Enjoy the current installment of "weekend reading for financial planners" - this week's edition kicks off with a new industry study from Fidelity, finding that the looming Department of Labor fiduciary rule isn't just stressing out broker-dealers, but is making RIA firms nervous too, as more and more wonder exactly what the new burdens of compliance will be, and whether new investments in technology will be necessary to bridge the gap. At the same time, also in the news this week was a fresh warning from FINRA that it is beginning to scrutinize how firms are adopting "robo-advisor" tools, pointing out that automated technology doesn't eliminate a firm's due diligence obligations to understand the algorithms being used, how solutions are recommended, and whether they are really suitable for the investor.
From there, we have several practice management articles this week, including: a look at the different types of advisor leadership styles, which matters more and more as an advisory firm grows and the role of the founder shifts from advisor and business developer to true CEO and leader; a discussion of the recent regulatory change that some RIAs are no longer required to issue annual privacy notices to clients (but why it's so easy to do they should continue to provide them anyway); a look at the new Investopedia Advisor Insights platform that aims to pair financial advisors up to answer consumer questions (and whether it is really likely to generate any business for advisors or not); and a handy checklist of what you should have in the "introductory package" of marketing materials that you provide to prospects and centers of influence.
We also have a couple of technical articles this week, from a discussion of which clients will be impacted by the coming changes to Social Security claiming strategies (with the first deadline kicking in on April 29th), to an analysis of how the line of credit is calculated for a reverse mortgage (and why it's better to establish one sooner rather than later, especially if you think interest rates will rise), and also a look at how the way advisors are using Monte Carlo analysis may be inappropriately biasing the results in an overly favorable manner (by failing to consider the potential sampling error of using historical data in the first place).
We wrap up with three interesting articles: the first raises the question of whether the real robo-advisor "unicorn" (a startup that achieves a $1B valuation) may not be the popular startups of Wealthfront or Betterment, but the lesser-discussed Acorns that may has a paltry $73.6M of AUM but is currently on track for a whopping 2 million users by the end of 2016; the second looks at the popular "mandatory arbitration" clause in advisory firm agreements, and raises the question about whether this is really a valid consumer protection (or in the case of an RIA, an outright breach of fiduciary duty but not allowing clients at least the option to go to court); and the last is a look at how, even as critics suggest the Department of Labor has acted "too fast" in its fiduciary proposal, the movement towards a fiduciary duty for financial advisors is actually a global phenomenon, already enacted in the U.K. and Australia, and pending in Canada, for which the current fiduciary proposals in the U.S. are actually "mild" by comparison (which in turn suggests that the DoL's fiduciary rulemaking may just be the beginning of the changes to come!).
Enjoy the "light" reading!