Weekend Reading For Financial Planners (June 27–28)

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.

Market Appreciation A Double-Edged Sword For Growing Advisory Firms: Report

(Jennifer Lea Reed | Financial Advisor)

Since the bottom of the bear market associated with the Great Recession, the stock market, on the whole and with a few downturns mixed in, has been on an absolute tear, rising more than 10X as the S&P went from under 700 in March of 2009 to over 7,000 today, and continues to regularly set record highs. Which has been supportive of both client portfolios, and revenue for advisors who charge fees on an Assets Under Management (AUM) basis. However, for several years now, some industry observers have noted that while advisory firm revenue continues to grow (buoyed by strong market performance), organic growth (i.e., growth net of market appreciation or any mergers and acquisitions) has lagged significantly.

According to the latest Growth and Profitability Report from The Ensemble Practice and ActiFi (which used data submitted by advisory firms for fiscal year 2025),  the average firm had a 38.6% operating profit margin during the year (up nearly 15 percentage points over the past decade), though organic growth from new client relationships was only 3.7%. The report highlighted that recent strong stock market performance is likely one cause of this phenomenon, with a correlation between prior-year market returns and current-year organic growth of -0.64 (meaning that higher prior-year returns dampen current-year organic growth, perhaps because consumers feel more confident managing their own investments when market performance is strong, and are more likely to make changes and realize their advisor hasn't been serving them well after the markets have gone down).

Notably, the report also found that firms are not merely subject to the whims of the market when it comes to adding new clients. For instance, firms serving clients with between $500,000 and $1 million in investible assets (who are expected to generate between $5,000 and $10,000 in annual revenue) achieved the strongest combination of growth and profitability with 4.3% organic growth and a 40.4% profit margin, compared to those serving clients who generate more than $20,000 annually, which reported just 1.6% organic growth and 35.6% margins (suggesting that attempting to move 'upmarket' is not a guarantee of greater AUM growth or profitability).

The report also found that while client referrals remain the highest-quality lead source, the fastest-growing firms looked beyond this tactic (receiving 58% of their leads from referrals, while the slowest-growing firms got 70% of leads from this source), a finding echoed in Kitces Research on Advisor Marketing that similarly finds "the growthiest firms rely on referrals the least". The fastest-growing firms (which generated 10.9% in net new AUM from new clients, compared to the slowest growing firms, which saw a net loss of 0.2% of new assets [losing more to departures than they added]) also were more likely to track leads and manage a sales pipeline, indicating a potential payoff from better-organized marketing and sales efforts (though it may simply be that firms already better at marketing and growth are more likely to track their already-successful results?).

Altogether, the report shows that while advisory firms on the whole remain highly profitable, market appreciation (and the AUM-based revenue growth that comes from it) appears to be covering up for what is ultimately fairly weak organic growth. Which means when the next market downturn comes, most firms will struggle to grow enough organically to offset the impact of the market decline. On the other hand, the data does also suggest that when a market downturn comes in the future, firms that have the marketing infrastructure to reach consumers who are newly incentivized to seek out an advisor could be better positioned to weather the storm that could otherwise significantly erode their revenue (and emerge even stronger when the market eventually recovers).

NAPFA Strengthens Fiduciary Standard For Its Members, Adding To Broader Permutations Of The Term

(Kenneth Corbin | Barron's)

Consumers have become increasingly aware of the term 'fiduciary' in recent years, especially since the Department of Labor's major "fiduciary rule" proposal in 2016, with more consumers intentionally seeking out an advisor who claims to be one. However, with no single definition of fiduciary (as the actual fiduciary requirements are different between ERISA, the SEC, the CFP Board, and various membership associates), and a reality that Regulation Best Interest still allows advisors to "hat-switch" between fiduciary and non-fiduciary roles with the same client, some consumers are disappointed to find that the depth of this fiduciary commitment from some advisors is not always what they expected.

In an effort to raise the bar for members of its organization, the National Association of Personal Financial Advisors (NAPFA) this week introduced a new fiduciary standard to apply specifically for NAPFA members that, among other measures, expands on its previous requirement that NAPFA-registered advisors operate on a fee-only compensation model (which had expressly banned commissions, product sales, incentives, and third-party compensation that can create conflicts of interest).

NAPFA's new standards entail a series of "5 Duties", including the long-standing Duties of Care and Loyalty that have always applied to fiduciaries in various forms, along with a related Duty of Competence (to maintain continuous learning, which will tie to a new increase in NAPFA-required Continuing Education for its registered advisors to 60 hours every two years [whereas CFP Board earlier this year announced a coming its CE requirement to 40 hours every two years starting in 2027], a Duty of Compensation (capturing NAPFA's historical fee-only requirement), and a Duty of Engagement (to only operate in one's areas of expertise, and seek out other professionals where needed).

To this end, NAPFA's new fiduciary rules are similar to others (e.g., CFP professionals also have a "fiduciary at all times" standard), but not the same as CFP Board spells out fiduciary duties in even greater detail (with a series of 15 Fiduciary Duties), and NAPFA's commitment to fee-only principles differentiates it from the more fee-agnostic CFP Board.

The broader question, though, is whether NAPFA will be able to effectively differentiate its version of Fiduciary from the multiple other definitions out there. While NAPFA's anchoring to fee-only has long been controversial, it was a highly effective differentiator, as it implicitly required advisors to be RIAs (and subject to the SEC's fiduciary duty) and only RIAs (to avoid any other conflicted sources of compensation, effectively requiring a 'fiduciary at all times' outcome). Whereas when Fiduciary is now an increasingly common term, and one that NAPFA has to share with other organizations and regulators, it's unclear whether NAPFA will really be able to create a clear distinction and differentiator in the eyes of consumers. In fact, a "Core Purpose Coalition" of NAPFA members has already raised concerns that NAPFA's changes are straying too far from its original and founding purpose to support fee-only financial planning in particular.

Nonetheless, NAPFA's shift appears to be an attempt to help its registered advisors stand out from the broader advisor population by adopting fiduciary requirements that in some ways go beyond those of CFP Board and the Securities and Exchange Commission (albeit primarily with respect to its Duty of Compensation and fee-only obligation, which has always been NAPFA's key differentiator), though time will tell whether consumers will be able to successfully parse NAPFA's new fiduciary standards apart from all the others to really find the best advisor fit for their needs?

Advisors Upbeat About Growth Prospects, Preparing For Competition From AI: Survey

(Leo Almazora | InvestmentNews)

From reading news headlines, it can seem like there is an ever-growing set of threats to the financial advisory business, with potential competition from AI getting significant attention lately. That said, a recent survey suggests that advisors themselves are largely optimistic about their growth prospects and are proactively taking steps to meet potential challenges.

According to a survey of 300 U.S. advisors by asset manager Natixis, respondents reported average asset growth of 12.5% over the past year and expect growth of 10.7% over the next year and to average 11.2% over a three-year horizon. In terms of competition, 78% of respondents said other (human) financial advisors currently represent their biggest competition, though only 26% expect that to be the case in five years, with 35% expecting AI-powered, self-directed advice tools will be their most serious threat. While only 12% of advisors expect that AI will put them out of business, many are taking steps to prepare, including 91% who say they are leaning into personal relationships and accountability to differentiate themselves from AI capabilities. Respondents were optimistic about the potential for AI to support their businesses (with 70% saying AI tools have the potential to free up time to work with clients and 76% expecting that advisors who adopt AI tools will gain a competitive edge), though 58% did acknowledge that integrating AI into day-to-day workflows has been more difficult than they anticipated.

Ultimately, the key point is that while advisors on the whole encounter potential challenges, they can take proactive steps to continue to demonstrate their unique value for prospective and current clients. And in a world of expanding AI-powered tools, leaning into what makes financial advice 'human' could be a key to standing out and continuing to succeed well into the future.

SECURE 2.0 401(k) Catch-Up Contribution Restrictions Are Here, How Should High-Income Clients React?

(Amy Arnott | Morningstar)

Given the cash flow demands of young adulthood and middle age, from student loan repayments to child care bills, some individuals are only able to go full speed on retirement savings once they reach their late 40s or early 50s. For those who have reached age 50, the ability to make "catch-up" contributions in their workplace retirement plans (for 2026, an additional $8,000 contribution on top of the standard contribution limit of $24,500, with those between the ages of 60 and 63 eligible to make a "super catch-up" contribution of $11,250 per year) can help them reach their retirement goals even if they got a relatively late start on saving.

Historically, individuals making "catch-up" contributions had the option to make 'traditional' or Roth contributions. Given that individuals in this age range are often in their peak earning years, traditional contributions can often be an attractive option to obtain an up-front tax deduction while they are in a relatively high tax bracket. However, under a measure (that was delayed for two years) in SECURE Act 2.0, starting in 2026 individuals with more than $150,000 (indexed for inflation) in prior-year wages from their current employer will only be allowed to make catch-up contributions to a Roth 401(k) or similar employer plan (though this rule doesn't apply to IRAs). Which could be frustrating for affected individuals who might have preferred to make traditional contributions.

Nevertheless, those whose incomes preclude traditional catch-up contributions to their 401(k) (and have the financial wherewithal to make them in the first place) could still benefit from making Roth contributions, including the tax-free growth and tax-free qualified distributions provided by Roth IRA accounts (and while many individuals will eventually roll their Roth 401(k)s into Roth IRAs, Roth 401(k)s also now don't have RMDs following passage of SECURE 2.0). At the same time, those who want greater flexibility (both for penalty-free withdrawals before reaching age 59 1/2 and possibly for available investment options) might choose to invest available dollars within a taxable account instead of making catch-up contributions.

Altogether, while the new catch-up contribution restrictions limit the choices of certain relatively higher-income individuals (though self-employed individuals and those who switch jobs could find relief in this area), continuing to make (Roth) catch-up contributions could be a viable option. And more broadly, financial advisors are also in the position to help clients decide what level of contributions are needed to meet their retirement saving goals and (for those across the income spectrum) whether to make their 'standard' 401(k) contributions on a traditional or Roth basis.

Gaining Early Retirement Flexibility Through The Rule Of 55

(Anne Tergesen | The Wall Street Journal)

Many retirement savers are aware that withdrawals made from workplace retirement plans before reaching age 59 1/2 come with a 10% penalty (with a few exceptions). Which can be a psychological and financial hurdle for individuals whose retirement assets are largely tied up in workplace retirement plans and who want to (or are forced to) retire before reaching this age.

One path available to certain workers, though, is the so-called "Rule of 55", under which an individual who leaves their employer in the year they turn 55 (or later) to withdraw money from the 401(k) or 403(b) plan associated with that company without having to pay the 10% early withdrawal penalty (though withdrawals from the non-Roth portion of the plan will be subject to taxation as ordinary income). There are key rules that need to be followed for this strategy to be effective, however, including only withdrawing from the plan associated with the job that was left while reaching their age 55 year (and not an IRA or a 401(k) from a previous employer) and being aware of the specific plan's guidelines for making withdrawals (e.g., some plans might allow for monthly withdrawals, while others might only allow for a single one-time withdrawal).

In sum, while the "Rule of 55" can provide flexibility to those who retire relatively early, there are key planning considerations to keep in mind, from knowing which assets can be withdrawn penalty-free (which suggests that those interested in using the 'rule' won't want to roll over their 401(k) assets to an IRA upon retiring from their company) to creating a withdrawal strategy that not only is available under the company's plan but also makes sense from a tax perspective (as some retirees might choose to use assets from taxable accounts or elsewhere that might create a lower tax burden and potentially better allow for tax strategies such as Roth conversions or capital gains harvesting in low income years).

Why Married Couples Don't Always Maximize Their 401(k) Matches

(Taha Choukhmane and Cormac O'Dea | Center for Retirement Research at Boston College)

One of the best deals in retirement saving is the ability (for those whose employers offer it) to get a match for (at least a portion of) one's workplace retirement account contributions. While those who maximize their 401(k) contributions (or come close to it) typically will be contributing more than enough to get the full available employer match, those who contribute less might be missing out on "free money".

Notably, the decision of how much to contribute to a workplace retirement plan can be more complicated for married couples than it is for singles, as they might decide to allocate more or less to a particular spouse's plan for a variety of reasons (e.g., level of an available match or quality of investment options). However, the authors found (using regulatory and IRS data covering 185,000 couples) that in the course of deciding how much for each spouse to contribute, approximately one in five couples fails to get the full available match from one or both spouses' employers, leaving an average of $757 on the table each year. For instance, if one spouse's employer offers a more generous match than the other's (e.g., by matching 100% of a contribution up to a certain percentage of income rather than 50%), maximizing their benefits would mean ensuring they 'fill up' the available 100% match before contributing to the 50% match.

When investigating the cause of this phenomenon, the authors found that inertia (i.e., maintaining a previous contribution level even if their circumstances have changed) or deciding to contribute equal amounts to each spouse's account, among other potential causes, didn't account for a particularly meaningful portion of the gap. However, a custom survey they fielded identified two potential causes. First, some individuals might not have realized the benefits of coordinating matches (furthering this point, respondents who demonstrated higher financial literacy were more likely to maximize their match). Nonetheless, some individuals deliberately didn't coordinate and maximize their 401(k) matches; those in this group were often associated with less-stable marriages (e.g., couples who subsequently divorce were more likely to have foregone match maximization while they were married) and/or believed (perhaps misguidedly) that they and their spouse would keep their entire retirement account balances in the case of divorce (rather than the accounts being considered marital assets).

In the end, financial advisors appear to have a valuable role to play in encouraging married clients to coordinate their workplace retirement account contributions to maximize available matches, whether by highlighting the potential gains from coordination as well as the legal status of balances in these accounts, which might provide relief to a spouse concerned about larger contributions to their partner's account.

Does Long-Term Care Insurance Add Up?

(Christine Benz | Morningstar)

The long-term care (LTC) insurance industry has faced an upheaval in recent years, with the number of companies offering standalone LTC insurance declining from more than 100 during the product's peak in the 1990s to fewer than ten companies offering the product today (with additional companies offering hybrid annuity or life insurance products that offer an LTC rider). Even amongst those companies that still offer the product, existing and new policyholders have seen premiums skyrocket in recent years as the insurance companies attempt to meet the cost exposures they face.

Amidst this backdrop, some individuals might wonder whether standalone LTC insurance is still worth pursuing. While it can be costly, these policies do offer benefits, including protecting against the potential for an LTC event before an individual or couple is able to amass sufficient assets to self-insure, providing some protection against an extended LTC need (though new policies today typically are limited to a certain time period ), and, perhaps most valuable, providing peace of mind that could allow for greater spending in retirement (and reduce the potential conflict involved in deciding whether to pursue more expensive care even if it means drawing down assets that might go to children or others).

That said, the cost of this coverage might be prohibitively high to some individuals (who might use their more limited assets to support lifestyle expenses and plan to have Medicaid cover an LTC contingency), while wealthier individuals (whose numbers have increased amidst strong market performance over the past 15 years) might decide to self-insure. Individuals in the 'middle' of these two extremes might be the best candidates for an LTC policy, though there are key decisions to be made, including the type of policy to purchase (e.g., a standalone LTC insurance policy or a hybrid option), the amount of coverage to purchase and the features of the policy (e.g., inflation adjustments), and when to buy coverage (as relatively younger individuals will be more likely to qualify for coverage but could end up paying premiums for longer than if they had waited to buy).

Ultimately, the key point is that the decision of whether to purchase an LTC insurance policy (and, if so, the amount and type of coverage) can be a complicated (and frustrating) one in the current industry environment. Which gives financial advisors the opportunity to offer value for their clients by showing the impact of different types of LTC events (e.g., varying lengths and costs) on their financial plan, the implications of supporting the potential costs of it through the various sources of funding available, and (if the LTC insurance route is chosen) helping them find the policy that is most appropriate (and cost-effective) for their needs.

How Financial Advisors Respond When Clients Face LTC Insurance Premium Hikes

(Cude, Groshong, Burns, and Weber | Journal of Financial Planning)

Companies that initially offered long-term care (LTC) insurance policies often ended up mispricing them, in part because of underestimated morbidity (i.e., the number of policyholders who would end up needing LTC and the length of the need) and underestimated lapse rates (i.e., the number of policyholders who would voluntarily drop their policies). While some insurance companies dropped out of the market entirely, those that remain have issued premium hikes in part to make up for the previous miscalculations.

For LTC insurance policyholders, such (often large) premium hikes can come as a shock and leave them with the decision of whether to accept the premium hike or reduce their coverage. Based on interviews with financial advisors, the authors found that respondents had several ways to support their clients. First, the advisors could clearly lay out the options available to the clients (as some thought the notices of premium increases were pushing clients in a particular direction), perhaps after letting the clients (understandably) express any frustration from the premium hike.

Advisors could then make recommendations based on the client's particular situation. For instance, many clients would still stand to benefit from maintaining their coverage, even with the premium increase, given that they might have limited options to replace the policy or enact an alternate approach to finance long-term care. For those that might choose a reduced benefit option rather than paying a higher rate, advisors could offer value by selecting the option based on the client's age (e.g., older clients might feel less of an impact from dropping the inflation rider given there would be fewer years for the benefit amount to compound) or circumstances (e.g., reducing the benefit period if the policy's daily benefit increased over time due to an inflation rider), perhaps in coordination with considering other resources that could be tapped to pay for care (e.g., a reverse mortgage).

In sum, an LTC insurance premium increase isn't just a dollars-and-cents issue for clients, but also an emotional one as well (given that they've often already paid many thousands of dollars for the policy). Which allows financial advisors to support their clients by helping them step back to analyze the options at hand and select the one that best meets their financial needs and care preferences.

Why You Should Only Buy Insurance Protection Expected To Lose You Money (On Average)

(Nerd's Eye View)

While no one likes to pay more in insurance premiums than they have to, an important fundamental principle of insurance is that in the end, there must be enough premiums (plus growth) to cover potential future claims (plus overhead and profits for the insurance company). Insurance coverage that is "too" cheap is actually risky, and coverage that is "expensive" is actually the most secure!

In fact, one of the most significant caveats to considering any form of insurance (or annuity) guarantee at all is if the insurance is not going to lose you money on average, it's actually something to avoid. In other words, insurance guarantees should never be expected to make money on average for the policyowner, or the insurance company will lose money until it inevitably goes out of business and the guarantee will be gone anyway!

As a result, decisions to purchase insurance and/or seek out guarantees can be viewed from the perspective of seeking to trade a small known loss to avoid a big unknown loss instead. The goal is not to finish with more money on average, but simply to shift the range of outcomes in a manner that increases the number of small losses and reduces the exposure to big ones that may be unrecoverable depending on one's circumstances (e.g., the loss of a house, an extended period of disability, or a long-term care event).

Which suggests that when considering a type of insurance or annuity guarantee with a client, it can be valuable to lay out why and how the coverage and guarantees are expected to lose money… and then decide if the trade-off is worthwhile anyway! And if it can't be determined how the guarantee will lose the client money on average, it's a strong indicator that either a key detail is missing, the guarantee is overpromising something it can't deliver, or the guarantee itself may be a mirage that the insurance company cannot possibly make good on in the end!

17 Content Types To Survive Google's Zero-Click Future

(Cyrus Shepard | Zyppy Signal)

Anyone who has used Google Search lately has likely noticed that its results page has evolved significantly over time, from going straight to the results (with perhaps one sponsored result at the top), to a series of sponsored results before the 'regular' results are listed (with the number of sponsored results depending on the query), to, now, an AI summary based on the query, followed by sponsored results and then (after significant scrolling) the 'regular' results.

Which has led to speculation of a "Zero-Click" era where Google users will get their answers from the AI summaries rather than clicking through to the search results below (or even the sources used for the AI summary). In fact, recent data suggest that nearly 60% of Google searches don't result in clicks to third-party websites, potentially threatening the business models of sites that depended on Google-derived clicks for attention and revenue.

That said, given its popularity, Google is still sending billions of users to websites each day. Shepard evaluated the types of sites that are not only rising to the top of search results but are actually receiving clicks in the process. In general, these sites tend to be proprietary, unique, and solve problems (going beyond 'just' providing information, which can be found in the AI summary).

To start, sites that have an "owned audience" that can be reached via email (e.g., a newsletter list) can stand out because those searching for it know where they're going (or don't have to search in the first place, given that the company is in their inbox regularly). Other types of sites that could perform well in the current environment include those with original research (particularly if it's cited by others), those with user-generated forums and discussions, creator video and podcast (where the user comes not just for the information, but for the host as well). In addition, brand pages (that help a visitor understand the company and establish trust) and pages with tools and calculators could stand out as well (which could be particularly supportive of financial advisors).

Ultimately, the key point is that content creators (including financial advisors) can continue to thrive in a "Zero-Click" environment by creating material that goes beyond mere information and instead establishes credibility and trust through unique insights or perspectives (that can't easily be communicated through an AI summary alone!).

How Blogs Can Survive As Information Becomes More Centralized

(Seth Godin | Seth's Blog)

In the earlier days of the Internet, information was spread across the web, including blogs that covered a range of topics. While a search engine could help you find one of these blogs, it was also easy to follow along with every post that was made using RSS readers. At a time when such chronological tools have been swamped by algorithmic-based feeds and AI summaries are taking over search results, blog authors and other independent content creators might wonder whether they have a future.

Godin suggests that rather than trying to fight the centralization of information and depend on Google for traffic, a better strategy could be to nurture a highly focused audience that will want to keep coming back (without necessarily getting a cue from a search engine or social media). By offering high-quality content, creators can earn the trust of readers and get their permission to follow up with them directly (e.g., through an email list). Further, by creating compelling, unique content that the audience will benefit from sharing, creators can encourage further growth of their platform without relying on search tools or social media algorithms.

In sum, while information has become more centralized (with AI tools able to provide coherent [if not always entirely correct] responses quickly), creators can still stand out by understanding their target audience, creating content that meets their needs, and ultimately  building a stronger relationship that encourages loyalty (and continued engagement) over time.

Has AI Already Killed How-To Nonfiction?

(Tim Ferriss)

Amongst the most popular non-fiction books are those that help the reader learn how to do something, whether it's getting fitter or managing their finances. However, with AI tools ingesting these books, it's easier than ever for individuals to learn the information contained in a how-to book without actually reading it.

As evidence of this trend, Ferriss has seen sales of his best-selling how-to books on work, health, and other topics decline precipitously over the past couple years, dropping 46% in 2025 and on pace to fall another 57% in 2026. While there are other potential explanations (e.g., the popularity of YouTube channels and podcasts), it appears that the growing capabilities of AI chatbots to relay information to users is playing a major role in this decline.

Ferriss is not planning to abandon writing long-form books, however, as he argues that the 'magic' of books is not in the information they convey but rather the sequencing within them (e.g., interspersing the 'how to' instructions with stories that help the concepts stick). For instance, while it's long been possible to search for descriptions of exercises and nutrition practices that can help an individual boost their health, not everyone has actually followed through (with Ferriss finding, anecdotally, that those who have read his books in full have found greater success than those who merely received a summary of its key points).

While not directly related to book sales, this phenomenon perhaps speaks to the potential for financial advisors to continue to thrive as information becomes easier to access. Because while the mechanics of achieving financial success can be summarized, personalizing them for a particular individual's preferences and goals (and getting them to actually implement recommendations) can often benefit from a human relationship!

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.