Weekend Reading For Financial Planners (October 3–4)

Author: Adam Van Deusen, CFP®

Team Kitces

Adam Van Deusen, CFP®, is a Financial Planning Nerd at Kitces.com, where he hosts the Financial Advisor Technician podcast, writes articles for the Nerd’s Eye View blog (including the popular Weekend Reading for Financial Advisors), and regularly speaks at industry events on a range of technical and practice management topics. He previously worked at a financial planning firm in the Washington, D.C. area 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.

IRS Draws A Line In The Sand On Section 351 Strategies

(Ron DeLegge | Financial Advisor)

Following the long run-up in the US equity markets since the bottom of the 2008–2009 financial crisis, many investors with taxable investment accounts have likely found themselves with high embedded gains in their portfolios. While the gains signal portfolio growth, they also create challenges for ongoing management. Because when it comes time to rebalance the portfolio to its asset allocation targets – or to reallocate the portfolio to a new strategy – any trades made to implement those changes can generate capital gains, resulting in tax consequences for the investor.

One relatively new strategy, the Section 351 exchange, allows some investors to reallocate assets without triggering capital gains tax. Section 351 allows for tax deferral when assets are transferred to a corporation in exchange for that corporation's stock, provided the transferor owns at least 80% of the corporation following the exchange. The strategy works by pooling the portfolios of multiple investors in a newly created ETF, with the investors receiving ETF shares in return for the assets that they contributed. If the exchange meets the requirements of Section 351, it is tax-deferred for investors. And once inside the ETF 'wrapper', assets can be reallocated with no tax impact for the investors via the tax-efficient ETF structure, which makes use of in-kind creation and redemption of shares.

This week, though, the IRS (in what appears to be an effort to set limits for funds leveraging 351 exchanges while leaving the broader strategy available to investors) issued guidance and a revenue ruling seeking to curb narrow, engineered strategies in which appreciated securities are contributed but then quickly redeemed to upend the portfolio completely. Tactics that the agency is watching out for include the rapid turnover of contributed securities, seed baskets that don't match the ETF's stated strategy, and transactions that appear pre-arranged. While this guidance will be particularly relevant for ETF managers using the 351 opportunity, investors could face tax consequences if the ETF engages in improper activity (e.g., the IRS said that if an ETF is seeded with appreciated securities and those securities are quickly redeemed or swapped out, the investor contributing them might face taxes for the exchange).

Altogether, ETFs leveraging the Section 351 exchange remain viable opportunities for advisors and their clients following this week's IRS guidance; rather, the IRS appears to be putting fund managers (and investors in them) on notice to avoid pushing the boundaries of this mechanism (which suggests that advisors could support their clients by evaluating such ETFs' characteristics to gain confidence that it won't end up triggering an unexpected tax bill).

Trump Accounts Have Auto-Enrolled More Than 60 Million Children, Treasury Says

(Jessica Dickler and Kate Dore | CNBC)

The "One Big Beautiful Bill Act" (OBBBA), passed last year, introduced the Section 530A "Trump Accounts", a new type of 'starter' retirement account designed to be opened and funded on behalf of minor children so they can start accumulating tax-deferred retirement savings at an early age. Notably, parents were initially required to open a Trump Account on their child's behalf (a multi-step process), leading (perhaps limiting uptake and leading some eligible children to miss out on seed funding from the government or private donors).

Amidst this backdrop, the Treasury Department announced this week that it automatically enrolled more than 60 million eligible children in Trump Accounts, clearing one hurdle to adoption. That said, parents still need to claim their child's account (which they can do through the Trump Accounts phone app). Notably, the account will need to be claimed to enable the government's $1,000 seed contribution for children born between 2025 and 2028, available contributions from philanthropic and employer sources, as well as contributions from family members.

Notably, the Treasury Department this week also issued temporary regulations allowing philanthropic sources to donate approved publicly traded stock to Treasury to be distributed to the Trump Accounts of eligible children. Previously, Trump Accounts could only hold low-cost, diversified funds, so the change will allow philanthropic donors to contribute (appreciated) stock (with recipients of it generally being required to hold it for five years before being sold).

While this week's auto-enrollment action appears to remove one step in the Trump Account setup process (which could lead to more individuals being able to receive contributions from outside sources), the underlying considerations of whether parents might contribute to their children's accounts themselves remain in place. Which puts financial advisors in position to ensure clients and their children take the actions necessary to receive the outside contributions they are entitled to and help them decide whether additional contributions are appropriate given their particular intergenerational giving goals and broader financial plan.

Investors Balancing "FOMO" With "FORO" When It Comes To Retirement Spending: Survey

(James Rogers | InvestmentNews)

Retirement is often portrayed as an opportunity for individuals to enjoy the fruits of their labor after a lifetime of working and saving. However, the transition from work to leisure can be challenging for some retirees, particularly as they go from 'saving mode' to withdrawing funds from their retirement accounts (perhaps seeing their total balances fall if withdrawals outpace investment gains over time). Which can sometimes lead retirees to be hesitant to spend, even if they might otherwise be able to afford to.

According to a survey of 3,023 U.S. adults at least 50 years of age sponsored by Prudential, retirees appear to be experiencing a mix of "FOMO" (fear of missing out) as well as "FORO" (fear of running out) when it comes to their retirement spending. For instance, 86% of all respondents said they don't feel free to spend their savings on things they enjoy, with 61% of those with at least $500,000 in investible assets saying so as well. Further, 42% of respondents said they struggle to balance enjoying experiences now versus waiting until it may be too late (notably, this feeling was stronger amongst those with at least $500,000 in investible assets, with 51% of this group indicating this is the case).

At the same time, 26% of savers said they fear that their future biggest regret will be missing out on life (with this figure rising to 40% amongst those at higher asset levels). Notably, a key emotional driver that 'unlocks' a willingness to spend is a feeling that a saver has earned the right to enjoy their savings through discipline and hard work (as this group was 47% more likely to feel comfortable spending their savings for pleasure). Also, some retirees might be more willing to spend if they receive 'guaranteed' income in retirement with those who have or expect to use a pension, annuity, or other source of guaranteed income in retirement being 43% more likely to feel they have permission to enjoy their savings.

In sum, individuals might enter retirement with mixed emotions when it comes to spending, balancing a desire to enjoy their remaining years with concerns that they will spend in an unsustainable manner. Which makes financial advisors well-positioned to help such clients determine how much they can afford to spend in a sustainable manner and, if necessary, perhaps identify ways to help hesitant clients spend more.

4 Big IRA Mistakes That Can't Be Undone

(Leonard Sloane | The Wall Street Journal)

Financial advisors have much to offer to their clients when it comes to tax-efficient retirement saving and decumulation strategies, from selecting a destination account for contributions in a given year to effective asset location amongst different accounts. An additional, and perhaps underrated, way advisors can add value for their clients is by helping them avoid costly mistakes (that can't be reversed) when it comes to managing their IRAs.

Several potential mistakes involve 'indirect' IRA-to-IRA rollovers, which are limited to one during any 12-month period (which, notably, isn't based on the calendar year and generally applies across all of an individual's IRAs). If this rule is violated, excess contributions have to be removed from the receiving IRA and pretax funds in the ineligible rollover are taxable (also, those younger than 59 1/2 could face a 10% penalty on early distributions). Also, when engaging in an indirect rollover, the "same property" must be moved to another IRA within 60 days for the rollover to be eligible for tax-free treatment (or else the assets transferred would be considered an excess contribution that would need to be removed). Both of these cases suggest that advisors can support clients moving assets from one IRA to another by facilitating a direct custodian-to-custodian transfer, which isn't subject to the once-per-year rule.

Another issue with indirect rollovers occurs when an individual inherits an IRA. While a surviving spouse who is the beneficiary of an inherited IRA can withdraw the funds and deposit them into their own IRA tax-free within a 60-day window, this isn't an option for non-spouse beneficiaries (who must use a direct transfer; in this case, while an electronic transfer might be simpler, having the sending custodian issue a check payable to the receiving custodian [and not the beneficiary] can work as well).

Outside of indirect rollovers, investors need to be careful when engaging in so-called 72(t) plans that allow them to tap into their IRAs before age 59 1/2. IRA owners who want to take advantage of this strategy have to set up a distribution plan for "substantially equal periodic payments" that must be in effect for at least five years or until age 59 1/2, whichever is longer, with limited flexibility once the plan begins. For instance, changes including contributing more to the IRA or changing the distribution amount can trigger a 10% penalty that is retroactive to all distributions taken before age 59 1/2. With this in mind, advisors might recommend that clients divide their IRA, with one portion used for the 72(t) plan and the other treated normally to provide greater flexibility.

Ultimately, given the many rules (and sometimes confusing terminology) surrounding IRAs, advisors can help their clients avoid unwanted taxes and penalties by playing "defense" against potential (costly) mistakes in addition to offering "offensive" strategies to make the most of their retirement accounts!

3 IRA Transactions That Must Be Completed By October 15th

(Sarah Brenner | The Slott Report)

While clients might view April 15th as the key tax deadline during the year, advisors recognize that tax planning is a year-round endeavor, with various deadlines relevant for clients in different circumstances. And while some advisors might be looking ahead to year-end deadlines (e.g., for Roth conversions or for fulfilling required minimum distributions), October 15th is the deadline for several tax moves.

First, while the deadline for making a traditional or Roth IRA contribution for 2025 was April 15, 2026, the deadline for making a SEP IRA contribution is the business' tax filing deadline, including extensions, which could mean that many business-owner clients could have until October 15th to establish and/or fund a SEP for 2025. Also, individuals who made excess contribution to an IRA for 2025 (e.g., they discovered after the fact that their income exceeded the Roth income limit) have until October 15th to fix the mistake by withdrawing the contribution, plus net income or loss attributable to it, to avoid the 6% excess contribution penalty. Finally, October 15th is the deadline to remove an unwanted 2025 IRA contribution, whether by removing the contribution entirely (e.g., if the individual discovered that a traditional IRA contribution will be nondeductible) or by moving it to another type of IRA (e.g., deciding to change a traditional IRA contribution to a Roth contribution).

In sum, while October 15th is well known as the tax filing deadline for those who went on extension for the previous year's taxes, it is also relevant for several IRA transactions. Which suggests that identifying clients who might benefit from one of these IRA moves and bringing this deadline to their attention could both lead to better retirement savings outcomes and also show the client that their advisor is looking out for them throughout the year!

Modernization Of Rollover Processes In Progress, But Not There Yet

(Denise Appleby | Morningstar)

Rolling over a workplace retirement plan to an IRA comes with many potentially costly pitfalls along the way. For instance, in one IRS private letter ruling, a 401(k) participant was denied relief after she asked to have her 401(k) assets rolled over to her traditional IRA but her IRA custodian deposited the amount into her Roth IRA instead, resulting in an (unintentional) effective Roth conversion, with the pretax amount being taxable. With many potential points of confusion along the way (whether from the distributing institution, the receiving institution, or for the work the participant has to do in the middle), this process has been ripe for modernization.

In "SECURE Act 2.0", Congress directed the Treasury Department to develop sample forms and procedures to simplify this process, resulting in IRS Notice 2026-49, which includes four sample forms (e.g., a participant's rollover request and the receiving plan's rollover acceptance) as well as a proposed five-step rollover process. This process (aimed at preventing miscommunications) starts with the participant giving instructions to the receiving institution, which then contacts the distributing institution, who verifies the requests and provides information about the source account. The receiving institution then confirms that it can accept the rollover and provides the delivery instructions, before the distributing institution finally sends the asset directly to the receiving institution (with any checks issued being made payable to the receiving institution for the benefit of the participant and sent directly to the institution, avoiding the need for the participant to receive the check and forward it on).

Comments are still being accepted on the proposal (see page 15 of the IRS notice), and Appleby highlights potential gaps in the forms, including how they identify the exact receiving account type and registration and how they handle certain Roth, after-tax, beneficiary, and SIMPLE IRA transactions. Though she also notes that even if improved forms are adopted, plan participants can still be on the hook for mistakes that are made, highlighting the importance of care during the rollover process (e.g., confirming the type of account from which the assets are leaving and the exact type and registration of the receiving account).

In the end, while rollovers can be particularly confusing for plan participants who might only make a few of them over the course of their lives, they are much more common for financial advisors. Which means that advisors can leverage this expertise to both ensure a client's rollover is made correctly and to reduce client stress by taking this burden off of their hands!

How To Attract $1M+ Clients On LinkedIn For Financial Advisors

(Indigo Marketing Agency)

While there is no shortage of social media sites advisors can use to get their message out to potential clients, LinkedIn represents a niche in this environment for its higher share of professional (rather than personal) content. Which can make it a useful place to connect with a firm's ideal target client (at least if they're professionals who use the site). Nevertheless, because success on LinkedIn (or any other social media site) doesn't come automatically, taking an intentional approach can increase the chances that the time invested in this marketing effort pays off.

First, an advisor can consider different content types on their feed, and having a mix of post types can be particularly effective. These could include video clips (e.g., 30–90 second clips that showcase an advisor's personality and expertise), long-form (i.e., 500–1,000 word) posts on a specific planning topic (which can build credibility), short, punchy posts with strong visuals, personal posts tied back to financial planning, and/or 'carousel' posts with multiple images (e.g., a step-by-step financial planning guide). Notably, whatever the post type(s) chosen, consistency is key, with 3–5 posts per week being a potential target.

Beyond posts on one's own feed, engaging with others (e.g., tagging relevant individuals in posts and engaging authentically with others on the site) can increase visibility and provides a positive signal to LinkedIn. Also, while posts can generate attention, having a conversion point and measuring it (e.g., visits to the firm's website) can allow an advisor to assess whether this work on LinkedIn is generating results (with other data points to assess including profile views, connection requests from ideal prospects, direct messages mentioning the content, and consultation bookings attributed to LinkedIn).

Ultimately, the key point is that while LinkedIn can be an effective marketing tool, an advisor's relative success with it is likely to be the result of creating original content, posting it in a variety of formats, engaging with others in the community, and leading interested followers to take the next step to learn more about the firm and, hopefully, become a client!

Building A Personal Brand By Leaning Into Effective Social Media Content And Engagement

(Bridget Willard | Rethinking65)

For financial advisors, social media offers a way to demonstrate their expertise, whether by recording videos explaining a topic relevant to their ideal target client or by answering questions posed by users. Beyond this 'professional' content, though, leaning into one's personal side could help build connections with prospective clients as well.

For instance, even if an individual was referred to the advisor by a current client, they might still do their own 'research' on the advisor before reaching out directly. With this in mind, a consistent presence on social media (and perhaps across platforms, as certain individuals might frequent one over another) can make it easier for interested consumers to learn more about them and their style. Willard emphasizes that advisor content on social media doesn't necessarily need to be limited to planning-related topics (though posts certainly could discuss common client questions, responses to recent news, or other similar subjects), but rather can be used to put forth the advisor's personal side (e.g., talking about a particular hobby could invite a conversation with an interested individual who shares that interest).

Given that advisors have limited time to spend on marketing (and on social media in particular), Willard offers what she calls the "3-2-1 Method" as a guideline, where an advisor connects with or follows three people, comments on two posts, and writes one original post or shares a post with a comment each day (which she suggests might take no more than five minutes). In this way, the advisor can build consistency and a certain depth of content and engagement without necessarily sacrificing other priorities.

In sum, while social media might not represent an advisor's largest source of inbound inquiries, it can lay the foundation for a relationship with prospective clients, even before they schedule a call. Which suggests that a (consistent, if brief) time investment in this tactic could pay off over the long run.

Social Media For Advisors: Market Scalably With Evergreen Content

(Sydney Squires | Nerd's Eye View)

Social media marketing remains an attractive yet often elusive strategy for financial advisors seeking to build their client base. Its low cost of entry and potential for wide visibility give it a strong initial appeal. However, as the latest Kitces Research on How Financial Planners Actually Market Their Services suggests, it is also one of the least efficient and most time-consuming marketing tactics in practice. As while it might not require significant hard-dollar costs, the 'soft costs' involved – time spent on content creation, adapting to shifting algorithms, trend monitoring, and building an audience – can add up quickly, particularly when advisors struggle to consistently produce high-impact content.

A central challenge with social media is that success often hinges on two distinct but rarely simultaneous goals: reach and conversion. One post may generate likes, comments, and new followers (reach), while another might prompt newsletter sign-ups or webinar registrations (conversion). Expecting a single post to achieve both is unrealistic, and the constant push to meet these divergent goals can lead to an exhausting and unsustainable content creation cycle. Making matters more difficult, social media platforms are increasingly saturated, making it harder for advisors to stand out without significant time investment or specialized skills in content strategy.

Amidst this backdrop, advisors can consider using evergreen content, which retains its relevance regardless of current events or seasonality, and offers a scalable solution to the high soft costs of social media. A guiding principle in evergreen content strategies is harnessing what's called the "long tail" effect: a small percentage of content often generates the majority of results. In practice, this means that only about 10% of an advisor's posts will drive most of the engagement and conversions, while the rest produce little return. This dynamic poses a significant burden for advisors who feel they must constantly create fresh content in hopes of striking gold. However, recognizing and leaning into the long tail can be a turning point. By identifying which posts already perform well, advisors can repurpose top-performing content – especially evergreen content that remains relevant over time – and avoid the burnout of perpetual reinvention. Reposting content is not only efficient but also effective – audiences are unlikely to recall seeing a post months earlier, and repeated exposure often strengthens a message's resonance.

The success of evergreen social media content ultimately depends on strategic planning and performance tracking. Each post should be assigned a clear objective – either engagement or conversion ­– and performance should be measured accordingly. Tools like UTM codes and Google Analytics can help advisors track which posts are driving website traffic, while social media platforms and schedulers often provide data on in-platform engagement. Over time, advisors can refine their evergreen libraries through regular audits, removing outdated or underperforming content and adding newer, high-performing posts. Leveraging AI or working with copywriters can further streamline ideation and content creation without compromising the advisor's unique voice.

In sum, while social media marketing is often labor-intensive and inefficient when approached haphazardly, advisors can dramatically improve their return on time and effort by leaning into evergreen content. This strategy not only mitigates the pressure of constant content creation but also maximizes the value of high-performing posts. By developing and maintaining a well-curated library of reusable, relevant content, advisors can build a more consistent and scalable marketing pipeline that highlights their personality and expertise – helping them connect with prospective clients more meaningfully over time!

There Is No Substitute For Thinking

(Nick Maggiulli | Of Dollars And Data)

Available Artificial Intelligence (AI) tools allow users to perform a wide range of tasks, from crunching large data files to writing short- or long-form content. While using AI can be a time-saver in many cases, questions have emerged not only about the quality of output produced but also whether using AI for 'thinking' tasks could reduce one's cognitive ability over time.

To start, it's fairly easy to identify written content on social media or elsewhere that shows signs of being produced by AI (with various 'tells' including the use of em-dashes and the "It's not X, it's Y" structure). Which can call into question for readers whether the author had the original idea themselves (and had AI put it into written form) or whether they totally outsourced their idea generation to the AI tool itself. The latter is perhaps more concerning, as an individual who outsources both thinking and writing to AI could find themselves out of touch with both of these skills rather quickly (which could be particularly harmful to students and younger professionals who might not develop key skills that could serve them well in their future careers, even in a world where AI use becomes more common).

For financial advisors in particular, amidst discussions that AI-powered, consumer-facing advice tools could become more effective and popular, the ability to think, reason, and respond directly (often on the spot during client meetings) suggests that continuing to flex the thinking 'muscle' could be a valuable practice (perhaps calling for an analysis of which AI tools are taking on more 'manual' tasks and which might be performing tasks requiring more cognitive depth?).

The Risks Of Cognitive Delegation And The Challenge Of Accountability In The Age Of AI

(Schuller, Sisto, Wojaczek, Mohr, Wierckx, Janssens, and Fabbri | Enterprising Investor Blog)

Technological innovations have supported investment analysis over time, from the introduction of the spreadsheet to more powerful data-crunching tools. AI-powered tools, however, offer the prospect of taking a human out of the analytical process entirely (even more so than previous algorithm-based tools). Which could be tempting for advisory firms from an efficiency (and hard dollar) perspective but could ultimately erode what makes them unique.

One of the most challenging aspects of investing is the ability to integrate new data and exercise sound judgment in the face of uncertainty (while also providing a reassuring voice to nervous clients). Notably, this isn't the kind of judgment that can be learned in a book; rather it often comes from putting in the 'reps' with clients and experiencing various market environments over time. While more senior advisors today have likely accumulated many such experiences to use with clients going forward, newer advisors who lean into AI tools to perform analyses and develop recommendations could find themselves without the ability to fully internalize the underlying conceptual frameworks behind them (making it harder for them to respond when they don't have an AI tool immediately available!).

Also, AI use in the investment process (and otherwise) could create accountability and governance issues. For instance, firms might consider whether and how they want to put one (or more) human employees 'in the loop' when it comes to assessing AI output before making it a part of a client's plan. In addition, evaluating employee performance (and skills) could become more difficult as it could be challenging to disentangle what insights came from the employee and which came from an AI tool.

Ultimately, the key point is that in a world of widely available AI tools, using them to conduct analyses doesn't represent a differentiator for firms and their advisors. Which suggests that the true separator could be advisors' ability to interpret AI outputs, make adjustments where necessary, and communicate them to clients in a clear manner (which might mean more 'learning by doing', particularly for newer professionals, even when a task could be taken on by an AI tool?).

7 Principles For Writing With (And Without) AI

(Noah Brier | Why Is This Interesting?)

While AI had been built into different systems for many years, the introduction of ChatGPT and other Large Language Models (LLMs) was a revelation for much of the public in terms of their ability to process natural language prompts and craft outputs that could vary based on a requested length or style. Which raised the question of whether writing could become an obsolete skill if AI could produce well-written content based on (and perhaps augmenting) a user's ideas.

Brier argues that while AI might have a place in the writing process (e.g., highlighting possible grammatical or punctuation errors), maintaining control over the written product is important in order to create a thoughtful, unique output. To start, writing is not just a matter of putting words on paper (or on a screen) but rather is a process of thinking through what one wants to say and translating into effective prose (suggesting that totally outsourcing writing could mean reduced cognitive abilities over time).

Also, good writing shows respect for the reader; this could mean focusing on using concise language (whereas LLMs are happy to produce lengthy, verbose tracts) and taking the time to ensure that the author's point gets across clearly (with one rule of thumb being that a piece of writing should necessarily take longer to produce than it does to read). In addition, good writing is often "anti-consensus" and original, allowing the author's true voice to come through, whereas AI writing output frequently represents consensus thinking (which might pass for a high school essay but could lead to lost readers in a world of seemingly infinite sources of contact).

In the end, writing can be thought of as a lifetime pursuit rather than a set of one-off tasks. Which suggests that the work of writing is not necessarily producing a particular project, but rather is a matter of honing one's craft to become a more effective communicator (and, perhaps, a better thinker) over time.

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.