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

Weekend Reading For Financial Planners (Jan 28-29)

January 27, 2023 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 the news that CFP Board announced this week that it is splitting into two separate organizations with the same leadership but different nonprofit statuses. By switching to 501(c)(6) nonprofit status, the new CFP Board of Standards will have expanded abilities to advance the planning profession through lobbying and more targeted advertising messages to grow the ranks of CFP professionals.

Also in industry news this week:

Why cash management strategies could become increasingly important parts of an advisor’s value proposition in a higher-interest-rate environment
Why improved returns on cash products could be a double-edged sword for some advisory clients following last year’s market volatility

From there, we have several articles on practice management:

Why advisors could be the big winners when it comes to competition among custodians and the entry of software providers into the space
Why rising interest rates might not be a major hindrance to RIA M&A activity in the year ahead
How consumer behavior research can help advisors pick the best strategy for raising their fees

We also have a number of articles on cash flow and budgeting:

Why spouses can benefit from having different views on money and how advisors can help foster positive communication between partners on financial issues
How advisors can help clients shift the spending paradigm from ‘wants versus needs’ to considering the best strategies for achieving their spending priorities
How advisors can help clients (and their children) understand the potential risks of using ‘buy now pay later’ services

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

Why trying to optimize downtime can lead to burnout
A strategy for ensuring that relationships don’t fall by the wayside
How remote workers can shake up their work from home routines

Enjoy the ‘light’ reading!

Weekend Reading For Financial Planners (Jan 21-22)

January 20, 2023 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 several states are considering a series of tax hikes targeting higher-income and ultra-high-net-worth residents after similar proposals failed to pass at the Federal level. While it remains to be seen whether the measures will actually be enacted, proposed measures include raising income and capital gains tax rates, instituting wealth taxes, and reducing the state estate tax exemption, potentially creating future planning opportunities for advisors with clients in those states.

Also in industry news this week:

While the number of RIA M&A deals increased in 2022, the size of these deals declined, perhaps reflecting challenging market and economic headwinds
A recent survey suggests that nearly half of financial advisory clients have changed advisors or have considered doing so since the start of the pandemic and that portfolio performance has become a primary consideration in their decision-making process

From there, we have several articles on practice management:

Why advisory firms might first consider whether they are using their current tech stack optimally before looking to new software solutions
How advisory firms can better organize and track their data to avoid drowning in a sea of numbers
Why firm culture and opportunities for career advancement could be more important than starting salary for many financial planning job candidates

We also have a number of articles on cash flow and spending:

A review of several key psychological factors that drive clients’ spending decisions
How consumers are potentially losing money by keeping significant cash in savings accounts at major banks, and the opportunity for advisors to create cash management strategies for clients
How advisors can support clients whose children suffer from ‘failure to launch syndrome’

We wrap up with three final articles, all about the financial advice industry:

Why the competition for talent, a pullback in private equity funding, and firms balancing efficiency with effectiveness could be key trends within the financial advice industry in the coming year
How consumers could benefit from fee-only advice within the insurance industry
The benefits of taking on leadership positions within financial planning industry associations

Enjoy the ‘light’ reading!

Weekend Reading For Financial Planners (Jan 14-15)

January 13, 2023 02:05 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 Federal Trade Commission has proposed a nationwide ban on noncompete clauses in employee contracts, aiming to give employees more freedom to change jobs within the same industry. In the advisor world, where noncompete agreements are fairly common, a ban on the practice could incentivize firms to reassess their employee value proposition and to consider ways to establish their clients’ relationships with the firm, and not just with their advisors.

Also in industry news this week:

A study suggests that simplification is the top reason consumers combine their investment accounts, signaling that the onboarding process for new advisory client assets is a value-add in itself
FINRA has released its enforcement priorities for 2023, including a continued focus on compliance with Regulation Best Interest as well as several new priority topics, such as manipulative trading, fixed-income pricing, and trading in fractional shares

From there, we have several articles on retirement planning:

The latest rules for 2023 Required Minimum Distributions from inherited retirement accounts
How reviewing and adjusting capital market assumptions can help advisors refine their use of Monte Carlo simulations
Why relying on Treasury Inflation-Protected Securities (TIPS) to support the bulk of retirement income needs could be risky

We also have a number of articles on investment planning:

A recent study indicates that rebalancing a portfolio on an annual basis is superior to longer or shorter time horizons
How stocks and bonds tend to perform following their biggest down years
The long-term portfolio growth trajectory clients can expect when implementing a dollar-cost averaging strategy

We wrap up with three final articles, all about dealing with distractions:

The four types of attention and how individuals move between them throughout the day
How consolidating the wide range of ‘inboxes’, from email to workplace messaging, can help limit distractions throughout the day
How incorporating breaks to review notifications and social media during the workday can create more time for focused work

Enjoy the ‘light’ reading!

Providing Mortgage Advice In A Higher Interest-Rate Environment: Opportunities For Advisors To Add Value

January 11, 2023 07:06 am 0 Comments CATEGORY: Debt & Liabilities

Leading up to 2022, financial advisors and their clients had grown accustomed to a relatively low mortgage rate environment. In fact, until earlier this year, the average 30-year fixed mortgage rate had stayed below 5% since 2010 (and below 7% since 2001). But as the Federal Reserve has sought to raise interest rates this year to combat inflation, mortgage rates have reached higher levels not seen in more than 20 years, with 30-year fixed mortgages reaching an average of 6.9% in October 2022, twice the 3.45% average rate in January.

While the plight of today’s first-time homebuyers facing higher mortgage rates has attracted much media attention (deservedly so, as the monthly payment on a 30-year fixed mortgage for the median-priced home in the U.S. increased by nearly $1,000 in the past year), higher interest rates can affect financial planning calculations for current homeowners as well. For instance, higher interest rates have raised the borrowing costs for those looking to tap their home equity through a home equity loan or a Home Equity Line Of Credit (HELOC), and older homeowners considering a reverse mortgage will also be subject to higher interest rates.

At the same time, higher interest rates can present opportunities for some individuals. For example, those who are interested in making an intra-family loan could generate more income from the higher Applicable Federal Rates (while the loan recipient benefits from a rate significantly lower than standard mortgage rates). In addition, many current homeowners could have mortgages with rates lower than the ‘risk-free’ rate of return now available on U.S. government debt, which has risen alongside broader interest rates (perhaps changing the calculus of whether to pay down their mortgage early). And current homeowners with significant equity could consider downsizing and buying a smaller home in cash, potentially benefiting from a less-competitive housing market while not having to take out a mortgage at the current rates.

Ultimately, the key point is that a higher interest-rate environment affects not only homebuyers looking to purchase a home for the first time but also those who are current homeowners. Further, given that a home can be considered a consumption good (that often comes with emotional attachments) as well as an asset on the homeowner’s net worth statement, advisors can also add value by helping clients explore their home-related goals and assessing the financial tradeoffs of purchasing a more or less expensive home with a mortgage in a higher rate environment (or, if they have the means, whether buying a home in cash might be appropriate!). Regardless of whether a client is an aspiring first-time homebuyer or considering downsizing in retirement, advisors can add value by helping their clients navigate higher mortgage-rate environments!

What Makes Financial Advisors Happier: More Time Or More Money?

January 9, 2023 07:01 am 0 Comments CATEGORY: Personal/Career Development Practice Management

While it may be easy to assume that having more money would make a person happier by opening consumption opportunities unavailable to those with less income, experienced advisors can likely identify many examples of high-income individuals who are unhappy with their lives. To provide a more holistic view, researchers have sought to assess whether increased income leads to greater happiness on two dimensions: emotional wellbeing (how an individual feels today) and evaluative wellbeing (how an individual feels about their life overall).

An oft-cited 2010 study by Daniel Kahneman and Angus Deaton found that while overall life evaluation was positively correlated with income (even at levels exceeding $120,000), emotional wellbeing only increased up to $75,000 of income, plateauing after that point. This suggested that, after a certain point, increased income would not necessarily increase an individual’s day-to-day happiness. However, a 2021 study by Matthew Killingsworth using a more granular measurement scale found that day-to-day wellbeing continues to increase even beyond income levels exceeding $75,000 (while also finding that overall life evaluation increases with higher income as well).

When it comes to financial advisors, in particular, Kitces Research found a similar positive correlation between income and happiness. For instance, our research found that not only is advisor take-home income positively correlated with overall life satisfaction, but also that, similar to Killingsworth’s findings, their income is positively correlated with positive feelings and negatively correlated with negative feelings, even as income exceeds $75,000.

Importantly, there are other factors that can mediate the relationship between income and happiness, which may explain why higher income doesn’t always lead to greater happiness. For instance, Killingsworth found that respondents increasingly reported that they did not have enough time to get things done as their income rose, serving as a small but significantly negative mediator of the association between income and experienced wellbeing. This concept of ‘time poverty’ also appears to apply to financial advisors, as Kitces Research has found that the number of hours an advisor works in a given week is inversely correlated with their wellbeing.

These findings suggest that advisors who choose to pursue increased income in the pursuit of greater experienced happiness may be more successful if they deliberately protect the time they have available for their other responsibilities and interests. A few ways that can help advisors do this include adding staff as their firm reaches certain revenue ‘pain points’ where they have too much work on their plate, and allocating more ‘hard dollars’ paid to outside vendors for marketing services as the firm grows, allowing firm owners to use their time for more valuable and/or enjoyable activities.

Ultimately, the key point is that as an advisor’s income increases, their wellbeing – in terms of both day-to-day happiness and overall life evaluation – can potentially increase as well. But if higher income comes with increased demands on the advisor’s time, particularly if they get to the point where they feel they don’t have time to finish everything they need to get done, the experienced ‘time poverty’ can have a negative effect on the advisor’s wellbeing. In the end, time is the ultimate scarce resource, and it is important for advisors to spend it wisely, particularly as their income increases!

Weekend Reading For Financial Planners (Jan 7-8)

January 6, 2023 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 Securities and Exchange Commission (SEC) has received significant pushback from investment adviser and financial industry trade groups to the regulator’s recent proposal that would establish formalized due diligence and monitoring obligations for investment advisers that outsource certain advisory functions. While the proposal received support from state regulators and consumer advocates, adviser industry groups argued that the measure would create unnecessary extra work for advisers and could be a particular burden on smaller firms.

Also in industry news this week:

Amid a robust regulatory agenda, the SEC is facing elevated employee attrition, particularly in its senior ranks
How planning specializations can help firms and their advisors stand out from the pack

From there, we have several articles on retirement planning:

Why an individual’s portfolio of relationships could be just as important as their investment portfolio when it comes to happiness in retirement
A recent study shows how delaying Social Security benefits typically leads to greater lifetime wealth than claiming benefits early in order to reduce portfolio withdrawals
Why ‘failure’ scenarios in Monte Carlo simulations are very different than plane crashes

We also have a number of articles on practice management:

Why the most successful firms in the coming years might be those who dominate individual market segments rather than those that are ‘overdiversified’
Four ways firms can attract next-generation advisor talent
Why being proactive can help firms overcome the challenges of hitting capacity ‘walls’

We wrap up with three final articles, all about New Year’s resolutions:

Why the most successful goals are often those that fit within one’s self-identity
How a ‘time audit’ can help an individual spend more time on their most important personal and professional activities
Why a single push-up could be the key to achieving a New Year’s resolution

Enjoy the ‘light’ reading!

Weekend Reading For Financial Planners (Dec 31-Jan 1)

December 30, 2022 01:04 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 passage of “SECURE Act 2.0” has brought a wide range of changes to the world of retirement planning. And given the variety of planning opportunities created by the legislation – from the raising of the beginning age for RMDs to the ability to transfer funds from 529 plans to Roth IRAs – advisors have a significant opportunity to demonstrate value for their clients!

Also in industry news this week:

Why many clients of robo-advisors are seeking out human advisors in the current market climate
A new study shows that there is a wide gap between firms leveraging technology to enhance the client experience and those that do not treat their tech stack as a priority

From there, we have several articles on advisor technology:

A recent survey shows that many advisors at large firms are unhappy with their firm’s current tech stack and that client growth has suffered because of it
Why it is important for advisory firms to conduct an audit of their tech stack and the steps they can take to conduct the exercise
Why advisors might consider looking past some of the big names in advisor technology to find tools that can provide a better experience for themselves and their clients

We also have a number of articles on investments:

Fixed-income ETFs saw inflows this year, while their mutual fund counterparts experienced significant outflows, suggesting that the dominance of bond mutual funds could be eroding
How advisors are increasingly purchasing individual bonds rather than bond funds in client accounts
Why a higher interest rate environment could represent a ‘sea change’ for investors in the years ahead

We wrap up with three final articles, all about self-improvement:

Why working to change their mindsets might be the activity that provides the greatest return-on-investment for advisors
How to set better health goals for 2023 and actually follow through on them
Why the ability to achieve big goals starts with seemingly small habits

Enjoy the ‘light’ reading!

2022 Highlights — The Top 22 Nerd’s Eye View Blog Posts You Might Have Missed

December 26, 2022 07:07 am 0 Comments CATEGORY: Nerd's Eye View

As 2022 comes to a close, I am once again so thankful to all of you, the ever-growing number of readers who continue to regularly visit this Nerd’s Eye View Blog (and share the content with your friends and colleagues, which we greatly appreciate!). This year has been challenging for many financial advisors as they help their clients (and their own firms!) navigate a volatile market environment (in both stocks and bonds – oof!) and inflation levels not seen in several decades. Personally, it has been a big year of change as well, with the Kitces.com platform adding new team members, rolling out a new IAR CE offering and our latest Estate Planning course, and introducing the AdvisorTech Directory, among other additions, to fulfill our own mission of “Making Financial Advicers Better and More Successful”.

We recognize (and appreciate!) that this blog – its articles and podcasts – is a regular habit for tens of thousands of advisors, but that not everyone has the time or opportunity to read every blog post or listen to every podcast that is released from Nerd’s Eye View throughout the year. As many of you noted in response to our Reader Surveys, most choose which content to read or listen to based on headlines and topics that are of interest (and skip the rest). Yet in practice, this means that an article once missed is often never seen again, ‘overwritten’ (or at least bumped out of your Inbox!) by the next day’s, week’s, and month’s worth of content that comes along.

Accordingly, just as I did last year, and in 2020, 2019, 2018, 2017, 2016, 2015, and 2014, I've compiled for you this Highlights List of our top 20 articles in 2022 that you might have missed, along with a few of our most popular episodes of ‘Kitces & Carl’ and the ‘Financial Advisor Success’ podcasts. So whether you’re new to the blog and #FASuccess (and Kitces & Carl) podcasts and haven’t searched through the Archives yet, or simply haven’t had the time to keep up with everything, I hope that some of these will (still) be useful for you! And as always, I hope you’ll take a moment to share podcast episodes and articles of interest with your friends and colleagues as well!

Don’t miss our Annual Guides as well – including our list of the “9 'Best' Financial Advisor Conferences (For Scaling Up) In 2023”, the ever-popular annual “2022 Reading List of Best Books For Financial Advisors”, and our increasingly popular Financial Advisor “FinTech” Solutions Map and AdvisorTech Directory!

In the meantime, I hope you're having a safe and happy holiday season. Thanks again for the opportunity to serve you in 2022, and I’m excited to share more soon about some new initiatives we’re planning to do to support the Financial Advicer community even more in 2023 and beyond!

Weekend Reading For Financial Planners (Dec 24-25)

December 23, 2022 01:07 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 Congress appears poised to pass “SECURE Act 2.0”, a series of measures that will have significant impacts on the world of retirement planning. From gradually raising the RMD age to 75 to expanding opportunities to make Roth-style contributions, to increasing the annual limit for Qualified Charitable Distributions, this legislation will likely impact nearly all financial planning clients!

Also in industry news this week:

How a recent survey shows that financial advisors are increasingly attracted to independent affiliation models, with greater autonomy, higher potential pay, and the ability to build value in a business cited as key factors driving this preference
While RIA M&A activity has been red hot during the past couple of years, a survey suggests that advisors are expecting lower valuations in 2023

From there, we have several articles on advisor marketing:

Five tactics advisors can use to make the most of the online referrals they receive
How advisors can structure introductory prospect meetings to build trust and increase the chances of moving the relationship forward
Why advisors crafting their marketing message might first want to consider whether their target client needs a ‘life raft’ or a ‘sailboat’

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

Why advisors might want to consider using a client service calendar to organize the wide range of services they provide for clients throughout the year
A review of financial planning actions, from tax-loss harvesting to charitable giving, that have a December 31 deadline
How the holiday season presents an opportunity to have important money-related conversations with family members

We wrap up with three final articles, all about gift giving:

The do’s and don’ts of holiday gift giving in the workplace
How ‘regifting’ can help save money and reduce waste
Why being present during gatherings with friends and family members can be the best gift of all during the holiday season

Enjoy the ‘light’ reading!

Weekend Reading For Financial Planners (Dec 17-18)

December 16, 2022 02:00 pm 1 Comment CATEGORY: Weekend Reading

Enjoy the current installment of “Weekend Reading For Financial Planners” - this week’s edition kicks off with the news that CFP Board is forming a Competency Standards Commission in 2023 to review and evaluate its competency requirements for Education, Examination, Experience, and CE, which represents an opportunity for CFP Board to adjust its requirements, in alignment with the desires of the CFP community itself, to build confidence among the public that those with the CFP marks really will provide them with a consistently high level of financial planning advice!

Also in industry news this week:

While the FPA is going full steam ahead on its federal and state lobbying efforts to regulate the title “financial planner”, CFP Board is more focused on increasing recognition of the CFP marks
A recent survey suggests that Americans who use a financial advisor are less stressed than those who do not, but that the perceived price of advice is a deterrent to many (even those with significant assets)

From there, we have several articles on practice management:

Why it is important for advisors charging on a fee-for-service basis to regularly reassess their pricing, and best practices for letting current clients know about a fee increase
How advisors can benefit from reviewing their list of clients and letting go those who are no longer good fits for the firm
How firms can best leverage their internal data to improve the number of client referrals they receive

We also have a number of articles on retirement planning:

While weak stock and bond market performance has challenged advisors and their clients this year, these trends have likely increased the ‘safe’ withdrawal rate for new retirees
How the tontine, a centuries-old financial product has made a comeback this year as a way to mediate longevity risk
A recent survey indicates that Americans broadly feel like they are behind on their retirement saving, with those closest to retirement age most likely to think they need to catch up

We wrap up with three final articles, all about personal growth:

The lessons entrepreneurs and investors can take from the life and career of Warren Buffett
How individuals can best harness their willpower to achieve their biggest goals
While financial advisors regularly give advice to clients, more care is needed when giving unsolicited advice to friends and family

Enjoy the ‘light’ reading!