Weekend Reading For Financial Planners (May 2-3)

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.

Comprehensive Financial Planning On The Rise As Investors Seek More From Human Advisors

(Michael Fischer | ThinkAdvisor)

While for much of the 20th century, consumers had to rely on a broker to buy, sell, and manage their investments, the Internet age has created many new options for managing investments and receiving advice, from self-directed brokerage platforms to 'robo-advisor' solutions. Which has upped the ante for human financial advisors, who can no longer stand out by offering 'basic' portfolio management.

According to a survey by research and consulting firm Cerulli Associates, 54% of financial advisors said their clients will receive ongoing comprehensive financial planning advice in 2027, up from the current 48%. Among the perceived benefits of offering comprehensive planning services, stronger client relationships (cited by 83% of respondents), an enhanced ability to help clients achieve financial goals (79%), and increased client retention (73%) were noted most often by respondents. Advisors also appear to be leaning into technology to compete with tech-forward digital platforms, though 58% of respondents said their tech stack lacks key features, functionalities, or integrations.

In the end, while the rise of digital, retail-focused advice platforms and the value of financial planning likely isn't news to most financial advicers, an increased focus on expanding planning services by advisors who were previously investment-centric suggests that offering comprehensive financial planning might become less of a differentiator than it might have been in the past. Further, the rise of artificial intelligence tools that can provide answers to common planning questions (and perhaps even [accurately?] customize recommendations for a consumer's individual situation) could put additional pressure on planners, which could make leaning into the human-centric elements of the planning relationship (e.g., developing a personal connection and making clients feel understood) a way to stand out in the years ahead?

Many Retirees Seeking More Non-Financial Planning Discussions With Advisors: Survey

(Steve Randall | InvestmentNews)

As a financial advisor, it can be natural to focus on the dollars and cents of a client's life to help them meet their financial goals. Nevertheless, given that money is often seen as a means rather than an end in itself, working with clients to understand the 'why' behind client's financial goals can help put them into perspective and lead to deeper client conversations.

According to a survey by the Oath Money & Meaning Institute of 420 retirement-age Americans with an average of $500,000 in retirement savings, 67% of respondents indicated that devoting time to preparing for the non-financial side of retirement (e.g., purpose, identity, routines, and relationships) is either very important or absolutely essential. However, when meeting with a financial professional about retirement, 75% indicated that non-financial goals and values only sometimes, rarely, or never came up in these conversations. While some advisors might be hesitant to dig into non-financial issues, more than half of respondents indicated that they were at least somewhat comfortable doing so with a financial professional (with only 8% saying they would be very uncomfortable).

In sum, while advisors can offer significant hard-dollar value through comprehensive financial planning services, many retirement-age clients appear to want to go a level deeper by discussing their non-financial goals as well, linking their financial success with personal fulfillment. Which suggests that advisors who do so could both boost client retention (by helping their clients lead both financially and personally fulfilled lives) and stand out for prospects (given the survey's findings that many advisors might be underrating this planning element).

Majority Of Millennials Want To Retire Early, But Risk Tolerance Could Stand In Their Way: Survey

(Kerry Hannon | Yahoo Finance)

Under the 'traditional' view of retirement, an individual will spend their career working full-time until leaving the workforce altogether, perhaps some time in their mid-to-late 60s. While this plan can work well for many individuals, younger generations appear to have an appetite for retiring earlier…though they might find it challenging to actually make it happen.

According to a survey of 500 Millennials between the ages of 29 and 44 sponsored by Parnassus Investments, 79% of respondents indicated that they want to retire early. Nonetheless, while some Millennials might have sufficient incomes and savings rates (or receive windfalls) to support an early retirement, many will likely have to rely on investment growth to do so. However, respondents expressed moderation when it came to their risk tolerance, with only 14% indicating that they would be comfortable making investments that may fall 20% or more for a chance to increase 20% (a measure that's more conservative than the performance of broad-market index funds). At the same time, only 36% of respondents said they work with a financial advisor and two-thirds said they taught themselves to invest, suggesting that there could be room for advisor-led education on risk-return profiles of different investments and the level of return needed to achieve particular financial goals.

Altogether, while many Millennials might have lofty goals surrounding early retirement, advisors could play a valuable role in putting them into perspective, whether in terms of showing what it would take to meet them, offering alternative options to full early retirement (e.g., "Coast FIRE" or sabbaticals), and/or, at a more basic level, uncovering why they want to retire early in the first place (along with exploring what brings them purpose and fulfillment and how work fits into the equation).

When It Comes To Bonds, Don't Be A Hero

(Christine Benz | Morningstar)

During their multi-decade bull market (which coincided with a general decline in interest rates), bonds not only served their role as a portfolio ballast but also provided a generous return. However, the past few years have been murkier for this asset class, with rising interest rates leading to weak returns (which was particularly painful in conjunction with the stock market decline experienced in 2022).

Amidst this backdrop, some investors have taken a more tactical approach to their fixed income investments, for example by selecting particular bond types based on expectations for future interest rate changes. However, this can sometimes backfire, with Morningstar research finding that some of the biggest gaps between funds' total returns and investors' actual returns occurred in bond funds (with a gap of about one percentage point in rolling 10-year periods between 2000 and 2024), as some investors entered and exited these funds at inopportune times.

With this in mind, Benz argues that investors (and their advisors) might instead take a strategic approach to their bond investments. Rather than considering current interest rates and future expectations, investors can instead start by considering their anticipated spending needs and time horizons. For instance, an individual on the verge of retirement and who will require income from their portfolio to meet their spending needs over the next several years might allocate a larger portion of their portfolio to cash and equivalents than a working-age individual who might be decades from retirement.

The next decision is whether to invest in individual bonds or bond funds. The former might be preferable for a retiree with known spending needs (e.g., by investing in a ladder of Treasury Inflation-Protected Securities to 'guarantee' a certain amount of income each year), while the latter might be used by investors with less precise spending goals who want greater flexibility. For those who choose to use funds, using their spending horizon to guide which types of funds to invest in can be an effective strategy; for instance, holding periods of less than two years might call for cash-type instruments, while short- and intermediate-term bond funds might be appropriate for periods between two and ten years.

In sum, while 'timing the market' for bonds can be a challenging endeavor, financial advisors are well-positioned to support their clients in determining the size and composition of bond investments in the context of their overall financial plan. Which could allow clients to reap the benefits that bonds can offer in supporting cash flow needs and portfolio stability while reducing the risk of mistiming the market.

Bond Funds That Have Offered Some Inflation Protection

(Maciej Kowara | Morningstar)

While bonds are often thought of as a portfolio stabilizer (at least compared to stocks), they are not without risk. After an extended period of relatively tame increases, inflation spiked earlier this decade, potentially exposing bonds to potential real (i.e., inflation-adjusted) losses, even if their nominal returns were positive.

Kowara looked at return data for the decade ending December 31, 2025 to assess the performance of different types of bond funds through a period that included inflation rates not seen for some time. Overall, approximately 70% of bond funds at least kept up with inflation, with about 20% generating cumulative real returns of more than 25%. However, breaking bond funds down into different categories shows a wider range of experiences for investors.

Bond fund categories seeing the largest real gains included high-yield bonds (with 80% of funds having a cumulative real return of more than 25% and only 4% experiencing a loss of purchasing power) and bank loans (with 48% showing a real gain of more than 25% and only 4% experiencing inflation-adjusted losses), which is perhaps a result of a relatively strong economy during much of this period rewarding investors willing to take credit risk.

Government bond funds were much more of a mixed bag for investors. Living up to their name, Treasury Inflation-Protected Securities (TIPS) funds did a good job of helping investors maintain their purchasing power, with 88% doing so. However, investors in short-term government funds and, in particular, long-term government funds weren't as fortunate, with 64% and 90%, respectively, losing purchasing power during the period (though intermediate-term government funds performed better, with only 28% losing their purchasing power).

Ultimately, the key point is that because any bond investment comes with risk, it's up to investors (perhaps with the assistance of a financial advisor!) to determine the return profile they seek and the types of risk they're willing to accept. And when it comes to inflation risk, the experience over the past decade suggests that TIPS funds largely lived up to their billing (though investing directly in a TIPS 'ladder' could reduce inflation risk further), while those willing to take credit risk were rewarded with strong real returns as well.

Assessing Buffer ETFs Vs T-Bills For Short-Term Cash Needs

(Elisabeth Kashner | Advisor Perspectives)

An investor with a need for cash in the not-too-distant future might have traditionally looked at cash-like instruments such as Treasury bills, certificates of deposit, or money market funds that offer some level of return (to perhaps blunt the impact of inflation) with little to no risk of nominal losses. More recently, though, a number of "buffer" ETFs have emerged that use options strategies to offer 100% downside protection from market losses while potentially providing a stronger return than cash-like instruments.

With an upcoming need for cash to fund a construction project, Kashner took a total cost of ownership approach to assess whether available buffer ETFs might be preferable to T-bills for her needs. To start, she selected buffer ETF products that track the S&P 500 as the underlying asset (as they're offered by the most managers) and contained contracts maturing when she would require the proceeds and then compared their expense ratios and median daily spreads (to come up with a total cost of ownership) as well as the initial upside gross 'caps' that came with each. Lucky for her, the option with the lowest total cost of ownership was also the ETF with the highest initial cap.

Next, she compared the potential best- and worst-case scenarios for her chosen buffer ETF and a T-bill with a similar maturity date. Overall, while the T-bill's return was the exact same in either case, the buffer ETF's potential return profile came with a spread, with the worst-case scenario seeing approximately 4.1 percentage points worse performance than the T-bill and the best-case scenario offering about 4.3 percentage points of additional upside. That said, other factors will enter into this calculation as well, including the Federal and state tax treatment of the returns produced from each (e.g., the buffer ETF might look better if it is held long enough to receive long-term capital gains treatment [whereas T-bill interest is taxed as ordinary income], though T-bill interest isn't taxed at the state level, which might be appealing to those living in high-tax states).

In the end, Kashner decided that the potential additional upside available with the buffer ETF compared to the T-bill wasn't worth the known costs of investing in one of these products, though she noted that other investors might have made a different decision based on their risk tolerance and tax situation. Which suggests that financial advisors could support clients by considering (100% downside-protected) buffer ETFs as an additional potential option for relatively short-term cash needs but also by determining whether it's a better 'fit' than other options for a given client's profile.

Why Client Loss Is A Leadership Failure, Not A Relationship Problem

(Ray Sclafani | ClientWise)

Financial advisors pride themselves on having close relationships with their clients, which can last for years or even decades. However, when the 'stickiness' of these relationships is tied to a specific advisor, firms can face attrition when an advisor departs (e.g., due to retirement or a move to a different firm), as the client might have felt a much stronger connection with their specific advisor than the firm as a whole (making it easier to move on to a different source of financial advice).

With this in mind, Sclafani differentiates between who he calls "lone rangers" and "legacy leaders". The former are often firm founders who own key client relationships, make decisions independently, and deliver most of the advice personally, even if they have others on staff. "Legacy leaders" on the other hand tend to enable their teams to provide advice independently, cultivate future leaders intentionally, and create structures to ensure a consistent client experience. Given that many firms start with a single founder/advisor, it can take time to transfer client trust to newer members of the team. Nonetheless, there are many ways to do so, from committing to having multiple advisors participate in client meetings, having regular follow-up come from the entire team, and clearly assigning task related to advice delivery.

Altogether, while some firm leaders might find it hard to separate themselves from managing client relationships, effectively sharing and delegating responsibilities to (next-gen) staff could be the key to creating a business that endures beyond their own direct influence (while also creating additional capacity to growth further into the future!).

The Hidden Cost Of Success: Navigating Professional Isolation As Your Practice Grows

(XY Planning Network Blog)

Leaving a job at a financial planning firm to start one's own can be both exciting and lonely at the same time, as doing so comes with significant independence and upside potential at the cost of a loss of daily connections with coworkers. Which leads many new firm founders to link up with individuals in the same boat, whether through mastermind/study groups or other types of relationships that can offer both camaraderie and business insights.

However, as their firm grows, a founder might find that they don't share the same level of connection with those they turned to during their startup phase. For instance, a firm owner facing challenges properly staffing their firm might not be able to get sufficient feedback from peers who are still in solo practices. For founders feeling isolated during the current stage of their business' life cycle, a network refresh could be in order. This could mean holding onto previous relationships (as these individuals might have become strong friends) while also seeking out peers who are facing similar issues (and/or mentors who have made it through the other side of them).

Notably, there are several potential avenues to find these next-stage peers. To start, financial planning organizations (e.g., FPA, NAPFA) have a sufficient membership base to include those who are in just about every stage of the business-building process (creating the possibility for particularly impactful 'niche' study groups). Founders who live in an area that includes many other RIAs might also seek to host regular in-person gatherings to discuss their businesses. Also, seeking out local business owners outside of the financial planning industry could offer fresh insights into how those in other fields handled similar problems (and could be a potential source of new clients as well?).

Ultimately, the key point is that as a financial planning firm evolves over time, so too do the problems that a founder faces. Which suggests that seeking out new peers and mentors who are currently dealing with or who have previously faced similar issues could lead to better understanding and more effective insights to apply in one's business.

7 Research-Backed Practices To Build A Superteam That Keeps Getting Better

(Ron Friedman | Harvard Business Review)

A key part of transitioning a solo practice into a full-fledged business is hiring a team that serves as a force multiplier for a firm and allows it to scale effectively. However, hiring qualified and competent individuals isn't necessarily sufficient to create a dynamic, thriving firm, as even strong teams can stagnate over time.

To assess what goes into making a strong team, Friedman and his research partners surveyed more than 6,000 knowledge workers across a range of industries to assess how their teams set priorities, make decisions, and collaborate. Using this data, they identified "superteams" where workers scored their team a 10 on a 10-point scale on both its effectiveness and how its performance compares with that of other teams in their industry. Such "superteams" tended to share three key strengths: managing time, energy, and attention more efficiently, having members that actively make one another better, and constantly building new skills and improving over time.

While the first two strengths are no doubt important, the third item is what really can drive a team (and a business) to greater heights in the future. Notably, there are several practices that leaders can use to drive improvement over time. For instance, teams that run 'experiments' can often unearth new processes, services, or products that they might not have considered if they stuck to existing or time-tested practices. Also, fostering curiosity amongst team members can lead to better knowledge sharing internally and external education as well (importantly, this can include leaders as well, who can learn from team members through 'reverse mentorship'). Insight-sharing can also be fostered by having team members answer the question "what's blocking me today", as others on the team might have experienced the same problem or could have a creative solution that might not have been considered. Further, leaders of "superteams" regularly provide feedback that motivates improvement without coming across as critical (e.g., by framing mistakes as useful data on the path to improvement rather than a character flaw). Finally, emphasizing the meaning of the team's work (and not just focusing on key performance metrics) can provide team members with the energy and motivation to push through the tough times.

In the end, building a "superteam" is not the result of a single tactic, but rather takes a commitment to consistent improvement towards a shared goal. While doing so could require investment on a leader's part (e.g., supporting educational opportunities for staff or being willing to incur losses on failed 'experiments'), this path could lead to exponential returns down the line!

If America's So Rich, How'd It Get So Sad?

(Derek Thompson)

By many measures, Americans and the U.S. economy as a whole have done well in the 2020s, with the national economy significantly outgrowing that of many other high-income countries, more Americans breaking into the upper middle class, and workers at the bottom of the income distribution seeing their wages grow faster than those at the top in the last few years. However, measures of individual happiness are at some of their lowest levels on record, raising questions about what might be causing this persistent downturn.

Notably, while measures of happiness and satisfaction (understandably) took a sharp dive amidst the COVID pandemic, a greater mystery is why these levels haven't recovered as the pandemic receded and regular activities resumed. One potential explanation is the sharp inflation levels experienced for the first time in decades, with consumers facing higher prices for both day-to-day goods and services and big-ticket items such as houses. Another possible contributor to greater unhappiness is a rise in time spent alone and declining social trust overall. Still another possible explanation is the pace of news (or a "permacrisis") that can make it hard to look away from national and international events (which is perhaps amplified by the prevalence of smartphones and social media).

It's worth noting, though, many other countries have experienced happiness declines as well, indicating that this phenomenon isn't unique to the United States. Particularly curious is the finding that happiness declines this decade have been steepest in countries where English is the primary language, with Canada, the United Kingdom, and Australia seeing the largest drops and other countries (including Portugal, Spain, and Italy) actually experiencing increases in happiness during the 2020s. Perhaps even more interesting is that this effect has been seen intra-country as well, as life satisfaction for people under 30 in Quebec (where 80% of the population speaks French) fell half as much as it did for people in the rest of Canada (where English is the primary language).

In sum, lower levels of happiness in the United States (and in other parts of the world) might not be able to be reduced to a single factor, but rather could be the result of a general sense of unease that began with the pandemic and has yet to relent. And while a given individual might not be able to change geopolitics or price levels, making investments in relationships and community could be small steps on the path to building stronger social ties and greater trust?

Inside The Booming Business Of Social "Third Places"

(Laya Neelakandan | CNBC)

Individuals tend to spend most of their days either at home or at work. Beyond these first two "places" though, are so-called "third places", where members of the community can informally meet and interact. Such "third places" (e.g., libraries, churches, and cafes) can provide valuable connective tissue for a community, allowing interaction amongst both friends and strangers.

Recent years have seen a decline in the prevalence and use of many third places (RIP shopping mall), which some have associated with a decline in social trust and greater individualism. At the same time, individuals and entrepreneurs have sought to create new third places that could allow for greater socialization and community building. One branch of this revival has been in third places centered on wellness, including fitness facilities and bathhouses, among others (offering a common place for socializing after work other than bars). A key part of this trend has been creating regularly scheduled times for members of these groups to meet, allowing for stronger relationships to form than what might be possible from chance encounters at the facility.

Ultimately, the key point is that third places can represent an important part of the social fabric of a community. Which suggests that whether it's a matter of joining a formal club or just getting outside to a public park, library, community center, seeking out third places could lead to new (and perhaps surprising) relationships.

When Cost-Consciousness Takes The Joy Out Of Work

(Mark Maurer and Chip Cutter | The Wall Street Journal)

Going into the office isn't just a matter of getting work done, as it can also be a place for collaboration and conversation with colleagues and a place to fulfill daily needs, from a morning cup of coffee to heating up lunch in the office kitchen (no fish, please). Which offers employers the opportunity to offer small perks (from free coffee to a monthly catered lunch) that can make employees' workdays just a little bit better.

At the same time, cost-conscious leaders might question whether such expenditures are worth it (even if they might represent a miniscule part of the company's total budget), particularly at companies that are facing revenue pressures or who greatly expanded perks to lure workers back to the office in the aftermath of the pandemic (in fact, CFOs at large U.S. companies used the word "efficiency" at least once on 307 conference calls in the first quarter, up from 219 in the prior-year period and representing the highest level since at least 2020).

While cutting off a coffee subscription might be a marginally effective cost-cutting move in the short term, it could potentially have larger negative ramifications when it comes to attracting and retaining employees. For instance, employees might feel as though they're not valued if a beloved perk is taken away without their input. Also, at a time of growing stress amongst workers about the potential effects of artificial intelligence, some employees at perk-cutting firms might assume that their salaries could be next on the chopping block and start to look for a new job.

In the end, while a free morning coffee might not be the straw that breaks the camel's back when it comes to employee retention, the removal of different perks could be taken as a signal by employees that goes well beyond their practical value (and perhaps lead to greater costs to the company in the future in hiring and training new employees?).

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.