Weekend Reading For Financial Planners (August 2–3)

NASAA Seeks To Loosen State Rules On Testimonials To Conform With The SEC's Marketing Rule

(Melanie Waddell | ThinkAdvisor)

For decades, RIAs were not allowed to use any type of client testimonials in their marketing, under the rationale that advisors would simply 'cherry-pick' the clients who had achieved the best results to solicit for testimonials, resulting in a skewed impression of what clients were actually likely to experience in working with the advisor.

That changed in 2020, however, when the SEC completely revised its original Marketing Rule to 'modernize' it in accordance with the rise of testimonial marketing in other industries through online review sites like Yelp and Google. The new Rule 206(4)-1, which became final in 2021 and enforceable beginning in 2022, permits testimonials in RIA marketing, provided that the advisor doesn't attempt to curate (i.e., cherry-pick) which reviews to publish or that they also publish a specific set of disclosures about the nature of the testimonial. The takeaway was that, for the first time, SEC-registered advisors could reference third party review sites like Yelp and Google Reviews, and advisor-specific sites like IndyFin and Wealthtender, to highlight their ratings and reviews (whereas under the old rule, clients were free to leave reviews of their own volition, but advisors could neither ask clients to leave them nor highlight any of the reviews on their websites or marketing materials).

The caveat, however, was that the SEC's new Marketing Rule only applied to advisory firms under the SEC's jurisdiction, and not to the many smaller RIAs that are instead regulated at the state level. And while some states adapted their own securities regulations to conform with Rule 206(4)-1, around half of all states have retained the old ban on testimonials. Meanwhile, the North American Securities Administrators Association (NASAA)'s own Model Rule 102(a)(4)-1, which many states use to shape their own securities regulations around dishonest or unethical business practices, retained language that explicitly bans testimonials as well. With the result being that while all SEC-registered advisors, as well as select state-registered advisors, are free to use testimonials in their marketing, a significant additional subset of state-registered advisors are still banned from using them.

But now, over four years after the SEC's Marketing Rule became effective, NASAA has proposed to amend its Model Rules to conform to the SEC's Rule 206(4)-1 and permit testimonials under the same conditions as provided in the SEC's rule.

For advisors, NASAA's new Model Rule is a step towards eliminating the inconsistency between different state jurisdictions on whether or not testimonials are allowed in marketing materials, which can be a source of confusion over what an advisor is or isn't allowed to include in their marketing materials (particularly when an RIA is registered in multiple states, some of which may allow testimonials while some do not). It would also help to even the playing field between advisors who can use testimonials in their marketing and those who can't, giving the former a significant advantage over the latter in leveraging the "social proof" effect of testimonials to build trust with the advisor's target clientele.

Notably, NASAA's proposed Model Rule would still need to be finalized, and then states would need to adopt the Model Rule into their own securities regulations in order to actually permit testimonial marketing in the states that don't currently allow it. But after a long wait it seems that the wheels are finally in motion towards resolving the state-by-state inconsistency on testimonial marketing, and implementing the 'modernized' version of the rule for all advisors regardless of their jurisdiction.

Research Shows That Independent RIAs Stand To Increase Headcounts Despite Advisor Retirements

(Alec Rich | CityWire RIA)

For years, the financial media and industry observers have been sounding the alarm about a coming wave of advisor retirements with the aging of the Boomer generation that make up a significant portion of the industry (by some estimates nearly 40% of all advisors), resulting in fewer advisors to serve the aging population of Boomers (and rising Gen X'ers) who are also reaching retirement age and increasingly in need of financial advice. There's little reason to doubt these predictions, as the demographic numbers of the advisory industry are what they are, and nobody can work forever. However, it's possible that the effects of the upcoming advisor retirement wave will look different depending on whether one is looking at the RIA channel or the broker-dealer channel.

According to a new whitepaper from Cerulli and 55ip, despite the upcoming retirement boom which Cerulli anticipates will result in the retirement over 105,000 advisors, or 37% of advisors industrywide by 2033, in the nearer future the RIA and independent broker-dealer (IBD) channels stand to actually increase headcount, with advisors at independent RIAs projected to rise by 11.8% and IBDs by 4.7% by 2028. Meanwhile, insurance, bank, and national/regional broker-dealers are all expected to decline in headcount, as well as wirehouses and hybrid firms.

In other words, despite the looming retirement wave, advisors are so increasingly favoring independent channels, due in no small part to the fact that advisory firm transitions tend to favor the RIA channel as the RIA M&A boom over the last several years has disproportionately increased RIA valuations, that the RIA channel is projected to absorb a bigger share of retiring advisors' firms, clients, and staff, leading to higher headcounts in the RIA channel and resultingly disproportionate attrition rates on the broker-dealer side.

Ultimately, while there's still reason for concern that the imminent retirement of tens of thousands of advisors will make it difficult to meet the demand for financial advice from individuals and families facing their own retirement, it appears that an increasing portion of the advisors to whom those individuals can turn for advice will be in the RIA channel. Which is good news in that a greater number of retirees will be able to hire a fiduciary advisor at an RIA, even though there is still work to be done on bringing newer advisors into the industry (and the RIA channel specifically) to better meet the demand for fiduciary advice overall. Though as the trends themselves are demonstrating, eventually market forces (from the fact that consumers are favoring the RIA channel and its fiduciary advice, to the rising salaries for advisors in the RIA channel) may resolve the matter by making the financial advisor job increasingly appealing until there are enough new entrants to satisfy the demand?

Why The Number Of Broker-Dealers Could Drop 20% In The Next 5 Years

(John Manganaro | ThinkAdvisor)

For many years, the trend in the financial advisory industry has been movement away from broker-dealer firms – from the large wirehouses to national or regional broker-dealers to insurance broker-dealers to small and midsized independent broker-dealers – and towards the independent RIA channel. The shift towards RIAs has been driven both by advisors (who often appreciate the greater independence of decision making and technology under the RIA banner, as well as the potential to keep more of the client revenue that they earn, and to not be beholden to product sales for their compensation), as well as clients (who have voted with their feet on their preference for the greater fee transparency and less conflicted advice of the RIA model).

After many years of steady movement of advisors and firms from broker-dealers to RIAs, one would think that the momentum would slow down at some point when most of the advisors who would rather be at an RIA have moved to the RIA channel, and the ones still at broker-dealers would prefer to remain there. However, according to recently released data on advisor registration totals, the broker-dealer-to-RIA shift is still very much ongoing, and could even gain momentum in the near future. According to FINRA, the total number of broker-dealer firms has declined by 5.4% over the last five years, while a separate report from the Investment Advisers Association (IAA) shows that the number of SEC-registered RIAs has grown by 17.6% over the same time.

What could cause these trends to accelerate in the future is the fact that the total number of advisors registered solely as broker-dealer representatives still greatly outnumbers the number of advisors registered solely as IARs, at 311,469 broker-dealer representatives to 89,223 IARs. Meaning that there is likely still a very long way to go until reaching an equilibrium point where advisors will be fully sorted into the channel that they prefer, and there is plenty of room for an increase in momentum as the benefits of the RIA channel become more apparent.

The key point is that while it seems like the movement towards RIAs has been going on year after year for a long time (and the data generally backs this up), there's still no reason to think that movement will slow down in the near future. Because even though a greater proportion of advisors are providing fiduciary advice now than ever before, the reality is that there is still plenty of unmet demand for advice that can allow new entrants to thrive in the RIA channel.

New Tax Breaks For Tips, Overtime, And Car Loans Aren't Quite What They Seem

(Sheryl Rowling | Morningstar)

During the 2024 presidential campaign, Donald Trump promised to enact policies that would exempt income from tips and overtime wages from tax, as well as to make interest on auto loans tax deductible as mortgage interest is currently. Subsequently, when Trump's signature piece of tax legislation for his second term, the One Big Beautiful Bill Act (OBBBA) was signed into law, it contained provisions titled "No Tax On Tips", "No Tax On Overtime", and "No Tax On Car Loan Interest", set to take effect from 2025 through 2028.

But despite the unmistakable implication from the titling of those provisions that they fully deliver on Trump's campaign promises, in reality they don't truly make tips, overtime, or auto loan interest tax-free. Rather than being fully excluded from income, each provision is set up as a deduction, which is important because, in the case of tips and overtime, that income is still subject to payroll taxes (i.e., the 7.65% FICA tax for Social Security and Medicare). Furthermore, the deductions are structured to be taken after Adjusted Gross Income (AGI) is calculated, meaning the deductions aren't factored in for determining other tax items like the taxability of Social Security income, IRMAA surcharges for Medicare Part B premiums, or income limits for Roth IRA contributions.

Additionally, despite the broad claims of their titles, the new deductions set fairly narrow restrictions on what can actually be deducted. The tips and overtime deductions are capped at $25,000 apiece (with the overtime deduction further limited to $12,500 for single filers), while the auto loan interest deduction maxes out at $10,000 per year. And not all tips or overtime wages will qualify for the deduction: Only tips from "occupations traditionally receiving tips", and not received in the course of a service trade or business, will qualify for the tips deduction, while only overtime pay required by the Fair Labor Standards Act (FLSA) qualifies for the overtime deduction, which excludes many overtime benefits paid to union workers and other occupations exempt from FLSA. Meanwhile, the auto loan interest deduction is limited only to loans used to purchase new cars assembled in the United States – meaning that anyone paying interest on a pre-existing auto loan, or anyone who buys a used car, takes out a new loan on an existing car (e.g., to buy out a lease), or buys a car not meeting the "assembled in the United States" criteria, won't be able to deduct their loan interest.

Ultimately, while the trio of new deductions will undoubtedly benefit some number of households that fit within their eligibility criteria, the maze of rules and restrictions surrounding them will serve not only to narrow the range of taxpayers who can benefit from the deductions, but also sow a great deal of confusion among taxpayers and tax professionals around who actually qualifies for the deduction. Tax practitioners and advisors engaging in tax planning for 2025 and beyond will need to be increasingly diligent about the data they gather – e.g., the specific occupation of the client to understand whether or not they can deduct tips; whether or not the client's overtime wages are mandated by FLSA; or whether their recently purchased car was new, used, and/or assembled in the U.S. – to account for the true impact the deductions will have on their clients. Though if there's a silver lining, it's that the deductions can only reduce a taxpayer's taxable income, meaning at worst they'll pay the same amount of tax as they did prior to OBBBA!

How OBBBA Expands Qualified Small Business Stock (QSBS) Tax Benefits

(Alexandra Valentín | CityWire Americas)

The tax rules for Qualified Small Business Stock (QSBS) under IRC Sec. 1202 have existed under various forms since 1993, creating tax benefits for founders and early investors in startup companies and arguably playing a role in the stratospheric growth of the tech startup ecosystem over the course of the 21st century. Originally Sec. 1202 allowed for 50% of the gain on the sale of QSBS to be excluded from the seller's income, but after numerous revisions in the 2000s the exclusion percentage was increased to 100% for QSBS acquired in 2010 or later and held for at least five years, with a maximum of $10 million of total excludable gain.

The recently passed One Big Beautiful Bill Act (OBBBA) goes even farther in expanding the tax benefits to QSBS holders. While keeping the maximum 100% gain exclusion for QSBS held for at least five years, the new law introduces a tiered exclusion schedule for QSBS held over shorter periods, with 50% of gain being excludable for QSBS held at least three years and 75% excludable for QSBS held at least four years, rather than requiring QSBS to be held at least five years to receive any exclusion at all.

Perhaps even more significantly, OBBBA increases the maximum excludable gain from QSBS from $10 million to $15 million, effectively providing a tax benefit for QSBS holders at the maximum 23.8% long-term capital gains tax rate of $15 million × 23.8% = $3.57 million. Additionally, the new law allows larger corporations to qualify for QSBS status, increasing the qualifying "gross assets" limit from $50 million to $75 million.

From a planning perspective, the new rules apply only to QSBS issued after OBBBA's enactment date of July 4, 2025, marking that date as a dividing line between financing rounds or equity issuances under the old rules and those that qualify for the new benefits. However, for newly issued QSBS, the new law adds further fuel to planning strategies such as gifting QSBS to multiple family members or trusts, each of whom can qualify for their own $15 million gain exclusion under Sec. 1202. Ultimately, while QSBS status may only apply to a small slice of corporations in the business landscape, OBBBA represents a potentially massive tax windfall for those founders and investors who can qualify for it.

A Guide To Expanded 529 Plan Rules And New 'Trump' Child Accounts Under OBBBA

(Ben Mattlin | Financial Advisor)

Parents often want to save funds on behalf of their children for future use, whether that be to help offset the cost of college or other educational expenses, buying a first home, getting a head start on retirement savings, or just having some extra money for traveling or doing whatever they see fit with as a young adult.

There are numerous options for doing so as well, each with their own specific rules, nuances, and tax characteristics. For example, taxable custodial accounts like UTMAs and UGMAs can be used by the child for any purpose once they reach the age of majority, but are also taxed on any income they produce and are subject to the Kiddie Tax rules while the child is under age 18. Funds in 529 plans are tax deferred and can be withdrawn tax-free, but only for certain qualified educational costs (though up to $35,000 can also be rolled tax-free into a Roth IRA). And retirement accounts like traditional or Roth IRAs offer tax-deferred or tax-free growth, but require earned income to contribute and are inaccessible for penalty-free withdrawals until age 59 ½ unless the distribution meets certain criteria for an exception.

The recently passed One Big Beautiful Bill Act (OBBBA) contains two provisions that are notable for parents who aim to put savings away for their children.

First, the new law opens up two new categories of expenses that will be eligible for tax-free withdrawals from 529 plan savings: Up to $20,000 per year of qualified K-12 expenses such as tuition, books and curriculum materials, testing fees, and tutoring costs (where previously only K-12 tuition costs of up to $10,000 was eligible for withdrawal); and an unlimited amount of costs towards qualified postsecondary credentials, including tuition, materials, exam fees, and ongoing CE costs for licensing, certification, and credentialing programs (including the CFP certification).

Second, OBBBA creates an entirely new type of account (dubbed the 'Trump' Account) that allows up to $5,000 of contributions per year on a child beneficiary's behalf up through the year that the child turns 17. Starting the year the beneficiary turns 18, the account reverts to something like a standard traditional IRA, where distributions are taxable upon withdrawal and distributions before age 59 1/2 are subject to a 10% penalty tax. Additionally, Congress provided for the funding of $1,000 to a Trump account for U.S. citizens born from 2025 through 2028, seeking to jumpstart the use of the program – and to potentially form the nucleus of a long-term plan to supplement (or replace) retirement Social Security benefits by expanding the ability for government-funded contributions to be made over beneficiaries' working lives.

For now, though, the main effect of OBBBA on parents saving for their children is to expand the range of options available even beyond what they were already. A parent with the desire and ability to do so can now contribute to a UTMA or UGMA for general unrestricted funds, a 529 plan for K-12, college, and/or postsecondary costs (with $35,000 of any leftover funds eligible to be rolled over to a Roth IRA), a Trump account for future retirement savings, and once the child has earned income of their own, a traditional or Roth IRA for an even bigger retirement jumpstart. Although ultimately few parents will likely save to all these accounts – so the challenge going forward will be deciding which account makes the most sense to fulfill the parent's goals for their savings on their child's behalf.

Our Tech-Forward Future

(Bob Veres | NAPFA Advisor)

In the nearly three years since the launch of ChatGPT brought artificial intelligence (AI) into the mainstream, there has been no end to the breathless predictions for what AI might one day be capable of; however, it's been much rarer to find actual concrete use cases for what AI can actually do for financial advisors. Over the last year, however, some of those use cases have gradually been coming into focus, and while they aren't (yet) world-changing in their scope, they do point to a future where financial advisors can work in conjunction with multiple AI tools to make at least incremental improvements in their operations, client service, and planning.

Perhaps the most useful AI use case to emerge so far has been the automation of notetaking in client meetings, as achieved by AI meeting note tools including Jump, Zocks, Finmate AI, and around a dozen others that have all appeared in the Client Meeting Support category of the Kitces AdvisorTech Map (as well as an increasing number of embedded AI notetakers from other software providers such as Wealthbox, Altruist, and Nitrogen). These tools can help to significantly reduce the amount of time advisors and their teams spend on meeting preparation and follow-up (which Kitces Research on Advisor Productivity has found usually take around one hour each, or two hours total, per client meeting).

Additionally, AI can be helpful in sifting through quantities of unstructured data and using them to generate summaries and insights. For example, tools like Holistiplan and FP Alpha's estate modules and Wealth.com's Esther can parse through the non-standardized text of a client's will and trust documents and create a summary of the key provisions, saving the advisor the time of reading through the documents themselves and manually pulling out the information needed to reconstruct the client's estate plan.

It's important to note, however, that the incremental time savings represented by AI's current use cases won't necessarily translate into skyrocketing advisor productivity. Kitces Research on Advisor Productivity has found that the true drivers of productivity are working with more affluent clients (and charging full value for the advisor's services) and leveraging staff support to allow the advisor to focus on their client work, while focusing on cost or time savings was actually associated with less productivity.

Ultimately, as we see more AI tools coming out (and even more AI-related bluster), the key question will be how much these tools can actually do to improve the quality of advice that advisors give. Because while efficiency improvements are nice to have and can cut down on the frustration of manual tasks from advisors and back office staff alike, from an actual productivity standpoint they pale in comparison to giving in-depth advice to high-net-worth clients (and charging full value for that advice) – which is much harder to automate than a meeting follow-up email!

The Compliance Risks Of Using Generative AI In A Financial Planning Practice

(Emma Foulkes | Journal of Financial Planning)

In recent years, generative AI has found its way into more and more technology for financial advisors, from AI meeting note tools that transcribe meetings and generate summaries and follow-up emails to chatbots embedded within CRM tools that can answer questions about past client interactions without needing to sort through reams of past communications. While these tools can be helpful in cutting down the time spent on tedious day-to-day tasks, they introduce risks to advisory firms that may not exist with other types of technology.

For example, when an AI-generated communication is sent to a client, it's treated as if it came from the advisor themselves, regardless of whether the advisor actually had any role in writing it. E.g., if an advisor sends an AI-generated meeting summary to a client that contains false or misleading information about the client's investments or the advisor's recommendations, the advisor themselves could be held to be in violation of regulations forbidding misleading client communication.

By that same token, generative AI has proven disturbingly prone to providing factually incorrect information (i.e., 'hallucinating'), which is made worse by the reality that there's generally no way to verify the data sources or rationale via which it comes to its conclusions. In that way, using AI to provide actual financial advice (rather than simply drafting or polishing communications) is difficult to do as a fiduciary advice, since AI tends to act as a 'black box' that can't be fully vetted for accuracy.

The key point is that even though AI technology can seem mind-blowingly advanced and capable of things no technology has done before, it's still in its infancy as a practical tool and isn't yet to the point where it can be trusted to act fully autonomously. Advisors can manage these risks by ensuring that they – and not they AI – are the source of any financial advice given to the client; that they proofread any AI-generated communications for accuracy, compliance, and sensitive information before it's sent to the client; and that they follow the policies of their firm and the SEC or state regulators when using generative AI tools.

Above all, advisors are responsible for the results of any technology they use, meaning that for all of the time-saving potential of AI, it's the safety and security of client data and the accuracy and quality of advice that come first.

The Silent Revolution: How AI In RIA Operations Is Eating Your Tech Stack

(Craig Iskowitz | WealthTech Today)

When developments in AI technology began to accelerate in the early 2020s, one of the earliest claims about the technology's impact would be that it would be a game changer for portfolio management. With millions of potential data points existing between corporate filings, economic data, and even brand mentions on social media, it was thought that advanced AI technology could find connections that no human had thought of, leading to market-beating investment ideas for those with the right tools.

The problem, however, was that institutional asset managers like hedge funds have been pouring money for many years into just that type of technology to find and exploit connections between esoteric data points, leaving very few stones left unturned for 'retail' AI tools to discover. And realistically, if a technology company did happen to create an AI tool so powerful that it could reliably find new ways to create alpha, the smartest move would be for it to start its own hedge fund to make money off of those strategies itself, not to license the platform to others for a SaaS fee.

That said, AI still can have plenty of use cases in wealth management – except instead of existing on the front end where dollars are invested and advice is given, it sits on the back end where it can be used to make the firm's operations flow smoother for a more streamlined client experience.

For example, it's traditionally been a challenge for wealth management firms using alternative or private investments to incorporate those investments into their client portals and performance reports, since so many of those investments' statements come in the form of paper or PDF documents rather than structured data that can flow easily into a reporting platform. AI tools such as Powder, however, have proven capable of pulling data from PDFs and scanned documents and normalizing them for importing into client portals and performance reporting tools, resulting in a more efficient way for clients to see all their data at once.

Ultimately, while the hype-driven popular conception of AI may be as a genius stock picker, the true utility of AI in wealth management is behind the scenes where it can help with eliminating manual data entry, pulling together data from disparate and irregular sources, and streamlining client meeting prep and follow-up. Which isn't as sexy as having a robotic Warren Buffett available at all hours to make investment recommendations, but is enough to make real improvements to operational efficiency, particularly in bigger firms where even a 1–2% improvement might be the equivalent of multiple full-time staff!

The Large American Family Is Becoming A Luxury Good

(Katie Gatti Tassin | Money With Katie)

For many years, it wasn't uncommon to see large families depicted in popular culture, from The Brady Bunch to the McCallister family in Home Alone. And while those families were often depicted with aspirational homes and lifestyles – the real-life suburban Chicago home that served as the setting for Home Alone is worth over $5 million today, while the Brady Bunch had an actual live-in maid – they were still intentionally made to be relatable to their audience. It was possible to connect with a family shown onscreen piling into a station wagon or sleeping in bunk beds, where it was clear that everyone had to make do with a little less space or privacy than they might have preferred. Even though the families onscreen were well-to-do, in other words, they still were only a rung or two above the middle-class lifestyles of the people watching them.

In 2025, however, the cost of having (and raising) children has exploded to nearly $300,000 per child on average, meaning that even having multiple kids, much less as large a family as was shown the old TV shows and movies, is increasingly out of reach for many families. And perhaps not coincidentally, the depiction of large families onscreen has taken a distinctly upmarket turn in recent years, epitomized most famously by celebrities like the Kardashians but also extending to numerous social media influencers on platforms like Instagram and TikTok. In today's pop culture, having young children running around amidst luxury SUVs and Birkin bags in an Instagram post implies an abundance of wealth – either to spend on a $30,000 handbag or $30,000 per year on daycare – that's well beyond what most people have access to. Instead of being relatable as in the TV and movies of old, the lifestyles of the most famous large families today seem distantly remote from those who watch them.

The key point is that, in a country that often defines itself by the freedom of choice that its citizens enjoy, the freedom to have a bigger family is restricted by the skyrocketing cost of raising kids and the absence of European-style policies like guaranteed paid parental leave for new parents and free or subsidized daycare for young children that support families across the income spectrum. While it's worth remembering that what we see onscreen doesn't usually reflect life as it actually happens – platforms like reality TV and social media tend to depict their subjects only in the most flattering and glamorous light – it's also true that popular culture provides at least some reflection of how we view ourselves as a society. And in that reflection, raising multiple children has itself become a kind of luxury good, available only to those who can afford it.

The Death Of The AmEx Lounge

(Nick Maggiulli | Of Dollars And Data)

Since the end of the Great Recession, the net worth of the top 10% of Americans has surged, going from a median of around $1.3 million in today's dollars to nearly $2 million. The reasons for this are numerous: A mostly uninterrupted bull market since 2009, booming real estate values, high demand for educated workers, tax cuts benefiting upper income households, and so on. But the result is that there are far more people today who could be considered millionaires than there once were, even when adjusting for inflation: An estimated 23 million households today have over $1 million in net worth, compared to just 7% with an equivalent inflation-adjusted level of wealth back in 1989.

On the one hand, the growth of the top 10% illustrates how uneven the distribution of economic gains since the Great Recession has been: Since 2007, while the median net worth of the top 10% of U.S. households has grown by 49%, the median net worth of all households has grown only 11%.

But on the other hand, for those actually in the top 10%, the growth of the millionaire class has changed what it means to be a "millionaire". The markers of wealth that were previously accessible only to a relative few, from airport lounges to homes in major metro areas to beach resorts, are now shared among a much larger group of affluent households. With the result being that those creature comforts are no longer the status symbol that they used to be, but are instead either bid up in price (as with real estate), overcrowded (as with airport lounges), or require cutthroat competition to get in on their benefits (as with beach resorts where guests need to wake up by 4am just to claim a pool chair).

In other words, for each person who assumes that moving up to the next level of wealth will allow them access to the same privileges that they see people at that level enjoying now, the reality is that there millions of others also trying to work their way up the ladder, and once they do reach the next level then by definition it won't be as exclusive as it seems today. Which is another lesson on why it's best not to define one's own wealth by external markers of wealth and exclusivity, but by looking inside oneself to see whether their own (current and future) needs are being met.

How Coupons Became Passé, Even In A High-Price World

(Oyin Adedoyin | Wall Street Journal)

In the midst of the Great Recession in the late 2000s and early 2010s, high unemployment and economic uncertainty led many people to turn to the age-old strategy of clipping coupons to save money on common goods like groceries and clothing. The trend hit its peak with the TLC show Extreme Couponing, which showed people going to great lengths to amass coupons, buy in bulk, and save what could amount to hundreds of dollars on shopping trips. It was, in the parlance of those times, a thing.

But before long, retailers got wise to the fact that people were downloading coupons online and exchanging information in forums on how to combine different coupons to get the best deals – effectively scaling the practice of couponing far beyond clipping from the traditional newspaper insert – and so they added more restrictions to their coupon policies to stem the tide of extreme couponing. Today, companies have largely phased out coupons altogether in favor of online loyalty programs, and so even amid the period of historically high inflation in 2021-2023, few people turned back to coupons to save money, even among those who practiced extreme couponing back in the early 2010s.

What's clear, though, is that no matter the era, there will be people willing to go to extreme lengths just for the thrill of a good deal. Many of yesterday's extreme couponers have become today's credit card points hackers, traveling on short notice and flying one-way to take advantage of deals for their own sake. But at the same time, many of those who once spent untold time and effort on couponing have simply decided that it's no longer worth the hassle, and that the convenience of drive-up orders or the efficiency of sticking with a grocery list is more valuable than the money they would have saved by trying to find the best deal. And so as banks and airlines start to roll back their own rewards programs to curtail the extreme points-maxing of points enthusiasts, the cycle will likely renew itself, as some people go out in search of the next great deal, and others decide that they've spent enough time and energy hunting for bargains and get out of the deal-seeking game altogether.

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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 "Wealth Management Today" blog.