Weekend Reading For Financial Planners (July 18–19)

Author: Adam Van Deusen, CFP

Team Kitces

Adam is a Financial Planning Nerd at Kitces.com. He previously worked at a financial planning firm in Bethesda, Maryland, 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.

RIAs See Double-Digit AUM Growth In 2025, Though Gap Widens Between Top-Performing Firms And Others: Schwab Benchmarking Study

(Jennifer Lea Reed | Financial Advisor)

Investors experienced double-digit equity market growth in 2025, which in turn is supportive of RIAs' growth in their Assets Under Management (AUM) as well as their revenue (for those charging on an AUM basis). However, given that market performance is out of the control of firms and their advisors, taking a peek beneath the surface of this top-line growth can show the practices that drive sustainable organic growth (i.e., the growth they generate net of market performance and acquisition activity).

According to Charles Schwab's latest RIA Benchmarking Study, which surveyed 1,236 firms on its custodial platform, respondents on the whole saw AUM increase by 17% and the associated revenue rise by 13.2% (given that advisory firms have breakpoints in fee schedules, it is typical for revenue to grow slightly slower than AUM). However, client growth expanded by only 4.7%, supported by an overall client retention rate of 97%, reflecting how the bulk of revenue growth is driven by markets lifting portfolios, rather than the firm organically expanding its client base.

The results also indirectly reflect how as advisory firms get larger and attract a higher-dollar but typically older (and more likely to be in retirement withdrawals phase) clientele, organic growth further flows with size; firms with less than $250M AUM showed 7.2% net organic growth in 2025, while firms with more than $250M AUM saw 4.8% net organic growth (suggesting almost no net additions from existing clients, as their 4.8% growth rate is almost completely explained by the average 4.7% client growth rate overall). And in a troubling sign that advisory firms are further struggling with organic growth, these growth rates themselves were down from last year (when they were 7.8% for small firms and 5.3% for large firms, respectively).

On the other hand, one group that saw their net organic growth expand in 2025 were firms that Schwab labeled "top performers", those that rank in the top 20% of an index based on both quantitative (e.g., 5-year client compound annual growth rate, staff attrition, and time spent on client service) and qualitative factors (e.g., having written strategic and succession plans). This group saw total AUM growth of 25.4% (up from 23.8% in 2024) and net organic growth of 12.9% (up from 12.4% the previous year). Looking at specific factors, the study found that firms with a written marketing plan, ideal client persona, and clearly articulated client value proposition (for that particular ideal client persona) gained 87% more new clients in 2025 and brought in 127% more new client assets than other firms. Reflecting that successful growth is less a function of just doing "more" (or asking for more referrals alone), and instead is about a more systematic execution of a broader marketing plan for the firm as a whole (akin to Kitces Research on Advisor Marketing that similarly finds "the growthiest advisory firms rely on referrals the least").

Nonetheless, the top priorities of RIAs surveyed remained similar to last year, with acquiring new clients through referrals leading the way (with such reliance perhaps explaining why growth continues to slow), followed by staff recruitment, acquiring clients through business referrals, enhancing strategic planning and execution, and acquiring new clients through digital channels. Firms appear to be increasingly focused on incorporating Artificial Intelligence (AI) into their businesses as well, with a desire to improve productivity through the use of AI and integration of AI into the firm's business strategy entering the top 10 priorities for the first time. This was also reflected in areas where firms said they could benefit from outside help, with AI strategy topping the list (47%), followed by marketing strategy (23%) and growth strategy (21%).

Ultimately, the key point is that while RIAs saw healthy AUM growth in 2025 and continued to achieve high client retention rates, beneath the surface this growth wasn't evenly distributed across firms, with most firms relying on referrals (and struggling to organically grow more than about 4% as a result), and a smaller subset of firms that are reinvesting into their marketing and achieving 2X to 3X the growth rate. Which suggests that using the benchmarking study data to take stock of the key practices that separate top-performing firms identified in the study from others (from narrowing in on an ideal client persona to creating a documented marketing plan and focusing in on a select subset of marketing tactics the firm can execute and scale well), and considering how (and whether) they might fit within their own practice, could help firms continue their client and AUM growth through future bull and bear markets!

RIA M&A Continues Brisk Pace, Though Gap In Valuation Expectations Widens: Report

(Alex Ortolani | Wealth Management)

The past few years have seen a wave of RIA Merger and Acquisitions (M&A) activity, including (often private equity-backed) RIA "consolidators" completing full acquisitions of smaller firms. While the often-discussed interest in deals amongst certain larger firms could have many smaller firm owners contemplating an external sale seeing dollar signs, a survey suggests there might be a gap between seller expectations and what buyers might be willing to pay.

According to data from M&A consulting and advisory firm DeVoe & Company, the first half of 2026 saw the most deals in the RIA space on record at 167 (13% higher than the prior-year period), though the second quarter only saw one more deal than there were in the first six months of 2025. Notably, a DeVoe survey of 40 executives from RIA "consolidators" found that 73% see a widening gap between what sellers expect and what buyers are willing to pay (with just 9% believing the gap is narrowing), with seller expectations perhaps buoyed by the rapid pace of deals in recent years and the eye-catching headline valuations certain sellers are able to achieve (though the terms of these deals might tell a more nuanced story). Overall, 82% of respondents anticipate stable valuations through the remainder of the year, with 18% expecting declines, and none expecting increases (a change from 2025, when 8% of consolidators expected higher valuations).

In sum, while RIA M&A deal flow appears to remain active and opportunities exist for firm owners looking to make an external sale, some may find that lofty valuation expectations could be hard to reach. Further, owners might also consider what matters to them most when it comes to succession planning, as the terms of a deal (whether with an external buyer or as part of an internal succession), from their future role to the level of service their clients can expect, often play an important role in determining the satisfaction they have with the ultimate decision they make.

Tax Planning Offers Inroads For COI Relationships With Real Estate Professionals, Survey Suggests

(Hallie Diamant | InvestmentNews)

When it comes to managing capital gains, a primary focus for investors and financial advisors alike is equity, fixed income, and other investment portfolio assets given the relatively higher frequency of transactions. Nonetheless, while real estate transactions might occur less often, their size (and the strategies available to mitigate the tax impact) can present an opportunity for financial advisors to offer significant value to their clients (and, potentially, the real estate professionals they work with).

According to a survey of real estate professionals by MetLife, respondents on the whole (94%) said clients should understand the tax implications of property sales but far fewer (33%) believed their clients are comfortable making complex financial or tax-planning decisions on their own (with 85% of respondents encouraging clients to consult tax professionals before completing a sale). While respondents said they were familiar with tax planning strategies such as 1031 exchanges (92%) and structured installment sales (62%), though 20% said they were hesitant to discuss the latter strategy based on limited understanding of how it works.

For financial advisors, this survey suggests a potential opening not only to support clients in conducting tax-efficient real estate transactions, but also to potentially partner with the real estate professionals with whom their clients are working, as such relationships could be mutually beneficial, with the real estate professional benefiting from the advisor's tax-planning work (which could encourage their client to actually make the sale) and the advisor subsequently benefiting from a potential future stream of referrals from the real estate professional (who might see it as an opportunity to close more deals).

A Child's Trump Account Could Grow To $5.5 Million – Or 'Just' $39,000

(Spencer Look |Morningstar)

While other measures within last year's "One Big Beautiful Bill Act" dominated initial headlines (e.g., the temporary increase to the State And Local Tax [SALT] Deduction), recently the introduction of "Trump Accounts" has gained the attention of many as consumers were able to start opening them beginning on July 4. While these accounts represent an opportunity to give children a head start on saving for retirement (or other purposes), a recent analysis suggests the ultimate value (in dollar terms) Trump Accounts will reach depends on a variety of factors.

Look simulated 1,000 wealth paths through age 55 for a child receiving the program's one-time $1,000 Federal seed contribution at birth (which is currently available for children born between 2025 and 2028, though it could be extended by Congress down the line) incorporating return assumptions based on an investment in a U.S. large-cap stock fund with an annual fee of 0.1% as well as different levels of additional contributions and potential withdrawal patterns.

His analysis finds a dramatic spread between the ending value of Trump Accounts depending on the level of contributions to the account. For instance, a child who receives the $1,000 seed contribution would have a mean account balance of $3,324 at age 18 and $38,642 at age 55, while a child who receives the seed contribution as well as the maximum of $5,000 in contributions each year from birth to age 17 would have a mean account balance of $239,940 at age 18 and $5.5 million at age 55 (note that all dollar figures are in nominal terms). While the potential growth of the value of a child's Trump Account is impressive when held to retirement age (particularly if regular contributions are made throughout their childhoods), it's possible that many children will decide to liquidate at least a portion of the account once they reach adulthood (perhaps to support a home purchase or to start a business), reducing the value of future compounding (while also being subject to taxation and an early withdrawal penalty in the process).

In sum, while Trump Accounts have the potential to generate significant wealth for their owners given the ability to compound returns over an extended period, ultimately the dollar value of this benefit is dependent in part on contributions and withdrawals to the account. Which suggests that parents looking to maximize the value of these accounts might both seek ways to increase contributions (e.g., taking advantage of the $1,000 seed contribution and potential contributions from employers) and, when their children turn 18 and assume the ability to control the account, explain the implications of using funds in the account in the near term versus letting the balance grow for the long term.

The (Double Tax) Trouble With Trump Accounts

(Adam Michel | The Wall Street Journal)

The Federal government has established a variety of tax-advantaged savings vehicles to encourage saving for various purposes, including retirement, education, and medical expenses. These accounts typically only tax account holders once, whether up front while allowing qualified tax-free withdrawals (e.g., in the case of Roth IRAs and 529 plans) or when funds are distributed from the account while allowing for an up-front tax deduction (e.g., traditional IRAs), though health savings accounts offer the potential for an up-front tax deduction and tax-free withdrawals for qualified medical expenses.

The arrival of the Trump Account onto the scene offers a new vehicle for savers, though Michel argues that its tax treatment isn't as attractive as many existing account types. For instance, while Trump Accounts (like many other tax-advantaged accounts) offer deferred taxation on investment growth (reducing 'tax drag' from ongoing income distributions from an investment), they are taxed both at the contribution level (e.g., dollars used to make parental contributions aren't made on a pre-tax basis) and upon withdrawal (with gains above basis being treated as ordinary income). Which suggests that while the ability to tap into external sources of contributions to Trump Accounts (e.g., the government's pilot $1,000 seed contribution for those born between 2025 and 2028 as well as contributions made by employers or charitable groups) could be attractive for parents looking to help their children save, they might consider alternative destinations for their personal contributions depending on their goals (e.g., 529 plans for education expenses or to a taxable custodial account to gain more flexibility for withdrawals than Trump Accounts offer).

Altogether, while Trump Accounts represent a new type of tax-advantaged account, the advantages of these accounts might not be as strong as other vehicles for certain savings goals. Which suggests a valuable role for financial advisors in helping clients identify the account type that best meets their objectives (and tax situation) while also, in the case of Trump Accounts, helping them identify potential sources of outside contributions that represent 'free' money to boost their children's savings!

Why Taxable Custodial Accounts Are Better Than OBBBA "Trump Accounts" For Kids' Savings

(Ben Henry-Moreland | Nerd's Eye View)

Conceptually, the purpose of Trump Accounts is to give kids a head start on saving for retirement, and many of the account's aspects mirror those of traditional IRAs (including the 'challenge' of distributing what could become a very large account with withdrawn funds being treated as ordinary income for tax purposes). With that in mind, other account types might be worth considering for certain individuals based on their savings goals.

In addition to 529 plans (which can offer tax-free growth and distributions when used for qualified higher education expenses), one option that might be worth exploring for some is a taxable custodial (e.g., UTMA or UGMA) account. Although taxable accounts don't receive tax-deferred treatment on investment income, that fact could actually turn out to be an advantage because of the "kiddie tax" rules, which allow up to $2,700 of qualified dividends and capital gains to be realized tax-free for dependent children. As a result, a custodial account could have significantly more "basis" than a TA at age 18 and beyond – meaning that the TA will end up generating more taxable income in the future (and be taxed at higher rates on that income due to the ordinary income treatment of gains upon withdrawal)!

One factor that could make TAs more favorable is the ability to convert TA funds to Roth, which could allow a TA owner to pay tax on the funds in their account at relatively low rates early in their career and allow them to grow tax-free thereafter. However, unless the owner has funds available outside of the account to pay the actual tax on the conversion, they'd need to withdraw from the account to pay that tax (and pay tax plus an early withdrawal penalty on that amount as well), significantly reducing the amount that's left in the Roth account to grow tax-free. Which means that even with the ability to convert to Roth, the taxable account could still come out ahead in the end (or at least not be so far behind as to be worth sacrificing the greater flexibility of the taxable account's funds to be used pre-retirement).

The key point is that when it comes to saving for kids, starting to save at an early age is far more important than what type of account those savings go into. While many illustrations of TAs project how their value can grow to eye-popping levels over time, the reality is that similar (or even better) results can be achieved in other types of accounts that have far more flexibility than TAs. And so while TAs can serve as a good conversation starter with parents who are interested in saving for their kids (and it may even be worth opening a TA just to receive the 'free' $1,000 pilot contribution if there's a child who is eligible for it), it may be best to involve other types of accounts in the discussion as well – since they could prove to be an as good or better option for growing a child's savings for the long term!

A Decade Of Referral Research: What Really Works And How Are Things Changing

(Julie Littlechild | Absolute Engagement)

Client referrals often represent a primary source of new clients for financial advisory firms. However, some firms might find that their referral pipeline has peaks and lulls and consider what they might do to create a more consistent, robust stream of referrals.

Based on more than a decade of research into client referrals, Littlechild has identified three themes that tend to drive success with this tactic. First, she finds that clients tend to refer to help others, not necessarily to help their advisors. Which suggests advisors could drive more referrals by helping clients understand the problems they solve as opposed to just asking directly for more referrals.

Second, there is a persistent 'referral gap', where clients think they're making more referrals than their advisors actually receive (e.g., in a 2026 survey, 42% of clients reported making a referral but advisors reported meeting referrals from only about 4% of clients). This indicates that advisors could boost the number of referred individuals that actually reach out to them by making it easier for clients to connect potential prospects directly to their advisors.

Finally, Littlechild finds that most client referrals are made based on a friend or family member asking a client for a recommendation to a financial advisor rather than based on being asked by their advisor to recommend names of potential prospects. Which suggests that helping clients understand the types of individuals the advisor works with could make them more confident in recommending the advisor to those who fit those criteria.

Ultimately, the key point is that client referrals aren't necessarily a consequence of a one-time ask, but rather the result of an advisor providing a high-quality client service experience and equipping clients the information they need to make a referral when the opportunity arises (including having a digital presence that can confirm to referred individuals that the advisor is the right person to address their planning needs!).

5 Ways To Build A Scalable Client Referral Flywheel

(RFG Advisory)

Client referrals can be an attractive marketing tactic as unlike certain others (e.g., paid advertising or hosting in-person events), they don't require hard-dollar outlays. That said, client referrals don't necessarily surface automatically, and advisors can boost the chances of creating a steady stream of referred prospects by taking a structured approach to this tactic.

To start, creating an ideal client avatar (e.g., in terms of life stage, pain point, or niche segment) can help clients better understand the types of individuals their advisor serves best (increasing their confidence that they'll make a successful referral). To support this, an advisor could create a short, story-driven, jargon-free message that clients could use to identify when a friend or family member might be a good fit (e.g., "I work with multigenerational families navigating major transitions, like inheritance, retirement, or selling a business"). Incorporating this language into regular client communications (e.g., meetings, newsletters, and social content) can help reinforce the message and keep the advisor top-of-mind for clients throughout the year.

When an advisor does receive an introduction from a client, creating a system for responding quickly and professionally (e.g., a warm introduction via joint email or phone call, a prompt follow up to the prospect, a personalized thank-you letter to the referrer, and a status update once the prospect engages or becomes a client) can both encourage the referred individual to take the next step and show the referring client how seriously the advisor is taking their referral (hopefully encouraging them to refer again in the future!). Also, using the firm's CRM system to track referrals (e.g., who referred whom, how they were introduced, and what happened next) can provide valuable data, including which clients are referring most often and which client stories seem to resonate the most.

In sum, creating infrastructure around a referral program can transform it from an intermittent circumstance to a scalable flywheel that can generate even more referrals over time (which can also lead to happier clients, who might get great satisfaction from helping friends and family members access high-quality financial advice!).

Building A Systematic COI Referral Partnership Program

(Gordon Stevens | Journal of Financial Planning)

Financial advisors often work with a client's CPA, estate attorney, or other related professionals to ensure that planning recommendations are understood and implemented by these key parties. Advisors also frequently refer clients to these Centers Of Influence (COIs) when they could benefit from their particular area of expertise. Which makes these individuals potential sources of referrals to the advisor as well (as they likely have other clients who could benefit from financial planning). However, advisors are sometimes disappointed by the number of referrals they receive from COIs (particularly if the advisor sends many more referrals the other way).

To create a more productive COI referral system, Stevens recommends that advisors first gather their COI relationships (e.g., in their CRM and on LinkedIn) and then divide them into four categories: Category A relationships are already working, with regular, reciprocated referrals; Category B relationships are dormant, where there might have been interaction in the past but there is no active referral flow; Category C relationships are one-sided, with the advisor sending referrals to the COI but receiving none; and Category D relationships are those that don't exist yet (i.e., COIs the advisor could meet but hasn't yet). He finds that Category B relationships often represent the best growth opportunities as a certain level of trust has already been built (and therefore a 'cold' introduction isn't necessary).

With potential partners organized, advisors can consider creating a partnership proposition that clearly outlines the benefits a COI referral partner would receive from the relationship. For instance, an advisor might create benefit 'tiers' based on the number of referrals they receive from a particular COI (e.g., a 'bronze tier' partner might get priority response to referrals under 24 hours and a biannual check-in, while higher-tier partners might receive financial compensation for referrals [though doing so requires hewing closely to relevant compliance requirements]).

After re-introducing themselves to Category B relationships, an advisor might then look to Category C relationships and determine why they are one-sided. For instance, in some cases the COI might want to make referrals but doesn't understand the advisor's ideal client type or know the advisor's preferred method for receiving referrals (which suggests that a simple 'intervention conversation' could lead to more referrals from these individuals). An advisor then might move on to explore new, Category D relationships, perhaps looking past traditional COIs to other professionals who work with those who fit the advisor's ideal client profile (e.g., real estate agents, M&A advisors, or executive recruiters) and to whom the advisor could provide value (e.g., implementing a tax strategy that encourages a client to sell a piece of property, resulting in a commission for their real estate agent).

In the end, because referrals don't necessarily come automatically from COI partners (even those who regularly receive referrals themselves from a financial advisor), creating a structured referral program that identifies key COI partners (and those who could become partners), offering them (and their clients) a strong value proposition, and nurturing those relationships over time could create a more sustainable referral pipeline (and stronger firm growth over time).

How To Thrive As A Member Of The 'Open Sandwich' Generation

(Dan Haylett | Humans Vs Retirement)

Much has been written about the challenges for those in the "sandwich generation" who are responsible for caring for both aging parents and their own children while managing their own careers. However, at some point both sides of the 'sandwich' come off (as parents pass away and children leave home), creating a new set of emotional and lifestyle implications for those in this "open sandwich" generation.

While becoming a member of the "open sandwich" generation can create newfound freedom (e.g., with significantly reduced care obligations), this can come with a psychological toll, whether it's missing parents who have died, the regular appearance of children in the home, or a reduced sense of purpose from no longer needing to be relied upon by these individuals. It can also become a jarring transition to now being the 'senior' generation (i.e., with no parents or grandparents above), as such individuals might be expected to carry the 'weight' of keeping family history and being seen as a source of wisdom (though this can be a newfound source of meaning as well).

Those entering the "open sandwich" phase (which often occurs alongside retirement from work) can potentially benefit by proactively seeking ways to 'fill' the empty layer(s) that are now missing, which could include community-building, travel, volunteering, or other projects that offer structure and a sense of purpose (and also allow individuals to take advantage of their newfound time freedom). Because while "open sandwich" life might look different than what an individual might have been used to for several decades, it offers an opportunity to be more intentional about designing one's life.

Altogether, while members of the "open sandwich" generation might have more freedom than their younger counterparts who are busy balancing care and work responsibilities, they can potentially experience psychological and emotional burdens that might not easily be put aside. That said, seeing this moment as an opportunity to intentionally expand one's horizons (while recognizing the natural grief that comes with loss) could help ease the transition into this new (and potentially exciting) phase of life.

When Adult Children Move In With Their Parents: A Sign Of Failure Or Financial Savviness?

(Rebecca Picciotto and Nicholas Miller | The Wall Street Journal)

When a child moves away from home for college or to enter the workforce, it can be a bittersweet moment for parents: on the one hand they might be proud of their children for stepping into independence and adult life, but they might also miss their presence around the house. In recent years, though, many parents have experienced a 'boomerang' effect, with more adult children returning to live at home in early adulthood.

According to data from the Federal Reserve's latest Survey of Household Economics and Decisionmaking, 49% of adults under age 30 (including a third of those 25 and older) said they lived with a parent, up 12 percentage points from 2019, suggesting that many young adults see living with their parents as a viable option (though the data doesn't separate out young adults who move away from home but eventually have their parents move in with them).

According to a survey by Thrivent, 55% of young adults who moved back home said it was out of financial necessity, which suggests that, when used well, this period could be used to build a financial cushion that would allow the adult child to go out on their own (whether by renting or buying their own home). To help ensure their adult children don't get 'too' comfortable at home, though, parents could consider charging them rent (which could be returned if used to support an external housing arrangement), sharing bills, and/or creating deadlines to move out.

In the end, while having adult children at home could be emotionally (and financially) fulfilling for both parents and the children alike, the challenges it presents (from an undetermined endpoint to reduced privacy for both sides) could mean that sitting down and agreeing to ground rules for this arrangement could lead to a happier (if temporary) period for all involved (and perhaps offer an opportunity for financial advisors to meet with both sides to discuss the financial implications of this plan!).

Go While You Still Can

(Derek Hagen | Meaningful Money)

Everyone understands at a conceptual level that their time is finite, though it can sometimes be hard to turn that knowledge into action (given that an individual might reasonably expect to have many years ahead of them). That being said, because each year is not 'equal' in what it can offer, recognizing that time is more limited than it might appear could lead to more meaningful experiences and time spent with others.

To start, while an individual might have a reasonable grasp on their expected lifespan, their 'healthspan' (i.e., the number of years in good health they have left) could be (much) shorter, particularly when it comes to engaging in certain activities (e.g., an intense sport an individual might enjoy playing in their 30s or 40s might take a harsher physical toll as they enter their 50s and 60s). Which suggests they might consider allocating time for such activities that have a closer expiration date.

Also, an individual's lifespan (and healthspan) isn't aligned with that of their loved ones. For example, a middle-aged individual might have plenty of healthy years left, but their parents might have fewer (suggesting that now could be the time to take the adventurous trip they've been considering). On the other end of the spectrum, time with children in the home is also limited (which could mean reserving time for activities with them that might not be logistically or physically possible several years down the road). Such considerations could also extend to pets, who have an even shorter lifespan and healthspan than their adult companions.

Ultimately, the key point is that while it might seem like there's little urgency to do certain activities given an expected lifespan that could extend decades into the future, one's (more limited) healthspan and the incongruous trajectories for loved ones could suggest moving certain goals up to ensure they are met (perhaps with a nudge from a financial advisor?).

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.