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 big industry news that asset manager Blackrock is partnering with Microsoft to create a new digital financial planning and retirement platform for consumers, aiming to leverage both Microsoft’s tech prowess and workplace reach to insert Blackrock-created digital advice tools directly into the employer marketplace… for which the software’s recommended solutions will include new Blackrock retirement income products, as Blackrock increasingly focuses on technology, not just as an effective tool to manage portfolios, but literally a distribution channel for its investment products.

Also in the news this week was a surprising “double-header” of fee-only news, as both Ron Carson and Ric Edelman have converted their practices to be entirely fee-only going forward, with Edelman’s firm shedding the last sliver of its commission-based trails (which were down below 1% of revenue anyway) and Carson forming his own limited-purpose broker-dealer to house and sell off his prior commission-based trails to (in order to drop his own FINRA licenses for good).

From there, we have a slew of investment-related articles this week, including: a look at the significance (or not) of the recent inversion of the yield curve; how the U.S. is now reaching the crossover where, for the first time in 75 years, it is now a net exporter of oil, as the country approaches energy independence (albeit still in a globally-interdependent energy marketplace); a deep-dive look at securities lending and its rise as a tool to reduce the cost of ETFs; Betterment’s decision to launch a new “two-way sweep” that shifts client cash into short-term bond funds with higher yield (including automatically transferring and investing “excess” client cash held in outside bank accounts, potentially attracting over $2B in new AUM in the coming year); the shift of ultra-high-net-worth investors towards “direct investing” into businesses in lieu of public market (or even hedge fund or private equity) investing, and what may be underappreciated risks in doing so; and a fascinating study from Riskalyze that finds a substantial relationship between the risk tolerance of clients… and other individuals who live in the same state, providing yet another reminder and affirmation that investing is often a herd behavior.

We wrap up with three interesting articles, all around the theme of looking out to the opportunities and challenges of 2019: the first is a look at the major challenges likely to loom in 2019, from the SEC’s anticipated re-proposal of Regulation Best Interest and the rising risk of a bear market to the industry’s ongoing transition away from an AUM-centric model and the growing availability of “fee-only” insurance and annuity products; the second explores similar industry trends in the UK, which remarkably mirrors the US in everything from the need for succession planning, to the rise of next generation advisors, the emergence of the “second generation” (i.e., non-founder) CEO of advisory firms, and the growing pressure on advisory firm founders to develop business skills to manage their growing advisory business enterprises; and the last is a fascinating discussion around Vanguard’s stated intent to come into the financial advice business and drive away high-cost low-value financial advisors just as they did to high-cost low-value mutual fund managers… even as the firm builds its advisory business on top of its own (admittedly low-cost and popular) mutual fund and ETF business, raising the question of whether Vanguard really represents the future of financial advice or the last remnant of its proprietary-product-centric past?

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 latest edition of Financial Planning magazine’s annual Advisor Technology survey, showing the most widely adopted advisor software tools in various categories… and highlighting that, with the proliferation of advisor technology, the problem now is not the threat of robo-advisors but simply the burden of choosing which of the ever-growing number of solutions human advisors want to use to deliver their own tech-enabled services!

Also in the news this week was the stunning news that wirehouse Wells Fargo will be rolling out a pilot program for “independent” RIA offices (albeit still operating under the Wells Fargo brand) in an effort to stem the tide of brokers breaking away to the RIA channel, and the news that the SEC is going to take a hard look at its own custody rule in 2019 and whether it’s time to update the requirements for the modern technology-driven world (where custody is far more complex than just having physical possession of a client’s printed stock certificate!).

From there, we have several articles on industry trends, including a look at the initial success of recent Financial Planning Re-Entry Initiative from the CFP Board’s Center for Financial Planning to increase the number of women in financial services, an updated discussion from Bob Veres on the recent OneFPA Network proposal (and the FPA National Board’s response to his earlier criticisms), and the news that the FPA NexGen community is transitioning itself away from being an independent community for younger advisors and instead will adopt the vision and mission of FPA National and serve as its community for any advisors who are new to the profession (whether entering as young students or more experienced career-changers instead).

We also have several practice management articles this week, including a reminder of the importance of focusing not just on reducing employee turnover but “regrettable” turnover, the impact of culture and how it is naturally set from the top by a firm’s founder/leader (but can be consciously changed/improved), and tips for advisors who want to negotiate a better deal for themselves when changing broker-dealers (and understanding what can potentially be negotiated in the first place).

We wrap up with three interesting articles, all around the theme of finding our own purpose and success in life: the first looks at how, despite the popularity of the saying “do what you love and the money will follow,” a better approach is probably the Japanese concept of “ikigai” which considers both whether what you’re doing is something you love, something you’re good at, something the world needs, and something you can actually get paid for (and that it takes the intersection of all 4 to really succeed financially at what you love); the second takes a fascinating look at how luck may play a far greater role in success than we realize (but talent does matter, and you can choose to put yourself in positions where good luck can happen to you); and the last explores how the key to getting what you desire (and aspire to) is being willing to change when necessary in order to achieve it.

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 new proposal from the CFP Board to allow CFP certificants with a public disciplinary event (that culminated in a public letter of admonition or one-year suspension of their CFP marks) to potentially scrub their records clean after 5-10 years… raising the question of where the financial planning profession should balance forgiveness and the recognition that people can and do change against the need for consumers to be aware of a potentially problematic history that could indicate a higher risk of recidivism.

From there, we have a number of practice management articles, including a look at when/why an advisory firm should consider hiring a Chief Operating Officer (COO), the questions to ask when interviewing an advisory firm CEO, a fascinating research look from the Harvard Business Review at how real CEOs manage their time, and a good reminder about how, if advisory firm owners want their employees to “act more like owners,” they need to be given opportunities and pathways to actually become owners (and see that their behavior can be rewarded).

We also have several financial advisor marketing articles this week, from a look at how most advisory firms don’t effectively allocate their marketing budgets, to the best (and worst) kinds of content to buy/use when marketing online, how to handle your social media presence during the holiday season (hint: clients and prospects tend to be on social media sites more during the holidays, so don’t take a holiday from your own social media accounts!), and some helpful tips and considerations when buying holiday gifts for clients (or referral sources, or centers of influence).

We wrap up with three interesting articles, all around the theme of the internet and how we interact with it: the first is a fascinating look at how internet technology is so lowering the costs to deliver goods and services, that startups are now finding ways to leverage the internet to serve the poorest 2 billion people of the world cost-effectively and even profitably (and without requiring them to have smartphones that most of the world’s poor still do not); the second provides a fascinating look at how the first era of the internet was all about decentralized protocols (on which platforms like Yahoo and Google and Facebook were built), how the pendulum has swung to more centralized platforms as those companies built their own proprietary layers on top (potentially limiting innovation), and how decentralized networks like blockchain may bring about a third (more open and more innovative) era of the internet; and the last explores how our behavioral biases not only adversely impact our investing behavior, but can cause us to misperceive the current state of the world, especially in a social media environment where platforms have an incentive to hold our attention (even if it means stoking our biases instead of helping us to overcome them), and how in the process we may be missing out on how incredibly positive world progress has actually been in recent decades!

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 latest round of public hearings in New Jersey regarding its coming 2019 proposal to issue a state-level fiduciary rule, as fiduciary advocates suggest that it may be necessary given the SEC’s non-fiduciary “Regulation Best Interest” proposal, while the product distribution industry objects on the grounds that it will create an untenable regulatory burden between state and existing Federal regulations.

Also in the news this week was an indication from Congresswoman Maxine Waters, who will soon take over the powerful House Financial Services Committee (which oversees the SEC itself) as the Democrats take control of the House, and has already proposed changing the existing “Capital Markets, Securities, and Investment” subcommittee to instead become the “Investor Protection, Entrepreneurship, and Capital Markets” subcommittee with a particular focus on fiduciary and annuity issues (setting up for a new conflict over the SEC’s proposed Regulation Best Interest rule in 2019?). And industry commentator Bob Veres shares his (very concerning) first take on the new OneFPA Network initiative, raising the question of whether FPA National’s growth problem is really a result of “dysfunctional” chapters or because National hasn’t figured out how to manage its own business model woes in the face of declining revenues from Journal advertisers and conference sponsors.

From there, we have a number of articles on advisor marketing and referrals, including: how to actually handle the conversation with a prospect you’ve been referred to in order to ensure they actually set a meeting to learn more about your services; how introverts can succeed in business development by creating and sticking to a clear and consistent process; how to stop using “filler words” (like Um, Uh, and Like) to sound more professional; why some advisors adopt a “by referrals only” growth strategy, the potential problems with doing so, and how to do it successfully (for those who really want to); and why it’s important to remember that even prospects who don’t turn into clients still might in the future (so be certain to be cordially helpful to all prospects you interact with!).

We wrap up with three interesting articles, all around the theme of personal change and improvement: the first looks at how despite a historical view that human traits are fixed (i.e., you’re either “born with it,” or you’re not), in reality the plasticity of our brains means we can and do learn new skills and abilities and can even change our personalities (which means it’s less about having the right traits or not, and more about how to cultivate them in yourself); the second is an interesting look at how adopting a more “analogy” processes around managing your tasks for the day can actually help you be more mindful (and ultimately more productive); and the last provides a powerful reminder that, while our brains can rewire themselves to break old habits and build new ones, it still requires a concerted and willful effort to do so… although the good news is that, because our brains can be re-wired into new habits, the change you’re trying to accomplish does eventually get easier to maintain!

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 fascinating news that #4 independent broker-dealer Commonwealth Financial is launching a standalone RIA services division, not just to service its sizable base of dual-registered advisors but a growing segment who have dropped their FINRA licenses altogether… but want to stay with the broker-dealer anyway for their non-broker-dealer RIA support services instead, as the brokerage industry increasingly reinvents itself for a more RIA-fiduciary-centric future!

Also in the news this week is the news that Interactive Brokers is scaling up its RIA services division (at least for RIAs that are still primarily in the business of actively managing client portfolios and want ultra-low trading costs), and the announcement that Edelman Financial Engines is launching a new RIA custody relationship with Trust Company of America now that the latter is part of E-Trade… to get access to a soon-to-be-launched (and likely-to-be-lucrative) E-Trade Advisor Network as E-Trade mimics the successful advisor networks of Schwab, Fidelity, and TD Ameritrade (at least, for the subset of advisors who can participate).

From there, we have a number of investment-related articles this week, including a look at how advisory firms are choosing their investments these days (hint: it’s all about fees, performance, and brand trust), a Morningstar highlight of Vanguard’s TIPS fund as CPI slowly but steadily starts to rise, and a look at how the growing number of firms beginning to automatically convert their C-shares to A-shares after 7-10 years may itself accelerate firms to transition to the advisory model to maintain their revenue (for which the end of the year is a good time to take a fresh look at the advisor’s own book of clients still holding C-shares). Also in the discussion of investments this week is a look at the “good” that Wall Street does accomplish, how to handle the situation when a couple doesn’t align on their risk tolerance, and why webinars can be a particularly effective method to reach (lots of) clients in times of market volatility.

We wrap up with three interesting articles, all around the theme of pricing model innovation amongst financial advisors: the first highlights a new Simon-Kucher study on advisory firm pricing models that finds it’s not actually so difficult to serve Millennials profitably… it just requires not using the AUM model and shifting to a more direct fee-for-service model instead; the second looks at some of the caveats of shifting to a flat-fee model, and how to build in “stabilizers” to ensure that the advisor/client relationship doesn’t get too out of whack; and the last is a fascinating exploring of the “Good-Better-Best” approach to pricing models, where businesses offer three tiers and empower consumers to choose which they want for themselves.

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 news that the FPA will be reorganizing its entire chapter structure, effectively disbanding its independent chapters and consolidating them into a single centralized “OneFPA Network” to leverage shared resources (from technology to accounting) and create better alignment from National to its chapters… though in a world where many FPA members were already citing that their local chapter presence was the primary reason they joined and stayed, it’s not entirely clear whether FPA’s planned change really addresses the organization’s root challenges to remedy its waning membership and share of CFP certificants in the first place.

Also in the news this week is the latest news about coming wirehouse grid changes for 2019 that are taking a striking focus on both investing into their advisors (with higher payouts for earning CFP certification) and also more of a tech focus (with grid bonuses to advisors who get their clients to increase their digital engagement as well), and a preview of the SEC’s coming changes to its advertising rules next spring that many hope will provide better clarify (and simply more reasonable regulation) when it comes to social media and digital advertising.

From there, we have a number of investment articles this week, from an interesting recent study by Fama and French showing that, even over a decade-long period of time, there’s a material chance that value, small-cap, or even stocks overall fail to outperform (and that therefore even the past decade’s underperformance of value could easily be just statistical noise), a review from Morningstar of the best 529 college savings plans (all of which are direct-sold, although the Utah my529 plan now has an advisor-supported option), and a good reminder of when and how to get more proactive in communicating with clients about rising market volatility (and when, perhaps, you shouldn’t, as it may be more likely to alarm clients than reassure them!).

We also have a few articles about industry changes around the broker-dealer community, including suggestions on what brokers should consider when they get the news that their broker-dealer is being sold (or even if they just fear it might happen soon), how shifts in wirehouse culture over the past 10-20 years have undermined their retention efforts, and how last year’s decision of Morgan Stanley and UBS to leave the Broker Protocol may ultimately be looked back upon as a major milestone in the industry… the point at which wirehouses in the aggregate recognized that their culture had become so watered down that they decided it was better to cut back on recruiting amongst one another altogether than risk continuing to lose brokers in the aggregate to the independent channels!

We wrap up with three interesting articles, all around the theme of the office spaces in which we work: the first is a look at how “natural light” has become one of the #1 perks in office space; the second explores how office space designers are looking at a possible future where there are no more desks and chairs in office spaces at all, shifting instead to a range of sofas of “softer” working spaces more conducive to personal interaction; and the last looking at the latest research on standing desks and finding that there may be more health benefits to them than recent critics have been suggesting after all!

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 Schwab is launching a new “Center of Excellence” that is intended to push forward internal innovation, including ways to better support “smaller” advisors with $25M to $100M of AUM that still form the bulk (70%+) of advisor assets but tend to get the least support due to their small individual size, in what may signal a broader shift of RIA custodians to put more resources to “downmarket” advisors in addition to competing for the small subset of the largest firms.

From there, we have a number of articles looking at broad industry trends, from an interesting look at the 50-year anniversary of a number of major independent broker-dealers (who all formed in 1968 as insurance company subsidiaries after a major court case and regulatory ruling required them to do so to continue offering early-stage variable annuities), to a discussion about the rising trend of private equity firms investing into broker-dealers, why perhaps it’s time to shift our current industry disclosure approach to providing more standardized data that third-party sites can better package for consumers (instead of regulators trying to design the “optimal” disclosure), a discussion of how direct-to-consumer “Insurtech” providers are trying to disrupt life insurance companies the way online discount brokers disrupted the traditional stockbroker, and an interesting “call to action” to RIA custodians about what they need to improve to better support younger/newer advisory firms.

From there, we have a number of tax planning articles as well, including: pending guidance from the IRS that will affirm that meals do remain deductible even though entertainment expenses aren’t deductible anymore (even if the meal itself is tied to an entertainment event); how the Tax Cuts and Jobs Act is shifting the focus of estate planning away from estate taxes and towards income tax planning and asset protection instead; and what to watch out for if clients want to do a “temporary loan” to themselves using the IRA 60-day rollover rules.

We wrap up with three interesting articles, all around the theme of connecting better with others: the first delves into the research about how we actually form close friendships, and what it takes to speed the process of finding and establishing close friends; the second offers up some useful tips on how to better write persuasive emails that connect (and are less likely to be misunderstood); and the last explores the research on what it takes to be perceived as more charming, which as it turns out, has little to do with being perceived as more competent and instead is driven almost entirely by being perceived as more “warm,” which means trying to be more welcoming to the other person who may be equally nervous about being perceived as charming themselves!

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 interesting news that after several years of scandals, two Wells Fargo brokers are actually suing the company and claiming that because the company recruited them with forgivable loans but without disclosure of the impending scandals, that they shouldn’t be required to repay the forgivable loans now that they’re leaving the firm to distance themselves from Wells’ damaged reputation (and potentially setting the groundwork for other brokers in the future to sue their platforms for scandals that impair their advisors’ ability to attract and retain clients?).

Also in the news this week was a big “Diversity Summit” hosted by the CFP Board’s Center for Financial Planning where the organization shared research about what financial services needs to do to improve its diversity (and stay relevant in a world where fewer than 3.5% of CFP certificants are black or Latino even though within 30 years people of color are projected to be the majority of the U.S. population!), and a look at a recent Cerulli research study finding that, notwithstanding industry buzz about fee compression, actual surveys to end consumers suggest that they are not nearly as fee-sensitive as most advisors fear (in part because consumers still aren’t clear enough on the value of financial planning from different advisors in order to price-comparison-shop them in the first place!).

From there, we have a number of retirement planning articles, including a look at end-of-year IRA tax planning strategies (from partial Roth conversions to Qualified Charitable Distributions from IRAs), an analysis of the so-called “Tax Torpedo” (when the taxation of Social Security benefits phases in, and retirees are temporarily boosted from the 24% tax bracket to a 40.7% marginal tax rate), and a review of some lesser-known-but-still-important IRA tax rules… from how the once-per-year 60-day rollover rule can impact spousal IRAs, to the fact that while inherited IRAs cannot be converted to a Roth account, inherited 401(k) plans can be (but are still not as appealing to convert as an individual’s own IRA and 401(k) accounts!).

We also have several articles specifically on referrals, including a reminder that how you initially respond to the person who makes the referral can have a significant impact on whether you get any more referrals from them in the future, to what to be wary of so you don’t turn off an otherwise-warm referral lead, and why it’s important to communicate how you will handle referrals that are not in your target market (so those who might refer to you don’t have to worry about what happens if they refer a friend, family, or colleague who might otherwise be “rejected” by you and embarrass them in the process).

We wrap up with three interesting articles, all around the theme of how to more productive and find more energy in your day: the first looks at how to arrange your activities throughout the day to get the best results (complex work in the morning, creative work in the late afternoon!); the second draws on a big list of productivity tips from various experts in order to get things done more effectively; and the last is a fascinating look at the latest research from Tom Rath’s “Are You Fully Charged?” about what it actually takes to bring more energy to your daily activities and literally feel more energized about what you do 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 the big news that despite all the recent buzz, it appears that the SEC may be waiting nearly a year to release a final version of its Regulation Best Interest advice rule… but only because the Department of Labor may also be working in coordination with the SEC on its own version of an updated fiduciary rule as well. And also in the news this week is an announcement by the CFP Board that the organization is expanding its Mentor Match program, from what over the past two years was focused primarily on mentoring for young women entering financial planning (as part of its Women’s INitiative or WIN program), to be available to any CFP certificant instead.

From there, we have a number of additional articles on retirement planning, from a look at the rise of “financial freedom” and “financial independence” as an alternative to the traditional label and approach of “retirement,” to a fascinating look at the spectrum for total financial dependence to total financial independence (on a 17-step scale!), and the phenomenon of “microadventures” as a way to have more enjoyable vacation experiences even when you don’t have the time for an extended vacation (whether during your working years, or in “busy” retirement itself!).

We also have several practice management articles this week, including: an articulation of the key difference between being a manager and a leader; a different way to think about who your most “valuable” clients are (based not just on their revenue or referrals, but how much they value what you do as a financial planner in the first place, which makes them more likely to become your long-term advocates); why it may be better to ditch the Annual Review for As-Needed Reviews instead; and a look at ideas about how to name (or re-name) your advisory firm if you don’t want to simply name it after yourself as the lead advisor/owner.

We wrap up with three interesting articles, all around the theme of how to make better decisions: the first explores the so-called “distinction bias,” and how we tend to overweight and overvalue small differences (and misjudge how much we’ll really care about them in the future) when we compare objects side by side; the second looks at how delaying decisions tends to increase their stakes, so often the best way to make “easier” decisions is simply to proactively make more/faster small decisions instead; and the last looks at the growing base of research around decision-making itself, and how to better frame decisions for yourself with techniques like creating a “premortem” analysis or doing proactive scenario planning… or if you want to use the traditional “Pros and Cons” list, at least be certain to assign values or weights to them so that you give each factor its proper consideration!

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 New Jersey is about to launch its own version of a fiduciary rule for advisors, driven not by New Jersey legislators but directly from the New Jersey state regulators, as a state-level fiduciary movement appears poised to surge again in the face of federal regulators failing to address the fiduciary gap.

From there, we have a number of additional articles of notable industry news, including: the SEC’s ongoing hiring freeze is threatening to reverse its recent increase in the examination rate, as by 2019 it’s projected there will only be 1 SEC staff member for every 20 RIAs the regulator oversees; state securities regulators continue to step up on regulation and enforcement, with actions against unregistered individuals reaching a new record in past year (likely as a result of the surge of fraudulent cryptocurrency offerings); the College for Financial Planning has partnered with US SIF to launch a new sustainable, responsible, and impact investing designation (the Chartered SRI Counselor, or CSRIC); and the CFP Board’s Center for Financial Planning is partnering with Wharton on a new course in Client Psychology.

We also have several practice management articles this week, from a look at how hybrid robo-advisors and their salaried employee advisor jobs are providing a new career track alternative for financial advisors, to the importance of getting good at retention of existing advisor employees (given the incredibly high cost of turnover for experienced employees), a deep-dive look at what it really means to “manage” a client relationship, and an exploration of whether financial advisors should be learning more “conflict resolution” skills to help clients (especially couples and families) navigate their money conflicts.

We wrap up with three interesting articles, all around the theme of recognizing that we must sometimes embrace imperfection: the first is a powerful reminder that going beyond about 80% of the way on “surface shine” is rarely about actually improving the outcome and more about just satisfying ourselves; the second discusses how we often look to experts and their habits to figure out an optimal approach to something new when the truth is that we really need to just get started (because the “optimal” is rarely necessary to start!); and the last explores how the key to improving over time is to recognize that failures will happen, and those who improve the most are the ones who are willing to actually talk about them, and avoid the natural tendency to just sweep the embarrassment under the rug and move on before we have a chance to actually learn from the experience.

Enjoy the “light” reading!

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