Archives Of Weekend Reading For Financial Planners

Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with a striking new study from state regulators finding that broker-dealers are drastically more likely to recommend ‘complex’ investment products than RIAs (from being 2X more likely to use leveraged and inverse ETFs, to 8X more likely to recommend variable annuities, and 9X more likely to use non-traded REITs), raising questions of whether or how the newly implemented Regulation Best Interest will actually change such tendencies or not (which NASAA is preparing to measure with a follow-up study in early 2021).

Also in the news this week is news that FINRA is preparing new Regulation Best Interest guidance as initial broker-dealer exams reveal where firms are doing well and where they’re still struggling to implement, and a new industry study that finds the Department of Labor’s 2015 fiduciary rule really was reducing the cost of annuity products for consumers while not limiting access to financial advice for small investors (at least for the limited time window it was in effect before the product manufacturing and distribution companies successfully sued to have it vacated anyway).

From there, we have several articles on the ongoing rise of new lower-cost annuity solutions, including a fresh look at how Single Premium Immediate Annuities compare to bonds in today’s low-interest-rate environment, when it pays to wait to buy an annuity to avoid ‘locking in’ today’s low interest rates (and how far and fast rates must rise to actually benefit), and how a new wave of no-commission annuities are being developed by annuity companies after a major new Private Letter Ruling last year that allows RIAs to bill their AUM fees from the products directly (but are still struggling with the technology integrations necessary for RIAs to execute annuities in their client portfolios at scale).

We’ve also included a number of client communication articles this week, from a reminder that helping panicking clients starts with first acknowledging that it’s normal to panic during turbulent times (rather than telling clients to ‘calm down’), to a look at how Financial Therapy is gaining more and more attention as a complement to (and facilitator for implementing) financial advice in the pandemic environment, and a look at how clients will rarely change their behavior until their advisor understands and helps them to change their own financial stories first.

We wrap up with three interesting articles, all around the theme of how to maintain a cohesive work environment in the midst of what is now becoming a long-term work-from-home world: the first looks at how introducing a “virtual commute” can help us to more effectively transition from our home life to our work life (and back again); the second looks at the techniques that companies are implementing to maintain their office cultures in an online/virtual world (from internal video podcasts to virtual team-building exercises); and the last looks at how technology tools themselves are being reshaped in how they are used to maintain a strong office culture in a world where it’s unclear when we’ll be returning to our offices (or if we ever will for at least some firms!?).

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 despite concerns from fiduciary advocates that the Department of Labor’s new “fiduciary” rule will undermine consumer protections by allowing “fiduciary commissions”, the annuity industry is mounting a challenge to the rule out of a concern that it is still too stringent in attaching a higher standard of care to sales of annuities into IRA rollovers, raising the question of whether a final rule will be issued in the coming months or not (and if it is, whether it will again be challenged and struck down as the last DoL fiduciary rule was).

Also in the news this week are some interesting new industry studies, including a look at the growing interest from industry providers to gain adoption of Health Savings Accounts amongst financial advisors to use as a supplemental retirement savings account for more affluent clientele, and another study finding that 44% of investors (and 68% of Millennials) would consider switching away from an advisor who did not align with their political views (stoking fears amongst some advisors that political discussions will cause lost clients, but signaling an opportunity for others that being more upfront about the advisor’s politics can actually better bind clients who share similar political views).

From there, we have a few articles on industry trends around advisor platforms, including a veritable explosion of new recruiting efforts from broker-dealers that have transitioned to virtual recruiting (as it’s now easier to vet a new platform from the comfort of your home office!?), the ongoing tension that RIAs face in choosing which RIA custodian on whom they both depend and may compete with (as the Schwab-TD Ameritrade merger creates a veritable oligopoly of mega providers), and the options for advisors to consider if they don’t have enough in assets under management to affiliate with one of the mega RIA custodians.

We’ve also included a number of marketing articles this week, from a look at how anticipated SEC revisions to the advertising and (anti-)testimonial rules could create an upheaval in advisor marketing in 2021, how “expertise marketing” is different than traditional advisor marketing and is all about finding synergies that build compounding marketing momentum over time, and why it’s so important to consider the Client’s “Lifetime Value” and not just the top-line revenue growth of the firm to understand the health of an advisory firm and its marketing efforts.

We wrap up with three interesting articles, all around the theme of what clients really want from the advisor-client relationship: the first explores a recent Spectrem Group study that finds, despite the rise of robo-advisors and more and more online technology, that more consumers are relying on financial advisors now than in the aftermath of the financial crisis a decade ago (though at the same time, there has also been an uptick in self-directed investors relying on increasingly sophisticated technology solutions); the second provides an interesting perspective from the client’s point of view (literally, written by a client who has had many financial advisors over the years) on what really matters when it comes to client retention; and the last recaps a keynote session from this week’s Morningstar conference about how the future of the financial advice industry is changing, where the AUM model and in-person meetings won’t vanish, but a growing range of virtual meetings and non-AUM fee-for-service business models are opening new doors of opportunity to grow advisory businesses!

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 buzzing industry news that Merrill Lynch is barring its brokers from receiving gifts, meals, or entertainment from its wholesalers, in what some see as a shift of even large brokerage firms to begin stamping out more conflicts of interest in the new era of Regulation Best Interest, and critics suggest is simply the new path of brokerage firms to require asset managers and product companies to go through (and revenue share to) the home office instead of its brokers directly (payments which must be disclosed, but are not against the rules for broker-dealers under Regulation Best Interest).

Also in the news this week are some notable new industry studies, including one that looks at what clients actually want to talk about in advisory meetings beyond their portfolios (from protecting against identity theft to new housing decisions), the latest data on which types of consumers are actually using robo-advisors (only 10% of Millennials with <$50,000 of assets but almost 50% of those with >$500,000!), and the latest trends in how advisory firms are investing (showing the continued dominance of ETFs, an ongoing decline in the use of individual stocks, bonds, and REITs, but what is still, at best, just a small minority of advisors who are actually ‘passive’ as most advisors appear to be using ETFs as their own active management portfolio building blocks).

From there, we have several more interesting investment-related articles, including the launch of the new Long Term Stock Exchange by Lean Startup founder Eric Ries, the growing turmoil in prime money markets as interest rates appear to be pegged near the zero-bound for a long time to come and ‘gates’ implemented to prevent a 2008-style run on money markets may actually be exacerbating one this time around, growing questions about the long-term viability of the 60/40 portfolio in a persistent low-yield environment and what the future alternatives may be, and a look at how no-commission annuities may be emerging as a bond alternative for advisory accounts.

We wrap up with three interesting articles, all around the theme of being (and feeling) wealthy and what helps us get there: the first is a review of the recent Morgan Housel book “The Psychology Of Money” which explores the differences between being rich and being wealthy; the second examines what it takes to not feel ‘rushed’ (hint: it’s all about delegation to focus on the biggest and most important tasks); and the last explores recent research finding that those who work with financial advisors don’t just do better with their money… they’re also happier with it, too!

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Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with a big expose from the Wall Street Journal on the SEC’s new Form CRS, which found that amongst 8,100 firms that had filed Form CRS, 3,100 of them had a legal or disciplinary history they were required to disclose… and 40% of them failed to do so, raising serious concerns about whether the “transparency and disclosure” lynchpin of the SEC’s new Regulation Best Interest rules is already coming up short.

Also in the news this week is an announcement that the state of Massachusetts will begin to enforce its own state fiduciary rule on both investment advisers and broker-dealers (in response to its view that the SEC’s Regulation Best Interest came up short in regulating brokers giving advice), criticism of the Department of Labor’s new fiduciary rule from both fiduciary advocates who say it doesn’t go far enough and industry participants who fear it will already impose ‘too much’ fiduciary obligation on brokerage firms and insurance companies, and news that the SEC is finalizing changes to its Advertising and Anti-Testimonial rules with updates due to be announced next month!

From there, we have several interesting investment articles on retirement planning, including a look at how to reframe retirement as an 8,000 day period that clients can plan around (recognizing that ‘play golf’ may be a good start to retirement, but probably is not something you want to do for 8,000 straight days!), new research from Morningstar’s David Blanchett about how to set a reasonable life expectancy estimate for retirees, a discussion of how to craft a ‘Retirement Policy Statement’ to complement a client’s Investment Policy statement, an exploration of how retirement is really more a ‘state of mind’ than a state of being, and a look at the origins of FIRE as a movement around Financial Independence and not just ‘extreme Early Retirement’.

We wrap up with three interesting articles, all around the theme of the new Work-From-Home era: the first explores how firms are testing out new ‘hub-and-spoke’ models of work environments with limited central office space and decentralized home office work environments; the second looks at the new rise of ‘tiny office’ spaces (e.g., ‘tiny homes’ custom-built as an office space!); and the last looks at how work from home may be challenging for many jobs and types of workers but especially conducive to knowledge-based workers (including financial advisors!?)!

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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 the SEC has updated the Accredited Investor rules, declining to increase the income and net worth thresholds but expanding the definition of who constitutes a “sophisticated” investor to include financial advisors themselves… allowing anyone with a Series 7, 65, or 82 license to be able to participate in private market investments themselves (though still not necessarily on behalf of their clients, unless their clients still qualify under the more ‘traditional’ measures).

Also in the news this week is an announcement that insurance companies expanding into the world of fee-based annuities for the no-commission RIA channel are now starting to develop life and disability insurance products for RIAs, as insurance distribution continues to be reinvented, and a study finding that advisors unwittingly tend to engage the men more than the women of their heterosexual couples, resulting in a gender bias that is associated with women not only being more likely to terminate their advisor after a bad experience but being less likely to complain or give the advisor a chance to correct the issue before being fired from the relationship.

From there, we have several interesting investment articles, including a new Morningstar analysis finding that actively managed funds did not actually outperform their passive peers during the recent market volatility (though notably, they didn’t underperform either), a look at how market valuation measures aren’t very predictive in the short term but that measures like Shiller CAPE are very predictive in the long run (which has significant implications for what return assumptions advisors are using in their retirement planning projections), and a review of SPACs that are suddenly becoming the hot new alternative to IPOs.

We also have a few articles around selling an advisory firm, including what it takes for advisory firms to get a double-digit multiple of earnings for their seller valuation, a look at recent M&A trends for advisory firms that are rebounding quickly after a brief pandemic slowdown, and some guidance on what it takes to sell your advisory firm on the open market (for sellers who have never been through the process before and only get one chance to get it right!).

We wrap up with three interesting articles, all around the theme of building a practice that fits your personal goals (rather than simply one that is solely focused on growth): the first explores the rise of the ‘lifestyle’ practice as an alternative to the ‘traditional’ work-hard-play-hard approach (of intensive hours of growing the firm and vacations to recover and then returning to the grind of building again); the second examines one 37-year-old advisor’s decision to turn his practice into a lifestyle firm focused on profits and personal time efficiency over growth; and the last explores the ‘curse of the overachiever’ and how to think about the balancing point and finding the sweet spot between wanting to succeed as a high achiever and when you’ve got ‘enough’ to focus your energy elsewhere, instead!

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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 Schwab is launching a free MoneyGuide-like financial planning software solution for all of their (retail) clients to use, emphasizing both Schwab’s own increasing focus on financial planning as part of its retail advice to consumers, and undermining financial advisors who view their own value proposition as ‘just’ delivering the comprehensive financial planning software output as a financial plan that more and more consumers will be able to get for free from Schwab directly.

Also in the news this week are several interesting industry studies, including one that finds despite the hype around model marketplaces from asset managers looking for adoption and technology companies offering them in the hopes of getting a piece of the pie, actual advisor adoption is barely around 10% as advisors fear making a third-party money manager too much of their own value proposition with clients, and a look at how the tech snafus of many advisor platforms are leading a majority of advisors under age 40 to look for new platforms that are more tech savvy.

From there, we have several interesting articles about advisory fee models, including the latest research from Bob Veres showing that, while the AUM model remains dominant with more than 70% of firms being “AUM-dominant”, only a minority of those are AUM-only and instead blended fee models of AUM and hourly or subscription/retainer fees are becoming increasingly common, a look at one advisor who decided to stop offering hourly financial planning options for clients (out of frustration that they didn’t always follow through on the advice properly on their own), and a discussion of what happened when one advisor decided to raise his minimum fee to $10,000 per client (and the conversations he had with a subset of clients who didn’t want to stick around for the fee increase).

We also have a few articles around client communication, including a look at how the pandemic may have changed the style of communication but the demand for client communication is only increasing, how adopting more digital tools (if only ‘forced’ by the pandemic) is ending out reducing paperwork errors and increasing client trust, and an exploration of what it means to go ‘full curbside’ service in an advisory firm the way more and more retail businesses have had to transition

We wrap up with three interesting articles, all around the theme of productivity and the digital world: the first looks at how team meetings may actually be more productive virtually than in-person by adopting digital collaboration tools (e.g., Google Docs); the second explores how it’s often ‘easy’ to quickly delegate by email but leads to such poor delegation habits that a “no delegating by email” rule may actually improve the business; and the last explores how technology has made it easier and easier to maintain an ever-longer to-do list but just results in more frustration when we can’t get to everything on the digital to-do list, and why it’s better to keep a shorter and simpler to-do list by paper (if only to force yourself not to try to task with more than can really be done and focus instead on the few things that really matter most!).

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 updates from the SEC on Regulation Best Interest, acknowledging a growing confusion for hybrid broker-dealers (and the consumers that work with their representatives) in trying to delineate when it’s permissible to advertise as a financial advisor (or not), when a representative’s fiduciary duty applies (or not), and when and what disclosures must be made when an advisor takes off their advisor hat and puts on their broker hat instead.

Also in the news this week are a number of big announcements on industry diversity efforts, including a series of 25 new scholarships from the American College for Historically Black Colleges and Universities (HBCUs), a new $500,000 donation to the AAAA (Association of African American Financial Advisors) Foundation to support next-generation Black CFP professionals coming through CFP Board-registered programs at HBCUs, a look at how sustaining improved diversity in the industry is about not just improving the pipeline of diversity but also the entry-level job opportunities (to go beyond sales-based jobs that have a disproportionately high failure rate), and a powerful reminder that being ‘blind’ to the color of an advisor’s skin can still hinder diversity because doing so implicit ignores the positive value of the differences in thinking and perspectives that come from a diverse team.

From there, we have a number of marketing-related articles as well, from a look at the difference between “blanket” (broad-based) and “target” (focused) marketing, how to choose a prospective target market when you’re already a generalist with a broader client base, how to refine your marketing once you’ve selected a more focused target market, and why it’s so important to think about the audience you really want to reach when marketing (and recognizing that in the end, you can go deeper with them or broader to reach more of them, but it’s very difficult to do both at the same time and periodically it may be best to switch from one to the other!).

We wrap up with three interesting articles, all around the theme of pricing and the value of an advisor’s services: the first explores how to handle prospective clients who try to negotiate and haggle down the advisor’s fee; the second explores how pricing your time by the hour can change your own thinking, in ways that may be good for growing your business or career but risk over-focusing on income growth at the cost of sacrificing the happiness that in theory more income was supposed to bring; and the last explores the concept of Value-Based Pricing and the power of pricing, not based on what your time is worth as an advisor, but what the time and value being delivered is worth to the client 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 big industry buzz that Schwab has announced it will be retaining TD Ameritrade’s iRebal solution in the merger, which is both a big relief to TD Ameritrade RIAs often reliant on the tool, a big opportunity for Schwab to expand adoption of the popular tool to its own even-larger base of Schwab advisors, and a big threat to independent rebalancing software providers currently serving Schwab RIAs that may soon find themselves threatened by Schwab’s offer of another ‘free’ solution.

Also in the news this week is the latest industry trend data from FINRA, showing a record-low number of registered representatives joining broker-dealers in 2019, as more and more financial advisors don’t simply leave broker-dealers for RIAs but join RIAs rather than coming into the brokerage side of the industry in the first place (while broker-dealers try to combat the trend by increasingly expanding their own hybrid platforms for those who want to and are willing to be dually registered with FINRA and as an RIA!).

From there, we have a number of additional articles about industry trends, including a consumer survey showing that while investors increasingly want to talk to their financial advisors about a broader range of topics, “investments” are still the dominant category for advice; highlights of the latest FA Insight practice management study showing that advisory firms still grew well in 2019 but organic growth continues to slow while operational overhead costs are on the rise; a mid-year “snapshot” study from Ensemble Practice noting that at least larger advisory firms have weathered the pandemic well with the median firm’s revenue down barely 1% and only 4% of firms engaging in layoffs but a whopping 48% of advisory firms seeing at least one employee resign as the pandemic disrupts normal working (and parenting) habits; and a study finding that individual financial advisors shined over ‘call center’ advisors when it came to making personal connections that maintained client satisfaction in the midst of the pandemic.

We also have several articles on marketing, including why advisor marketing should be viewed as less of a magic formula to spot and more of an ongoing series of experiments to test and improve upon (with some ideas on where to start), tips from Influence expert Robert Cialdini on how to engage and be persuasive with prospects (especially when meeting with them virtually), and a look at how to create an advisory firm that is distinct for having a clear mission and a team that passionately believes in that mission.

We wrap up with three interesting articles, all around the theme of thinking hard about what “success” really means: the first explores how the traditional measure of wealth (accumulated assets) is a poor way to measure because success at wealth-building is really about the wealth you build relative to your income; the second also explores how we often use the wrong “proxy” to measure success; and the third takes an even deeper look at what it really means to be “successful” and what we should be considering when we try to measure the value of our own lives and what we’ve accomplished.

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 on the HEALS Act, the proposed legislation from Senate Republicans that may become the 5th economic stimulus bill in response to the coronavirus pandemic but is currently still mired in debate, not only between Republicans and Democrats, but also within the Republican party, and raising questions of how quickly the trillion-dollar stimulus will actually get passed and what form it will end out taking.

Also in the news this week was an announcement by the Democrats of their official “Party Platform” should they take leadership in Washington, which for financial advisors includes a notable provision of lifting the standards for all financial advisors, effectively signaling that if the Democrats win in November, there may be a new movement in 2021 to replace Regulation Best Interest and/or the Department of Labor’s proposed Reg-BI-coordinating changes and implement a more full-force fiduciary obligation for all investment advisers and broker-dealers.

From there, we have a number of articles about referral marketing, including the recognition that so few consumers are unhappy with their advisors that just waiting for prospects to ask an existing client “Do you know a good advisor?” (in the hopes of being referred by your client in the moment) probably isn’t enough to drive referrals, how even great advisors fail to get referrals because they’re not specific enough about the problems they solve, why advisors also often fail to get referrals because existing clients don’t know who to watch for that would be appropriate to refer to their advisor (i.e., a lack of clear positioning in the marketplace), and how to increase referrals by (re-)focusing not on getting more referrals from everyone but just a few people who are most likely and interested to refer and may become ‘power-referrers’ for the advisor.

We also have several articles on insurance, including a look at how advisors and their clients are making health insurance decisions in the face of pandemic layoffs (including how to potentially ‘game’ the COBRA system with a newly-extended 120-day window to apply for coverage… but only if and when it’s really needed?), how the pandemic may ironically be improving the financial health of long-term care insurers by sadly cutting claims short (but at least potentially stabilizing pricing in the process), and the rising concerns of how indexed universal life insurance is being illustrated (or potentially, over-illustrated) given the increased risk that returns for the coming decade will not be nearly as rosy as they were for the past 10 years.

We wrap up with three interesting articles, all around the theme of making slow but steady incremental improvements for ourselves: the first explores how the key to change is not about whether we engage in (new) activities every day or get the desired outcomes but whether we can honestly say we gave it our “best effort” (which creates the kind of ‘focused practice’ that ultimately leads to results); the second looks at the behaviors that best provide us resiliency in the face of the inevitable life setbacks that may come as we try to achieve our goals; and the last provides a powerful reminder that in the end, long-term success isn’t just about going through the right routines but engaging in “practice” that helps us find and regain the focus we need to succeed (while recognizing that, as with any effort that requires practice, it will take time, and setbacks along the way and disruptions to the typical routine are normal and to be expected!).

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 on the prospective fifth round of economic stimulus in response to the coronavirus pandemic, with a formal legislative proposal delayed until next week, but the details starting to take shape, including another round of stimulus checks (similar to the March stimulus), and an extension for unemployment benefits (but likely at a lower level than the prior), while a proposed payroll tax cut through the end of the year appears to be off the table… with more details anticipated early next week as Congress aims to pass something by the end of next week (July 31st, when Congress goes back out on its August recess, and the current additional unemployment benefits would otherwise expire).

From there, we have a number of articles about the growing focus on business continuity for financial advisors, from a recent NASAA study raising the question of whether succession plans may need to become mandatory at some point as advisors age (and cognitive impairment and diminished mental capacity becomes a risk not just for clients, but for older advisors themselves), the rise of business continuity planning as a top concern for advisory firms themselves (in light of the pandemic), and the rise of “Sell And Stay” transactions where advisory firms choose to sell and harvest the economic value of their businesses, but then remain as employees with the acquirer for several years thereafter (decoupling the decision of when to sell and no longer have responsibility for business continuity, from the actual decision to exit the business and retire altogether).

We also have several articles on cash flow and budgeting, including a look at the “Values-Based” approach to budgeting, how the biggest driver of “super savers” is not scrimping on avocado toast and lattes but driven primarily by decisions about housing and automobiles, how the pandemics curtailment of travel may force major changes in ‘premium’ credit cards that offer no-longer-as-valued travel rewards, why having a “finhobby” to take your mind off financial stresses can help to come up with financial solutions, and why a growth mindset really can help one “think” their way to financial success.

We wrap up with three interesting articles, all around the theme of navigating one’s own career to success: the first explores how, despite the growing focus in modern society on the value of entrepreneurship, we may be underrating the value (and economic wealth-building potential) of the “traditional” career; the second explores the rise of coaching as a way to better navigate one’s career transitions (whether within their firm or when looking to make a change) to get the guidance needed to really find an ideal role and path for the future; and the last explores the “canvas strategy” for career-building, where the focus is simply on doing the work that has positive impact regardless of who gets the credit… recognizing that in the long run, deferring credit for one’s success often just builds compounding interest that makes it even more rewarding (and in the meantime, helping others along the way of your career just makes you indispensable in your current job, which isn’t a bad place to be in the current economic environment!).

Enjoy the ‘light’ reading!

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