Weekend Reading For Financial Planners (April 11–12)

68% Of Affluent Investors Now Willing To Pay For Financial Advice, Up From 38% In 2010

(Jennifer Lea Reed | Financial Advisor)

The number of options for investors has increased dramatically over time, from a time when working with a human broker was necessary to place trades to today's environment of numerous options to create and manage self-directed online brokerage accounts. Given the ease of managing one's accounts (alongside the rise of fintech solutions for cash flow management, tax, and estate planning as well), some might hypothesize that there would be less interest in paying for financial advice from a human advisor.

However, despite the rise of the "robo" movement and now Artificial Intelligence (AI), recent survey data from Cerulli Associates indicates that, in reality, affluent individuals appear to be hungrier than ever for human advisor support, with 68% expressing willingness to pay for financial advice, up from 38% in 2010. The firm found that demand for advice tends to rise alongside wealth (likely due to the increased complexity of their financial situations), with 75% of those with at least $5 million saying they were willing to pay for advice, compared to 64% of those with between $2 million and $5 million. At the same time, even those with significantly less wealth were open to paying for advice as well, with only 34% of those with less than $100,000 in financial assets saying they wouldn't be willing to do so.

In terms of how investors surveyed would prefer to pay for advice, 36% said they prefer to pay a percentage fee based on assets, compared to 23% who prefer transaction-based commissions (with another 25% saying they intend to use no-fee self-directed platforms), confirming Cerulli's view that the industry's long-term shift towards fee-based advice remains intact. Cerulli also found that clients of firms who increased their fees tended to take the change in stride, particularly if the firm had a clear value proposition, signaling that as the demand for and willingness to pay for advice grows, some firms should likely be considering fee increases to keep their pricing in-line with the rising demand (and as a firm increases the depth [and perhaps breadth] of services provided and the staffing needed to offer them).

In sum, a broad swath of consumers across the wealth spectrum appears to be open to paying for financial advice, creating a potential 'blue ocean' of opportunities for financial advisors. At the same time, creating a solid value proposition appears to remain important for attracting and retaining clients as self-directed options remain available (and could expand with advances in AI?).

Percentage Of Widows Who Leave Their Advisor Is (Much) Lower Than Often Assumed: Study

(Dinah Wisenberg Brin | ThinkAdvisor)

While financial advisors pride themselves on the long-term relationships they have with their clients (often spanning multiple decades), it's inevitable that a certain number of clients will pass away over time. And given differing life expectancies in general, it's often the man in an opposite-sex couple who dies first, leaving behind a widow (who might or might not have been the 'CFO' of the relationship) to manage the finances as a new one-person household.

In cases where a couple had an established relationship with a financial advisor, some widows might seamlessly transition to continue this relationship as a newly single person. However, when the husband might have taken the lead on the relationship with the advisor (and where the advisor perhaps gave less attention to the wife's priorities), widows might seek out alternative sources of advice (and transfer her assets from the advisor's firm in the process). In fact, an often-cited figure indicates that up to 70% of widows left their advisor after their husband's passing.

A recent analysis of survey data by consulting firm Kehrer Group and data insights firm RFI Global finds, however, that this number is significantly lower, with 13.7% of those who had been widowed in the past two years firing or changing their advisors (in fact, the researchers tried to track down the original source of the 70% figure to no avail). That said, this figure is more than triple the 4.7% of other households that fired their advisor within the past two years, indicating that recently widowed clients are particularly susceptible to leaving their advisors after their husband's deaths.

Ultimately, the key point is that while the attrition rate of recent widows might not be as dire as some advisors might have assumed, this group is still much more likely to leave an advisor than other clients. Which suggests that making investments in the relationship with both members of a couple and prioritizing relationships with recent widows to help them through this challenging transition could lead to greater retention of these clients.

New Washington State Tax On High Earners Has Some Clients Scrambling, Demonstrates Impermanence Of Tax Policy

(Andrew Cohen | InvestmentNews)

While a client's Federal income tax bill is often larger than what they owe their state in income taxes, the latter can often represent a significant slice of their income. State income taxation can vary significantly, from top marginal rates above 10% in certain states to no income taxation in others (though residents in the latter states will likely contribute to the state through sales taxes or other levies). However, tax policy is constantly evolving, meaning that a particular state's rates and the types of income taxed could change significantly over time as governments consider the services they want to provide.

Washington, which has not had a state income tax, has made headlines in recent years with several tax-related changes, including a 0.58% payroll tax to provide (limited) long-term care benefits for eligible workers and a capital gains tax on long-term gains exceeding $250,000 (adjusted for inflation). More recently, the legislature has passed a 9.9% tax on income above $1 million, to take effect for the 2028 tax year (with revenues from the tax being used to fund childcare programs, free school meals, tax credits for working families and tax breaks for small businesses). Which has led some high-income residents (the tax expected to effect 20,000-30,000 households) to consider whether they might leave the state to avoid the tax (and to consult their financial advisors on the implications of doing so).

Altogether, while the new tax might be most impactful on advisors with a significant number of high-income Washington-based clients, it does signal for the broader range of clients that while a certain state (or the Federal government) might have a certain tax policy today, it's not guaranteed to remain the same into the future. Which suggests that when making decisions of where to live today (or in retirement), tax-sensitive individuals might not assume a particular state will remain favorable for the long run (or that a no-income-tax state might be the best option today if they're highly exposed to the other taxes the state charges)…though of course many individuals might find the benefits of living in a particular state worth the tax burden they face!

Breakeven Real Rates For Delayed Social Security Claiming

(Nathan Dutzmann | Advisor Perspectives)

Social Security benefits are a valuable part of retirement income plans in part because they are both 'guaranteed' (insofar as the U.S. government continues to be able to pay full benefits) and are inflation adjusted over time (which isn't necessarily the case with other sources of guaranteed income). The Social Security system also allows participants to choose when to begin claiming benefits (with delayed claiming leading to a larger monthly benefit) …which can provide flexibility, but also (for some) stress about whether an individual is claiming at the 'right' time for their needs.

From a mathematical perspective, a common way to look at the Social Security claiming decision is to determine the "breakeven age" where the increased monthly payment earned by delaying benefits equals the monthly benefits not received by claiming earlier. While this can be calculated simply by adding up cash benefits for both figures, in reality individuals who claim benefits earlier (and have other available assets) have the opportunity to invest the benefits they receive. With this in mind, a breakeven age calculation could consider available rates on Treasury Inflation-Protected Securities (TIPS), which represent a source of 'guaranteed', inflation-protected income not dissimilar from that received from Social Security.

The impact of TIPS on the breakeven age calculation depends on the current available TIPS rates, with higher rates leading to a later breakeven age (and therefore tilting the scales towards claiming earlier) and lower rates leading to an earlier breakeven age. However, Dutzmann finds that for a longevity planning horizon of age 90-100 (which is above standard individual life expectancies but accounts for a longevity contingency), current long-term TIPS rates fall 2.5%-4.5% below the "breakeven rate" at this age (suggesting that delaying benefits would be prudent). At the same time, individual factors could play into this decision as well, including the client's sex (with women tending to live longer on average), health or family history (which could suggest a longer- or shorter-than-average life expectancy), and marital status (as a higher-earning spouse might elect to delay benefits while the other spouse might claim earlier).

In sum, financial advisors can support their clients in the Social Security claiming decision by incorporating the investment alternatives they have available to help determine a breakeven age. That said, many individuals might want to go beyond the math to incorporate other factors, including prioritizing income in a particular part of retirement (e.g., spending more earlier on while they're healthy versus ensuring robust income in their later years), which suggests that there is no single formula that determines the 'right' claiming decision for every client!

Steps To Take To Ensure Clients Receive Social Security Benefits On Time

(Mark Miller | Morningstar)

The Social Security Administration is facing a dual customer service challenge at the moment, with more and more members of the large Baby Boomer generation entering the pipeline and the agency feeling the impact of staffing cuts that saw a drop of 7,500 employees in 2025 (with many coming from customer service and information technology staff). Which has led to reports of long waits for in-person or phone assistance and delays in the processing of benefits applications.

To start, individuals will often find it more convenient to conduct Social Security-related business online (through their my Social Security account). This includes accessing their annual Social Security statement (and reviewing it to ensure their listed earnings history is correct) and, for those who are ready, applying for retirement benefits (individuals can also apply for Medicare Part A and B benefits on the Social Security website as well). Given potentially extended processing times, those planning to claim benefits might also consider getting an early start submitting applications, as those for retirement benefits can be submitted up to four months ahead of an individual's intended start date, while Medicare applications can be filed up to three months ahead of the start date. If it is necessary to call Social Security, reaching out earlier in the day (with offices opening at 8am in the individual's time zone) can lead to quicker responses, as call volume tends to be lower earlier on (doing so also helps avoid the possibility of being on hold through the close of business and having to start over the next day). Also, for those experiencing particularly lengthy waits, Congressional representatives' offices can sometimes push the process along.

Altogether, while financial advisors often spend significant time helping clients determine the 'right' time to claim Social Security benefits, they can also play a helpful role in making sure they actually receive their benefits on time. Which could save clients significant time and hassle (and ultimately lead to a significant goodwill boost for their advisor!).

Getting Comfortable Delaying Social Security With Six-Month 'Reversible' Delays

(Jeff Levine | Nerd's Eye View)

Financial advisors often assist their clients with deciding when to file for Social Security benefits, helping them choose between filing prior to their Full Retirement Age (FRA) for a reduced benefit, filing at FRA for the 'full' benefit, or delaying benefits after FRA until (at the latest) age 70 to increase the monthly benefit by 8% per year. Which can create a high-stakes decision for clients on when to claim benefits.

Fortunately, the Social Security rules allow advisors to reframe the filing decision to make it easier for their clients to decide more confidently whether to file or delay. Because, in reality, delaying Social Security benefits isn't a one-time decision at all: an eligible individual can change their mind and file for benefits at any time. Furthermore, once they have reached FRA, that person can apply for up to six months of retroactive benefits, allowing them to receive a lump sum of accumulated payments while also activating their monthly benefits going forward. Meaning that, if the individual initially decides to delay filing, they effectively have a six-month window to change their mind without giving up any of the benefits they would have received had they chosen to file in the first place.

Therefore, rather than asking clients to make a single, irrevocable decision for the entire 3- to 4-year period between FRA and age 70, advisors can, instead, reframe the choice as a series of reversible decisions for six months at a time. If the client changes their mind within that six-month timeframe and wants to file, they can file a retroactive application and claim their benefits as if they had done so at the beginning of the period. Otherwise, they can continue to delay filing for another six months, further repeating the cycle until the client either decides to file or reaches age 70 (at which point they would file anyway, having reached the maximum age for delayed benefit credits). Not only does this framing provide the client with a more reasonable timeframe to foresee future health issues or other factors that could cause them to change their mind, but because the six-month intervals align with the period in which individuals can apply for retroactive benefits, each six-month decision is entirely reversible.

As with any Social Security filing strategy, it's important to be aware of the risks and tradeoffs of recommending this strategy to clients – for example, applying for retroactive benefits and receiving a six-month lump sum could result in a temporary spike in taxable income, with potential cascading effects on tax deductions, credits, and Medicare premiums. Ultimately, however, by nudging clients with the option to consider when to claim benefits through six-month 'reversible' decisions, advisors can potentially help them make better choices and to act with confidence!

The Hidden Problem With Style Investing

(Larry Swedroe | Wealth Management)

Beyond indexes that aim to track the total stock market, a variety of index funds are available that target a certain investment style, such as 'value' (i.e., less-expensive stocks based on price-to-earnings, price-to-value, or a similar ratio) and 'growth' (i.e., stocks experiencing strong revenue and/or earnings growth). These funds have become popular for investors who want to tilt their portfolios in a particular direction.

However, a research paper by Chris Brightman, Campbell Harvey, Que Nguyen, and Omid Shakernia of investment manager Research Affiliates suggests that investors might want to look under the hood to determine whether investors might be able to improve the returns they get from certain style funds. For instance, they find that many major index providers construct their value and growth indices using what's called the "completeness principle", where all stocks are classified as either value, growth, or both (meaning that owning both a value index fund and a growth index fund from the same provider could lead to the same results as simply owning the broader market index!). This means that value funds could contain stocks with limited growth prospects (and potentially reduced future returns) and growth funds could have particularly expensive stocks (that could limit future returns).

With this in mind, the authors used stock return data from 1970 to 2025 to gauge whether this model could be improved upon. They sorted stocks based on book-to-price and sales growth, then created a value portfolio (of stocks that were cheaply priced regardless of the companies' growth rate) and a growth portfolio (of fast-growing companies, regardless of their valuations), finding that each of these portfolios outperformed the broader market index both separately and when combined together (with a combined equal-weight portfolio outperforming by 0.8% per year), whereas the leftover group of 'expensive, slow-growing' stocks underperformed the broader market by 2.1% per year. They found that returns could be further enhanced by using momentum signals between the value and growth strategies.

In sum, while mutual funds and ETFs make investing in value and growth styles simple, this research suggests that the presence of more expensive and slower growing stocks in these funds could be reducing potential returns. Which might lead some investors (and their financial advisors) to consider a more active approach that focuses on the individual stocks that best represent the chosen style (though this might be balanced against the time and/or expense of doing so…perhaps leading some investors to return to a broader market indexing approach?).

Your Active ETF Is Cheap, But Your Trade Might Not Be

(Robby Greengold | Morningstar)

When evaluating ETFs, investors (and financial advisors) frequently compare different funds' expense ratios (as a similar strategy can often be found at a lower cost from a different fund provider). What might be considered less (but could be quite impactful on the total cost of the trade) is the bid-ask spread of the ETF.

The bid-ask spread is the 'price' of liquidity, representing inventory risk, basket trading costs, and a profit margin for market makers who provide liquidity for ETFs. Notably, bid-ask spreads can vary by fund category. For example, as of late 2025, the median spread for U.S. large-cap stock active ETFs was 0.12% [as a percentage of the ETF's price], compared to 0.20% for small-cap active ETFs and approximately 0.23% for emerging market active ETFs. Fixed-income active ETFs saw significant ranges in spreads as well, with ultrashort bond ETFs having a median spread of less than 0.05% but emerging market funds having a median spread in excess of 0.35%.

In addition to differences based on fund category, spreads can change based on market movements. For instance, during the 'tariff tantrum' in early 2025, the spread for a typical large-cap active ETF more than doubled to approximately 0.35% while the typical spread for emerging-market active ETFs spiked to around 0.75%. Spreads also tend to be wider during the first 30 minutes and the last 30 minutes of the trading day, suggesting that investors can reduce costs by trading between these periods (notably, investors in international equity and fixed income ETFs might consider transacting during trading hours for those markets, as spreads tend to be narrower during these periods).

Ultimately, the key point is that the cost of investing in an ETF (actively managed or otherwise) is not just a matter of its expense ratio, but also the bid-ask spread existing at a given time. Which suggests that financial advisors can add value for their clients by being aware of the bid-ask spreads on the ETFs they're considering and trading during times when spreads are likely to be narrower.

Is It Possible To Invest Ethically?

(Ally Jane Ayers | Money Changes Everything)

Many investors seek to design portfolios that meet their specific financial goals, finding the right risk/return profile for their particular needs. Some investors, though, are also concerned about the specific companies they invest in and whether they produce goods or are engaged in activities that the investor disapproves of. In recent years, a wide range of funds (and strategies, such as direct indexing) have emerged to meet the demand of this latter group, offering the promise of capital growth while avoiding companies engaging in certain activities (e.g., pollution, weapons production, or facilitating criminal activity).

Ayers argues, though, that this promise can sometimes be an (expensive) illusion for investors. For instance, because each fund sets its own criteria on which stocks to exclude, a particular fund's priorities might not match up with a particular investor's priorities (e.g., two funds with "green" or "ethical" in the name might exclude different sets of stocks). Also, these funds sometimes are structured to exclude funds based on relative weighting on certain factors compared to other stocks in the index, which can lead to the inclusion of companies that are performing slightly better than others on certain criteria but which the investor might want to exclude. She also argues that an individual investor is unlikely to make a difference in a particular company's fortunes by excluding it from an index (based on the limited size of the investment compared to the company's market capitalization, and because most individual companies represent a small part of an overall index).

Amidst this backdrop, Ayers suggests a more effective approach for concerned investors is to pursue a strategy designed for portfolio growth (as well as spend their human capital working and/or volunteering for organizations making a positive impact on the world), which can allow them to have more capital to deploy towards favored causes, whether by donating to charities working in key areas or making purchases that reflect their goals (e.g., by shopping at a local grocery store rather than a larger chain).

In sum, those interested in ethical investing might consider whether they can make a larger impact by excluding certain stocks from their portfolios (including the time and potential dollar cost of doing so) or by using this time (and potential additional capital) to directly support the causes they care about. Which offers opportunities for financial advisors to add value for their clients (and potentially stand out in the marketplace), whether by putting in the work needed to identify companies that match a client's priorities (or funds that do so) and/or putting an emphasis on charitable planning (both for the impact clients can make and, in the latter case, for the tax planning benefits of doing so!).

Two Methods To (Actually) Reduce Smartphone Use

(Cal Newport)

While many individuals might want to spend less time using their smartphone, actually doing so can be a particularly thorny problem. In part, this is due to the 'reward' that phone use provides the brain in the form of a jolt to its short-term motivation system. Combined with the proximity of one's phone at any given time (which makes it harder to resist than a temptation like freshly baked chocolate chip cookies, which aren't always available), simple 'hacks' don't always work to reduce phone use.

Amidst this backdrop, Newport suggests two methods that could be more effective for those looking to spend less time on their phones. The first is to delete any apps that monetize one's attention from their use. These include social media apps (which seek to keep users engaged for longer [and thereby receiving more ad revenue] using the 'infinite scroll') and others that deliver the brain artificially consistent 'rewards'. Second, individuals can reduce the ubiquity of their phone by keeping it in one place in their house (e.g., plugged into the wall in the kitchen). This forces the user to physically move to access the phone (rather than just pull it out of their pocket) and also reduces phone-based distractions during other activities (e.g., eating dinner, reading, or even when watching television).

In the end, while many functions of smartphones are necessary (and useful!) for daily life, given the (purposefully) addictive nature of various apps and other features, finding the right balance of usage (and following through on it) can be a challenge. Which suggests that more draconian measures (whether it's keeping the phone in one room and/or deleting certain apps altogether) might be necessary to reduce phone usage for the long haul.

Against The "Smartphone Theory Of Everything"

(Derek Thompson | The Argument)

Smartphones are ubiquitous in modern life, as seemingly just about everyone from teenagers to older adults having one in their pocket at any given time. At the same time, social scientists and others have observed various (often negative) changes in society (from reduced attention spans to worsening mental health for some groups) during the past decade. Which has led many to wonder if increased usage of smartphones might be related to (or even the direct cause of) these changes (also known as the "Smartphone Theory of Everything", as dubbed by NYU Professor Arpit Gupta).

Thompson, however, suggests that rather than being a "poison" that leads to various negative outcomes, smartphones are instead a "displacement machine" that takes users' attention away from other (perhaps more productive or fulfilling) activities, whether it's sleeping, socializing, or even focusing on a television show.

Also, smartphones do appear to offer users more access to the news, with experiments that have certain participants remove particular social media apps for a certain period finding that while they were less anxious than those who kept these apps on their phones, they were less informed about what was going on in the world (with the link between news consumption and anxiety potentially being a finding that news reporting has become increasingly negative over the past several decades). And while being informed can be a good thing, at the extreme, "doomscrolling" could create increased stress over time.

In sum, Thompson suggests that smartphones are less of an inherently toxic item and more of a delivery mechanism for content that can have varying effects depending on how (and how often) it's used (and who it's used by, as stronger negative associations have been seen amongst certain teenagers, amongst other groups). Which suggests that the effects of smartphone use is context-dependent (e.g., reducing use when more productive or enjoyable activities or at hand, or reducing time spent on stress-inducing scrolling)…a perhaps unsatisfying answer compared to a simple good/bad binary that could lead to easier choices surrounding their use?

What Happened When College Students Took A Week-Long Smartphone Fast

(Callie Holtermann | The New York Times)

While middle-aged and older adults can remember a time without smartphones (or even cell phones at all), today's college students have lived around smartphones for practically their whole lives. Which might make it even more difficult for them to imagine going without these devices for an extended period.

A group of students at St. John's College in Santa Fe, New Mexico decided to take the plunge, volunteering to give up their smartphones for a week (with some students going further and avoiding computer use altogether) to see how it would impact their lives and views of the phones themselves. On the first day, many participants faced the specter of waking up without a phone-based alarm (while some students had separate alarm clocks, others set up a system of door knocks to make sure everyone made it to class). They also had to figure out how to communicate with each other without being able to send text messages. This led to increased use of the school's landline phones as well as a chalkboard that was used to leave messages to one another. In addition, many participants in the smartphone 'fast' discovered that they had significantly more time to fill without their phone to turn to during periods of boredom…which ended up having positive effects when many ended up having more face-to-face interactions with their classmates.

While most of the students weren't ready to permanently give up their smartphones at the end of the experiment (in part because of many of their functional uses, including operating the school's laundry machines), the time without them did lead many to question their relationship with these devices, with a particular focus on how reducing phone use could lead to more time for building relationships with their classmates (which could be instructive for adults with busy schedules who are looking to carve out time for more social activities).

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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.