Kitces Report
Kitces Topic Areas:
- General Planning
Program Description:
Historically, there has been limited research and insight when it comes to assessing how financial advisors actually work. To establish advisor trends in productivity with respect to preparing plans, using technology, and determining client fees, Kitces Research conducted its third bi-annual survey of financial advisors in 2022. In this latest report, various perspectives of financial advisor productivity are examined, and findings are compared with those from previous studies conducted in 2018 and 2020.
Learning Objectives:
1. Discuss how financial advisors spend their time differently based on their advisory roles and business models.
2. Identify the components of and differences between the Calculator, Comprehensive, Customized, and Collaborative planning approaches and how each approach impacts plan delivery.
3. Describe how different members of a financial advisory team impact financial plan creation.
4. Explain how CFP certification impacts an advisor’s plan development process and the time spent on developing the plan.
5. Evaluate the different ways that financial planners communicate with clients.
6. Compare how different financial planning tools are used and how they impact the financial planning process.
7. Determine how financial planning fees and fee structures relate to different business models and clientele.
Key Terms:
Registered Investment Advisor (RIA): A firm or individual registered with the Securities and Exchange Commission or state authorities and working in the investment advice business.
Collaborative Planning: Financial planning approach that generally relies on planning software used as a live/real-time collaborative tool with clients during client meetings.
Custom Planning: Financial planning approach that generally relies on custom-written plan developed for each individual client’s circumstances.
Comprehensive Planning: Financial planning approach that generally relies on printed reports from financial planning software used to show a more holistic picture of the client’s current and project ted financial situation.
Calculator Planning: Financial planning approach that generally relies on plan analyses to calculate the client’s needs or gaps, which help the advisor identify products to implement.
Broker-Dealer (B/D): A financial entity engaged in executing securities trades in their own account as a dealer, and in executing securities trades on behalf of customers as a broker.
Financial Planning Practice: An entity for which there is a common business vision, budget, client base, and service standard. Across the entity, resources and profits are pooled. A practice could be an entire firm, an individual, or a team of individuals affiliated with a larger firm (e.g., a broker-dealer, an independent RIA, or a platform service provider).
Service Team: A subset of a practice that consists of a group of individuals within the practice that serves a defined client base, with at least 1 individual managing client relationships and leading the delivery of financial planning advice. Support roles could include associate advisor, paraplanner, or client service administrator.
Unsupported Solo Advisor: Advisors with no other advisors or W-2 employees.
Supported Solo Advisor: Senior advisor with ultimate responsibility for all clients of the practice, supported by 1 or more W-2 employees, which may include associate advisors.
Senior Advisor: Accountable for managing the most valued client relationships as well as business development and mentoring other advisors.
Ensemble Advisory Firm Or Team: Multiple advisors or advisor teams pooling all resources and profits, where clients are clients of the firm and are served under a consistent standard.
Silo: Multiple advisors or advisor teams, each independently responsible for their own distinct client base and profits.
Service Advisor: Primarily accountable for relationship management and retention of existing clients.
Associate Advisor: Supports more senior advisors on a team to deliver advice in a client-facing capacity but typically has no primary responsibility for client relationships.
Paraplanner: Conducts financial planning analyses and provides similar financial planning support for more senior advisors but is not responsible for delivering recommendations to clients.
Financial Planning Specialist: Serves as a centralized planning resource to support all advisors of a practice; may include Director of Financial Planning.
Client Service Associate: Interacts with clients only with respect to administrative requests.
Level of Complexity:
CFP / IWI: Intermediate
NASBA: Basic
Recommended CPE:
- 3.0 CFP hours
- 4.0 NASBA hours
- 3.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 3.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
April 30, 2019
Kitces Topic Areas:
- Insurance
- Taxes
Session Description:
There are few things more expensive than unexpected – and uninsured – medical expenses. Whether the medical expense is a sudden health event, the progression of a chronic illness, or due to a permanent disability, serious health-related expenses can wreak havoc on a family’s finances. Sadly, medical-related bankruptcy filings now account for nearly two-thirds of all bankruptcy filings. And to that end, each year, more than a half million are forced into bankruptcy as a result of medical-related events, from the high cost of care to the impact of lost wages.
As a result, to the extent that medical expenses do occur, and need to be paid, it is crucial to maximize the available tax benefits that the government provides to help support households in their time of medical need… from the income tax deduction for (qualified) medical expenses, to the treatment of paying to get into medical facilities, premiums for various types of insurance to protect against such expenses, and the receipt of those insurance benefits themselves.
Learning Objectives:
LO #1: Identify how to use the income deduction for qualified (uninsured) medical expenses.
LO #2: Identify the impact of the TCJA on deductible medical expenses.
LO #3: Identify how to handle costs incurred for dependents.
LO #4: Identify the importance of the timing of qualified medical expenses.
LO #5: Identify qualified and non-qualified medical expense.
LO #6: Identify the impact of residence-related qualified medical deductions.
LO #7: Identify the tax deductibility of upfront and ongoing continuing care retirement communities (CCRCs).
LO #8: Identify different strategies for using different accounts (tax-favored, ABLE, retirement) for qualified medical expenses.
Key Terms:
Adjusted Gross Income (AGI): This refers to a person’s total gross income minus specific deductions.
Hurdle Rate: The specified percentage of adjusted gross income (AGI) hat the taxpayer’s medical expenses must exceed in order to be deductible.
Continuing Care Retirement Communities (CCRCs): Retirement communities that are hallmarked by providing varying levels of medical and/or long-term care within the same community and location.
Flexible Spending Accounts: This is a tax-advantaged account, but most of the money in it has to be used by the end of the year. Only $500 can be carried over.
Archer Medical Savings Accounts: This is an account designed for employees of small businesses and self-employed individuals with high-deductible health plans.
Health Savings Accounts: The “gold” standard because they allow for tax-deductible contributions and tax-deferred growth earnings, in addition to the fact that distributions made to pay for medical expenses are 100% tax free.
Achieving a Better Life Experience Act (ABLE) Accounts: These are tax-preferenced accounts that can be used to help save and invest for individuals who have already become disabled (or blind) by their 26th birthday.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Recommended CE Hours:
- 1.5 CFP hours
- 2.0 NASBA hours
- 2.0 IRS EA hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
January 30, 2019
Kitces Topic Areas:
- Estate Planning
- Taxes
Session Description:
In the past, estate planning was a primary objective for the mass-affluent needing to avoid Federal estate taxes. Recent estate tax changes though, estate planning will really only matter to a very small minority. For everyone else, the new focus will be on tax-planning at death, specifically maximizing available step-up in basis opportunities.
Learning Objectives:
LO #1: Identify the different ways in which assets are treated, receiving a step-up in basis or not, after an individual has passed.
LO #2: Identify the how IRD deductions are used and applied.
LO #3: Identify how steps-down in basis are treated.
LO #4: Identify planning considerations for when property is held jointly between spouses at death.
LO #5: Identify planning strategies to maximize step-up in basis opportunities.
LO #6: Identify strategies for transferring assets between spouses before death.
LO #7: Identify planning strategies for capital losses.
LO #8: Identify trust strategies to maximize step-up in basis.
Key Terms:
Income in Respect of Decedent: Any type of pre-tax asset whose ordinary income tax consequences were not already recognized before the decedent passed away.
IRD Deduction: Federal income tax deduction that can be claimed by the recipient of the IRD asset for any Federal estate tax paid attributable to the IRD asset.
Step-Up In Basis Rule: This rule essentially treats the beneficiary of an asset received due to the owner’s death as though they purchased the inherited asset for its fair market value on the date of the decedent’s death.
Portability: This term applies to the Federal estate tax exemption, made permanent by the American Taxpayer Relief Act of 2012, that allows the surviving spouse to transfer any of the deceased spouse’s unused exemption amount to the surviving spouse.
IRC Section 2038 Marital Trust: This is an advanced technique to try and secure a step-up in basis for all marital assets upon the passing of the first spouse.
Joint Exempt Step-Up Trust: This trust forms a single joint trust with separate shares for both the husband and wife, where each spouse retains the right to revoke his/her share of the trust until their death.
Capital Loss: A capital loss occurs whenever there is a loss on a capital asset, such as real estate or stock; i.e. it decreases in value.
Qualified Terminable Interest Property (QTIP) Trust: A type of marital trust designed to provide for the spouse after death that at the same time protects assets for future generations.
Medicaid: This is the healthcare coverage that covers low-income adults, children, pregnant women, and the elderly.
Boomerang Period: The one-year waiting period that applies to gifting assets.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Recommended CE Hours:
- 1.5 CFP hours
- 2.0 NASBA hours
- 1.5 IWI General Financial Planning hours
- 1.5 IWI Taxes & Regulations hours
- 2.0 IRS EA hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
December 4, 2018
Kitces Topic Areas:
- Client Trust & Communication
- Financial Psychology
- General Planning
Session Description:
In this month’s newsletter we look in depth at strategies for applying behavioral finance within a financial planning context, including the ways in which System 1 and System 2 decision making processes differ, the impact of saliency on decision making and behavior, behavioral patterns for following through on commitments, the impact of “herd” behavior in financial planning, and how the “End of History Illusion” affects financial planning!
Learning Objectives:
LO #1: Identify the differences between System 1 and System 2 decision making processes and when they are used.
LO #2: Identify the impact of Saliency on decision making and behavior.
LO #3: Identify behavioral patterns of following through on commitments and breaking goals into smaller pieces.
LO #4: Identify the behavioral impact of “herd” or peer behavior in financial planning.
LO #5: Identify how the “End of History Illusion” affects financial planning.
Key Terms::
System 1: Decision process that makes automatic and fast decisions.
System 2: Decision process that requires processing and thinking.
Depletion of System 2: Loss of ability to use System 2 depletion due to exhaustion.
Choice Architecture: Design of how to present choices to an individual.
Saliency: The quality of being particularly noticeable or important.
Modular Financial Planning: Financial planning that deals with subsets of goals and issues separately.
Comprehensive Financial Planning: Financial planning that deals with all goals and issues together.
Social Proof: behavior that looks for validation of or accountability to other individuals from a group.
End-Of-History Illusion: the inability to foresee a change in yourself in the future despite observing changes from the past.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
- 1.0 IWI General Financial Planning hours
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP / IWI (formerly IMCA) hours
- 1.5 NASBA hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
November 14, 2018
Kitces Topic Areas:
- Insurance
- Retirement Planning
Session Description:
In this white paper, we explore retiree health insurance provided through Medicare, the core components of Medicare coverage, how different components of Medicare are provided and the costs of coverage to retirees, the role that Medicare Advantage can play for retirees trying to further manage down the cost of premiums, the initial enrollment periods for signing up for Medicare, and the importance of reviewing Medicare coverage annually.
Learning Objectives:
LO #1: Identify the primary source of health insurance for those over age 65.
LO #2: Identify the three core components of Medicare coverage.
LO #3: Identify standard premiums for Medicare coverage.
LO #4: Identify the health insurance coverage provided by Medicare Advantage.
LO #5: Identify Medicare initial enrollment periods.
Key Terms::
Medicaid: The program that was specifically designed to cover medical and long-term care costs for low-income individuals who cannot afford to pay for their own care, and has specific means-based income requirements for eligibility.
Medicare: Created by Congress, this program provides health insurance for anyone/everyone who was eligible for Social Security benefits as well.
Medicare Part A: Known as “hospital insurance”, it is designed to specifically cover inpatient care in a hospital. It also provides a small about of coverage for skilled nursing, home health, and hospice.
Medicare Part B: This is the more traditional “medical insurance” component of the program, covering a wide range of both preventative and medically necessary “non-hospital” medical expenses.
Medicare Part C: This can be considered an alternative to being enrolled in traditional Medicare. It is offered through private insurers, not CMS.
Medicare Part D: This is the prescription drug coverage portion of Medicare.
Centers for Medicare & Medicaid Services (CMS): This is the Federal agency that administers the single-payer national health insurance program
Medigap: These are supplemental policies designed to fill in the “gaps” of Medicare coverage.
High Deductible Health Plan (HDHP): According to the IRS, these are plans where the deductible is at least $1,350 for an individual and $2,700 for a family. Yearly out-of-pocket expenses within these plans range from $6,650 for individuals and up to $13,300 for a family.
Health Savings Account: This is one of the few “triple tax benefit” accounts available to off-set HDHPs. It allows those that qualify to have tax-deductible contributions, tax-deferred growth, and tax-free qualified distributions.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 2.0 NASBA hours
- 1.5 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
October 23, 2018
Kitces Topic Areas:
- General Planning
- Retirement Planning
Session Description:
In this issue of The Kitces Report, we explore the issues to consider when evaluating the benefits and economic impact of various Social Security claiming strategies, from the importance of understanding who is eligible for benefits in the first place, to the breakeven analysis needed in deciding when to claim the Social Security benefits! We also look at how crucial, and complicated, Social Security planning is for couples. As a result, it’s necessary to gather and consider the full range of client goals and preferences to optimize Social Security planning solutions, rather than just focus on the strategy that gives the most amount of money by delaying all the way until 70, or pays the client immediately at age 62. Finally, we wrap up by identifying the various Social Security “reform” proposals, and consider how potential changes to Social Security in the future should impact the claiming decision.
Learning Objectives:
LO #1: Clarify who is entitled to Social Security benefits and be able to calculate the Social Security benefit your clients will receive. Be able to explain the difference between, and understand the meanings of, the acronyms AIME, PIA, and COLA.
LO #2: Describe what the Full Retirement Age (FRA) is and explain how choosing dates to receive Social Security benefits that are before or after the FRA impact the benefit amount.
LO #3: Illustrate an understanding of the cost/benefit analysis on the decision to delay Social Security benefits. Be able to calculate the additional benefit received for delaying while also calculating the time to break even. Explain why there might be times when clients may not want to delay Social Security benefits.
LO #4: Identify the three unique factors that drive the relative benefit of delaying Social Security benefits and explain how these factors act as a hedge to a portfolio.
LO #5: Discuss why Social Security planning is more complicated for couples than individuals. Understand what a restricted application for spousal benefits is, and identify when these might be relevant. Identify challenges that pertain to couples in timing Social Security benefits.
LO #6: List the four key options for couples claiming Social Security benefits.
LO #7: Understand when the Social Security “Earnings Test” applies, and to whom it applies. Explain the impact it can have on your client’s benefits.
LO #8: Identify the various Social Security “reform” proposals that have been presented and explain how future reforms could impact the optimal claiming decision.
Key Terms::
Social Security: A government program that provides monetary assistance to people with inadequate or no income
Averaged Indexed Monthly Earnings (AIME): AIME is used to calculate one’s actual social security benefit. It is determined by adding up the top 35 years of (inflation-adjusted) Social Security work history, and dividing by 35 years x 12 months/year = 420 months.
Cost-Of-Living Adjustment (COLA): COLA is typically equal to the percentage increase in the consumer price index, it is an adjustment for social security to help handle inflation
Consumer Price Index: This is an list or index of the variation in prices paid by a typical consumer for retail goods and other items.
Inflation: This is the general increase in price, or the fall of purchasing power, of different goods
Primary Insurance Amount (PIA): This is the benefit that is calculated using the income replacement formula. It represents the benefit the retiree would get at full retirement age.
File-and-Suspend: Allowed by the Senior Citizens Freedom to Work Act of 2000, file-and-suspend was a way to “take” one’s benefit and allow the spouse to receive the spousal benefit while spending one’s own benefit so it could continue to grow. This was ended by the Bipartisan Budget Act of 2015
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 2.0 NASBA hours
- 1.5 IWI General Financial Planning hours
- 1.5 IWI Taxes & Regulations hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
October 25, 2018
Kitces Topic Areas:
- General Planning
- Investments
Session Description:
In this issue of The Kitces Report, we explore the issues to consider when evaluating the benefits and economic impact of various financial planning strategies, from the importance of deciding how to measure the outcomes in the first place, to the challenging “compared to what” problem that makes it difficult to objectively assess the value of a particular financial planning recommendation and whether or by how much it will actually improve the outcome. We also look at how many financial planning strategies reduce risk enough to make them viable strategies, even though the economic impact is actually negative! As a result, it’s necessary to gather and consider the full range of client goals and preferences to optimize financial planning solutions, rather than just focus on (positive) economic value alone.
Learning Objectives:
LO #1: Discuss why being able to quantify the economic benefits of financial advice is important to both you as the financial planner, and your clients.
LO #2: Clarify the importance of accurately measuring the economic outcome that is desired. Explain how selecting financial planning strategies should be aligned with the desired outcomes.
LO #3: Explain the “compared to what” problem. Illustrate an understanding of the fundamental issues when trying to assess the economic impact of a financial planning recommendation.
LO #4: Be able to evaluate research in previous studies. Explain the inherent issues of the prior studies on the financial impact of various financial planning strategies. Discuss how baseline assumptions influence the result of the prior studies, how risk management might reduce returns but reduces long-term risk significantly, and how and why “tax alpha” is different from investment alpha.
LO #5: Identify the three primary reasons as to why it is difficult to calculate the economic impact of a financial planning recommendation. Discuss how the economic consequences of financial planning strategies are relative to the client.
LO #6: Explain why and how behavioral coaching may be the greatest economic impact to a client, the significance of interpersonal communication, and why it is so difficult to measure and assess its impact.
Key Terms:
Advisor Alpha: Vanguard defines this as “how advisors can add value, or alpha, by providing relationship-oriented services”. It is how the advisor’s knowledge and relationship with the client can improve overall investment performance.
Advisor Gamma: By Morningstar, the goal is to evaluate how the financial outcomes of retirees are improved by engaging in five financial planning strategies, for more effective asset allocation to dynamic withdrawal rate spending approaches to proper asset location decisions.
Capital Sigma: Developed by Envestnet, this is their way to quantify the value of advice between financial advisors and their client’s portfolios.
Utils: A unit of measures for utility.
Utility function: A concept derived from economics, the purpose of utility function is specifically to assign a measuring unit – “utils” – to potential outcomes. More positive spending levels means, for example, more utils.
Prospect Theory: A behavioral economic theory that identified that human beings have greater aversion to losses than the enjoyment we gain from an equal favorable result. The theory was developed by Daniel Kahneman and Amos Tversky.
Risk-Adjusted: This is referring to how one should refine investment returns based on the amount of risk one had to take to produce that return.
Tax-Alpha: Another value-ad for clients and advisors, this is the opportunity to engage in proactive tax strategies to generate tax savings either through asset location and or tax loss harvesting.
Asset location: This is when advisors decide where to hold or “locate” assets amongst taxable accounts, tax-deferred accounts, or tax-free accounts.
Tax Loss Harvesting: This is a process of selling an investment that has experienced a loss in order to capture a loss for tax purposes (offsetting a gain) without permanently changing the underlying investment/portfolio.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate/Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 2.0 NASBA hours
- 1.5 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
October 20, 2018
Kitces Topic Areas:
- Investments
- Taxes
Session Description:
In this month’s newsletter, we take a deep dive into rebalancing, looking at where it actually does enhance returns, where it’s better as a risk management strategy, why a “tolerance bands” approach to rebalancing may be more effective than just doing rebalancing at regular time intervals, and why rebalancing is still be worth doing in the long run, notwithstanding all of these challenges!
Learning Objectives:
LO #1: Explain how regular rebalancing can actually decrease long-term returns of a portfolio.
LO #2: Discuss the concept of a “rebalancing bonus” and how one might successfully go about achieving it.
LO #3: Describe how “tolerance bands” work and why it is that they might be more effective when rebalancing when compared to regular time intervals.
LO #4: Illustrate an understanding of the differences between absolute and relative rebalancing thresholds and how each of them impact rebalancing targets.
LO #5: Be able to explain how those that are currently saving, or are in retirement and making withdrawals, can rebalance without requiring any tax-triggering trades.
LO #6: Discuss why rebalancing might be behaviorally difficult for clients to implement.
Key Terms::
Portfolio Rebalancing: Realigning the balance of investments in a portfolio, generally to stay in accordance with the original target weightings for that portfolio.
Tolerance Bands: In contrast to timed rebalancing (daily, quarterly, yearly), the threshold for triggering a rebalancing trade is not the passage of time, but how over-weighted or underweighted it’s permitted to become given the relative movement of the underlying investment itself.
Asset Class: A group of securities that have similar characteristics and move in similar ways in the marketplace. The three most common classes are: stocks (equities), bonds (fixed-income), and cash (money market).
Target Allocation: This is how the portfolio is being strategically designed based on risk and goals. A retirement portfolio versus a portfolio designed for a child’s education may have different target allocations. The two portfolios would likely use different mixes of asset classes at different percentages to manage the risk and term length associated with the goal.
Volatility: A statically measure of how dispersed pricing is on a particular asset or asset class. In a volatile market there may be more opportunities for rebalancing.
Correlation: This is a measure of the relationship between to assets or asset classes. Correlations nearing 1 or -1 mean that the assets are moving together, where a 0 would mean that the assets are not correlated at all.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
November 9, 2018
Kitces Topic Areas:
- Annuities
- Retirement Planning
Session Description:
With a rising number of baby boomers facing retirement, and a rather volatile market over the past two decades, there has been an increasing interest in the use of annuity products to provide safe and secure income in retirement – with the unfortunate caveat that the simplest options like immediate annuities have generally been unpopular, and the more complex alternatives like variable annuities with living benefit riders have been criticized that many buyers may be misunderstanding what really is and isn’t guaranteed in the first place. In the past few years, a new type of annuity solution has emerged, dubbed the “longevity annuity”, which seeks to avoid carving a large portion of a portfolio into an illiquid immediate annuity, while also avoiding the complexity of variable annuity (and more recently, equity-indexed annuity) income guarantees. In this month’s newsletter, we explore the concept of longevity annuities, what they are and how they work, and where they may fit into the retirement income puzzle (especially as a longevity hedge). In next month’s newsletter, we’ll continue in further depth into the analysis of longevity annuities, how they compare to other types of retirement income strategies and approaches, and the caveats that must be considered when trying to fit them into a retirement income strategy.
Learning Objectives:
LO #1: Compare and contrast the similarities and differences between longevity annuities and immediate annuities.
LO #2: Be able to accurately list and define the three components of annuity payments.
LO #3: Explain the concept of mortality credits and illustrate how they impact the annuity payment stream.
LO #4: Accurately explain the various choices a client has when considering the purchase of a longevity annuity and illustrate how those choices may impact the payments from the annuity (i.e. impact of when payments begin and/or refund guarantees).
LO #5: Understand how the inflation-adjustment feature on longevity annuity payments works.
LO #6: Describe the how the income payments from longevity annuities are taxed.
Key Terms:
Annuity: A financial product that pays a fixed sum of money to someone, each year, usually for the rest of their life.
Longevity annuity: Sometimes referred to as a deferred income or advanced-life delayed annuity, this financial product converts a lump sum into a stream of income.
Immediate annuity: This type of annuity also converts a lump sum into a stream of income, however, it starts immediately instead of later in life.
Mortality credit: The share of the contributions from other people who did not survive.
Qualified Longevity Annuity Contract: These are purchased with pre-tax dollars, like an IRA or an employer retirement plan.
Non-Qualified Longevity Annuity Contract: These are purchased with after-tax dollars.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- CFP / IWI (formerly IMCA) hours
- NASBA hours
- IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
June 30, 2014
Kitces Topic Areas:
- Annuities
- Estate Planning
- Taxes
Program Description:
For the purposes of this month’s newsletter, we will focus specifically on the tax treatment of nonqualified, deferred annuities (regardless of whether they are fixed or variable, as that does not directly impact the tax treatment).
Learning Objectives:
LO #1: Explain the primary tax preference for deferred annuities still in the accumulation stage while also recognizing the caveat to this tax benefit.
LO #2: Understand and articulate the taxation of distributions from an annuity.
LO #3: Explain the tax situation that occurs when a deferred annuity is surrendered for an amount that is less than the original basis.
LO #4: Describe when post-death distributions must begin for an annuity and explain the unique complications that may result for jointly held annuity contracts.
LO #5: Be able to list and explain the distribution options for the various types of beneficiaries (i.e. spousal, non-spousal, and Trust).
LO #6: Understand the importance of knowing the rules of your client’s particular annuity contract and their annuity company prior to a death occurring.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 0.0 NASBA hours
- 1.5 IWI General Financial Planning hours
- 1.5 IWI Taxes & Regulations hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
October 25, 2018
Kitces Topic Areas:
- Investments
- Retirement Planning
- Taxes
Session Description:
In this month’s newsletter, we take a deeper dive into asset location concepts and strategies, including a look at how the introduction of Roth-style accounts adds further complexity, the potential to “create” new asset location accounts (e.g., non-qualified deferred annuities) to take advantage of tax-deferral, and how viewing investments on an after-tax basis can impact not only the asset allocation itself but also the after-tax volatility of an investment that can itself further change asset location priorities. In addition, we also look at some of the practical implementation challenges, and some of the client psychology and communication issues that arise in trying to effectively implement asset location.
Learning Objectives:
LO #1: Decipher which high-return investments belong in taxable versus retirement accounts based on their tax efficiency.
LO #2: Explain when and why high-return, tax-efficient investments should be placed inside a Roth IRA instead of a Traditional IRA and/or taxable brokerage account.
LO #3: Be able to describe when asset location should not be performed and why.
LO #4: Clearly illustrate why it is that an investor’s asset allocation on an after-tax basis may be materially different than their current, before-tax allocation.
LO #5: Articulate to client’s the importance of viewing assets as a household, while also mentally “accounting” for separate accounts in order to help clients overcome the psychological impact of some accounts not performing as well as others.
LO #6: Establish and maintain an asset location priority list.
Key Terms:
Asset Location: This is the personal finance term that indicates how or that investors can distribute money across different investments, but more importantly investments with different taxation.
Taxable Account: A good example is a brokerage account, and the tax treatment for this type of account is based on what is in the account – stocks or bonds.
Tax-Deferred Account: A good example is an IRA or a 401(k), taxes are not paid when the money goes in, but are taxable as ordinary income when withdrawn, and that ordinary income treatment applies
Tax-Exempt Account: A good example is a Roth IRA or a 529 college savings plan, and these accounts grow initially tax-deferred and allow withdrawals of the growth to be tax free assuming the requirements are met.
Long-term capital gains: These can also be long-term capital losses, and different from short-term gains and losses based on taxation. For instance, long-term capital gains stem from selling an investment that has been held for longer than 12 months at the time of the sale.
Buy-and-hold: This is a passive investment strategy where once the investor purchases his or her stock, s/he then holds it for an extended period of time regardless of fluctuation in the marketplace.
Dividends: Most often paid on a quarterly basis, this is a distribution of a portion of a company’s earnings, paid to the shareholders. Dividends can be cash, stock, or other property.
Tax-efficiency: This is another way to describe an investment strategy that minimizes tax liability.
Equities: This is referring to stocks or shares of a company.
Bonds: This is a fixed-income investment. The investor loans the money and in return receives a variable or fixed interest rate in return to pay back the loan over a certain period of time.
Time Horizon: The is the length of time over which an investment can grow (or not) and is held before liquidating or selling at some point in the future.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 1.5 IWI Taxes & Regulations hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
October 20, 2018
Kitces Topic Areas:
- Investments
- Retirement Planning
- Taxes
Session Description:
In this month’s newsletter, we explore the concept of asset location and its prospective benefits when executed well, along with examining the available research on how to make the best decisions regarding asset location when taking into account the tax treatment of the available accounts, the tax treatment of the chosen investments, and the expected risks and returns of those investments.
Learning Objectives:
LO #1: Decipher between which type of account (taxable or retirement) equities and bonds, respectively, should be held in and explain why.
LO #2: Describe why equity turnover and ongoing dividends erodes much of the value of tax deferral that is normally associated with buy-and-hold strategies.
LO #3: Explain why tax efficiency doesn’t matter all that much when expected returns are low.
LO #4: Construct an asset location priority list based on high-return assets and their level of tax efficiency.
LO #5: Be able to illustrate the “outside-in” concept for building a portfolio based on asset location.
Key Terms::
Asset Location: This is the personal finance term that indicates how or that investors can distribute money across different investments, but more importantly investments with different taxation.
Taxable Account: A good example is a brokerage account, and the tax treatment for this type of account is based on what is in the account – stocks or bonds.
Tax-Deferred Account: A good example is an IRA or a 401(k), taxes are not paid when the money goes in, but are taxable as ordinary income when withdrawn, and that ordinary income treatment applies
Tax-Exempt Account: A good example is a Roth IRA or a 529 college savings plan, and these accounts grow initially tax-deferred and allow withdrawals of the growth to be tax free assuming the requirements are met.
Long-term capital gains: These can also be long-term capital losses, and different from short-term gains and losses based on taxation. For instance, long-term capital gains stem from selling an investment that has been held for longer than 12 months at the time of the sale.
Buy-and-hold: This is a passive investment strategy where once the investor purchases his or her stock, s/he then holds it for an extended period of time regardless of fluctuation in the marketplace.
Dividends: Most often paid on a quarterly basis, this is a distribution of a portion of a company’s earnings, paid to the shareholders. Dividends can be cash, stock, or other property.
Tax-efficiency: This is another way to describe an investment strategy that minimizes tax liability.
Equities: This is referring to stocks or shares of a company.
Bonds: This is a fixed-income investment. The investor loans the money and in return receives a variable or fixed interest rate in return to pay back the loan over a certain period of time.
Time Horizon: The is the length of time over which an investment can grow (or not) and is held before liquidating or selling at some point in the future.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 1.0 NASBA hours
- 1.5 IWI General Financial Planning hours
- 1.5 IWI Taxes & Regulations hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
December 3, 2018
Kitces Topic Areas:
- General Planning
- Investments
Session Description:
Given the difficult ongoing investment environment, investors have increasingly been turning to various “alternatives” to support portfolio growth and manage risk, aided in no small part by a technological revolution that makes analytically complex strategies that would have been impossible 30 years ago, and difficult 15 years ago, easily implemented in today’s marketplace. A recent example of this trend is risk parity investing. Notwithstanding its long conceptual roots dating back to Markowitz, and favorable performance since the 1990s, risk parity investing has only really begun to gain momentum in the past few years. In this newsletter, we look at what risk parity investing really is (and what it’s not), the opportunities, risks, and practical challenges in implementing such strategies, and whether risk parity investing ultimately represents a short-term investing fad, or an emerging shift in how portfolios are constructed.
Learning Objectives:
LO #1: Explain the fundamental principal of risk parity portfolios. Additionally, recognize that an even split of capital amongst many asset classes does not necessarily reduce risk.
LO #2: Describe how the use of leverage in a risk parity portfolio that is truly well-diversified may still be less risky than a concentrated portfolio in a limited number of risky assets.
LO #3: Illustrate an understanding of the proactive monitoring process that risk parity portfolios entail and why the proactive monitoring is necessary.
LO #4: Explain how the risk parity portfolios performed when backtested and why their extensive diversification may help the portfolios in rising rates and inflation but hurt in times when equities have considerable growth.
LO #5: List the caveats and concerns relevant to risk parity portfolios.
Key Terms::
Risk Parity: Parity exposure to multiple risks; thus effectively diversifying a portfolio would mean it will hold multiple asset classes, and have the opportunity to take advantage of the returns from multiple risk premia.
Modern Portfolio Theory (MPT): An investment theory put forth by Harry Markowitz in 1952, that says risk-adverse investors can construct portfolios as to optimize/minimize their expected return based on the level or market risk they were willing to take on.
Efficient Frontier: This is the set of “optimal” portfolios based on MPT in that the portfolios along this continuum offer the highest return for a defined level of risk. Portfolios that either above or below the efficient frontier, a regression, are either too risky for the amount of return or not enough return for the amount of risk.
Volatility: Often measured in terms of standard deviation or variance, this is a statistical measure of return spread for a given market or particular security. How much does the asset’s trading price vary over time.
Diversification: A portfolio construction technique that reduces overall risk in the portfolio by incorporating investments across various industries, categories, places and financial instruments. Well diversified portfolios help to manage risk.
Risk Premia: Is notion or consideration that for a higher return (premium) there is a related level of risk.
Rebalancing: A process of periodically, and sometimes opportunistically, buying and selling assets in a portfolio to re-establish the portfolio’s desired level of asset allocation; i.e. 60/40 stocks and bonds.
Sharpe Ratio: This is the average return earned over and above, or in excess, of the risk-free rate per unit of volatility or total risk. In other words, how much more return is a portfolio receiving for the amount of extra risk (volatility) it is taking on.
Leverage: This is referring to the capital being borrowed to then make an investment. The return on the investment is or should be greater than the interest paid on the borrowed capital.
Backtest: This is a process of testing trading strategies using historical data. The goal is to see or understand the viability of a trading strategy in a similar market before using the strategy in real-time with actual capital at risk.
Asset Allocation: The process of dividing up and organizing investments within a portfolio across a wide range of asset categories; stocks, bonds, cash. This can minimize risk as well as personalize a portfolio based on goals and time horizons.
Risk Allocation: In somewhat of a contrast to asset allocation, risk allocation is an alternative method that weights assets based on their risk. Risk factors cross the asset class boundaries.
Capital Asset Pricing Model (CAPM): A theory of financial market behavior that allows investors to consider the relationship between systematic risk and the expected return of an asset. It is common to see this theory used to analyze asset pricing.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 1.0 NASBA hours
- 1.5 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
October 25, 2018
Kitces Topic Areas:
- Estate Planning
- Taxes
Session Description:
January-February 2013 issue of The Kitces Report newsletter on the now-permanent rules for portability and the planning implications that carryover of a deceased spouse’s estate tax exemption will have on the use of bypass trusts.
Learning Objectives:
LO #1: Be able to explain the “permanent” changes made to the estate tax system with the passage of the American Taxpayer Relief Act of 2012.
LO #2: Discuss why the portability of the estate tax exemption renders the bypass trust as no longer necessary as it pertains to preserving a deceased spouse’s estate tax exemption.
LO #3: Be able to identify and list the many situations in which it still makes sense to use a bypass trust.
LO #4: Describe the necessary requirements in order to elect for portability.
LO #5: Explain and list the potential significant direct and indirect costs of the decision to keep using a bypass trust.
LO #6: Help clients analyze and weight the trade-offs between adverse income tax consequences versus the bypass trust planning benefits.
Key Terms:
Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUIRJCA): Signed into law on December 17th, 2010 this act resolved the fiscal cliff and had a large impact on estate taxes.
American Taxpayer Relief Act (ATRA): Signed into law on January 2nd, 2013 this act permanently resolved the series of estate and income tax planning sunsets.
Economic Growth and Tax Relief Reconciliation Act (EGTRRA): Signed into law in 2001 by President Bush, this was his first piece of tax legislation and a precursor to ATRA.
Deceased Spouse’s Unused Exemption Amount (DSUEA): This is the amount remaining of the $5.25M that the deceased spouse passes on to the surviving spouse.
Generation Skipping Tax (GST): This is an estate tax imposed on beneficiaries who are two or more generations removed from the testator
Bypass Trust: An estate planning vehicle that allows assets to be sheltered now and in the future from estate taxes
HEMS: This is the acronym that stands for “health, education, maintenance, and support” that is often a part of trust language allowing access to the beneficiary
Qualified Terminable Interest Property (QTIP): This is a type of trust or estate planning tool.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 1.5 IWI Taxes & Regulations hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
November 9, 2018
Kitces Topic Areas:
- Investments
- Retirement Planning
Session Description:
In this issue of The Kitces Report, we look back and review the past 20 years of safe withdrawal rate literature, in an effort to better understand the major revelations and research innovations, and arrive at some conclusions about what this entire body of research can tell us today about what is and isn’t a safe, sustainable portfolio withdrawal.
Learning Objectives:
LO #1: Be able to explain what the safe withdrawal rate is, who first published the idea, how it is determined, and what assumptions are necessary.
LO #2: Show an understanding of how the safe withdrawal rate is influenced by time horizon, taxation, expenses, risk tolerance, and market valuation.
LO #3: Describe how diversification influence the safe withdrawal rate, and why it may be difficult to determine the exact amount of the influence. Discuss why asset allocation glide paths may not actually be beneficial.
LO #4: Explain how the ability, or inability, to be flexible with spending impacts the initial safe withdrawal rate.
LO #5: Clarify the impact that annuitizing a portion of a portfolio may influence the withdrawal rate. Identify the potential benefits and risks of this strategy.
LO #6: Discuss the limitations of prior research on safe withdrawal rates. Identify the many other considerations that should be accounted for when analyzing safe withdrawal rates.
LO #7: Be able to understand and evaluate the prior research on safe withdrawal rates.
Key Terms:
Withdrawal rate: This is a calculation that details what percentage of invested assets you could or are currently spending, related to spending down savings in retirement
Annuity: This is a fixed sum of money paid each year, traditionally for the rest of the annuitant’s life.
Legacy: This is the idea that an individual would like to leave something behind, a monetary portion of their portfolio assets, for later generations or a perhaps a charity.
Market Valuation: In the simplest terms, this is the value of an asset based on the price that would or could be paid for it, if it were to be sold
Risk Tolerance: This is a measure of a client’s preference towards taking risks.
Diversification: This is a process where by a client’s portfolio would have a wide range of unrelated assets.
Time Horizon: This is the time from now to when the person retires or the person passes. Time horizon refers to now or a give point in time to the future point in time.
Glide Path: The term used to describe decreasing equity exposure over time.
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
October 20, 2018
Kitces Topic Areas:
- General Planning
- Human Capital
- Investments
Session Description:
In this issue of The Kitces Report, we look at some of the information that was taught during the 2010 “Life Cycle Investing for Financial Planners” during July 26-28, 2010, in Boston, MA. In doing so, we attempt to understand whether and how some aspects of financial planning might be changed, or improved, by incorporating some of the life cycle finance economics perspectives.
Learning Objectives:
LO #1: Be able to explain what Life Cycle Finance is and why it is important to understand as a financial planner.
LO #2: Discuss what utility and utility function are. Explain why they are important considerations in financial planning, and why humans tend to exhibit a tendency for diminishing marginal utility of consumption.
LO #3: Describe how using TIPS as a baseline strategy for optimizing lifetime consumption is an ideal strategy. Explain why someone might consider using the strategy of annuitization, and discuss how the use of options can help mitigate risk.
LO #4: Illustrate how human capital changes over time. Identify the various factors that impact a client’s human capital. Explain how financial planners can begin integrating human capital into their practices. Define total wealth.
LO #5: Discuss the implications for the financial planning profession. Identify the caveats and concerns that need to be considered under the life cycle framework.
Key Terms::
Life Cycle Finance: The name or label for the body of economic theory, models, and research that explore how individuals should make decisions about savings, investing, and spending over their lifetimes. Over the planning horizon, individuals will make decisions about how to manage their financial wealth, and what to do with their income/earnings as received, in order to fund their spending (consumption) throughout the years.
Human Capital: In LCF, human capital represents the present value of an individual’s future lifetime earnings.
Consumption: In LCF, consumption is the present value of all future spending; I.e. a liability.
Utility: An abstract measure of how much enjoyment or good an individual derives from the decision that they make.
Utility function: This is a mathematical function that ranks choices, typically goods and services, based on an individual’s utility preferences.
Diminishing Marginal Utility: This is a term that describes individual’s tendency to feel less enjoyment the more an item, good, or service is consumed. To explain another way, as income rises higher and higher we derive less and less additional enjoyment from each additional increment of income.
Habit formation: In LCF, this is when we notice consumers reaching and preferring to sustain a certain standard of living, or maintain certain spending habits.
Loss aversion: We experience more negative feelings about a loss than positive feelings about an equivalent gain. Losing $10 hurts more than gaining $10 feels good.
Risk-free rate: The theoretical rate of return of an investment with zero risk. Treasury bills, assuming the U.S. government remains a secure borrower, are an example of a financial product with a risk-free-rate.
Annuitization: The process of converting an annuity investment into a series of periodic income payments.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
October 30, 2018
Kitces Topic Areas:
- General Planning
- Taxes
Session Description:
Many financial planners do not necessarily have a firm grasp on what tax rates are really associated with certain levels of income, and often underestimate marginal tax rates and overestimate effective tax rates. In this month’s issue of The Kitces Report, we review some of the foundations of tax principles, looking primarily through a lens towards their impact on marginal and effective tax rates. We also look at what kinds of tax rates really occur at varying levels of income.
Learning Objectives:
LO #1: Be able to explain how to identify what your tax rate really is. Discuss how income tax brackets are used, and how you arrive at taxable income.
LO #2: Illustrate an understanding of marginal tax rates. Describe how you arrive at the marginal tax rate, and why there is more to them than meets the eye.
LO #3: Describe how dividends and capital gains are taxed, specifically qualified dividends and long-term capital gains. Discuss how they are applied under the tax bracket tables themselves.
LO #4: Explain how the Alternative Minimum Tax (AMT) system works. In doing so, identify the various tax rates, the exemption amounts, and discuss how capital gains and qualified dividends are treated. Show an understanding of where it is applied on the tax return.
LO #5: Estimate the marginal and effective tax rates for your clients.
Key Terms:
Marginal Tax Rate: Is the tax rate that will apply – at the margin – to the next $XX of income that the client earns, and/or the tax rate will be saved with the next $YYY of deductions.
Tax Bracket: This refers to the tax rate tiers that apply under the tax code at increasing levels of income.
Progressive Tax System: This is the style of tax system where those with higher income pay a higher percentage share of taxes.
Gross Income: Defined in IRC Section 61, Gross income is all income from whatever source derived [except as otherwise provided by the tax code]
Adjusted Gross Income: This is the income left over after eligible income types and sources have been excluded, and the negative economic adjustments have been made to account for income that wasn’t really received/earned/made.
Above the Line Deduction: These deductions are taken deducted or excluded when determining AGI
Below the Line Deduction: These are the deductions taken from AGI, after it has been determined in order to calculate one’s final taxable income
Alternative Minimum Tax (AMT): This is a supplemental income tax imposed by the federal government which is required in addition to income tax for some individuals, trusts, estates, or corporations
Capital Gains: These are the profits from the sale of property or an investment
Level of Complexity:
- CFP / IWI (formerly IMCA): Advanced
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 1.5 IWI Taxes & Regulations hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
October 25, 2018
Kitces Topic Areas:
- General Planning
- Investments
Session Description:
In this month’s newsletter we will explore in greater depth exactly what risk tolerance is and what we’re trying to measure, how it fits in with other aspects of a client’s overall risk profile, and to consider what’s required to truly design a quality measurement of risk tolerance.
Learning Objectives:
LO #1: Describe the current and new risk tolerance paradigms. Differentiate between the two and discuss similarities.
LO #2: Distinguish risk capacity from risk attitude. Explain why it is important to do this under the new risk tolerance paradigm and how it influences portfolio, and goal, creation.
LO #3: Define what risk perception is. Explain how, and why it is constantly changing. Describe how behavioral finance has been incorporated into the world of finance. Define what heuristics is, and identify the common behavioral finance heuristics as they relate to risk perception in particular.
LO #4: Explain how risk attitude, capacity, and perception are integrated with each other to influence a client’s overall risk profile.
LO #5: Identify problems associated with risk tolerance questionnaires, explain how psychometrics can help improve such questionnaires, and discuss alternative approaches to measuring risk tolerance.
LO #6: Illustrate how you can utilize this information to create your client’s risk profile.
Key Terms:
Risk tolerance: This is a conflated measure of a client’s ability to withstand risk.
Risk capacity: This determines how much risk a client can afford to take, how much risk a client would be required to take to achieve the specified goal, and indirectly reveals whether the risk in the portfolio should be driven by a need for risk or by the client’s decision to take more or less.
Risk attitude: This is or could be considered an upper limit of acceptable risk in the portfolio, above which the client’s portfolio should not roam.
Risk perception: This is the wildcard of the client experience. It operates independently of the client’s underlying risk attitude, causing them to potentially misjudge whether the risk they’re actually taking is more or less than they intended.
Heuristic: These are mental short-cuts that individuals use to make decisions faster.
Availability heuristic: When a person uses the most “available”: convenient, easy, most accessible information.
Overconfidence: When a person prefers to credit themselves for success, but not take the same responsibility for failures.
Loss aversion: When a person experiences a loss (loses $10 dollars) then hurts more than it feels good to have a success (find $10 dollars).
Familiarity: When a person prefers to use the information that they are most comfortable with when make a decision. We like when things are familiar.
Recency: When a person weighs more heavily recent events, over older events.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.5 CFP / IWI (formerly IMCA) hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Nerd's Eye View
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Program Description:
In this session, learners will review two Nerd’s Eye View blog articles: Hiring Your First Employee: What You Need To Know To Cover Your Compliance Obligations, When Are Advisors (Financially) Liable For Negligent Investment Advice? (And Who Pays For It), and The SEC Playbook For Newly-Registered Advisers: Preparing For The SEC Examination And Complying With The Information Request Letter. In the first article, Jacqueline Hummel walks advisors through the critical considerations and compliance obligations when hiring their first employee. Topics such as whether to hire an independent contractor or employee, registration requirements for investment advisors, and determining how new hires will be supervised are discussed. In the second article, Ben Henry-Moreland reviews the legal precedence for advisor liability when providing advice to clients and discusses the implications on firms and individual advisors for negligence. In the third article, Chris Stanley provides a detailed overview of the process of going through an SEC Examination and highlights best practices for preparation for newly registered investment advisers.
Learning Objectives:
- Describe critical considerations when firm owners hire their first employee for a new business, including workload assessment, compliance requirements, and registration needs.
- Explain the legal framework and principles surrounding the professional liability of financial advisors.
- Recognize the implications of professional liability of individual advisors and advisory firms and the importance of firm culture in minimizing liability risks.
- Identify the steps typically involved in the initiation of an SEC examination for newly registered advisers.
- Prepare for the information requests and procedures associated with the SEC’s Information Request Letter during an examination.
Level of Complexity:
CFP/IWI: Intermediate
NASBA: Basic
Specialized Knowledge:
- CFP: Professional Conduct and Regulation
- NASBA: Ethics
- NASAA: Fiduciary obligations and ethical practices
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Key Terms:
Securities and Exchange Commission (SEC): a regulatory agency in the United States established by the Securities Exchange Act of 1934. The SEC is responsible for enforcing Federal securities laws and regulating the securities industry to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
Form U4: Document used to establish an individual’s registration with applicable states as an Investment Adviser Representative (IAR) of a registered investment adviser.
Form ADV: A set of foundational registration documents that must be submitted by any investment adviser seeking to become registered with the SEC or the states.
Investment Advisers Act Of 1940 (“the Advisers Act”): A law that places certain requirements and restrictions on investment advisers pertaining to registration, compensation, and creation of advisory agreements.
Assets Under Management (AUM): The dollar amount of client assets managed by a financial advisory firm. Firms using an AUM fee structure generally calculate client fees based on a percentage of the client’s AUM.
Regulatory Assets Under Management (RAUM): Defined by the SEC as “securities portfolios for which [advisers] provide continuous and regular supervisory or management services.” For most states, an RAUM over $100 million requires registration at the SEC level.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
- Retirement Planning
Program Description:
In this session, learners will review two estate planning articles from the Nerd’s Eye View blog by David Haughton, JD, CPWA: Creating Incentive Trusts To Foster Beneficiary Legacies Without Spoiling The Kids and Making Estate Planning More Tax Efficient And Equitable For Beneficiaries By NOT Just Splitting The Assets Evenly. Both articles examine how inherited assets may impact beneficiaries and how clients, with the assistance of their advisors, can be proactive by planning for the realities of future inheritances. In the first article, Haughton walks through the common ways decedents transfer assets to beneficiaries and explains how incentive trusts can be used to incentivize (or disincentivize) behaviors in accordance with their values, such as personal responsibility, entrepreneurship, and philanthropy. In the second article, Haughton discusses how clients commonly leave their beneficiaries equal amounts of each asset to be distributed as a way to split assets tax-efficiently and equitably. But Haughton suggests an alternative asset-by-asset approach that can be more effective, which considers the beneficiary’s unique financial circumstances and that may result in a more equitable split of assets. This article explains the approach, its advantages and disadvantages, and when it may be a useful strategy for clients to adopt.
Learning Objectives:
1. Discuss the various methods of distributing an estate and their potential effect on beneficiaries’ behavior and financial management.
2. Identify different strategies to incentivize and disincentivize beneficiaries within an estate plan.
3. Explain how different asset types (non-qualified, qualified, and quasi-qualified) affect the tax implications for beneficiaries in estate planning.
4. Analyze how an asset-by-asset approach to estate planning can influence the overall tax efficiency and equitable distribution of an estate compared to a ‘one big pot’ approach.
5. Assess how beneficiaries’ income levels and tax statuses may be affected by the distribution and tax liabilities of inherited assets and determine when an asset-by-asset approach might be beneficial.
Level of Complexity:
CFP/IWI: Intermediate
NASBA: Basic
Specialized Knowledge:
- CFP: Estate Planning
- NASBA: Specialized Knowledge
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Estate Planning: The process of organizing and preparing for the management and distribution of a person’s assets after their death.
Individual Retirement Account (IRA): Retirement accounts that have tax benefits such as tax-free growth and/or the ability to defer taxation to a later date (hopefully when one’s individual tax rate is lower).
Non-Qualified Deferred Annuities: A form of annuity which does not receive a tax deduction upon contribution and growth is taxed upon distribution, but which does receive tax deferral in the interim.
Step-Up In Basis: The readjustment of an asset’s value when the asset has appreciated between the time it was purchased, and the time it is received by a beneficiary.
Employee Retirement Income Security Act (ERISA): A Federal law designed to protect an individual’s assets by setting standards for employee retirement and health benefit plans.
Discretionary Trust: Trusts that often require that all, or a substantial portion of retirement account distributions remain in the trust and not distributed out to the trust beneficiaries.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
- Taxes
Program Description:
In this session, learners will review 2 Nerd’s Eye View blog articles: 529-To-Roth IRA Rollovers: Taking Advantage Of The New Option To Move Education Savings To Retirement Savings and Planning For Changes In Client Marginal Tax Rates After TCJA’s Sunset. In the first article, author Ben Henry-Moreland walks the reader through the 529-to-Roth rollover option created by the SECURE 2.0 Act. In this article, Ben explains the 529-to-Roth rollover provisions, the limitations of this Roth rollover option, and when this option may be a useful planning tool. In the second article, Ben summarizes the impacts of the Tax Cuts and Jobs Act (TCJA) sunset with a focus on how it may impact different types of clients and how advisors can think about planning for this change in tax legislation amidst uncertainty on future tax legislation.
Learning Objectives:
1. Summarize the benefits and restrictions associated with 529 savings plans.
2. Explain the provisions and limitations of the SECURE 2.0 Act’s 529-to-Roth rollover rules.
3. Restate the key provisions of the Tax Cuts and Jobs Act (TCJA) and its impact on individual and corporate tax planning strategies.
4. Discuss the implications of TCJA’s sunset provisions scheduled for the end of 2025 and the factors that may influence their extension or expiration.
5. Evaluate tax planning strategies in the context of potential changes in tax law due to the expiration of TCJA.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Tax Planning
- NASBA: Specialized Knowledge
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
529 Plan: A state-agency-sponsored tax-advantaged account established for education savings intended to be used for college expenses (tuition, books, and other qualified expenses), K-12 tuition, certain apprenticeship costs, and some student loan repayments.
Roth IRA: An Individual Retirement Account (IRA) in which after-tax distributions are made and future withdrawals (including interest) are tax-free when made after age 59 1/2.
State And Local Tax (SALT) Deduction Cap: A temporary limit of $10,000 set by the 2017 Tax Cuts & Jobs Act, which applies to the amount of State And Local Tax (SALT) an individual taxpayer can claim as an itemized deduction on their Federal income tax return.
SECURE 2.0 Act: Part of the Consolidated Appropriations Act of 2023 signed into law by President Joe Biden on December 23, 2022, SECURE 2.0 Act made sweeping changes to various retirement savings rules, including (but not limited to) pushing back RMDs to age 73 in 2023 (with a provision to push them back again to age 75 in 2033), elimination of RMDs from Roth accounts in employer retirement plans, allowing transfers from 529 accounts to Roth IRAs.
Tax Cuts And Jobs Act (TCJA) of 2017: Signed into law in December of 2017 by President Donald Trump, this was the largest re-write of the Federal Tax Code in more than 30 years, closing the loophole on Roth recharacterizations by eliminating the ability to recharacterize Roth IRA conversions made in 2018 or later.
Qualified Business Income (QBI): The net income of a pass-through business after all business deductions have been claimed.
Qualified Business Income (QBI) Deduction: Also known as a Section 199A deduction, this deduction allows pass-through businesses to deduct up to 20% of the lesser of the following: 1) their combined qualified business income, or 2) their taxable income (before applying the 199A deduction itself).
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
- Nerd's Eye View
Program Description:
In this session, learners will review two Nerd’s Eye View blog articles: Navigating The FTC’s Ban On (Most) Non-Competes: The New World Of Partnerships And Non-Solicits and Why “Deferred Sales Trusts” Can Be A Risky Way To Defer Taxes On A Business Sale.
In the first article, authors Michael Kitces and Adam Van Deusen from Kitces.com explain the impacts and implications of the Federal Trade Commission ban on non-competes, detailing the scope of the ban, exceptions, and anticipated impact on financial advisory firms. They further provide alternative methods for advisors to protect their interests without enforceable non-compete agreements.
In the second article, Ben Henry-Moreland discusses the benefits and downsides associated with installment sales for business owners. He then explains the Deferred Sales Trust (DST) strategy, highlighting the purported benefits, risks, and legal concerns associated with this business sale strategy.
Learning Objectives:
- Describe the rationale behind using non-compete agreements and their implications for employers and employees.
- Explain the Federal Trade Commission’s (FTC) rule on banning non-compete agreements, including its scope, exceptions, and anticipated impact.
- Analyze alternative methods firms might use to protect their interests in the absence of enforceable non-compete agreements.
- Summarize the concept and mechanics of installment sales, including the tax benefits and potential downsides.
- Evaluate the Deferred Sales Trust (DST) strategy, its purported benefits, risks, and legal standing.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Professional Conduct and Regulation
- NASBA: Specialized Knowledge
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 1.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Federal Trade Commission (FTC): An independent agency of the United States government established whose primary mission is to enforce antitrust laws and promote consumer protection.
Non-Compete Agreement: An agreement that prohibits an employee from working for a competing company, at least for a certain period of time.
Non-Disclosure Agreement (NDA): A contract to legally enforce confidentiality between two or more parties to prevent sensitive information from being shared with others.
Non-Solicit Agreement: An agreement that places restrictions on a departing employee with respect to communicating with (and soliciting) the firm’s clients.
Installment Sale: Any sale of property in which the payments from the buyer to the seller are spread out over more than one calendar year
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Program Description:
In this continuing education session, we review two blog articles: How To Register And Remain Registered With The SEC As An Internet Investment Adviser and DoL’s Retirement Security Rule & PTE 2020-02 Amendment: What Advisers Need to Know Now About Giving Rollover Advice After Sept 23, 2024. In the first article, Chris Stanley explains the history of the Internet Adviser Exemption as a pathway to SEC registration and reviews the 2024 amendments to the rule. In the second article, Jacqueline Hummel reviews upcoming changes to the fiduciary standards for advisors providing investment advice to retirement investors under the final version of the Department of Labor’s Retirement Security Rule.
Learning Objectives:
- Explain the history and evolution of the Internet Adviser Exemption.
- Identify and explain the criteria for SEC registration.
- Analyze the impact of the 2024 amendment of the Internet Adviser Exemption.
- Describe the significance and key provisions of the Department of Labor’s Retirement Security Rule (the “Final Rule”).
- Compare and contrast legislation related to advisor fiduciary standards.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Professional Conduct and Regulation
- NASBA: Behavioral Ethics
- NASAA: Fiduciary obligations and ethical practices
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 1.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Key Terms:
Compliance: Establishing, maintaining, and enforcing policies and procedures reasonably designed to achieve compliance with regulatory laws, such as Regulation Best Interest.
Employee Retirement Income Security Act (ERISA): A Federal law designed to protect an individual’s assets by setting standards for employee retirement and health benefit plans.
Form ADV: A set of foundational registration documents that must be submitted by any investment adviser seeking to become registered with the SEC or the states.
Form CRS: Customer/Client Relationship Summary document that explains the nature of services, relationship, fees, costs, standard of conduct, and conflicts
Registered Investment Adviser (RIA): A firm or individual registered with the Securities and Exchange Commission or state authorities and working in the investment advice business.
Robo-Advisor: a digital platform or software program that provides automated, algorithm-driven financial planning services with minimal human intervention.
Securities and Exchange Commission (SEC): a regulatory agency in the United States, established by the Securities Exchange Act of 1934, responsible for enforcing federal securities laws and regulating the securities industry to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
U.S. Department of Labor (DoL): a Federal government agency responsible for promoting and ensuring the welfare of job seekers, wage earners, and retirees in the United States.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
In this continuing education session, we will review 3 articles on client communication in financial planning client engagements. In the first article, “3 Question Types To Go From (Just) Retained To Highly Engaged And Happier Clients,” Meghaan Lurtz, PhD, FBS details research on client engagement and opportunities for advisors to engage clients proactively. In the second article, “Reframing Risk In Retirement As “Over- And Under-Spending” To Better Communicate Decisions To Clients, And Finding “Best Guess” Spending Level,” Justin Fitzpatrick, PhD, CFP, CFA explains how the success/failure framing of Monte Carlo analysis can cause clients to focus on the possibility of failure and how to consider reframing retirement income discussion into a framing of overspending or underspending. Fitzpatrick further discusses how advisors can help clients determine a balanced spending level. In the third article of this series, “5 Questions Using Risk Assessment Data That Help Advisors Understand Clients’ True Concerns About Risk,” Meghaan Lurtz walks advisors through transforming the collection of risk tolerance data from clients into risk conversations to help advisors more precisely understand how clients are impacted by risk and how to best serve them.
Learning Objectives:
- Describe the relationship between client retention rates and engagement rates.
- Identify the signs of client engagement.
- Reframe client conversations about retirement income risk to help guide clients through future plan adjustments.
- Explain the different types of risk measurement tools.
- Utilize questions about risk assessment data to engage clients in conversations about risk.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Psychology of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Econometric: A type of risk measure that focuses on probabilities and trade-offs.
Guardrails Strategy: A retirement spending approach developed by Guyton and Klinger, this strategy considers upper and lower portfolio limits (i.e., the “guardrails”), that serve as pre-determined thresholds for determining when to increase or decrease future spending.
Monte Carlo Analysis: A type of probability-based analysis often used in retirement planning, which at a basic level calculates multiple iterations of a client’s projected income and spending over a specified time period while randomizing investment returns, with an output representing the percentage of iterations in which the client did (or did not) deplete their assets over the time period.
Psychometric Risk: A style of risk measurement generally used by psychologists, it uses psychological scales that assess one’s broad willingness to take financial (or other) risks.
Status Quo Bias: A cognitive effect whereby individuals prefer to stay in their current situation when faced with the possibility of change.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz will include a review of the following articles: Is Private Debt Worth Considering As An (Alternative) Asset Class In Client Portfolios?, Creating A (Just In Case) Game Plan For Clients Facing Layoffs and How Sequence-Of-Inflation Risk Impacts Retirees Beyond Just Sequences Of Returns
Learning Objectives:
- Understand the considerations underlying whether an investment in a private debt fund might be appropriate for a given client.
- Assess a client’s preparedness for a potential job layoff.
- Describe how advisors can help clients prepare for a potential job layoff.
- Understand how an advisor can support a client who is laid off from their job.
- Discuss the impact of sequence-of-inflation risk on retirement planning and the characteristics that make a plan more susceptible to such risk.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Flexible Spending Account (FSA): A type of savings account offered as an employer benefit that allows individuals to save for certain out-of-pocket medical expenses. Taxes are not paid on withdrawals but, unlike Health Savings Accounts (HSAs), balances cannot be carried over year-to-year or after terminating from employment.
Home Equity Line Of Credit (HELOC): A revolving line of credit that offers homeowners access to a loan backed by equity in their home. Typically there is a set period – often 10 years – during which funds can be borrowed, and only interest on borrowed funds needs to be repaid during this period. After the ‘draw’ period ends, the loan is paid back, similar to a traditional mortgage, over another set period (which might be 10, 15, or even 20 years).
Monte Carlo Analysis: A type of probability-based analysis often used in retirement planning, which at a basic level calculates multiple iterations of a client’s projected income and spending over a specified time period while randomizing investment returns, with an output representing the percentage of iterations in which the client did (or did not) deplete their assets over the time period.
Private Debt Fund: A managed pool of assets that lends money to companies, frequently small and middle market firms, potentially offering a higher rate of return than funds that invest in debt traded on the public market.
Private Debt Fund General Partner: Responsible for managing the private debt fund, with responsibilities that include: selecting attractive credit opportunities, negotiating lending contracts, managing their execution, actively monitoring investments, renegotiating lending agreements in case of covenant breaches, and managing the execution of credit workouts and the realization of secondary market transactions.
Sequence-Of-Inflation Risk: The risk presented by inflation volatility over time, as even if high short-term inflation rates average out into lower long-term averages, a retiree could still be in significant trouble if the sequence of those returns is unfavorable (e.g., high inflation rates occurring at the beginning of retirement may require larger drawdowns that compromise the portfolio’s subsequent potential for future growth).
Sequence-Of-Return Risk: The risk presented by return volatility over time, as even if short-term volatility averages out into favorable long-term returns, a retiree could still be in significant trouble if the sequence of those returns is unfavorable (e.g., if bad returns occur at the beginning of retirement).
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz will include a review of the following articles: Implementing Retirement Income Guardrails To Facilitate (The Right) Spending Raises And Spending Cuts, Providing Mortgage Advice In A Higher Interest-Rate Environment: Opportunities For Advisors To Add Value, and How Different Monte Carlo Models Perform In The Real World: Assessing Quality Of Predictiveness In Retirement Income Forecasting Models
Learning Objectives:
- Describe how advisors can best implement a ‘guardrail’ retirement income strategy and discuss the strategy with clients.
- Learn ways advisors can add value for their clients in a higher interest-rate environment.
- Understand how probabilistic forecasts correspond with real-world outcomes
- Explain why traditional Monte Carlo analyses might not be the best probabilistic forecasting model to use in retirement planning.
- Describe 4 different approaches for Capital Market Assumption (CMA) creation
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Brier Score: A score function calculated to assess the accuracy of a predictive model, based on the mean squared error of the predictions of the model. A lower score indicates more accurate predictability.
Guardrails Strategy: A retirement spending approach developed by Guyton and Klinger, this strategy considers upper and lower portfolio limits (i.e., the “guardrails”), that serve as pre-determined thresholds for determining when to increase or decrease future spending.
Home Equity Line Of Credit (HELOC): A revolving line of credit that offers homeowners access to a loan backed by equity in their home. Typically there is a set period – often 10 years – during which funds can be borrowed, and only interest on borrowed funds needs to be repaid during this period. After the ‘draw’ period ends, the loan is paid back, similar to a traditional mortgage, over another set period (which might be 10, 15, or even 20 years).
Intra-Family Loan: A type of loan where the loan recipient receives the loan from a family member rather than a commercial institution. Such a loan can provide the lender with interest income and the recipient with a lower interest rate than they might otherwise receive, but the loan must be set up in accordance with IRS regulations to avoid running afoul of gift tax rules.
Monte Carlo Analysis: A type of probability-based analysis often used in retirement planning, which at a basic level calculates multiple iterations of a client’s projected income and spending over a specified time period while randomizing investment returns, with an output representing the percentage of iterations in which the client did (or did not) deplete their assets over the time period.
Regime-Based Monte Carlo Simulation: Adjusting the return and standard deviation assumptions in a Monte Carlo analysis to emulate particular market conditions for certain periods of time; for example, adjusting the first ten years of an expected timeline to reflect expectations based on current valuations.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz reviews two blog articles: Net Unrealized Appreciation Tax Strategies and Why Tax-Loss Harvesting During Down Markets Isn’t Always A Good Idea.
Learning Objectives:
- Describe the rules that must be followed for a Net Unrealized Appreciation transaction to potentially reduce an individual’s tax liability.
- Understand the circumstances where a taxpayer could most benefit from a Net Unrealized Appreciation.
- Explain how tax-loss harvesting can create future tax liabilities by lowering the portfolio’s cost basis
- Describe situations where tax-loss harvesting may not be beneficial for a client
- Analyze the tax-deferral benefit of tax-loss harvesting
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Tax Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 1.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Capital Gains: The profit on the sale of an asset (stock, real estate, art) that has increased over time.
Capital Loss: The value below the cost basis someone receives after the sale of an asset.
Lump-Sum Distribution: Withdrawal of the entire balance owned by an individual who is a plan participant of their employer’s qualified retirement plan. The distribution must take place within a single tax year, and generally takes place only after the participant leaves the company, reaches age 59 ½, becomes permanently and totally disabled, or dies.
Net Investment Income Tax (NIIT): A 3.8% tax on income received from an investment asset before taxes.
Net Unrealized Appreciation (NUA): Appreciation of the employer’s company stock held in an individual’s retirement plan sponsored by the employer.
Tax-Loss Harvesting: A strategy for generating tax savings that involves selling a security in a taxable account for a loss to create a tax deduction, then using the proceeds to buy a similar security to remain invested in the market.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz will include a review of the following articles: Limits Of Tax Diversification And The Tax Alpha Of Roth Optimization and How S-Corp Owner Employees Can Accurately Track Home Office Deductions.
Learning Objectives:
- Explain how the timing of account contributions is important in Roth optimization.
- Understand why splitting contributions between Roth and Traditional IRAs isn’t really a means of achieving tax diversification.
- Identify the tax thresholds that impact Roth optimization strategies.
- Understand eligibility guidelines for claiming the home office deduction.
- Discuss the drawbacks and benefits of each of the 2 methods used to calculate the home office deduction.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Tax Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Tax Equivalency Principle: The principle that the value of tax-free growth in a Roth account is equivalent to the value of the upfront tax deduction taken for a contribution to a traditional retirement account, assuming that tax rates stay the same over time.
Roth Optimization: Strategically allocating contributions between Roth and Traditional retirement accounts by factoring in the timing of one’s own tax circumstances
Marginal Tax Rate: The tax rate that applies only to each additional dollar earned as income.
Effective Tax Rate: The average tax, calculated by dividing total amount of tax by total income.
Exclusive-Use Test: This test must be passed to claim the home office deduction, where the portion of the home that is deemed the home office must be used entirely for business purposes.
Regular-Use Requirement: A requirement that must be met to claim the home office deduction, where the home office must be used on a regular basis. Simply using one’s home office on occasion would be insufficient to claim the deduction.
Principal-Place-of-Business Requirement: A requirement that must be met to claim the home office deduction, where the home office must be the taxpayer’s principal place of business as determined by the amount of time spent at various business locations and the importance of tasks performed at each location.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
In this continuing education session, learners will review two blog articles: Why Pre-Commitment Strategies Can Work And 3 Steps To Implement Them With (The Right) Prospects and Maximizing The Step-Up In Basis By Gifting Assets Between Spouses. In the first article, Dr. Meghaan Lurtz, FBS explains the psychology behind pre-commitment strategies along with the potential pitfalls of using the pre-commitment strategy of providing a free financial plan to prospects. In the second article, Jeff Levine, CPA/PFS, CFP®, AIF, CWS®, MSA explains how maximizing the step-up in basis at death can be a powerful planning tool and details how advisors can help spouses to proactively plan for the step-up rules during life to maximize their benefit.
Learning Objectives:
- Discuss the behavioral biases that make pre-commitment strategies so effective.
- Explain how to mitigate the potential downsides of implementing pre-commitment strategies.
- Understand when assets in a decedent’s estate receive a step-up in basis.
- Explain how step-up in basis rules differ in separate-property and community-property states.
- Describe the pitfalls of transferring assets to Medicaid-eligible spouses.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Endowment Effect: Tendency to overestimate the value of things we own.
Loss Aversion: The desire to avoid loss, based on the premise that the pain of loss is more potent than the pleasure of gain.
Status Quo Bias: A cognitive effect whereby individuals prefer to stay in their current situation when faced with the possibility of change.
Step-Up In Basis: The readjustment of an asset’s value when the asset has appreciated between the time it was purchased and the time it is received by a beneficiary.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz will include a review of the following articles: Factor Investing And Its (Behavioral) Persistence: Facts and Fiction About The Zoo Of Factors and Instant-Issue Term Life Insurance: What Are The Costs Of Low-Hassle Coverage, And When Are They Worth It?
Learning Objectives:
- Define what factor-based investing is and how to assess whether a particular factor may be worthy of consideration.
- Understand some of the risk-based and behavioral theories offered for different factor styles.
- Explain the screening process for traditional versus instant-issue insurance
- Discuss the pros and cons of instant-issue term life insurance.
- Evaluate whether instant-issue term insurance may be appropriate for a client.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Risk Management and Insurance Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Investment Factor: specific drivers that influence a security or portfolio’s return. Th two main types of factors include macroeconomic (e.g., economic growth, inflation, credit, etc.) or style (e.g., value, momentum, quality, size, carry).
Capital Asset Pricing Model (CAPM): A model that defined how risk can drive expected returns of a particular investment by examining risk and return through its exposure to market beta.
Beta: A measure of a security’s (or portfolio’s) volatility, or risk relative to the overall market.
Instant-Issue Term Insurance: Term life insurance policy that provides a (nearly) instantaneous decision to an applicant with no underwriting requirements.
Accelerated/Non-Med Insurance: Term life insurance policy that provides a faster decision (often around 2-4 weeks) and simpler underwriting requirements than traditional term life insurance policies.
Underwriting: A process that helps insurance companies determine the risk involved with insurance applicants through gathering information to develop a profile based on the applicant’s age, gender, health, medical history, and lifestyle factors that can impact a person’s health.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz will include a review of the following articles: Framing Prospect Conversations Around What Motivates Them Today (And Not Their Future Goals) and Discovery Meeting Framework: 6 Questions To Help Prospects Who Are Resistant To Change
Learning Objectives:
- Describe the impact of discussing dreams and goals in discovery meetings.
- Explain how focusing on current pain points can motivate clients more than discussing future dreams when it comes to taking action on their financial plans.
- Apply 3 approaches to creating more meaningful conversations in prospect discovery meetings.
- Understand the challenges clients may face in discovery meetings.
- Recognize how the Transtheoretical Model of Change can apply to financial planning clients.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Psychology of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Action Stage Of Change: The stage when clients take the plan that they were putting together in the preparation stage and actually set it in motion.
Contemplation Stage Of Change: The second stage in the Transtheoretical Model of Change, where individuals are aware that they have an issue, know that their behaviors have consequences affecting the issue, and have developed an intention to make a change.
Discovery Meeting: A meeting with prospects where the advisor and prospect can learn about one another to facilitate deciding whether they will enjoy working together and envisioning the scope of work that will be done through the engagement.
Maintenance Stage Of Change: The final stage of change in the Transtheoretical Model of Change. Clients in this stage are turning new actions (implemented in the previous “Action” stage) into habits and, in doing so, need to build up financial self-efficacy.
Pre-Contemplation Stage Of Change: The first stage in the Transtheoretical Model of Change, where individuals often do not know or believe that they need to make a change.
Preparation Stage Of Change: The third stage in the Transtheoretical Model of Change, often denoted by the fact that the client, although not ready for action, is actually trying to take an idea from the Contemplation stage and map out how to get it done once they are finally ready for action.
Transtheoretical Model (TTM) Of Change: A theoretical model developed by James Prochaska, John Norcross, and Carlo DiClemente, which describes the process of change in six stages.
Termination Stage of Change: A stage commonly applied to a mental health therapy setting, when patients feel they no longer need guidance from their therapist to make the change they initially sought because it has become fully integrated into their lives.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz reviews two blog articles: Navigating the Thrift Savings Plan: Planning Opportunities To Support Federal Employees, Military Servicemembers, And Veterans and The HSA ‘Deathbed Drawdown’: Making Tax-Efficient Distributions Of Large Balances (When There Isn’t Much Time). In the first article, Stacy Miller, CFP®, walks readers through the Thrift Savings Plan. This article details the background of the plan and why professional advice can be helpful to federal employees and military servicemembers, especially as military servicemembers transition back into civilian life. She concludes this article with actionable steps that advisors can take to support clients that are participants in the Thrift Savings Plan.
In the second article, Ben Henry-Moreland, Senior Financial Planning Nerd at Kitces.com reviews the benefits of Health Savings Accounts (HSAs) along with the pitfalls of having funds remaining in the accounts at the death of the owner. He further explains two strategies for managing HSA funds.
Learning Objectives:
- Describe the history of the Thrift Savings Plan and the current state of the plan.
- Explain the main features of the Thrift Savings Plan.
- Determine how to support clients that are participants in the Thrift Savings Plan.
- Explain 2 standard approaches to managing HSAs.
- Assess the benefits and potential drawbacks of superfunding Health Savings Accounts.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Blended Retirement System (BRS): The military retirement system that was developed out of an effort to create flexibility and mirror what retirement benefits are available to civilians.
Health Savings Account (HSA): A savings account that receives favorable tax treatment when distributions are used to pay for medical expenses. Contributions are tax-deductible, growth is tax-deferred, and withdrawals used to pay for (qualified) healthcare expenses are tax-free. In order to contribute, an individual must be covered by an HSA-eligible HDHP and have no other health coverage, may not be enrolled in Medicare, may not be claimed as a dependent on someone else’s tax return.
High-Deductible Health Plan (HDHP): A healthcare plan that has a higher deductible requirement than a traditional health insurance plan. In order to be an HSA-eligible HDHP, a plan must have a minimum annual deductible and a maximum annual out-out-pocket amount that meets the limits set by the IRS.
Thrift Savings Plan (TSP): The Federal employee and military member’s version of the 401(k) plan.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz reviews two Nerd’s Eye View blog articles: Tax-Loss Harvesting Best Practices (And How To Scale It Across A Client Base) and Reconstructing Lost IRA Basis to Help Avoid Double Taxation. In the first article, participants will learn how to determine if tax-loss harvesting is appropriate for a client and review potential pitfalls when executing these transactions. In the second article, participants will turn their attention to lost IRA basis, covering how basis can be lost, how to effectively track basis, and how to recover basis if it is lost.
Learning Objectives:
- Analyze factors to consider when determining if tax-loss harvesting for a client would make sense.
- Explain how tax harvesting can be used to defer or arbitrage taxes.
- Describe tax regulations related to wash sales and how to avoid this type of transaction.
- Identify the common ways in which IRA basis can be lost.
- Identify strategies to help clients recover lost basis.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Tax Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Basis: The original cost paid for an investment, which can be different from the actual value of the investment at the time of sale.
Capital Loss: The value below the cost basis someone receives after the sale of an asset.
Non-Deductible IRA: Different from traditional IRAs, contributions are made with after-tax dollars and, therefore, offer no immediate tax benefit.
Tax-Loss Harvesting: A strategy that relies on the deliberate sale of securities resulting in a capital loss so that capital gains (or, to some extent, ordinary income) taxes can be reduced.
Traditional IRA: An individual retirement account that allows individuals to contribute pre-tax dollars that grow tax-deferred until withdrawal. Withdrawals are then taxed at the individual’s income tax rate at the time of withdrawal.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz will include a review of the following articles: Performance Advertising Guidelines For Investment Advisers Under the SEC’s New Marketing Rule and IAR CE: Continuing Education Requirements For Investment Adviser Representatives And How Different States Adopt NASAA’s Model Rule
Learning Objectives:
- Explain the regulations regarding performance advertising in the SEC’s Marketing Rule.
- Describe the types of communication that are defined as advertisements under the first ‘prong’ of the SEC’s Marketing Rule.
- List the 7 performance advertising prohibitions under the SEC’s Marketing Rule.
- Describe the new continuing education requirements for Investment Adviser Representatives.
- Determine whether or not an IAR is required to complete continuing education.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Key Terms:
SEC Marketing Rule: An SEC regulation adopted in 2020 (and requiring compliance by November 4, 2022) that introduced new rules and revised existing rules for SEC-registered investment advisers, most notably allowing the use of third-party testimonials and endorsements.
Gross Performance: Investment returns that are reported without accounting for fees or expenses that would be paid by the client
Net Performance: Investment returns that are reported after accounting for fees and expenses paid by the client
Hypothetical Performance: Investment returns that are reported for a portfolio that does not actually exist in reality, but is instead calculated based on historical investment data, market assumptions, or other calculations, and is heavily scrutinized by the SEC for its potential to mislead investors.
Form U4: Document used to establish an individual’s registration with applicable states as an Investment Adviser Representative (IAR) of a registered investment adviser.
Registered Investment Advisor (RIA): A firm or individual registered with the Securities and Exchange Commission or state authorities and working in the investment advice business.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz will include a review of the following articles: How Advisors Can Help (Not-So HNW) Clients Maximize Asset Protection By Assessing Strategies, Tools, And Education and Navigating The Double Consolidation Process To Help Parent PLUS Student Loan Borrowers Reduce Loan Burden
Learning Objectives:
- Explain options for asset protection for non-HNW clients.
- Understand when the use of a trust or the formation of a corporate entity (e.g., an LLC) can make sense for an individual as an asset protection strategy.
- Describe the protection that ERISA provides to qualified plan assets and how to determine the protection it provides to IRA accounts.
- Recognize the financial planning opportunities for Parent PLUS student loan borrowers.
- Describe how Parent PLUS loans can qualify for Income-Driven Repayment (IDR) plans through a double consolidation loan strategy.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Bankruptcy: A legal process that begins when a person or business who cannot pay outstanding debts files a case under the U.S. Bankruptcy Code in order to free themselves from the debt. As part of the process, their assets are evaluated and can be used to repay part of the outstanding debt.
Homestead Exemption: A provision offered by most states that serves to protect a personal residence from creditors after the owner dies or declares bankruptcy.
Limited Liability Company (LLC): A business structure that can be recognized by the IRS as a corporation, partnership, or a disregarded entity, depending on the nature of the structure and the election made by the owners of the structure. LLCs can protect owners from personal liability of business debt.
Spousal Lifetime Asset Trust (SLAT): A trust that can be used in lieu of a bypass trust, it is intended to benefit the spouse (and/or children) of the grantor. Funded by gift while the donor is still alive, SLATs provide the surviving spouse with access to principal and income of the trust.
Umbrella Insurance: Personal liability insurance that extends coverage generally provided by homeowners or auto insurance policies.
Uniform Fraudulent Transfers Act (UFTA): A model act adopted by most states, which serves to define when a creditor can make a claim to fraudulently transferred assets.
Monte Carlo Analysis: A type of probability-based analysis often used in retirement planning, which at a basic level calculates multiple iterations of a client’s projected income and spending over a specified time period while randomizing investment returns, with an output representing the percentage of iterations in which the client did (or did not) deplete their assets over the time period.
Sequence-Of-Inflation Risk: The risk presented by inflation volatility over time, as even if high short-term inflation rates average out into lower long-term averages, a retiree could still be in significant trouble if the sequence of those returns is unfavorable (e.g., high inflation rates occurring at the beginning of retirement may require larger drawdowns that compromise the portfolio’s subsequent potential for future growth).
Sequence-Of-Return Risk: The risk presented by return volatility over time, as even if short-term volatility averages out into favorable long-term returns, a retiree could still be in significant trouble if the sequence of those returns is unfavorable (e.g., if bad returns occur at the beginning of retirement).
Direct Loans: Federal government loans provided through the William D. Ford Federal Direct Loan program.
Income-Driven Repayment: A repayment plan for Federal student loans where the monthly payment is based on a percentage of the borrower’s discretionary income rather than on the loan balance and interest rate.
Loan Consolidation: Allows a borrower to combine multiple Federal student loans into one loan. Consolidation does come with risk, particularly for those pursuing loan forgiveness on an Income-Driven Repayment plan, because it wipes out the loan history attached to the original loans.
Loan Forgiveness: The cancellation of a borrower’s obligation to repay some or all of the remaining amount owed on a loan.
Saving on A Valuable Education (SAVE) Plan: An Income-Driven Repayment plan introduced by the Biden Administration for Federal student loan borrowers serving to replace the REPAYE plan and reduce borrowers’ monthly student loan payments.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This quiz will include a review of the following articles: Why International Diversification Is Still The Prudent Strategy (While Keeping Behavioral Biases, Risks, And Results In A Healthy Perspective) and Changes To Student Loan Planning With The New SAVE Income-Driven Repayment (IDR) Plan
Learning Objectives:
- Understand how recency bias can impact an investor’s viewpoint on global diversification.
- Discuss the general trend of market diversification across countries after a systemic financial crisis.
- Explain the rationale for a disciplined approach to global diversification.
- Evaluate how changes to student loan regulations impact student loan borrowers.
- Describe the intricacies of the new SAVE Income-Driven Repayment (IDR) Plan.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Investment Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Recency Bias: A behavioral bias that cause individuals to overweight the importance of recent events over those that occurred farther in the past.
Cyclically Adjusted Price-To-Earnings (CAPE) Ratio: Valuation measure that calculates the share price of an asset (generally broad equity indices) divided by the average inflation-adjusted earnings over a given period, usually 10 to 20 years. The Shiller P/E Ratio is a 10-year CAPE ratio.
Investment Factor: Specific drivers that influence a security or portfolio’s return. The two main types of factors are macroeconomic (e.g., economic growth, inflation, credit, etc.) and style (e.g., value, momentum, quality, size, carry).
Loan Consolidation: Allows a borrower to combine multiple federal education loans into one loan. Consolidation does come with risk, particularly for those pursuing loan forgiveness on an Income Driven Repayment plan, because it wipes out the loan history attached to the original loans.
Loan Forgiveness: The cancellation of a borrower’s obligation to repay some or all of the remaining amount owed on a loan.
Income-Driven Repayment: A repayment plan for Federal student loans where the monthly payment is based on a percentage of the borrower’s discretionary income rather than on the loan balance and interest rate.
Public Service Loan Forgiveness (PSLF): Government program offering forgiveness of outstanding student loan balances for borrowers who dedicate 120 months (10 years) to a full-time job in public service (i.e., a nonprofit or government job).
Saving on A Valuable Education (SAVE) Plan: An Income-Driven Repayment plan introduced by the Biden Administration for Federal student loan borrowers serving to replace the REPAYE plan and reduce borrowers’ monthly student loan payments.
Negative Amortization: An increase in principal loan balance due to failure to pay sufficient interest to cover the loan. Balances amortize higher as excess unpaid interest accrues and compounds.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month, we review two Nerd’s Eye View articles: 1st Quarter 2024 Economic And Market Outlook: Potential Increased Volatility, Threats To Economic Growth, And Equity Markets and In The Long Run, Stocks Outperform Bonds… Or Do They? by Larry Swedroe, the Head of Financial and Economic Research for Buckingham Strategic Wealth.
In the first article, Swedroe provides an overview of the 1st quarter 2024 economic outlook, where he reviews key aspects of economic activity in the 1st quarter of 2024, examines what the behaviors in the various financial markets might suggest about investor expectations, and offers insight into how advisors might help clients prepare for current economic conditions.
In the second article, Swedroe explains recent studies on the performance of stocks and bonds and how these studies may alter the advisor’s understanding of long-term stock and bond performance and of using bonds as portfolio diversifiers.
Learning Objectives:
1. Explain the key issues impacting the U.S. Economy in the 1st quarter of 2024.
2. Describe the risks associated with a rising debt-to-GDP ratio.
3. Assess strategies to help clients weather the potential economic risks and take advantage of possible opportunities.
4. Discuss current research on the long-term performance of stocks and bonds.
5. Re-evaluate client asset allocation construction based on current research on diversifying risk.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Investment Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Gross Domestic Product (GDP): A measure of the value of all finished goods and services produced within a particular country.
Consumer Price Index (CPI): A measure of the average change in prices that consumers pay for a market basket of goods and services; it is generally used to assess the effectiveness of government policies.
Correlation: a relationship between two or more things. In finance specifically, correlation refers to the degree to which two securities move in relation to each other.
Cyclically Adjusted Price-To-Earnings (CAPE) Ratio: Valuation measure that calculates the share price of an asset (generally broad equity indices) divided by the average inflation-adjusted earnings over a given period, usually 10 to 20 years. The Shiller P/E Ratio is a 10-year CAPE ratio.
Federal Funds Rate: The target interest rate determined by the Federal Open Market Committee and used by commercial banks as an overnight rate when lending and borrowing excess reserves to each other.
Magnificent 7: A financial moniker for 7 high-performing tech stocks, including Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla.
Recession: The contractionary business cycle period when economic activity (including consumer spending) declines.
Recency Bias: A behavioral bias that causes individuals to overestimate the importance of recent events over those that occurred further in the past.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
In this continuing education session, the learner will read 4 articles from the Nerd’s Eye View blog: The Problem Of High U.S. Equity Valuations And How Advisors Can Factor In Current Evaluations Risks, Why Moving To A Lower-Tax State Doesn’t Always Result In Lower State Taxes On Deferred Income, How Communicating Guardrails Withdrawal Strategies Can Improve Client Experience And Decrease Stress, and Why Guyton-Klinger Guardrails Are Too Risky For Most Retirees (And How Risk-Based Guardrails Can Help).
Each of the 4 articles will discuss important aspects of retirement planning through the lens of investing and tax planning. In The Problem Of High U.S. Equity Valuations And How Advisors Can Factor In Current Evaluations Risks, Larry Swedroe, Head of Financial and Economic Research for Buckingham Strategic Wealth, explains how advisors can create more reasonable return assumptions for long-term financial planning. Swedroe explains the factors that have led to the high average equity returns from the last decade, why these high U.S. equity returns are not likely to continue into the future, and how to account for these high U.S. equity valuations in investment portfolios.
In Why Moving To A Lower-Tax State Doesn’t Always Result In Lower State Taxes On Deferred Income, Ben Henry-Moreland explains state taxation for deferred compensation and how to factor in state tax laws when relocating to minimize taxation on future retirement income.
Derek Tharp is featured in 2 articles this month: How Communicating Guardrails Withdrawal Strategies Can Improve Client Experience And Decrease Stress and Why Guyton-Klinger Guardrails Are Too Risky For Most Retirees (co-authored by Justin Fitzpatrick). He explains the importance of explaining withdrawal guardrails to clients to reduce stress and provide clarity on how to cope with economic downturns in retirement. In the second article on retirement guardrails, the authors explain the strengths and weaknesses of the Guyton-Klinger guardrail method and explain how risk-based guardrails can be used to better manage retirement income risk.
Learning Objectives:
- Summarize the factors that have led to the high valuations for U.S. equities.
- Develop a plan to address the issue of high U.S. equities valuations in a client’s investment portfolio.
- Determine how a client’s deferred income would be taxed at the state level.
- Articulate why it is important to communicate withdrawal guardrails to clients.
- Explain how Guyton-Klinger withdrawal guardrails work along with their strengths and weaknesses.
- Compare Guyton-Klinger withdrawal guardrails with the risk-based retirement guardrails.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Retirement Savings and Income Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Key Terms:
Capital Gains: The profit on the sale of an asset (stock, real estate, art) that has increased over time.
Equity Compensation: Non-cash payment for services that provides ownership in a company. It is commonly offered to executives and key employees in addition to their pay and includes different forms of company stock.
Guardrails Strategy: A retirement spending approach developed by Guyton and Klinger, this strategy considers upper and lower portfolio limits (i.e., the “guardrails”), that serve as pre-determined thresholds for determining when to increase or decrease future spending.
Monte Carlo Analysis: A type of probability-based analysis often used in retirement planning, which at a basic level calculates multiple iterations of a client’s projected income and spending over a specified time period while randomizing investment returns, with an output representing the percentage of iterations in which the client did (or did not) deplete their assets over the time period.
Recency Bias: A behavioral bias that causes individuals to overweight the importance of recent events over those that occurred farther in the past.
Restricted Stock Options: Also referred to as share grants or performance shares, provide employees with shares of the company, but are subject to vesting criteria.
Risk-Based Guardrails: A holistic approach to adjusting client income based on a range of factors, including longevity expectations, expected future cash flows, expected future (real) income changes, and other factors.
Stock Options: These give employees the right (not the obligation) to buy company shares at a fixed price (known as the exercise or grant price).
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month, we review 2 blog articles. The first article, A Proposed Salesperson’s Exemption To The DoL’s Retirement Security Rule?, the XY Planning Network Public Comment letter submitted to the Department of Labor regarding its proposed Retirement Security Rule, is shared with Nerd’s Eye View readers. The ethical concerns of consumers not understanding if they are working with an advisor or a salesperson are discussed along with the regulatory history separating advice and sales. In FinCEN’s New 2024 Requirement For State-Registered RIAs (And Other Small Businesses) To Report Beneficial Ownership Information (BOI), new reporting requirements proposed by the Corporate Transparency Act (CTA) are summarized, covering exemption businesses, reporting deadlines, necessary information, and penalties for non-compliance.
Learning Objectives:
- Describe the evolution of regulation and fiduciary obligations of financial advisors and financial services salespeople.
- Explain how consumer perceptions can be impacted by the titles of advisors and salespeople.
- State the elements of the proposed “Salesperson Exemption” to the Department of Labor’s proposed Retirement Security Rule.
- Summarize the proposed small business reporting requirements of the Corporate Transparency Act.
- Understand the proposed penalties for willfully reporting inaccurate Beneficial Ownership Information (BOI).
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Professional Conduct and Regulation
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Key Terms:
Investment Advisers Act Of 1940 (“the Advisers Act”): law that places certain requirements and restrictions on investment advisers pertaining to registration, compensation, and creation of advisory agreements.
Retirement Security Rule (RIN 1210-AC02): A Department of Labor proposal to update regulation that defines “fiduciary” under the Employee Retirement Income Security Act.
Financial Crimes Enforcement Network (FinCEN): a bureau of the United States Department of the Treasury that collects and analyzes financial data and transactions with the mission of protecting the financial system from illicit use and money laundering.
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 1.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This continuing education session focuses on client interaction and psychology when engaging in the financial planning process through the review of three articles: Fact, Situation, Feeling – Using The Iceberg Follow-Up Model To Connect With And Motivate Clients, Using Reflection Questions To Help Prospects Find Clarity And Focus On A Shared Planning Vision, Flip ‘Plan Presentation’ Into ‘Plan Engagement’ Meetings To Generate More Focus And Reflective Questions From Clients. Two articles will focus on the benefit of asking focused questions. The first article will detail how to implement a strategy to ask better follow-up questions to build deeper relationships with clients, and the second explains how to utilize reflection questions with clients to help them narrow their goals for a financial planning engagement and find the motivation to stick with their plan. The final article in this series highlights trends in how advisors present financial plans to clients and explains the concept of a flipped classroom with an illustration of how a ‘flipped’ classroom teaching style could be used in client presentations.
Learning Objectives:
- Explain the benefits of utilizing follow-up questions in the financial planning process.
- Utilize the Iceberg Method of follow-up questions to deepen client relationships.
- Describe a ‘flipped classroom’ approach and how it can be applied to a financial planning meeting.
- Recognize the benefits of utilizing reflection questions in prospect meetings.
- Employ reflection questions in discovery meetings with prospects.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Psychology of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Key Terms:
Close-Ended Questions: Questions that can often be answered with just a single word, such as “Fine”, “Great”, or “Okay”.
Discovery Meeting: A meeting with prospects where the advisor and prospect can learn about one another to facilitate deciding whether they will enjoy working together and envisioning the scope of work that will be done through the engagement.
‘Flipped’ Meeting: When information is presented in advance rather than during the meeting itself.
Follow-Up Question: A question that is used with the sole purpose of understanding the speaker better.
Open-Ended Questions: Questions that cannot be answered with a single word, and that are useful for encouraging careful thought and reflection.
Reflection: Repeating back to a client (or friend, family member, office mate) something they just said.
Social Constructionism: A theory that suggests reality can be developed collaboratively.
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
In this continuing education session, the learner will read two articles from the Nerd’s Eye View blog: “4th Quarter 2023 Economic And Market Outlook: Labor Market, Inflation, And Geopolitics” and “Designing “Custom GPTs” With Advanced ChatGPT Features To Enhance Advisor Capabilities With AI”.
In “4th Quarter 2023 Economic And Market Outlook: Labor Market, Inflation, And Geopolitics,” Larry Swedroe provides a Q4 2023 market outlook, providing an overview of current economic challenges, potential headwinds, and the future of interest rates. This piece concludes with thoughts on how investors can prepare for market uncertainty and protection against downside risk.
In “Designing “Custom GPTs” With Advanced ChatGPT Features To Enhance Advisor Capabilities With AI, David Ortiz walks readers through how he uses CustomGPTs to create efficiency in his practice through prompt engineering. Ortiz explains how AI tools can be utilized in conjunction with client meetings to enhance client engagement.
Learning Objectives:
1. Discuss the state of the economy based on the 4th Quarter 2023 economic and market trends.
2. Explain 4th Quarter 2023 trends in the labor market.
3. Explain investment strategies to prepare for potential downturns and economic uncertainty.
4. Understand how AI tools can be utilized in the financial planning process.
5. Evaluate AI prompts that could be used to enhance client engagement.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Investment Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Key Terms:
Consumer Price Index (CPI): A measure of the average change in prices that consumers pay for a market basket of goods and services and is generally used to assess how effective government policies are.
Gross Domestic Product (GDP): A measure of the value of all finished goods and services produced within a particular country.
Inflation: The general increase in prices that corresponds with a fall in purchasing power over time.
Recession: The contractionary period of a business cycle when economic activity (including consumer spending) declines.
ChatGPT: An artificial intelligence program created by Open AI that provides responses to user-provided prompts.
Custom GPTs: The customization of ChatGPT to create bots that are trained to perform an exact user-defined task.
Generative AI: a form of artificial intelligence that processes large amounts of pre-existing data and picks up on patterns within that data through various types of advanced ‘learning’ techniques, which it then uses to make inferences about the future.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
In this continuing education session, the learner will read three articles from the Nerd’s Eye View blog: “Using ‘Magic Wand’ Questions To Help Clients Articulate Financial Needs And Goals (That They Otherwise Struggle To Express)”, “Drafting A Power Of Attorney (POA) Using A Comprehensive ‘Kitchen Sink’ Approach To Avoid Common Pitfalls”, and “Using A Testamentary Charitable Remainder Unitrust (T-CRUT) To Give Twice To Both Loved Ones And Charitable Organizations”.
In “Using ‘Magic Wand’ Questions To Help Clients Articulate Financial Needs And Goals (That They Otherwise Struggle To Express)”, Dr. Meghaan Lurtz discusses how to use “magic wand” questions to ease client tensions while exploring their financial goals, concerns, and dreams. How this strategy can be used to facilitate financial discussions with couple clients is also discussed.
In “Drafting A Power Of Attorney (POA) Using A Comprehensive ‘Kitchen Sink’ Approach To Avoid Common Pitfalls”, David Hauhgton, JD, CPWA, explains the common power of attorney features that could lead to rejection by financial institutions and how they can be addressed through conscientious drafting or with actions post-rejection.
In “Using A Testamentary Charitable Remainder Unitrust (T-CRUT) To Give Twice To Both Loved Ones And Charitable Organizations,” Kathleen M. Rehl, PhD, CFP, CEFT emeritus, explains how Testamentary Charitable Remainder Unitrusts function and shares her experience in establishing one. She concludes this article with a review of the pros and cons of implementing a T-CRUT and the types of clients these trusts may be a good fit for.
Learning Objectives:
1. Utilize magic wand questions to help clients articulate their needs and goals in a positive environment.
2. Explain the function of the types of powers of attorney and their specific use purposes.
3. Evaluate whether a client’s power of attorney could be subject to rejection by financial institutions.
4. Describe how a Testamentary Charitable Remainder Unitrust (T-CRUT) functions.
5. Explain the pros and cons of utilizing a Testamentary Charitable Remainder Unitrust (T-CRUT) in an estate plan and who they are suitable for.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Estate Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Key Terms:
Durable Power of Attorney: This type of POA becomes effective as soon as it is signed and continues to be effective even after or through the principal becoming incapacitated.
Power Of Attorney (POA): A legal document that grants an individual (or group of persons, or even an organization) the right (i.e., the power) to act on another person’s behalf.
Springing Power of Attorney: This type of POA only comes into action (i.e., it springs into action) in the event of incapacitation.
Testamentary Charitable Remainder Trust (T-CRUT): A charitable remainder trust that is created after the death of the grantor. After the T-CRUT is funded, the trust then distributes a fixed percentage of trust income, equal to at least 5% but no more than 50% of the actual value of the trust, to beneficiaries for either a specified number of years not to exceed 20 or the life of the beneficiary. After this period, at least 10% of the original contribution to the trust must be transferred to a charity as the remainder beneficiary.
Recommended CPE:
- 1.5 CFP hours
- 2.0 NASBA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month, we review December blog articles. This quiz includes the following articles: When Does A Financial Coach Need To Register As An Investment Adviser? The “ABCS” Test To Determine Status and AI-Generated Financial Advice And The Fiduciary Catch-22.
Learning Objectives:
1. Restate the history of the investment adviser registration.
2. Explain the intricacies of the ABCS Test for determining the necessity for investment adviser registration.
3. Assess whether financial coaching services would require registration as an investment adviser.
4. Describe how a financial advisor’s fiduciary duties apply to technology use.
5. Comprehend the risks of using AI in their advisory practice and how to remain compliant when using AI tools.
Specialized Knowledge:
- CFP: Professional Conduct and Regulation
- NASBA: Specialized Knowledge (Personal Financial Planning)\
- IAR: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month, we review December blog articles. This quiz includes the following articles: Preserving HSA Eligibility And Maximizing Contributions After Age 65 and Implementation Questions To Properly Prioritize And Address To-Dos For Consistent Follow-Through.
Learning Objectives:
1. Explain the benefits of utilizing and building savings in an HSA.
2. State the requirements for an individual to contribute to an HSA and the associated contribution limits.
3. Describe strategies to preserve HSA eligibility after age 65.
4. Analyze roadblocks that a client may be facing when implementing a financial plan.
5. Understand how to utilize questions to help clients follow through on the implementation of their financial plan.
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- IAR: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month, we review November blog articles. This quiz includes the following articles: Effective Implementation Of A Backdoor Roth Strategy: Detailed Nuances, IRS Form 8606 (And When It’s Even Worth Doing); Anatomy Of An RIA Sale, Merger Or Acquisition: 5 Important Legal & Compliance Steps; and Advice Engagement Tools For A More Dynamic VIP (Visualization, Interaction, and Process) Planning Experience.
Learning Objectives:
1. Explain how the backdoor Roth IRA strategy works and who benefits from using the strategy.
2. Understand how pre-tax funds in a Traditional IRA can complicate a Roth conversion of non-deductible funds.
3. Describe the five typical steps of an RIA sale, merger, or acquisition.
4. Explain legal and compliance best practices in each step of an RIA sale, merger, or acquisition.
5. Determine how to create an engaging client experience utilizing visualization, interaction, and process
Specialized Knowledge:
- CFP: Retirement Savings and Income Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 2.0 NASBA hours
- 0.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month, we review November blog articles. This quiz includes the following articles: Helping Hesitant Clients Boost Their Retirement Spending and Employee Retention Credit: Helping Clients By Assessing Rules And Eligibility In 4 Phase.
Learning Objectives:
1. Explain the factors that may drive hesitancy to spend money in retirement.
2. Apply framing strategies and behavioral tactics to help hesitant clients spend money sustainably.
3. Understand the history of the Employee Retention Credit.
4. Determine a client’s potential eligibility for the Employee Retention Credit.
5. Calculate the Employee Retention Credit.
Specialized Knowledge:
- CFP: Tax Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 0.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month we review October blog articles. This quiz includes the following articles: 3rd Quarter Economic And Market Outlook: Understanding Risks And Opportunities In The Web Of Inflation, Interest Rates, Valuations, And More; and Avoid Getting Caught Up In Big Market Delusions: The Case Study Of Electric Vehicles
Learning Objectives:
1. Contrast the current economic trends of increasing demand for services and the U.S. manufacturing sector recession.
2. Describe some of the drivers involved in current inflationary trends.
3. Discuss how entitlement spending is impacting Federal debt levels.
4. Understand what is meant by “big market delusion” and recognize the warning signs that signal a potential event.
5. Explain how the electric vehicle industry has illustrated a big market delusion that began in the late 2010s.
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Finance
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Program Description:
This month we review October blog articles. This quiz includes the following articles: A Guide To Conducting And Documenting An Annual Compliance Review Under New SEC Amendment and Crafting An Annual Compliance Calendar For A (Solo) RIA: Staying On Top Of Compliance Tasks While Serving Clients.
Learning Objectives:
1. Understand why an amendment was made to the SEC Compliance Rule to clarify the requirement for advisers to maintain documentation of compliance reviews.
2. Describe the key elements that advisers need to evaluate when conducting an annual compliance review.
3. Discuss how annual compliance review documentation helps the SEC better understand a particular adviser’s compliance program.
4. Describe the basic compliance requirements for which a solo RIA is responsible.
5. Develop a plan to construct a “compliance calendar” to assist in the process of annual RIA compliance tasks.
Specialized Knowledge:
- CFP: Psychology of Financial Planning
- NASBA: Regulatory Ethics
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 1.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Program Description:
This month we review October blog articles. This quiz includes the following articles: Switching Between State And SEC Registration: Evaluating Options (And Requirements) For RIAs Nearing $100 Million RAUM and Extracting Actionable Takeaways From The SEC’s Staff Bulletin Regarding An RIA’s Standard Of Care.
Learning Objectives:
1. Understand the different requirements for registering with the SEC and at the state level, and when advisers need to switch between state and SEC registration.
2. Determine when an RIA should register with the SEC.
3. Understand when it is necessary for an RIA to de-register from the SEC.
4. Explain 3 of the primary actions an RIA can take to fulfill their Fiduciary duty of care.
5. Identify the components that should be considered in a client’s investment profile.
Specialized Knowledge:
- CFP: Psychology of Financial Planning
- NASBA: Regulatory Ethics
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 1.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month we review the August blog articles. This quiz includes the following articles: Motivational Interviewing Techniques To Help Clients Talk Themselves Into Implementing Advice and Crafting More Equitable Advisor Non-Solicit Agreements With The ACRES Agreement
Learning Objectives:
1. Evaluate how the 4 guiding principles of motivational interviewing support the general steps involved in the process.
2. Describe the stages of change and where ambivalence most commonly occurs during those stages.
3. Discuss the role of desire and fear in motivation.
4. Understand the role of the Broker Protocol in the historical use of employment agreements by financial services companies.
5. Differentiate the differences between non-compete and non-solicit agreements and how each have played a role in the financial advice industry.
Specialized Knowledge:
- CFP and IWI: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA Topic Area(s): New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month we review the August blog articles. This quiz includes the following articles: Planning For Adoption: Understanding Different Pathways And Their Costs, Tax Breaks, And Financial Assistance Available; IRS Notice 2023-54 Provides Welcome Relief To 10-Year Rule Beneficiaries And Retirement Account Owners Born In 1951; “Legacy IRA” Rollover To A Charitable Gift Annuity: Using This New Tax-Advantaged Opportunity To Help Clients Achieve Charitable And Retirement Goals
Learning Objectives:
1. Explain different tax planning opportunities available to adoptive parents.
2. Describe various pathways to adoption and associated cost estimates.
3. Discuss the impact of IRS Notices 2023-53 and 2023-54 on RMDs for inherited retirement accounts.
4. Understand the updated RMD requirements for individuals depending on age and birthdates.
5. Understand how SECURE 2.0 made Legacy IRAs available by expanding the provisions for charitable IRA rollovers.
Specialized Knowledge:
- CFP and IWI: Tax Planning
- NASBA: Taxes
- NASAA Topic Area(s): New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Program Description:
This quiz includes the following articles: Form U4: Common Missteps And Best Practices For RIAs; and RIA Code Of Ethics: Important Nuances To Note In Relatively Straightforward Requirements.
Learning Objectives:
1. Understand the purpose of Form U4 and what it discloses.
2. Describe common mistakes made when filing Form U4 and some best practices to avoid those mistakes.
3. Understand the challenges an RIA facse when preparing Form U4.
4. Describe the 5 components that constitute the minimum requirements related to Codes of Ethics that must be maintained by all SEC-registered investment advisers.
5. Develop a compliant code of ethics.
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- IWI: Ethics
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: Ethics
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 1.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Program Description:
This quiz includes the following articles: Paid Solicitation Under The SEC Marketing Rule: Using Third-Parties For Lead Generation And Prospecting; Form ADV Part 1: Common Missteps And Best Practices For RIAs.
Learning Objectives:
1. Understand the differences between solicitors, promoters, and providers, as defined by the SEC.
2. Distinguish between ADV Part 1 and ADV Part 2A.
3. Distinguish when testimonials and endorsements are considered advertisements.
4. Recognize common issues faced when completing Form ADV Part 1.
5. Identify the difference between the four ADV forms.
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- IWI: Ethics
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: Ethics
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 1.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
This month we review May blog articles. This quiz includes the following articles: Foster More Productive Client Meetings By Mitigating Interruptions Based On (Conversational) ‘Intensity Level’, Instead Of Asking “Why”, Try “What Else” To Get Clients To Open Up About Goals, and 5 Screening Questions To Assess Client Readiness And Appropriateness (And Why It’s Especially Useful For Some Firms)
Learning Objectives:
- Describe different individual conversational intensity levels.
- Discuss how individuals with different conversational intensity levels are impacted by interruptions.
- Explain the caveats of asking clients the question, “Why?” as a way to get explore their financial backgrounds.
- Understand when a screening call process can be most beneficial for a financial planning firm.
- Discuss how screening call questions can be used to identify relationships that will be a good fit for an advisor’s firm.
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Program Description:
IAR CE applied for, but reporting may be delayed.
This month we review May blog articles. This quiz includes the following articles: Investing For Nonimmigrant Visa Holders: Understanding Visa Types, Investment Challenges, And Tax Implications and Pass-Through Entity Taxes: Mechanics, Considerations, And Planning Opportunities For Navigating SALT Cap Workarounds.
Learning Objectives:
- Describe the types of nonimmigrant worker visas and the prerequisites to obtain them.
- Discuss the investment challenges faced by foreign nonimmigrant workers in the U.S.
- Understand what the Federal SALT deduction cap and how it impacts individual taxpayers.
- Explain how the Pass-Through Entity Tax is being used by some states to alleviate the impact of the Federal SALT deduction cap on certain business owners.
- Describe some of the scenarios where electing the PTET can benefit an individual taxpayer.
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Session Description:
This quiz includes the following articles: (1) Equity Compensation Planning as a Niche: Market Opportunities and Differentiated Value and (2) Investing a Roth IRA in Early Stage Growth Companies without Violating Prohibited Transaction Rules
Learning Objectives:
LO#1: Understand how to conduct valuation and investment risk analysis for clients with equity compensation
LO#2: Learn how to conduct tax strategy modeling for clients with equity compensation and the documents needed for this analysis
LO#3: Understand the Prohibited Transaction limitations for IRAs owning small businesses
LO#4: Learn how a client can legally move shares of an existing business into a Roth IRA
LO#5: Understand how an individual receiving compensation from a company owned by their IRA can create a Prohibited Transaction
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 2.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Equity Compensation: This is non-cash payment for services that provides ownership in a company. It is commonly offered to executives and key employees in addition to their pay and includes different forms of company stock.
Employee Stock Options: These give recipients the right (not the obligation) to buy company shares at a fixed price (known as the exercise or grant price).
Restricted Stock Options: Also referred to as share grants or performance shares, provide employees with shares of the company, but are subject to vesting criteria.
Stock Plan Service (SPS) Providers: Companies that provide both software and services to administer large corporate equity award programs
Prohibited Transaction Rules: IRS rules restricting an individual from using their IRA to engage in various types of transactions with certain “Disqualified Persons”.
Disqualified Person: The IRS prohibits an IRA from purchasing property from a Disqualified Person, which can include the IRA owner; the IRA owner’s spouse, ancestors, lineal descendants, and any spouse of a lineal descendant; or an officer or director (or person with similar responsibilities), 10% or more shareholder, or other individual who earns 10% or more of the wages, of a company that is owned 50% or more by the IRA owner and other disqualified persons (combined); or a business that is 50% or more owned by a Disqualified Person.
Prohibited Personal Compensation: When an individual’s IRA exercises control over a business, the IRA owner is no longer able to receive compensation personally from that business.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Session Description:
This quiz reviews the following two blog articles: Why High Equity Valuations And Low Bond Yields Won’t (Necessarily) Break The 4% Rule and Maximizing The Step-Up In Basis By Gifting Assets Between Spouses.
Learning Objectives:
- Explain what the 4% Rule means and how it is meant to be implemented.
- Discuss why Morningstar’s recent research report recommends updating the traditionally referenced safe withdrawal rate of 4%.
- Understand how current market conditions are used to predict future safe withdrawal rates.
- Understand when assets in a decedent’s estate receive a step-up in basis.
- Explain how step-up in basis rules differ in separate property and community property states.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 2.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Safe Withdrawal Rate: The highest initial withdrawal rate, followed by withdrawals of the same dollar amount every year in subsequent years, that will never result in the retiree fully drawing down their portfolio over the specified time horizon, even in the worst possible market conditions.
Cyclically Adjusted Price-To Earnings (CAPE) or P/E 10 Ratio: A ratio used to value equities based on the real price to earnings data over 10 years.
Robert Shiller: 2013 Nobel Laureate and Yale University behavioral finance economist who compiled various historical stock market data sets and confidence indexes, and is known for his research on stock prices, asserting that the market is inefficient.
Monte Carlo Analysis: A method of assessing the probability of certain outcomes and success levels by analyzing a large number of separate trials, generally based on historical market returns.
Step-Up In Basis: The readjustment of an asset’s value when the asset has appreciated between the time it was purchased, and the time it is received by a beneficiary.
Community Property: Property acquired by two spouses during marriage and considered to be divided 50/50 between each spouse.
Separate Property: Property acquired (and owned) by only one spouse during marriage, typically as a gift (including inheritances) or brought into the marriage (acquired by one spouse prior to marriage).
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Session Description:
This quiz includes the following articles: Maximizing Split-Interest Charitable Deductions With New Pooled Income Funds Over CRTs, and Can A Charitable Remainder UniTrust (CRUT) Truly Replace The Benefits Of The “Stretch” IRA?
Learning Objectives:
LO #1: Understand the differences and benefits of Pooled Income Funds, New Pooled Income Funds, and Charitable Remainder Trusts.
LO #2: Identify important considerations that help clients to determine the benefits and drawbacks of PIFs, NPIFs, and CRTs, and to choose which vehicle is best for their situation.
LO #3: Examine how the SECURE Act changed the stretch IRA and the impact of the 10-Year Rule.
LO #4: Examine the process of establishing a CRT and understand the factors to consider when designing the CRT payout.
LO #5: Understand what client factors planners should consider when suggesting the CRT.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.5 CFP hours
- 2.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
5-Year Rule for Inherited Retirement Accounts: The rule applying to non-designated beneficiaries where all assets must be out of an IRA by Dec. 31st of the fifth year following the year of the original IRA-owner’s death.
10-Year Rule for Inherited Retirement Accounts: The new rule created by the SECURE Act that requires IRA beneficiaries to withdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner’s death.
Charitable Remainder Trust (CRT): A tax-exempt irrevocable trust designed to reduce taxable income by first providing income to beneficiaries for a certain period of time, with the remainder left to a qualified charity. Two main types of CRTs are Charitable Remainder Unitrusts (CRUTs), which distribute a fixed percentage of the trusts’ balance to beneficiaries, and Charitable Remainder Annuity Trusts (CRATs), which distribute a fixed dollar amount to beneficiaries.
Charitable Remainder Unitrust (CRUT) Breakeven Point: The amount of time it would take for wealth created via distributions from a CRUT to catch up to wealth created via leaving the same amount of money to beneficiaries directly.
Donor Advised Fund (DAF): A private fund administered by a third party that accommodates tax-deductible donations that grow tax-free and that are designed to benefit qualified charitable organizations.
New Pooled Income Fund (NPIF): A type of Pooled Income Fund (PIF) that has been in existence for less than 3 taxable years preceding the year of contribution.
Pooled Income Fund (PIF): A type of charitable trust introduced as part of the 1969 Tax Reform Act. It is created and maintained by a public charity (who serves as the remainder beneficiary) and pools assets contributed by multiple donors. It pays lifetime income to individual income beneficiaries designated by the donor.
Qualified Charitable Distributions (QCDs): Non-taxable distributions made from an IRA given to a qualified charity by a donor who is at least 70½ years old.
Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Session Description:
This quiz highlights a series of articles surrounding questions and other critical communication skills that advisors will want to consider in order to deepen and enrich client relationships through the financial planning process.
Learning Objectives:
- Describe how the three meeting skills of preparing, managing, and listening are essential to create a positive client meeting experience.
- Be familiar with resources for newer advisors to help them practice honing their meeting skills.
- Discuss how advisors can use ‘true’ follow-up questions to demonstrate responsiveness to clients.
- Describe four types of direct indexing and when using each type of strategy makes the most sense.
- Explain how asking prospects “Why now?” can help advisors demonstrate the value of behavioral coaching.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 2.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Follow-Up Question: A question that is used with the sole purpose of understanding the speaker better.
Behavioral Coaching: In the context of financial planning, the process of helping clients make rational financial decisions and follow through on their priorities.
Passive Listening: Nonverbal form of communication involving attention to body language and eye contact.
Active listening: Listening that involves distilling information received from the speaker and reiterating the message back, to acknowledge the message was received and to assure the speaker that it was understood correctly.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Session Description:
This quiz includes the following articles: Adjusting Monte Carlo Success Thresholds By Tolerance For Spending Volatility, Getting Comfortable Delaying Social Security With Six-Month ‘Reversible’ Delays, and Analyzing Net Unrealized Appreciation (NUA) Opportunities For Privately Held Company Employee Stock Ownership Plans (ESOPs)
Learning Objectives:
LO #1: Understand the rules for retroactively claiming Social Security Benefits.
LO #2: Discuss how advisors can use 6-month ‘delay nudges’ to help clients make good decisions around claiming their Social Security benefits.
LO #3: Understand how (and when) employees of private companies can take advantage of NUA, and when alternate strategies should be considered when using NUA is not the best option for the individual.
LO #4: Understand the limitations of using a default probability-of-success target for all client plans.
LO #5: Identify how dynamic probability of success targets can be chosen for client plans.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 2.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Average Indexed Monthly Earnings (AIME): Metric used to calculate an individual’s Social Security benefit, calculated by taking the average of the 35 highest-earning years, indexed for wage inflation.
Full Retirement Age (FRA): The age at which an individual is entitled to 100% of their Social Security benefits, and generally ranges between age 66 and age 67, depending on the individual’s date of birth.
Lump-Sum Distribution: Withdrawal of the entire balance owned by an individual who is a plan participant of their employer’s qualified retirement plan. The distribution must take place within a single tax year, and generally takes place only after the participant leaves the company, reaches age 59 ½, becomes permanently and totally disabled, or dies.
Monte Carlo Analysis: A method of assessing the probability of certain outcomes and success levels by analyzing a large number of separate trials, generally based on historical market returns.
Net Unrealized Appreciation (NUA): Appreciation of the employer’s company stock held in an individual’s retirement plan sponsored by the employer
NUA Triggering Event: One of three conditions that must be met in order for a NUA transaction to take place.
Risk tolerance: How much risk a client is willing to tolerate.
Sequence of Return Risk: a phenomenon which reveals that even if long-term returns average out in the long run, it doesn’t necessarily mean the portfolio can sustain ongoing withdrawals with volatile returns in the meantime.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Session Description:
This quiz covers questions and strategies advisors can employ with clients experiencing crisis. Crisis can include things like losing a spouse or market event, or even just being anxious around an expected financial change.
Learning Objectives:
- Identify the use of purpose of narrative therapy.
- Understand how ‘audience questions’ can help clients respond to stressful financial situations.
- Discuss some of the communication challenges for advisors working with newly widowed clients.
- Describe strategies advisors can use to stay connected with newly widowed clients.
- Identify questions to ask and meeting processes for newly widowed clients.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 2.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Narrative Therapy: A process that focuses on finding and using words to create or modify the stories an individual tells themselves to help change the way they may see a certain issue.
Audience Question: A type of question used to generate new perspectives and potentially new ideas for solving a problem; for example, asking an individual how they would recommend that a friend solve the problem at hand.
End-Of-History Illusion: The expectation that a person will undergo relatively little change in the future.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
Session Description:
This month we review the November blog articles. This quiz includes the following articles: Maximizing Health Savings Accounts (HSAs) Tax Benefits With Adult Children Under Age 26, Establishing Solo 401(k) Plans For Self-Employed Workers: Options, Contribution Limits, Deadlines, And More!, and Tax Advice Restrictions For Financial Advisors: How To Offer Tax Planning And Remain In Compliance
Learning Objectives:
1. Explain the requirements for an adult child to establish a Health Savings Account (HSA).
2. Discuss the features of High-Deductible Health Plan (HDHP) coverage and Planned Provider Organization (PPO) plans, and when it makes sense for an individual or family to choose one over the other.
3. Describe the features and benefits of implementing a Solo 401(k) plan for self-employed workers.
4. Distinguish between tax advice and tax planning.
5. Explain how financial advisors who are not designated tax professionals can best offer tax planning recommendations for clients.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New & emerging issues and/or products for the IAR to navigate
Recommended CPE:
- 2.0 CFP hours
- 2.0 NASBA hours
- 2.0 IWI General Financial Planning hours
- 2.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 2.0 IAR PP Hours
Key Terms:
Health Savings Account (HSA): A savings account that receives favorable tax treatment when distributions are used to pay for medical expenses. Contributions are tax-deductible, growth is tax-deferred, and withdrawals used to pay for (qualified) healthcare expenses are tax-free. In order to contribute, an individual must be covered by an HSA-eligible HDHP and have no other health coverage, may not be enrolled in Medicare, may not be claimed as a dependent on someone else’s tax return.
High-Deductible Health Plan (HDHP): A healthcare plan that has a higher deductible requirement than a traditional health insurance plan. In order to be an HSA-eligible HDHP, a plan must have a minimum annual deductible and a maximum annual out-out-pocket amount that meets the limits set by the IRS.
Medicare: The Federal health insurance program for individuals 65 and older. In some cases, younger individuals with disabilities also qualify.
Solo 401(k) Plan: Retirement plan similar to a traditional 401(k) plan but restricted to self-employed business owners with no employees other than themselves (with the exception of the business owner’s spouse as the only other employee). The business owner may make contributions as an employee (with an annual limit of the smaller of 100% of compensation or up to $20,500 in 2022), and as an employer (up to 25% of their compensation).
Form 5500-EZ: IRS Form titled “Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan” that must be submitted annually by certain retirement plan owners, including single-participant plans.
Tax Advice: making a recommendation of a plan of action on a tax strategy. This is in contrast to tax planning, which does not involve making a recommendation.
Tax Planning: the consideration, analysis, and/or projection of tax strategies without taking the step of making a recommendation. This is in contrast to tax advice, which does involve making a recommendation.
Tax Avoidance: the provision of tax-related recommendations that are designed to (legally) minimize the amount of taxes paid by an individual.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Session Description:
This quiz includes the following articles: How To Register Your RIA: State Vs SEC Registration And When Notice Filing Is Required and Upfront And Ongoing RIA Compliance Obligations Of State Vs SEC-Registered Investment Advisers
This course covers the obligations of IARs for registering their RIA and their ongoing compliance obligations once registered, including allowed marketing activities, rules for advisory agreements, and fee disclosures.
This course is NOT applicable for CFP credit.
Learning Objectives:
1. Distinguish between the definitions of “Investment Adviser” as provided by the Federal Investment Advisers Act of 1940, and the model securities act for state registration (Uniform Securities Act of 2002).
2. Discuss the exemptions that allow an RIA to register under the SEC.
3. Explain when a state-registered adviser may need to notice file in a state.
4. Discuss the main differences between the requirements for investment advisors to apply for Federal versus state registration.
5. Describe the main parts of Form ADV and other documents that investment advisers must complete and submit to the SEC (for Federally registered advisers) and to their respective states (for state-registered advisers).
Level of Complexity:
-IWI: Intermediate
-NASBA: Basic
Specialized Knowledge:
- NASAA: Quality and accuracy of communications with clients and prospects
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 1.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Key Terms:
Form ADV: Foundational registration documents that must be submitted by any investment adviser seeking to become registered with the SEC or the states.
Form U4: Document used to establish an individual’s registration with applicable states as an Investment Adviser Representative (IAR) of a registered investment adviser.
Investment Adviser: As defined by the Advisers Act, “any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities”. The investment adviser generally refers to the firm (entity).
Investment Advisers Act of 1940 (“the Advisers Act”): Federal law that places certain requirements and restrictions on investment advisers pertaining to registration, compensation, and creation of advisory agreements.
Notice Filing: Requirement imposed on certain SEC-registered investment advisers to provide applicable state securities authorities copies of documents that are filed with the SEC, along with any applicable fees.
Supervised Person: As defined by the Advisers Act, any partner, officer, director (or other person occupying a similar status or performing similar functions), or employee of an investment adviser, or other person who provides investment advice on behalf of the investment adviser and is subject to the supervision and control of the investment adviser.
Uniform Securities Act of 2002 (“the 2002 Act”): model securities act created by the Uniform Law Commission, which many states use to model their own securities acts to place certain requirements and restrictions on investment advisers doing business in their state, pertaining to registration, compensation, and creation of advisory agreements.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
Program Description:
This Blog Quiz is only available for IRS EA credit.
This quiz reviews two blog articles : Maximizing The Step-Up In Basis By Gifting Assets Between Spouses, and Strategies For Maximizing (Or Minimizing!) Rule 72(t) Early Distribution Payments Using IRS Notice 2022-6.
Learning Objectives:
- Understand when assets in a decedent’s estate receive a step-up in basis.
- Explain how step-up in basis rules differ in separate property and community property states.
- Describe some of the issues involved in transferring assets to an individual enrolled in Medicaid.
- Understand how recent IRS guidance affects the calculations of 72(t) payments.
- Discuss what type of clients would benefit most from 72(t) payments and how best to implement strategies that use them.
Recommended CPE:
This Blog Quiz is only available for IRS EA credit.
- 0.0 CFP hours
- 0.0 NASBA hours
- 0.0 IMCA General Financial Planning hours
- 0.0 IMCA Taxes and Regulations hours
- 0.0 IMCA Ethics hours
- 0.0 IAR EPR Hours
- 0.0 IAR PP Hours
- 1.0 IRS EA Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Nerd's Eye View
- Taxes
Program Description:
This Blog Quiz is only available for IRS EA credit.
This quiz reviews two blog articles: The Impact Of New IRS Proposed Regulations On The SECURE Act: RMDs, Eligible Designated Beneficiaries, Trusts, And More! and Net Unrealized Appreciation Tax Strategies.
Learning Objectives:
- Discuss how the proposed regulations clarify the SECURE Act’s rules regarding 10-year distribution requirement for inherited retirement accounts.
- Understand who would qualify as an Eligible Designated Beneficiary under the proposed regulations related to the SECURE Act.
- Explain how trust beneficiaries of retirement accounts would be treated under the SECURE Act.
- Describe the rules that must be followed for a Net Unrealized Appreciation transaction to potentially reduce an individual’s tax liability.
- Understand the circumstances where a taxpayer could most benefit from a Net Unrealized Appreciation.
Recommended CPE:
This Blog Quiz is only available for IRS EA credit.
- 0.0 CFP hours
- 0.0 NASBA hours
- 0.0 IMCA General Financial Planning hours
- 0.0 IMCA Taxes and Regulations hours
- 0.0 IMCA Ethics hours
- 0.0 IAR EPR Hours
- 0.0 IAR PP Hours
- 1.0 IRS EA Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Program Description:
This program is not applicable to CFP Ethics requirements. Completion will award general CE hours for CFP.
This quiz includes articles from August 2021 and November 2021: Navigating Minimum Net Capital And Surety Bond Requirements For State-Registered RIAs and How Financial Advisor Titles Shape Consumer Perceptions. The course’s content addresses ethics and professional responsibility as it pertains to an advisor’s responsibility to remain financially solvent in accordance with state regulations and to accurately portray their services and duties to their clients in their titles and disclosures.
Learning Objectives:
-LO #1: Discuss the requirements for many state-registered investment advisers to ensure a minimum level of assets available in the event of a legal claim from the RIA’s clients.
-LO #2: Understand the difference between minimum net capital and surety bond requirements.
-LO #3: Learn about what empirical research demonstrates about the effects of advisor titles and disclosures on consumers’ perception of the roles and obligations of financial professionals
-LO #4: Discusses how various regulatory approaches to advisor titles might improve consumer clarity
-LO #5: Understand several proposed Federal and state regulations of financial advisor titles.
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- IWI: Ethics
- NASBA: Regulatory Ethics
- NASAA: Ethics, Professional Responsibility
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 1.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Course Review Date:
6/7/2022
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Key Terms:
N/A
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
N/A
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Session Description:
This program is not applicable to CFP Ethics requirements. Completion will award general CE hours for CFP.
This quiz includes the following article from June of 2019: Advisor’s Guide To The SEC’s Final Regulation Best Interest And Form CRS. The course’s content addresses ethics and professional responsibility as it pertains to an advisor’s responsibility to avoid or disclose conflicts of interest and remain compliant with SEC regulations (and those of any states that choose to adopt the Federal regulations).
Learning Objectives:
-LO #1: Learn the obligations for broker-dealers to act in the best interests of their client when making investment recommendations under the SEC’s Regulation Best Interest rule.
-LO #2: Understand the requirements for the new Form CRS that broker-dealers and SEC-registered RIAs are required to provide to potential clients.
-LO#3: Explain the clarification of RIAs’ fiduciary duty to clients that was released alongside the Regulation Best Interest rule.
-LO#4: Understand the SEC’s re-interpretation of the “solely incidental advice” exemption for broker-dealers to provide advice without needing to register as an investment adviser.
-LO#5: Explain an advisor’s responsibility to avoid or disclose conflicts of interest and remain compliant with SEC regulations.
Level of Complexity:
- CFP/IMCA: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New & emerging issues and/or products for the IAR to navigate.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IMCA General Financial Planning hours
- 0.0 IMCA Taxes and Regulations hours
- 1.0 IMCA Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Nerd's Eye View
Session Description:
This program is not applicable to CFP Ethics requirements. Completion will award general CE hours for CFP.
This program reviews the article Advertising With Testimonials And Endorsements Under The New SEC Marketing Rule. The article covers the the SEC’s new marketing rule and its implications for financial advisors, including what is defined as an “advertisement” under the rule, the enumerated prohibitions on RIA advertising, the new regulations applicable to testimonials and endorsements under the new rule, and the rule’s provisions regarding advertisement of third-party ratings. The session addresses ethics as pertains to remaining compliant with Federal and state securities laws and avoiding false or misleading statements in communications and advertising.
Learning Objectives:
LO #1: Understand the new rules for advisor marketing.
LO #2: Examine the implications of the new marketing rules for advisors who want to use endorsements or advertising.
LO #3: Understand the vocabulary associated with the new advertising rules.
LO #4: Understand the seven general violations to avoid with RIA advertising compliance under the new rules.
LO #5: Learn the required disclosures for an RIA promoter providing a testimonial or endorsement.
Level of Complexity:
- CFP/IMCA: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New & emerging issues and/or products for the IAR to navigate.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IMCA General Financial Planning hours
- 0.0 IMCA Taxes and Regulations hours
- 1.0 IMCA Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Client Trust & Communication
- General Planning
- Investments
Program Description:
This month we review the March blog articles in two quizzes. This quiz includes the following articles: Asking ‘Have You Worked With An Advisor Before?’ To Uncover What Prospects Really Value Most, The 30-Minute Prospect Meeting: A Framework And Agenda That Convert By Focusing On The Prospect’s (Immediate) Problem, and The ‘Yield-Split’ Method Of Asset Location To Improve Tax Efficiency Of Index Funds
Learning Objectives:
LO #1. Understand why it is valuable to learn about a prospect’s previous relationships with financial professionals.
LO #2. Describe why asking prospects about their personal memories and attitudes could make them nervous or defensive.
LO #3. Explain what an advisor can do in the initial meeting to help prospects understand how the advisor can solve their problems.
LO #4. Describe how implementing an asset location strategy can be valuable for financial planning clients
LO #5. Explain how a yield-split asset location strategy can add tax efficiency to a client’s portfolio
Level of Complexity:
- CFP/IMCA: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New & emerging issues and/or products for the IAR to navigate.
Recommended CPE:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IMCA General Financial Planning hours
- 0.0 IMCA Taxes and Regulations hours
- 0.0 IMCA Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
2.4.2021
Session Description:
The Monte Carlo analysis is a great financial planning tool, but it is not without its drawbacks. For instance, it is uni-dimensional, focusing only on the probability of success. And certainly, success is good, but the Monte Carlo does not ensure success nor does it tell a client what to do when the plan is no longer successful, which is the larger issue. Join us for this month’s webinar and learn how to adapt the Monte Carlo analysis, making it more useful and tangible for clients. Advisors will learn practical conversation tips and approaches for working with clients and begin to think about the Monte Carlo analysis in a new light.
Learning Objectives:
LO #1: Examine ideal triggers for adjusting client spending.
LO #2: Understand the influence of abstraction and why it matters to Monte Carlo analysis.
LO #3: Examine the dimensions (or lack thereof) of Monte Carlo analysis.
LO #4: Review how and examine how to best present results to clients.
LO #5: Understand how the ‘guardrails’ approach can be applied to Monte Carlo analysis and the tips for relaying that information to clients.
Key Terms:
Monte Carlo Analysis: A method of assessing the probability of certain outcomes and success levels by analyzing a large number of separate trials, generally based on historical market returns.
Perception: Related to our senses, this is what we are aware of what we are perceiving which can and is often guided by mental models.
Abstraction: Related to our perception, how are ideas and concepts (or even events) described, and what is the quality of the dimensions associated with making an abstract idea more concrete.
Functional Abstraction: This is related to the pieces or concepts of what makes an abstract idea more concrete and, in particular, usable for understanding or organizing.
Risk: Risk is a part of all portfolios and an aspect of the Monte Carlo analysis that a client may struggle to understand.
Magnitude: Magnitude, the measure of how large a change would be, is a missing piece of the Monte Carlo analysis, but is certainly a very important point of what the client experiences.
Framing: Whether positive or negative, the framing of an event or an outcome is incredibly powerful in shaping how clients feel about that outcome.
Guardrails Approach: Commonly used in spending and rebalancing decisions, this is a rules-based approach setting thresholds on either side of the intended withdrawal rate and then making adjustments up or down over time to keep within the safe range.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
2.24.2021
Kitces Topic Areas:
- Client Trust & Communication
- Financial Psychology
Session Description:
This month we review the February blog articles in two quizzes. This quiz includes the following articles: (1) Helping Resistant Clients Follow Through On Recommendations Using Reflection, and (2) Nudges, What Works (And Doesn’t) Beyond Automatic Savings
Learning Objectives:
LO#1: Identify the different styles of reflection and how they work with resistance.
LO#2: Understand how a person could use more than one style of reflection to address overconfidence bias, the most commonly encountered cognitive bias.
LO#3: Identify the problem of nudges from an educational perspective.
LO#4: Define nudges and how to apply them to practice while keeping education a priority.
LO#5: Identify the different styles of nudges and important considerations around transparency.
Key Terms:
Behavioral Bias: An irrational preference based on a person’s failure to take in all available information (or perhaps their failure to consider it altogether) when making a decision, which can result in less-than-optimal choices, or what economists call irrational decision-making.
Reflection: In its simplest form, this is simply repeating back to the client (friend, family member, office mate) what you have just heard them say.
Resistance: When a client pushes back on plan suggestions, for either conscious or unconscious reasons, which, if not handled with care, can cause the client to dig in deeper and commit to NOT changing.
Cognitive Bias: This bias is based on information processing, such as, confirmation bias where we seek out more information that confirms our current belief and sometimes purposefully ignore information that does not fit our current beliefs.
Nudge: A decision-making aid designed to simplify the process for clients to stick to their financial plan; nudges eliminate the requisite brainwork and lower (if not eliminate) the need for willpower.
Nudge Transparency: Transparency refers to whether the intention behind the nudge is made clear – if the intention is obvious or known then it is considered to be a transparent nudge.
Nudge Type: Nudges can either be Type 1 (automatic/subconscious) or Type 2 (deliberative/conscious). For advisors, nudge type depends on whether they want the client to think and deeply consider information, or if they do not need or want the client to make an effort to consciously think about a decision (e.g., sending a monthly check to transfer funds from a checking account to a savings account, when the process could easily be automated to free up brain space for other issues or behaviors).
Level of Complexity:
- CFP / IMCA: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP hours
- 1.5 NASBA hours
- 1.0 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
N/A
Kitces Topic Areas:
- Ethics
- Planning Profession
- Practice Management
- Regulation & Compliance
Session Description:
This month we review the June 2020 blog posts, which fulfill the requirement for CFP Board approved Ethics CE. The blogs and quiz have been designed to educate CFP® professionals on CFP Board’s new Code of Ethics and Standards of Conduct effective October 1, 2019.
Learning Objectives:
At the end of the course, participants will be equipped to: Identify the structure and content of the revised Code and Standards, including significant changes and how the changes affect CFP® professionals; Act in accordance with CFP Board’s fiduciary duty; Apply the Practice Standards when providing Financial Planning; Understand the Duty to Report to CFP Board and the Duty to Cooperate.; Recognize and avoid, or fully disclose and manage, Material Conflicts of Interest.
Level of Complexity:
- CFP: Basic Ethics
Specialized Knowledge:
- CFP: Ethics
Recommended CE Hours:
- 2.0 CFP Hours
- 2.0 IAR E&PR Hours
- 2.0 IWI General Financial Planning hours
- 2.0 IWI Ethics hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Webinars
Kitces Topic Areas:
- General Planning
Program Description:
Every day, financial advisors help clients plan for their retirement. Retirement goals are discussed, financial models are run, and retirement withdrawals are optimized. However, financial preparation is only one pillar of happiness in retirement. Michael Finke, Ph.D., CFP® walks us through the latest research on retiree happiness, highlighting other areas where clients should invest to secure their future life satisfaction. Topics discussed include the impacts of relationships on retiree happiness, cognitive decline’s relationship with investment performance, and the factors associated with having a higher likelihood of overspending or underspending in retirement. Throughout the presentation, Michael provides strategies that advisors can use to ensure that once they help clients prepare for retirement financially, they can also help them prepare to actually enjoy it.
Learning Objectives:
• LO #1: Summarize trends in life satisfaction during retirement
• LO #2: Initiate client conversations to plan for a fulfilling retirement, including setting lifestyle and legacy goals
• LO #3: Explain the impact of relationships on retiree happiness
• LO #4: Describe the issues associated with spending in retirement, along with factors that increase the likelihood of underspending and overspending in retirement
• LO #5: Anticipate the physical and cognitive decline of aging clients and understand the potential impacts on their behavior as an investor
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
Jeff Levine, CPA/PFS, CFP® and Director of Advisor Education at Kitces.com, will be walk advisors through regular year-end planning discussions advisors will likely be having with clients as well as discussions based on the tax, inflation, and market environment experienced in 2024. Such topics include addressing risk for near- and current retirees in the current market environment as well as changes to relevant rules. In addition, the webinar will discuss Roth conversions, Tax-Loss Harvesting, and other strategies and questions to cover with clients in order to help them think about the present as well as the future. Financial planners will walk away with greater awareness of potential changes and strategies to close out 2024 and start 2025.
Learning Objectives:
– LO #1: Identify near/recent retiree conversations around sequence of return risk and how to talk to clients in those situations about tradeoffs.
– LO #2: Review recent legislation, RMD rules, and FSA rules and how to plan moving into the future.
– LO #3: Review strategies and considerations for Roth conversions, year-end contributions, as well as both tax loss and tax gain harvesting.
– LO #4: Reviewing tax withholding considerations and how to have conversations about future tax rates
– LO #5: Review Medicare open enrollment and revisit home office deductions.
– LO #6: Identify other conversations, such as State And Local Tax (SALT) planning and beneficiary reviews, that can also bring value to end of year planning and reviews.
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Financial Psychology
Program Description:
Election season can represent a stressful time for many clients, leading to an uptick in emotional responses, such as anger, anxiousness, or worry. Advisors know that clients bring their whole selves to their engagements, and advisors often must address these feelings to help clients progress with their financial goals and objectives productively. Barbara Kay explains how advisors can quickly assess their client’s personality types and then provides guidance on how advisors can adapt their approach to connect with and calm clients based on their unique needs. Throughout her presentation, Barbara explains the scenarios that may cause clients stress and why and provides some context around how stress can present itself depending on the client’s personality type. Barbara concludes with advice on how financial advisors can use financial counseling techniques to effectively communicate with clients during times of high emotion and address client biases.
Level of Complexity:
-CFP/IWI: Intermediate
-NASBA: Basic
Learning Objectives:
• LO #1: Explain how the Big 5 personality types relate to DISC styles – 12 minutes
• LO #2: Identity your DISC style, quickly assess your client’s DISC styles, and adapt your DISC style to effectively connect with clients – 12 minutes
• LO #3: Understand how negative triggers may impact clients and how to calm clients based on their DISC style – 12 minutes
• LO #4: Describe common biases and how they relate to personality types and DISC styles – 8 minutes
• LO #5: Apply financial counseling techniques to communicate experiencing emotional upheaval – 9
Recommended CPE:
1.5 CFP hours
1.5 NASBA hours
0.0 EA hours
1.5 IWI General Financial Planning hours
0.0 IWI Taxes and Regulations hours
0.0 IWI Ethics hours
0.0 IAR EPR Hours
1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Investments
Program Description:
ETFs have become commonplace in client portfolios as the ETF market has continued to grow at a rapid pace. However, despite the efficiency of the ETF market, this system has also become more fragile, leading to tons of news headlines speculating about the future of ETFs and various investing trends. David Nadig takes advisors through a deep dive into how the ETF market has developed, areas that advisors should actually be concerned about and continue to monitor, and trends that will impact the future of ETF investing. This webinar also features a review of tools and metrics that advisors can use to conduct ETF due diligence, along with a specific list of tools with their pros and cons, including a walkthrough of some commonly used and affordable options.
Level of Complexity:
-CFP/IWI: Intermediate
-NASBA: Basic
Learning Objectives:
1. Discuss the current state of the ETF industry
2. Consider how ETFs are created and redeemed and their unique characteristics when making choices about utilizing them in a client portfolio – 12 minutes
3. Evaluate platforms to obtain information necessary to complete due diligence on ETFs based on your needs as an advisor and the clients you serve – 12 minutes
4. Explain aspects of the ETF market that may be cause for concern or monitoring in the future – 10 minutes
5. Discuss trends in the market that will impact the future of ETF investing – 10 minutes
Recommended CPE:
1.5 CFP hours
1.5 NASBA hours
0.0 EA hours
1.5 IWI General Financial Planning hours
0.0 IWI Taxes and Regulations hours
0.0 IWI Ethics hours
0.0 IAR EPR Hours
1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
Program Description:
The Corporate Transparency Act (CTA) has created additional filing obligations for an estimated 32 million existing entities, including client entities, such as LLCs and Family Limited Partnerships. However, the filing requirements, who they apply to, and how to best help clients navigate the broad scope of the CTA are still being determined. In this webinar, Martin Shenkman, CPA, MBA, PFS, AEP (distinguished), JD, explains the background of the CTA, the scope, filing requirements, reporting exceptions, and the people who need to report. Through the webinar, Shenkman highlights the role advisors can fill in educating clients about CTA requirements and provides helpful information regarding making compliance less cumbersome.
Level of Complexity:
-CFP/IWI: Intermediate
-NASBA: Basic
Learning Objectives:
• LO #1: Explain the purpose and scope of the Corporate Transparency Act.
• LO #2: Develop a plan for educating clients on the Corporate Transparency Act and helping clients obtain filing assistance.
• LO #3: Identify when clients will be required to file a report with FinCen and the corresponding deadlines for compliance.
• LO #4: List the information that reporting companies will be required to provide to comply with the Corporate Transparency Act.
• LO #5: Describe the people who are required to report, considering unique circumstances like trust ownership.
Recommended CPE:
- 1.5 CFP hours
1.5 NASBA hours
0.0 EA hours
1.5 IWI General Financial Planning hours
0.0 IWI Taxes and Regulations hours
0.0 IWI Ethics hours
0.0 IAR EPR Hours
1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Insurance
Program Description:
Between life insurance, disability insurance, and long-term care insurance, insurance planning can be the focus of financial planning engagements when clients need to address gaps in their risk management. However, when addressing these risk management concerns, advisors commonly make the mistake of helping clients move forward with applying for insurance without proactively planning for the application process. This can lead clients to have a tougher application process and higher premiums that could have been planned for in advice. Carolyn McClanahan, MD, CFP® gives advisors the inside scoop on coding in medical records and their impact on client medical histories, common illnesses and their impact on insurability, and how to proactively plan for insurance applications to minimize insurance premiums for clients.
Level of Complexity:
-CFP/IWI: Intermediate
-NASBA: Basic
Learning Objectives:
- Describe the process of applying for individual insurance, along with pointers on how to increase the likelihood of a smooth process
- Talk with clients about common illnesses and how they could impact individual insurance premiums and ways to reduce these impacts
- Understand the importance of documenting medical conditions accurately to obtain favorable insurance rates
- Explain how life insurance companies evaluate and rate individuals with osteoarthritis, depression, and other chronic conditions
- Recognize the role of gender, age, and specific health conditions in determining eligibility and premium rates for disability insurance and long-term care
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 0.0 EA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Retirement Planning
Program Description:
Managing and strategically planning for retirement accounts is an ever-present concern of financial advisors and their clients. In the last few years, there have been several tax changes that have impacted the way advisors plan for retirement accounts, and even more changes are on the horizon, leaving advisors with a host of tax legislation to sift through to avoid tax penalties and missed planning opportunities. In this webinar, Robert Keebler explains how recent tax measures can provide retirement account holders with tax relief and support during challenging circumstances and how recent tax court proceedings and PLRs have provided clarification around tax laws. During this presentation, Keebler also delves into strategy for the future with a discussion of planning for the Tax Cuts and Jobs Act sunset and post-mortem distribution planning for retirement accounts.
Level of Complexity:
-CFP/IWI: Intermediate
-NASBA: Basic
Learning Objectives:
- Describe how recent tax measures have provided tax relief for retirement account holders
- Explain tax law clarifications provided by tax court proceedings and recent private letter rulings on the management of individual retirement accounts
- Analyze the benefits and considerations of using Roth conversions as a planning strategy for the sunset of the Tax Cuts and Jobs Act
- Summarize the impact of SECURE Act 2.0 impact on retirement accounts for retirees and retirement savers
- Plan for post-mortem retirement accounts distributions considering SECURE Act 1.0
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 0.0 EA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Insurance
Program Description:
Medicare can be a complicated insurance system for clients to navigate as they transition from employer-provided insurance, especially when many human resource professionals and insurance agents for employer group insurance plans often do not fully understand the nuances of Medicare. This lack of clarity can lead to ineffective coverage and costly healthcare expenses during retirement. Financial advisors have an opportunity to ease their clients’ transitions into retirement by sharpening their knowledge of Medicare options. In this webinar, Elaine Floyd walks us through the options for Medicare coverage along with the benefits and risks associated with Original Medicare and Medicare Advantage plans. She further details how to shop for and enroll in Original Medicare, Medigap, and Medicare Advantage with beneficial considerations when going through the process, leaving advisors with a clear, practical roadmap for clients seeking coverage.
Level of Complexity:
-CFP/IWI: Intermediate
-NASBA: Basic
Learning Objectives:
• LO #1: Summarize the differences between Original Medicare and Medicare Advantage.
• LO #2: Describe trends in the Medicare Advantage sales and enrollment.
• LO #3: Analyze whether Original Medicare or Medicare Advantage would be more suitable for a client’s needs.
• LO #4: Walk clients through the process of shopping for and enrolling in Original Medicare and Medigap plans.
• LO #5: Walk clients through the process of shopping for and enrolling in a Medicare Advantage plan.
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 0.0 EA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
The 10-year rule created a major shift in how financial advisors plan for the transfer of assets. Over the past five years, the IRS has provided multiple notices and deadlines for how the 10-year rule will be implemented, leaving advisors and clients with a host of rules to dissect and interpret. Based on the latest guidance in Notice 2024-35, final regulations seem to be on the horizon. In this webinar, Jeff brings the 10-year rule back to the forefront of advisors’ minds with a review of the history of the rule along with strategies for how to minimize the impact of the 10-year rule. Throughout this presentation, Jeff provides practical solutions for advisors to utilize with clients as account holders and beneficiaries, with a focus on minimizing taxes and maximizing the transfer of assets.
Level of Complexity:
-CFP/IWI: Intermediate
-NASBA: Basic
Learning Objectives:
LO #1: Summarize the background and implications of the 10-year rule.
LO #2: Analyze the benefits and drawbacks of utilizing a “leave it alone” strategy for beneficiary clients.
LO #3: Describe the options and key considerations for distribution timing for beneficiary clients.
LO #4: Explain beneficiary designation options to minimize the impacts of the 10-year rule.
LO #5: Evaluate the use of distributions, transfers, and conversions to minimize the tax impact of the 10-year rule for future beneficiaries.
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 2.0 EA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Investments
Program Description:
Over half a million divorces occur in America every year, indicating that financial planners are likely to encounter client couples facing divorce within their practice. Due to the adversarial nature of the legal process, the emotional and financial strain on divorcing couples is often exacerbated, leading clients to experience significant stress and leaving advisors looking for ways to offer help. While financial planners are uniquely positioned to provide impactful support due to the collaborative and problem-solving nature of their work, they must navigate complex ethical considerations when working with clients experiencing divorce. This includes maintaining professional integrity while managing evolving client relationships and knowing when to call in specialized divorce planning experts.
In this webinar, expert Michael Kothakota will discuss how financial planners can position themselves to support clients facing divorce. He will cover strategies to navigate the ethical and emotional aspects of divorce planning, ensuring that planners are well-equipped to provide the best possible guidance during such a challenging time.
Level of Complexity:
-CFP/IWI: Intermediate
-NASBA: Basic
Learning Objectives:
- Define divorce, its methods, and the main considerations around custody, support, and asset division
- Explain why divorce is not well-suited to the legal process and why financial planners are in a great position to help
- Analyze when it’s ethical to work with a client couple facing divorce
- Understand the emotional pitfalls that both clients and planners can face when dealing with divorce planning
- Identify additional resources available to deepen financial planning knowledge related to divorce
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Investments
Program Description:
Investment portfolios should be rebalanced. This is a commonly understood concept of investment management. Advisors less commonly have a chance to take a step back and consider what rebalancing is, how often it should be done, or if this practice is actually benefiting the client. In this webinar, Michael E. Kitces, MSFS, MTAX, CFP, CLU, ChFC, RHU, REBC, CASL dives into these questions and sheds light on the practice of portfolio rebalancing, the rationales of rebalancing, and the practicalities of executing these portfolio maintenance activities. Kitces then explains the concept of tolerance band rebalancing to create a system for rebalancing, considering the complexity of multi-asset-class portfolios and the specific needs of different types of clients, such as savers and retirees, and asset types.
Level of Complexity:
-CFP/IWI: Intermediate
-NASBA: Basic
Learning Objectives:
- LO #1: Explain rebalancing, including its importance in portfolio management and potential pitfalls.
- LO #2: Assess the factors that would determine the optimal rebalancing frequency.
- LO #3: Explain the concept of tolerance band rebalancing.
- LO #4: Analyze the optimal tolerance bands for client portfolio rebalancing.
- LO #5: Create a rebalancing system utilizing tolerance bands considering the needs of different types of clients.
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
Program Description:
Every year, high school students endure the arduous process of applying to colleges, hoping to receive the illustrious acceptance letter. As parents walk through the ups and downs of this process with their students, another challenge may loom in the background: how to pay for college once their children get in. With the cost of college continuing to rise, the issue of how to pay for college has become increasingly concerning, especially for affluent families that are often ineligible for need-based aid. In this webinar, Joe Messinger, CFP®, discusses how financial planners can help facilitate better conversations between parents and their students about paying for college, touching on topics such as school selection, important applications and formulas, and methods for lowering the cost of college. He further delves into specific strategies to maximize clients’ resources to pay for college through a combination of tuition discounts, tax optimization opportunities, lending strategies, and scholarships.
Level of Complexity:
-CFP/IMCA: Intermediate
-NASBA: Basic
Learning Objectives:
- Discuss unique challenges that affluent clients may face when planning for college expenses.
- Describe the difference between the FAFSA and the CSS Profile.
- Facilitate conversations about higher education planning and school selection with clients and their students.
- Explain tax strategies associated with education planning.
- Analyze student financial aid packages to determine which loans would benefit the client and discuss opportunities to appeal.
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Retirement Planning
Program Description:
Monte Carlo analysis is a commonly used tool in financial planning, with the probability of success being the most common method for reporting a financial plan’s results. However, this practice may be hurting clients more than helping them by creating more financial stress and a propensity for miserly financial behavior. In this webinar, Dr. Tharp explains how the use of probabilities of success is akin to the practice of bloodletting in the medical field, where professionals are commonly using a practice that is often misunderstood by professionals and clients. Through the presentation, Tharp explains what the probability of success metric truly means and its shortcomings, especially when considering ongoing planning. Tharp then explains an alternative planning method, adjustment-based guardrails, and presents practical methods to reframe retirement income planning to reduce the likelihood of underspending while helping clients enjoy their retirement fully.
Level of Complexity:
-CFP/IMCA: Intermediate
-NASBA: Basic
Learning Objectives:
- Explain why underspending is a common issue for financial planning clients
- Discuss what probability of success is with clients and understand its shortcomings
- Analyze the differences between retirement spending calculation methods
- Frame retirement income planning for better conversations with clients
- Describe the concept of adjustment-based planning
Recommended CPE:
- 1.5 CFP hours
- 1.5 NASBA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Estate Planning
Program Description:
HSAs are a common employee benefit for many clients. However, this form of savings account has several rules regarding contributions and distributions that can easily be overlooked by clients, leaving them open to potential tax penalties and missed opportunities to maximize the benefits of this unique savings vehicle. In this webinar, Ben Henry-Moreland, Senior Financial Planning Nerd at Kitces.com, walks participants through a detailed explanation of the planning considerations of HSA ownership starting from contribution eligibility to distribution rules to transferring assets in an HSA at death. In this session, he also explains how to strategically utilize an HSA to plan for current medical needs, take advantage of tax-free growth, and coordinate benefits with spouses and adult children.
Level of Complexity:
-CFP/IMCA: Intermediate
-NASBA: Basic
Learning Objectives:
LO #1 Summarize the history of the HSA and the state of medical expenses in the United States.
LO #2 Analyze HSA contribution eligibility and limits for clients
LO #3 Coordinate HSA contributions for spouses and non-dependent children
LO #4 Describe HSA distribution rules and strategies
LO #5 Explain the rules and planning considerations associated with the death of an HSA owner
LO #6 Strategize with clients about how to use and maintain an HSA
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Regulation & Compliance
Program Description:
Within every financial advisor’s practice, certain tasks have always been time-consuming, thereby constraining the efficiency of other essential duties. These include preparing for client meetings, constructing financial planning proposals, and addressing general client inquiries. As these tasks continue to grow rapidly, they become not only a drain on time but also a financial burden. While various technologies have aimed to streamline financial advising processes, from notetaking to managing client compliance, the demands of the profession have persisted. Despite improvements, advisors find themselves increasingly inundated with tasks such as email drafting and blog writing, detracting from their ability to focus on their most important task of all, meeting with clients. Now, with the advent of cutting-edge generative AI, particularly exemplified by ChatGPT, advisors can experience a significant acceleration in efficiency. This webinar aims to showcase practical examples of how ChatGPT can revolutionize advisors’ practices, expanding their capabilities and enhancing the efficiencies that ultimately benefit their clients.
Learning Objectives:
LO #1 Understand the uses and history of Generative AI in practice and applications for Financial Advisors
LO #2 Identify the specific aspects of ChatGPT and its practices currently in use and its overall limitations.
LO #3 Evaluate the uses of Generative AI, specifically ChatGPT to enhance Financial Planning
LO #4 Analyze how prompt engineering can impact the output of ChatGPT for financial advisor inputs.
LO #5 Practice prompt engineering with ChatGPT for financial planning uses and applicable scenarios.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
7.13.2021
Session Description:
Asking great questions is an essential part of the job of the financial advisor. Great questions help us to gather important information, and great questions can help motivate clients to take action. Many advisors are aware of the difference between a closed-ended question and an open-ended question, but questions can take additional forms as well. Join us this month and learn not only about the different types of questions that are available to advisors, but also about how and when to use these questions throughout the financial planning relationship.
Learning Objectives:
LO #1: Examine the impact of different styles of questions on the brain.
LO #2: Review the varied types of questions advisors can use, more than just closed- versus open-ended questions.
LO #3: Review ideas, and reasons behind those ideas, for asking certain types of questions at specific times related to the seven steps of financial planning.
LO #4: Understand why continuing to ask great questions, beyond initial onboarding, is so important to keep the relationship with the client fresh.
LO #5: Examine question-asking pitfalls and discuss how to avoid them.
Key Terms:
Close-ended Questions: Questions that can often be answered with just a single word, such as “fine”, “great”, or “okay”.
Open-ended Questions: Questions that can or would be difficult to answer with a single word and usually involve really thinking about an answer.
Swing Questions: Closed-ended questions that use “will”, “can”, “would”, “could”, and “should”. For example, “Would you be willing to do X?” Or, “Can you tell me a bit more about Y?”
Implied Questions: A style of question that uses statements that are structured as indirect questions and use phrases like “I wonder” or “you must”.
Projective Questions: This style of question uses phrases like, “What if…?” Or “What would…?” with the goal of allowing the client to visualize a wide range of options, answers, or ideas.
Scaling Questions: This style of questioning actually requires a short series of questions. The first question uses a 1 to 10 scale, and then the follow-up questions ask about where and why they have placed themselves on the scale in the way that they did.
Transformation questions: These are open-ended questions combined with close-ended questions; this combination, though, generally just results in a ‘yes’ or ‘no’ close-ended response because of how the listener’s brain tends to process the question structure.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
Bonds are a common part of a client’s investment portfolio. However, common does not mean uncomplicated. The bond type, method of purchase, and circumstances by which it is sold can all impact how a bond’s basis is adjusted, the tax that will be applied, and the applicable forms for tax reporting.
In this webinar, Tim Steffen, CPA/PFS, CFP®, CPWA® demystifies taxation rules on bonds that can be easily overlooked, such as the tax treatment on Original Issue Discount (OID) bonds, market discount, and premium on bonds. For each unique bond scenario, Tim explains options for how applicable taxes on bonds can be reported and walks through how to review the forms used for tax reporting. Tim concludes this webinar with a review of savings bonds that are particularly popular in a high-interest rate environment and highlights the difference between how individual bonds and bond funds are taxed.
Level of Complexity:
CFP/IWI: Intermediate
NASBA: Basic
Learning Objectives:
- Summarize key characteristics of bond purchasing and ownership.
- Review common forms used for tax reporting throughout the lifecycle of bond ownership.
- Explain how Original Issue Discount and market discount bonds are taxed.
- Describe the types of bond premium and the associated tax rules.
- Recognize the tax differences associated to savings bonds, and Treasury Inflation-Protected Securities, and bond funds or ETFs.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
This presentation introduces a simple 4-step retirement income plan that helps advisors gain a deeper understanding of the client’s attitudes toward lifestyle and legacy goals. Goal-based retirement planning provides a client-driven process that matches investment risk and financial product selection to spending. Moving beyond a traditional withdrawal strategy and failure rates demonstrates the need for spending adjustments and provides a framework for discussing products that reduce longevity risk. Through a better understanding of client preferences and a deliberate discussion of objectives and income tradeoffs, the goal-based income plan provides retirees with a deeper and more realistic understanding of how their investments relate to how they spend in retirement.
At this webinar, Professor of Wealth Management at The American College of Financial Services, Michael Finke, explains the practical implementation of a simple 4-step retirement income plan designed to help financial planners gain a deeper understanding of their clients’ attitudes toward lifestyle and legacy goals.
Level of Complexity:
CFP/IWI: Intermediate
NASBA: Basic
Learning Objectives:
1. Understand the fundamental principles of goal-based retirement planning
2. Recognize the limitations of traditional withdrawal strategies and failure rates in retirement income planning
3. Explain the four-step retirement income plan, including its components and how they address client preferences, objectives, and income tradeoffs.
4. Evaluate the importance of discussing lifestyle and legacy goals with clients to create a deeper and more realistic understanding of how their investments relate to their spending in retirement.
5. Apply knowledge of goal-based retirement planning concepts to facilitate more meaningful discussions with clients about financial product selection and investment strategies
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Estate Planning
Program Description:
Financial planners are often working to adapt estate plans to consider client concerns over legislative changes. However, proposed legislative changes may or may not come to pass, leaving financial planners with the option of changing client estate plans with limited information or potentially leaving clients exposed to the consequences of future tax law. Neither of these outcomes is ideal. This leaves the question of how to properly create estate plans that meet client needs and are flexible enough to remain effective in uncertain times. In this webinar, David Haughton, JD, CPWA®, explains how to create flexible estate plans with trusts that go beyond the traditional AB trust structure. He also details how a “kitchen sink” power of attorney, IRA beneficiary designations, and donor-advised funds can be utilized for flexible wealth transfers.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Learning Objectives:
- Explain factors that could render an estate plan flawed or obsolete
- Discuss the current legislative changes that could impact client estate plans and why an AB trust structure may be outdated
- Describe trust structures that offer more flexibility than an AB trust structure
- Analyze trust distribution options to balance control and flexibility
- Outline how estate planning techniques beyond trusts can be utilized for estate planning flexibility
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Client Trust & Communication
Program Description:
Rapport building is pivotal groundwork for a trusting relationship. One sure fire way to build rapport and ultimately trust is by asking follow-up questions. In this presentation, advisors will learn why follow-up questions are so powerful for trust and connection. They will also learn about varied forms of follow-up questions and how to use those forms in the varied financial planning meetings, specifically introduction meetings, discovery meetings, and plan presentations meetings. Utilizing follow-up questions to strategically build rapport and trust in the early stages of a new financial planning engagement.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Learning Objectives:
• LO #1: Identify what is going on in the brain when we ask follow-up questions
• LO #2: Define the “true” follow-up question
• LO #3: Review the connection between asking true follow-up questions and active listening
• LO #4: Review varied structures of follow-up questions
• LO #5: Identify how to use different types of follow-up questions based on the financial planning meeting
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
Stock options can be a valuable portion of a client’s compensation. However, Incentive Stock Options (ISOs) can require a significant amount of planning to maximize the benefits of this compensation to align with client goals, especially since ineffective planning for ISOs can result in significant unplanned tax liability. Planning for a client’s stock options can also be an emotional experience, where clients may feel overwhelmed or sad when considering parting with company stock. In this webinar, Daniel Zajac, CFP®, EA, provides a review of ISOs, explains how to decide on a client strategy for exercising ISOs based on a client’s situation and the status of the issuing company, and details how to calculate the potential tax impact of exercising and selling ISOs, including navigating alternative minimum tax. Zajac concludes this webinar with a discussion of how to start conversations with clients about their incentive stock options and build a plan that aligns with their overall goals.
Learning Objectives:
- Explain what incentive stock options are and how they differ from non-qualified stock options
- Estimate the tax impact of exercising incentive stock options
- Analyze the pros and cons of two incentive stock options strategies: “exercise and sell” and “exercise and hold”
- Evaluate planning opportunities for incentive stock options
- Establish a plan for working with clients that have incentive stock options
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
Tax planning has become an increasingly important part of the typical wealth management relationship, making a sound understanding of tax-saving strategies an absolute must for many financial professionals. One such strategy that has a place on the financial advisor’s “rolodex” of planning tools is Section 1202 Qualified Small Business Stock (QSBS). For the right business owner-client, QSBS offers a virtually unrivaled opportunity to create substantial, long-term tax-free growth. Unfortunately, not all small businesses are eligible for QSBS treatment, and of those that are, owners often fail to fully maximize their tax-free potential due to a lack of understanding of the key rules, or a failure to think creatively.
At this Kitces monthly webinar, Jeff Levine explains key QSBS concepts and provides practical tips advisors can apply to help clients take advantage of this unique planning opportunity.
Learning Objectives:
- Explain essential Qualified Small Business Stock (QSBS) rules
- Identify what makes a client the “right business owner-client” to take advantage of a QSBS strategy
- List options for preserving QSBS treatment for sales prior to the 5-year required holding period
- Describe how to “convert” a non-QSBS business to a QSBS business
- Summarize the pros and cons of incorporating a QSBS strategy into a client’s financial plan
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Planning Profession
- Practice Management
- Regulation & Compliance
Program Description:
This program fulfills the requirement for CFP Board approved Ethics CE. It has been designed to educate CFP® professionals on CFP Board’s new Code of Ethics and Standards of Conduct effective October 1, 2019. In this engaging and thought-provoking webinar on CFP ethics, expert Darin Shebesta will delve into the ethical considerations and responsibilities of Certified Financial Planners. Explore the intricate balance between client relationships, fiduciary duty, and personal integrity, as we navigate the complex ethical landscape in the financial industry.
This program satisfies the CFP Board’s 2 hours of ethics CE per reporting period. We also offer a written, self-study CFP Ethics program which satisfies the same 2 hour requirement. CFPs can not complete more than 2 hours of ethics per reporting period.
Learning Objectives:
- Understand the structure and content of the revised Code and Standards, including significant changes from prior rules.
- Describe CFP Board’s Fiduciary Duty
- Identify Material Conflicts of Interest and How to Avoid, or Fully Disclose, Obtain Informed Consent, and Manage Them.
- Understand the Duty to Report to CFP Board and the Duty to Cooperate.
- Identify the Practice Standards When Providing Financial Advice that Requires Financial Planning or Financial Planning.
- Understand the Duty to Provide Information to Clients When Providing Financial Planning and/or Financial Advice.
Recommended CPE:
- 2.0 CFP hours
- 0.0 NASBA hours
- 2.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 2.0 IWI Ethics hours
- 2.0 IAR EPR Hours
- 0.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
Program Description:
In this session, advisors will receive an update on charitable giving trends and then delve into the considerations for what assets to donate, who can receive charitable donations, how to donate, and when to donate to maximize charitable deductions. The nuances of Qualified Charitable Distributions (QCDs), Donor Advised Funds (DAFs), charitable trusts, and private foundations are discussed. The session concludes with suggestions of topics to discuss with clients on family philanthropy
Learning Objectives:
- Explain current trends in charitable giving and how to engage with clients on discussions around family philanthropy
- Describe the different assets that can be donated to charities and the resulting tax implications.
- Analyze when to give to charity to maximize charitable deductions based on a client’s tax situation.
- List 4 categories of charitable giving methods (i.e., direct gifts, philanthropic structures, split interest vehicles, private foundations) and describe how specific methods in these categories can be utilized for a client.
- Differentiate between charitable trusts and when each would be suitable to meet a client’s needs.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Ethics
- Taxes
Program Description:
In this session, advisors will gain a comprehensive understanding of the types of tax advice they cannot provide without being a designated tax practitioner, such as a CPA, EA, or attorney. Explore the allowable types of tax advice from a legal standpoint, while also recognizing the potential liabilities for advisors and their firms in the absence of proper procedures for competent and client-centric tax advice. Discover the nuances between tax planning and tax advice, and learn best practices for advisors to add value through tax planning when direct tax advice may not be an option.
Learning Objectives:
- List the limitations of providing tax advice as a financial advisor without proper tax practitioner credentials.
- Differentiate between tax planning and tax advice.
- Identify the best practices for establishing procedures and oversight mechanisms to ensure competent and client-centric tax advice, reducing potential liability risks and enhancing the quality of service provided.
- Assess potential gaps in tax advice offering.
- Determine best practices to add value with tax planning when giving tax advice isn’t an option.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 1.0 IAR EPR Hours
- 0.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Estate Planning
Program Description:
Estate planning documents are often executed and then untouched for years, as clients may consider their estate planning complete. However, changes in life circumstances, tax law, technology, and even medical advances may render a client’s existing estate plan suboptimal and ineffective in meeting a client’s needs.
At this Kitces monthly webinar, Martin M. Shenkman, CPA, MBA, PFS, AEP (distinguished), JD explains the role that advisors can play in ensuring that their client’s estate plans remain relevant in our ever-changing world. Martin provides practical issues advisors can look for and potential solutions to common issues with old yet common estate planning strategies.
Learning Objectives:
• Explain how changes in tax law have impacted the relevancy of some estate planning strategies, such as bypass trusts.
• Examine a client’s existing estate plan to evaluate if their estate is still appropriate for their needs.
• Describe how clients can outgrow their existing estate plan and what can be done to address it.
• Review a client’s trusts, including life insurance trusts, for relevancy and practicality for the client’s current needs.
• Contemplate the pros and cons of altering a client’s existing estate plan.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
Jeff Levine, CPA/PFS, CFP® and Director of Advisor Education at Kitces.com, will be walk advisors through regular year-end planning discussions advisors will likely be having with clients as well as discussions based on the tax, inflation, and market environment experienced in 2023. Such topics include addressing risk for near- and current retirees in the current market environment as well as changes to relevant rules. In addition, the webinar will discuss Roth conversions, Tax-Loss Harvesting, and other strategies and questions to cover with clients in order to help them think about the present as well as the future. Financial planners will walk away with greater awareness of potential changes and strategies to close out 2023 and start 2024.
Learning Objectives:
– LO #1: Identify near/recent retiree conversations around sequence of return risk and how to talk to clients in those situations about tradeoffs.
– LO #2: Review recent legislation, RMD rules, and FSA rules and how to plan moving into the future.
– LO #3: Review strategies and considerations for Roth conversions, year-end contributions, as well as both tax loss and tax gain harvesting.
– LO #4: Reviewing tax withholding considerations and how to have conversations about future tax rates
– LO #5: Review Medicare open enrollment and revisit home office deductions.
– LO #6: Identify other conversations, such as State And Local Tax (SALT) planning and beneficiary reviews, that can also bring value to end of year planning and reviews.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Client Trust & Communication
Program Description:
Financial advisors will inevitably work with clients facing turbulence related to their finances, whether it is a personal job loss or stress about a market downturn. In these situations, financial advisors might attempt to act as rationally as possible and encourage their clients to do the same. However, because the human brain is not wired to move between stress and rationality quickly, such an approach could backfire, and the client could feel as though their concerns are not being heard by their advisor.
At this Kitces Monthly Webinar, join licensed clinical psychologist Barbara Kay as she discusses the neuroscience of anxiety, techniques advisors can use to communicate with a client facing stress, and potential pitfalls to avoid when working with clients during turbulent times.
Learning Objectives:
- Understand how the biology of the brain determines how humans respond to different types of stressors.
- Learn why humans frequently act more emotionally and less rationally when facing stressful situations.
- Understand how advisors can prevent “emotional contagion” that can make them feel stressed as well when working with an anxious client.
- Learn a 3-step process for helping clients de-escalate when facing a stressful situation.
- Explain potential pitfalls that can derail a conversation with a client experiencing stress.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Retirement Planning
Program Description:
NASAA IAR CE credit applied for. There will be a delay in reporting completions.
Financial advisors often work with clients who are nearing or in retirement, and healthcare is one of the most pressing concerns for people as they approach retirement age and beyond. But although it’s important to make sure the numbers all add up and that clients have the resources to pay for healthcare costs throughout their retirement, what’s even more important (but often forgotten) is that they – and the people who might become responsible for caring for them – are aligned on their healthcare goals, so they can maintain their desired quality of life even when health issues arise.
Join Carolyn McClanahan, founder of Life Planning Partners, at the October Kitces Monthly Webinar, where she will discuss the real-life challenges faced by planners and their clients around meeting healthcare needs in retirement, including pre-planning before a medical event occurs to ensure the client’s goals are communicated with and supported by family and health care providers, deciding who will provide care (be it family members, friends, or professional help) and how they will be paid, and learning what government assistance programs may be available to help with the cost of care.
Learning Objectives:
At this Kitces Monthly Webinar, advisors will learn:
- How to agree on and prepare an Advance Medical Directive
- What factors should be considered when deciding on who will provide care
- How to decide whether to receive care at home or in an assisted living or skilled care facility
- How to get the most out of the available benefits from a Long-Term Care Insurance policy
- What assistance government programs like Medicare, Medicaid, and VA can provide
Specialized Knowledge:
- CFP: Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.5 CFP hours
- 2.0 NASBA hours
- 1.5 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.5 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Retirement Planning
Program Description:
The appeal of a Roth-style retirement account is the potential for tax-free growth for life. However, the reality is that creating a Roth account has a ‘cost’ – the upfront tax liability of contributing to (or converting into) the account, which is avoided with a traditional pre-tax IRA or 401(k). As a result, optimal Roth strategies do not merely involve contributing to or converting into Roths, but managing the timing and leveraging the available tax law to maximize the strategy.
Join Chief Financial Planning Nerd Michael Kitces at the September Kitces Monthly Webinar, where he’ll share techniques to maximize Roth contributions, including “Backdoor Roth” IRAs and “Mega Backdoor Roth” 401(k) strategies, leveraging the Roth recharacterization rules to optimally fill lower tax brackets, and being able to ensure that an investment in a Roth has a positive return before being required to commit to it!
Learning Objectives:
At this Kitces Monthly Webinar, advisors will learn:
- How to calculate the amount of after-tax contributions needed to equal the same amount of pre-tax contributions given various tax rates and pre-tax contribution amounts
- The mechanics of the “Backdoor” Roth IRA strategy and considerations for using it
- The rules for successfully implementing a Mega “Backdoor” Roth IRA Strategy
- How to create additional tax planning flexibility using partial Roth conversion
Specialized Knowledge:
- CFP: Retirement Savings and Income Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Retirement Planning
Program Description:
Monte Carlo simulations have become the dominant method for conducting financial planning analyses for clients. They are a feature of most comprehensive financial planning software programs, and advisors often use this data point as the centerpiece when they present a financial plan. However, a Monte Carlo simulation ultimately captures an outrageous spectrum of outcomes, then puts a probability of success number on a client’s plan which is supposed to help them make sense of that outrageous spectrum, but doesn’t necessarily leave them with a true peace of mind. Further, most advisors don’t really understand how to best interpret a Monte Carlo simulation, let alone communicate the analysis to clients in a way that creates the peace of mind they’re looking for. As an alternate strategy, advisors use guardrails, which are guidelines to increase or decrease spending when portfolio withdrawal rates reach certain levels. Yet, most retirees do not spend at the constant distribution rates assumed . So what is available to the advisor who wants to provide an effective retirement analysis to clients that reflects how dynamic retired life can be?
At this Kitces Monthly Webinar, Derek Tharp, Lead Researcher at Kitces.com, discusses risk-based guardrails as a way to better guide flexible income planning for retirees, and the levers that can be adjusted in setting proper (risk-based) guardrails for retirement income.
Learning Objectives:
– LO #1: Define the risk-based guardrail approach and its advantages.
-LO #2: Examine how guardrail strategies perform in the real world.
– LO #3: Understand which levers really matter in a risk-based guardrails plan.
– LO #4: Examine the impact of different risk-based guardrail parameters.
– LO #5: Identify practical considerations of using risk-based guardrail parameters.
Specialized Knowledge:
- CFP: Retirement Savings and Income Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
Over the past few decades, higher education costs have increased at a pace far exceeding inflation. In an effort to help save for such costs, many families have turned to 529 plans. While the basic mechanics of such plans are well understood by most advisors, 529 planning can become surprisingly complex, especially when planning for multiple (generations of) potential students, or when 529 plan funds are used for purposes other than higher education. Join Lead Financial Planning Nerd, Jeff Levine, at the July Kitces Monthly webinar, where you’ll explore many of these complexities and take a deep dive into some of the more challenging aspects of 529 planning.
Learning Objectives:
- An overview of key 529 plan rules
- Tax consequences of changing 529 plan owners and/or beneficiaries
- The impact of ownership decisions on student aid
- Trust-owned 529 plans considerations and the “Dynasty 529 Plan”
- State tax complications created by recent changes to the Federal tax rules
- SECURE 2.0’s 529-to-Roth IRA transfers and the “Sweet 16 Roth IRA”
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
The transition from employer insurance to Medicare is fraught with confusion. Clients turning 65 or leaving employment must leave the safety and simplicity of their pre-selected and subsidized employer plan to the wild world of Medicare, with all its parts, multiple enrollment periods, and private insurance options to fill the coverage gaps. This session will cover health insurance in retirement: how Medicare works, how to choose private insurance to go with Medicare, and how to establish a health care budget.
Learning Objectives:
LO1: Review Medicare coverage options and enrollment deadlines
LO2: Describe how advisors can help working clients coordinate their work-provided health insurance coverage with Medicare coverage once they reach age 65
LO3: Describe how enrollment in Medicare affects how a client can use their Health Savings Accounts
LO4: Understand the differences between and potential pros/cons of Medigap and Medicare Advantage coverage
LO5: Identify how to estimate total client health care costs in retirement
Specialized Knowledge:
- CFP: Insurance
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- Taxes
Program Description:
S Corporations, and their taxation, are of interest for financial planners as much as they are for financial planning clients. For instance, what is “reasonable compensation”? Or how is the health insurance premium handled? – These are questions financial planners have to answer for clients as well as sometimes for themselves. This month’s webinar will arm financial advisors with the benefits, limitations, and strategies for S-Corps that they can share with clients and use for themselves.
Learning Objectives:
- LO #1: Review basic S Corp rules and definitions, such as the taxation of S Corp profits.
- LO #2: Review recent tax law changes as they relate to S Corps.
- LO #3: Identify the benefits of S Corps, such as liability protection and the transferability of ownership interests.
- LO #4: Identify the limitations of S Corps, such as the number of allowed shareholders.
- LO #5: Identify strategies S Corp owners can consider to reduce their tax liability.
Specialized Knowledge:
- CFP: Taxation
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 1.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
Program Description:
Helping clients to figure out how to spend their money in retirement is a large part of advisor’s work and no easy task. Clients can get confused about strategies. And strategies themselves become more and more complex given the complexity of the client (is the client a couple, high-income, business owner, have inheritance or giving goals). Yet, one unifying principle is that advisors and clients both want as much income in their hands as possible and this brings taxes and tax efficiencies front and center. Join us and learn not only about efficient strategies, but rules of thumb that can be taken back to practice and ease client-advisor conversations about planning and spending complexities in and through retirement.
Learning Objectives:
- LO #1: Understand the taxation of different accounts and investments.
- LO #2: Examine the impact of changing marginal tax rates.
- LO #3: Review the planning considerations and outcomes of different types of accounts and investments.
- LO #4: Review net return rules for exempt and deferred tax accounts.
- LO #5: Outline the retirement withdrawal implications and rule of thumb for spending in retirement.
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Key Terms:
Gross Return: Total return before accounting for fees, taxes, commissions, or expenses.
Net Returns: The amount of return after fees, tax, commissions or expenses are deducted. What the client would actually receive at the end of the day for spending/use.
Goal-Based Investing: Building an investing strategy that funds a spending goal with highest net return for a given level of risk.
Marginal tax rate: This is the tax rate paid on the last dollar of taxable income. Or sometimes defined as the amount of additional tax paid for every additional dollar earned as income.
Net Investment Income Tax: This is an imposed tax, an additional 3.8%, on certain net investment income of individuals, estates, and trusts that have income above the statutory threshold amounts.
Asset location: A strategy for minimizing taxation by placing certain types of investments in different types of accounts (e.g., taxable, tax free, or tax deferred).
Tax Bracket Management: A strategy of realizing income to fill up tax bracket ‘buckets’ to avoid paying a higher tax rate in the future.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
Program Description:
Ongoing monitoring meetings get boring. Advisors and clients alike are not thrilled to be having the same meeting again and again where there is nothing new or exciting to report. Yet, when clients hit the “fine” phase of the client-advisor relationship, this can be the perfect time to start having “flourish” conversations and bring some fun back to the client-advisor relationship and transform the boring monitoring meetings. Join us and learn about thinking of the three phases of the client advisor relationship as fix, fine, flourish and the questions to ask clients that move them from fine to flourish which ends up brining the advisors back to where they are happiest, at fix.
Learning Objectives:
- LO #1: Examine on-going monitoring meetings and what makes them boring and how to know when clients are bored too.
- LO #2: Understand the fix, fine, flourish cycle to client advisor relationships.
- LO #3: Define flourish and identify the flourish components.
- LO #4: Review questions and meeting process for having flourish conversations.
- LO #5: Identify how to start having flourish-based meetings.
Level of Complexity:
- CFP: Financial Planning Process
- NASBA: Specialized Knowledge (Personal Financial Planning
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Key Terms:
Fix: The early phase of the client-advisor relationship where there are clear financial issues or goals that need to be addressed. Transitions can also reignite fix.
Fine: The middle phase of the client-advisor relationship where clients and advisors alike mainly describe their interaction as fine. These are useful times for rest, but they can also get boring and end out with unsatisfying meetings.
Flourish: A third phase of the client advisor relationship where new goals related to growth and self-worth, and purpose, meaning, autonomy and relationships are explored with greater depth that would not have been possible before, earlier in a fix or fine phase.
Maslow’s Hierarchy Of Needs: Developed by Abraham Maslow, Maslow’s hierarchy of needs was meant to explain motivation and provide insight into the human condition to meet both basic physical and emotional needs as well as complex physical and emotional needs. Human needs are broken into 5 categories: physiological needs, safety and security, love and belonging, self-esteem, and self-actualization.
End Of History Illusion: The psychological phenomena describing how a person will describe their current self compared to their younger self as totally different and yet asked to describe the future self, persons will default to saying future self is much like the current self. In a sense, they describe an end of history as though they will stop changing.
Arrival Fallacy: The psychological phenomena describing how people often enjoy the pursuit of a goal more than they enjoy actually achieving the goal. Humans tend to be happier striving toward success than they do achieving success.
Positive Psychology: A movement spawned by Dr. Martin Seligman that focuses on studying individuals that are doing well, have strengths, and want to have more full lives in contrast to focusing on the study of disorders and maladaptive behavior.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
Program Description:
Jeff Levine, CPA/PFS, CFP® and Director of Advisor Education at Kitces.com, will give an in-depth breakdown of the SECURE 2.0 Act that has been passed by both houses of Congress and is expected to be signed into law before the end of 2022. In this breaking-news webinar, Jeff will go over the numerous provisions of SECURE 2.0 that will be relevant for advisors and their clients, including the legislation’s gradual pushing back of the RMD age from 73 to 75, the expansion of opportunities to make Roth contributions (including new SEP and SIMPLE Roth IRAs), and the elimination of RMDs on Roth-style employer retirement accounts; along with the ability to transfer 529 plan assets to a Roth IRA, expanded catch-up contribution limits, new exceptions to early-withdrawal penalties, and more. Advisors will walk away with information on how their clients will potentially be affected by the new law, as well as ideas on how to take advantage of some of the new planning opportunities it opens up.
Learning Objectives:
– LO #1: Identify when individuals will be required to begin RMDs under the new law
– LO #2: Explain how SECURE 2.0 affects Roth savings in employer-sponsored retirement plans
– LO #3: Describe the new catch-up contribution rules for employer retirement plans and IRAs
– LO #4: State the new methods that employees can use to take advantage of employer matching contributions under SECURE 2.0
– LO #5: Describe the new rules that apply to transferring 529 assets to Roth IRAs.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Taxation
- NASBA: Specialized Knowledge (Personal Financial Planning)
Key Terms:
529 Account: A state-agency-sponsored tax-advantaged account established for education savings intended to be used for college expenses (tuition, books, and other qualified expenses), K-12 tuition, certain apprenticeship costs, and some student loan repayments.
529A Account (aka ABLE Account): Also known as an ABLE account, created in 2014 as part of the “Achieving a Better Life Experience” (ABLE) Act. This account allows families to save and invest funds for the care of a disabled family member while maintaining eligibility for public benefits such as Social Security, Medicaid, and public housing.
Age 50 Public Safety Worker Exception: Exception to the 10% early withdrawal penalty for certain public safety workers (e.g., firefighters, corrections officers, forensic security employees, et al.) who separate from service in the year they turn 50 or older.
Long-Term Care Insurance: insurance policy that is designed to help with the cost of long-term care services.
Multiple Employer Plans (MEPs): These are single retirement plans that are maintained for the benefit of two or more unrelated employers.
One Bad Apple Rule: A rule imposed by the IRS that results in the disqualification of an entire MEP if an impermissible action – or the failure to take a required action – is carried out by a single employer participating in the MEP. In other words, if just one employer in the MEP (of many participating employers) didn’t properly complete all the required steps of 401(k) plan administration, the entire plan – for all participating employers – would be disqualified.
Qualified Charitable Contribution: An above-the-line charitable contribution established by the CARES Act to support charitable giving.
Qualified Longevity Annuity Contract (QLAC): A deferred annuity, in contrast to an immediate annuity, funded with an IRA or a qualified retirement plan.
Qualifying First Responders: Law enforcement officers, firefighters, paramedics, and Emergency Medical Technicians (EMTs) who receive service-connected disability and retirement pensions.
Required Minimum Distribution (RMD): The amount that one must withdraw each year from qualified retirement accounts (e.g., Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, etc.) once the owner has reached age 70½.
Roth Account: An account in which after-tax distributions are made and future withdrawals (including interest) are tax-free when made after age 59 1/2.
Saver’s Credit: A tax credit for eligible taxpayers who make certain contributions to retirement plans (e.g., Traditional and Roth IRAs, 401(k), 403(b) government 457(b), SARSEP, and SIMPLE plans). Amount of the credit is a percentage of the contribution (up to $2,000 for individuals and $4,000 for MFJ), depending on AGI.
Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.
SECURE Act 2.0: Part of the Consolidated Appropriations Act of 2023 signed into law by President Joe Biden on December 23, 2022, SECURE Act 2.0 made sweeping changes to various retirement savings rules, including (but not limited to) pushing back RMDs to age 73 in 2023 (with a provision to push them back again to age 75 in 2033), elimination of RMDs from Roth accounts in employer retirement plans, allowing transfers from 529 accounts to Roth IRAs.
Solo 401(k) Plan: Retirement plan similar to a traditional 401(k) plan but restricted to self-employed business owners with no employees other than themselves (with the exception of the business owner’s spouse as the only other employee). The business owner may make contributions as an employee (with an annual limit of the smaller of 100% of compensation or up to $20,500 in 2022), and as an employer (up to 25% of their compensation).
Variable Annuity: Contract between an insured and insurance company that establishes a tax-deferred investment account with insurance features that can provide a stream of income through periodic payments and a death benefit for a designated beneficiary
Variable Universal Life Insurance: Permanent life insurance policy that offers savings and investment components and flexible premium. The cash component can be invested through investment subaccounts.
Course Review Date:
N/A
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
Session Description:
SLATs (Spousal Lifetime Access Trusts) are a popular estate planning tool for married clients with a net worth above the current estate planning exemption. Yet, SLATs can also be adapted for clients with $1-10 million in net worth solving for uncertainty, tax, asset protection, and aging. In this webinar advisors will review what a SLAT is and then go through tangible examples of how to turn this traditionally ultra-high net worth tool into a useful tool for a wider range of clients.
Learning Objectives:
- Define a SLAT (Spousal Lifetime Access Trust) and its common uses.
- Identify the benefits of a SLAT for ultra-high net worth couples.
- Identify the benefits of the SLAT for families with $1-10M in net worth.
- Identify the considerations for how to make a SLAT appropriate for $1-10M clients.
- Identify how insurance and beneficiaries must also be considered to make the SLAT appropriate for $1-10M clients.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Estate Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IMCA General Financial Planning hours
- 0.0 IMCA Taxes and Regulations hours
- 0.0 IMCA Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
SLAT (Spousal Lifetime Access Trust): A set of irrevocable trusts made between partners, where the other partner is the beneficiary to the other partner’s trust and vice versa.
DAPT (Domestic Asset Protection Trust): A trust in which the settlor is also named as a beneficiary.
Hybrid DAPT: A traditional irrevocable trust combined with a Domestic Asset Protection Trust (DAPT).
SPAT (Special Power of Appointment Trust): A trust that gives someone, in a non-fiduciary capacity, a collateral power of appointment, allowing distribution of trust property to anyone in a class that includes the grantor (e.g., descendants of the grantor’s grandparents).
ILIT (Irrevocable Life Insurance Trust): An irrevocable trust that, when used properly, keeps a life insurance death benefit out of the grantor’s estate.
Step Transaction: The legal principle that a series of related steps in a transaction should be taxed based on the overall economic nature of the transaction, not just based on the separate individual steps.
Reciprocal Trust Doctrine: Essentially states that if Person A creates a trust for B, and B creates an identical (i.e., reciprocal) trust for A, that the courts can “uncross” the trusts and treat the situation as though each person created a trust for his/her own benefit.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
Program Description:
A unique element of financial planning is that client relationships can last for a very long time, with many advisors assisting clients over the course of decades as their financial planning needs evolve in step with their personal lives. Due to this aspect of the planning relationship, it is almost inevitable that an advisor will encounter a time when a client is diagnosed with a terminal illness. And while it is important for the advisor to review technical areas of the financial plan (from cash flow to estate planning) with these clients, an even more critical consideration is how to best communicate and interact with a client whose thoughts are consumed by their illness. If the advisor isn’t aware of the strategies for working with a client with a “sick brain”, all the best financial plans will be useless.
Learning Objectives:
- Identify key questions and phrases to use when you communicate with a client who tells you they have a serious illness.
- Summarize common issues for clients that come up when they are moving through the planning process when they don’t feel well
- Identify end-of-life financial concerns around cash flow and insurance.
- Identify end-of-life financial concerns around estate planning, tax planning, and investment planning.
- Compare and contrast case study examples and hear how different end-of-life financial planning can be addressed.
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Health Insurance
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IMCA General Financial Planning hours
- 0.0 IMCA Taxes and Regulations hours
- 0.0 IMCA Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
Ethical Will: A document that passes on values, family stories, and goals from one generation to the next.
Healthcare Directive: Legal document that provides information and direction pertaining to future medical care.
Step-Up in Basis: This is what can happen to an inherited asset at the death of the decedent, when low basis stock or other assets are “stepped-up” to current market values, which can result in large capital gains tax savings.
Beneficiary: The person who receives gifts or assets via a will or other legal documentation.
Hospice: A type of care that focuses on keeping an individual comfortable emotionally, physically, and spiritually as they transition from life to death.
Palliative care: This type of care, like hospice care, is about reducing symptoms and increasing quality of life, but palliative care can begin much sooner than hospice care and support an individual’s quality of life and even extend healthy life.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Kitces Topic Areas:
- General Planning
- Retirement Planning
Session Description:
Sometimes there are situations where individuals need access to funds in their tax-deferred retirement accounts sooner than the rules allow. In fact, except for a narrow range of ‘emergency’ situations, the only way most individuals can access these funds without incurring a 10% early withdrawal penalty tax is by setting up “Substantially Equal Periodic Payments (SEPP)”, otherwise known as 72(t) payments. To do so, however, taxpayers must adhere to several rules that have been provided by the IRS or risk paying significant penalties. Join us at the August Kitces Monthly webinar where expert guest, Jeffrey Levine, will discuss the rules to consider and strategies to apply when helping clients who may need early access to their retirement funds.
Learning Objectives:
- Identify which critical 72(t) payment rules must be considered to avoid penalties
- Identify how to navigate IRS Notice 2022-6, which sets a new 5% ‘floor’ interest rate for calculating 72(t) payments
- Understand the special planning considerations that come up in situations of divorce or multiple accounts
- Understand the special planning considerations that come up with layering exceptions, reporting, and Roth conversions.
- Learn how to apply 72(t) strategies to a variety of client goals
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Taxation
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New and emerging issues or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IMCA General Financial Planning hours
- 1.0 IMCA Taxes and Regulations hours
- 0.0 IMCA Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Key Terms:
72(t) Early Distribution Payments: Distributions from retirement accounts taken before the account owner reaches age 59 ½ but are exempt from the normal 10% early distribution penalty.
RMD Method: A method for calculating 72(t) payments by which the taxpayer’s current account balance is divided each year by an appropriate life expectancy factor.
Annuitization Method: A method for calculating 72(t) payments by which the account balance is divided by an annuity factor that is the present value of an annuity of $1 per year beginning at the employee’s age and continuing for the life of the employee (or the joint lives of the employee and designated beneficiary).
Amortization Method: A method for calculating 72(t) payments by which payments are determined by amortizing the individual’s account balance over a number of years (based on life expectancy determined from one of the approved tables) and using an appropriate interest rate.
Section 7520 Rate: This is the mid-term AFR Rate. It is used in estate planning, it is also what is considered to be the “reasonable” rate for 72(t) distributions.
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Session Description:
Monte Carlo analysis has become the dominant methodology for advisors to analyze retirement income planning strategies. But the way the results of Monte Carlo analysis are framed for clients can invoke different emotional responses and can affect portfolio withdrawal rate decisions. With this in mind, advisors can take advantage of a range of options to improve their use of Monte Carlo analysis, including framing the results as a “Probability of Adjustment” rather than “Probability of Success”, comparing results using historical scenarios, leveraging regime-based models, and using risk-based guardrails. Using these methods, advisors can potentially provide clients with greater peace of mind regarding their retirement income choices and better help them achieve their specific income and legacy goals.
Course Review Date:
6/21/2022
Learning Objectives:
LO #1: Understand what makes Monte Carlo more reliable than straight-line analysis when portfolio withdrawals are being taken
LO #2: Identify why framing Monte Carlo results as a “Probability of Adjustment” rather than “Probability of Success” can leave clients more confident during a market downturn
LO #3: Identify how Monte Carlo simulations can be improved by using a regime-based approach and by comparing the results to historical returns
LO #4: Understand how risk-based guardrails combine the advantages of standard guardrails and Monte Carlo analysis and can be used to account for client-specific cash flows and risk preferences
LO #5: Identify best practices for communicating results and information to clients for better informed decisions about risk and portfolio adjustments
Level of Complexity:
- CFP/IWI: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: Risk, Retirement Savings, & Income Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASSA: New and emerging issues and/or products for the IAR to navigate
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 0.0 IWI Taxes and Regulations hours
- 0.0 IWI Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Session Description:
Funding the costs of higher education is a financial planning topic area that clients frequently seek out advisors to assist with, especially as costs continue to rise. The four-year sticker price of college now exceeds $300,000 at some of the country’s most prestigious institutions. As a result, outstanding student loan debt exceeds $1.7 trillion. Training on financial aid and late-stage college planning is a small component of most advisor education programs, leaving many advisors with questions on how they can best assist their clients with the important decisions around higher education costs. Join us at the May Kitces Monthly Webinar where expert guest, Joe Messinger CFP, ChFC, CLU, CC, will share ideas on how you can better guide families through the college funding maze and make more informed buying decisions.
Course Review Date:
3/31/2022
Learning Objectives:
-LO #1: Review the state of college tuition and college funding outcomes.
-LO #2: How to project a family’s financial aid and out of pocket cost at individual institutions
-LO #3: How to create a college funding plan and ensure students graduate with manageable debt without robbing retirement
-LO #4: What the key differences are in the federal and institutional formulas used to determine a family’s expected family contribution (EFC) need based financial aid eligibility
-LO #5: Which cash flow and tax planning strategies to deploy when funding college expenses
Level of Complexity:
- CFP/IMCA: Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New & emerging issues and/or products for the IAR to navigate.
Recommended CPE:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IMCA General Financial Planning hours
- 0.0 IMCA Taxes and Regulations hours
- 0.0 IMCA Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Session Description:
While retirement-income guardrails offer a convenient and easy-to-understand framework for advisors to explain when a client would need to make portfolio adjustments to facilitate spending during retirement, certain guardrail models come with major limitations. For example, withdrawal-rate guardrails are a commonly used framework, but they do not always accurately reflect a client’s dynamic income sources and actual spending behaviors. Risk-based retirement-income guardrails, on the other hand, have the benefits of communication and clarity, while modeling a client’s retirement income sources and spending patterns more realistically. Please join Derek Tharp, Ph.D., CFP(R), CLU(R), RICP(R) and lead researcher at Kitces.com to learn more about risk-based guardrails and the impacts of the varying associated parameters using several examples and practical considerations for implementation.
Course Review Date:
TBD
Learning Objectives:
LO #1: Define the retirement-income guardrail approach and its advantages.
LO #2: Examine the major limitations of withdrawal-rate guardrails.
LO #3: Understand how risk-based retirement-income guardrails overcome limitations of withdrawal-rate guardrails.
LO #4: Examine the impact of different risk-based guardrail parameters.
LO #5: Identify practical considerations of using risk-based guardrail parameters.
Key Terms:
Guardrails Strategy: A retirement spending approach developed by Guyton and Klinger, this strategy considers upper and lower portfolio limits (i.e., the “guardrails”), that serve as pre-determined thresholds for determining when to increase or decrease future spending.
Retirement Distribution Hatchet: This refers to the dynamic spending profile observed in retirement attributed to a client’s various income sources and spending behavior.
Initial withdrawal rate: The withdrawal rate made from a client’s portfolio at the very beginning of retirement.
Upper / lower guardrail: The upper and lower guardrail limits when adjustments in spending need to be made.
Speed of adjustment: The level of adjustment relative to the initial target that should be made over a given period of time, given the client’s unique guardrail parameters.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New & emerging issues and/or products for the IAR to navigate.
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IMCA General Financial Planning hours
- 0 IMCA Taxes and Regulations hours
- 0 IMCA Ethics hours
- 0 IAR EPR Hours
- 1 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Session Description:
An increasing volume of research is making clear what financial planners have long known – that clients do not always act in a purely rational manner. But it’s one thing to recognize that clients sometimes make irrational decisions, and another to really understand what drives those decisions and how to help clients avoid the most damaging mistakes. In this session, advisors will learn what the behavioral finance research has shown about our not-always-rational decision-making process, and how to consider making adjustments to the delivery of their financial planning services to help clients achieve more desirable outcomes through better communication and enhanced trust.
Course Review Date:
01/19/2022
Learning Objectives:
LO #1: Understand the process of how the brain makes decisions and the limitations of rational thinking on decision making.
LO #2: Be able to apply behavioral finance concepts to how clients are engaged and communicated to as part of the financial planning process.
LO #3: Illustrate how to reshape planning recommendations so that they are better communicated to clients in order to better facilitate client implementation.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
- NASAA: New & emerging issues and/or products for the IAR to navigate.
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IMCA General Financial Planning hours
- 0.0 IMCA Taxes and Regulations hours
- 0.0 IMCA Ethics hours
- 0.0 IAR EPR Hours
- 1.0 IAR PP Hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
7.7.2021
Session Description:
By removing the ‘stretch’ provision for many beneficiaries of inherited IRAs, the SECURE Act also eliminated a strategy frequently used by CPAs and financial advisors to plan around the tax challenges of large inherited IRAs. For many designated beneficiaries who are not considered “Eligible Designated Beneficiaries” (the new beneficiary class created by the SECURE Act), the stretch provision has been replaced by the 10-Year Rule, which mandates that an inherited IRA’s balance be paid out in full by the end of the 10th year after the account owner’s death. Unfortunately, this change undermines some of the common intentions of lifetime payouts from inherited IRAs, such as protecting against excessive spending or providing long-term financial security. However, one viable alternative option to maintain lifetime beneficiary income involves transferring the IRA to a Charitable Remainder Trust (CRT) upon the IRA owner’s death. Although this can preserve lifetime income for beneficiaries, there are specific rules that must be followed for the strategy to work. Unlike IRA distributions which have relative flexibility, the payout rate for CRTs must remain constant (and within certain IRS-created limitations) as determined by terms of the trust. Additionally, income from CRTs is taxed on a less favorable “worst-in, first-out” basis, whereby ordinary income is considered to be distributed first, followed by long-term capital gains, then principal, and finally tax-exempt income. Furthermore, upon the termination of the CRT (i.e., when the beneficiary dies and the specified charity inherits the remainder), the net present value of the trust assets must be at least 10% of the initial value of the gift made into the CRT when it was first established. And given the nature of how CRTs work, once the beneficiary dies, assets do not pass on to a next-in-line successor beneficiary that the CRT beneficiary can choose; instead, any remaining assets in the CRT must pass along to the designated charitable beneficiary. While these requirements may not allow for the exact distribution strategy that the client may have originally planned for, it does serve to protect the lifetime income stream of the beneficiary and provide for a favorable outcome. Join us to learn more about the strategies and nuances of using a CRT to provide clients with the benefit of a lifetime payout.
Learning Objectives:
LO #1: Examine how the SECURE Act changed the stretch IRA and the impact of the 10-Year Rule.
LO #2: Examine the process of establishing a CRT and understand the factors to consider when designing the CRT payout.
LO #3: Review taxation as it applies to the CRT, the estate, and the human beneficiary.
LO #4: Understand what client factors planners should consider when suggesting the CRT.
LO #5: Examine challenges of the CRT and potential ways to offset them.
Key Terms:
Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.
Section 7520 Interest Rates: This rate is revised monthly by the IRS. It is equivalent to 120% of the applicable Federal midterm rate. It is used to discount the value of annuities, life estates, and charitable interests in trusts to present value.
Applicable Federal Midterm Rate: This rate is considered the minimum allowable market rate for loans and is published monthly by the IRS; it is the obligation of maturities of more than 3 years up to 9 years.
Charitable Remainder Trust (CRT): This is a type of remainder trust that can be used by charitable individuals to give assets to a charity (and to beneficiaries) while receiving some tax benefits for doing so. Two main types of CRTs are Charitable Remainder Unitrusts (CRUTs), which distribute a fixed percentage of the trusts’ balance to beneficiaries, and Charitable Remainder Annuity Trusts (CRATs), which distribute a fixed dollar amount to beneficiaries.
CRUT’s Breakeven Point: This is the amount of time it would take for wealth created via distributions from a CRUT to catch up to wealth created via leaving the same amount of money to beneficiaries directly.
5-Year Rule for Inherited Retirement Accounts: The rule applying to non-designated beneficiaries where all assets must be out of an IRA by Dec. 31st of the fifth year following the year of the original IRA-owner’s death.
10-Year Rule for Inherited Retirement Accounts: The new rule created by the SECURE Act that requires IRA beneficiaries to withdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner’s death.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1 CFP hours
- 1 NASBA hours
- 1.0 IWI General Financial Planning hours
- 1.0 IWI Taxes & Regulations hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
4.15.2021
Session Description:
Despite being a requirement for FINRA-registered brokers and insurance agents and a matter of fiduciary protection for registered investment advisors, most financial advisors today give short shrift to risk tolerance questionnaires. But does this really mean that risk tolerance questionnaires are universally worthless, and that there’s no value in trying to measure a client’s risk tolerance by any means? Absolutely not! Instead, what’s necessary is to delve deeper on both fronts. This session will explore exactly what risk tolerance is, what risk tolerance questionnaires are trying to measure, and will consider what’s required to design a high-quality risk tolerance questionnaire that will provide a useful assessment of a client’s risk tolerance.
Learning Objectives:
LO #1: Understand the new risk profile paradigm.
LO #2: Define the three risk components of the new paradigm.
LO #3: Be able to distinguish between risk capacity and risk tolerance and evaluate how the new risk profile utilizes both of these components.
LO #4: Identify how risk perception changes and list the common mental heuristics associated with risk perception.
LO #5: Define the two risk attitude approaches. Explain the pros and cons of each approach.
Key Terms:
Risk tolerance: This is a conflated measure of a client’s ability to withstand risk.
Risk capacity: This determines how much risk a client can afford to take or would be required to take to achieve the specified goal. It indirectly reveals whether the risk in the portfolio should be driven by a need for risk or by the client’s decision to take more or less.
Risk attitude: This is or could be considered an upper limit of acceptable risk in the portfolio, above which the client’s portfolio should not roam.
Risk perception: This is the wildcard of the client experience. It operates independently of the client’s underlying risk attitude, causing them to potentially misjudge whether the risk they’re actually taking is more or less than they intended.
Heuristic: These are mental shortcuts that individuals use to make decisions faster.
Availability heuristic: When a person uses the most “available” (e.g., convenient, easy, most accessible) information or option to make a decision.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
5.17.2021
Session Description:
Portfolios, just like people, do not exist in isolation; they are not islands. With that idea in mind, this webinar aims to answer questions such as: “How does one build an appropriate portfolio for an investor in the decumulation stage?” and “What risk factors and preferences should be incorporated?” In this webinar, financial planners will consider not only the portfolio itself, but also what total wealth encompasses (human capital as well as obvious financial capital), the client’s goals and timeline, and what it means to have an income focus. Ultimately, efficient portfolios are uniquely designed for each client; there is no single efficient portfolio that will be appropriate for all retirees. Additionally, building efficiency for your client requires a ‘total wealth’ perspective.
Learning Objectives:
LO #1: Identify how each concept of an efficient total wealth portfolio (the total wealth, equity allocation, and age) impacts the success of that portfolio.
LO #2: Understand the impact of pension wealth on total wealth and taking risk in a portfolio.
LO #3: Understand how the retirement goal itself can fundamentally change the efficiency of a portfolio.
LO #4: Identify not only how clients often think about generating income in retirement, but also how different asset types generate income in different rate environments.
LO #5: Identify the impact of time on a portfolio and the impact time has on the types of assets in that portfolio.
Key Terms:
Efficient Frontier: A principle introduced by Modern Portfolio Theory, originated by Harry Markowitz, which represents the theoretical relationship between a portfolio’s maximum return and varying levels of risk. It is used to design asset allocations, and portfolios that fall on the efficient frontier curve are considered to be ‘good’ portfolios.
‘Mountain’ Chart: A common chart used in financial planning analyses that shows assets accumulating over time, reaching a peak, and then decreasing as the portfolio is spent down. The resultant curve resembles a mountain-like shape.
Human Capital: Net Present Value of your future earnings.
Pension wealth: A guaranteed income stream that will be paid for the recipient’s life. It is very bond-like and can have huge impacts on how individuals think about their wealth and the risk that they can or cannot take.
Price return: The return on equity positions.
Time diversification: The often-debated belief that holding equities becomes less risky with more time.
Buckets: A savings strategy for thinking about risk, client behavior, and time.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1 CFP hours
- 1 NASBA hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
2.4.2021
Session Description:
What contributes to overall life satisfaction in retirement? How can advisors help clients to maximize life satisfaction in retirement? Join us and learn the answers to these questions while also brushing up on the latest research on retirees, retirement spending, and retirement behavior. In this webinar, we will examine topics such as health, wealth, relationships, spending, and some of the psychological fears and joys faced by clients as they set goals to enjoy retirement.
Learning Objectives:
LO #1: Examine what actually makes people happy in retirement.
LO #2: Understand recent research on life satisfaction and retirement spending.
LO #3: Examine the psychological impact of guaranteed retirement income.
LO #4: Examine some of the physical and emotional considerations that can impact retirement satisfaction.
LO #5: Review planning considerations specific to working with individuals in retirement, especially for clients expecting to live into their 80s and 90s.
Key Terms:
Word Recall Test: A cognitive test that helps to show how cognitive decline happens gradually with age. The test requires you to repeat back 10 words that you were told earlier in a conversation. The test gets harder and harder for individuals to do as they age.
Qualified Longevity Annuity Contract (QLAC): This is a type of deferred annuity that can be funded with investments from either a qualified retirement plan or an individual retirement plan. The annuity provides monthly payments that are guaranteed until death and shielded from stock market returns. The money used to buy the QLAC is exempt from RMDs until payout begins.
Cognitive Theory: This is a psychological framework that explains how humans process thoughts and make decisions.
Crystallized Intelligence: The knowledge, facts, and information a person accumulates over a lifetime.
Fluid Intelligence: An individual’s ability to solve problems and use abstract reasoning.
Required Minimum Distribution (RMD): This is the minimum amount that account owners from certain retirement plans must withdraw annually starting with the year that they reach 72.
Annuity: This is a financial product that provides a fixed sum of money paid to someone each year, typically for the remainder of their life.
Pension: This is a type of employer retirement plan that provides income in and through retirement.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
1.12.2021
Program Description:
Executive compensation is a complex subject matter area for clients and their advisors. In this webinar, we will take a deep dive into advanced planning strategies for NSOs and ISOs. Join us and understand the different strategies that apply specifically to stock options, restricted stock shares, and restricted stock options, starting with the client objective (risk reduction, liquidity, tax minimization, wealth accumulation, hedging, or wealth transfer).
Learning Objectives:
LO #1: Examine strategies pertinent to both employee stock options and restricted stock grants.
LO #2: Identify the needs for advising executives and how to explain issues and variables related to executive compensation.
LO #3: Examine how exercising stock options impacts different goals around creating wealth, minimizing downside risk, or reducing taxes.
LO #4: Examine how Restricted Stock Units (RSUs) impact different goals around creating wealth, minimizing downside risk, or reducing taxes.
LO #5: Identify how Restricted Stock Shares impact different goals around wealth creation, minimum downside risk, or reducing taxes.
Key Terms:
Non-Qualified Stock Options (NSOs): Commonly issued employee stock options provided to many types of employees. NSOs can also be granted to individuals who are not employees of the company or on the company payroll. NSOs are not as advantageous tax-wise as ISOs, as the profit on NSOs is taxed as ordinary income.
Incentive Stock Options (ISOs): ISOs are a less common type of employee stock option and are provided mainly to C-suite or top-level executives. ISOs can only be granted to employees of a company, and they are tax-advantaged as the profit on ISOs is taxed at the capital gains rate.
Bargain Element: A bargain element is an option that can be exercised below the current market price, providing an immediate profit.
$100,000 Rule: The $100K rule limits employees to receive a maximum of $100K of exercisable options (based on the stocks’ aggregate fair market value) as incentive stock options each year. Stock options in excess of $100K in one year are treated as NSOs by the IRS.
Time-Based Exit Strategy: Exercising and selling a percentage of stock options in the last few years before expiration.
Price-Based Exit Strategy: Exercise and sell when stocks trade in a pre-determined price range.
Tax-Based Exit Strategy: Exercise and sell relative to the impact on ordinary income tax rates.
Restricted Stock Units (RSUs): Compensation issued to certain employees providing them a conditional interest in shares without any value until certain vesting requirements are met. As such, they are considered to be ‘phantom’ stock until vested and do not produce dividends nor do they provide any voting rights.
Restricted Stock Shares: Similar to Restricted Stock Units (RSUs), except that Restricted Stock Shares transfer actual stock ownership on the date of the grant, produce dividends, and provide voting rights. Like RSUs, though, Restricted Stock Shares are non-transferable, taxed at ordinary income, and have no limit after vesting.
SEC 10b5-1 Plans: Pre-arranged plans that provide a trading vehicle for insiders and affiliates to sell predetermined numbers of shares during pre-determined blackout periods.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 1.0 IWI Taxes & Regulations hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
1.12.2021
Session Description:
Change is a normal part of the way advisors work with clients, but helping clients change can be difficult and the best way to go about it is not always clear. For instance, those in helping positions often inadvertently create more resistance to change than if the person had just tried to change on their own. In this webinar, advisors will learn about resistance and ambivalence, what causes them, and what to do about them. Join us and learn about the nine proven techniques to help clients change.
Learning Objectives:
LO #1: Identify the theories of financial psychology and how they pertain to changing behavior.
LO #2: Identify the differences between planning, coaching, and therapy.
LO #3: Examine the research on clients’ financial engagement and how engagement has been shown to move clients forward.
LO #4: Examine resistance and ambivalence to change and how advisors play into client resistance.
LO #5: Identify and describe the nine techniques related to client change.
Key Terms:
Financial Flashpoint: An early life event or series of events surrounding money that are so emotionally powerful they leave an imprint into adulthood; money experiences.
Money Scripts: This is a belief about finances passed down through generations, typically developed in childhood. They are often subconscious, based on partial truths, and impact behavior.
Money Disorders: These are maladaptive patterns of financial beliefs and behaviors that lead to clinically significant distress and impairment in social or occupational functioning, undue financial strain, or an inability to enjoy one’s resources.
Resistance: What bothers us most in work and relationships; when advice is ignored.
Ambivalence: This is the source of resistance. When part of you wants to change and part of you does not want to change.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
10.23.2020
Session Description:
Determining a “safe” amount of retirement spending is an increasingly popular topic amongst financial planners, yet a great deal of confusion exists about the current state of research and how it should be applied. In this session, we will explore the problems with traditional linear projections, the impact of the sequence of returns on the ability to safely retire, the current state of research on safe withdrawal rates, and the uses and potential concerns of applying the research in client situations.
Learning Objectives:
LO #1: Identify and distinguish the difference between the “safe” withdrawal rate and the “initial” withdrawal rate.
LO #2: Illustrate the impact that return sequencing has on a portfolio’s end result? Explain how inflation impacts the portfolio’s end value as well.
LO #3: List potential adjustments to Safe Withdrawal Rates
LO #4: Describe the various caveats to the safe withdrawal research that need to be considered.
LO #5: Illustrate how the safe withdrawal rate can be an effective anchor for setting reasonable client expectations
Key Terms:
4% Safe Withdrawal Rate: This is essentially the worst possible scenario based on historical data; it is the withdrawal rate that would have worked in the worst scenario we have ever seen.
Inflation: This is the general increase in prices of goods and the corresponding fall of purchasing power that inches up every year. In some environments, it can move up or down dramatically.
Dividends: These represent how much money is paid by a company to its shareholders, normally on a quarterly basis. Dividends come out of the company profits.
Capital Gains: These are the profits (if realized) from stock, land, or a business that result when the fair market value of the asset increases over its original purchase price. The gain (or loss), when realized, is a taxable event.
Principal: This refers to the initial monetary corpus that is contributed to an investment account (e.g., savings that are set aside for retirement or in a trust account).
Sequence of Returns: This is the order in which investment returns (or lack thereof) take place, which ultimately impacts withdrawal strategies and is used in some fields of retirement research that analyze portfolio returns in retirement accounts.
Risk Tolerance: This is how much risk an investor is able to tolerate within their portfolio.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
9.24.2020
Session Description:
Executive compensation is confusing financially and emotionally. In this webinar advisors will learn not only about the trends associated with executive compensation and some of the common concerns those with executive compensation plans face, but also how to think about, strategy wise, what different opportunities the different executive compensation plans may bring.
Learning Objectives:
– LO #1: Identify the financial as well as emotional concerns driving the need for executive compensation planning.
– LO #2: Identify trends in executive compensation planning
– LO #3: Identify similarities and differences between restricted stock and employee stock option plans
– LO #4: Examine the timing of different executive compensation planning options
– LO #5: Identify the differences between restricted stock and RSU grants
– LO #6: Examine the characteristics of Non-Qualified Deferred Compensation and employee stock purchase plans
Key Terms:
Overconfidence: The tendency to overestimate or exaggerate one’s ability to successfully perform a given task.
Status Quo: Status quo bias is the preference for choosing a more familiar option rather than a less familiar option, even if the less familiar option is more beneficial.
Home Country: The tendency to favor companies in one’s own country over those from other regions and countries.
Endowment: Tendency to give holdings that are owned a disproportionate value because they are already owned versus purchasing outright.
Non-qualified stock options (NSOs): The more common type of employee stock options, provided to many types of employees. NSOs can also be granted to individuals who are not employees of the company or on the company payroll. NSOs are not as advantageous tax-wise as ISOs, as the profit on NSOs is taxed as ordinary income.
Incentive stock options (ISOs): ISOs are a less common type of employee stock options, provided mainly to C-suite or top-level executives. ISOs can only be granted to employees of a company, and they are tax-advantaged as the profit on ISOs is taxed at the capital gains rate.
Bargain Element: A bargain element is an option that can be exercised below the current market price, providing an immediate profit.
100,000 Rule: The $100K ISO limit caps employees at receiving a maximum of $100K worth per year of exercisable options (based on the stocks’ aggregate fair market value) as incentive stock options. Stock options in excess of $100K in one year are treated as NSOs by the IRS.
Level of Complexity:
- CFP / IWI (formerly IMCA): Intermediate
- NASBA: Basic
Specialized Knowledge:
- CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
- NASBA: Specialized Knowledge (Personal Financial Planning)
Recommended CE Hours:
- 1.0 CFP hours
- 1.0 NASBA hours
- 1.0 IWI General Financial Planning hours
- 1.0 IWI Taxes & Regulations hours
Availability:
All self-study courses will be available at least through December 31, 2024.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.
Course Review Date:
6.30.2020
Kitces Topic Areas:
- Insurance
Program Description:
Healthcare and healthcare costs can be difficult conversations to have, let alone difficult financial planning issues to tackle. In this webinar, Dr. Carolyn McClanahan, a medical physician as well as a personal financial planner, covers how to help clients control costs by discussing (a) healthcare cost challenges and factors such as inflation, (b) health insurance choices (COBRA vs. Affordable Care Act), (c) how clients should use health insurance to be most cost effective, and finally (d), from her unique perspective as a physician, she discusses how to help clients to be empowered patients.
Learning Objectives:
- LO #1: Identify important considerations that pertain to the current inflation rate of medical expenses.
- LO #2: Understand how health care is charged and how that relates to health care costs.
- LO #3: Identify pros and cons of different insurance options from employer-based insurance, COBRA coverage, and individual plans.
- LO