Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big news of this week’s “Tax Extenders” legislation that not only reinstated popular provisions like Qualified Charitable Distributions from IRAs but makes most of them permanent so advisors and their clients won’t be in tax-extender-limbo in the future.
Also in the news this week was the announcement from the CFP Board that it is beginning a process of updating its Standards of Professional Conduct, including both public forums and a public comment period scheduled in 2016, to address both any appropriate updates given the changing regulatory environment, and also perhaps its controversial “fee-only” compensation definitions. And given the outcome of this week’s legislation – which did not include a debated provision to limit the Department of Labor’s fiduciary rule next year – there’s a discussion of what the final rule will likely include, as it is expected to be released in early 2016.
From there, we have a number of technical financial planning articles, including: a discussion of whether the Barclays Aggregate Bond Index is “broken” as a bond benchmark; a critique of a recent Wade Pfau study suggesting that whole life might actually be a better retirement accumulation vehicle than buying term and investing the rest; a look at how “positive feedback loops” (that amplify negative outcomes) can occur in retirement, especially for those who lack spending flexibility; tips for financial aid filings, from FAFSA to CSS/PROFILE, as the annual financial aid process gets into full swing; reminders of common IRA distribution and RMD-related mistakes to avoid; and a discussion of how for most clients still working, their most valuable asset to “manage” is not their retirement portfolio or their real estate, but their own individual earnings ability (which means their best path to greater wealth is not through earning better investment returns but getting an increase in their salary/income from working!).
We wrap up with three interesting articles: the first is an Investment News feature on the financial advisory industry’s ongoing diversity problem (where only 20% of financial advisors are African-American, Hispanic/Latino, or Asian, while even financial analysts and CPAs have a 27% minority representation); the second is a Harvard Business Review article about disruptive innovation and what it really is (and is not), and why Uber is not actually true disruption at all (but robo-advisors might be); and the last is a fascinating look at the ongoing demographics “problem” emerging in both the U.S. and developed nations around the world, that may explain everything from sluggish U.S. growth to low interest rates, and why the dynamic may not change anytime soon.
And be certain to check out Bill Winterberg’s “Bits & Bytes” video on the latest in advisor tech news at the end, featuring his 6th annual take on the “Best Technology Of 2015” in the categories of Best Back-Office Technology, Best Clint-Facing Technology, and the Best Overall Innovation of the Year!
Enjoy the reading!