Weekend Reading For Financial Planners (September 5–6)

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.

More Than Half Of RIA Client Assets In (Often Advisor-Built) Model Portfolios: Survey

(Elaine Misonzhnik | Wealth Management)

For a subset of financial advisors, their value proposition has shifted over time from a focus on portfolio management to encompassing a more comprehensive suite of financial planning services. Given the time needed to offer advice on a wider range of planning areas, this shift opens the door for a range of time-saving portfolio management solutions that have grown in popularity, including the use of model portfolios that allow advisors to put clients in a good-fit portfolio solution based on their goals and risk tolerance without customizing every position within it.

According to a survey of 560 advisors from FUSE Research Network, 55% of RIA client assets and 56% of client accounts are in model portfolios (higher than the overall average of 47% across the broader set of advisory channels). Notably, advisor-built models are the most commonly used in portfolio construction (representing 51% of model assets), followed by home-office models (20%), standard third-party models (17%), and third-party custom models (12%). In terms of model composition, ETFs (used by 89% of advisors) and mutual funds (76%) were the most commonly used, with individual stocks (59%), individual bonds (37%), separately managed accounts (27%), direct or custom indexing (23%), and private funds and limited partnerships (16%) also featuring in advisors' models.

In terms of top priorities when it comes to constructing portfolios, 45% of overall respondents cited risk-adjusted returns as one of their top two focus areas, followed by maximizing long-term wealth growth (43%), maximizing diversification and asset class coverage (42%), and minimizing downside risk (35%). Advisors at RIAs were most likely to prioritize minimizing costs (with 20% putting it as a top-two priority) compared to independent broker-dealer (12%) and wirehouse (7%) advisors.

In the end, advisors have the opportunity to customize how they provide portfolio management (and other) services to match the unique priorities and demands of their ideal target clients. Which, at a time when more advisors are leaning into comprehensive planning (and as technology has smoothed the investment management process), could mean greater use of models, Turnkey Asset Management Platforms (TAMPs), and other tools that can allow them to provide high-quality portfolio management services while gaining more time to lean into the human-centric elements of advice (amidst the potential for artificial intelligence-powered tools to take on a greater share of operational tasks).

RIAs Relying On Custodial Referrals Fear Fewer Leads As Schwab Hikes Referral Program Asset Minimums

(Sam Bojarski | Citywire RIA)

While many financial advisory firms pride themselves on the quality of service they provide their clients, doing so requires getting clients in the door in the first place. Which can lead advisors to spend time and hard dollars on one (or more) marketing tactics to attract new clients, with some firms (particularly newer firms whose owners have time to do so as they build their client base) choosing more time-intensive tactics and others (especially larger firms trying to scale up more quickly) choosing tactics that cost more money but require less time (allowing that time to be spent on serving current clients, while scaling growth more quickly with marketing that 'just' requires allocating more dollars).

One tactic in this latter bucket is the use of custodial referral programs (e.g., Charles Schwab's Schwab Advisor Network and Fidelity's Wealth Advisor Services), by which a custodian directly refers clients to a firm participating in the program. Because even though platforms like Schwab and Fidelity have now built their own in-house wealth management offerings, higher-dollar clients with greater complexity are often still referred out to external RIAs in the custodian's network that specialize in such clients (as if the custodian can't win the business themselves, they would rather refer the prospect to an RIA that is on-platform than risk having that person leave for another advisor on another platform altogether). These referrals come at a price, though, and unlike other advisor lead generation programs where a firm might pay a flat fee for each referral, the custodial programs typically charge the firm a perpetual basis-point fee on each referral that becomes a client.

Recently, the bar for complexity that makes Schwab willing to refer out instead of just retaining in-house appears to have been rising, as the company told program participants last month that it was increasing the asset minimum for clients it could refer out from $2 million to $5 million starting in January (after increasing the minimum to $2 million from $500,000 [a figure that had held since 2002] just a year ago). Which will shrink the pool of potential referrals across RIA participants across the board, forcing the roughly 2% of RIAs that have historically used (and often relied) upon custodial referrals to look further into other avenues (even as Schwab itself has been narrowing the field, with reported declines in the number of participating firms from 300 in 2020 to approximately 140 as of early 2025).

For its part, Schwab still emphasizes that total net flows for its referral network for the first six months of 2026 were $18.2 billion, up 15% year-over-year, with more than half of net flows through the program coming from clients with $10 million or more in investable assets. Though it's unclear whether that's because Schwab is really proactively trying to grow the program, or simply because there have been a number of large IPOs in the first half of the year which may have generated an atypically large number of liquidity event referral opportunities (e.g., the SpaceX IPO).

In sum, Schwab's Advisor Network program appears to be shifting from an offering that allows RIAs on its custodial platform to tap into 'mass affluent' consumers who interact with Schwab (with Schwab appearing to want to serve this group themselves under its own wealth management offering) to a program tailored to (typically larger, with the reach and capacity to handle them across Schwab's national network of branches) firms that seek to serve a more 'upmarket' clientele where Schwab would rather refer out to a network RIA than risk losing the client and their assets altogether. Still, with the outlook of reduced flow, some RIAs may consider whether participation in the program is still worth it (and therefore whether they need to keep their Schwab affiliation at all). At a broader level, though, the key is to recognize that Schwab isn't necessarily looking to compete with its own RIAs, per se; it's simply making decisions about what clients it can serve in-house versus referred out to ensure it keeps assets on its platform (where Schwab still drives the overwhelming majority of its revenue from cash sweep and revenue-sharing fees from asset managers)?

SEC Preps Plan To Widen Investor Access To Private Markets

(Nicola White | Bloomberg News)

Publicly traded investments offer several advantages for investors over private market investments, including greater price transparency and disclosure requirements, allowing them to better judge whether a particular stock or bond makes sense for them. Which has meant that while a broad swath of investors participates in public markets, private markets have largely been the domain of institutional investors (who have the time and capability to analyze these more opaque investments) and wealthier individuals (who might have the risk tolerance and capacity for these investments).

Nevertheless, as the market for private investments has increased in recent years (and as funds that include them want to reach a broader customer base), momentum has gained in some circles to allow a broader range of investors to tap into them. This movement gained steam this week as the Securities and Exchange Commission (SEC) submitted a proposal to the White House Office of Management and Budget to expand access for retail investors to private markets (through registered funds) and allow investment advisers to charge performance fees to a wider range of clients.

After a White House review, the SEC is expected to release a proposal to the public for comment before voting on a final version of the rule. While proponents suggest that such a move could open up new investment opportunities for relatively less wealthy investors, those skeptical of such a move suggest that it could be challenging for retail investors to understand the risks (and all-in costs) of such investments.

For financial advisors, increased consumer awareness of private markets could lead to questions about the appropriateness of these investments for their portfolios. Which could create an educational opportunity to explain the risk and opportunity sets of private market investments, and, for advisors who want to lean in that direction, stand out by putting in the work to identify appropriate opportunities for their clients.

What's A Safe Withdrawal Rate After You've Already Retired?

(Amy Arnott | Morningstar)

When it comes to creating a retirement income plan, including identifying a potential safe withdrawal rate, the focus is often on individuals who are just entering retirement. Which can often call for a strategy that can be sustainable over a 30+ year time horizon. However, this math can change when an individual has a shorter time horizon for their assets (e.g., because they're approaching an advisor at age 75 rather than 65), as they can often start with a higher safe withdrawal rate (given that their portfolio has to support them for fewer years).

Using data from Morningstar's "State of Retirement Income" report (which seeks to identify starting safe withdrawal rates for retirees who want to determine a sustainable, inflation-adjusted spending amount that will bring a 90% probability of success in a Monte Carlo analysis using forward-looking asset-class return and inflation assumptions), while a retiree with a 30-year time horizon could start with a withdrawal rate of 3.9% of their portfolio value, this figure increases to 4.4% for those with a 25-year time horizon, 5.3% with a 20-year time horizon, and all the way up to 9.7% for individuals with a 10-year time horizon (notably, the above figures assume a 40% stock, 60% bond allocation.

These findings could be instructive to clients who are well into retirement and want to see whether their spending levels could be increased or might need to be reduced. For instance, a retiree who expects to live for another 15 years might find that they're currently withdrawing from their portfolio at an 8.2% annual rate (above the 6.7% rate deemed to be sustainable by Morningstar for a retiree with a 15-year horizon). Which could mean cutting spending down to the sustainable level or perhaps eliminating annual inflation adjustments to reduce real spending over time. On the other hand, a different retiree might find that they're currently spending at a rate that is below the sustainable level for their retirement time horizon. In this case, they might be able to bump up their spending rate or perhaps feel more confident in making a large, one-time purchase or gift.

In the end, one of the ways financial advisors can offer value to their clients is by regularly reassessing their situation and course-correcting where necessary (which could also mean implementing a flexible retirement income strategy). Which for some retirees could mean being able to increase their spending as they move through retirement if their portfolio value and current spending levels permit it!

Putting A Couple's Retirement Plan Through A Widowhood Stress Test

(Kathleen Rehl | Advisor Perspectives)

Depending on the assumptions used, a client couple's financial plan might have them dying in the same year, or perhaps within a year or two of each other. However, in many cases one spouse will pass away well before the other, leaving a potentially extended period of widowhood. Which is not only a major lifestyle change but also represents a major change to the course of the recently widowed spouse's financial plan.

Given the personal and financial implications of (early) widowhood, financial advisors can support client couples by 'stress testing' their plan for such a scenario. Part of this test is financial, for example in determining spending sustainability with only one Social Security check and assessing the extent of the 'widow's penalty' that can come when a widow files under single (rather than married, filing jointly) status. Another key question, though, is whether the financial plan established when both spouses were alive still 'fits' for the surviving spouse, who might have unique preferences when it comes to generating income and risk tolerance.

Which speaks to the importance of engaging both members of a couple (even if one appears to be less interested in the planning process) to ensure their plan 'works' for both of them now and how it might change if one or the other spouse were to pass away first. In addition, doing so can generate trust that can facilitate action when one spouse does pass (with the advisor playing a valuable role in helping the survivor understand what decisions are urgent and which can be made down the line after they've had time to fully process their spouse's passing).

Ultimately, the key point is that the sustainability of a couple's financial plan isn't just a matter of being able to support a survivor's lifestyle if one or the other spouse were to pass away first but also ensuring that both spouses are comfortable with the plan. Which could create one less concern (and greater trust) both now and in the future when one spouse does pass away.

Creating A 'Bucket' For Long-Term Care Expenses

(Christine Benz | Morningstar)

While an individual might assume that much of their spending will be relatively stable over the course of retirement, a potential long-term care need looms large for many (particularly for client couples, as significant long-term care costs for one spouse could have negative lifestyle implications for the other). Which might lead some individuals (particularly if they don't have long-term care insurance coverage) to incorporate this potential expense into their savings and asset allocation approach.

Given that a 'bucket' approach to retirement portfolio planning (e.g., one bucket with cash-like assets to cover one to two years of spending, a second bucket invested in bonds to cover another five to eight years of spending, and a third bucket invested in equities to offer growth upside) is popular with many retirees, Benz suggests that interested individuals might consider adding a fourth savings 'bucket' to cover future long-term care expenses. For instance, a retiree might set aside enough money to cover two years of expenses in a care environment that is comfortable to them (though, notably, they can subtract out Social Security benefits and other sources of guaranteed income from the amount that needs to be saved, as these income streams would continue). While this would reduce portfolio assets available for lifestyle spending, the peace of mind gained from putting this money into the long-term care 'bucket' could be worth it.

An investment approach for this 'bucket' might depend on an individual's age. For instance, given that long-term care events often occur later in life, a 65-year-old might invest this 'bucket' more aggressively than an 80-year-old. Either way, the individual will want to see some growth in their assets, at least to keep up with rising prices in long-term care costs. In terms of location, Benz suggests retirees might earmark assets in a traditional IRA for this purpose, as they might need to come out anyway (as an individual facing long-term care costs is very likely subject to Required Minimum Distributions) and because the (taxable) distributions from this account could be offset to a certain extent by the ability to deduct healthcare expenses in excess of 7.5% of adjusted gross income.

In sum, while the prospect of long-term care costs can be intimidating for many retirees, creating a 'bucket' with dollars allocated for this purpose could provide a measure of peace of mind (even if it wouldn't necessarily meet all of the costs of an extended care need). Which presents an opportunity for financial advisors to support their clients by helping them decide whether to do so and, if so, how much to put in this 'bucket' and how to invest it to meet their goals for these assets.

The 5-Step Handoff To Better Delegate Outcomes

(Kerry Johnson | Advisor Perspectives)

When advisory firm owners start their business, they typically have every task on their plate, from operations to client-facing responsibilities. While this allows the advisor to put their stamp on every part of the business, it can also be time-consuming (particularly as they start to add clients). Which can eventually lead to a founder making a hire so that they can better focus on the highest-value tasks for the business.

A problem, though, is that it can be hard for founders to actually give up certain responsibilities, because they believe they can do it faster or better than a team member. Sometimes, this leads to the advisor delegating certain tasks, but not ownership over the overall outcome. Which can reduce the time saved by the founder (if they're constantly checking team members' work) and be demotivating for employees (as they're only given discrete tasks rather than being entrusted with a full process).

An alternative approach is to hand off a full outcome, rather than an individual task, to a team member, providing them with the opportunity to take ownership of the issue at hand and allow the founder to focus on what they truly do best. A first step to do so is to define the outcome desired rather than a specific activity (e.g., what does the ultimate result look like for the client?). Next, the founder can set the standard and the guardrails (e.g., compliance and timelines) for the desired outcome, giving the team member space to fill in available space as they see fit. Also, a clear transfer of ownership can prevent confusion (e.g., by telling the team member, "You don't need to check with me on anything unless you get stuck."). In addition, having a scheduled checkpoint can avoid the temptation to regularly check in on the outcome (which could feel like micromanagement to the employee). Finally, giving the team member credit when work goes well can make them feel even more empowered when it comes time to take on another outcome.

Altogether, while it can be hard for founders to let go of certain responsibilities that they think 'only' they can do, delegation is a key to growing a firm in a scalable way. And by creating a process for doing so that gives team members ownership of the outcome, they not only can free up time on their calendars but also develop more skilled (and perhaps more loyal) employees in the process.

How To Integrate Your New Planner Into Client Meetings

(Caleb Brown | New Planner Recruiting Blog)

When hiring an associate advisor, it can feel most comfortable for a firm's founder to pass off 'behind the scenes' work that they can review before it is seen by a client. However, because the founder wants the associate to eventually become a client-facing advisor (as does the associate themselves!), finding ways for them to build confidence and trust with clients is an imperative.

A first step to creating opportunities for new associates is to identify clients who have straightforward situations and who are easier to work with, as they might represent lower-risk entry points for the associate (providing a warm introduction to the associate, their qualifications, and the role they'll play can support this effort as well). Associates can then start to build trust and rapport with these clients by drafting and sending client communications (after being reviewed by the founder or a lead advisor, at least to start), which can allow them to eventually become the 'go-to' contact for the clients.

Advisors can also help give associates client meeting 'reps' by first reviewing the plan or update with them and allowing them to present a section where they are confident in their knowledge (e.g., presenting the cash flow section since they might have input key data [and because it might be less technical than certain other planning areas]). Then, following a client meeting, having associates review notes (whether generated by them or the firm's AI notetaker) and debrief with the lead advisor can provide them with a chance to ask questions and better understand how the advisor approached key issues.

In sum, while it can be hard for a firm founder to 'let go' of certain (particularly client-facing) responsibilities, doing so is not an all-or-nothing proposition. Which means that associates can be brought along slowly, getting more 'reps' in and developing their craft over time, boosting their skills and confidence (as well as the confidence of the firm and its clients in them!).

6 Ways To Delegate To Get Faster ROI From A New Associate Advisor

(Sydney Squires | Nerd's Eye View)

Many advisory firm owners face a dilemma as they reach capacity: they know they need help with planning work and would like to hire an associate advisor, but they may be uncertain about what, exactly, to delegate. Since associate advisors rarely prospect or manage their own clients today, it can feel challenging for firm owners to envision what the associate would do full time that would provide a real return on investment. Without a clear delegation strategy, though, both the lead advisor and the associate risk running into frustrations, inefficiencies, and missed opportunities for growth.

When it comes to accelerating ROI on associate advisors for smaller firms, the key is to delegate in ways that reduce the senior advisor's time spent per client. Doing so frees the lead advisor to focus on business development, deepen relationships with complex clients, or simply avoid burnout. Kitces Research on Advisor Productivity finds that solo advisors typically spend about 20 hours per first-year client, but with support staff, that time can drop by 25%. Even if an associate takes longer to complete a task, the time saved for the lead advisor still translates to a net gain – especially when reinvested in higher-value activities. A partial delegation approach – where the associate owns tasks within clear review guardrails – helps manage risk while steadily building confidence and capability.

To facilitate this ramp-up, five functional areas stand out as ripe for early delegation: client onboarding, meeting preparation and recurring plan updates, post-meeting follow-up, incoming client requests, and firm-specific "advisor odds and ends". Onboarding tasks like data entry, identifying insurance or planning gaps, and building preliminary recommendations help associates learn the firm's process while contributing meaningfully. Meeting prep and recurring plan maintenance tasks create repeatable opportunities to train on client strategy and support the advisor's client-facing time. Follow-up work – such as reviewing AI-generated notes, assigning action items, and drafting communications – further embeds the associate into the service model. Handling incoming client requests and CRM updates allows them to build judgment around common client needs, while owning certain 'miscellaneous' advisor tasks (like reviewing estate documents or tracking planning deadlines) frees up the lead advisor to focus on more strategic work.

Successful delegation, however, requires intentional structure. A phased model – progressing from observation, to guided work, to synchronous review, and eventually to asynchronous or conditional reviews – ensures that associates progress systematically, while the lead advisor retains appropriate oversight. When paired with clear benchmarks, this model supports learning and accountability, prevents premature autonomy, and keeps work consistently moving off the senior advisor's plate – all while building a confident, competent future advisor who is better prepared for advancement.

Ultimately, early-stage associate advisors don't need to be fully self-sufficient to generate ROI – they simply need opportunities to do meaningful work in a supervised, structured way. When lead advisors approach delegation as a tool to expand capacity – not as a demand for perfect execution – firms can begin seeing returns within months, not years. With a deliberate onboarding path and well-defined responsibilities, associate advisors can become an investment in sustainable firm growth!

How Much Can You Afford To Spend On This Remodel?

(Meg Bartelt | Flow Financial Planning)

After living in a house for several years, a homeowner might decide they want to remodel their property, whether to add features or space that doesn't currently exist or perhaps to freshen up an older home. However, home remodels can be expensive (from tens to hundreds of thousands of dollars), raising the question of whether the homeowner can 'afford' it (and how they will pay for it).

In general, Bartelt suggests that undertaking a remodel might not be the wisest course of action for those who don't have the money to pay for it on hand (or in easily liquidated assets), as taking on a loan for it can create a cash flow drag and reduce an individual's income flexibility (e.g., their ability to take on a lower-paying job). Also, while some might consider a remodel to be an 'investment' (e.g., because it could increase the value of their home), the return on it would very likely be less than if assets used for it were invested in the stock market (also, achieving that return requires an individual to actually sell the home that they might enjoy living in!).

For those with the assets to pay for the remodel, the decision of whether to go forward with it becomes a matter of priority. For those who are already financially independent (i.e., don't need to work anymore to fund their lifestyle for the rest of their lives), spending a chunk of money on a pricey remodel could mean a reduction to their sustainable annual spending. Individuals who have reached "Coast FIRE" (i.e., their retirement savings are expected to compound to such an extent that they do not need to save more to meet their future retirement spending needs) might consider what the remodel expense means for their financial cushion during their working years and the margin of safety they have for meeting their retirement goals (as market returns, inflation, and other factors can affect whether an individual remains on the Coast FIRE path over time). Finally, those who still need to save more for retirement might first calculate (perhaps with the support of a financial advisor) whether they would remain on track to meet their retirement goals (and whether increased savings is necessary) after using assets for the remodel (and perhaps consider whether the benefits of the remodel are worth the price of potentially working longer!).

Altogether, a remodel represents a large consumption purchase for a homeowner (that frequently ends up costing much more than initial estimates suggest). Which puts a financial advisor in a good position to show the financial impact of taking on a remodel, analyzing the available options to pay for it (e.g., paying in cash, selling assets, or taking out a securities-backed loan), and ultimately giving their client the information they need to determine whether going through with the remodel will be worth it for them!

The Invisible Cost Of Yards

(Heather and Douglas Boneparth | The Joint Account)

Homeownership comes with costs that go well beyond the mortgage payment, from taxes and insurance to ongoing repair and maintenance costs. For those with green space on their property, this latter category includes the time and/or hard-dollar costs of maintaining a yard.

Perhaps the most obvious task when it comes to lawn maintenance is mowing, which can be done by oneself (if time allows) or outsourced to a professional service or perhaps a teenage entrepreneur. Unfortunately, yard maintenance costs go well beyond mowing, to include seeding (which can cost $1,000 or more depending on the size of the yard), fertilizing ($400–$800 per year), weeding (presenting time costs or $50–$125 per treatment), leaf cleanup (which can require multiple sessions over the course of a fall), watering (both the water bill and related equipment), mulching, as well as moving or removing plants and trees, amongst other tasks. Which can all add up to a multi-thousand-dollar bill over the course of the year.

In sum, while a functional yard can be a source of enjoyment (and, for some, a point of pride), the costs to maintain it can represent a significant budget line item. Which could be instructive when an individual is considering whether to buy a particular property or looking for costs that could be downsized through a move in retirement?

How To Spot HOA Risks Before Buying A Home

(Veronica Dagher | The Wall Street Journal)

For those who have previously rented their home, an attractive feature of buying one is often the ability to make changes to it without seeking the approval of a landlord. Nonetheless, while this applies to the inside of the house, those whose property is part of a Homeowners Association (HOA) or are part of a condominium might find that their freedom when it comes to external changes is limited (and that they could be on the hook for additional costs that they might not have expected).

Given the impact that an HOA can have on a homeowner's enjoyment of their property and the neighborhood, learning more about it before making a home purchase can help avoid headaches (and unexpected expenses). To start, asking the seller to provide records of HOA improvement projects can show how they have been (or will be) funded (e.g., through a special assessment) and whether they will cause disruptions (e.g., the neighborhood pool being out of commission for a summer). Relatedly, understanding an association's reserves can show whether it tends to anticipate major expenses or pass costs on to future owners. When looking at an association's reserve study, a "percent funded" level above 70% is considered to be strong, while a figure below 30% could increase the chances of special assessments.

A prospective buyer might also ask about insurance claims the association has made, as water leaks, construction disputes, or harassment claims could be red flags. Finally, a buyer might spend time in the neighborhood (or perhaps on related social media channels) to get a feeling for the neighborhood as a whole (e.g., someone who's more relaxed might find it stressful to live in a place where neighbors are constantly citing each other for purported HOA bylaw violations).

Ultimately, the key point is that purchasing a home within a condo association or with an HOA means that the buyer hasn't gained complete independence over their property and is, in a sense, in business with others in the neighborhood to govern and maintain common spaces (and, sometimes, the external appearance of private homes and property). Which could be a key factor when deciding whether to purchase a particular home (and when assessing the potential long-term impact of the purchase on the buyer's budget).

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.