Weekend Reading For Financial Planners (December 13–14)

RIA AUM Growth Boosted By Acquisition Activity, Quality Of Post-Deal Integration: Study

(Andrew Foerch | Citywire RIA)

One of the major trends in the RIA space in recent years has been the record-setting pace of dealmaking, with large (often private equity-funded) aggregators (and relatively smaller firms) purchasing other RIAs as a source of client and asset growth (as well as a source of new talent). An important question, though, is whether such inorganic growth is the key to firm growth (beyond market appreciation) or whether RIAs, on the whole, are seeing strong organic growth (i.e., new client assets and additional assets brought in from current clients).

According to a report from WisdomTree, The Compound Insights, and RIA Growth Catalyst considering RIAs with $100 million or more in Assets Under Management (AUM), 9.1% of firms studied completed an acquisition between 2019 and 2024, including both "serial buyers" (which had engaged in three or more deals) and "opportunistic buyers" (which made one or two acquisitions during the period). When looking at three-year AUM growth through 2024 (excluding market appreciation), serial buyers saw an average growth rate of 92.8% (with median growth of 82.5%) and opportunistic buyers saw average growth of 46.7% (with a median of 16.2%), while other firms saw average growth of 8.5% (and a median decline in AUM of 2.7%). While acquisitive firms' growth was based in part on the acquisitions themselves (and their ability to manage the integration process), these data points suggest that some firms are struggling with organic growth, even if their overall AUM continues to rise amidst strong market performance (and while the report notes that many firms might be purposefully not in 'growth mode', the median decline in AUM suggests some firms might not be adding clients and assets at a sufficient pace to keep up with the certain level of client attrition that is bound to occur).

Looking at firms that did make an acquisition during the study period, the report found that firms that saw greater post-deal growth were those that achieved successful integrations between the two firms as well as philosophical alignment between the buyer and seller (impacting areas such as client retention, advisor satisfaction, and operational synergy). Which suggests that acquisitions by themselves don't necessarily lead to stronger growth on a forward-looking basis, but rather the ability to find a like-minded partner and create a smooth process (for employees and clients alike) when combining firms can lead to a stronger combined entity.

Ultimately, the key point is that while not all RIAs will be interested in making an acquisition, this report suggests that such firms that seek to grow (or at least maintain their client headcount) might look beyond overall AUM growth (which has likely been boosted by strong market performance during the past few years) to assess whether their net organic growth is meeting their targets (as otherwise a future market downturn could lead to a sharp drop in the firm's AUM in the absence of new client assets brought in) and consider different strategies to boost this metric. And for those who are considering an acquisition, taking the time to ensure a good 'fit' between the two firms and a smooth post-deal integration can increase the chances that the price paid for the deal will lead to long-term returns in the form of client (and employee) retention.

Wealth Managers Add Services (And Fees) To Meet UHNW Demand: Report

(Michael Fischer | ThinkAdvisor)

Over time, some financial advisory firms decide that they want to move 'upmarket' to serve wealthier clients. While the prospect of generating higher per-client revenue might be enticing, the ability to attract and retain these clients often leads firms to add services demanded by this client group, which can increase the time burden on advisors and perhaps lead to slimmer profit margins (if the advisor has to spend significantly more time per client or add staffing to handle this burden).

According to a report from Cerulli Associates, practices that are more focused on the Ultra-High-Net-Worth (UHNW) space (defined here as having $20 million or more in financial assets) tend to offer multiple additional services, on average, including business planning (75%), foundation management (74%) and private banking (61%) among the more prevalent 'upmarket' offerings. Also, UHNW-focused firms are nearly twice as likely to offer concierge or lifestyle services (58%) to their clients than firms focused on the broader High-Net-Worth market (31%).

Notably, Cerulli found that as firms are adding more services, their fees are increasing as well. This includes higher AUM-based basis point fees as well as charging extra for certain offerings. For example, the report found that 55% of firms had increased fees for trust administration and trustee services, 44% did so for tax planning, preparation, and compliance, and 36% increased fees for concierge/lifestyle services.

In sum, while working with wealthier clients can be an attractive proposition for firms (whether based on the possibility of earning higher fees or an interest in the planning areas that are particularly important to this group), providing a 'standard' menu of services might not be sufficient to attract and retain these clients (particularly given competition from major bank-based advisors and established practices offering family office-style services). Which suggests that pursuing this group could require a commitment (both financial and time) to provide a broader suite of services (and perhaps the ability to go deeper into current service areas, such as tax and estate planning) and become an attractive destination for this client demographic.

FINRA Cautions Firms On AI Hallucinations, Use Of Agents

(Patrick Donachie | WealthManagement)

Each year, FINRA publishes an annual oversight report to provide its member broker-dealers with insight into findings from its regulatory operations programs (and notice of the self-regulatory organization's priorities in the coming year). Notably, FINRA's latest report for 2026, released this week, reflects both longstanding threats (e.g., cybersecurity, anti-money laundering controls, and Regulation Best Interest) as well as emerging issues, including the use of generative Artificial Intelligence (gen AI) tools, such as ChatGPT.

FINRA noted that its rules are "technology neutral", highlighting that existing rules apply to the use of gen AI, whether in terms of supervision, communications, recordkeeping, and fair dealing. Given findings that the top use of gen AI tools among member firms is "summarization and information extraction" (with other top uses including question answering, assessing the tone of a certain text, language translation, and financial modeling), the regulator urged firms to develop procedures that catch 'hallucinations' (i.e., when an AI model generates inaccurate or misleading information), consider potential bias in these tools' output (perhaps based on outdated training data), and test these tools regularly. The report also flagged the use of AI "agents" that can autonomously perform tasks on behalf of their users. While these tools have the potential to boost efficiency, FINRA noted that they could act "beyond the user's actual or intended scope and authority"  .

Ultimately, the key point is that the increased use of gen AI tools by financial advisory firms could lead to more actions or decisions based on 'hallucinations' on the part of an AI chatbot or agent. And given the attention paid to this topic by both FINRA and the Securities and Exchange Commission (SEC), conducting due diligence of AI tools used (and their outputs) will be an important practice for both broker-dealers and RIAs not only to fulfill their responsibilities to regulators but also to earn and maintain the trust of their clients.

Analyzing The Social Security Claiming Decision For Married Couples

(Brian Alleva | Journal of Financial Planning)

Nearly all financial planning clients will be eligible to receive Social Security benefits and will therefore face the decision of when to claim them. While there are 97 monthly claim ages from 62 (the earliest date benefits can be claimed for most individuals) to 70 (when an individual can earn their maximum possible benefit), the decision becomes more complex for client couples, for whom there are more than 9,000 possible claim age combinations. Which can lead some couples to wonder whether they're getting this decision 'right'.

In some cases, the claiming decision can be relatively straightforward (at least for those seeking to maximize the expected present value of their lifetime benefits). For instance, if a husband is older and earned more than his wife, it can make sense for the husband (who is likely to die sooner, at least based on mortality tables) to wait to claim until age 70, while the wife would claim when she turns 62. This strategy maximizes the value of the 'widow benefit' the wife receives after her husband dies while also extending the period she collects benefits on her own record in the meantime.

However, many couples don't match this model, whether because the spouses are of equal age (or where a wife is significantly older than her husband), have relatively equal earnings records, or have life expectancies that vary from the actuarial tables (e.g., one spouse is expected to die earlier than expected due to a particular health condition). Which can throw a wrench into the 'standard' scenario described above.

With this in mind, Alleva analyzed a wide range of situations for client couples, finding that the optimal claiming strategy (at least in terms of the total expected present value of lifetime benefits) can vary depending on the couple's unique circumstances. For instance, he finds that for couples with nearly identical Primary Insurance Amounts (PIA), having the older spouse claim at age 70 (to maximize the number of high-amount payments over the period where both spouses are alive), with the younger spouse claiming at age 62 (regardless of the sex of the older spouse) is optimal in most cases (though it is particularly effective when the older spouse is a man who is expected to die before their spouse).

Altogether, given the complexities of Social Security claiming decisions (particularly for client couples), financial advisors are well-positioned to offer insights into the opportunities tradeoffs of different claiming strategies and can help clients think through the 'math' behind this decision (i.e., maximizing lifetime benefits) while also keeping in mind lifestyle considerations as well (e.g., if the clients might enjoy having greater income earlier in their retirement, even if it means receiving lower total lifetime benefits). Though perhaps the key insight here is that there is no 'one size fits all' prescription when it comes to claiming Social Security, particularly when it comes to the unique circumstances of different client couples.

Why The 'Widow Tax Hit' Might Not Be As Serious As Some Might Assume

(Edward McQuarrie and William Bernstein | Advisor Perspectives)

When advising client couples, an important planning topic is to explore what their financial plan would look like when one member of the couple eventually passes away. One of the considerations within this analysis is that the surviving spouse will eventually be subject to tax rates applicable to single filers, suggesting that they could end up paying significantly more in taxes than the couple did when they qualified for married filing jointly status.

McQuarrie and Bernstein argue that this 'widow tax hit' might not be as severe as some might assume. To start, given the complicated nature of tax brackets (which have varying widths in terms of dollar amounts and percentage-point jumps between them), a surviving spouse won't necessarily pay twice as much in taxes (even though their tax bracket width will be half as wide). Also, the surviving spouse's income is unlikely to remain the same as it was when their spouse was still alive. For instance, there will now only be one individual's Social Security income coming in (though if the deceased spouse was the higher earner, the survivor could now receive their larger benefit instead of their own) and lower lifestyle costs (as well as only one set of Medicare premiums and healthcare expenses), requiring fewer portfolio withdrawals (though the surviving spouse might be required to take higher-than-needed taxable Required Minimum Distributions). When looking through different case studies, the authors find that the loss of income is likely to be a more serious financial issue for the survivor than any increase in tax rates to which they are subject.

Ultimately, the key point is that while the specter of the 'widow tax hit' might be used to sell certain products or strategies, in reality the bite of this hit might not be as sharp as some clients might assume. Which presents advisors the opportunity to model for client couples the actual additional tax burden they might face if one or the other spouse dies first, the impact of this burden on the success of their financial plan (which might be less than they expect!), and, if desired, potential ways that this burden could be reduced (e.g., annual income planning to avoid IRMAA 'cliff' thresholds or partial Roth conversions during low-income years).

How Spouses Retiring At Different Times Can Avoid Money Clashes

(Tammy LaGorce | The New York Times)

When working with a client couple, a baseline assumption might be that each spouse will retire at the same time, to allow for lifestyle changes (e.g., a post-retirement move) and to be able to both enjoy post-retirement pursuits (e.g., travel without either partner having to worry about using leave at work).

However, a survey from Ameriprise of 1,500 couples found that, in reality, only 11% of partners retired together, while 62% staggered their retirement dates by at least a year (whereas among couples still working, only 39% expected that one partner would retire more than a year after another). And while retirement is a major transition in itself, relationships can become particularly fraught if one spouse continues to work after the other retires, whether in terms of feeling pressure to continue earning a sufficient amount of income or potential resentment that the retired spouse is enjoying more leisure time (and perhaps spending more money on hobbies and interests than the still-working spouse).

With this in mind, financial advisors are well-positioned to help client couples navigate the possibility of a staggered retirement. At a basic level, given that a particular client couple might assume a simultaneous retirement, introducing the possibility of a staggered retirement (whether driven by health, workplace, or lifestyle considerations) and its impact not only on the couple's financial plan but also on relationship dynamics (e.g., how each partner's spending might change in such a scenario). Further, whether or not a couple retires simultaneously or on a staggered basis, discussing expectations for spending in retirement well in advance (as these attitudes might be different than how they approached spending during their working years when they had steady paychecks coming in) can help avoid conflicts down the line (e.g., if one spouse is particularly hesitant to spend portfolio assets while the other has no problem doing so).

In sum, many clients couples might underestimate the chances that they will not retire simultaneously, potentially leaving them unprepared financial and emotionally to handle such a situation. Which gives financial advisors the chance to both model what such a contingency would mean for their financial plan (perhaps running scenarios for an earlier-than-expected retirement for each spouse separately) but also to get the conversation started between each spouse to set expectations for how a staggered retirement might affect their relationship with money and with each other.

Giving Power: The Missing Metric In Charitable Planning

(Philip DeMuth | Journal of Financial Planning)

While financial planning clients often are charitably minded, they might not recognize the tax implications of different ways to give, whether in terms of the medium or the timing of a gift. Which can create an opportunity for advisors to create hard-dollar value for their clients (and the charities they support) through strategic charitable giving.

DeMuth offers a metric called "Giving Power" that can help advisors evaluate different giving strategies (and communicate the value of different options to their clients). The giving power metric takes the tax savings from a particular method of giving (which can be negative, if the client is giving after-tax dollars and receives a limited or no tax benefit) and divides it by the total size of the charitable gift. A positive giving power means the government is subsidizing the gift, while a negative giving power means the donor is paying more than $1 (after taxes) to deliver $1 to charity (while a giving power of 0% is tax neutral).

Notably, the "Giving Power" result can vary widely for the same client. For instance, the "Giving Power" of a cash donation for a high-earning couple with limited other potential itemized deductions could be sharply negative (given that they were responsible for Federal and state taxes on the income used to make the gift and received no tax benefit because they used the standard deduction [though starting in 2026, the One Big Beautiful Bill Act will allow non-itemizers to deduct a limited amount from their taxable income]). However, if the same couple 'clumped' multiple years' worth of donations into a single year (in order to claim [at least a certain amount] of the value of the donations as itemized deductions) and donated highly appreciated securities instead of cash, the "Giving Power" would be positive (and the tax savings would be greater). Other strategies that could offer positive "Giving Power" include taking advantage of employer matches, making a testamentary IRA bequest, or engaging in Qualified Charitable Distributions [QCDs].

In sum, financial advisors have a valuable role to play in helping clients maximize the 'power' of their charitable giving, whether in terms of when a gift is given (e.g., clumping contributions or giving more in high-earning years) as well as how it is given (e.g., potentially taking advantage of opportunities to donate highly appreciated assets, make QCDs, and/or earmark the most tax-inefficient accounts [from an heir's perspective] to source funds for charitable giving at death). Which can allow clients not only to achieve greater tax savings, but also to make a greater impact with the charitable organizations they've chosen to support!

How To Prioritize Charitable Planning With Clients

(Ken Nopar | ThinkAdvisor)

When it comes to the services offered by a financial planner, the first items that come to a client's mind might be retirement planning or investment planning. In addition, given that it has a nexus with many parts of a comprehensive financial plan (from retirement and estate planning to tax and retirement planning), charitable giving can be an area where advisors can provide significant value.

However, some clients (who might have engaged in the same charitable giving practices for years), might not recognize that this can be a key part of their financial plan. With this in mind, advisors can take a proactive approach (whether near the end of the year when clients might be charitably minded, or perhaps earlier in the year to better understand the clients' giving goals and plan accordingly) by communicating how they can add value in this area, whether or not clients have particular organizations in mind (in which case, the advisor can support the client in terms of timing the donation and selecting the optimal assets to give to maximize tax benefits) or not. In the latter case, an advisor might recommend that the client donate into a Donor-Advised Fund (DAF) to receive a current-year tax benefit while being able to recommend grants from the fund over time (and perhaps check back in with the client regularly to ensure they have actually made grants from the fund!).

In sum, at a time when comprehensive financial planning has become more common, financial advisors can potentially differentiate themselves in the eyes of prospects and clients by showing them how they can maximize the value of their giving for the organizations they support while reducing the clients' tax bill, whether in the current year or over the course of their lifetime.

Enhancing Client Conversations About Charitable Giving: Sample Questions, Scripts, And Tools For Better Engagement

(Kathleen Rehl | Nerd's Eye View)

Charitable giving is an essential aspect of many people's financial lives. Some give through established channels, such as by donating to charities or volunteer work, others may give informally to family members on a regular but less structured basis – and some simply aspire to "do more". Yet, despite the important role that charitable giving can play, studies show that many advisors hesitate to bring up the topic with clients, as they may worry about overstepping boundaries or feel uncertain about a client's interest in philanthropy. However, advisors play a critical role in helping clients navigate the complex landscape of charitable giving.

Introducing the subject of charitable giving may feel daunting. However, with a few thoughtful approaches, these conversations can feel more natural and rewarding for both client and advisors. They can ease into the discussion by normalizing it – such as sharing their own giving experiences like donating a portion of their income or supporting local charities. Open-ended questions, like asking what legacy a client wishes to leave, can also allow the client to share their vision. From there, advisors can offer their technical expertise on strategies and options that a client may not have considered. Resources like handouts or educational videos can also be helpful tools to inform clients – often, many people are simply unaware of the range of possibilities!

Beyond these initial steps, advisors can support clients' charitable goals in other ways, such as by vetting charities that align with their clients' interests or educating them on various giving strategies. Advisors may also introduce tax-advantaged approaches that add value in multiple ways – for example, helping grandparents set up donor-advised funds that support future generations while creating tax benefits. Additionally, life events that change a client's financial circumstances, such as retirement, receiving a windfall, or selling a business, can be ideal opportunities to revisit charitable giving as part of a client's evolving financial and personal goals.

As clients and advisors get deeper into charitable conversations, it may be helpful for clients to create a personal charitable mission statement – a guiding star for their giving decisions during and beyond their lifetimes. These statements often stem from clients' life stories and core values, passions, and most closely held causes. If clients need guidance, advisors can offer a template or list of values to help get them started. Once clarified, these values empower advisors to suggest charitable options that align closely with what matters most to the client.

Ultimately, the key point is that charitable giving conversations create a meaningful space for mutual exploration – where clients can discover and clarify their values and priorities while learning about the various options and vehicles available to support the causes they care about. By encouraging productive philanthropic conversations with clients, advisors not only help clients give with purpose but also deepen client satisfaction and trust. And when clients are enabled to support the causes closest to them, they experience the true impact of a financial plan that aligns with their personal legacy!

How Managers Build (Or Break) Their Team's Self-Confidence

(Irina Stanescu | The Caring Techie Newsletter)

As a financial advisor (particularly one newer to the profession), self-confidence can ebb and flow. On one day a client might express how much their advisor makes their lives better, whereas on another day an advisor might come up with a 'perfect' plan only to have its analyses and recommendations ignored by the client. Given these ups and downs, managers play an important role in building (or, perhaps, breaking) their team's self-confidence.

Stanescu identifies several managerial behaviors that might (unintentionally) erode their team's self-confidence. For instance, micromanaging or jumping in to help too fast can send the message that the manager doesn't trust the team member to perform certain tasks correctly. In addition, public criticism (even if it's framed as feedback) can create feelings of shame and doubt in one's skills (also, a lack of feedback could lead an employee to fill in the 'gap' with self-doubt). Another potential confidence-reducing factor is having inconsistent expectations (as when the goalposts keep moving, employees can't enjoy the success they've already achieved).

On the other hand, several managerial behaviors can boost their team's self-confidence. For example, giving people autonomy (perhaps setting guardrails initially but then letting them go) to struggle and succeed on their own can be a confidence booster (similarly, not offering to help too quickly can give an employee space to figure out an issue on their own). Also, because individuals tend to remember public moments more than private ones, using team meetings for regular praise of individuals' work (and saving constructive criticism for one-on-one conversations can help the positive moments have a lasting impact (while still identifying potential areas of improvement). Managers can also improve team members' self-confidence through their communication, whether by offering regular encouragement, asking team members for input (which shows that their perspective is valued), or helping team members engage in introspection to assess why they might be feeling less confident.

In sum, managers have a role to play not only in ensuring their team offers high-quality client service, but also in helping them build a level of self-confidence that will encourage them to advance into more senior roles. Which could ultimately lead to both more engaged employees and stronger performance for the firm as a whole!

The Trust Equation: It's Not Just Who You Hire, It's How You Hire

(Torben Emmerling | Behavioral Scientist)

Hiring is a high-stakes endeavor, both for a company (which makes investments in time and money to hire and train a new employee) and job candidates themselves (who are looking for the right landing spot for the next stage of their careers). Which suggests that a thoughtful approach not only can help companies identify the best candidate for a particular position, but also give candidates insight into the company's values (and how it might treat them if they do become an employee).

After identifying several potential areas of weakness in the hiring process (from ambiguous job descriptions to uncomparable interviews), Emmerling's firm (a behavioral science consultancy) restructured how they hired new employees. Its new process starts with thoughtfully assembling the hiring team, including team members who possess expertise in the domain the firm is recruiting for, who will work with the new hire, and who can provide complimentary perspectives to other team members. Next, the firm spends time up front clarifying the role being hired for (which can help candidates better understand whether they might be a good fit and avoid surprises down the line). The firm also takes steps to reduce potential bias in the process, stripping out demographic information and randomizing the order that candidates are presented to reviewers.

When it comes to evaluating the candidates, his firm designs interviews and assessments to be consistent across candidates, with interview questions focusing on a candidate's actual behavior (e.g., "Tell me about a time when you…." questions) and case study assessments that demonstrate their ability to perform the role being sought. Also, the firm's reviewers first score them independently on pre-defined metrics before coming together for group discussion (which can help prevent power dynamics within the group from affecting conversations about the candidate). Finally, the firm communicates regularly with candidates throughout the process, giving them a picture of what the full process looks like up front and providing regular updates. Altogether, this has led the firm to achieve higher retention rates, as new team members arrive already aligned with its cultural norms.

In the end, given the importance of hiring for financial advisory firms, taking an intentional approach to the hiring process can lead to a more qualified (and perhaps broader) pool of applicants, more objective evaluations of candidates throughout the evaluation process, and, ultimately, a stronger hire who will help the firm grow for years to come!

Why It's Important For Leaders To Celebrate Their Wins

(Lan Nguyen Chaplin | Harvard Business Review)

Firm leaders will often recognize the importance of celebrating team members' wins, whether formally (e.g., during annual performance evaluations) or informally through more casual communications. However, several factors can lead executives to not celebrate their own victories, potentially leading to more stress and less enthusiasm for their job.

To start, there is often a temptation for a founder or CEO to do "more" with their business. For instance, an advisory firm founder might hit a long-time goal for client headcount, AUM, or revenue but already be looking ahead at the 'next' goal (or perhaps compare themselves to other firms that have grown faster) without celebrating reaching the current milestone. Other leaders might feel uncomfortable acknowledging their own accomplishments, perhaps to not seem too egotistical.

Nonetheless, recognizing one's own accomplishments can come with a range of benefits, from serving as a buffer against stress to providing a mood lift that can encourage further progress. One possible way to do so is by tracking one's personal accomplishments (even though a founder or CEO might not be up for a promotion, seeing accomplishments written down can be a mood booster!). Also, given that leaders can often feel like there is always 'more to do', differentiating between important external obligations versus self-imposed pressure can potentially open up time and space for additional reflection on one's accomplishments. Finally, those who are self-conscious about having their accomplishments recognized publicly might find alternate ways to celebrate their wins, whether with a smaller group (e.g., telling peers in a study group rather than posting on social media) or perhaps through a reward for oneself (e.g., relaxing time away from the office to reflect on key accomplishments).

Ultimately, the key point is that because firm founders or executives might not have formal structures to recognize their accomplishments, taking the time to step back and celebrate progress that's been made can provide both a mood boost and a stabilizing force in a world of seemingly endless demands on their time and attention.

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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.