Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with some potential talking points to clients about the recent market volatility (and a good reminder that while it’s stressful, this is a time to reinforce your value with clients, and even encourage them to refer other friends and family who may be nervous as well).
Also in the news this week are some new regulatory initiatives around advisory fee disclosures, including both the latest exam priorities from the SEC that are targeting both advisory fees and any less-transparent behind-the-scenes compensation advisors may be earning, and a new standardized “fee table” that Massachusetts may soon start to require all RIAs to use to clearly (and consistently) disclose their compensation.
From there, we have several additional investment-related articles, including a discussion of the implosion $XIV (the short/inverse VIX fund that may have accelerated/amplified the market decline), a look at why the Shiller CAPE ratio deserves more credit than it has being given in recent years, why the rising interest in using actively managed bond funds to deal with potentially rising interest rates may be misplaced, and a strikingly candid discussion from Morningstar on how its new Analyst Ratings have been performing over the past 5 years (and where they can still be improved).
We also have several articles specifically on marketing and business development, from a look at the research on the psychology of referrals and word-of-mouth marketing (hint: it’s all about what the referrer believes he/she can gain in social capital by making the referral, not about helping the advisor being referred!), a good discussion on how closing online prospects who find you via your website is different than the traditional sales process for new clients, and why advisors need to be very careful when promoting any awards or rankings that the firm receives.
We wrap up with three interesting articles, all around the theme of looking differently at common problems: the first looks at how, when we compare income inequality across multiple countries, many of the common explanations for why it is occurring (e.g., decline of unions, rising immigration, etc.) don’t hold up, and that instead it may be the rise of regulatory barriers that are actually insulating and compounding income inequality (especially in professional services, health care, and the financial industry); the second explores how becoming an expert may actually make you more referrable than “just” being a specialist in a niche (though becoming a recognized expert is also arguably harder than “just” focusing on a niche); and the last raises the question of whether the traditional industry mantra “life insurance is sold, not bought” may simply be because historically insurance was so opaque and so hard to buy, and whether the rise of “InsurTech” tools will lead even fee-compensated advisors to increasingly implement insurance recommendations directly for clients, as it becomes easier and easier to actually do so!
Enjoy the “light” reading!