Archives Of Weekend Reading For Financial Planners

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the latest release of FINRA’s 2019 budget, which once again shows flat revenue as broker-dealers struggle with stagnating growth and a decline in the number of people taking licensing exams to become brokers, forcing FINRA to rely on as much as $185.8M of its reserves this year just to meet its operating and capital expenses… and raising the question of whether FINRA will eventually be forced to restructure, or substantially increase member fees to broker-dealers… which in turn may only further accelerate the broker-dealer decline as regulatory costs rise.

From there, we have a number of articles around household cash-flow planning, including a fascinating new job-skills training program that focuses on those with problem-solving and perseverance skills and has lifted low-income individuals from an average of $18,000 to $85,000 of income, some tips to keep “lifestyle inflation” in check as income grows, the dynamics of trying to transfer not just financial assets but instill financial and other values for the children of affluent households, and how it’s increasingly necessary to look not just at a household’s own budget and cash flow but also to ask about their potential obligations for other family members (from children who may need to support elderly parents, or parents who may need to support adult children).

There are also several marketing-related articles this week, from tips to quickly and easily adapt “generic” marketing content into something more customized (and more likely to be effective) for clients, “growth hacks” that can accelerate a firm’s marketing success, how the techniques of a hostage negotiator (who must build rapport quickly in high-stakes situations) can inform the way we try to introduces ourselves and connect to prospects, and tips on how to respond to the infamous conversation-ender where you introduce yourself as a financial advisor and someone quickly responds, “I already have a financial advisor!”

We wrap up with three interesting articles, all around the theme of how we spend our time and focus our attention: the first explores the benefits of doing a “time audit” to better understand how you really spend your time (and whether it’s truly on the important tasks, including not just the urgent but also the long-term important ones); the second looks at how scheduling free-time and leisure activities actually reduces their enjoyment (because then it’s just another scheduled task/chore to do!), and why “rough scheduling” with flexibility timing is better; and the last provides a fascinating look at the importance of being cognizant of and deliberate in what you really “measure” in your life (and how that impacts the way you focus your time and effort).

Enjoy the “light” reading!

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Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the mega-news that Envestnet is buying PIETech, the maker of MoneyGuidePro, for a whopping $500 million as Envestnet seeks to further expand itself into a holistic “financial wellness” technology platform.

Also in the news this week was the news that the SEC’s “Share Class Selection Disclosure” initiative has culminated in 79 investment firms agreeing to return $125 million in inappropriately collected or improperly disclosed 12b-1 fees in their hybrid broker-dealer relationship with the client, another study reinforcing that while consumers still don’t trust the financial services industry they overwhelmingly (97%) trust their own individual financial advisor, the revelation that this week’s College Admissions scandal actually emerged as a tip-off to Federal investigators from someone seeking leniency in a securities fraud case, the news that Ameriprise is getting ready to launch a retail bank (so their advisors will be able to offer banking products to their clients), and a new advisory firm loan platform from SkyView Partners that will allow firms looking to merge, acquire, or complete a succession plan to bid out their loan needs to more than a dozen different banks at once.

From there, we have several insurance-related articles this week, including the news that Genworth (the largest long-term care insurer) is indefinitely suspending sales of traditional long-term care insurance through advisors and instead will rely solely on direct-to-consumer telesales instead (a potentially chilling trend for the availability of long-term care insurance to advisors from other carriers in the future), a good primer on the rise of “structured annuities” with various Buffer and Guard strategies to partially protect against downside, and an interesting look at how a decade of “unexpectedly low” interest rates have caused life, annuity, and long-term care insurers to make changes to their policies and premiums that have adversely affected both advisors and their clients.

We wrap up with three interesting articles, all around the theme of the brain and how it works: the first takes an interesting look at the connection between our brains and exercise, particularly running, and the ways that running appears to stimulate our brain functions (for which we may have had an evolutionary bias in the first place); the second explores the emerging research on why the brain is so “noisy,” and how the difficulty in being able to silence our brains may not necessarily be a result of “faulty wiring” but instead part of the brain’s learning mechanisms and how it is able to take in so much information in a wide range of contexts; and the last looks at how, because human beings must take in information to survive, but also exist as “herd animals,” that sometimes our need to be right can conflict with our need to feel socially connected… thus helping to explain why sometimes we’ll ignore factual information that might otherwise change our beliefs (because it would also disrupt our social connections), and how the key to really changing someone’s mind is to start by being more connected to them socially so the “leap” to new information doesn’t require such a socially disruptive leap of faith as well.

Enjoy the “light” reading!

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Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with yet another round of warnings from the SEC at a recent compliance conference that they continue to scrutinize hybrid RIAs for whether they’re using the appropriate (lowest-cost) share class for any mutual fund held in an advisory or wrap account for which the advisor is already receiving a separate fee (including now when it comes to 529 plans as well).

Also in the news this week were two proposed bills in Congress that would ban mandatory arbitration (not specifically targeted at financial services, but nonetheless potentially disrupting industry-standard mandatory arbitration clauses in brokerage and many advisory agreements), and a new succession planning program from Wells Fargo that could make it feasible for wirehouse brokers to get paid as much as an independent RIA does to sell their practice (but without needing to leave the wirehouse in order to do so)!

From there, we have several articles around practice management and employee development and retention, including a discussion of what it means to craft a good employee experience, how to more effectively make new employees feel included from day 1 (so they don’t get disengaged as leaders/managers tend to take input more from existing employees who have existing relationships), the rise of in-house “universities” at larger advisory firms to both develop their talent and better attract next generation advisors, why even though toxic employees tend to be more productive than average their cost to the firm in the aggregate still exceeds their productivity benefits, the business impact of having stressed-out workers, and why, despite their popularity, advisory firm bonuses for business development often don’t work (especially if their purpose is to get advisors not already doing much of any business development to try to start).

We wrap up with three interesting articles, all around the theme of how the industry itself is changing: the first looks at how, as the role of the financial advisor changes, so too is the requisite skill set to succeed as a financial advisor of the future; the second explores whether wirehouses can really be successful in launching their own RIA platforms to try to prevent their entrepreneurially-minded brokers from leaving to start their own independent RIAs; and the last raises the question of whether the real transformative opportunity in the industry is not to lift the fiduciary duty of loyalty (that advisors must act in their clients’ best interest and mitigate conflicted compensation), but simply to lift up advisors’ educational standards so it’s more likely that when a consumer engaged a financial advisor, he/she really has the “substance” to deliver in-depth quality financial advice in the first place!

Enjoy the “light” reading!

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Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a fascinating study from Morningstar, which finds that, even as financial advisors increasingly frame “behavior management” as a key value proposition, consumer research ranks “helping me control my emotions” as dead last amongst the benefits of working with a financial advisor, instead showing a preference for more tangible benefits like the advisor’s relevant skills and knowledge, how well the advisor communicates, performance results, and actually achieving financial goals.

Also in the news this week was a big announcement that Bank of America is dropping the Merrill Lynch name from its investment banking unit, consolidating the Merrill Lynch Private Banking and Investment Group (PBIG) into just Merrill Private Wealth (removing the “Lynch”), and retiring the 165-year-old U.S. Trust brand altogether… and raising the question of whether the days are numbered for the entire Merrill brand itself. And there’s a fascinating discussion from Bob Veres about whether FPA chapters should consider “seceding” from the FPA to form a new “CFP Society” that would fulfill the original founding vision of the FPA to be the home for CFP professionals (while the FPA itself has declined from nearly 50% to barely 20% market share of CFP certificants since 2000).

From there, we have several articles on spending and cash flow decisions, from research that suggests social media (and the rise of modern media in general) may be helping to drive the ongoing decline in the National Savings Rate in recent decades, the rise of “stealth wealth” behavior for those who don’t want to live ostentatiously (whether to avoid being solicited as a “wealthy” person, or simply to help find social circles that don’t encourage profligate spending), research on the habits of wealth accumulators that differ from everyone else, a fascinating series of interviews with people who had “sudden wealth” events about how they really handled the money, the ways our spending does (or often doesn’t) really align with our values (as an alternative way to determine whether we’re “living within our means”), and why perhaps society needs to become more cognizant of – and more sympathetic towards – the fact that even households living within their means and exercising financial discipline are often still exposed to significant “financial fragility” as well.

We wrap up with three interesting articles, all around the theme of finding and building our own career path: the first explores the research of what it really means to “find your passion” or calling, and how it turns out that you’re more likely to find a passion by simply engaging in something that’s aligned with your values and having your passion for it build as you succeed (rather than trying to identify the passion and find the “perfect” passion job in the first place); the second provides a powerful reminder that almost by definition, you can’t learn from experience until you’re willing to do and experience something different than what you already do (which is why experimentation is so crucial); and the last is a fascinating reminder that while most people try to be good workers in their jobs, and find a good company to work for, that ultimately it’s finding the right industry that may actually be most important to long-term career success, as even the best companies and workers may struggle in an industry that is shrinking, while a rising/growing industry tends to lift all boats (while providing an outsized reward to the top performers in particular).

Enjoy the “light” reading!

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Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the huge industry news that Envestnet has purchased PortfolioCenter from Schwab, just months after Schwab announced that it was not going to create a full-scale upgraded cloud replacement to its still-popular platform, in what appears to be a tremendous strategic win for Envestnet (given both that Tamarac itself is built on top of PortfolioCenter, and that the acquisition gives Tamarac over 2,000 “new” PortfolioCenter desktop users to cross-sell their Tamarac cloud-based solution to).

Also in the news this week is a study from Cerulli finding that consumers do increasingly show a preference to pay their advisors with ongoing AUM fees or retainer fees… unless they’re mostly self-directed, in which case they’d actually prefer to pay commissions on each transaction as needed instead. And there’s also a fascinating recap of industry lobbyist spending in financial services, which finds that product manufacturing and distribution firms (e.g., fund companies, insurance and annuity carriers, and broker-dealers) spent more than $15M in lobbying last year, while advisor-centric organizations spent less than $300k… which goes a long way to explaining why the industry manages to keep defeating or watering down each proposed fiduciary rule!

From there, we have several articles on marketing, from tips on how to actually pick a specific niche or otherwise select an ideal target client (from the seemingly endless number of available choices), to why factors like “having at least $500,000 in investable assets” or “is a delegator” may be important “acceptance criteria” to selecting a new client (or not) but should not be part of the description of your ideal client profile (because they don’t define needs that you solve that would make you more referrable), and a series of tips on what you must consider when designing a good financial advisor website.

There are also a number of investment articles this week, from two articles that look at how the recent launches of zero-fee mutual funds are not actually attracting significant new asset flows (suggesting that perhaps consumers are either becoming wary of “free” from financial services firms, or simply that index funds have become “cheap enough” that price is no longer going to be the driver it once was), to another that looks at recent criticisms against index funds from regulators wondering if perhaps there are now too many behind-the-scenes conflicts for index fund providers in how they construct and execute their index funds.

We wrap up with three interesting articles, all around the theme of personal productivity and efficiency: the first is a fascinating look at how Aaron Klein of Riskalyze manages his increasingly busy email Inbox (and why despite the near email overload, he views email as his “secret weapon” and not a burden); the second explores the benefits of time-blocking, where entire days are set to one type of task (e.g., client meetings) or another (e.g., internal/staff meetings and prep) to reduce the amount of task- and context-switching that ultimately degrades personal productivity; and the last is a review of the recent book “Atomic Habits” by James Clear, which dives into how to actually change and improve your habits for the better, noting that improving by “just” 1% per day leads to a massive 3,700% improvement in the span of a year, and emphasizing that the key to achieving even massive long-term goals may not be in focusing on the long-term goal itself, but simply trying to establish the small short-term habits that can help you get on the right track… and then let the compounding of that habit carry you the rest of the way!

Enjoy the “light” reading!

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Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the announcement that both Schwab and Fidelity are further expanding their list of commission-free (i.e., No Transaction Fee or NTF) ETFs, further expanding their offerings from both BlackRock and State Street, along with a number of secondary ETF providers… but still with the notable absence of Vanguard’s ETFs, as the battle of RIA custodians requiring back-end shelf space payments for access to NTF platforms continues to heat up (and raising the question of whether Vanguard may someday launch its own RIA custody platform with open access to all ETFs on a no-transaction-fee basis, to match its recent retail NTF ETF offering). Also in the news this week was the announcement that UBS is looking to launch its own internal independent channel, ostensibly to further stem the tide of brokers still moving independent even after the firm left the Broker Protocol.

From there, we have several articles on practice management, including: how industry benchmarking data shows that advisory fees are not declining (despite robo-advisor competition), but profit margins are beginning to suffer as advisory firms reinvest into providing more value-added services to justify their current fees in the face of competition; why it’s important to focus on service to clients and not pursue industry recognition awards (and more generally, the danger of “vanity metrics” that can distract from an advisory firm’s core focus); and how to think about segmenting services to clients in order to serve smaller clients profitably.

There are also a number of marketing articles this week, from some tips from marketing directors at large RIAs about what smaller RIAs could be implementing as well, to ways to show clients you’re really “worth it” when trying to justify fees, why new clients toss the typical advisor’s Welcome Packet in the trash (and how to make it better), and an interesting tactic of learning more about your ideal clients and what they really care about by simply trying to figure out what their favorite magazine would be (because niche magazines themselves have often already spent extensively on researching what’s most important to their niche clientele).

We wrap up with three interesting articles, all around the theme of industry change and disruption: the first looks at Ken Fisher of Fisher Investments, which recently crossed the stunning threshold of $100B of assets under management, driven heavily by aggressive spending in marketing even as most advisory firms maintain there’s no value to spending on marketing for clients; the second examines the big buzz at the recent Inside ETFs conference, that even as ETFs continue to disrupt the mutual fund industry, the next disruptor – of ETFs themselves – may have already appeared, in the form of technology-driven “Direct Indexing” that replaces the need for funds altogether; and the last similarly looks at how, even as Vanguard grows in its dominance amongst asset managers, changing competitive dynamics raise the question of whether Vanguard itself will have to restructure under new CEO Tim Buckley to stay ahead over the next 10 to 20 years.

And be certain to read to the end, where we include a video from advisor tech guru Bill Winterberg, highlighting some of the notable advisor FinTech trends on display in the VEO Village at the recent TD Ameritrade National LINC conference!

Enjoy the “light” reading!

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Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the news that state legislators are taking action yet again to fill the fiduciary void left by vacating the DoL fiduciary rule and the SEC’s non-fiduciary Best Interest Regulation… this time, from Maryland, which has proposed a new fiduciary rule that would uniformly apply to RIAs, brokers, and insurance agents, and setting off the usual objections from industry product manufacturers that a state patchwork of fiduciary rules will create an unnecessarily high burden of regulatory complexity (albeit while the industry also continues to fight against fiduciary regulation at the Federal level, too!).

Also in the news this week is coverage of the recent TD Ameritrade LINC National conference where CEO Tim Hockey vowed not to compete with the RIAs on its platform (as the issue of RIA custodians with retail divisions competing against their own RIAs becomes an increasingly sensitive issue), a new diversity push at Edward Jones to steer retiring advisors’ books of clients to advisors who are women and people of color that some are claiming goes “too far” by paying advisors more to hand off clients to minorities (and less to transition their clients to another white male), the news that within 2 weeks of Bogle’s death Vanguard removed its claims of being an “at-cost” and “no-profit” provider (though it’s unclear if the firm is really changing its strategy, or simply backing off claims that were causing it legal troubles about whether its pricing was an inappropriate tax dodge), and a look at Fidelity’s expansion of its model portfolios as advisors increasingly outsource investment model design and implementation (which asset managers like Fidelity are using as an opportunity to increase their own assets by offering pre-built models that “happen” to predominantly use their own proprietary funds).

From there, we have several articles on advisor technology, from a discussion of whether presentations on advisor technology should be eligible for CFP CE credit, highlights from the T3 advisor technology conference, how the rise of Artificial Intelligence (AI) will likely play out with advisors in the coming years (think less “robots replace advisors” and more “software that combs through data to identify planning opportunities for advisors to discuss with their clients”), and a review of the ongoing technology initiatives at all the major RIA custodians as a veritable “technology arms race” gets underway as platforms compete for advisors’ attention.

We wrap up with three interesting articles, all around the theme of the changing landscape of the financial services industry itself: the first looks at the recent Royal Commission report in Australia, a highly critical review of their conflicted financial advisor landscape, and the rather drastic changes that the regulators may now implement to ensure advisors are truly acting in the best interests of their clients and not merely as salespeople for their company’s products; the second is a fascinating exploration of the evolution of the financial services industry over the past 130 years, which finds that, despite exponential growth in technology efficiencies, the financial services industry all-in takes the same 1.5% to 2% of assets to facilitate investment now as they did more than a century ago (albeit while providing more value-adds for the same aggregate fee); and the last which looks at research on the true value that clients get from planning for their future finances, and how financial advisors, in particular, appear to provide the most value and best outcomes for at least those planning-oriented clients.

Enjoy the “light” reading!

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Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big industry news that eMoney Advisor founder Edmond Walters is “back”, with a new high-end financial planning software to support tax, estate, and legacy planning conversations with ultra-high-net-worth clients… positioned not necessarily to compete with traditional financial planning software, but to go beyond it, as the offering is actually being developed in partnership with MoneyGuidePro and Envestnet’s Logix planning software.

Also in the news this week is a great series of profiles on the leading “Women In WealthTech”, as ThinkAdvisor highlights the rise of gender diversity in enterprise technology for financial advisors (even as the gender diversity of financial advisors ourselves continues to struggle).

From there, we have several articles on the (re-)emergence of fixed indexed annuities, as DPL Financial Partners facilitates the launch of a new no-commission fixed indexed annuity for the RIA channel, Roger Ibbotson publishes a study suggesting that indexed annuities may be a superior fixed income alternative to traditional bonds in a diversified portfolio, and Michael Edesess suggests that real-world annuity contracts may still be too expensive to beat bonds in practice (and for those who wish to pursue the strategies anyway, could accomplish even more by simply using options strategies themselves instead).

We also have a number of career and practice management articles this week, from tips on the first tasks to outsource to a virtual assistant as a solo financial advisor, more tips on how to make your advisory firm more attractive and compelling when hiring talent in the midst of a severe advisor talent shortage, even more tips on how to manage the overwhelm of meetings, and some fascinating insights from an advisor on what she wishes she learned in practice management sessions about running an advisory firm but instead had to learn “the hard way” instead.

We wrap up with three interesting articles, all around the theme of social media and email overwhelm and how to combat it, including: a recent study that analyzed the effects of taking a 1-month break from Facebook and how it not only created more free time (obviously, from the freed up Facebook time) but also lifted up participants’ mood and reduced their political polarization (but also their political knowledge as Facebook is a key source of political news and information); the second explores the effects of taking a month off from email as well (hint: most of your emails are not as important as you think they are!); and the last explores the idea of doing a “digital declutter” and that it’s not enough to just try to take a break from social media, and instead we have to rethink the kind of digitally-minimalist lifestyle we really want to live (or not).

Enjoy the “light” reading!

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Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big news that the Nevada Securities Division has released a working proposal of its new fiduciary rule, which would expansively apply a fiduciary duty to both investment advisers and brokers who give advice or merely hold out as an advisor in the state, as more and more states move to implement their own uniform fiduciary rules in the absence of any effort from the SEC to do so instead.

Also in the news this week is the announcement that Raymond James is buying boutique RIA M&A investment bank Silver Lane (in what signals an anticipation of even more growth in RIA mergers and acquisitions in the coming years), and updated regulations from the Treasury on the new Section 199A Qualified Business Income deduction (including important clarifications and some new restrictions for real estate investors).

From there, we have a few articles on savings and spending habits, including advice on how to not just save more effectively but to lift your savings rate over time, tips for juggling multiple credit cards to maximize credit card rewards points, and a look at the rise of “luxury concierge” services for the affluent providing “bespoke experiences” as the affluent increasingly focus on not just buying goods but services and experiences as well.

We also have a number of retirement articles this week, from a look at how the “bucket approach” to retirement actually tends to decrease retirement success by almost any measure, how deferred income annuities improve retirement readiness (by only using, but only needing, a small portion of the portfolio in the first place), and the unanticipated challenges that one early retiree faced when he actually retired early at the age of 41.

We wrap up with three interesting articles, all around the theme of income and wealth inequality, which has been increasingly in the news lately: the first looks at a recent study by Oxfam, which finds the top 26 billionaires now have as much wealth as the bottom 50% of the entire population of the planet, with the top 1% overall capturing nearly 82% of the world’s annual wealth increase last year (further amplifying wealth and income inequality); the second looks at Senator and president-candidate Elizabeth Warren’s recent proposal of a new wealth tax of 2% to 3% as a means to raise government revenue and reduce wealth inequality; and the last explores the recent proposal from Representative Alexandria Ocasio-Cortez, who has proposed a new top tax bracket of 70% on those earning more than $10M, based in part on the fact that the US had top tax brackets from 70% to 90% through the 1950s, 60s, and 70s… except as it turns out, the high tax rates were also accompanied by a wide range of tax shelters and other tax avoidance schemes at the time, and that in reality the effective tax rate on the top 1% wasn’t all that different back then than it is already today.

Enjoy the “light” reading!

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Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the incredibly sad news that Vanguard founder and index investing pioneer, Jack Bogle, has passed away at the age of 89… but his legacy will live on, in both the books he wrote, the index funds he created, and the company he built with a unique mutual structure that ensures it will continue to support his legacy long after he’s gone.

Also in the news this week is the ongoing government shutdown, which looks increasingly likely to drag on for an extended period of time… and is leading economists and analysts to start assessing all the secondary effects that may soon emerge as agencies run out of stop-gap measures, from TSA shortages at airports to the Department of Agriculture’s food stamps program and nearly $460M of lease payments to various commercial real estate investors that won’t be paid every month the shutdown continues.

From there, we have a number of tax planning articles this week, including an announcement from the IRS in Notice 2019-11 that tax underpayment penalties will be waived in 2018 for anyone whose estimated tax payments and withholding added up to at least 85% of their total tax liability (instead of the usual 90%), a look at the various above-the-line tax deductions you can still take even with a higher standard deduction that limits the ability to itemize, and some tips on how to prepare and get organized for the upcoming tax season.

We also have several advisor technology articles, from a look at the increasingly sticky issue of who really owns a client’s financial data (and how the industry may need to change to really empower consumers to own and control their own financial data), a look at what AI will really likely do for financial advisors (hint: think “make advisors more proactive,” not “replace them”), the hazards of “legacy technology” for financial advisors, and how the creator of the modern password requirement (with upper- and lower-case letters, numbers, and special characters) regrets what he created as we’ve now reached the point of requiring passwords that are very difficult for consumers to use and remember but easier and easier for malicious computers to hack (as computing power grows exponentially greater every year).

We wrap up with three interesting articles, all around the theme of the habits and time use of successful and affluent people: the first looks at how the affluent spend their time, finding that what leads to happiness isn’t just having more wealth, or spending it on experiences per se, but simply engaging their leisure time in any kind of more “active” leisure (e.g., exercising or volunteering) rather than more passive leisure (e.g., watching TV or just relaxing); the second explores the “boring” habits of successful people, who tend to write things down, simplify their lives to reduce unnecessary choices, but still remain open to updating and changing their systems over time; and the last looks at how one of the most common first or early jobs of the ultra-wealthy was some kind of “sales” job, as the reality is that for everyone – even, and including, fiduciary advisors – it’s still absolutely vital to have sales skills in the modern era, if only to be able to sell yourself and your value (whether it’s to a client or boss).

Enjoy the “light” reading, and Happy New Year!

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