Archives Of Weekend Reading For Financial Planners

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with tips from leading cybersecurity expert Brian Krebs on what you (and your clients!) should do to protect themselves from potential identity theft after the recent news of the massive 143 million person data breach at Equifax.

From there, we have several regulatory articles this week, including an in-depth look from Investment News on the current state of FINRA and whether the industry watchdog needs better oversight and governance itself, the latest warning from the SEC to investment advisers to do a better job monitoring and overseeing their advertising (including the use of third-party recognition programs), and the emerging discussion of whether the best regulatory path forward might not be to apply a uniform fiduciary duty to all advisors and brokers but simply to better regulate the term “advisor” in the first place (and let non-advisor salespeople continue to not be subject to a fiduciary duty, as long as they distance themselves from the “advisor” title).

We also have several practice management articles, from a look by Cerulli at the latest trend of advisors towards outsourcing portfolio management (as the majority of CFP professionals now use some kind of third-party manager), why effective leadership in an advisory firm is all about not treating everyone the same and instead focusing the leadership’s time, energy, and resources into its top emerging talent, and tips on how to effectively groom next generation “G2” talent in an advisory firm to eventually take over and manage client relationships. In addition, there are also articles on how to develop a prospect tracking list, the merits of having a client advisory board versus conducting a client focus group, and when it makes sense to use video as part of your marketing (and how much it costs to get it done right).

We wrap up with three interesting articles, all focused around the psychology of how you position your business, your clients, and your team: the first explores how in the end, the best business models are very simple ones (e.g., make complex things simple, make boring things exciting, or eliminate middlemen), and raises the question of whether as advisors we try too hard to convey complex value propositions when simpler ones would be better; the second is a reminder that in most businesses (including financial advising), the bulk of utilization, revenue, and referrals tend to come from a small subset of “whale” clients, which makes it especially important to connect with them and make them feel appreciated (but balance against overserving them to the point they’re unprofitable!); and the last is a look at how a business that consults on behavioral economics structures its own employee team bonuses, with an emphasis on not just paying a year-end performance-based bonus, but giving employees guidance on how to spend their bonuses in a manner that is most likely to actually contribute to their happiness.

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 series of big news stories around broker-dealers, including the announcement that LPL is going to force most new hybrid advisors who join the platform to use LPL’s own corporate RIA (and not outside RIAs, nor even the RIAs of its OSJs), the news that Mass Mutual is cutting its MetLife annuity trail compensation by a whopping 73% for advisors who left the MetLife broker-dealer in recent years (a potentially troubling precedent), and the emerging trend of smaller broker-dealers “tucking in” to larger B/Ds by becoming a branch OSJ in order to avoid the compliance and technology burdens of running a B/D while maintaining their team and culture.

From there, we have a few practice management articles, including one on how trying to make all your clients happy can actually reduce the success of the business (as it hopelessly divides the limited resources of the business), another on why it’s better to try to win new client business by being “different” than just showing how you’re “better” (in large part because few consumers will believe you when you say you’re better anyway!), and a third on how to handle the news when you find out you’re losing a great client (by changing your own mindset to focus on the capacity opportunity it creates!).

We also have several more technical articles this week, from a discussion of how it’s not enough to just talk about “success” and “failure” risk of a retirement plan because there are really several different degrees of “bad” (from not maintaining a desired standard of living, to not being able to support a basic floor standard of living, or true depletion and bankruptcy), to a fascinating study that looks at what investors really want from an advisor’s investment reporting (and how it’s not only a performance reporting issue but also a trust issue), and a look at how our understanding of investor risk profiling is beginning to change with a more nuanced understanding of the different factors at play (which should only get better as we gather more big data on how investors really do behave).

We wrap up with three interesting articles, all focused on the theme of overcoming our own personal hurdles and demons: the first looks at how for successful advisory businesses, one of the greatest “risks” is becoming satisfied that the business is good enough, and never asking pushing it to be great (which leaves substantial upside on the table!); the second is the story of investment writer Morgan Housel, who was a lifelong sufferer of severe stuttering, but went through a personal shift that has allowed him to at least partially overcome his disability, to the point that he is now working actively as a professional speaker on behavioral finance and investment issues; and the last is the story of writer Jeff Goins, who transitioned from being “just” a successful writer to an entrepreneur and business owner, and grew the business to more than a million dollars of revenue… making himself miserable in the process, and ultimately leading him to make a difficult decision to “downsize” the business, which while scary ultimately led him to be substantially happier, and to take home substantially more in profit 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 a slew of big news, including that the Department of Labor has received OMB approval to issue a formal proposal to delay the full enforcement date of the fiduciary rule by another 18 months until mid-2019 (but will still have to collect and consider public comments before making it final), the IRS is loosening rules on hardship distributions and employer retirement plan loans for those impacted by Hurricane Harvey, a Federal judge has struck down the Obama administration’s overtime pay rules (which could have impacted a wide range of financial advisor trainees and paraplanners), HUD has announced new rules that will increase costs and reduce borrowing limits for HECM reverse mortgages, and this weekend Wall Street will be finalizing the switchover to shift most trade settlements from T+3 to T+2 instead.

From there, we have a number of articles on marketing for financial advisors, including: new research on how the financial services industry is using social media (and that even though LinkedIn is the most adopted platform, Twitter is actually the one with the most advisor activity!); the rise of text messaging as a way of communicating with clients; a guide on Facebook marketing and advertising for financial advisors; guidance on the key information that must be on your advisor website to communicate both your costs and your value; and a look at how and why most financial prospects slip through the cracks (and what advisors should do about it).

We wrap up with three interesting articles: the first explores the concept of “nonlinear” thinking, why it’s so much better to improve a car’s fuel efficiency from 10 Miles Per Gallon to 20MPG (instead of improving from 20MPG to 50MPG), and how such nonlinear concepts translate to other parts of the business world; the second explores the critical thinking concept of “inversion”, where instead of focusing on your goals and what it takes to succeed, you focus on what could ruin the outcome (and identify that as something concrete to avoid!); and the last takes a fascinating look at the true difference between an “amateur” and a true “professional”, which is all about the mindset of how you approach problems and try to create solutions.

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 an interesting new advisor survey on the Department of Labor’s fiduciary rule, which finds that despite the claims of Wall Street lobbying firms that “small investors” will be abandoned if the fiduciary rule fully takes effect, only 3% of financial advisors themselves actually agree with the statement that they’ll stop providing advice on qualified retirement accounts in a fiduciary world!

From there, we have a number of articles on the topic of health insurance and health care planning this week, including a look at the rise of “direct primary care” providers who simply charge an ongoing monthly fee (and accept no insurance) for a primary physician with easier access and shorter wait times for an appointment, the rise of “concierge medicine” and private doctors that work directly to provide holistic medical advice for a wealthy family, a new platform for advisors called “HealthStyles.net” that can be provided to clients to help them get more educated on health care issues, and another new software solution called “Whealthcare” for advisors who want to get even more involved in supporting and better analyzing the intersection of a client’s financial planning and health care needs (a substantial opportunity to add value as investment management becomes commoditized).

We also have several investment-related articles, including a look at the increasingly controversial practice of order routing rebates from market exchanges to broker-dealers, a potential pilot program from the SEC to shift away from the current “maker-taker” structure of setting markets, the opportunity (and underutilization) of securities-based lending revenue to offset most or all of the expense ratio of ETFs, and the prospective rise of performance-based fees in mutual funds as a way for fund managers to differentiate their pricing and better align their compensation with the interests of their mutual fund shareholders (though it remains to be seen whether investment managers will actually be willing to adopt the practice!).

We wrap up with three articles focused on the evolving role of the financial advisor itself: the first reviews a recent Boston Consulting Group study that suggests as technology continues to expedite the administrative tasks of financial advisors, that we’ll be increasingly forced to deliver more sophisticated advice, and need more in-depth formal education to substantiate our value; the second is a look at the rise of financial coaching, and the emergence of training programs for those who want to be financial coaches and financial therapists (and whether financial planners should be engaging in such training programs themselves); and the last is a look at how the generational shift in financial planners themselves, from the “founding” Baby Boomer generation of advisors to the Millennials, is creating a significant shift in the vision of what it means to be a financial planner in the first place, and is driving a growing number of young financial planners to strike out on their own to create new firms that disrupt the incumbents… exactly as the prior generation of Baby Boomer financial planners did 20-30 years ago!

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 slew of announcements about major broker-dealer mergers and acquisitions, including LPL acquiring National Planning Holdings (and its four subsidiary broker-dealers) from Jackson National, Kestra acquiring H. Beck from Securian and Minnesota Life, and Cetera folding in Girard Securities from being an independent subsidiary broker-dealer into a regional super-OSJ instead… a sign that as DoL fiduciary implementation looms large, broker-dealers are feeling the pressure to merge for economies of scale, and insurers are simplifying their distribution by eliminating their captive broker-dealers altogether!

We also have several compliance-related news and articles this week, including the SEC’s latest Risk Alert regarding the results of its Cybersecurity initiative for broker-dealers and RIAs, a separate announcement from the SEC that RIAs can delay some of the new Form ADV updates if they have any intra-year amendments to make after October 1st (though all RIAs will still need to comply when annual ADV season rolls around next spring!), and a look at what RIAs need to remember when hiring a new (experienced) advisor and going through the registration and compliance process of onboarding.

There are also a few advisor technology articles, including a look at the new technology initiatives rolling out from the leading RIA custodians as “advisor FinTech” becomes the primary differentiator for custodians, a look at the latest updates of the Capitect client portal (and increasingly, performance reporting and rebalancing) software, and a review of the Folio Connexion (AcX) platform that advisors can use to create their own white-labeled “robo-advisor-for-advisors” solution.

And given the summer vacation season, we wrap up with three articles all focused on how to better maximize your own vacation enjoyment: the first looks at whether a mandatory scheduled vacation policy is better than a flexible or open vacation policy when it comes to actually boosting employee creativity, productivity, and happiness; the second looks at why a 2-week vacation isn’t actually any better than a 1-week vacation when it comes to boosting happiness; and the last provides some (research-backed) tips and tactics about how to actually maximize the happiness of your vacation experience… for those who still have a little summer vacation left, or perhaps are already beginning to look forward to their winter holiday vacations instead!

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 Department of Labor’s announcement that it is working on a new delay proposal for the full implementation of the fiduciary rule, that could extend the current transition period by as much as 18 months to July of 2019… though it remains unclear what legal basis the DoL has for postponing full implementation so much further, and whether OMB will actually approve its proposal.

In the meantime, DALBAR’s Lou Harvey has proposed a new “Seller’s Exemption” that would make it easier for salespeople to avoid the fiduciary rule – on the condition that they do not provide any actual advice, nor hold out to the public as “advisors” – and given that the delay would still just delay full implementation (but not repeal the fiduciary rule itself), we also feature coverage on what procrastinating advisors should do to get caught up on their upcoming DoL fiduciary compliance obligations.

From there, we have several practice management and personal productivity articles, including: how to achieve a state of “Flow” and peak productivity; the ways that we as financial advisors sometimes sabotage our own growth as we try to change our businesses to better fit our own lives; what to focus on if you’re a “reluctant manager” who just wanted to serve clients but now increasingly find yourself in a managerial role with your advisory team; common conversational traps that advisors fall into with clients; why it’s crucial to understand your financial planning “weaknesses” and limitations on your technical knowledge (and don’t say you’re “comprehensive” when you’re really not!); and a reminder that financial planning can take an emotional toll on us as advisors, which means it’s especially important to have strategies to manage your own stress!

We wrap up with three interesting articles, all looking at emerging trends in the advisory landscape: the first looks at whether advisory firms need to stop focusing on increasingly commoditized investment (and even comprehensive financial planning) advice, and instead try to figure out how to expand their services to also include solutions their clients more proactively seek out; the second examines the aftermath of the “new” fiduciary rules (and outright commission bans) that rolled out in the UK and Australia in the past 5 years, which ultimately did not disrupt financial advisors (but did force them to shift their business models); and the last is an interesting look at whether the new term for advice-centric advisors to differentiate themselves is to not just be “fee-only” but to be an “advice-only” fee-for-service advisor, where by definition the only thing the client pays for is the advice itself (and nothing else)!

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 several recent industry tracking studies, including one showing that RIA assets continue to grow (but those serving individual investors continue to be dominated by a large volume of “small” advisory firms with less than $1B of AUM and fewer than 10 non-clerical employees), and another examining fund flows data and finding that advisors are not eschewing actively managed funds altogether, just high-cost funds – as both ETFs, and low-cost active funds (with expense ratios under 20bps) are experiencing positive inflows!

From there, we have a few technical articles, including: strategies to plan around the Medicare Part B and Part D surcharges for those with high income; how the growth rate of college tuition has actually been in steady decline for a decade (and last year was actually in-line with the general level of inflation); ways to use trusts to shelter (and tax-manage, and asset-protect) investment real estate; and a primer on how annuity mortality credits really work.

We also feature several practice management articles this week, from a look at how to develop the “other” career track in advisory firms (for administrative and operational employees), to why it’s crucial to develop career tracks and provide promotions based on performance and skill attainment (and not just based on tenure), and why businesses (both advisory firms and in other industries) often start to “break” as they cross 25 employees, and have to adjust to the dynamics of being a larger business.

We wrap up with three interesting articles, all looking at mindset issues in what it takes to be financially successful: the first looks at a recent Journal of Financial Planning study, which finds that more affluent households tend to take more financial risks, but only because they also tend to better understand those risks (and take them prudently) in the first place; the second discusses some of the “habits” of the affluent that appear to bolster their wealth accumulation and financial success; and the last examines Warren Buffett’s recent statement that his future successor must not only be smart, but have a “money mind”, and explores what it really means to have a money mind.

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 Golden Gate University has launched the first Master’s in Financial Planning with a concentration in financial life planning, as financial planning education providers increasingly shift to focus on training new financial advisors in the communication and empathy skills needed for future success. Also in the news this week was the announcement that the Treasury is shutting down the MyRA program (after it failed to blossom into a full-blown automatic IRA enrollment solution, and only a lackluster 20,000 households have signed up in the past two years), and for the first time an independent RIA successfully sued a large broker-dealer (for $1.5M!) for poaching one of its advisors who improperly took client information when he left (signaling a new escalation in the growing battle between broker-dealers and RIAs, as in the past it was only broker-dealers suing RIAs for poaching advisors, not the other way around!).

From there, we have a few practice management articles this week, including one about the importance of becoming an “emotionally intelligent CEO” for advisory firm founders who must transition from “just” being the lead advisor into being a leader and executive of the firm, another about what to do if an employee declines a promotion or opportunity for partnership, and why advisors need to be wary of asking “platitude” questions like “What keeps you up at night” when talking to prospects, and instead reframe question to get more concrete responses that help the advisor really understand how he/she can help.

We also feature several more technical articles, from a review of the rules on deducting long-term care expenses (not just LTC insurance, but the underlying expenses themselves for those who aren’t fully insured!), to issues to consider when choosing a (family or corporate) trustee as part of the estate plan, and the rules for Medicaid recovery (where the state files a claim against a decedent’s probate estate to recover state Medicaid expenses against any of the decedent’s remaining assets at death that weren’t already spent down).

We wrap up with three interesting articles, all looking at the connections between happiness, fulfillment, and how we spend our dollars: the first is a review of a recent study finding that spending money on timesaving tasks (e.g., hiring a maid, or ordering takeout for dinner) provides a greater happiness boost than spending on material goods; the second looks at the decline of conspicuous consumption amongst the affluent, and the rise of “inconspicuous consumption” amongst the upper-middle-class (spending on things like services and education), in a manner that doesn’t overtly display social status, but may reduce social mobility; and the third is a fascinating interview about the latest research on positive psychology and what leads us to really feel fulfilled in our lives.

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 robo-advisor Betterment has raised yet another $70M round of venture capital funding, and boosted its valuation up to $800 million… though the company intends to use the dollars primarily to hire more human financial advisors, and launch new products, suggesting that even the leading pure robo-advisor is pivoting away from its roots to try to become a broader wealth management platform and brand.

From there, we have several more articles around the theme of advisor technology, including a fascinating look at how Morgan Stanley is planning to use big data and AI to augment the productivity of its financial advisors (with everything from tools that automatically monitor and provide updated portfolio recommendations to clients, to solutions that pre-draft relevant emails to clients and allow advisors to more easily customize and then send), a review of the advisor technology platforms of some of the smaller RIA custodians (including RBC Advisor Services, TradePMR, and SSG), a new advisor technology solution called “BizEquity” that helps advisors to do business valuations for their small business owner clients (either as a value-add, or a prospecting tool), and some tips on how to run an effective internal cybersecurity training session for your advisory firm.

We also feature a few practice management articles this week, from the reason why advisory firms should do less customization of their financial advice as the firm grows and adds more advisors, to how the rise of back-office custodians and technology has powered a growth of independent advisors and made it possible for even small “solo” advisory firms to be very successful (without the resources of a traditional wirehouse), why advisory firms need to focus on building a firm foundation before executing new growth initiatives, and a look at the relative dearth of internship opportunities in the independent advisory community (and some steps to take to fill that void).

We wrap up with three interesting articles, all looking at the ongoing evolution of investment theory: the first looks at how, even with the rise of passive index funds at an ever-lower cost, the fact that retail investors can’t effectively own a market-cap-weighted index of global wealth means all investors ultimately have to make some “active” decision when it comes to asset allocation across the available indices and asset classes; the second is an in-depth look at the Adaptive Markets Hypothesis, and how it aims to explain the behavior of markets better than the Efficient Markets Hypothesis; and the last is a good discussion about the fundamental purpose of investing itself, and how a true goals-based approach to investing may entail different kinds of investment choices than asset allocations than the classic diversified equity portfolio (although for very long-term goals, even goals-based portfolios still end up being rather equity-centric!).

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 Schwab RIA Benchmarking study, that finds despite the hubbub of robo- and other competitive threats, the independent RIA community has continued to grow assets at 10%/year over the past 5 years, although the fastest-growing firms are increasingly combining referral-based marketing with other forms of marketing and business development beyond referrals alone. Also in the news this week is a Boston Consulting Group study finding that in the aggregate, gross revenues of the asset management industry declined in 2016 (for the first time since 2008), even though total industry assets were up by 7% to $69 trillion, as the shift to low-cost products continues to take its toll. And the SEC has approved the FINRA proposal to revamp its traditional “Series” licensing exams, and roll out a new Securities Industry Essentials (SIA) exam that prospective new brokers can take, even if they’re not yet sponsored with a broker-dealer.

From there, we have several articles on the theme of health insurance and Medicare, including a look at how uncertainty over health care policy in Washington is making it harder for advisors to craft effective recommendations for clients considering early retirement (who are uncertain whether they will still be able to access cost-effective health insurance without being limited for pre-existing conditions in the future), how the Social Security COLA is likely to be 2% this year but will be mostly consumed by the unwind of 2015’s “Hold Harmless” provisions on Medicare Part B premiums, and proactive planning strategies and talking points for (prospective or current) retirees who are approaching age 65 and need to make decisions about Medicare.

We also feature several articles specifically focused on financial advisor marketing, from advice on how to sharpen up your core marketing messages to prospective clients (without needing to spend money on a marketing expert), to a series of marketing tips from a wide-ranging interview of advisor marketing experts, and a look at the concept of a “marketing nest” and how it differs from a “marketing niche” as a way to accelerate near-term growth for the firm (though while the nest may be best in the short term, the niche is still best strategically in the long run).

We wrap up with three interesting articles, all looking at the ongoing evolution of the “soft skills” of financial planners, and what it takes to be successful: the first is a Journal of Financial Planning study, looking at how “behavioral finance” and financial therapy techniques can be incorporated into the 6-step financial planning process; the second is a discussion of “active listening” and how developing the skill (yes, it is a skill) can improve your communication (with clients, and even with your spouse!); and the last is a look at what it takes to gain more confidence as a financial advisor, recognizing that if you don’t truly believe in what you do and that you can help your clients, that lack of confidence means your clients probably won’t believe in your value, either, so building personal confidence is crucial for business success (whether that means finding support at home, joining a study group, gaining education or experience, or whatever else it takes!)!

Enjoy the “light” reading!

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