With the never-ending onslaught of information in today’s world, I am often asked what I am reading, as someone who consumes perhaps an abnormally large amount of financial planning content. Accordingly, I’ve decided to start a new column for this blog, called “Weekend Reading” – where I’ll share a few of the more interesting articles I’ve read in the current week. The goal is to keep it to no more than an hour’s worth of reading; something you can do in a single sitting when you’re taking a rest over the weekend and trying to keep up with the financial planning world. Here I offer up the first week’s articles. I hope you find it helpful! Read More…
How’s That Hedging For Your Revenue Working Out?
Market volatility is a stressful time, not only for clients, but often for planners as well. Not only does client activity rise, with more phone calls, meetings, and some hand holding, but at the same time revenues come under pressure, as new (and sometimes existing) clients often become less willing to implement, and firms with revenue is tied to the markets can actually see an outright decline in income. But the latter part, at least, is not something you have to just accept; there are ways to hedge the revenue and profit risk in your practice, and so far, those strategies are doing exactly what they’re supposed to!Read More…
Support and Criticism of the CFP Board’s Proposed Changes to the Experience Requirement
Last month, the CFP Board released proposed changes to the CFP certification experience requirement in order to earn the CFP marks. This weekend the comment period closed; in this blog post, I share the feedback that I submitted. What do you think about the proposed changes?
The Investment Advisor SRO Battle Begins – Round 1
Hanging prominently on the rear wall of the chambers of the Financial Services committee hearing room in the Rayburn House office building is a full-length, tastefully executed portrait of FINRA’s chief lobbyist. That would be Mike Oxley, the former chairman of that committee and a namesake of Sarbanes-Oxley fame during the congressional crackdown on the Enron accounting scandals. Oxley’s job: get his client some sweet new regulatory turf composed of 11,000 of the biggest investment adviser firms in the country before brokerage advice dries up in the marketplace. So far the pay is good — $125,000 reported in the first half of 2011 — and more where that came from.
Diversification Should Not Be An Excuse For Blindly Owning Bad Investments
Diversification is a fundamental principle of investing – examples of the concept date back as far as Talmudic texts estimated to have been written over 3,000 years ago, stating “Let every man divide his money into three parts, and invest a third in land, a third in business and a third let him keep by him in reserve.” The diversification principle received a further boost in the recent era when Harry Markowitz’s Modern Portfolio Theory supported the notion that the volatility of a portfolio may be less than the volatility of its parts, such that the introduction of even a high-return high-risk asset to the portfolio may improve the portfolio’s risk-adjusted return (or even outright reduce its volatility). Yet at the same time, both the rabbis of the Talmud and Markowitz would probably agree that the first step of investing your assets is even more basic: make sure you own stuff that has a reasonable expectation of providing a useful return in the first place. Unfortunately, though, we seem to have lost sight of this rule in recent years!Read More…
Is CFP Board Weakening or Strengthening the CFP Work Experience Requirement?
In mid-August, the CFP Board issued some proposed changes to the CFP Board work experience requirement, including differentiating the work experience requirement for those personally deliver financial planning, from those who work in a supporting, supervisory, or teaching role. Up until now, all experience has been treated the same; but under the proposed rules, those who support, supervise, or teach will need more experience than those who personally deliver planning. Yet at the same time, the proposed changes make the differentiation by reducing the work experience requirement for those who personally deliver financial planning from three years, down to only two years. Is this strengthening the standard, or weakening it?Read More…
