that they have 'use-it-or-lose-it' requirements that limit the ability to roll over funds into a following year, meaning that clients might be conservative and only make contributions up to a level that is likely to meet their eligible healthcare spending over the course of the year.

Notably, while a client can only choose to contribute to either an HSA or an FSA, there is an exception where those contributing to HSAs can also contribute to a limited-purpose FSA that typically covers dental and vision expenses (which could provide an opportunity to cover those expenses with pre-tax contributions while allowing more of the client's HSA contributions to compound over time!).

Altogether, given that many clients might be confused by the various acronyms surrounding different types of health care savings accounts, advisors are well positioned to help explain the differences and evaluate which option best meets a client's unique health and financial situation in a given year (including managing savings options for client couples) and provide ongoing support in managing these accounts (particularly HSAs, in terms of creating a savings and withdrawal strategy, potentially investing dollars within it, and possibly spending it down before death).

End-Of-Year Medicare Planning Opportunities During The Open Enrollment Period

(Jeff Levine | Nerd's Eye View)

The fall offers advisors the opportunity to help clients over 65 potentially save money (or preserve access to key doctors) during the Medicare Open Enrollment Period, which runs each year from October 15 through December 7, by making changes to their coverage (which then take effect on January 1) that generally can't happen during the other 44 weeks of the year.

The first key adjustment opportunity – and important annual review process – is to assess whether any changes need to be made to a Medicare enrollee's Part D prescription drug plan, as providers do change formularies (the list of available favorably-priced drugs) from year to year, and failure to monitor the situation can lead to a spike in medical costs if key drugs are suddenly no longer covered.

For those who are over age 65 and don't have a Part D prescription drug plan, the next option during the annual Open Enrollment Period is to add one. The caveat, however, is that, for individuals that did not sign up for Part D during their initial enrollment period (which is a six-month window spanning the three months prior to and after their 65th birthday) they will almost certainly have to pay an ongoing "late enrollment penalty" in addition to their regular premiums, unless they have "creditable coverage" from another prescription drug plan in retirement. Though for those who already face a late enrollment penalty, waiting further will just further increase the penalty from here!

In some cases, though, the key Medicare change opportunity is not just to switch Part D prescription drug plans, but to change the entire Medicare plan itself – from original Medicare to a Medicare Advantage (Part C) plan, or vice versa. Medicare Advantage plans are offered through various private insurance companies (rather than through the Federal Government) and are often lower cost than traditional Medicare (with often an even wider range of benefits, including not only Part B and Part D coverage but sometimes even dental and vision coverage as well). However, Medicare Advantage plans encourage (or really, require) individuals to utilize providers with whom the carriers have negotiated concessions and discounts (i.e., in the Advantage plan's "network")… which means it's necessary to monitor the plans each year to ensure that the desired doctors are available, or otherwise switch plans to another that includes the desired doctors. And those who relocate may wish to switch altogether into (or out from) a Medicare Advantage plan, as the quality of network (and therefore popularity of the plans) varies tremendously from one geographic region to another.

Ultimately, though, the key point is simply to recognize that, while the last few months of the year are especially hectic, there are several opportunities for planners to add real value for their clients. And for older clients, it goes beyond just end-of-year tax planning, but also helping them perform an annual "check-up" on their Medicare coverage, which can end up saving them not only time and money, but can ensure that they continue to see the doctors they want to see (and take the prescription drugs they want/need to take) in the first place!

4 Ways Client Biases Are Costing Them Money

(Sheryl Rowling | Morningstar)

Financial advicers are well-versed in the ins and outs of key financial planning topics, from tax-efficient investing strategies to maximizing the available savings from retirement accounts. However, while many of these tax strategies might seem clearly sensible from a purely logic-based point of view, clients sometimes come to the table with biases that might discourage them from taking advantage of available opportunities.

For instance, one of the most popular tools in an advisor's toolkit is the (partial) Roth conversion, which can allow a client to move assets into a Roth account during years when they are in a relatively low tax bracket to, among other potential benefits, reduce the size of Required Minimum Distributions (RMDs) that they would need to make from their traditional IRA and reduce the tax burden faced by heirs. An issue, though, is that the amount converted to a Roth is subject to taxation as ordinary income. Which might dissuade many clients from doing so, even if these dollars would be taxed at a higher rate later on (whether as part of an RMD obligation or based on a beneficiary's tax bracket). In this case, quantifying the long-term benefit of tax-free growth and the potential tax burden of funds not converted could give them a better understanding of the value of this recommendation (though some clients who seek to minimize their current tax bill at all costs might still decide not to go through with it!).

Another area where an advisor could face resistance is in recommending tax-loss harvesting opportunities, as clients might feel psychological pain by taking a loss (even if there are tax benefits to be gained by realizing losses). In this case, highlighting that a similar (but not substantially identical) asset will be bought immediately could give the client reassurance that they remain fully invested while reaping the tax benefits of the strategy.

Advisors can also add value for their clients through asset location (i.e., choosing the best account to hold certain assets in for tax purposes based on their expected growth and income characteristics). However, doing so can lead to performance disparities between individual accounts and the portfolio as a whole, perhaps prompting questions from clients (e.g., during a period of strong equity returns, a client might wonder why an account with significant bond holdings is lagging). Emphasizing that the portfolio is constructed to have the highest possible after-tax return (even if it means all accounts don't grow at the same pace) could give these clients focus on the bigger picture rather than individual account returns.

Finally, an advisor might find that a particular client (perhaps high-income clients who need to hold bonds in a taxable account) could benefit from investments in municipal bonds. However, the client might be skeptical of this approach because these bonds' nominal returns can lag those of comparable taxable bonds. In this case, focusing the client on a comparison of the after-tax returns of different fixed-income options could show how municipal bonds could be advantageous (and also demonstrate how the advisor is considering the client's unique tax situation!).

In sum, while the benefits of a particular planning strategy might be clear to an advisor, clients might view the same recommendation with skepticism. Nevertheless, by understanding the source of the skepticism and framing the recommendation in a way that emphasizes the client's goals (e.g., tax minimization) could help them better understand the advisor's thinking and perhaps encourage the client to accept the recommendation.

Helping Prospects Overcome The Emotional Hurdles Of Switching Advisors

(Brendan Frazier | RFG Advisory)

While many prospective clients reach out to an advisory firm having not previously had an advisor relationship, others might currently have an advisor but be concerned that they could get better service elsewhere. While both types of prospects will want to understand the value the firm can provide, the second group will not only compare the firm to their current relationship but also whether the costs of switching (both logistical and emotional) are worth it.

When meeting with prospects who currently have an advisor, a potential first step is to uncover the 'pain' the prospect is feeling in their current relationship (e.g., they're only getting investment management advice from their advisor and want support on tax, insurance, and estate planning as well). Next, because the prospect switching advisors can feel daunting, the conversation could continue by focusing on a small, easy first step (e.g., explain how the advisor could help the prospect reduce their tax bill through Qualified Charitable Distributions). Also, given that the prospect might fear making a 'bad' choice, providing social proof (e.g., an anecdote of a client who successfully navigated a similar transition) can help remove this doubt.

Another factor that might discourage a prospect from switching advisors is the logistics (actual or assumed) involved in doing so. With this in mind, providing the prospect with a road map that outlines every stage with specific timelines and responsibilities can give them a better sense of exactly what they would experience. Also, the advisor can provide support in helping them address the potential awkwardness involved when leaving their current advisor (e.g., by offering suggested phrasing for breaking the news). Finally, given that people often struggle to make objective decisions about their own lines, the advisor could encourage the prospect to consider how they might provide advice to a friend facing a similar situation (or perhaps take the perspective of a child or grandchild who would ultimately benefit from the higher level of service offered by the new advisor).

In the end, while an advisor might be tempted to wield a proverbial 'sledgehammer of value' to convince a prospect that their value proposition is superior that of their current advisor, taking the time to address the many psychological factors that can discourage an individual from switching firms could ultimately be the key to helping the prospect not only understand what the new advisor offers, but also increase their confidence that making a move will be a (relatively) seamless transition and ultimately the right decision for their needs!

Do Clients Really Want Independent Advice?

(Joachim Klement | Klement On Investing)

It would be easy for a financial advisor to assume that clients come to them seeking expert advice on various financial planning topics. However, given that clients will come to the table with their own opinions on some of these topics (e.g., preferred asset classes or tax strategies), a key question is whether they truly want their advisor's independent advice (no matter where it lands) or whether they want the advisor to confirm their own preferences.

A recent study from researchers at the University of Pennsylvania explored this question, conducting several experiments to explore how subjects responded to different types of advice and finding that individuals tend to prefer advice that confirms their own preferences. For instance, participants were asked to imagine a serious dilemma as well as someone they know who they would ask for advice. Then, they were told to come up with two pieces of advice this individual might give them and then rate this advice (in between, the researchers also asked participants to rate their preferred option from the two pieces of advice). Finally, the subjects were asked to rate how they would react if the person giving advice chose option 'A' or option 'B'. The researchers found that participants clearly rated advice better if it agreed with their preferred option to solve the problem, that they had more confidence when given advice that confirmed their preference, and that the 'preferred' advice was more useful. In a separate experiment, researchers similarly found that participants would be more likely to ask someone for advice who suggested their preferred solution to a problem compared to someone who offered a different idea.

While these are experimental findings, they do suggest that advisors might not assume that clients are coming to them for truly independent advice. Further, while an advisor who loses out on a prospect might wonder where they went 'wrong', the reality is that the prospect might not have been seeking the 'best' advice, but rather the advice that confirms their prior beliefs!

Whose Cup Are You Filling?

(Derek Thompson)

One of the most valuable (and perhaps most vulnerable) commodities in the 21st century is attention, as there is no shortage of parties vying for it, from friends and family members to job responsibilities to social media platforms. Given this backdrop, without taking an intentional approach to attention it can be easy to focus on low-priority areas and let higher priorities slide.

Thompson likens the ability to spread attention to a water pitcher with several available cups to fill. Given that the amount of water in the pitcher is finite (just as there are a set number of hours available each day), the goal is to pour the 'right' amount of water in each cup based on its importance. Nonetheless, while an individual might prioritize filling the 'family' or 'meaningful work' cup first, in reality other cups can tempt them away. For example, after publishing a book, Thompson found himself spending significant amounts of time on social media responding to (sometimes low-quality) critiques of it from posters (often anonymous individuals with whom he'd never interact again), leaving him less time and energy to spend with his wife and daughter.

Altogether, whether it's time in the evenings or during the workday (where it can be easy to get sucked into emails, instant messages, and other attention-seeking activities and ultimately run out of time for more important projects), the battle for attention can be a fierce one. Nonetheless, by taking a moment to consider how one's attention is being allocated, individuals can perhaps recognize opportunities for 'rebalancing' and focusing on what's most important.

"Is There More To Life Than This?"

(Lawrence Yeo | More To That)

At the end of a busy day of a commute, work, exercise, family responsibilities, and more, it can be easy to wonder whether one's life could somehow look different. This tendency is only magnified in a world where it's nearly impossible to see visions of how others (supposedly) live, whether it's a constant stream of vacation pictures or narratives of how a particular person is 'crushing it'.

For those who might wonder whether their lives could be more than what they are now, Yeo suggests taking a moment to ask two questions, "Do I feel this way because I'm aware of my own potential?" and "Do I feel this way because other people are making me feel inadequate?". If the answer to the first question is "yes", it could be a good signal that a change might be in order. For example, if an individual isn't getting meaning out of their job or thinks their skills could be better applied elsewhere, then a career change might be worth exploring. However, a "yes" to the second question could mean that making changes in pursuit of 'more' could ultimately prove fruitless, given that there will always be people who (appear to be) more successful, wealthy, or happy (and who are happy to flaunt it on social media and elsewhere).

In the end, in a world where there are limitless alternative lives to compare oneself to, taking time for introspection (whether through journaling, meditation, or engaging in a social media 'fast' to avoid the temptation of comparison) can reveal one's true inner goals, the pursuit of which could ultimately be more satisfying (and more likely to succeed) than trying to imitate the (advertised) life of someone else.

The Red Queen Fallacy (And The Benefits Of Slowing Down)

(Brian Klaas | The Garden Of Forking Paths)

When one asks a friend or colleague how they're doing these days, a common answer these days is "busy". Which is often literally true (given the number of commitments and opportunities on one's plate), but leaves a question open: is all of this busyness actually getting them closer to their goals or are they largely running in place?

In Lewis Carroll's "Through the Looking Glass", Alice enters a strange world and starts running alongside a character known as The Red Queen. They run faster and faster, but they don't actually get anywhere, which Klaas compares to modern life, where individuals can feel pressure to 'keep up', which can result in a frantic race that might lead to more money or titles but not necessarily to one's inner goals. Often, individuals get stuck in what he calls a "checklist existence", where one can check off the to-dos on their list today, but these constantly regenerate, giving the feeling of never being caught up (the pinnacle of this concept is "hustle culture", by which one's efforts are never "enough" and more needs to be done if they want to really succeed).

Amidst the challenge of facing these temptations, Klaas suggests that individuals slow down and spend more time contemplating where they are today and where they want to be in the future. In this way, individuals not only can better 'run their own race' (i.e., work towards their own goals rather than those pushed on them by others) but also, perhaps more importantly, step back and appreciate all of the good things in their lives at any given moment.

Ultimately, the key point is that while it can feel like one is always 'behind' (given that there is always the possibility of 'more' income or status, or in the case of financial advisors, clients and AUM), those who find meaning in their work, strive for their own goals, and appreciate the good things in life along the way (no matter where they stand in terms of these metrics) could perhaps be the most fulfilled individuals of all?

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We hope you enjoyed the reading! Please leave a comment below to share your thoughts, or send an email to [email protected] to suggest any articles you think would be a good fit for a future column!

In the meantime, if you're interested in more news and information regarding advisor technology, we'd highly recommend checking out Craig Iskowitz's "WealthTech Today" blog.