Weekend Reading For Financial Planners (May 3–4)

CFPs To Pay Higher Annual Fee, Though Some Question ROI

(Alex Ortolani | WealthManagement)

CFP Board performs a variety of functions for its certificants that help set them apart from other advisors, from setting standards for certification (i.e., its education, experience, exam, and ethics requirements) that attempt to demonstrate a baseline level of competency to those seeking an advisor, to setting fiduciary standards for CFP professionals who use the marks in the hopes that it increases the public's confidence that CFP professionals will put their clients' interests ahead of their own. In addition to its standard-setting role, CFP Board, starting in 2011, has engaged in public awareness campaigns (across multiple media, including television, digital ads, and social media) to promote visibility of CFP certification to consumers and the potential benefits for consumers to seek out financial advice from a CFP professional.

This public awareness campaign comes with a hard-dollar cost, however, and as CFP Board seeks to expand the campaign in the coming months it announced this week that it will increase the annual fee for new certificants and renewing CFP professionals by another $120 to $575 (a second fee increase following fast on its prior fee increase in 2022, when again the annual fee was increased from $355 to $455 per year to fund the public awareness campaign and a variety of other initiatives). Notably, unlike the 2022 increase, where only $15 of the $100 rise was earmarked to help fund the public awareness campaign, in this case the entire $120 would be allocable to the public awareness campaign (such that in total, $280 of the total $575 fee will now fund direct expenses of the public awareness campaign). With the new dollars, the CFP Board's public awareness campaign will now include a $30 million annual national advertising initiative (funded by both annual certificants fees as well as funds from CFP Board's investment reserves) to boost consumer engagement, with a focus on strategically timed spring and fall broadcasting windows as well as year-round public and media relations.

CFP Board highlighted apparent successes of its previous public awareness efforts, including a survey indicating that unaided consumer awareness of the CFP brand increased from 17% in 2011 to 44% in 2024, with the preference for working with a CFP professional (as opposed to another advisor) rising from 22% to 89% during that time span. CFP Board also highlighted that in its annual certificants survey, 90% of respondents said promoting the CFP brand is a top priority (though respondents might not have been considering the costs they might have to bear for such a campaign?).

Nevertheless, the new fee increase has led to angst among some CFP professionals (e.g., on the CFP subreddit), who will now have seen their annual dues increase by more than 60% over the past three years based on the two fee increases, with some questioning whether the public awareness campaign has directly generated new clients (and revenue) for them, and that few CFP professionals have ever received a client from the CFP Board's Find A CFP Professional tool via their "Let's Make A Plan" consumer website (and similarly, Kitces Research on Advisor Marketing shows that CFP Board's website is amongst the lowest ranked in both Lead Quantity and Lead Quality for financial advisors).

Ultimately, the key point is that while CFP professionals demonstrate income and productivity benefits compared to advisors without the certification (that could outweigh the time spent achieving the certification and the money spent to maintain it in many advisors' minds), CFP certificants might not have infinite patience (depending on the magnitude of future fee increases?). Already, questions are bubbling up about how an enhanced awareness campaign might translate to additional clients for their practice (particularly given the large number [now more than 100,000] of CFP professionals to choose from) when individual advisor results have already been negligible, and whether CFP Board has already made such significant inroads in raising awareness of the certification and the benefits of working with a CFP professional that there might be less juice to squeeze at this point? On the other hand, the fact remains that consumers don't choose an individual financial advisor 'just' based on their CFP marks alone, and even if no consumers say "I found you because of the CFP Board's commercials", when the CFP marks are seen as a credible indicator of competency by the public, the primary benefit of the CFP Board's public awareness campaign may simply be that consumers don't contact advisors who don't have the CFP marks, and those advisors with CFP marks benefit by being the ones who get a chance to meet with prospects to then explain their own individual value in the first place.

Majority Of Clients Reassured By Their Advisor Amidst Market Turbulence, Though Others Feel Underserved: Survey

(Diana Britton | WealthManagement)

The past few months have been challenging for investors given the volatility in equity markets and seemingly ever-changing economic news (potentially raising their uncertainty and nervousness about where markets might head in the coming months). Nonetheless, this environment provides financial advisors with both the opportunity to put the current spate of volatility into context and to reassure their clients and demonstrate how they are positioned to weather a range of contingencies.

To gauge how investors are reacting to the current environment, research firm J.D. Power in mid-April conducted a survey of 1,190 investors with at least $100,000 in assets to see how they were responding to the market turbulence. A majority of respondents with advisors (52%) said they felt reassured and well-guided by their advisors (while 31% said they were uncertain and didn't feel like they had enough support from their advisor, and 7% said they were frustrated and not getting the guidance they need). In terms of advisor engagement, 57% of respondents reported that their advisor had engaged via "low-touch" methods (e.g., email, letter, text, or secure message) and 56% said their advisor had used "high-touch" tactics (e.g., phone call, video call, or in-person meeting).

Notably, 56% of overall respondents said the current period is the toughest investment climate they've experienced, with 33% reporting that they've navigated worse market conditions. This might have contributed to the result that 40% of self-directed investors surveyed said they are probably or definitely likely to use a financial advisor in the next 12 months.

Altogether, these survey results suggest that many investors (particularly those without an advisor supporting them) remain on edge about the current state of the markets and what might lie ahead. Which presents opportunities for advisors both to reach prospective clients who might be primed to seek an advice relationship in the current market and to reengage their current clients to improve their confidence in their financial plan (and perhaps encourage them to refer friends and family to their advisor in the process?).

FINRA's Outside Business Proposal Could Have "Chilling Effect" On RIAs, Critics Say

(Sam Bojarski | Citywire RIA)

Given the potential for conflicts of interest, broker-dealer registered representatives are required by self-regulatory organization FINRA to disclose certain Outside Business Activities (OBAs), with the broker-dealer required to evaluate the activity and assess whether the activity should be limited in order to ensure it doesn't interfere with or otherwise compromise the representative's responsibilities to the broker-dealer and its customers (or be viewed by the public as being part of the broker-dealer's business itself). Representatives are also required to report private securities transactions that the firm is also required to supervise.

Amidst this backdrop, FINRA has proposed a new rule (with a comment period lasting until May 13) that it says is designed to streamline regulations in these areas and in some ways narrow the scope of existing requirements (e.g., excluding activities at dually registered affiliates as well as securities transactions among immediate family members). However, some commenters on the proposal have argued that other parts the new rule could dramatically increase the compliance burden on certain broker-dealers and RIAs.

For instance, Peter Purcell, CEO of broker-dealer Purshe Kaplan Sterling (PKS), said that his firm (which works with about 650 independent RIAs that use it for commission-based brokerage services) would have to double its staffing as a result of the proposed rule. While FINRA said that its proposal largely maintains the status quo regarding outside investment advisory activity, PKS, in a letter commenting on the proposal, highlighted that while past FINRA guidance specified that execution of a securities transaction would trigger supervision requirements, a recent regulatory notice replaced the word 'execution' with the broader phrase 'effects or places a securities order', which could bring otherwise independent RIAs under the broker-dealer's oversight when using the broker-dealer for certain transactions (perhaps including using the broker-dealer to 'park' old commission trails when transitioning to the RIA model). In addition, attorney Brian Hamburger noted that the proposed rule would reduce the autonomy of investment adviser representatives who have business that allows them to be a registered representative and suggested that it could be an attempt by FINRA to increase their role in the regulation of investment advisers (who are otherwise regulated by the Securities and Exchange Commission or individual states).

In sum, while parts of the proposed rule appear to reduce the reporting burden for broker-dealers and their registered representatives in certain areas (e.g., for representatives' work that is low risk, such as refereeing sports games or driving for a car service), critics suggest the potential for it to draw in RIAs that conduct certain business through broker-dealers could lead to a dramatically increased compliance burden for broker-dealers and RIAs (who might otherwise be focused on their SEC or state regulatory obligations, including the reporting of outside business activities and securities transactions) alike (perhaps discouraging RIAs from engaging in transactions through an unaffiliated broker-dealer altogether?).

The Gold Investment Thesis Revisited

(Harry Mamaysky | Advisor Perspectives)

While the performance of equities has been rocky over the past several months, one asset that has experienced strong appreciation is gold, which has set multiple record highs over the past year and a half. While some investors might be attracted to its recent performance (and its reputation as a safe-haven asset amidst current economic uncertainty), advisors might wonder whether this performance might continue going forward or whether the price of gold might retreat.

Mamaysky notes that one of the key drivers of gold's strong performance has been global central banks, which have been net buyers of gold for the last several years (and could continue given recent market turmoil and uncertainty surrounding global trade). In addition, he argues that gold has served as a hedge against market and economic uncertainty. For example, the correlation of daily gold and S&P 500 returns has been 21% (offering a diversifying influence within investor portfolios). Further, historically, gold tends to perform well when equity markets are down; in the worst 5% of 12-month return periods for the S&P 500 (when it fell 25% on average), gold has posted an average return of 2%. On the other side of the (gold) coin, he notes that the price of gold (as of mid-April) relative to the consumer price index is at an all-time high dating back to the mid-1970s (perhaps suggesting that its price is overstretched).

In the end, while gold has performed well over the past year (in both absolute and relative terms) and appears to maintain its qualities as a portfolio diversifier, its historically elevated price and a particular client's risk profile and investment goals could be important factors for advisors who are either considering an allocation in client's portfolios (or who encounter questions from clients experiencing a case of 'gold fever').

U.S. Bonds Have Never Been Risk-Free, And Never Will Be

(Allison Schrager | Bloomberg News)

Compared to stocks, bonds are often viewed by investors as a lower-risk investment. And within this asset class, U.S. Treasuries are sometimes seen as the least-risky segment of the fixed income universe given their liquidity and the fact that they are backed by the full faith and credit of the U.S. government (historically making them less risky than corporate bonds or those issued by less-developed countries, at least for default risk).

At the extreme, some investors might consider U.S. Treasuries as a "risk-free" asset (particularly those investing in the years leading up to the early 2020s, a period of declining rates and relatively low inflation). However, the rising inflation experienced in the past few years (and the subsequent rise in interest rates) led to declining bond prices, including for U.S. government debt, serving as a wake-up call for investors. More recently, the possibility of a trade war led Treasury yields to sharply rise (and prices to fall in early April, possibly worrying some investors that they could experience another extended period of poor performance for Treasuries (with the potential for future bouts of inflation to further erode their real returns). Which raises the importance for investors (and their advisors) of ensuring their exposure to bonds (including Treasuries) is aligned with their investment time horizon. For instance, shorter-duration instruments might be better suited for clients with near-term cash needs (perhaps some retired clients), as longer-duration bonds could expose them to greater interest rate risk (even if the likelihood that the U.S. government will default on this debt remains low).

Ultimately, the key point is that while Treasuries are likely to be less volatile than other assets in a client's portfolio (e.g., equities), they still come with a variety of risks (perhaps to the surprise of some clients, who might think of them as "risk-free"). And amidst client conversations regarding the ongoing market turbulence advisors could find an opportunity to revisit their clients' bond allocations, ensuring that they're aligned with client goals and explaining the potential risks to this portion of their portfolio.

Buffer Beef: Evaluating The Performance Of Buffer ETFs

(Jeffrey Ptak | Basis Pointing)

To meet the needs of investors looking to participate in equity market gains while limiting their exposure to market losses, a number of products have emerged in recent years that offer (at least some) downside protection in return for capping the upside return from investing in equities. One particularly popular set of products is buffer ETFs, which use options strategies to provide a "buffer" against losses, while an upside 'cap' is put in place to pay for the cost of providing the downside protection.

The growing number of buffer ETFs introduced has led to a range of analyses regarding their value for investors. Recently, investment firm AQR published a commentary arguing that the results of various options-based strategies (including 'buffer' strategies) have been disappointing for investors, leading to a response from buffer ETF provider Vest. Ptak took a look at buffer ETF performance himself, analyzing buffer ETFs that existed in January 2020 and survived through January 2025, first calculating each ETF's beta versus its primary prospectus benchmark over the period, then creating a custom benchmark that tracked each ETF's prospectus benchmark index (with a weight set equal to the beta) and a Treasury bill ETF (which got the remaining weight). Overall, he found that only 7 of the 41 buffer ETFs studied outperformed their custom benchmark in terms of return (further, 4 of the 41 buffer ETFs had a higher Sharpe Ratio than the custom benchmark). Perhaps more notable (given that one of the presumed purposes of buffer ETFs is to mitigate downside risk), every buffer ETF studied was more volatile than its custom benchmark (though half of the buffer ETFs had a shallower maximum drawdown than the custom benchmark).

Nonetheless, Ptak notes he was able to create the custom benchmarks with the benefit of knowledge of its beta to its prospectus benchmark. For example, buffer ETFs focused on the S&P 500 and the Nasdaq 100 look better when compared to a generic portfolio consisting of 60% stocks and 40% bonds, lagging slightly in terms of annual performance (8.1% versus 8.5%) but showing less volatility (9.8% average annual standard deviation versus 12.8%) and better limiting drawdowns (with none of the 35 buffer ETFs in the group having a deeper drawdown than the 60/40).

In sum, the relative performance of buffer ETFs can differ based on the benchmark being used. Though, more broadly, financial advisors might consider whether they prefer to use buffer products or attempt to achieve the promise of buffer ETFs (mitigation against downside losses while participating in much of the upside of risk assets) by creating a portfolio consisting of other (potentially lower-fee) assets (e.g., a combination of stocks, bonds, and cash)?

Do Households Have A Good Sense Of Their Long-Term Care Risks?

(Anqi Chen, Alicia Munnell, and Nilufer Gok | Center For Retirement Research At Boston College)

As life expectancy has expanded over the past century, so too has the need for long-term care for aging adults. While this care is often provided by family members (often a significant, and uncompensated, burden), many seniors will spend at least some time receiving long-term care services that require payment. However, many clients might not fully understand the chances that they might require long-term care (and the potential scope and cost of the care), which could lead them to misestimate when it comes to their finances (e.g., underestimating the cost and have unmet needs or spend down assets to qualify for Medicaid on the one hand, or overestimating the cost and unnecessarily restricting their consumption in retirement on the other).

The authors' research found that among those who reach age 65, 82% will need long-term care services at some point, suggesting that long-term care planning could be a valuable practice for financial planning advisors and their clients. Notably, this care varies in terms of intensity (i.e., the number of Activities of Daily Living (ADLs) [e.g., bathing and eating] with which they need assistance) and duration, with only 18% of individuals needing (the likely most costly) high-intensity care (i.e., two or more ADLs or an Alzheimer's/dementia diagnosis) for more than 3 years (and 29% of the total population who reaches age 65 needing long-term care for less than a year. Notably, though, the risk of needing high-intensity care varies by demographic, with women (56% versus 46% for men), Black and Hispanic individuals (57% versus 50% for White individuals), and those with less education (53% for those with a high school diploma or less education versus 46% for those with at least a college degree)

Looking at subjective measures of risk of needing long-term care, the authors (leveraging data from the longitudinal Health and Retirement Study) find that while 52% of individuals who reach age 65 will need high-intensity long-term care at some point, only 29% expect to need to enter a nursing home at some point. Further, the deviation from the average of self-assessed risk varies by demographic, with black and Hispanic individuals being more likely to underrate their risk of moving into a nursing home, with those with at least a college degree overrating it. On the other hand, individuals appear to overestimate their risk of cognitive decline, with 52% of individuals expecting to experience this, compared to the 29% who will experience Alzheimer's or dementia (though it's worth noting that the two data points measure somewhat different outcomes). On this question, those with at least a college degree were the most likely to underrate this risk, while Hispanic individuals were most likely to overrate it.

Altogether, these data points suggest that many clients might not be able to accurately estimate the likelihood that they will need long-term care in the future (and what that care might encompass). Which presents an opportunity for financial advisors to both provide clients with data to better understand their potential risk (given their particular circumstances) and create a plan to address these needs that allows them to achieve their lifestyle goals in retirement while mitigating their exposure to potentially high long-term care costs.

When Will Clients Need Long-Term Care?

(Allison Bell | ThinkAdvisor)

Like other insurance products, clients buy long-term care insurance policies without knowing exactly when (or if) they will need to use it. Nonetheless, for financial planning purposes, having an understanding of the likelihood of when long-term care needs will arise can be helpful for retirement planning purposes.

According to an analysis of national data by the American Association for Long-Term Care Insurance, 79% of insureds with hybrid life-long term care coverage filed claims by age 90, while 88% of those with standalone long-term care coverage claimed by 90. Looking earlier in retirement, about 38% of those with standalone policies claimed benefits by age 79 while 22% of hybrid coverage users did the same. For those with standalone coverage, the most likely period to claim benefits was between ages 80 and 84 (with 27% of insureds doing so), while those with hybrid policies were most likely to claim between ages 85 and 89 (perhaps due to not wanting to draw down the life insurance benefits on the policy earlier on). A separate analysis of data from Connecticut found the mean age of claiming benefits was 81, with women much more likely to claim (at 59% of claims). The most common type of service used in association with the claim was a home health aide (53%), followed by assisted living care (29%), nursing home care (27%) and skilled nursing at home (7%).

In the end, while a client's unique health and other circumstances will determine if and when they need long-term care services, providing them with insight into when such a need might occur based on the broader population and its potential impact on their finances can help advisors make better recommendations (and clients make more informed decisions) when it comes to potentially purchasing long-term care insurance coverage (including the type of coverage, the benefit level, and when to do so).

15 Questions To Help Clients Select The Right Retirement Community

(Alexandra Armstrong | Journal Of Financial Planning)

As clients age, they might start considering moving into a retirement community to reduce their home maintenance responsibilities and to take advantage of the social and healthcare opportunities they can provide. However, with potentially many options to choose from (depending on their location) and with many ownership and rental models available, financial planners can play a valuable role in helping clients navigate this decision.

When evaluating potential options, clients first might ask about the care options that are available in each. For example, while Continuing Care Retirement Communities (CCRCs) offer independent living, assisted living, or memory care, other retirement communities might offer more limited options. A set of key questions involves the ratio of caregivers to residents in the facility (e.g., a ratio of one caregiver to nine residents in assisted living facilities is desirable) as well as their experience and tenure at the facility (as well as whether they bring in staff from outside agencies). Clients can also ask about the extent of services provided in the community (e.g., physical, occupational, and speech therapy services, as well as the cultural and fitness activities offered). Perhaps of most interest to a client's advisor, they can also ask for the fee options available (e.g., one CCRC might charge an entrance fee [that could be partially refundable to heirs] as well as a monthly fee while another might offer the opportunity to purchase an apartment outright, which can be sold later on), which can help the advisor show how different options affect their cash flow and legacy interests.

Ultimately, the key point is that while the decision to move to a retirement community (and which one to pick) can be a challenging one for clients (who might be hesitant to move out of their current home), their financial advisors can support them not only by running the numbers on different options, but also by helping them understand the landscape (perhaps bringing in trusted senior living professionals for clients who are interested) and offering wisdom from the experiences of other clients who have faced this decision (e.g., a client who was glad they moved while they were still healthy so they could enjoy the amenities in their new community!).

A 4-Step Method For Maximizing Memories With Money

(Tim Maurer | Forbes)

We only get a limited amount of time to spend with loved ones, whether our parents, children, or friends. With this in mind, many of us try to "make" as many memories as possible, so that even when we see these people less often (e.g., children who leave home) or not at all (e.g., someone who passes away), we can still benefit from the time spent together (and get ongoing value from any monetary expenses related to the experience).

A first step to maximizing these memories is to listen to ideas friends and family members come up with and use them to craft memorable experiences. For instance, a parent who likes to talk golf might enjoy being able to see a professional tournament in person. Next, for children in particular, helping them take their curiosity to the next level can be fruitful when it comes to lasting memories. For example, a child who asks questions about the stars might be blown away by a trip to the planetarium while one who seems interested in plants could enjoy creating a small garden with their parent. Also, giving each side a chance to shape the experience can lead to memorable outcomes as well (e.g., two friends who live on opposite sides of the country might alternate who picks the location for the annual trip, introducing the other to a place they've never been). Perhaps most important is to focus spending on experiences (rather than buying "things"), with some research showing that experiences lead to greater happiness (leading up to the event, during the experience, and afterwards) compared to other types of purchases (though certain 'things' [e.g., a tennis racket] that promote experiences [e.g., a weekly tennis match with a parent] can fit in this bucket as well!).

In sum, making lasting memories is not necessarily about the extravagance of an experience or purchase, but rather about creating a meaningful experience with a loved one. Which can ultimately pay dividends that far exceed any initial monetary investment!

The Holy Trinity Of Assets

(Tony Isola | A Teachable Moment)

If you asked someone to describe their assets, they might talk about stocks, bonds, or real estate. But in reality, these financial assets only represent one part of an individual's total wealth, with time and health also representing significant contributors to overall wellbeing.

While having an abundance of money, time, and health is an optimal outcome, the amount of each often varies across an individual's lifetime. For instance, young adults might have an abundance of time (e.g., no childcare responsibilities) and health, but might not have built up much wealth yet. Those in middle age might have built up wealth and are still healthy but might have less time as they balance work responsibilities (perhaps as they advance up the ranks in their company or start their own firm). And those who are retired might have significant wealth (after decades of saving) and time (during the day, as they no longer have to work), but might experience declining health. While each individual's experience will vary, Isola notes that there can be a "magical stage" between the second and third stages where an individual (perhaps in their 50s) has all three forms of wealth. However, at this point, some choose to prioritize building additional wealth while ignoring their health (and perhaps spending time at work that could be used to build relationships and hobbies), which could ultimately lead to less happiness when they retire (as poor health could restrict their ability to spend their wealth on the things they enjoy the most).

In the end, striking a balance of building financial wealth while promoting better health and having ample free time can be a difficult challenge. Nevertheless, being aware of each of these sources of wealth and not letting one be neglected can ultimately lead to a more balanced, and perhaps more enjoyable, life. Which suggests that financial advisors can play a valuable role not only in helping clients build their financial wealth, but also raise their awareness of the other forms of wealth that will impact their lives today and through retirement!

Would You Buy A Ski Chalet?

(Mike Dariano | The Waiter's Pad)

For ultra-high-net-worth clients, just about any purchase is within their reach. The question though (for these individuals as well as those with more moderate wealth considering a major purchase) is whether what they're buying will ultimately lead to greater happiness (or perhaps more stress).

For example, a client might consider whether to buy a ski chalet on their favorite mountain. On the surface, this could make sense from a variety of angles, from cost (not having to rent a house every time they go and perhaps being able to earn rental income themselves) to overall enjoyment (as owning a chalet might encourage them to head to the mountains and go skiing more often). On the other hand, such a purchase could lead to added stress, from having to maintain the house (or paying someone to do so) to the hassle of getting to the mountain often (which could require a plane trip and a multi-hour rental car drive). Also, owning the house (and feeling like they need to use it to get their money's worth)  might discourage the client from exploring other mountains, or other types of destinations altogether, which might be more enjoyable.

Ultimately, the key point is that price isn't necessarily the most important factor when a client is considering a major spending decision (though seeing how it would affect their financial plan is no doubt a valuable exercise!). Rather, taking a step back to ask whether it will lead to enjoyment, allow greater interaction with loved ones, and won't cause too much additional stress can help the client determine whether the purchase (ski chalet or otherwise) will, in reality, provide them with greater overall wellbeing in the long run.

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We hope you enjoyed the reading! Please leave a comment below to share your thoughts, or make a suggestion of any articles you think we should highlight in a future column!

In the meantime, if you're interested in more news and information regarding advisor technology, we'd highly recommend checking out Craig Iskowitz's "Wealth Management Today" blog.