Most planners doing financial planning reviews with clients have witnessed the phenomenon: when markets go up, clients look at their growth rates; when markets go down, clients look at the dollars they have lost. What can behavioral finance tell us about why we have such an asymmetric view of the market’s ups and downs?
Recent research on the reaction of investors to the 2008-2009 market downturn has confirmed an interesting tendency of investors that I have long believed – the better our returns, the more we’re willing to save. Yet the irony is that theoretically, the better our returns, the LESS we need to save, because we’ll have more growth from our investments. Nonetheless, if we don’t account for this very human behavior about saving, we can end out with some disastrous financial planning advice.
As I come up to speed on the world of blogging, it is my goal to make it easier for all of you to read the content on this website. Accordingly, I have configured this blog’s content to publish via FeedBurner, so that you can conveniently using any number of blog reader programs to keep up with new content.
Earlier this week, the National Commission on Fiscal Responsibility and Reform released a draft version of its proposals on how to take control of our nation’s deficit challenges, including suggestions for comprehensive tax reform. The good news in the proposal is that it includes a repeal of the highly unpopular Alternative Minimum Tax (AMT). The “bad” news is that the proposal also includes a repeal of many popular tax credits and deductions as well. But the reality is that we can’t really have one, without the other.
Citing an array of classic problems – including interest rates, morbidity, mortality, and persistency – long-term care and general insurance behemoth MetLife announced this week that it will be leaving the long-term care marketplace completely. And coming on the heels of recent announcements last month by GenWorth and John Hancock of significant premium increases on large blocks of their policies, it would seem that the long-term care insurance marketplace is in a bit of turmoil. Does this mean the industry is in trouble, or is this actually a sign of stabilization?
After taking up the issue at their board meeting yesterday, the CFP Board officially announced this morning that the 80% fee increase for CFP certificants to support a public awareness campaign for the CFP marks has been approved. So now the only question is: Will it work? Will this mark the start of a new dawn for the growth of financial planning as a profession, or an(other) expensive failure in the annals of CFP Board history?