Weekend Reading For Financial Planners (February 7–8)

Clients Advised By CFP Professionals Receive More Comprehensive Plans, Have Greater Trust In Their Advisor Than Others Receiving Advice: CFP Board Study

(Steve Randall | InvestmentNews)

CFP Board has grown its ranks significantly in recent years, now topping more than 100,000 certificants. While the process to obtain the certification is fairly rigorous (encompassing education, exam, experience, and ethics requirements) and CFP professionals are held to the organization's Code of Ethics and Standards of Conduct, a key question is whether clients who work with a CFP professional end up receiving a higher level of service than those who work with other financial advisors.

To explore this question (and to assess the value of receiving advice over time), CFP Board is running a longitudinal study (now in its second year) to assess the impact of working with a financial planner, and CFP professionals in particular. This year's survey (which received responses from 4,567 individuals between ages 25 and 65 with at least $50,000 of household income and $30,000 of investable assets) found several benefits to those working with CFP professionals compared to other advisors (naturally, CFP has an interest in promoting the marks both amongst financial advisors and consumers). These included receiving plans covering more topics in detail. For example, 63% of those working with a CFP professional received a detailed retirement company, compared to 42% of those advised by a non-CFP professional, with similar results for investment planning (64% versus 41%), estate planning (43% versus 22%), risk management and insurance planning (43% versus 22%), and tax planning (35% versus 16%)…though these results do show that there is significant variance amongst CFP professionals in terms of the depth of financial plans provided.

Another area with a notable gap amongst clients working with a CFP professional versus other advisors was in client communication, with 60% of the former group saying that their advisor makes an effort to learn about their family and values, compared to only 41% of the latter, and 57% reporting that their CFP professional advisor makes an effort to learn about their spouse's relationship with money (compared to 37% of others receiving advice). This deeper communication appears to be paying off in terms of client trust, with 73% of those working with a CFP professional reporting that they trust their advisor "a lot", compared to 52% of other advised clients (those advised by CFP professionals were also significantly more likely to report being satisfied with the role their advisor plays, having lessened financial anxiety, being motivated to achieve financial planning goals, and having referred others to their advisor).

In sum, this survey suggests there are payoffs to both clients (in the form of more comprehensive planning and a closer advisor relationship) and advisors (with greater client trust and a higher propensity to make referrals) from an advisor having the CFP certification. Nonetheless, given that these benefits weren't universal across the population of clients advised by CFP professionals, it appears that while the marks might be a signal to a consumer, it's up to individual planners themselves to provide this higher level of service to their clients!

Schwab Plans To Ramp Up, Expand RIA Lending Capabilities

(Alex Ortolani | WealthManagement)

Some clients who need to pay for a major expense might have sufficient assets in their non-retirement accounts to cover this need but could balk at the potential of realizing capital gains from selling appreciated assets (if they don't have sufficient cash on hand). With this in mind, some lenders offer securities-backed lines of credit, which allow individuals to access liquidity from their invested assets (that serve as collateral) without realizing gains in the process.

Such lending has long been a benefit to clients working with advisors at wirehouses, which have large and well-known banking operations. However, this practice (and its convenience) has also grown in recent years for RIAs, for example with Charles Schwab's 2023 introduction of its "Pledged Asset Line" (PAL), which allowed RIAs on its custodial platform to get securities-backed lines of credit for clients within hours, rather than weeks. Speaking during the company's recent fourth-quarter earnings call, Schwab CEO Rick Wurster said that the PAL program has seen 85% growth in originations in the last year (though only 9% of ultra-high-net-worth clients using the PAL service, suggesting significant room to expand) and that the company will continue to ramp up its lending capabilities for RIAs (without getting into specifics of any new programs on the horizon).

Ultimately, the key point is that as advisors at RIAs compete with wirehouse counterparts, particularly for high- and ultra-high-net-worth clients, the ability to access securities-based lending could be a valuable tool in their toolbox, allowing them to offer similar services as their counterparts while differentiating themselves in other areas (e.g., by specializing in the unique planning needs of a particular subset of these clients).

Client Referrals Still Top Source Of New Advisory Clients, COI Referrals Significant As Well: Cerulli Survey

(James Rogers | InvestmentNews)

New clients are the lifeblood of a growing firm (or even one looking to maintain their client headcount, given some level of inevitable attrition), and luckily for financial advisors, there is no shortage of methods to attract them. And while many technologically enabled marketing tools have emerged over the past several years, a recent survey suggests that traditional, analog approaches to attracting prospects remain most common.

According to a survey of advisors across industry channels from Cerulli Associates, referrals from clients, friends, or family members accounted for 54.2% of new clients for respondents, with contacts from Centers Of Influence (COIs) such as CPAs and attorneys representing the second most common source at 13.9% of new clients (similarly, Kitces Research on Advisor Marketing has found that these are the most common tactics used by advisors, at 88% for client referrals and 62% for COIs). In terms of most-effective strategies for building COI relationships, a survey of practice management professionals found that the most commonly cited tactics were joint meetings with clients or prospects, connecting with COIs over mutual interests (e.g., golf, wine, or art), and referring clients to the other professional to naturally start a relationship (with these efforts potentially paying off not only in new client referrals for the advisor, but also in identifying high-quality COIs to refer their own clients to for tax preparation or legal needs).

In sum, given the strong relationships many advisors build with their clients (and the high level of service they provide), it makes sense that clients would want to provide referrals to friends and family (though they might need a nudge to do so!), though advisors looking to branch out further appear to be finding success building ties with COIs or even turning to other client acquisition avenues (to perhaps provide an additional flow of prospects if current clients become largely tapped out on good-fit referrals?).

Retirement Income Strategies That Maximize Lifetime Spending

(Amy Arnott | Morningstar)

Those entering retirement approach this period from different perspectives when it comes to how they want to approach their income and spending. While some might prioritize having significant assets to pass along to heirs or charities at their deaths, others might prefer to maximize their spending during their lifetimes (with less concern for their portfolio balance at death, as long as it supported their income needs during their lifetimes).

For those in the latter group, researchers at Morningstar analyzed nine retirement income strategies for a $1 million portfolio (using forward-looking return and volatility assumptions to test 1,000 hypothetical return patterns over a 30-year period, while aiming for a 90% probability of success) to determine which would provide lifetime spending in retirement. While a 'base case' of an initial withdrawal rate of 3.9% (with the initial dollar amount adjusted annually for inflation) resulted in median total lifetime spending of $1.17 million (with a median $1.42 million ending value for the portfolio), the analysis found that more flexible spending approaches can allow for a higher initial withdrawal rate and greater lifetime spending (though did result in a lower terminal balance for the portfolio).

For instance, a probability-based guardrails approach (that reassesses the spending plan's probability of success on a regular basis and makes adjustments as needed) allowed for a 5.1% initial withdrawal rate and led to $1.55 million in lifetime spending (though a median final portfolio value of $230,000). Using a classic guardrails approach (i.e., setting an initial withdrawal percentage then adjusting subsequent withdrawals annually based on portfolio performance and the previous withdrawal percentage) resulted in a slightly higher initial withdrawal rate (5.2%) and a higher median ending value ($700,000) but resulted in somewhat less lifetime spending ($1.36 million) compared to the probability-based guardrails approach. Another strategy that resulted in higher lifetime income than the 'base case' was a Required Minimum Distribution (RMD) strategy that uses the portfolio's value divided by life expectancy (as determined by the IRS' Single Life Expectancy Table) to determine annual withdrawals. While this method resulted in $1.50 million of lifetime spending, it also came with the smallest median ending value ($120,000) and a notably higher standard deviation of cash flow compared to the guardrails strategies.

In sum, for clients who are willing and able to make spending adjustments during their retirements and prefer to prioritize lifetime income over terminal portfolio value, these flexible income strategies offer a higher initial withdrawal rate and more lifetime spending compared to a more static approach to withdrawals. And given that they can take a fair amount of upkeep to maintain (particularly the guardrails strategies, with the RMD strategy being simpler), advisors are well-positioned to support clients in achieving their (higher) lifetime spending goals in a sustainable manner!

Unexpected Expenses Are The Rule In Retirement, Not The Exception

(Jennifer Lea Reed | Financial Advisor)

When individuals think about their spending in retirement the first things that come to mind might be a boost to travel expenses or additional dollars allocated towards their hobbies and interests. In addition to this 'fun' spending, though, a recent analysis finds that building in room for unexpected expenses into a retirement budget could be a prudent move.

According to a brief by Manita Rao and Anqi Chen from the Center for Retirement Research at Boston College (that used data from the University of Michigan's 2000-2020 Health and Retirement Study and 2001-2019 Consumption and Activities Mail Survey), 83% of households experienced financial shocks annually with $6,000 in average annual expenses for unexpected items. Notably, the size of those expenses was positively correlated with income, as those with more than $100,000 in annual income in retirement saw average annual unexpected expenses of $10,900, compared to $6,000 for the overall retired population. In addition, higher-income individuals were more likely to experience "rainy day" (e.g., greater-than-budgeted expenses for car and home maintenance) or higher-than-budgeted healthcare expenses than their lower-income counterparts (with 79% experiencing a "rainy day" event and 73% having an unexpected healthcare expense in a given year, compared to 47% and 48%, respectively, for those with under $50,000 of income). At the same time, higher-income households (perhaps not surprisingly) were better able to cover these unexpected expenses than their lower-income counterparts.

Ultimately, the key point is that while clients might have created an 'emergency fund' to cover unexpected expenses or income reductions during their working years, they can face expense surprises in retirement as well. Which perhaps suggests that in addition to considering 'core' lifestyle expenses and 'optional' discretionary expenses, retirees (and their advisors) might also plan for the chance that they will experience spending shocks frequently throughout retirement (perhaps by maintaining a certain level of liquidity and/or stress-testing their financial plan for different possible levels of unexpected spending?).

Dynamic Retirement Spending Adjustment Showdown: Small-But-Permanent Vs Large-But-Temporary

(Derek Tharp | Nerd's Eye View)

The origin of the "safe withdrawal rate" approach was simply to set retirement spending low enough to survive the worst historical sequence of returns we've ever seen; if a future scenario was comparably bad, the retirement portfolio would make it to the end, and if market returns turn out better, the retiree simply has to decide what to do with their 'extra' money.

The caveat, however, is that for at least some retirees, the approach of "be conservative upfront, and increase your spending later if returns permit" is not very appealing. Instead, it's more desirable to spend more in the early years, and simply engage in spending cuts if returns end out being less favorable. Except remarkably little research has ever delved into what the best approach is to cutting spending, if it actually does become necessary to make adjustments in order to stay on track!

Notably, this is different than how many retirees often react when a substantial market decline occurs, where the instinctive response is often to engage in substantial spending cuts for a "temporary" period of time, until the market recovers. For instance, if there's a precipitous market crash of at least 20%, the retiree might trim spending by 20% as well for the next 3 years, until the portfolio recovers. Even if engaging in such spending cuts present serious strains to the retiree's current lifestyle.

Except as it turns out, engaging in a more rapid series of smaller - but permanent - spending cuts can be even more effective. For example, rather than cutting spending by 20% for 3 years after a market decline of more than 20%, if the retiree simply commits to trimming real spending by 3% (permanently) in any year that market returns are negative - approximately the equivalent of forgoing an inflation adjustment during the down year, and a fairly trivial spending adjustment for most retirees - the safe withdrawal rate rises by almost 0.5% (to more than 4.5%). With the large-but-temporary cut, the safe withdrawal rate only rises by 0.1%, instead.

Ironically, it may feel to retirees that engaging in 'small' cuts aren't enough to ameliorate the consequences of a significant market decline early in retirement. Yet the reality is that the cumulative effect of small cuts really does add up - more than engaging in large-but-temporary cuts - in a manner that not only helps keep retirement on track if there's an unfavorable sequence of return, but arguably better aligns to how most retirees spend as well, where real inflation-adjusted spending typically declines in the later years anyway. And of course, if market returns are actually favorable, the retiree not only avoids substantial spending cuts, but enjoys the benefit of starting their retirement spending from a higher level in the first place!

A Formula To Help RIAs Diagnose Organic Growth Opportunities

(Tom Rieman | WealthManagement)

Many financial planning firms have enjoyed a bump in their Assets Under Management (AUM) during the past few years thanks in part to strong market performance. However, such growth can be fleeting (if a market downturn were to occur) and can cover up potentially weaker organic growth (i.e., new client assets and additional assets brought in by current clients) at the firm. Which might lead some firms to assess the current state of their organic growth and the potential levers they could pull to improve it.

Rieman offers a formula that he argues is both diagnostic and predictive for a firm's organic growth, where Organic Growth = (Value x Amplification x Efficiency) / Commoditization. With this in mind, a firm looking to raise its organic growth could do so by increasing its value proposition, leaning into marketing efforts (to boost its amplification), become more efficient, or reduce the impact of industry commoditization. Nevertheless, he suggests that the strongest variable that firms could pull is on value, not only because a stronger value proposition targeted at the firm's ideal client is attractive in its own right, but also because it can make the firm's amplification efforts more effective (e.g., by being able to show how the firm is different than others). In addition, having a differentiated value proposition can help the firm stand out amongst other sources of financial advice and reduce the effects of commoditization. Further, given that increasing efficiency doesn't raise growth in its own right (but rather creates the capacity to handle client growth), lifting value is also complementary to greater efficiency.

Ultimately, the key point is that while there are several different variables that can drive a firm's organic growth rate, its value proposition could be the linchpin that both helps a firm stand out in the eyes of its ideal target client and serves as a accelerant to the firm's marketing and operational improvements, leading to higher, and more sustainable organic growth over time.

The Difference Between Defining And Delivering A Great Client Experience

(Julie Littlechild | Absolute Engagement)

One way financial planning firms can promote client retention is to emphasize their client experience, ensuring that clients feel engaged and valued over the (potentially many) years they work with the firm. And when it comes to improving their client experience, firms often emphasize individual tactics they can employ (e.g., adding a new piece of client-facing technology) rather than zooming out to their broader strategy.

However, taking time to consider a firm's client experience strategy (including who will make decisions and implement changes) can help ensure a consistent experience for clients (and set expectations for advisors). For instance, a firm might decide that it wants 80% of its client experience to be the same across all advisors and clients (e.g., the process for booking review meetings and creating and sharing an agenda), leaving the remaining 20% open for each advisor to showcase their unique experiences and preferences. Also, firms can potentially better execute their client experience by appointing a team member (perhaps a senior advisor at smaller firms or a standalone position within larger ones) to serve as the lead on client experience, ensuring consistency across key client touchpoints and serving as a central connector across the firm's departments (this individual might also ensure that the firm's prospect and client experiences flow together seamlessly). At the same time, a firm could also consider having a client experience committee to provide feedback on existing measures and generate ideas for new ones (with actual decision-making authority held with leadership).

In sum, delivering a high-level client experience is not just about the specific touchpoints and technology a firm uses, but also results from firm-wide standards that lead to a consistent experience for clients and smoother implementation for advisors (who can then spend more time on actually meeting with prospects and clients).

The Advisory Dilemma: Personalized Or Systematic?

(The Investment Ecosystem)

If an advisory firm had infinite time and staffing resources, it would likely seek to offer a high level of personalized service to each client. However, because doing so in reality can be cost-prohibitive (unless clients are paying a fee commensurate with that level of service), firms often seek a certain level of standardization and systemization across functions. Even then, too much systemization could make clients feel like they are receiving a generic experience that they could get elsewhere (perhaps at a lower cost).

To start, firms face a dilemma when it comes to deciding the services for which they will provide a systematized experience and which ones will be more personalized. For instance, in recent years many firms have used model portfolios to reduce the time spent on investment management, allowing for deeper advisor-client interactions in other parts of the planning process. Notably, though, firms also face these questions within specific services as well. For example, when it comes to measuring client risk tolerance for portfolio management purposes, a firm taking a more standardized approach might use an off-the-shelf risk tolerance questionnaire, while one offering greater personalization might go deeper by transforming risk data into conversations between a new client and their advisor (with a tradeoff of time that could be used for advisor-client discussions on other topics).

In the end, most advisory firms will likely fall somewhere in the middle of the personalization-systematization spectrum, perhaps identifying key areas where their expertise or their ideal target clients' primary planning needs call for a more hands-on approach and other areas where standardization could be used to deliver other services with greater efficiency?

9 Trends Shaping Work In 2026 And Beyond

(Aykens, Lowmaster, McRae, and Shepp | Harvard Business Review)

The workplace has seen many dramatic changes over the past few decades, from the rise of the Internet to a post-pandemic increase in remote work to today's ever-present discussions of Artificial Intelligence (AI) and its potential use cases. Though, when it comes to AI, sometimes the future possibilities are well ahead of the present reality.

While much ink has been spilled regarding AI and the workplace, companies appear to still be in the early innings of realizing significant value from it, with research and consulting firm Gartner finding that one in 50 AI investments deliver transformational value and only one in five has created any measurable return on investment. Further, while AI has the potential to boost employee productivity and perhaps lead to leaner staffing and layoffs, Gartner analysis found that less than 1% of layoffs in the first half of 2025 were the result of AI increasing employee productivity (rather, some of these layoffs might have been made in anticipation of productivity gains that might not come).

Even though AI has not yet led to a major productivity boom across industries, its effects could still be felt in the workplace throughout the coming year. For example, if companies start raising output expectations from employees (perhaps mandating the use of large language models to support their work), they might end up receiving "workslop" (i.e., quickly produced but ow-quality work generated by or with AI) that can take significant time to correct. Also, greater use of AI tools could challenge employees' mental fitness, whether through the cognitive atrophy that could occur from replacing critical thinking with AI output, or even, at the extreme end, "AI psychosis", which can occur after extended use. Further, the growth of AI presents technical threats for companies as well, whether through cybersecurity incidents (e.g., more sophisticated phishing schemes) or in the recruiting process (with firms potentially seeing an increase in AI-generated resumes and fraudulent applicants).

Altogether, while the future course of productivity gains brought about by AI is unknown, its impacts are still being felt today. And for financial advisory firms, this could mean seeking opportunities for greater efficiency (that could translate into additional time for prospect and client interactions) while being attuned to AI-enabled threats (particularly when it comes to keeping client assets secure at a time when deepfake technology could make verification more challenging).

The Rush To Return To The Office Is Stalling

(Theo Francis | The Wall Street Journal)

While the start of the COVID-19 pandemic led companies across many industries to implement remote policies, over time many companies have implemented return-to-work policies, whether full-time or on a hybrid basis. However, some companies have seen pushback from workers as their in-office requirements become stricter (e.g., moving from one or two days a week in the office to four or five).

Overall, the percentage of work performed at home work peaked at just over 60% in early 2020 before declining to between 25% and 30%, where it has remained fairly steady for the past few years. Nonetheless, companies between early 2024 and late 2025 required 12% more time in-office, according to data from think tank Work Forward, with varied results (e.g., one survey found that employers requiring one day a week in the office have near perfect compliance while those requiring three or more days have less than 75% adherence). Also, given findings that some workers are willing to leave their employer if the in-office work requirements become too stringent for their liking, firms might make concessions for top performers to prevent them from leaving (though firms also appear to be using in-office requirements as a way to promote some attrition without having to lay off workers). Also, companies must prepare logistically (and financially) for large-scale return to office moves in terms of ensuring sufficient office space and proper furnishings.

Ultimately, the key point is that companies face a balancing act when it comes to return-to-office policies between activating the potential collaborative benefits of in-office work with possible negative attitudes amongst employees towards increasing their time working away from home. For financial advisory firms, this could mean balancing client demand for in-office meetings and offering opportunities for junior employees to tap into in-person training, networking, and mentorship with the ability to offer employees more flexible schedules (or perhaps even allowing fully remote work to tap into a wider base of applicants when advertising new positions).

New Breed Of Shared Offices Is Bringing Co-Working Market Back To Life

(Peter Grant | The Wall Street Journal)

The 2010s saw the rise of co-working spaces, which offered companies and individual employees the opportunity to tap into the benefits of office space (plus additional amenities, such as food and beverages, that varied by provider) without long-term leasing commitments. In fact, in 2018, then-industry leader WeWork occupied more Manhattan office space than any other company

While the onset of the pandemic brought the co-working movement to a screeching halt (sending some of the industry's largest players into bankruptcy protection), co-working spaces have made a comeback, totaling 158.3 million square feet across 8,800 U.S. locations, up from 115.6 million square feet and 5,800 locations three years ago. The new era of the co-working industry has come with changes, including the prevalence of single-site operators (with fewer multi-location operators) and interest not just from small companies and solopreneurs but also from larger companies looking for flexible space when adding employees or entering a new location. Given that they are competing with home-based work, many co-working locations in the new era also are leaning into amenities to compete against the draw of working from home.

In sum, given the financial commitment involved in leasing or purchasing significant office space, co-working spaces appear to remain a viable alternative for remote workers looking to get out of the house, small companies seeking to work together while minimizing costs, or even larger firms that desire flexibility (and perhaps a steady flow of cold brew for their employees).

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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 "WealthTech Today" blog.