Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the announcement of the annual Social Security COLA (cost-of-living adjustment) for 2018, which will be a whopping 2.0%… a modest increase, and one that most ongoing Social Security recipients won’t even enjoy due to the unwind of the Medicare Part B “Hold Harmless” provisions that kicked in back in 2016… although ultimately, the 2.0% COLA is actually still the biggest Social Security inflation adjustment we’ve had since 2012!
From there, we have a number of interesting articles about trends in the world of investing and asset management, from a recap of a fascinating panel discussion from the recent Money Management Institute conference about how asset managers are being disrupted by technology and regulation (more so than advisors themselves), to a look at the recent SPIVA scorecard that continues to show that most money managers can’t beat their indices (although if you confine the list to a subset of low-cost managers who invest in their own funds, the majority actually are outperforming their benchmarks in the long run!), how advisors are (or need to be) increasingly using ETFs in their portfolios instead of individual stocks (not just for the challenges of stockpicking, but the difficulty in scaling a wealth management business where different clients own different stocks), and a candid self-assessment of Morningstar star ratings by Morningstar itself which funds that while star ratings have limited predictive value they do tend to correlate to funds that are more likely to be lower cost, have moderate volatility, and actually stay in business (albeit perhaps due to the favorable flows that the funds receive when Morningstar gives them a good star rating in the first place!).
We also have several career management articles this week, including: tips for advisory firms to actually develop their young talent internally (which is increasingly necessary as the cost of hiring experienced advisors just continues to rise); the Culture, Community, and Compensation components of an advisory firm that are essential to young advisor employee retention; how yet another wirehouse (UBS) is revamping its trainee program to shift away from commission-based sales and into a more in-depth salary-based training in actual financial advice; and a good reminder that as advisory firms get bigger and deeper, and financial planning itself attracts a wider range of candidates, that there is a growing opportunity for entire career tracks built not around client-facing positions but the operations roles in a successful advisory business.
We wrap up with three interesting articles, all around the theme of year-end planning: the first provides tips and best practices on how to handle end-of-year employee reviews; the second gives some great ideas on what to do for end-of-year holiday gifts for clients (i.e., what to do instead of just the traditional mass holiday card!); and the last explores why you can only do so much planning for your future before you have to just take the first step, initiate something new, be ready for it to fail, and figure it out as you go… a good reminder as advisory firms do end-of-year strategic planning and consider what they will do new and differently in the coming year (and how to overcome the hurdle of what they planned to do new and differently in 2017 that never actually happened!?).
Enjoy the “light” reading!