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 industry news that lawmakers are recommending the Federal Trade Commission investigate Envestnet’s Yodlee over its data-sharing practices, raising concerns that the anonymized data they sell might still potentially be pieced back together by data buyers and that Yodlee is not sufficiently disclosing the way it sells data and the risks involved… though notably, Yodlee maintains that it does sufficiently scrub its data before sharing, and the practice is common across more providers than just Yodlee anyway.

Also in the news this week is a profile in Financial Planning magazine of Schwab, and specifically how it pursues advisors in its retail division that want to switch over to form an RIA or join an existing one… raising concerns about whether Schwab is impeding the ability of Schwab’s retail advisors to work in the industry if they leave Schwab, or whether independent RIAs are being inappropriately aggressive in pursuing Schwab retail advisors to join their firms and bring their existing Schwab retail clients along (even though RIAs would lambast Schwab if its retail team ever tried to poach RIA clients and assets?).

From there, we have several articles on industry trends, including one analysis that suggests, despite robo-advisor competition, the market for financial planning advice is actually poised to explode to the upside in the 2020s (in large part because the rise of technology is making it so much more efficient to deliver financial advice that it will reduce the cost and expand the market of who advisors can serve), a look at the ongoing slow but steady decline of wirehouse advisor headcount (even as wirehouse advisor productivity hits record highs), and the continued rise of mergers and acquisitions of advisory firms (which hit a new record in 2019, up a whopping 31% from the prior year).

We also have several practice management articles, from a discussion of when it’s time to revisit your own fee structure with clients (or not), a discussion of the rising popularity of the subscription-fee model for financial advice and when it works best (or doesn’t), the appeal of offering tax-planning services to grow your advisory firm, and the rise of “cash-management” solutions where advisors can offer clients high-yield bank savings accounts to complement their investment/brokerage services.

We wrap up with three interesting articles, all around the theme of personal productivity: the first explores how effectively achieving your goals requires not just setting goals, but prioritizing them to be able to focus and avoid being overwhelmed; the second examines how the real key to productivity is to focus on the ‘fundamentals’ first (from sleep to nutrition to workspace environment) and your own psychology, rather than fretting about self-control or self-motivation; and the last looks at how the real key to being more productive is not about what else you can manage to do, but what you can stop doing (and especially identifying the things you can stop doing that relieve you of even more otherwise-unnecessary decisions down the road)!

Enjoy the ‘light’ reading!

Read More…

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the industry news that FINRA will be probing brokerage firms (both for retail clients and ostensibly RIA custodians as well) regarding their often-conflicted cash sweep programs into affiliated banks or proprietary money market funds, which has taken on an increased focus in the new era of zero commissions (where platforms have to rely more than ever on earning net interest revenue from client cash instead). Also in the news this week is the rumor that private equity firm TA Associates may be shopping Orion Advisor Solutions… for a nearly $2B valuation, in what will likely be a sale (if it occurs) to another private equity firm or industry-strategic buyer focused on growing Orion even larger as the world of advisor technology continues to heat up.

From there, we have several articles on marketing, including a Broadridge study finding that advisors are increasingly investing into various forms of digital marketing over purely traditional (i.e., live in-person channels), a Snappy Kraken study finding that email (and a website call-to-action to join a mailing list) is still far better at generating leads for advisors than social media, a look at various digital marketing strategies that financial advisors can experiment with on their websites, and why ‘old-fashioned’ book publishing can still be an effective advisor marketing strategy (but is not a very good advisor business opportunity for the book sales themselves).

We also have several articles on more technical planning issues, including a look at the new provisions of the SECURE Act that will allow up to $10,000 of 529 college savings plans to be used to repay student loans (or for an apprenticeship program), Fidelity’s launch of an HSA platform for advisors to manage their clients’ Health Savings Accounts (though it’s not clear that many clients will ever have HSA balances large enough to be worthwhile for advisors to do so!), and when it makes sense to consider claiming Social Security’s 6-month-retroactive-lump-sum payment for those who begin their benefits after Full Retirement Age.

We wrap up with three interesting articles, all around the theme of breaking old habits and forming new ones: the first provides a series of tips from successful executives and business leaders about their key habits for productivity; the second looks at how moving (i.e., relocating where you live and/or work) presents a unique opportunity to break old routines and form new habits; and the last explores some of the research about habits and willpower, and how those who have above-average self-control tend to be more successful not because they’re better at avoiding or breaking their bad habits but because they’re better at focusing their energy to form similarly-hard-to-break good habits instead… or stated more simply, that the key to improving your own behavior is less about trying to force yourself to stop doing the things you don’t like, and more about finding and forming habits around the things you do like instead!

Enjoy the ‘light’ reading!

Read More…

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the industry news that Envestnet is partnering with Dynasty Financial to create a new “Advisor Services Exchange” (ASx), and in the process is taking a small financial stake in Dynasty, raising questions of whether Envestnet is seeking to evolve beyond its technology core into a broader range of advisor services.

Also in the news this week was the announcement that former Congressman Chris Dodd and Barney Frank have filed an Amicus Brief against the SEC regarding Regulation Best Interest (Reg BI) claiming that as the ones who wrote the law itself the SEC misinterpreted the authority they were granted under Dodd-Frank to issue Reg BI (and that therefore the rule should be vacated), the governor of Massachusetts is advocating on behalf of the financial product manufacturers and broker-dealers that the state should consider walking back its fiduciary proposal, and a coalition of trade associations are coming together to make the case that Congress should allow financial advisors to claim the 20% Qualified Business Income (QBI) deduction in the future (though it’s not clear that Congress will take up any tax legislation this year!).

We also have several articles on practice management and succession planning, including: the benefits of deliberately hiring younger and less experienced (but potentially longer-tenured and more creative) advisors into a firm; the common reasons that Millennial advisors quit their advisory firms; how to better promote a culture of positive work/life balance to avoid burning out next-generation talent; the factors to consider (or not) when trying to select a future successor for the firm; and why the development of next-generation successor leaders in an advisory firm requires a fundamentally different set of talents than what the founder needed to learn to grow the business to that point in the first place.

We wrap up with three interesting articles, all around the theme of generalists versus specialists: the first explores how specialists have more opportunities to succeed but are also more prone to being disrupted and unable to adapt, such that it’s important to keep some ‘generalist’ interests as well; the second dives into research finding that generalists tend to be more successful in slow-moving environments while in an increasingly complex world it’s actually the specialists with the domain knowledge to spot opportunities in environments of rapid change; and the last introduces the concept of the ‘Generalized Specialist’, who develops a core competency of expertise but also tries to deliberately maintain a broader multi-disciplinary perspective as well (to be better able to both adapt and integrate new, disparate ideas).

Enjoy the ‘light’ reading!

Read More…

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the industry news that the first anti-trust lawsuit has been filed to stop the Schwab-TD Ameritrade merger… and has already been dismissed in what most are simply calling a publicity stunt and not a serious challenge (though it remains to be seen whether more anti-trust scrutiny will still come to the prospective Schwabitrade merger, especially with respect to its RIA custodial business). Also in the news this week is the announcement that Vanguard is cutting stock and option trading commissions to zero for its own direct-to-consumer brokerage platform, matching the spate of similar cuts from Schwab and other retail discount brokerage platforms… and capstoning a 2-year battle with TD Ameritrade’s removal of Vanguard from its no-transaction-fee ETF platform that ultimately resulted in a collapse of trading commissions and TD Ameritrade’s own demise!

From there, we have several articles on retirement planning this week, from a look at how Medigap supplemental policies are being restructured for those becoming eligible for Medicare in 2020 and beyond (including the elimination of Plan C and Plan F policies and the introduction of a new Plan G), research from Wade Pfau on what the industry is still getting wrong about reverse mortgages, and a look at how, while deferred annuities remain controversial, there is a growing base of research about how effective Single Premium Immediate Annuities (SPIAs) can function as a fixed income alternative to support retirement income.

We also have several articles on financial advisor marketing, including: new Morningstar research about how the top priority for advisors is to grow and gain more clients, yet getting new clients is also advisors’ greatest challenge, and despite these woes the majority of advisors are still unwilling to spend on marketing; the proposed new regulations on RIA advertising that could spawn a slew of new advisor marketing strategies in the coming years through the potentially-soon-to-be-permitted use of client testimonials, third-party advisor review sites, and even performance advertising; strategies to get your marketing going even if you don’t feel you’re “creative” at marketing; and the sometimes-unwitting ways we can turn people off in our marketing and sales activities with prospects because of how sensitive other human beings are to body language and other non-verbal communication.

We wrap up with three interesting articles, all around the theme of forecasting what will (and won’t) change in the new decade of the 2020s: the first provides some forecasts about how the financial planning profession will change in the coming years, as financial planning becomes increasingly known as a discipline unto itself (with its own regulatory concerns, oversight needs, and standards); the second looks at the recent 50th-anniversary celebration of financial planning convened by the CFP Board, and how industry organizations are looking to come together to further professionalize financial planning in the 2020s; and the last takes a good look at what won’t likely change in the 2020s (that advisors can still safely ‘bet’ on and invest in growing their own businesses), focused almost entirely around advisors themselves, our ability to communicate effectively with clients and prospects, and the importance of the advisor-client relationship in helping clients to stay the course (because notwithstanding all the changes in technology, clients are still human beings who will behave like human beings!).

Enjoy the ‘light’ reading, Happy New Year, and best wishes to you in 2020!

Read More…

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a deeper-dive look at the SECURE Act (now that it is officially signed into law), as advisors get up to speed on the real-world planning implications and conversations that must happen with clients in the coming year. Also in the news this week is a major across-the-board fee cut from DFA, which ultimately amounts to ‘just’ 1-8 basis points of fee cuts and an asset-weighted cut of just 8% of their fees, but still sends a signal that even DFA is feeling the growing pressure of fee cuts (though in the end, such cuts may hurt DFA’s competitors even more?).

From there, we have several articles on cash flow and spending behaviors, from an “investment pyramid” of the areas to focus on first (i.e., set goals before trying to focus, have good savings habits before worrying about asset allocation, etc.), the second looks at how complex strategies can help create wealth but it’s crucial to fix the ‘simple’ behaviors first (most notably, spending less than we make and having ongoing savings!), and the last examines the research around whether the shift to cashless “e-money” through smartphones will lead us to lose control of our spending (hint: perhaps not, as seeing the money subtracted from our e-wallet immediately may still yield the digital equivalent of the pain of paying [with cash]).

We also have a few articles on marketing, from why email is not dead but buying email lists is (and how to build your own email list instead), what “marketing brand archetypes” are and how they can help you refine your marketing messaging, why paying for “reach” to get your marketing message out more widely isn’t necessarily a good idea (it’s about reaching the right people, not just more people), and how you can get through a marketing (or writing) mental block by trying to picture one specific person you’re aiming to help (and then craft your messaging to be relevant and on-target for that specific person… and likely everyone else similar to them who may also need your help!).

We wrap up with three interesting articles, all around the theme of New Year’s resolutions and habit change: the first explores the research about why it is that New Year’s resolutions (and habit change in general) so often fails; the second delves even further into the problem with trying to make “SMART” concrete new Year’s goals (instead of trying to appeal to our own ‘superordinate goals’ of what we aspire towards); and the last provides some even more concrete tips about how to actually get more done in the coming year as 2019 comes to a close.

Enjoy the ‘light’ reading!

Read More…

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the news that after months of delays, the SECURE Act is finally being passed as an extension of a year-end Congressional spending bill, opening up the potential for Multi-Employer Plan (MEP) 401(k) offerings and more annuities in defined contribution plans… and notably for most advisors, severely curtailing the use of the popular “stretch IRA” strategy to generally no more than 10 years (instead of the full life expectancy of a much-younger beneficiary).

Also in the news this week is the release of the results of the CFP Board’s independent task force on enforcement that found “significant failures” in its enforcement processes that must be reformed in the future, and the news that the SEC is looking to expand the Accredited Investor rules beyond the current income and asset test (including, notably, a broad-based permission that would allow all financial advisors themselves with a Series 7 or Series 65 to participate as an Accredited Investor).

From there, we have several technology-related articles, including a look at how the growth of advisor technology for the past decade is reaching the point where now the primary challenge is that advisors have ‘too many’ choices (and not enough time to wade through options, evaluate how they’ll integrate, and do due diligence on vendors), a review of the recent InVest West FinTech conference that is taking an increasing focus on not just UX (user experience) and CX (client experience) but also AX (advisor experience), and a review by Bob Veres of a new wave of “financial planning software” companies that are not producing comprehensive planning software but instead increasingly more specialized ‘niche’ solutions around everything from tax return reviews and tax planning to Social Security timing, Medicare, and other elder care planning issues.

We also have a few articles on marketing, from tips on how to diligently follow up with a prospect after an initial meeting (without being too pushy), to a reminder that in the end clients don’t want to hear your story (as the advisor) but want to tell their story (as we all like talking about ourselves!), and some suggestions on how to handle that moment in a prospect conversation where they say “I’m sorry, I already have an advisor”.

We wrap up with three interesting articles, all around the theme of gift-giving (’tis the holiday season!): the first looks at how from an economic perspective, gift-giving is remarkably inefficient (as people try to ‘guess’ what non-financial gift will provide the appropriate amount of satisfaction and relationship-building with the recipient, with one study estimating $13B per year of ‘economic waste’); the second looks at the rise of experiential gifts, which may be compelling to the recipient but are exponentially harder to organize and ‘give’ in the first place; and the last explores recent research finding that when it comes to family and close friends, a sloppily-wrapped gift is actually better than a neatly-wrapped one (as it lowers the expectations of what’s inside and is more likely to have an upside surprise when opened!), but for more distant acquaintances it’s still important to neatly wrap the gift (as an expression of your commitment to the burgeoning relationship)!

Enjoy the ‘light’ reading!

Read More…

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the 2019 edition of Financial Planning magazine’s annual Tech Survey, showing the adoption leaders in each of the key advisor tech categories… and that despite all the hype, advisor use of “robo” tools remains not only tepid (at barely 11% of the advisor marketplace) but is actually declining as advisors predictably appear to be abandoning offering clients robo-only approaches and reverting back to their core (and more sustainably-priced) human-based financial advice services instead.

Also in the news this week is the release of the Investor Choice Act in the House that would end mandatory arbitration clauses amongst broker-dealers and RIAs, and a look at the recent Wells Fargo Advisors succession plan rollout that will pay retiring advisors as much as 225% of their trailing 12-month revenue (akin to a 2.25X multiple in the RIA marketplace) and facilitate next-generation advisors to buy those advisors out (but in turn more deeply binding those young advisors to the firm for the long run).

From there, we have several investment-related articles, including the latest Morningstar study on the behavior gap that finds the trailing 10-year gap has narrowed to ‘just’ 45 basis points in the US and has actually turned positive in the U.K. and Australia (though the narrowing/improvement may be driven in large part by rolling off the volatile years of the financial crisis and a 10-year sustained bull market), recent approvals to another 4 asset managers to offer non-transparent actively-managed ETFs (though it’s not clear if advisors will actually adopt them), and an emerging trend that the push for lower-cost ETFs may finally be bottoming out as a series of recent zero- or even negative-expense ETFs have failed to garner market share since their launches earlier this year.

We also have a few articles on practice management, including a recent YCharts study on advisor communication (finding that most clients still don’t think their advisors communicate frequently enough, or with enough personalization), the importance of regularly re-assessing an advisory firm’s pricing and business model (and that the fear that clients will leave if the fee model changes are overblown), and a look at how the majority of advisors find the process of selling a firm to be very anxiety-inducing (as they try to figure out whether the acquirer really has the right culture and people to take the firm forward).

We wrap up with three interesting articles, all around the theme of managing (and improving the outlook of) your own career: the first explores how “sales skills” are often the top-ranked ability that successful people cite for their success (whether it’s selling their services, or themselves, or their ideas, in the company/marketplace); the second looks at how it is increasingly acceptable to have a “resume gap” (whether due to taking time off to start a family, or to pursue new skills, careers, or even hobbies for a period of time); and the last examines how the best way to sustain and lift your own career is to try to develop your own personal brand that can give you (career) “pricing power” in the marketplace of job opportunities!

Enjoy the ‘light’ reading!

Read More…

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the industry news that Schwab is tapping former TD Ameritrade RIA chief Tom Bradley to lead a new “Core” RIA support platform for RIAs under $100M on the Schwab platform, indicating both a shift of Schwab moving further “downmarket” to smaller and solo RIAs, and providing a strong signal to smaller TD Ameritrade RIAs that they will not be abandoned or kicked off the platform after the Schwabitrade merger closes. We also have articles about the recent uniform fiduciary rule proposed in Massachusetts, and a look at the new SEC advertising and testimonials rule that’s been proposed by the SEC for the coming year.

From there, we have several investment-related articles, including a look at how advisors are increasingly using “alts” to diversify client portfolios but are disproportionately buying alts that are still highly correlated to markets (which make them more ‘modifiers’ than true ‘diversifiers’), a simple five-point checklist to evaluate prospective investment strategies that an advisor may be considering, and tips on how best to retain clients through turbulent markets (hint, it’s all about regular and timely communication, more so than the investment returns themselves!).

We also have a few articles on tax planning, including one on various year-end charitable planning strategies, a second on newly-updated IRS rules (via Revenue Ruling 2019-19) about how to handle retirement account checks that are sent but not cashed (to determine which year they are deemed “distributed” for both tax and especially RMD purposes), and a look at how year-end tax-loss harvesting is not really as valuable as many make it out to be.

We wrap up with three interesting articles, all around the theme of improving our own personal health: the first looks at how spending just 2 hours per week outdoors (even just taking periodic walks or sitting on benches outdoors throughout the week) can improve health; the second explores how those who have more green-ness – literally, in the form of plants or nature, even indoor in their own homes and offices – can improve health; and the last looks at all the simple health benefits that come from being kind, that literally release positive hormones in our bodies and that have a wide range of positive health effects (a good sign for being a financial planner in the business of helping our clients!).

Enjoy the ‘light’ reading!

Read More…

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the ongoing chatter about the fallout of the announced Schwab acquisition of TD Ameritrade, from Schwab relocating its headquarters to Dallas, the uncertain fate of TDA’s VEO, how Schwab will handle smaller RIAs that, in the past, may have joined TDA specifically because they didn’t meet Schwab minimums, and whether it will be necessary to repaper accounts as a part of the merger (which could put all the RIAs on TDA’s platform ‘in play’ for competing custodians).

Also in the news this week is a newly proposed rule from the SEC that would potentially limit the use of leveraged and inverse exchange-traded products as regulators grow increasingly concerned about inappropriate uses of such vehicles and whether investors (whether clients of a broker-dealer or an RIA) truly understand the risks involved.

From there, we have several tax planning articles, including new Final Regulations from the Treasury clarifying that there will not be a ‘clawback’ of gift and estate taxes even if the Tax Cuts and Jobs Act lapses in 2025 and the current $11.4M estate tax exemption falls back to lower levels, a look at how states are becoming increasingly aggressive on “residency audits” to determine whether those claiming to have relocated (to avoid the state’s high income tax rates) really changed their state of residence or not, and a reminder from IRA guru Ed Slott that with the beginning of a new year fast approaching the once-per-year 60-day rollover rule for IRAs does not reset and is still based on a rolling-365-day blackout period (but trustee-to-trustee transfers remain safe either way!).

We also have a few articles on advisory firm mergers and acquisitions, including a reminder of the key levers that drive the valuation of an advisory firm beyond just its revenue (as two firms with the same revenue may still have a drastically different valuation based on the stability and profitability of that revenue), the rise of bank funding options for RIAs that want to sell internally but not seller-finance the transaction, tips from successful acquirers of what it takes to close on a transaction (and get the seller to pick your firm as the chosen buyer), and some interesting research on the realities of today’s M&A market for advisory firms that is increasingly driven by large firms that are paying ever-higher levels of upfront cash or in-kind stock exchanges as a part of the transaction.

We wrap up with three interesting articles, all around the theme of customer/client service and interacting with clients: the first explores the concept of “aesthetic intelligence”, and that how an advisory firm and its services are aesthetically staged can have a significant impact on the client experience; the second explores how, amongst the affluent, human contact that eschews screens and computers is becoming a form of ‘luxury good’; and the last is a powerful reminder that at some point spending money as a business on good customer service isn’t just an overhead expense but a ‘marketing’ expense that drives word of mouth (and that it’s important to be strategic in how you allocate resources to client service recognizing its potential marketing impact).

Enjoy the ‘light’ reading!

Read More…

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the mega-news that Charles Schwab is apparently in talks to acquire TD Ameritrade, in what would create an absolute juggernaut in the brokerage industry with nearly $5 trillion in assets and as much as a 70% market share of RIA custody… which in turn is already raising concerns about whether, at least when it comes to RIAs, creating “Schwabitrade” might actually go too far in reducing competition and industry innovation (not to mention the challenges of integration and managing advisor service at such scale).

Also in the news this week is an indication of the growing “turf war” emerging as everyone from private banks (e.g., Goldman Sachs) to robo-advisors converge on serving the mass affluent that historically were the bread-and-butter client of the independent RIA but are now increasingly hard to attract in a more competitive landscape, and an indication that the SEC may be preparing new Proposed Regulations on both the definition of an Accredited Investor and the RIA Custody Rule (both of which are badly in need of updating for the modern era).

From there, we have several articles on behavioral finance, from a look at the value of a financial advisor as one who helps to minimize potential regret of the few big irreversible financial decisions in life (where it’s crucial to have the right advice to ensure the right decision is made in the moment), the emerging rise of “financial therapy” as a complementary value-add for financial advisors (or possibly even the future of the financial advisor’s value proposition), and a look at how thus far Artificial Intelligence is still struggling with the sheer breadth and complexity of interpreting human emotions (and suggesting that AI may still be a very long ways off from really being able to replace human-to-human interactions on emotional topics and issues).

We also have several marketing-related articles this week, from exploring why RIAs often have difficulty getting clients to read their email newsletters (and what are realistic stats to expect for client open and click-through rates), the importance of storytelling to both convey a financial advisor’s value proposition to prospects and their recommendations to clients through a financial plan (which arguably should be more of a ‘storytelling aid’ than an analytical document), and the key pages that prospects actually focus on (and therefore every financial advisor should have) on their financial advisor website.

We wrap up with three interesting articles, all around the theme of making good career decisions: the first looks at how most people seek out the wrong kind of career advice (asking people in similar roles or other ‘successful’ people who tend to give advice from their perspective, instead of asking people who know you well personally or are in the company/role in question already who can really validate whether you understand the role and how good of a fit it really is, or not); the second explores how to find the right community of peers to help get that professional sounding board and support; and the last looks at how, because the best firms end out being exponentially (1,000X) more successful, the key to career success is less about finding the right dream job and simply about finding the right company (“rocket ship”) to get on board with… and figure out later how to get into the best role/seat on the rocket ship!

Enjoy the ‘light’ reading!

Read More…