Weekend Reading For Financial Planners (September 26–27)

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.

With Clients Focused On Rising Consumer Costs, Opportunities Emerge For Advisors

(Tracey Longo | Financial Advisor)

One of the major economic themes of the past several years has been affordability, with elevated inflation rates taking a bite out of consumers' incomes. While financial advisors don't have the power to change prices themselves, the current environment does offer the opportunity to help clients position themselves to weather a period of higher prices while avoiding reactive moves that could harm their long-term financial outlook.

According to a CFP Board survey of 440 CFP professionals, 69% of respondents said clients have become more concerned about affordability during the past year, with 61% reporting that clients fear rising costs have put at least one financial goal out of reach. In fact, healthcare costs were identified by respondents as the topic most likely to be deemed as important by their clients (followed by retirement plans, tax policies, and the long-term viability of Social Security and Medicare).

As affordability takes center stage for certain clients, financial advisors have the opportunity to both boost their confidence and prevent them from making decisions that could be detrimental to their longer-term plans. For instance, 54% of advisors surveyed recommended that clients stress-test their plan against a recessionary scenario with the same percentage talking to clients about (re)building emergency funds. For clients' parts, a fair number appear to be taking the initiative to reduce their spending amidst higher costs, with 46% of advisors reporting that clients are decreasing discretionary spending, 32% are delaying a major life purchase, and 31% are paying down debt. Still, some clients are making more reactive decisions that might not be recommended otherwise, including making early withdrawals from retirement accounts (cited by 29% of advisors), reducing or eliminating retirement contributions (20%), taking on high-interest debt (18%), liquidating investment positions at a loss (10%), and allowing life, health, or disability coverages to lapse (9%).

Ultimately, the key point is that while dealing with higher costs can be a challenge for consumers, this environment offers advisors the chance to take a refreshed look at their clients' financial plans, showing areas of strength (e.g., sufficient assets to support a higher level of spending even if the inflation rate spikes again) and potential weak points (e.g., if a client is particularly exposed to a spending category that could shoot higher than the broader inflation rate) while also proposing solutions (where necessary) that balance their client's preferences for spending today versus strengthening their plan for tomorrow.

Survey Suggests AI Saving Advisors 200 Hours Per Year, With RIAs Leading The Way In Adoption

(Steve Randall | InvestmentNews)

The rise of both general purpose and advisor-specific Artificial Intelligence (AI)-powered tools has taken the advice industry by storm during the past few years. Amidst the significant hype surrounding AI, though, questions emerge about how advisors are actually using it and the benefits they are receiving.

According to a survey of 400 financial advisors by AssetMark, 54% of those surveyed who use AI reported saving at least 4 hours per week from doing so (with 15% of AI users indicating they save 8 hours per week or more). Overall, 85% of respondents reported adopting AI-integrated solutions to some degree, with 14% of those surveyed saying they have achieved universal adoption across their practice, 41% widely adopting AI, and 30% partially adopting AI. AI adoption appears to be stronger amongst advisors at RIAs compared to those working in independent broker-dealer platforms, with 91% of the former and 81% of the latter adopting AI (and 87% of RIA advisors indicated they expect their AI use to increase in the coming year, compared to 75% of their independent broker-dealer counterparts).

The most common use cases for AI tools fall into three buckets: summarizing (e.g., meeting notetaking, research materials, and drafting client communications), analyzing (e.g., performance reports, risk analytics, and market trends), and automating (e.g., workflows and scheduling, compliance checks, and forms). On the other hand, a fair percentage of advisors wouldn't trust AI in certain areas, including client-facing work (50%), compliance (43%), portfolio decisions (45%) and data handling (38%). Amongst advisors surveyed who have not adopted AI, client confidentiality or data privacy tops the list of concerns (cited by 46% of this group), followed by the time required to investigate, learn, or implement AI (43%), and its accuracy or reliability (34%).

In the end, while these are self-reported survey results (as respondents might have given a rough estimate of their time savings), they do indicate that a significant portion of advisors are investing time and/or money in exploring AI uses and are seeking a positive return on this investment. What will be interesting to track over the longer term, though, is what advisors do with time saved, with some potentially turning their focus to business development and/or deeper client service, with others perhaps seeking to gain free time in already packed professional and personal schedules?

RIA M&A Activity On Track To Plummet 19% in Q3

(Diana Britton | Wealth Management)

A major RIA industry trend over the past few years has been the rapid pace of Mergers and Acquisitions (M&A) activity, with a combination of aging founders and deal-hungry (and often private equity-backed) aggregators seeking firms to acquire, amongst other factors, contributing to a healthy deal flow. In fact, according to data from M&A consulting and advisory firm DeVoe & Company, the first half of this year was the strongest six months for RIA deal volume on record, with activity up 13% from the first six months of 2025.

The third quarter has seen a change of pace, however, with DeVoe reporting that there have only been 72 transactions during the quarter, down 19% from the third quarter of 2025. DeVoe noted that deal completions are a lagging indicator, with firms deciding to sell anywhere from 6 to 18 months beforehand, and suggested that economic shocks experienced during this period (from tariff announcements to the spike in bond yields and oil prices) could have led some firm owners to turn inward to focus on client service rather than their (external) succession plans. Which suggests that a future calmer economic environment could revive interest amongst sellers and lead to a larger volume of deals.

In sum, RIA M&A deal volume tends to ebb and flow over time, with the recent hot streak experiencing a (perhaps temporary) lull in the third quarter. Nevertheless, the underlying questions surrounding succession planning persist amongst firms (along with the seemingly insatiable appetite of some mega RIAs to continue to grow via acquisitions), with founders weighing the opportunity of combining with a larger firm versus completing an internal succession.

Analyzing Safe Withdrawal Rates For Early Retirees

(Amy Arnott | Morningstar)

For clients who retire sometime in their mid-60s, financial advisors might consider using a 30-year time horizon for creating a retirement income plan (though they might consider incorporating client-specific longevity estimates as well). This 30-year horizon was used to create the well-known "4% Rule" that suggests a retiree can withdraw 4% of their initial portfolio balance (adjusted for inflation annually) without having to worry about depleting their portfolio throughout their retirement.

However, this calculus can change for those who retire earlier, whether by choice or because they have to leave the workforce earlier than expected (e.g., due to health issues), as their portfolio might need to support their income needs for more than 30 years. Simulating retirement pathways for individuals seeking a 90% probability of success and incorporating forward-looking asset-class return and inflation assumptions, Morningstar finds that while the safe withdrawal rate for a 30-year retirement horizon is currently 3.9%, it falls to 3.5% for a 35-year retirement, 3.3% for 40 years, 3.1% for 45 years and 2.9% for 50 years.

Notably, the above figures assume a 40% stock/60% bond portfolio. Morningstar found that the safe withdrawal rate stays roughly similar for stock allocations between 30% and 60% but falls off at each tail (e.g., as the allocation approaches 0% or 100% stocks), as lower stock allocations don't provide enough growth and higher allocations increased sequence of return risk (though higher stock allocations and extended investment periods could lead to significant upside as well).

Of course, many retirees (particularly those working with financial advisors) won't use such a 'fixed' approach to retirement income planning and could have a higher initial safe withdrawal rate through strategies such as a "guardrails" approach (also, any future earned income and Social Security benefits can be factored in as well). The key point, though, is that rule-of-thumb retirement income guidelines can be different for those who retire early (in particular, those who retire much earlier than 'traditional' age), providing an opportunity for advisors to ensure these clients are able to support their retirement income goals in a sustainable manner (and perhaps to identify when they can afford to retire in the first place!).

The Factors Safe Withdrawal Rates Can't Take Into Account

(Elizabeth George | Use Your Wealth)

Much has been written over time about safe withdrawal rates, with everyone from DIYers (particularly those considering early retirement) to financial advisors getting into the weeds of what makes a safe withdrawal rate (and how to determine more accurately what it might be). At the same time, retirement is experienced in the 'real world', where inflows and expenses might not reflect what was initially predicted 'on paper'.

To start, while many safe withdrawal calculations only consider an investment portfolio (typically invested in a mix of stocks and bonds), some individuals might have other assets with different income and risk characteristics (e.g., rental real estate) that can complicate this picture. Also, individuals who retire from full-time work might continue to experience inflows (the extent of which might not be known when planning for retirement), whether from a future part-time job or a future inheritance. In addition, individuals might have a hard time predicting how flexible they can be with their spending in retirement, as those who do find that they can go without an annual inflation increase or similar adjustment after a down market year could find that they can have a higher withdrawal rate. Finally, much of the safe withdrawal rate research is conservative, trying to determine a withdrawal rate that would have failed in no historical scenarios (or with a very high probability of success), suggesting that those who are willing to take some risk could adjust their safe withdrawal rate upwards.

In sum, while it can be tempting for some individuals to try to optimize their future retirement spending and a safe withdrawal rate, the reality is that this calculation isn't an exact science. Which suggests a valuable role for financial advisors in giving clients (whether they are those who might stress out about portfolio value changes each year or those who have never heard of a safe withdrawal rate) a more robust picture of the uncertain nature of future retirement paths and monitoring the path they are on regularly, allowing them to spend more time on actually enjoying their retirement.

What If This Turns Out To Be A Terrible Time To Retire?

(Christine Benz | Morningstar)

There are many factors that can influence when an individual retires, from their health, their desire (and ability) to keep working in a particular position, and, naturally, financial considerations. While an individual (perhaps in conjunction with a financial advisor) might determine that they have saved 'enough' to retire, it can still be nerve-wracking to transition from employment-based income to portfolio-based income (especially for those who are delaying Social Security benefits and don't have other income streams).

Part of the problem with the 'enough' approach is that individuals will sometimes reach this point at the end of a bull market (after a period of significant growth in their portfolio). Which could mean that some retirees could start tapping their portfolio for income at a time when markets decline, exposing them to sequence of return risk.

Amidst this backdrop, aspiring retirees (and their financial advisors) can consider different strategies to mitigate this risk and increase the chances of a successful retirement over the long run. A first option is for an individual to keep working (whether full- or part-time) while increasing their spending on the leisure activities they plan to enjoy in retirement (perhaps using dollars previously allocated to retirement savings once they've reached or surpassed their 'enough' threshold). Also, retirees might take a close look at their spending to determine which line items are 'core' needs and which are 'adaptive', discretionary items (with such flexibility leading to greater confidence in a particular retirement income plan).

In terms of portfolio management, the years leading up to retirement and the first few years in retirement could be an opportunity to implement a 'bond tent' strategy, whereby bond allocations are increased as the individual works through the 'danger zone' where sequence risk can be most prevalent before returning to a higher equity allocation once they've made it through. In addition, maintaining more discrete holdings in a portfolio can reduce the chances that a particular position will need to be sold at a loss when portfolio assets need to be sold to generate income (while using sales of higher performers to refill a cash 'bucket' used for spending).

In the end, because the future is uncertain, it is natural for an individual to be concerned that they will retire at the 'wrong' time and face a market downturn that could impact their spending ability over the longer term. Nevertheless, advisors have several tools in their toolbox that can help mitigate this risk and give clients greater confidence in their decision to retire.

What To Do About Health Insurance When A Client Gets Laid Off

(Meg Bartelt | Flow Financial Planning)

One of the most challenging events that can occur during one's career is getting laid off, which can occur suddenly and create unexpected financial strain. While lost income is a major element of this change, the loss of employer-subsidized health insurance can also be a major financial factor, leaving individuals to face the daunting proposition of choosing amongst several (often expensive) options to maintain adequate health care coverage.

For many individuals, their primary options for maintaining coverage include COBRA (where they can maintain their current employer-provided coverage for a defined period, albeit often without the subsidy their employer provided), moving to a spouse's employer plan, or an Affordable Care Act (ACA) marketplace plan (with other options including Medicaid, short-term medical insurance, and health share ministries, amongst others). Notably, the decision of which option to choose can incorporate both financial and quality-of-life factors.

On the financial side, an individual in this position (along with a financial advisor, if they have one) can compare the premiums (including any COBRA subsidies from their former employer and their eligibility for premium tax credits if they elect an ACA plan), deductibles, and other costs associated with the different options available to them. Another factor to consider is their year-to-date usage of their current plan, as those who have already met their deductible might choose to remain on their current plan (through COBRA) at least until the end of the year (as even if COBRA premiums are higher than those available elsewhere, 'starting over' with a fresh deductible to fulfill on the new plan could prove to be more costly).

In addition to financial considerations, individuals might also consider how a change in health insurance providers will affect their access to providers, as it might be worth paying more for coverage (e.g., under COBRA) in order to be able to use their current doctors on an in-network basis. For example, Bartelt had a client who was laid off while she was pregnant, so it made sense to use COBRA to maintain her current coverage for herself (despite its premiums being higher than those on her husband's employer-subsidized plan) so she could stick with the same providers through and after she gave birth (notably, while the laid off individual might stay on their current plan through COBRA, their children could still move over to a spouse's plan).

Altogether, given the outsized financial and personal impact having appropriate health insurance can be for an individual, taking the time to assess available options after being laid off can help mitigate the dollar and psychological costs that can emerge during this period. Which means that financial advisors have the opportunity to offer significant value during this stressful time by helping clients explore the options available to them and consider the factors (that extend beyond cost) that might make one option better than another (as well as being there to reevaluate options until they secure employer-subsidized coverage again).

The Acute Challenges Of Losing Health Insurance Coverage After Age 50

(Brian O'Connor | The New York Times)

While losing a job (and the employer-subsidized health insurance that can come with it) is a challenge at any age, it can be even more burdensome for those in their 50s and above who face the prospect of an extended period without work as well as potentially higher costs for insurance that they are able to obtain.

To start, older workers tend to take longer to be re-employed than others. Amongst workers who were employed for at least three years and lost their jobs from 2023 through 2025, 72.9% of those under age 55 had found jobs by January 2026, while only 57.3% of those between ages 55 and 64 did so, according to data from the Bureau of Labor Statistics, meaning that they could face longer periods without employer-subsidized coverage. Also, only about half of longer-tenured workers who returned to the workforce on a full-time basis were earning as much or more than they had in the job they lost, suggesting a further financial pinch even when they are able to find a job.

For those facing a job loss but who haven't reached Medicare eligibility age yet, a few cost-saving options are available. For those considering coverage under COBRA, taking advantage of the 60-day window to sign up can provide a certain level of flexibility and the ability of dependents to move onto a different plan (e.g., from their own employer or Medicare, if they are eligible) can reduce COBRA premiums if the laid off individual uses it themselves. Also, while ACA plans can be more expensive for older individuals, the individual might be eligible for a premium tax credit, depending on their income (which could be lower for the year given the loss of employment income!). Others might look for coverage from alternative sources, such as short-term plans (particularly if they are confident in being able to get coverage elsewhere relatively quickly) or through a trade organization they belong to that offers group coverage.

In sum, individuals could face increased financial strain based on both the loss of income and the challenge of obtaining cost-effective (and high-quality) health insurance as they age. Which perhaps presents a planning opportunity for advisors in helping clients build resilience for such a contingency, whether through boosting cash reserves to cover such a period and/or by conducting a stress test to determine how this contingency could be handled, including what health insurance coverage would be available to them (and at what cost).

Reducing ACA Health Insurance Premiums Through The Premium Tax Credit

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

For millions of Americans who are self-employed, between jobs, or retired before reaching Medicare eligibility at age 65, the primary source of health insurance is the Federal or state Marketplace exchanges created by the Affordable Care Act (ACA). Many of these individuals and families rely on the Premium Tax Credit (PTC) to reduce the cost of their coverage: By limiting the out-of-pocket premium cost to a certain percentage of household income, the PTC effectively subsidizes Marketplace-purchased plans – which are often significantly more expensive than employer-sponsored or government-provided coverage.

From 2021 through 2025, COVID-era legislation temporarily 'enhanced' the PTC by reducing the maximum out-of-pocket limits on insurance premiums and making the credit available to households with income higher than 400% of the Federal Poverty Level (FPL), a group who had previously been disallowed from receiving the PTC. However, Congress allowed the enhanced credit to expire at the end of 2025, reverting the PTC rules back to their pre-2021 version.

Because the 400%-of-FPL threshold is a hard cutoff for the PTC, even $1 of income beyond that amount can result in thousands of dollars of additional premiums – all of which must be repaid to the IRS if they were originally paid out as advance premium subsidies. For households with Marketplace coverage, then, it can be extremely beneficial to keep income under 400% of FPL – $62,600 for a single person, $84,600 for a couple, or $128,600 for a family of four in 2026 – when it's possible to do so.

For people who are still working, contributions to pre-tax retirement accounts such as traditional IRAs and 401(k) plans, as well as HSAs and FSAs, can help reduce AGI, which is used to calculate household income for PTC purposes. Self-employed individuals may also have flexibility through the timing of business income and expenses. And those who are retired or between jobs can manage their income by adjusting the mix of pre-tax, Roth, and taxable account distributions, even when traditional tax planning strategies might otherwise favor drawing from pre-tax accounts.

The key point is that even though the PTC is not as generous as it was earlier in the decade, the most severe increases – particularly for families just over the 400%-of-FPL threshold, for whom losing the PTC could significantly strain cash flow – can often be mitigated through careful tax planning to reduce AGI via income exclusions and above-the-line deductions!

How Much Is Anything Supposed To Cost?

(Hanna Horvath | Your Brain On Money)

One of the major economic stories of this decade has been the return of long-dormant inflation, with prices across a range of goods and services increasing. Which has led many to say to themselves, "Shouldn't this cost X?" when perusing the grocery store, shopping online, or visiting a restaurant as their "reference prices" for items don't match their current price.

Beyond sticker prices themselves, the quality of certain goods has changed over time. Sometimes this can be for the positive (e.g., a $1,000 television today produces a much sharper picture than a $1,000 TV bought a decade or two earlier). However, sometimes manufacturers can keep prices steady while either reducing the size of its product (e.g., the "shrinkflation" seen in ice cream cartons and elsewhere) or the quality of ingredients or components within it (dubbed "skimpflation"). Which means that even if a product has the same or similar nominal price as it did in the past, which might make it seem like a good deal, one has to dig beneath the surface (perhaps reading a review of a durable good or checking the ingredient label at the grocery store) to determine whether this is actually the case.

Often, consumers trust brands to serve as a sign of what to expect when making a purchase (e.g., a McDonald's hamburger in one state tasting the same as one made in another), allowing us to reduce the mental bandwidth needed to evaluate a purchase. However, this shortcut has lost its power in many cases, as some brands have seen their quality deteriorate after being acquired (whether by a larger conglomerate or perhaps a private equity firm). Which again adds another layer of work (perhaps researching the latest model for any changes) to determine whether an item that could previously be trusted still delivers the goods when bought today.

Altogether, this environment presents consumers with the choice of spending extra (already limited) time in identifying what is truly a good value or being willing to accept potentially inferior (or overpriced) goods. Which might encourage some individuals to put a limit on how much attention they are willing to spend saving money (e.g., putting in the time to comparison shop when buying a car but not spending half an hour finding a coupon for toothpaste) and in determining their threshold from moving on from a brand that is no longer delivering the goods?

The Amazon Tax

(Seth Godin | Seth's Blog)

The expansion of Amazon.com from an online bookshop to a purveyor of just about every good under the sun was a boon for many parties, from consumers (particularly those in rural areas who might not have been able to purchase a particular good nearby) to manufacturers (especially smaller businesses that might not have had their own distribution platform), though there were no doubt losers amidst its emergence as well (e.g., retailers who couldn't compete with the prices and selection available on Amazon).

Anyone who has shopped Amazon in recent years has likely noticed changes to the platform, however. One of these is the prevalence of sponsored products, which pay to be listed near or at the top of search results for particular terms (sometimes requiring a user to scroll far down the results list just to reach a non-sponsored item!). In fact, Amazon makes nearly a billion dollars in profit from search ads every week. And unlike an ad that might introduce a consumer to a product they might not have considered before (which can increase total demand for the category), many of Amazon's ads end up being zero-sum games amongst different sellers to grab the attention of a consumer who was already planning to buy the item they searched for (even if they didn't know which particular one they wanted).

Not only does this ad environment make it more challenging to find the best option for one's needs (as Amazon could instead feature the item that is best-reviewed, least-returned, and/or best-priced for a particular search), but also could lead to higher prices for consumers if producers pass on the cost of advertising (which they might feel like they must engage in to avoid ending up well down the list for a particular search term). Also, if producers believe their best chance to sell more units is to pay for advertising in Amazon search results, they might cut costs on quality (being willing to lose a few disappointed consumers for the opportunity to reach more).

In the end, while Amazon allows consumers to have a plethora of goods shipped directly to their door in mere days, the experience of choosing what to buy has deteriorated over time. Which might lead some individuals to consider whether paying the Amazon "tax" is worth it or whether they might search elsewhere (including in-person stores?) for items they need.

Ordinary Abundance

(Jordan Dworkin)

It's easy to look at the world today and consider how things might have been 'better' in the past, such as in the quality or price of goods or experiences. However, taking a longer-term perspective can show that many of the household items we take as a given today would have been out of reach of even the wealthiest individuals of the past.

For instance, consider the ease of listening to music. Before recordings were available, one had to attend a concert (or, if wealthy, hire performers). Over time, though, the ability to listen to music has advanced from buying individual records to today's streaming platforms, where nearly any song can be listened to on demand (at extremely high quality). At a basic level, the presence of electricity, and electric lights in particular, mean that activities can take place into the night in a well-lit environment, whereas individuals in the past had to deal with (potentially hazardous) flame-based lighting. Communication has advanced by leaps and bounds as well. Whereas an individual in the early 1800s might have had to write a letter to communicate with loved ones, the prevalence of video tools means that a friend or family member can today be seen or heard instantly (for free!).

Moving into the kitchen, abundance prevails everywhere, starting with a tap providing plentiful, clean drinking water (with consumers no longer having to worry about contracting cholera or other water-borne diseases). A fruit bowl on the counter might display items that might have only been available in a particular season at best, and perhaps once in a lifetime at worst (and at a high price) for many individuals. Also, the presence of an electric refrigerator and freezer means that perishable items purchased can last for days or weeks without the need to haul in blocks of ice.

Ultimately, the key point is that much of what is common in homes today was an extravagant luxury (if it were available at all) just a couple hundred years ago. Which could provide some perspective (and perhaps optimism for the future?) at a time when there is no shortage of challenges for consumers.

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.