All Archives Of Weekend Reading for Financial Planners

Weekend Reading for Financial Planners (Nov 16-17)

November 15, 2019 02:59 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the industry announcement that independent broker-dealer network Advisor Group is acquiring fellow IBD network Ladenburg Thalmann, which will create the 2nd largest independent broker-dealer (behind only LPL), with more than 11,500 advisors overseeing $450B in assets across 9 broker-dealer subsidiaries.

From there, we have several practice management articles this week, including a look at the ever-growing breadth of CFP programs for undergraduates (providing students more choices for their CFP education, but arguably making it harder for advisory firms that are hiring to figure out which are the ‘best’ programs with the best-prepared students), the emerging trend of large advisory firms hiring CTOs (Chief Technology Officers), the new business role of a “Chief Of Staff” that can be used to leverage the efficiency of a founder/CEO (and/or to groom talent for future leadership positions), and an idea on how to better unleash the creativity of your own employees.

We also have several marketing-related articles, from exploring the ‘right’ way to diversify your marketing (not by diversifying the types of clients you’re trying to reach, but instead by diversifying the marketing channels you use to reach a narrower set of target clientele), to tips on figuring out if your niche just isn’t working for you yet or if you’ve picked the wrong niche altogether, the benefits (or not) of hiring a publicist to help an advisory firm with PR (depending on the natural proclivities of the owner towards social media and blogging), and how to build your confidence in your own blogging writing or video abilities to get over the “Imposter Syndrome” of thinking you don’t have enough expertise to be valuable (when in fact you do!).

We wrap up with three interesting articles, all around the theme of managing our time: the first looks at how the decade of the 2010s has become the decade we ‘lost’ control of our time (with the rise of the smartphone and becoming ever-reachable by anyone, anywhere); the second delves into why we seem to have such trouble protecting our time in the modern era; and the last provides some valuable tips on how to get better control of your time by saying “No” more often, and how to change your mindset to get more comfortable with saying “no” more often in the first place!

Enjoy the ‘light’ reading!

Weekend Reading for Financial Planners (Nov 9-10)

November 8, 2019 02:53 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big industry news that the SEC is looking at finally updating the advertising rules for RIAs after nearly 60 years, which would include allowing advisory firms the ability to use testimonials and endorsements from clients, and even highlight third-party ratings about their work with clients (while still limiting how firms tout their investment performance in particular).

Also in the news this week was an announcement by Schwab at their IMPACT conference that the firm is looking to expand its banking and lending services for advisors on their platform, the rollout of Morningstar’s new Analyst Ratings for funds (that are resulting in a substantial number of downgrades for funds, especially in their higher-cost share classes), and an indication that the SEC is gearing up to crack down on hybrid broker-dealers using affiliated money market sweep programs without properly disclosing the conflict to their RIA clients.

We also have several retirement related articles this week, from the IRS’ announcement that it is gearing up to roll out new life expectancy tables that will reduce RMD obligations beginning in 2021 (though the actual RMD factors may only be reduced by about 0.21%), a look at the “9 types of retirees” and their psychographic tendencies, how some firms are experimenting with virtual reality to literally help clients better visualize their future retirement (to help them change their behavior to save more), how to help clients have a more financially successful retirement not just by helping them plan for retiree health care costs but actually getting healthier to reduce those costs, and an interesting look at how the discussion of income inequality is raising questions about the nature of retirement and why “the rich” don’t just retire once they have “enough” in the first place?

We wrap up with three interesting articles, all around the theme of how we work most productively and what it takes to incentivize us to do so: the first looks at a recent study that finds while we tend to believe financial incentives will motivate others, when we consider our own motivations we usually don’t think it will have as much impact (raising questions of whether we overestimate the role financial incentives really play); the second explores the recent decision of Microsoft in Japan to test out a 4-day workweek (which at least temporarily resulted in a whopping 40% increase in productivity after a 5-week experiment); and the last looks at a company that is trying out (just) 5-hour work days for their knowledge workers, on the theory that if employees can really get concentrated deep work done from 8AM to 1PM, they’ll accomplish as much as a full work day anyway… and be happier and better rested with all the time they have left over.

Enjoy the ‘light’ reading!

Weekend Reading for Financial Planners (Nov 2-3)

November 1, 2019 03:46 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a fascinating look at a new CFP disclosure form from Northwestern Mutual, in advance of the CFP Board’s new fiduciary disclosure rules, that not only provides a template for what the future of (more thorough) CFP fiduciary disclosure may look like, but also raises questions anew of whether CFP professionals will find it difficult to comply with their fiduciary obligations themselves when working for firms that are primarily in the business of manufacturing and distributing products. Also in the news this week is the official launch of the OneFPA Network “Beta Test”, as more than 80% of FPA’s 86 chapters declined to even apply but the organization is still moving forward with its test of new staffing, accounting, and technology systems by accepting 11 of the 16 chapters that did request to be involved.

From there, we have several articles on spending and debt, including a look at the common myths of what does (and doesn’t) actually increase or decrease one’s credit score, the rise of new online installment notes that are replacing payday lending as the new triple-digit-interest-rate high-risk lending program, and how the “old rules of wealth” to save early and often for retirement are falling by the wayside with a Millennial generation that is still struggling to balance the desire to buy a home, start a family, build a career, and save for retirement… on top of carrying a potential mountainload of student loan debt that in some cases may literally take until retirement to repay!

We also have a few articles on financial advisor marketing, including new research on where financial advisors are spending their marketing dollars that work (hint: increasingly on not just social media, but digital advertisements funneling interested prospects to increasingly targeted advisor websites and landing pages), what it really means to pursue a relationship with a “Center Of Influence” (and how to identify such COIs beyond the typical lawyers and accountants), why you should not use a quick auto-responder with every new LinkedIn connection you make, and how Opt-In Text Messages are becoming a new financial advisor marketing channel.

We wrap up with three interesting articles, all around the theme of the growing awareness of the advisory industries’ issues with not only gender discrimination but also sexual harassment and sexual assault in the aftermath of the Ken Fisher incident: the first shares the stories of women in finance who have been sexually harassed or assaulted at a financial advisor conference; the second shares stories of women in finance who have faced gender discrimination challenges or similar sexual harassment or assault in the workplace; and the last looks at how advisory industry conferences are beginning to implement more stringent harassment and assault reporting tools, with actual enforcement mechanisms in place, to finally try to change behavior at industry events and hold accountable those engaging in inappropriate behavior.

Enjoy the ‘light’ reading!

Weekend Reading for Financial Planners (Oct 26-27)

October 25, 2019 03:35 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the announcement that Charles Schwab will allow (free) fractional share trading on their platform, which not only fires a shot back at upstart stock trading platforms like Robinhood that also allow fractional shares, but raises the question of whether Schwab is positioning itself to compete against mutual funds (and ETFs) more directly by facilitating Indexing 2.0 solutions that allow investors to buy the stocks underlying an index fund directly in the exact (fractional) amounts and avoid the cost of the mutual fund or ETF wrapper altogether.

From there, we have several articles on spending advice for clients, from tips on how to help clients who are spending “like mad”, a study finding that it may be easier to help clients actually change their savings behavior by engaging their emotionality rather than just trying to make them behave more rationally, understanding the limits of trying to be ever more frugal (or balancing out financial frugality with time frugality), and whether and to what extent advisors have a “moral obligation” to help clients that are on an unsustainable spending path towards portfolio depletion.

We also have a few articles on the trends of advisory firm mergers and acquisitions, including a look at whether the typical deals for RIAs are getting bigger or smaller (hint: it’s both bigger over $5B, and smaller under $500M, that is seeing an uptick in deal activity), what to consider when trying to value your own advisory firm, whether advisory firms should be concerned that publicly traded RIA consolidators like FOCS and AMG are lagging the general stock market, and what prospective sellers should be thinking about if they’re considering whether to sell their firms (and don’t want to botch the deal in the process).

We wrap up with three interesting articles, all around the theme of how shifting generational preferences and experiences are changing consumer behavior: the first looks at the rise of ‘group trips’, which are going from large guided tour groups (that leave group members unduly beholden to one another) into premium small-group experiences that have become particularly popular with affluent individuals in their 50s and 60s; the second looks at overall Consumer Expenditure Survey data on how Millennial spending compares with Baby Boomers (and Gen X) in their mid-20s to mid-30s, finding that, overall, Millennials earn more and actually don’t have to spend as much on ‘luxuries’ in clothing and entertainment… or can’t afford to, because of their substantially higher student loan debt overhang that averages nearly 10X (even after adjusting for inflation) that of the Boomer generation; and the last looks at how Millennials and the subsequent Gen Z now entering the marketplace, are beginning to disrupt the nature of what it means to work in an office, as work changes from a ‘place’ you go, to a ‘thing’ you do (from wherever it happens to be convenient to do that work, which may or may not include a lot of physical office time).

Enjoy the ‘light’ reading!

Weekend Reading for Financial Planners (Oct 19-20)

October 18, 2019 04:02 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off by diving into the big industry buzz of the past two weeks, where Ken Fisher, multi-billionaire owner of his eponymous $110B+ RIA, made sexually inappropriate comments at the recent Tiburon CEO Summit, spawning the financial advisory industry’s version of a #MeToo moment that has led to not only Fisher being banned from several conferences (and the withdrawal of more than $1B of his institutional investors), but a rising focus on sexual harassment policies at conferences and the stories of women across the industry sharing their own experiences of sexual harassment, sexual assault, or outright rape at industry conferences.

From there, we have several more articles on industry news this week, including the FPA’s decision to break with precedent and select its first non-CFP vendor representative as the next President-Elect for its National Board (from a company that also happens to be the FPA’s largest corporate sponsor, and that directly opposes FPA’s fiduciary advocacy lobbying efforts!), the CFP Board’s announcement that it is gearing up a new Enforcement Plan for the coming year with its new Standards set to take effect (and in response to the recent WSJ article questioning its current enforcement standards).

There are also a few regulatory articles, from a new PIABA study finding that expungement requests for brokers with problematic disciplinary records has skyrocketed as creative lawyers appear to have figured out how to game the system, a critique from the Inspector General that the SEC is failing in its enforcement efforts (with an average of more than 2 years from when the SEC begins an investigation until it actually issues an enforcement action against a problematic RIA), and an alert from FINRA that it may soon crack down on broker-dealers’ lax oversight of their brokers using text messages and social media messaging apps (without properly archiving and overseeing the communications, or failing to monitor their brokers from not using those channels if the broker-dealer states they’re not permitted).

We also have a few investment-related articles, including a look at why the SEC’s recent ETF rule will likely mean the death of the iNAV for ETFs (and why it may not necessarily be much of a loss in practice), how the industry has focused on declining ETF expense ratios but the average expense ratio that investors pay for mutual funds is also crashing (if only because investors have now put nearly 5X the dollars more into no-load mutual funds than loaded mutual funds as the industry increasingly shifts towards fee-based accounts), and how even as expenses on ETFs continue to lower there may be a floor appearing as recent ETFs that have launched with zero or even “negative” expense ratios are actually not attracting significant new dollars from investors.

We wrap up with three interesting articles, all around the theme of the challenges of burnout: the first explores the concept of “boreout”, where an employee isn’t necessarily burned out from too much work, but “bored out” from having too little work to do, to the point that it can actually result in deleterious health effects; the second examines the drivers of work motivation, and how compensation only carries someone ‘so far’ before other more intrinsic motivators become the primary drivers; and the last looks at a recent industry study finding that financial advisors themselves are experiencing far higher stress levels than the average person, for which the solution isn’t necessarily about ‘work-life balance’ and spending more time with family, but being more proactive in taking control of the advisor’s time and scheduling to have a more productive work day in the first place.

Enjoy the ‘light’ reading!

Weekend Reading for Financial Planners (Oct 12-13)

October 11, 2019 02:50 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the news that Fidelity has not only decided after all to match competing custodians with zero-commission trades on US stocks and ETFs, but is further accentuating how it provides better default money market options and eschews payments for order flow in an even further amplification of the competitive pressures of the RIA custody model.

From there, we have several more articles beginning to explore the implications of the industry’s rapid shift to zero-ticket-charge RIA custodians, including how the collapse of trading commission revenue could force RIA custodians to assess new custody fees (or else have to cut services given the lost revenue?), the way zero-commission trading may further accentuate the differences between broker-dealer platforms and RIA custodians (and further accelerate the breakaway broker trend), and the compliance issues that suddenly have emerged for RIAs that previously negotiated asset-based pricing on trades and especially those that bundled their asset-based trade pricing into a holistic wrap fee that may no longer be priced appropriately in a zero-trading-fee world.

We also have a number of articles on RIA and broker-dealer industry trends, from a look at the latest FINRA data showing that the number of brokers changing broker-dealers or switching to the RIA channel is actually declining (at least for now?), to the challenges of large broker-dealers that aren’t always leveraging their economies of scale for better service to their brokers (and sometimes use their scale to negotiate better distribution agreements for themselves instead), whether the industry is starting to shift away from revenue-based compensation for advisors (and how the rise of Merrill Edge could drive the shift in large firms), and how advisory firms learning to bring in their own clients (whether by centralized marketing or inorganic acquisitions) are leading to a rise of restrictive non-compete and non-solicit agreements in the RIA channel that may even be more limiting than the wirehouse channel those independent firms criticized just a few years ago.

We wrap up with three interesting articles, all around the theme of how we find and consume good news and other content in an increasingly complex (and algorithm-driven) world: the first provides some recommendations on less-commonly-known blogs and news sites to help advisors who want to try and figure out what the market ‘consensus’ is (in order to identify potentially-market-moving news); the second offers up another series of blog and media site recommendations for content that will challenge you to think differently; and the last takes a fascinating look at how after nearly a decade of increasingly-algorithm-driven content recommendations, companies from Netflix to Apple are bringing back human curation to provide the contextually relevant suggestions for readers/viewers that algorithms just haven’t seemed to be able to master (or at least, haven’t yet?).

Enjoy the ‘light’ reading!

Weekend Reading for Financial Planners (Oct 5-6)

October 4, 2019 02:54 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a slew of news stories spurred by Interactive Brokers’ announcement that it was cutting its trading commissions on all US stocks and ETFs to zero, which in turn spawned announcements from Schwab doing the same just two business days later, TD Ameritrade price-matching Schwab at zero just hours after that, E-Trade cutting their trading commissions to zero the next day… and Fidelity notably deciding to hold firm (albeit at just $4.95/trade), and suggesting that it may be better to hold firm on pricing if it keeps Fidelity’s revenue up to be able to provide advisors better service as well!

From there, we have a few articles on hiring and leveraging associate advisor talent in your advisory firm, from a discussion about the benefits of delegating (both to free up your time, and give your team more opportunities to excel and rise to the occasion), tips on how to pick the right/best successor for your firm, why associate advisor compensation actually declined in the latest benchmarking study despite an ongoing talent shortage (hint: advisory firms are so desperate that they’re hiring those with less experience and less talent… and then paying them less in the process), and some good suggestions on what to ask (and what you may not ask) when interviewing a prospective associate advisor!

We wrap up with three interesting articles, all around the theme of gratitude and sharing (and accepting praise for) our good deeds: the first explores why it’s important to learn to accept compliments with gratitude and not just brush them off saying “It was nothing”; the second delves into the research on “virtue signaling” and when/whether it’s good to show off your own good deeds; and the last explores what you should actually do to accept a compliment with grace (and make the person giving the compliment feel appreciated for having done so!), including and especially when the compliment is from yourself!

Enjoy the ‘light’ reading!

Weekend Reading for Financial Planners (Sep 28-29)

September 27, 2019 02:57 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the news that the SEC has adopted a new ETF Rule 6c-11, adding new formal disclosure requirements about daily holdings, bid/ask spreads, and trading premiums or discounts… but also eliminating the requirement for all new ETFs to obtain costly and time-consuming exemptive relief to be launched, which is anticipated to even further accelerate the pace of new ETF launches in the coming years (though inverse and leveraged ETFs, and non-transparent ‘active’ ETFs, will still remain with the slower high-scrutiny exemptive relief process).

Also in the news this week is a new joint initiative from the Foundation for Financial Planning along with the CFP Board, FPA, and NAPFA, to promote pro bono financial planning services, and notable internal compliance review underway at Merrill Lynch on advisors who are using Merrill’s home-office-created model portfolios, which happen to be the same as the portfolios offered directly to consumers in their Guided Investing and broker-facilitated Merrill Edge programs, and create an interesting microcosm of the challenge for advisors to justify exactly what value they’re providing over and above what a direct-to-consumer offering provides (especially when it’s your firm providing the side-by-side offering).

From there, we have a few more investment-related articles, including a look at the recent turmoil in interbank lending and the overnight repo market that may be signaling the end of banking excess reserves fueling economic growth, a discussion of the new “FedNow” system being developed to facilitate truly “instant” bank-to-bank payments (which may entirely eliminate overdraft fees, payday lending, and check-cashing services in the coming decade), and an early warning for mutual fund holders that a 10-year bull market coupled with rising outflows from mutual funds (as investors increasingly shift towards ETFs) could trigger very sizable mutual fund capital gains distributions in 2019 (far beyond what the funds themselves have appreciated this year).

We also have a number of articles on health insurance, including one that finds Affordable Care Act (ACA) marketplace plans may finally be “stabilizing” with premium increases slowing and some insurers increasing their options and competing in more state markets, a study that finds overall health insurance costs continue to march higher in the employer marketplace (with family coverage up 5% in 2019, leading the total cost of coverage for family plans for employers to top $20,000 in 2019), and a look at some of the behavioral finance research about why people have such difficulty choosing the right health insurance plan even when one is ‘clearly’ dominant (a combination of complex math, overwhelming choices, and a strong aversion to deductibles even when they may be cost effective).

We wrap up with three interesting articles, all around the theme of what motivates advisors themselves: the first looks at a recent Financial Planning Review study finding that women who have entered the profession find more career satisfaction going independent than working in large corporate environments; the second explores a new Morningstar study around practice management and the conflict between advisors who started firms because they want to serve their clients but have trouble finding and attracting them; and the last exploring the importance of avoiding peer pressure, including as a financial advisor, and creating the firm that is most fulfilling to you personally (and not just what the “industry says” you should be building towards).

Enjoy the ‘light’ reading!

Weekend Reading for Financial Planners (Sep 21-22)

September 20, 2019 02:35 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a big cover story from Investment News about the upcoming 50th anniversary of the financial planning profession from its humble beginning in December of 1969, and the ways that both the delivery and regulation of financial planning have evolved over the years. Also in the news this week is the announcement that Vanguard is preparing to launch a new “Digital Advisor” service, which will be a ‘true’ no-humans robo-advisor offering (as distinguished from its Personal Advisor Services solution with hundreds of human CFP professionals) charging just 15 basis points with a $3,000 account minimum.

From there, we have several articles around the ever-growing buzz of advisory firm mergers and acquisitions, including a look at the recent “Deals and Dealmakers Summit” that finds there are still far more interested buyers than there are prospective sellers, a recent DeVoe & Company study finding that as many as 50% of advisory firms may be willing to sell a stake in their firm (but for many, it’s only so they can raise capital to become buyers themselves), an analysis finding that so many of the largest RIAs have already been bought in recent years that advisor M&A is now moving ‘downmarket’ to mid-sized firms with $100M to $500M of AUM, and what to be aware of if you’re considering whether to sell to an RIA consolidator.

We also have a number of marketing articles this week, from a look at the factors to consider to avoid picking the ‘wrong’ niche when choosing to better focus the firm’s target clientele, tips on how to turn the ephemeral differentiation of “we provide better service” into something more tangible for prospects, tips about what it takes to actually grow successfully with online/digital marketing, and how some advisory firms that are cutting fees in the face of fee pressure may just be negotiating against themselves.

We wrap up with three interesting articles, all around the theme of understanding and quantifying the value of financial planning: the first examines a recent Russell Investments study finding that the value of financial planning is a combination of A (Annual rebalancing) + B (Behavioral mistakes) + C (Cost of getting it wrong with asset allocation) + P (Planning advice) + T (Tax-smart investing) and may add up to as much as 4.4%/year; the second covers a recent consumer study in the UK finding that the primary value of an advisor is derived from trust in the advisor themselves; and the last is a new Vanguard study further affirming the value of a financial advisor, and finding that, based on direct consumer surveys, nearly half of the perceived value of a financial advisor specifically comes from the non-financial ’emotional’ benefits of having someone the client can trust, who understands them, and can reassure them during difficult times.

Enjoy the ‘light’ reading!

Weekend Reading for Financial Planners (Sep 14-15)

September 13, 2019 02:56 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big news that two lawsuits have been filed against the SEC regarding its new Regulation Best Interest, one by a coalition of 8 state attorney generals that claim the SEC failed to follow the requirements of Dodd-Frank that any new standard of conduct for brokers be at least as stringent as the fiduciary duty that applies to RIAs, and a second by XY Planning Network that claim the SEC has exceeded its authority by trying to re-draw the dividing line between brokers and investment advisers and that all financial planning advice is required under the Investment Advisers Act of 1940 to occur under the RIA aegis anyway (making the standard of conduct for broker advice under Reg BI a moot point anyway).

Also in the news this week is an announcement that the various annuity carriers that declared they were pulling their fee-based annuity contracts out of New York due to the new disclosure requirements under Regulation 187’s new fiduciary rule for annuity and insurance sales may now return, thanks to further guidance from the New York Department of Financial Services that commission-based annuity agents won’t be required to disclose to clients that there may be less expensive fee-based versions of the same annuity contract if they’re not dual-registered to sell both in the first place… and raising concerns that New York is already undermining the relevance of its own new Best Interests standard by simply encouraging annuity agents to maintain commission-only agent licenses to avoid the disclosure requirements.

From there, we have several AdvisorTech articles this week, from the announcement that the CFP Board will now begin to grant CFP CE credit for at least some technology-related content, to the highlights of the new FinTech solutions that debuted at the recent In|Vest technology conference, the launch of a new digital-only commission-free RIA custodian called Altruist, and a discussion of the recent NASAA study finding that cybersecurity deficiencies are on the rise in state RIA examinations.

We also have a few investment-related articles, including the milestone that the total amount of U.S. equity assets held in passive mutual funds and ETFs have finally surpassed actively managed U.S. equity funds (though the total amount of global assets held in passive vehicles is still relatively low), and two different articles critiquing and debunking the recent Michael Burry statement that passive index funds may represent a “bubble” at risk of popping.

We wrap up with three interesting articles, all around the theme of where people choose to live: the first looks at how the looming deadline for tax extensions from 2018 means a slew of high-income taxpayers will see for the first time how much their tax liabilities were impacted by the new $10,000 cap on deducting state and local income and property taxes, which may potentially lead to an uptick of high-income individuals relocating to states with lower tax burdens; the second explores how the trend of intra-US migration from dense metropolitan areas to other parts of the country appears to be accelerating due not to the impact of taxes but to the cost of housing and the pursuit of more affordable housing options; and the last examines how the feasibility of working remotely in the modern digital age may be further accelerating the trend of relocation away from big cities as knowledge workers can increasingly be paid for what they do regardless of where they live (making it feasible to choose where to live based on housing affordability, taxes, weather, and any other preferences they may have… but without any need to consider the availability of local jobs in the new location!).

Enjoy the “light” reading!