Search results for: <br/>Author: Adam Van Deusen

Weekend Reading For Financial Planners (Oct 1-2)

September 30, 2022 02:02 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that a former Department of Labor official expects that it will take until next year for the agency to release new rules that would likely expand the number of financial professionals who must provide a fiduciary standard of care when providing investment recommendations for 401(k), individual retirement accounts, and other plans.

Also in industry news this week:

A recent survey suggests that high-income Millennials are more open to working with advisors than similar individuals in older generations
A new bill would make many parts of the Tax Cuts and Jobs Act of 2017 permanent, including its changes to tax brackets, the higher standard deduction, and the cap on state and local tax deductions

From there, we have several articles on advisor marketing:

How some of the biggest financial services firms are increasing their television advertising and how smaller firms can craft a scalable, cost-efficient marketing strategy
How firms are approaching the opportunities and potential pitfalls of the SEC’s new marketing rule, which will be enforced starting November 4
What advisory firms can do to make the most out of client testimonials and avoid negative reviews on third-party websites

We also have a number of articles on retirement planning:

Medicare Part B premiums are set to decline in 2023, providing seniors with a bit of relief in the current inflationary environment
The potential advantages of taking RMDs in stock rather than in cash during the current market downturn
Why the charges associated with guaranteed income products could be considered as the cost of insurance rather than fees

We wrap up with three final articles, all about work life:

Why some hybrid workers choose to come into the office on Fridays, from shorter commutes to more time with the copy machine
What ‘quiet quitting’ means for both workers and advisory firm owners
How ‘micro-breaks’ throughout the workday can help you avoid screen fatigue and stay energized

Enjoy the ‘light’ reading!

The Market For “Lemons” In Financial Advice: How Higher Standards Can Lower Costs And Increase Access To Advice

September 26, 2022 07:05 am 2 Comments CATEGORY: Planning Profession

In a now-famous 1970 paper, economist George Akerlof used the market for used cars to demonstrate the negative effects that can occur when there are significant information asymmetries between buyers and sellers of a good or service. He highlighted the market for used cars at the time, where, because consumers could not be sure of the quality of a used car they were offered, they were only willing to pay the price of a car in average condition, driving out sellers of high-quality used cars (“peaches”), who were not willing to accept the average price for their above-average product. At the same time, sellers of low-quality cars (“lemons”) were incentivized to enter the market, as they could receive a price greater than the actual value of their used car. This information asymmetry led to a negative cycle where more low-quality cars would enter the market, driving down consumer trust (and the price they were willing to pay) and even leading to a market of lower-quality cars.

The financial advisory industry is not immune to the same problems faced in Akerlof’s used-car market. Given the wide range of professionals who can call themselves ‘financial advisors’ – from someone whose business is selling insurance policies to a financial planner who sells financial advice itself – consumers can have difficulty understanding the type and quality of service they will receive from a given ‘advisor’. And just as the uncertainty of quality reduced the car buyers’ willingness to pay for high-quality cars in Akerlof’s analysis, the wide variance in advisor quality can also be likely to lead to a lack of trust among consumers.

But this also suggests that if standards in the market for advisors were raised (thereby increasing consumer trust), exceptional advisors could spend less money on differentiating themselves from advisors with lower standards, creating the opportunity for reduced marketing and business expenses that could be passed along in the form of lower costs for consumers (potentially opening up advice to a wider pool of clients!) and even allow for higher-quality advisors to enter the market. In fact, even a relatively modest shift to a higher-trust environment (which may be achieved by enacting higher standards) that just partially reduces the incredibly high client acquisition costs of financial advisors could more than offset the entire cost of fiduciary liability insurance from those higher standards!

In his paper, Akerlof suggests three strategies that could be used to counteract the effects of quality uncertainty and increase consumer confidence: licensing, quality guarantees, and branding. Accordingly, advisor licensing could mean establishing a requirement involving a professional designation like the CFP certification for those who provide financial advice. A quality guarantee could be implemented through a broad-based fiduciary standard (as advisors are understandably unable to offer outright performance guarantees), which can increase trust among consumers. And when it comes to branding, limiting the use of the title “financial advisor” and “financial planner” to those who are solely in the business of providing advice (rather than primarily selling products) and who meet certain competence and ethical standards would increase consumer confidence as well.

Ultimately, the key point is that information asymmetries that reduce consumer trust are common in the financial advisory marketplace, and raising industry standards of conduct could not only improve consumer confidence in advisors, but also reduce marketing costs for advisors trying to gain consumer trust. Because, in the end, helping consumers differentiate between advisor ‘peaches’ and ‘lemons’ can improve the public’s experience with financial advice and, at the same time, reduce marketing expenses for advisors, which in turn can reduce the total cost of advice and attract prospective clients from a broader pool willing and able to work with an advisor, as access to quality advice increases as well!

Weekend Reading For Financial Planners (Sept 24-25)

September 23, 2022 02:01 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that the SEC has issued a risk alert putting advisors on notice that examiners will be conducting a number of reviews to evaluate how firms are complying with the Commission’s new marketing rule, which it will begin to enforce starting November 4. While the new rule allows financial advisors to proactively use testimonials (from clients), endorsements (from non-clients), and highlight their own ratings on various third-party websites, the SEC’s warning suggests that advisory firms will want to take care to abide by the compliance requirements linked to the new rule.

Also in industry news this week:

How advisors can serve clients of the millennial generation who have seen their income and wealth grow as they have gotten older
A survey shows that more RIAs are outsourcing investment management, and that those who do are largely happy with the decision

From there, we have several articles on insurance and investment planning:

Why the chair of the Senate Finance Committee has taken an interest in the private placement life insurance market
A new designation is available for advisors looking to serve clients with nonqualified deferred compensation plans
How DPL Financial Partners’ growth is a sign of advisor interest in fee-based annuities

We also have a number of articles on advisor marketing:

The latest trends in advisor marketing, from the continued dominance of client referrals to the return of in-person gatherings
How advisors can pull off an event that can increase client loyalty and attract new prospects
Why some firms are thinking twice about taking advantage of the SEC’s new marketing rule right away

We wrap up with three final articles, all about business ownership:

Why business owners with strong technical skills limit their profitability by spending too much time working in their business rather than on it
The advantages and disadvantages of ‘renting’ versus ‘owning’ your career
Why focus and intense curiosity are common traits among some of the most successful business leaders

Enjoy the ‘light’ reading!

Weekend Reading For Financial Planners (Sept 17-18)

September 16, 2022 02:03 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with a report from Future Proof, dubbed the “world’s largest wealth festival”, held this week on(!) Huntington Beach, California. In addition to being held outdoors, the event stood out from ‘standard’ industry conferences in other ways, from the wide scope of its content to the diverse makeup of its attendees.

Also in industry news this week:

How the SEC appears poised to issue new or amended rules regarding its Custody Rule and 12b-1 fees by the end of the year, and what advisors can do to prepare their firms
A new report suggests that smaller firms have seen lower employee attrition rates than larger ones during the pandemic, and the steps firms can take to maintain a stronger company culture to attract and retain staff

From there, we have several articles on retirement planning:

A survey indicates that while pre-retirees largely understand the benefits of delaying Social Security benefits, only 11% plan to wait until age 70 to claim them, suggesting that advisors can play an important role in influencing clients’ retirement income decision making
Recent research shows that spending often declines throughout retirement, not because retirees have less income or fewer assets, but rather due to changes in health and preferences, offering advisors an additional data point to help project client expenses in retirement
With Medicare’s open enrollment period approaching in less than a month, advisors can add significant value to their clients by assessing whether changing their coverage could save them money

We also have a number of articles on spending and cashflow:

With an increasing number of retirees holding mortgages, advisors can add value by helping clients explore the financial and emotional considerations that go into the decision of keeping a mortgage or paying it off early
While some clients coming off a summer vacation might be tempted to buy a vacation home, advisors can help them consider the full range of consequences of doing so, from unexpected expenses to the potential for family conflict
How the travel industry has added to the growing number of subscription services, offering everything from discounted flights to access to luxury accommodations

We wrap up with three final articles, all about parenting and family dynamics:

The importance of friends for middle schoolers, and why ‘peer presence’ might be a more important dynamic than ‘peer pressure’ for parents to consider
How some parents helped develop an entrepreneurial mindset in their children, often by taking a step back
Why a growing number of family foundations are choosing a time-limited, rather than perpetual, approach in order to donate money faster

Enjoy the ‘light’ reading!

Weekend Reading For Financial Planners (Sept 10-11)

September 9, 2022 02:00 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that as Millennials grow their wealth, they could be increasingly turning to financial advisors for guidance. But amid competition from large asset managers and broker-dealers, advisors can consider how they can shape their service offerings and fee structures to attract Millennials and build client relationships that could last for decades to come.

Also in industry news this week:

As broker-dealers increasingly offer fee-based planning services, RIAs are responding by enhancing their own service offerings, and offering alternative fee structures to differentiate themselves from the competition
More states are adopting continuing education requirements for investment advisers, with three states establishing rules that must be followed by the end of 2022

From there, we have several articles on practice management:

A new company aims to train the next generation of planners and provide a valuable outsourced service to advisory firms
Why creating internal career paths and considering fully remote workers could help firms thrive in the current tight labor market for advisor talent
What advisors are doing to maximize the efficiency of their firms without bringing on additional staff

We also have a number of articles on retirement planning:

How the introduction of new ‘modern’ tontine products could provide retirees with a new way to mitigate longevity risk
The options available to clients who want to reverse their decision to start claiming Social Security benefits
How sequence of return risk can affect accumulators as well as retirees

We wrap up with three final articles, all about time management:

Why scaling your time can be more effective than trying to stretch or save it
How exercise can not only extend your lifespan, but also increase the quality of those years
How the ‘money value of time’ can help explain why certain periods of time are more valuable than others

Enjoy the ‘light’ reading!

Weekend Reading For Financial Planners (Sept 3-4)

September 2, 2022 02:04 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that, in its newly released draft strategic plan for 2022-2026, the SEC has indicated that the enforcement of Regulation Best Interest’s requirement that brokers act in their clients’ best interests when making an investment recommendation will be a priority going forward. Combined with the private arbitration cases that have been filed related to Reg BI, such enforcement in the years ahead would demonstrate the consequences of running afoul of Reg BI for broker-dealers and their representatives.

Also in industry news this week:

How enforcement of FINRA Rule 4111 could further the decline in the number of broker-dealers and registered representatives
A study suggests that some fund companies are misleading investors by changing their benchmark indices to make their performance look better

From there, we have several articles on investments:

How Morningstar plans to simplify its rating system amid continued concerns about its effectiveness
Why private placement life insurance policies could become an increasingly popular option for ultra-high-net-worth clients
Why market capitalization might not be the most accurate way to value the cryptocurrency market

We also have a number of articles on retirement planning:

New research suggests that while the average senior will amass hundreds of thousands of dollars in health care expenses in retirement, the net cost they have to pay is not nearly as high
The upcoming debut of a new tontine product could add another option for advisors looking to mitigate their clients’ longevity risk
The variety of ways individuals approach retirement, from choosing where to live to finding purpose in their daily lives

We wrap up with three final articles, all about mental frameworks:

How operating from a set of ‘big beliefs’ can help advisors assess the needs of individual clients
Why it might be more helpful to compare your current circumstances to alternate versions of your own life than to compare yourself to others
An advisor’s 41 tips for health, wealth, and happiness

Enjoy the ‘light’ reading!

Weekend Reading For Financial Planners (Aug 27-28)

August 26, 2022 02:21 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that the Biden Administration has released a series of long-anticipated Federal student loan relief measures. And while the announced $10,000 of debt forgiveness for some borrowers made the most headlines, advisors will also want to be mindful of a new Income-Driven Repayment plan that could help some clients with student debt reduce their monthly payments and the planning implications of the resumption of student loan payments in January!

Also in industry news this week:

An industry survey suggests that advisory firms are prioritizing growth despite a slower pace of client acquisitions so far in 2022 and rising labor costs
How Charles Schwab and other advisor custodians are competing to offer a more seamless digital onboarding experience for advisors and their clients

From there, we have several articles on practice management:

New rankings show what it takes for RIAs to make it into the top 100 by AUM, and why seeking out ‘smaller’ clients can spur firm growth
The range of considerations and potential consequences for RIAs considering going public
How advisory firm owners can take advantage of a newly expanded range of available sources of liquidity

We also have a number of articles on investing:

Why some advisors and their clients might want to consider taking RMDs this year ‘in-kind’ rather than in cash
How fixed annuities have become more popular among consumers amid rising interest rates and turbulent markets
New research shows how ‘free’ stock trades potentially cost consumers billions of dollars each year

We wrap up with three final articles, all about career development:

Why building a personal brand is more about consistency than a large social media following
How to construct a ‘personal board of directors’ who can help guide and advance your career
Best practices for advisors (or their clients) who want to take a sabbatical away from work

Enjoy the ‘light’ reading!

Weekend Reading For Financial Planners (Aug 20-21)

August 19, 2022 02:04 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that the FPA is planning to leave the Financial Planning Coalition (which also includes the CFP Board and NAPFA) at the end of the year. This follows the FPA’s announcement that it plans to pursue title reform for the term “financial planner”, and signals that there may be coordination challenges or divergent strategies among the three organizations that could make title reform more challenging, as regulators are likely to receive pushback on any significant title reform from the financial products industry that will want to see its salespeople also permitted to use the popular title.

Also in industry news this week:

A recent study shows that many financial advisors want to spend more time on comprehensive planning and are looking at automated solutions to help them reduce the time they spend on investment management
Why consumers see both human advice and technological solutions as key parts of their financial success

From there, we have several articles on advisor marketing and sales:

The questions busy advisors can add to their calendaring software to filter (and refer out) unqualified prospects before spending time on a meeting
Why it is valuable for advisors to create an archetype of their ‘ideal client’ and the process they can take to do so
Three high-value questions advisors can use to connect with prospects and convert more of them into clients

We also have a number of articles on client psychology:

How “temporal discounting” can help explain why clients put off difficult decisions
Why those with a longer “mental time horizon” tend to be more successful financially and how advisors can help their clients plan further into the future
Why the “End Of History Illusion” suggests that creating future financial flexibility for clients might be more valuable than pursuing specific goals that are decades away

We wrap up with three final articles, all about workplace trends:

Recent data points show how workers have been adjusting their presence in the office, from only going in a couple of days per week to working in the office for a few hours each visit
While companies might be tempted to use worker-tracking software to gauge productivity in the remote work environment, doing so can create a lack of trust and low morale among the workforce
How companies have adjusted their workplace rituals in the remote environment to promote employee engagement

Enjoy the ‘light’ reading!

Serving Pro Bono Clients As A Busy Advisor: How Advisers Give Back Makes Volunteering Easy

August 15, 2022 07:07 am 1 Comment CATEGORY: General Planning

Working as a financial advisor can be both financially rewarding and emotionally satisfying. By helping clients develop financial goals, creating a financial plan, and supporting the implementation and monitoring of the plan, advisors help clients live their best lives. But while new fee models have allowed fee-only advisors to reach an expanding range of potential clients, there are many Americans who could benefit from professional financial advice but might not have sufficient income or assets to pay for it. This gives advisors the opportunity to offer their services on a pro bono basis, and the Advisers Give Back platform allows them to do so in as little as one hour per month.

Pro bono financial planning refers to free, no-strings-attached financial advice and planning for underserved people. Most advisors are already familiar with many of the issues these individuals face, from setting goals to debt management, although the specifics might be slightly different given the typically lower incomes and wealth of pro bono clients. In addition to providing a valuable service to the community and serving as a meaningful activity for advisors, pro bono planning is also an important part of growing financial planning into a profession, similar to other fields (e.g., law) with established pro bono programs. Further, pro bono planning can help advisors develop their skills, whether it is working with individuals of different ages or incomes than their usual clients to practicing their empathetic listening and client meeting skills (which is especially relevant for more junior advisors whose primary functions may be focused on back office responsibilities supporting senior advisors, and who might not have as many opportunities for substantive one-on-one client interactions!).

Given the demands from running (or working for) an advisory firm as well as the time needed to research ways to offer pro bono planning, the non-profit group Advisers Give Back (AGB) has created a platform that allows advisors to participate in pro bono planning for as little as one hour per month. AGB allows advisors to meet with clients and develop recommendations while significantly reducing the potential friction involved in getting started with pro bono planning. For instance, AGB connects with pro bono clients so advisors do not need to spend time advertising their services.

Any advisor with the CFP certification can use the AGB platform after completing an online, 60-minute training session, after which advisors can set their availability for pro bono client meetings. The AGB platform facilitates multiple meetings with the same pro bono clients, allowing advisors to build relationships with their clients and to track their progress, so that both short-term stressors and long-term goals can be addressed. AGB also offers dedicated assistants who help with administrative tasks, communicating with clients and tracking their progress between meetings, which saves advisors even more time.

Ultimately, the key point is that the Advisers Give Back (AGB) platform allows busy advisors to engage in pro bono planning in as little as one hour per month. Which is important, because even though volunteering can offer advisors the personal satisfaction of offering a valuable service to the community, participating in pro bono opportunities is also a vital part of the business of financial advice itself becoming a recognized profession, and is an important contribution to the growth of financial planning as well!

Weekend Reading For Financial Planners (Aug 6-7)

August 5, 2022 02:14 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that the SEC has issued a new bulletin clarifying the responsibilities of brokers under Regulation Best Interest (Reg BI). The guidance indicates that, despite early fears that Reg BI was ‘overly accommodating’ to the brokerage industry, the Commission is expecting that reducing conflicts of interest should be an ongoing task for broker-dealers rather than a one-time compliance disclosure change, and that brokerage firms will want to ‘show their work’ when it comes to their compliance responsibilities (a potential best practice for RIAs, too!)!

Also in industry news this week:

A study suggests that a significant number of brokers who are disciplined by FINRA are engaging in ‘regulatory arbitrage’ by moving to state-regulated insurance companies, making it more difficult for consumers to learn about their past infractions
How the proposed “Inflation Reduction Act” will impact financial advisors and their clients

From there, we have several articles on advisor content marketing:

How advisors can generate topic ideas for content to engage their target audience
The best practices (and pitfalls to avoid) for advisors when crafting an email subject line
Why campaigns that combine “sunk marketing” with “momentum marketing” can lead to greater results for advisors

We also have a number of articles on retirement planning:

How the variability in annuity payouts across annuity providers has exploded in 2022, creating an opportunity for advisors to add value to clients by comparison shopping across insurance companies
Why state long-term care insurance programs are driving demand for private policies, and the implications of these programs for advisors and their clients
How advisors can support clients in choosing a Medigap policy

We wrap up with three final articles, all about the advisor regulatory landscape:

Why better regulation of the insurance industry could make life easier for financial advisors
What advisors need to know about the new IAR continuing education requirements
Why pursuing title reform for financial planners is a worthwhile endeavor, even if it might be a bumpy process

Enjoy the ‘light’ reading!