Weekend Reading For Financial Planners (August 1–2)

Author: Adam Van Deusen, CFP®

Team Kitces

Adam Van Deusen, CFP®, is a Financial Planning Nerd at Kitces.com, where he hosts the Financial Advisor Technician podcast, writes articles for the Nerd’s Eye View blog (including the popular Weekend Reading for Financial Advisors), and regularly speaks at industry events on a range of technical and practice management topics. He previously worked at a financial planning firm in the Washington, D.C. area and as a journalist covering the banking and insurance industries. Outside of work, he serves as a volunteer financial planner and class instructor for local and national non-profits.

Read more of Adam’s articles here.

AI Budget Line Items Surge For Advisory Firms, But ROI Is Opaque For Many

(Steve Randall | InvestmentNews)

It's hard to go a day without seeing news headlines about the growing influence of Artificial Intelligence (AI) in the business world, and within the financial advisory space in particular. The potential promise of AI to reduce time spent on various tasks, administrative and otherwise, (potentially allowing for more staff time spent on higher-value activities) has tempted many firms to invest in AI-enabled software tools, though a recent survey suggests that many might not have a full grasp on the Return On Investment (ROI) they're ultimately achieving (or not).

According to a survey by consultancy F2 Strategy of 40 firms across industry channels with a total of $8.6 trillion in assets, 67% of respondents had AI as a dedicated tech budget line item, a significant increase from the 14% that did so last year, with firms looking to leverage AI for greater operational efficiency, advisor productivity, and better scale without adding to their headcount. While more firms appear to be committed to AI spend, some might still be getting a firm grasp on total costs (not just the cost of specific software products and the cost of use-based large language model systems, but also the cost of employee time to shop for and learn new tools).

Notably, 65% of respondents said they have no formal AI success metric, which suggests some firms might not be able to have an accurate grasp on whether their AI spending is paying off (though 68% of firms that do measure their AI reported gaining 25% more efficiency in targeted workflows). Also, while AI tools have the potential to integrate different data sources within a firm, 64% of respondents said they don't have a unified data layer to make their AI projects work (suggesting they might not be tapping into the full powers of the tools they're using and paying for).

In sum, while AI use (and spending on this technology) appears to have taken off in the wealth management space, many firms still appear to be working through how these tools might serve their particular needs and what they're looking for in terms of return from them. Which suggests that taking a deliberate approach to investigating and acquiring tools that meet a firm's specific needs (and tracking the results of their use) could be a valuable investment of time to ensure AI spending actually produces the desired ROI.

Analysis Of SEC Filings Suggests AUM/Client Headcount Growth Divergence Amongst RIAs

(Tobias Salinger | Financial Planning)

RIAs have benefited in recent years from strong equity market growth, which has buoyed client portfolios and revenue (for firms that charge on an Assets Under Management [AUM] basis). That said, market-driven AUM growth could hide a lack of new client growth beneath the surface, potentially creating future risk for firms in a future market downturn.

According to an analysis of SEC data based on filings from 14,000 RIAs by Paithos Research (the research arm of financial advisor marketing and technology firm Paithos), while the median firm increased its AUM by 15%, but increased its count of individual or institutional clients by just 2% (or one new customer). Looking specifically at firms providing financial planning services (given that the broader RIA universe includes firms acting as behind-the-scenes asset managers, fulfilling roles from sub-advisors to mutual funds to the managers of various forms of separately managed accounts), this group saw a median 17% increase in AUM from the previous year, though only a 4% increase in new clients (a median of 10 new customer relationships in 13 months). In terms of firms that serve retail individual or high net worth clients, those that had at least one client last year showed a median addition of six clients this year, while firms with at least 10 clients the previous year showed a median gain of seven clients.

Altogether, this analysis suggests that while RIAs continue to reap the benefits of equity market growth, some firms are finding it challenging to add new clients (and while a portion of these firms might not be in 'growth mode', continuing to add new clients can protect against a certain level of attrition that inevitably occurs). Which suggests that assessing the effectiveness of the firm's current marketing funnels and perhaps considering strategies that can scale alongside the firm could help lead to more effective, sustainable growth (and allow a firm to better weather future market turbulence).

Is CFP Board Putting Its Own Interests Over Those Of The Public?

(Allan Roth | Advisor Perspectives)

Many financial advisors would like to see financial planning become a bona fide profession, alongside medicine, law, accounting, and others. Progressing from an industry to a profession can be a challenging path, though, including creating education and examination requirements as well as ensuring that those practicing it are upholding high technical and ethical standards in order to gain and maintain the public's trust.

For financial planning, CFP Board is arguably the best positioned to serve at the vanguard of elevating the industry to a profession in its role managing the CFP credential, including its education, exam, experience, and ethics requirements for those who seek it, in accordance with its long-standing mission to advance competent and ethical financial planning. CFP Board also maintains internal disciplinary capabilities (meant to ensure current CFP professionals continue to uphold the standards set by the organization).

At the same time, CFP Board also has its own interests, including growing the number of CFP professionals (which pay annual dues to the organization to help fund its operations, including salaries for staff, as well as advertising campaigns promoting the marks and the advisors who maintain them). Sometimes, these interests can conflict, including the question of how to handle individuals who faced customer complaints collected by or disciplinary actions enforced by outside organizations, such as the Securities and Exchange Commission or FINRA, and how those complaints are reflected on CFP Board's own Find-A-CFP-Professional platform.

For example, in 2019, an investigation by the Wall Street Journal found that CFP Board's "Let's Make A Plan" website that allows consumers to search for CFP professionals failed to disclose important background details in its advisor profiles (e.g., material disclosures about problematic behavior on FINRA's BrokerCheck website), potentially leaving consumers searching through CFP Board unaware of disciplinary and other actions they might consider when evaluating an advisor. Following the disclosures, CFP Board created a task force to review its enforcement program and updated the website to include links to a CFP professional's BrokerCheck and IAPD profiles so consumers could more easily see these records. However, a 2025 investigation by industry publication Financial Planning found that information published on CFP Board's advisor search tool was incomplete, with thousands of CFP professionals on the site having at least one disclosure on BrokerCheck (at the time, CFP Board noted that it wants the site to be credible to the public but that it was trying to balance "fairness" to CFP professionals, who sometimes receive disclosures on their BrokerCheck profiles through no fault of their own).

Amidst this backdrop, Roth argues that he would have wanted CFP Board to double down on its mission to the public as a 501 (c)(3) entity with a mission of supporting the public's interest (e.g., by ensuring consumers are fully aware of CFP professional's comprehensive disciplinary histories and upholding the organization's standards through discipline, and continuing to be more proactive in its disciplinary actions to weed out its own "bad apples".

Instead, he decries CFP Board's 2023 decision to split into two organizations: a 501(c)(3) entity (the CFP Board Center for Financial Planning), which promotes the benefits of financial planning to the public, and a 501(c)(6) entity, the CFP Board of Standards, which manages the CFP marks and akin to a membership association can more directly promote the interests of CFP professionals themselves within the industry as an attempt to grow the number of CFP professionals (and the revenue coming into the organization)… which can put the (c)(6) organization's growth goals in direct conflict with the (c)(3) organization's public interest, creating the risk that CFP Board tries to grow at the public's expense (rather than focusing on more robust disclosures and higher disciplinary standards for its certificants).

The split is especially notable as in recent years, Form 990s have come forth showing how the split played out, where in practice more than 85% of the CFP Board's revenue and operations shifted to the (c)(6) organization, while the original (c)(3) entity focused on the public has been substantively narrowed to little more than conducting research, providing scholarships, and supporting pro bono activity. Which means CFP Board as a whole has largely reconstituted itself away from being an organization that exists first and foremost to serve the public, into one that exists to "credential competent and ethical financial planners", where success is apparently defined by credentialing more of them.

In the end, this substantive shift in the CFP Board's mission means it now faces a challenge of considering the interests of itself as a growing (c)(6) non-profit aiming to grow the number of CFP professionals, alongside the interests of the broader public as the organization that also aims to "uphold CFP certification as the recognized standard". Which, as articles like Roth's highlight, is already becoming a more visible tension and concern amongst the CFP professional community itself.

The key question, then, is whether the industry as a whole (as it seeks to become a profession) would be better off with a CFP Board that serves the public (as a (c)(3) that CFP Board operated as for its first 50 years), and whether the pivot into a (c)(6) membership-association-style entity will bring enough benefits of growing CFP professionals to offset the risks and conflicts of interest that are created… especially when it comes to CFP Board's process of evaluating applicants and current professionals, determining "appropriate" disclosures and disciplinary actions, and balancing its growth goals (to increase the number of CFP professionals) against its efforts to improve the public's confidence in the profession (even if it means reducing the number of individuals with the marks?)

Wealth And Wellbeing: The Foundations Of A Truly Successful Retirement

(David Blanchett | SSRN)

When it comes to planning for a successful retirement, many individuals are focused on building a sufficient 'nest egg' to meet their spending needs. While financial wherewithal is no doubt an important part of this equation, a recent analysis finds that non-financial considerations can be just as (if not more) important when it comes to retirement satisfaction.

Using data from the 2022 Health and Retirement Study, Blanchett assessed the impact on retirement satisfaction of four key factors (lifetime income [e.g., Social Security benefits or defined benefit pension benefits], total savings, social connectivity, and health), both in isolation and when considered together. Perhaps not surprisingly, those with greater lifetime income, savings, health, and social connectivity were more likely to report being very satisfied with retirement than those who didn't score as well. Nonetheless, the differences across each factor are notable; for instance, 74% of individuals with at least $75,000 in lifetime income reported being very satisfied with retirement, while only 43% of those with less than $10,000 of lifetime income said the same. Looking on the non-financial side, while 73% of those who said they were in excellent health were very satisfied with retirement, only 30% of those in poor health reported the same.

Considering the factors in combination reveals that it's not necessarily sufficient to maximize one factor and ignore others. For instance, health appears to be a major driver of satisfaction, as while 82% of those who reported being in excellent health and with the highest level of social connections said they were very satisfied with retirement, this figure falls to 43% for those with the strongest social connections but in poor health. In fact, a regression analysis found that while retirement satisfaction increases with better scores on each of the four factors, the social and health components appear to play an even more important role than the financial factors (suggesting that making the 'swap' of sacrificing health over the course of one's career for higher income and savings might be a bad trade).

In sum, these findings suggest a valuable role for financial advisors not only in supporting clients financially (with a focus on both total wealth and lifetime income appearing to contribute to retirement satisfaction) but in helping clients recognize that their 'wealth' in terms of good health and social connectivity could be just as (if not more) important than their financial resources (perhaps encouraging them to create a plan to address these areas well in advance of retirement?).

Surveys On Retirement Spending Suggest Confidence-Boosting Benefits Of Financial Advice

(Jennifer Lea Reed | Financial Advisor)

Retirement is often framed as a time to sit back and enjoy one's 'golden years' after spending several decades in the workplace. However, the absence of a steady paycheck from employment can make this a stressful time as well, as a retiree's lifestyle expenses will need to be covered by other means. Which can sometimes make retirees reluctant to spend the assets they do have (for fear of exhausting them during their lifetimes) or even return to work at least in part to generate additional income.

According to a survey of 1,000 adults by the Allianz Center for the Future of Retirement, 71% of working Americans surveyed think they'll be reluctant to spend their savings in retirement to avoid drawing down their balances and 39% of retired respondents said they do hold back on spending for the same reason (reflecting the challenge of flipping the 'switch' from saving to drawing down investment accounts, 32% of respondents overall and 31% of Baby Boomers said it felt wrong to start drawing down assets after decades of accumulation). Half of respondents also noted concern about outliving their savings, high medical or long-term-care costs, and unforeseen expenses.

While 42% of respondents said they worry about spending too much money early in retirement, another 35% expressed concern that they will regret that they didn't spend enough. Part of the issue appears to stem from the challenge of estimating how much money they will need in retirement, with 75% of respondents indicating that it's difficult to do so. Further, a separate survey from Western & Southern Financial Group found that 45% of seemingly retired Americans are still working in some paid capacity and another 19% are open to returning to the workforce. Notably, only 33% said doing so would be a financial necessity, while 62% of retirees said it would be a personal choice (perhaps due to the sense of purpose and community it can provide, in addition to the financial boost). Also, respondents in both surveys highlighted the uncertain future of Social Security as a driver of their retirement-related anxiety.

Altogether, these surveys highlight several ways financial advisors can offer value for clients preparing for or in retirement. To start, having a retirement income plan could boost a client's confidence that they are spending in a sustainable manner (further, creating retirement 'paychecks' that simulate the regular income received during their working years could further reduce anxiety and encourage spending). Next, gauging a client's interest in working after retiring could allow for scenario planning to show how the additional income could strengthen their plan (or, depending on a client's circumstances) how the additional income isn't necessary to meet their lifestyle needs). Finally, planning for high-cost contingencies (e.g., an extended long-term care event or a [seemingly unlikely given the political ramifications] across-the-board reduction in Social Security benefits) can give clients a firmer grasp on their actual impact on their plans (mitigating the specter of seemingly limitless costs that could be incurred). Which gives advisors plenty of avenues to offer significant psychological value to clients that can complement the hard-dollar value they offer in other areas!

Why I Object To 'Hitting A Number' For Retirement

(Christine Benz | Morningstar)

Many advertisements for financial companies talk about hitting a certain savings 'number' in order to be able to retire. While having a 'number' to aim for could provide motivation to save during an individual's working years, it could also create (perhaps unnecessary) stress for individuals if their supposed 'number' seems unachievable.

Amidst this backdrop, Benz suggests that the concept of having a retirement 'number' might not be appropriate in the first place. To start, this 'number' is often calculated using 'back-of-the-envelope' math (e.g., using a 4% withdrawal rate) that could serve as a decent guidepost if retirement is in the distant future, but could turn out to be inaccurate as retirement gets closer (as an individual could want to consider how their spending might change as they enter retirement, any sources of income outside of their portfolio, as well as the impact of taxes and inflation on their total retirement spending over time).

Another issue with aiming at a particular retirement 'number' is that it could encourage an individual to retire after a period of strong market performance, possibly setting them up for a poor sequence of returns (that could imperil their future ability to draw from their portfolio) if a market downturn subsequently occurs.

Also, a singular focus on reaching a certain 'number' could lead an individual to put aside lifestyle considerations that might be more important for their overall wellbeing. For instance, certain individuals might decide that they want to continue working (at least part time) past 'traditional' retirement age (which could reduce the 'number' that they need to retire), while others might be willing to sacrifice greater income in retirement to retire earlier than expected.

Ultimately, the key point is that reaching a certain retirement savings 'number' isn't necessarily enough to guarantee financial success and overall satisfaction in retirement. Which suggests a valuable role for financial advisors in incorporating the many factors that lead to a financially successful retirement plan when tracking a client's savings and also in encouraging clients to take a step back to consider what they want their retirement to look and feel like in the first place.

Contributor To Manager: The Hardest Move In Any Advisory Career

(Ray Sclafani | ClientWise)

When a firm looks for an individual to step into a management role, they sometimes look to individuals who are top 'producers' in their specific area, assuming that their success will translate into a new management role. From the 'producer's' perspective, such a promotion opportunity could be enticing, whether due to increased salary, equity ownership opportunities, or the chance to move 'up' within the company. A key issue, though, is that the skills that make an individual a successful 'producer' aren't necessarily those that make a successful manager. Which, if not acted upon, could lead to negative results for the new manager, their team, and the company as a whole.

According to data from Gallup, managers account for 70% of the variance in team-level employee engagement (a greater impact than pay, perks, or mission statements). However, approximately 60% of new managers fail within their first 24 months, according to separate data from research and consulting firm Gartner, suggesting that many companies are missing the mark when it comes to onboarding new managers (with repercussions for the performance of their team).

Sclafani suggests that instead of considering a move from 'producer' to manager simply as a promotion, they treat it like a career change that requires training in the skills the individual needs to be successful. For instance, the firm might ask a candidate why they're interested in the specific role (and not just in the title or pay bump that comes with it). Once promoted, creating a 90-day onboarding plan can set markers for their progress in managing the adjustment (which could benefit from being paired with a coach or peer group for support). Also, having a formal training program can ensure they address the mindset shifts that are needed in the new role (e.g., from being a 'doer' to a developer of others and from an individual contributor to a systems thinker) as well as the skills needed to support a team (and be responsible for its production).

In sum, transitioning from a 'producer' role to a manager role can have higher-than-expected stakes for the individual receiving the promotion, the team they are going to manage (which can be a particularly challenging transition if the new manager was previously a peer of team members), and for the firm (which could face retention issues if the transition goes poorly). Which suggests that planning well in advance of the transition by both the firm (e.g., to set up an onboarding plan and training program) and the 'producer' making the move (e.g., to consider whether a management role is best suited for them or if they might prefer to remain a high-level 'doer') could be a valuable investment of time!

How To Frame Questions To Get Honest Answers From People You Manage (Or Clients)

(Gabriela Riccardi | Quartz)

Many professionals have likely had the experience of being in a team meeting where a manager finishes by asking, "Does anyone have any questions?", which is often followed by the sound of crickets from the crowd. While the manager might come away thinking that they were clear in their communication, in reality team members likely had questions that they didn't feel comfortable raising (perhaps because they didn't want to be seen as asking a 'dumb' question).

To surface 'hidden' questions, one tactic is to reframe the way the question is asked. For instance, instead of asking "Are there any questions?", the manager might instead say, "We covered a lot of material today. I'm sure there are plenty of you with questions. Now is a great time to ask them." In this way, the leader not only acknowledges that their comments might have raised questions, but also explicitly gives the audience permission to ask them (whereas "Are there any questions" might come off in a way that suggests the leader actually doesn't want any questions). Also, given that every meeting scenario is different, engaging in "framestorming" or considering different ways to ask a question can offer the chance to experiment with different framings that might be more or less effective at drawing out different individuals or groups.

Notably, the idea of reframing questions can be applied in the financial advisory client context as well, as clients might be tempted to say "no" when an advisor asks if they have any questions after presenting during a meeting even if they might have questions beneath the surface. Which ultimately suggests that rather than taking a lack of questions from an interlocutor (whether a team member or a client) as a sign of one's explanatory skill, it could instead be an opportunity to consider different ways of prompting them to ensure any underlying concerns actually come to the foreground.

The Unhappiest Successful Advisors: Accidental Business Owners

(Nerd's Eye View)

For some advisory firms, the biggest challenge is not the success and growth of the business...but that the advisory firm owners themselves are unhappy, or downright miserable. This seems to particularly occur amongst those firms managing between approximately $100 million and $300 million of AUM...a subcategory of firms one might call "accidental business owners". Because the source of their stress is that they may have built successful and profitable businesses - and now find themselves responsible for managing it - despite the fact that they never actually intended to build a firm that they would have to spend so much time managing in the first place!

To understand the phenomenon of the accidental business owner, it's important to first point out that the word "business owner" is being used in a very specific way. Advisory firms are often talked about as being "businesses", but there's a distinction between true "businesses" and advisory firm practices. The difference is that a practice is built around an individual advisor. The practice is you, and while you may have a staff member or two, it's primarily about the services you provide to clients. By contrast, an advisory firm business – a true business – goes beyond just you as the founder advisor.

The fundamental problem that crops up for those financial advisors who become accidental business owners is that the job of running an advisory business is different than the job of being a successful advisory practice. A successful practice as a financial advisor is all about your ability to effectively service your own clients. By contrast, running a successful advisory business requires you to be in the role of teaching and training other financial advisors to be good at business development, financial planning, servicing clients, and managing relationships (in addition to managing the firm, hiring staff, making technology decisions, and actually being a leader of the firm). Which means if the primary reason you started your firm in the first place was because you like to be a financial advisor, and give people advice, and help them, and have those client relationships… then being an advisory firm business owner is going to be pretty miserable, because you don't get to do any of that stuff anymore. Which ultimately tends to occur as firms grow to around $100 to $300 million in AUM, because this is often the point at which an advisor (or a small team of 2-3 advisors) crosses the threshold where they reach capacity and start to scale their practice up to a business.

With this in mind, those who find themselves in this situation might first acknowledge that there is effectively a fork in the road. The path on the left is to embrace your new role as a business owner. You may not have set out to do it, but here you are, and this is your opportunity to grow, to learn something new, and to do this well. You may recognize that you need help, but that's OK. If you're a more visionary type, and you can see what needs to be built, but you're really not the good manager to build and integrate it all together, then make the reinvestment to hire a Chief Operating Officer to be your right hand for implementation.

On the other hand, the path to the right is to go back to being a successful solo advisory practice again. This is by far the more painful path for many, because it basically means downsizing the firm and the number of clients you serve, which to many can feel like "failure". Except it turns out that it may be the single fastest step to actually make you happy again in your business. Because, due to the 80/20 rule, many or even most advisors can maintain their current take-home pay by scaling back to (just) their top 20% of clients while freeing up additional expenses and a lot of time and effort.

In the end, advisory firm owners might find value from considering both whether they're running a practice or a business and, more importantly, what they want it to be. While either path could lead to success, the key is to decide which one to build towards. And for those who find themselves accidentally going down the "wrong" path (as an accidental business owner that doesn't really want to be anymore) it's important to recognize that going back to a lifestyle practice is an acceptable answer, and it may be the path that truly leads to greater happiness!

Parsing The Rules On Whether A College Scholarship Is Taxable

(Laura Saunders | The Wall Street Journal)

Given the high cost of tuition at many colleges, students (and their parents) often dream of getting a scholarship that could defray (or perhaps fully cover) the costs. While not necessarily treated like other sources of income (e.g., from a job) when it comes to taxes, keeping careful records and applying aid strategically can minimize any potential tax burden.

To start, scholarships, grants, and fellowships typically are tax-free when used for tuition or for required fees, books, supplies, and equipment. On the other hand, financial assistance that's used to pay for room, board, most travel, and optional expenses typically is taxable.

In terms of institutional aid received, most colleges are required to send Form 1098-T both to students and the IRS; the form lists the qualified tuition and expenses paid by or on behalf of the student as well as the amount of any scholarships or grants from the institution to the student and from some third parties. However, the form doesn't break out whether a portion of the scholarship or related funds are taxable (e.g., if any of the funds were used to pay for room and board) and independent providers of scholarships or assistance aren't required to issue 1098-T forms (leaving it up to students and parents to track these totals).

Amidst this backdrop, financial advisors can support clients whose children earn scholarships not only by helping them track different sources of funding (and their associated expenses), but also by strategically using this funding for its most tax-efficient use (e.g., using scholarship dollars for tuition while using 529 plan assets to fund room and board [the latter of which represent tax-free distributions as long as the student is enrolled at least half time]) to avoid any headaches (or unexpected bills) come tax time.

Qualifying For Financial Aid As A Small Business Owner

(Lynn O'Shaughnessy | Wealth Management)

When assessing the level of financial need for a given student and their family, colleges (through the FAFSA form or CSS profile) consider both the student's income and assets as well as those of their parents. While checking, savings, and investment accounts fall under the umbrella of assets, a trickier issue is the consideration of family businesses.

While family businesses had previously been excluded as parental assets (which are multiplied by 5.64% in the Student Aid Index calculation when determining how much a family can pay for college) on the FAFSA, the past two admissions cycles saw family businesses included. However, following passage of the "One Big, Beautiful Bill Act" (OBBBA) last year, family businesses are no longer considered as assets for financial aid purposes on the FAFSA, provided that the business employs 100 or fewer full-time or full-time equivalent employees and is strictly owned and controlled by the family (with the family owning more than 50% of the company). Notably, income generated by the business still flows to the FAFSA via the IRS Data Exchange (which enables FAFSA to directly access a household's income tax returns) and is considered for aid calculation purposes.

On the other hand, the CSS Profile (which is used by more than 200 mostly private colleges and universities to award their own institutional aid) does require parents to report the net value of their business or farms as an asset (which is multiplied by 5% when determining its contribution to a family's ability to pay for college, though some schools use a graduated scale for business assets), so family business assets might still be a consideration for financial aid depending on the schools a student is considering.

In sum, clients who own small businesses (including many financial advisory firm owners themselves!) could find their students eligible for more need-based aid for many colleges than if the value of their business was considered an asset. Further, advisors could support clients by helping them manage their income in a given tax year that will be used for aid calculations (e.g., by adjusting the timing of equipment purchases or shifting bonus allocations) to boost their potential eligibility for financial aid.

The Latest In College Pricing: Tuition At 10% Of Your Income

(Ron Lieber | The New York Times)

Unlike many goods and services where there is a set price that all consumers pay, knowing how much a given student (and perhaps their family) will pay for college can be a much more challenging endeavor. Because while schools might publish a 'list price' for tuition, the actual price students pay can vary widely based on need-based financial aid and so-called "merit aid" (i.e., scholarships and grant money from a college not based on need, often used to attract students from relatively affluent families who might be enticed to attend by a discount from the full list price).

This system can leave students and their parents confused about which colleges they might be able to afford (and how much they might pay in the process). While some schools offer calculators that can provide an estimate of what a student might pay given their family's financial circumstances, at least one school is trying to make pricing more transparent. Whitman College in Walla Walla, Washington now lets prospective students know that they will pay no more than 10% of their parents' adjusted gross income in tuition (room and board are outside of this calculation but have a list price). Notably, students might end up paying less than this amount (e.g., if they receive merit aid), but it at least puts a ceiling on what they will pay (the school still verifies income using the Free Application for Federal Student Aid [FAFSA] form). The college itself hopes that this transparency will lead to more applications from students who might initially be scared off by its $90,000 list price (notably, only 6% of its entering students paid the full price last year!).

While it remains to be seen whether other schools follow in Whitman's path, this move does demonstrate that many colleges are aware that their increasingly high list prices could spook potential students who might, in reality, be able to afford to attend once all sources of financial assistance are considered. Which could also help financial advisors support clients considering college options with their children, as being able to put a number to this major cost (and perhaps showing them that they could afford to attend a wider range of colleges than they might have initially considered) could give the family greater confidence in making this decision!

We hope you enjoyed the reading! Please leave a comment below to share your thoughts, or send an email to [email protected] to suggest any articles you think would be a good fit for a future column!

In the meantime, if you're interested in more news and information regarding advisor technology, we'd highly recommend checking out Craig Iskowitz's "WealthTech Today" blog.