Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big news that UBS has exited the Broker Protocol, just three weeks after Morgan Stanley… but not before spiking the ball at Merrill Lynch and recruiting away several big Merrill teams as they left, which may just accelerate Merrill Lynch’s departure from the Protocol as the entire agreement unravels (to the detriment of both brokers and their clients).
Also in the news this week is the final and official announcement of the 18-month delay of the Department of Labor’s fiduciary rule… which may kick off a new spate of lawsuits by fiduciary advocates aimed at halting the delay (to compel the rule to take effect at the beginning of 2018 after all), and a surprise withdrawal of support from the White House of the SEC’s Administrative Law Judges, raising the possibility that the Supreme Court make take Ray Lucia’s case and strike down the SEC’s ability to appoint its own ALJs.
From there, we have several articles about life insurance, including a look at how life insurance companies are trying to develop new extension riders to avoid the otherwise taxable event of policyowners who reach age 100 (though it’s not clear that they can do so under the tax code), the issues with “guaranteed” whole life and why many common whole life strategies are not actually fully guaranteed (even though old-fashioned traditional whole life was/is), and a primer on the concept of “Private Placement Life Insurance” (PPLI) as a strategy to use the tax-deferral wrapper of life insurance to minimize the tax drag on high-income alternative investments for high-net-worth investors.
We also have a few practice management articles, including: a look at the rise of “predatory buyers” of advisory firms, who often leverage the limited closed market of their broker-dealer or RIA custodian to persuade advisory firm owners to sell on less-than-ideal (valuation or tax) terms; a reminder that growing a billion dollar (of AUM) advisory firm will require founders to transition from “just” being advisors into actually being “leaders” of their advisory firms (which in practice is a very uncomfortable transition for many!); and a look at how automation tools can be used to better engage clients and prospects… because even though the advisor knows it may have been automated, as long as the client receives value, they likely won’t care about how it was achieved!
We wrap up with three interesting articles, all around the theme of our rapidly changing world: the first is a fascinating in-depth look at the blockchain, the underlying technology that powers Bitcoin (and other cryptocurrencies), and why even if Bitcoin turns out to be a bubble or a fad, the blockchain technology itself is likely here to stay and could revolutionize a wide range of industries; the second explores the “dying art of disagreement”, and the idea that democracies are founded on our ability to have productive discourse with those we disagree with (which has become increasingly challenging with the polarization of today’s modern world); and the last raises the interesting question of whether the fiduciary debate has already be co-opted to the point that being a fiduciary is no longer a meaningful differentiator, and whether it’s time for leading advisors to take up a new battle to push the envelope around concepts like “integrity” or “stewardship” instead.
Enjoy the “light” reading!