More on Related Themes
2016-02-10 00:00:00 What Would It Take for the Prime U.S. Workforce to Fully Recover? by Jill Mislinski (Article)
We've updated our workforce analysis to include last week's Employment Report for January. The unemployment rate ticked down to 4.9% and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) dropped to 151K with December's number revised downward by 30K.
2016-02-08 00:00:00 On My Radar: QE Has Not Worked – Period! by Steve Blumenthal of CMG Capital Management Group
U.S. recession signals are intensifying. The QE boost that hasn’t reached Main Street will be taken away from Wall Street in the next recession. I wrote a piece this week for Forbes entitled, U.S. Recession Signals Intensify . The hard reality is we are due (some say overdue) for a recession and evidence suggests the next one is heading our way. Equity market declines are at their worst during recession as you’ll see in the following chart. View the next chart with a stiff drink in hand. To this, as advisors, we must defend!
2016-02-03 00:00:00 Iowa by Andrew Friedman of The Washington Update
In last month's white paper, The Metrics and Dynamics Underlying the 2016 Election, we said that a lack of ground organization might ultimately trip up Donald Trump's campaign. The results in Iowa reflected that deficiency. Trump generates large crowds and great excitement when he flies in to speak. But when he departs he leaves behind relatively few volunteers knocking on doors - and little guidance as to which doors are worthy of a knock. Ted Cruz and Marco Rubio developed ground organizations and predictive voter data greatly superior to Trump's.
2016-02-02 00:00:00 Today's KYC Rules No Substitution for Know Your Customer by Francois Sicart of Tocqueville Asset Management
In his latest piece, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, contrasts current 'Know Your Customer' rules with those that had been practiced for decades, when "stockbrokers were among the most trusted members of their communities."
2016-02-01 00:00:00 Two New Books on Retirement Planning by Joe Tomlinson (Article)
The New Year brought us two new books on retirement planning written by well-known authors – Teresa Ghilarducci and Jane Bryant Quinn. Ghilarducci focuses on key steps to build retirement savings, while Quinn provides a much fuller analysis for both accumulation and de-accumulation. Both are books advisors should read themselves as candidates to recommend to clients.
2016-02-01 00:00:00 Investing for Retirement: A Focus on Sustaining Income by Anshul Shah, Ric Costa of PIMCO
Longevity protection strategies can simplify retirement planning and may reduce the risk of running out of money in retirement.
2016-02-01 00:00:00 The Big Trap in Casual Conversations by Dan Richards (Article)
Today, I highlight an example of bad advice – focusing on how to engage people who aren’t clients in casual conversation and in particular on how to respond to the question “How’s business?”
2016-02-01 00:00:00 Managing Stress During Market Downturns by Beverly Flaxington (Article)
With market movements being mostly negative, I’m riddled with anxiety and stress. I dread every phone call with a client. Is there anything I can do to alleviate this? I can’t ignore the markets; I have a job to do.
2016-01-26 00:00:00 The Best Question to Engage Clients by Dan Richards (Article)
Explicitly asking about the value you provide won’t advance your relationship with most clients – but an alternate question will.
2016-01-26 00:00:00 Exit, Voice, and Loyalty by Adam Jared Apt (Article)
There are some activists who object to the belief that investing entails merely interpreting the economy; their point is to change it. The activists seem, at first glance, to have nothing in common with traditional investors, and to inhabit a separate conceptual world. What follows is an in-depth look at socially responsible investing.
2016-01-26 00:00:00 Getting Centers-of-Influence to Refer by Beverly Flaxington (Article)
This year in particular, with the markets underperforming, accountants and attorneys must have clients who need a second pair of eyes on their portfolios. We would be willing to do reviews at no charge and make recommendations. Why aren’t we seeing referrals from these firms?
2016-01-26 00:00:00 Why You Should Question “Buy And Hold” Advice by Lance Roberts of Real Investment Advice
I recently received an email from an individual that contained the following bit of portfolio advice from a major financial institution: “Despite the tumble to begin this year, investors should not panic. Over the long-term course of the markets, investors who have remained patient have been rewarded. Since 1900, the average return to investors has been almost 10% annually…our advice is to remain invested, avoid making drastic movements in your portfolio, and ignore the volatility.”
2016-01-19 00:00:00 How to Provide Career Development by Beverly Flaxington (Article)
Less than 30% of our staff believe we do a good job in career development. We would like to take steps to address this issue, but we’re not sure where to start.
2016-01-19 00:00:00 Newsletter - Volume 9, No. 1 - January 2016 by Harold Evensky of Evensky & Katz / Foldes Financial Wealth Management
A belated Happy and Healthy New Year! Now for this NewsLetter’s musings…
2016-01-12 00:00:00 Looking Ahead to 2016: What Matters Most by Beverly Flaxington (Article)
You work with advisors every day. What do you think will be the biggest challenges and opportunities we’ll face in the coming year?
2016-01-12 00:00:00 Can Your Firm be Required to Cover an Employee’s Mistaken Trades? by Anne Wallace, Esq. (Article)
If one of your employees makes a trading error, can you force him or her to reimburse your client directly for the losses? A securities lawyer answers that question.
2016-01-12 00:00:00 Has Vanguard Added Value as an Active Manager? by Larry Swedroe (Article)
Passive management was pioneered by Vanguard, and its founder, John Bogle, remains its most outspoken advocate. But the firm also offers actively managed funds. Have they added value relative to its passive counterparts?
2016-01-12 00:00:00 Should Advisors Hire a Financial Planner? by Bob Veres (Article)
Based on conversations with advisors who have allowed themselves to be financial planning clients, I’ve come to believe that most – perhaps all – financial planners should hire an outside professional.
2016-01-12 00:00:00 My Four Resolutions for 2016 by Dan Solin (Article)
To increase your assets under management in 2016, here are four resolutions to implement.
2016-01-11 00:00:00 Another Look at the Total Return Roller Coaster by Doug Short (Article)
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $17,357 for an annualized real return of 11.08%.
2016-01-07 00:00:00 Franco-Nevada: Royalty of the Gold Industry by Frank Holmes of U.S. Global Investors
In 1983, my friends and early mentors Seymour Schulich and Pierre Lassonde founded Franco-Nevada Mining, the world’s first gold royalty company. The two uniquely gifted money managers were on to something big. It was originally Seymour—then an oil analyst at the Canadian investment firm Beutel, Goodman & Company, where he and Pierre met—who recognized that the royalty model used in the oil and gas industry had some of the highest returns on capital.
2016-01-05 00:00:00 New Year’s Goals to Effectively Increase New Revenue by Beverly Flaxington (Article)
What is the right way to set achievable goals? I don’t want to set the bar so low that my team doesn’t need to work hard, nor can I afford to do that. At the same time, if I set it too high, all I will hear is grumbling for the first few months of the year.
2016-01-05 00:00:00 How to Influence Your Employees’ LinkedIn Profiles (Without Breaking the Law) by Kristen Luke (Article)
LinkedIn is a great tool for financial advisors to promote their business, research prospects, connect with COIs and ask for referrals. Because it has so much potential, advisors often want their employees to use their personal accounts to promote the business. While this may sound like a great idea on the surface, you need to tread carefully, as 21 states have passed legislation banning employer access to workers’ social media accounts.
2016-01-05 00:00:00 Krugman’s Billionaire Derangement Syndrome by Robert Huebscher (Article)
The New Year can be a time for taking positive, productive steps to improve one’s life and those of others. But not for Paul Krugman. He used his January 1 column in the New York Times to chastise the super-rich as narcissistic egomaniacs who use their wealth to manipulate the political process for their own purposes.
2015-12-30 00:00:00 The Next Generation in Philanthropy: The Rockefeller Foundation to the Zuckerberg Chan Initiative by Robert J. Holton of Cleary Gull
This recent announcement, from a modern technological billionaire using the latest technology to shake up the philanthropic world, echoes the thoughts and actions of another notable American, John D. Rockefeller. Adjusting for inflation, John D. Rockefeller may have been the wealthiest American to have ever lived, holding assets estimated at $253 billion in today’s dollars[i]. The Rockefeller Foundation today is worth a far more modest $4 billion, but has been setting a standard for philanthropy for the past 100 years.
2015-12-29 00:00:00 Rebalancing Revisited by Michael Kitces (Article)
Earlier this year, in a series of articles, Michael Edesess argued that rebalancing neither increases returns nor reduces risk, although in the latter case his conclusion was based on one’s definition of risk. However, it turns out that the debate on whether there is value in rebalancing – in terms of return enhancement and/or risk management benefits – actually depends on the similarity (or lack thereof) of the returns between the available investments in the first place.
2015-12-29 00:00:00 My Top Ten Tips for 2016 – Part Two by Beverly Flaxington (Article)
I hope you enjoyed Part I last week. Here is Part II of my “Top Ten” list of advice for 2016. Hopefully these lists will be beneficial and spark some ideas.
2015-12-29 00:00:00 The 10 Most-Read Articles of 2015 by Various (Article)
As is our custom, we conclude the year by reflecting on the 10 most-read articles over the past 12 months. In decreasing order, based on the number of unique readers, those are…
2015-12-29 00:00:00 The Ten Best Articles You Probably Missed by Robert Huebscher (Article)
Great articles don’t always get the readership they deserve. We’ve posted the 10 most-widely read articles for the past year here. Below are another 10 that you might have missed, but I believe merit reading…
2015-12-29 00:00:00 November Median Household Income at a New Post-Recession High by Doug Short (Article)
The Sentier Research monthly median household income data for November came in at $56,746. The nominal median rose $75 month-over-month and is up $2,812 year-over-year. That's an increase of 0.1% MoM and 5.2% YoY. Adjusted for inflation, the latest income was up $58 MoM and $2,574 YoY. The real numbers equate to increases of 0.1% MoM and 4.8% YoY.
2015-12-22 00:00:00 The Case against Wall Street by Bob Veres (Article)
Ladies and gentlemen of the jury, we are here today to consider the case of a defendant who is familiar to everyone: the brokerage industry, or simply Wall Street. The defendant is charged with a number of crimes: employing deceptive business practices; operating a cartel; undermining consumer protections; engaging in anti-competitive behavior against the emergent financial advisory profession; exerting undue and improper influence on Congress and the regulators; raking in excess profits and thereby harming the American economy that it originally was created to benefit.
2015-12-22 00:00:00 My Top Ten Tips for 2016 – Part One by Beverly Flaxington (Article)
The end of the year offers a chance to reflect on what’s worked well and decide what we’d like to do differently in 2016. For the last two columns of the year, I will provide my “top ten” list of advice I’ve given, common issues I’ve heard and ideas that come up over and over again. Part I -- the first five -- appears here, and Part II -- the second five -- will run next week.
2015-12-22 00:00:00 How to Create an Employment Code of Conduct by Kristen Luke (Article)
An Employment Code of Conduct is often defined as the “rules” an employee must follow. At Kaleido, we view it not as a rules book, but rather as an expression of core company values. These shared values define not only how your company operates, but also how employees’ behavior can contribute to a happy, healthy and productive workplace.
2015-12-22 00:00:00 5 Investing Myths That Will Hurt You by Lance Roberts of Real Investment Advice
In the summer of 1885 William R. Travers, prominent NYC businessman and builder of Saratoga Race Track, was vacationing in Newport, Rhode Island. He pointed out a long line of beautiful yachts tied up in the harbor. When he was informed that they all belonged to Wall Street brokers he simply asked, “Where are their clients’ yachts?”.
2015-12-17 00:00:00 Government Funding and Tax Extenders Legislation Affects Investors by Andy Friedman of The Washington Update
After weeks of negotiations, Congress reached agreement on a bipartisan bill to fund the government through September 2016. Following are provisions of particular interest to investors.
2015-12-15 00:00:00 How to Use an Employee Exit Survey to Improve Your Culture by Kristen Luke (Article)
Despite your best intentions, you will see employee churn in your firm. Onboarding is the beginning of your employee’s life at your firm; the exit survey is the end of it.
2015-12-15 00:00:00 Year-End Bonus or Holiday Thank You: Which works best for you and your team? by Teresa Riccobuono (Article)
This time of year I am often asked by advisors, "What should I do about holiday bonuses?" Although this seems like a simple question, it is certainly not.
2015-12-15 00:00:00 Are Clients Honest When They Say They Refer? by Beverly Flaxington (Article)
More than 90% of our clients say they would refer us if asked. However, our new business comes from only a handful of clients who actually refer us. Why do you think this is happening?
2015-12-15 00:00:00 The Risk and Opportunity in Peer-to-Peer Investing by Michael Kitces (Article)
In today’s low-interest-rate environment, advisors must add value to fixed-income allocations. Unfortunately, some of the higher yielding segments of the fixed-income markets – such as peer-to-peer (P2P) investing – don’t fit into the typical financial advisor investment platforms. But that will soon change.
2015-12-14 00:00:00 The Slippery Welcome Mat for Rising Rates, by Steven Malin, Ph.D of Allianz Global Investors
The commencement of a policy-rate-hike cycle by the US Federal Reserve has both symbolic and material significance for the US economy and financial system. Gradually unwinding unconventional, ultra-accommodative monetary policies sets in motion the repricing of assets and other long-delayed adjustments in economic, financial and currency markets. Comparing economic and financial outcomes with prior rate-hike cycles provides clues as to the possible outcomes this time around, but they have little predictive power.
2015-12-09 00:00:00 Retirement Savings Crisis Getting Worse, Not Better by Gary Halbert of Halbert Wealth Management
As long-time readers know, one of my continuing themes over the years has been saving, and in particular saving for retirement. Record numbers of Americans are retiring every year and, unfortunately, most have not saved nearly enough for the retirement lifestyle they envisioned.
2015-12-08 00:00:00 How to Create Baseline Job Descriptions by Kristen Luke (Article)
Managing human capital is complex. If you run a smaller firm, wearing multiple hats is the norm. One person might act as your senior advisor, associate advisor, operations manager and client service specialist. This makes it especially difficult to create job descriptions and run your firm as efficiently and effectively as possible.
2015-12-08 00:00:00 How to Focus Your Practice on Millenials by Beverly Flaxington (Article)
I receive a lot of questions about marketing to the next generation and working with millennials. For this week’s column, I sought input from a successful financial advisor who is a millennial and focuses on them in his own business. Read on for some millennial advice from Eric Roberge, founder of Beyond Your Hammock.
2015-12-08 00:00:00 An End-of-Year Marketing Checklist by Crystal Butler (Article)
While you are scrambling to finish the last quarter’s tasks that may have gotten lost in the wrapping paper, I want to make sure you do not forget anything that will make 2016 your best year ever. Here is a checklist to make your marketing is as impactful as possible.
2015-12-07 00:00:00 Who Will Dominate the Retirement Advice Business? by Joe Tomlinson (Article)
In the way Amazon dominates the book-selling business, a financial-service provider will emerge as the leading provider of retirement-income strategies. Here is how to assemble a full business model and my predictions about which companies have the best chance to take over.
2015-12-01 00:00:00 How to Build a COI Network by Kristen Luke (Article)
How do you find good COIs with whom you can trade referrals? Follow these steps to create a powerful COI network:
2015-12-01 00:00:00 Advisors Need a Fresh Look at Reverse Mortgages by Wade D. Pfau (Article)
Through inertia and stubbornness, old ideas die slowly. Financial advisors maintain a dismal view about reverse mortgages. However, much has changed in just the past few years. Revisit your outdated thinking with an open mind about a tool that is on the cusp of more widespread use.
2015-11-24 00:00:00 How to Develop a Growth Game Plan by Kristen Luke (Article)
Growth. When you’re a financial planning or wealth management firm, how do you do it right? From implementing a precise, uniform sales process to creating an annual marketing strategy, you need something – a game plan – that shows how you should grow and when you’ve actually succeeded.
2015-11-24 00:00:00 Reflections on Four Decades of Economic Forecasting by Harald B. Malmgren (Article)
Timeworn economic forecasting methodologies on which we rely -- whether prepared by governments, central banks or private economists -- are gradually becoming less relevant and reliable.
2015-11-24 00:00:00 Why Advisors Should Use Deferred-Income Annuities by Michael Finke (Article)
I will show that an eminently effective way to fund retirement is through a deferred-income annuity, particularly if it is purchased through an IRA as a qualified longevity annuity contract (QLAC). The advantages of purchasing a QLAC include the ability to avoid RMDs.
2015-11-24 00:00:00 State Estate Taxes: Planning for Uncertainty by Kevin Duncan of Fiduciary Trust Company International
Prior to 2001 most states imposed an estate tax based upon the Internal Revenue Code Section 2011 Credit for State Death Taxes. The Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”) repealed the credit effective for 2005, which effectively repealed any state estate tax that was tied to the credit. The states’ legislative response to EGTRRA was divided. Many states took no action and allowed their estate tax to become dormant.
2015-11-19 00:00:00 Newsletter Volume 8, No. 5 - November 2015 by Harold Evensky of Evensky & Katz / Foldes Financial Wealth Management
AMAZING AND VERY COOL! From my friend Peter: The French restaurant «Le Petit Chef» (The Little Chef) came up with an original way to entertain guests while waiting for their orders — using a projector on the ceiling, animation appears on the table.
2015-11-18 00:00:00 The Enormous Long-Term Cost of Holding Cash by Russ Koesterich of BlackRock
Many Americans are placing a disproportionate amount of their savings in cash. Russ explains the perils of this excessive conservatism.
2015-11-17 00:00:00 Stop Wasting Your Dollars on Marketing: Develop a Strategy by Mandy Fisher (Article)
If you are not strategic about the dollars spent on your marketing efforts, you will truly be wasting both your time and your money.
2015-11-17 00:00:00 How to Conduct a 360-Degree Performance Assessment by Kristen Luke (Article)
I’ve found that when advisory firm employees do well, they shouldn’t need a performance review. But they need something that sets expectations and encourages constant improvement.
2015-11-16 00:00:00 Asset Matters: How Goals-Based Allocation Drives Portfolio Positioning by Matthew Rubin of Neuberger Berman
When we work with clients to design a customized portfolio, we need to understand their most fundamental goals.
2015-11-13 00:00:00 APViewpoint Events presents: A Live Debate: Should the Fed Raise Interest Rates? by APViewpoint (Article)
Two industry thought leaders face off on the most contentious economic issue confronting advisors and investors today: the Fed’s stance on interest rates. In this live, Munk-style debate moderated by Larry Siegel, John and Frank will take opposing sides.John and Frank will answer attendees’ questions during the webinar and will also be available to continue the discussion on APViewpoint. Attendees can also vote on the proposition both before and after the debate. Results for both votes will be compared to determine the “winner.”
2015-11-09 00:00:00 Social Security Shock: Backroom Budget Deal Bans Two Loopholes by Tom Rowley of Invesco Blog
Two weeks ago, “things that go bump in the night” included two Social Security claiming strategies that got bumped from most retirement planning when the Senate passed a last-minute budget deal in the predawn hours of Friday, Oct. 30. There were none of the usual preliminaries: no hearings, no legislation, no grandstanding by proponents and opponents, no discussion in the financial media. It was simply a done deal, sealed and delivered, when President Barack Obama signed the bill into law last Monday to keep the government afloat.
2015-11-09 00:00:00 The Most Critical Planning Assumption – and How to Choose it by Joe Tomlinson (Article)
Compared to the popular approach of assuming a point estimate for the equity-risk premium, an approach that admits we don’t know what number is may seem counterintuitive. But what has been truly crazy is assuming we know a precise number when the evidence clearly indicates that we don’t.
2015-11-09 00:00:00 Business Planning Beyond the Numbers by Teresa Riccobuono (Article)
It's the time of year to develop a 2016 business plan. Many advisors believe the business plan consists solely of revenue, new-client acquisition and acquiring new assets. But there is much more than just a few numbers.
2015-11-09 00:00:00 How to Describe What Makes Your Firm Different by Kristen Luke (Article)
How do you differentiate yourself from your competition? The answer is not just in your marketing, which simply conveys the message of how you are different. You do so by drawing on all areas of your business.
2015-11-04 00:00:00 Disappearing Options to Claim Social Security—For Some by Gail Buckner of Franklin Templeton Investments
The Bipartisan Budget Act of 2015 eliminates two claiming strategies that enable a married couple to increase the total amount they could receive from Social Security. These strategies are known as 'file and suspend' and 'file and restrict.
2015-11-03 00:00:00 How to Build a Unique Value Proposition by Kristen Luke (Article)
This unique exercise will help you develop a value proposition that defines your company and catches the eye of future clients.
2015-11-02 00:00:00 Last Gasp Saloon by John Hussman of Hussman Funds
Historically, when the stock market has deteriorated internally following a recent period of overvalued, overbought, overbullish conditions, we know that market outcomes have been negative on average. But what if the S&P 500 Index falls below its 200-day moving average, and then recovers above it again? Doesn’t that recovery signal a resumption of the bull market? The answer largely depends on market internals.
2015-11-02 00:00:00 Ryan Takes Speaker’s Chair As One Deadline Remains by Andrew Friedman of The Washington Update
Last week was an uncharacteristically busy one in Washington. The White House and Congress – led by outgoing Speaker Boehner – reached an agreement on aggregate government spending through 2017. The agreement includes a corresponding increase in the nation’s debt limit, eliminating talk of a government default during the election season. With the budget deal passed, Boehner departed, leaving the Speaker’s chair to Paul Ryan.
2015-10-23 00:00:00 Can Household Finances Be Saved? by Carl Tannenbaum of Northern Trust
While the data suggest that Americans may be saving more than we thought, most aren’t saving nearly enough.
2015-10-14 00:00:00 Air Pockets! by Sam Stewart of Wasatch Funds
Global Stock Prices Dropped on Headline Concerns. But What Were the Underlying Causes? And Where Are the Opportunities?
2015-10-12 00:00:00 How to Create a Client-Experience Calendar by Rob Pascual (Article)
The most successful financial advisory firms have one thing in common: They offer an extraordinary client experience. That is a direct result of relentless attention to detail and design. It happens on a consistent basis when your firm has systematized almost every aspect of its operation.
2015-10-09 00:00:00 Happily Ever After: Lifetime Income in DC Plans Shouldn’t Be a Fairy Tale by Daniel Loewy, Christopher Nikolich of AllianceBernstein
One of the big risks in retirement saving and spending is a problem most people would like to have: a long life. But funding an extended “happily ever after” isn’t easy.
2015-10-05 00:00:00 Provise Bullets by Team of ProVise Management Group
The 3rd quarter is now behind us and the major indexes did not fare well through the dog days of the summer. For the quarter the S&P 500 was down 6.44%, the DJIA was down even more at 6.91%, the Russell 2000 was down 11.92%, and the MSCI EAFE index was down 10.23%. The Barclays Aggregate Bond Index was able to post a small gain of 1.23%. Year to date the indexes are -5.29%, -6.88%, -7.73%, -5.28% and +1.13% respectively. As disappointing as these benchmark returns were, a look behind the scenes reveals an even more somber picture.
2015-10-05 00:00:00 How to Define Your Service Model by Brooke Mease (Article)
What I’ve discovered through developing client-service models for many advisory firms is that you need to start by determining who you enjoy serving and then build out your service model based on the needs of those specific clients.
2015-10-02 00:00:00 Designing a Dividend Growth Portfolio for a Specific Retirement Yield Objective: Part 1 by Chuck Carnevale of F.A.S.T. Graphs
Managing an investment portfolio is a very personal matter. Consequently, the most important consideration is to design a portfolio that meets your own unique goals, objectives and risk tolerances. Everyone is different, and consequently, every investment portfolio can and should be appropriately different as well. Stated more straightforwardly, I do not believe in cookie-cutter or one-size-fits-all approaches to portfolio design.
2015-10-01 00:00:00 How Income Planning Can Help Clients Navigate the Future by Patty Quinn McAuley of Clark Capital Management Group
As our industry begins to address the income needs of the aging baby boomer population, arming clients with a personalized roadmap can help them stay on the right track to reach their desired outcomes. An income plan can bridge the gap between the investment plan and the actual execution of it, helping clients truly understand how their money will work for them.
2015-10-01 00:00:00 Standing Out in a Crowd: The Advisor Difference by Sam Ushio of Russell Investments
In today’s competitive landscape, how might one best show case the advisor difference in financial planning? Sam Ushio offers some ideas.
2015-10-01 00:00:00 About by (Article)
2015-09-28 00:00:00 The DOL’s Fiduciary Rule: What We Can Learn from the U.K. by Joe Tomlinson (Article)
The DOL’s proposed fiduciary rule has led to a furious debate over whether low- and middle-income Americans will be deprived of financial advice. Three years ago the U.K. made similar changes affecting the delivery of financial advice, and those changes were studied in detail. I’ll assess what we can learn from the British studies and give my views on additional steps the U.S. should take to improve financial outcomes.
2015-09-25 00:00:00 Goals-Based Asset Allocation in an Era of Financial Repression by Thomas Shively of Eaton Vance
Goals-based asset allocation seeks to align our total portfolio, including financial and nonfinancial assets, with our personal goals and our human way of thinking about risk.
2015-09-21 00:00:00 A Disaster-Preparedness Checklist by Teresa Riccobuono (Article)
Whether man-made or an act of nature, all businesses should be prepared for the unexpected. Here is a list of tips to consider to be sure you, your employees, your business and your clients are prepared and protected.
2015-09-21 00:00:00 How to Generate Alpha without Selecting Superior Funds by Bob Veres (Article)
In Part I of my series on active investment management, I described two types of research that attempted to help advisors uncover above-average talent: identifying conditions where you are more likely to find outperformers, and better ways to identify above-average managers. As it turns out, there’s a third possibility. Instead of identifying superior funds, you identify superior combinations of funds – which, of course, includes a fund-selection process, but then takes it one step further.
2015-09-17 00:00:00 Median Household Incomes by Age Bracket: 1967-2014 by Doug Short (Article)
Earlier today we updated our commentary on household income distribution to include the Census Bureau's release of the 2014 annual data. Our focus was on arithmetic mean (average) household incomes by quintile (and the top 5%) over the 46-year history of this data series. The analysis offered some fascinating insights into U.S. household incomes. But the classification misses the implications of age for income. Households are by no means locked into the same quintile over time.
2015-09-17 00:00:00 Does a Higher Retirement Bogey Call for a Different Club? by Jeff Middleswart of Ranger International
Recent research suggests the rule of thumb 4% distribution rate is far too high. If true, savers may want to consider adding dividend paying stocks to their portfolios.
2015-09-15 00:00:00 The Nazrudin Project – Bending the Profession Since 1995 by Richard Vodra, JD (Article)
The financial planning profession is only a few decades old, and is continuing to discover how it can best serve its clients. This is the story of one group and its process that has had an outsized impact for change over the last 20 years.
2015-09-08 00:00:00 That Was Not a Crash by John Hussman of Hussman Funds
To call the recent market retreat a “crash” is an offense to informed discussion of the financial markets. It was merely an air-pocket of the sort that typically emerges once overvalued, overbought, overbullish conditions are joined with deterioration in market internals. It was probably just a start.
2015-09-07 00:00:00 Think Like an Actuary to Become a Better Advisor by Ken Steiner (Article)
Developing a reasonable spending budget for clients who are near or in retirement is an actuarial problem. As such, it requires an actuarial solution. But, you don’t need to be an actuary to solve your client’s problem.
2015-09-03 00:00:00 Weight of the Evidence Argues for Caution by William Delwiche of Robert W. Baird & Co.
At this point, cycle lows for the popular averages may well be in place. This is not yet supported by the weight of the evidence, however. Simply put, risks remain elevated and it is too early to sound an all clear.
2015-09-02 00:00:00 Provise Bullets by Team of ProVise Management Group
There is a big debate within the financial services industry regarding who should be required to be a fiduciary. Basically a fiduciary puts their clients’ interests ahead of their own, a philosophy ProVise has espoused since our founding in the mid-80s. The Department of Labor has proposed a rule which would require ALL who give advice on retirement plans to do so at a fiduciary standard of care.
2015-08-31 00:00:00 The Active-Passive Debate Revisited by Bob Veres (Article)
Asset flows to passively managed funds are surging. But, as often happens, advisors are embracing a trend just as debunking information is arriving in the marketplace. New research is showing that selecting above-average active funds may not be the impossible task that the academic research has suggested.
2015-08-31 00:00:00 If You Need to Reduce Risk, Do it Now by John P. Hussman of Hussman Funds
The single most important thing for investors to understand here is how current market conditions differ from those that existed through the majority of the market advance of recent years. The difference isn’t valuations. On measures that are best correlated with actual subsequent 10-year S&P 500 total returns, the market has advanced from strenuous, to extreme, to obscene overvaluation, largely without consequence. The difference is that investor risk-preferences have shifted from risk-seeking to risk-aversion.
2015-08-28 00:00:00 12 Attractive Fast-Growing Dividend Growth Stocks for High Total Return by Chuck Carnevale of F.A.S.T. Graphs
The current market environment is presenting many challenges to the conservative retired investor in need of current income. Interest rates are near all-time lows and the valuations of many blue-chip dividend growth stocks have become extended. Consequently, it is becoming very difficult to find quality investment opportunities that can provide safety through sound valuation, attractive yield and the potential to fight inflation.
2015-08-28 00:00:00 Who Ate Joe’s Retirement Money? Sequence Risk and its Insidious Drag on Retirement Wealth by Peter Chiappinelli, Ram Thirukkonda of GMO
Defined Contribution (DC) plan participants are haunted by an invisible risk called sequence risk (sometimes called sequence-of-returns or path dependency risk), that is, getting the “right” returns but in the “wrong” order. Sequence risk in the retirement phase has been studied extensively. Sadly, not as much attention has been paid to sequence risk during the accumulation phase, but it is equally important.
2015-08-24 00:00:00 The Use and Abuse of Dividend Strategies by Robert J. Martorana (Article)
I will look at the underlying justification for a dividend-based strategy and at how the most popular funds have performed recently. I will then discuss the criteria that investors should use to construct the best dividend-oriented portfolio, and which mutual fund best meets those criteria.
2015-08-24 00:00:00 How an “Abundance Mentality” Drives Top Advisors by Dan Richards (Article)
Hard work, talent and luck drive top advisors. But research from Wharton’s top-rated faculty member shows there’s another quality high on the list.
2015-08-17 00:00:00 A Study of Real Real Returns Now in its Third Decade by Team of Thornburg Investment Management
If generals always fight the last war, investors all too often chase past performance and mistime the market. Despite the age-old admonition to buy low and sell high, few actually do, to the detriment of their portfolios and wealth. Why? No one wants to be the first to the party or the last to leave. Yet upswings in one asset class may not be all that apparent until well under way. By the time many market analysts and financial media notice, relative valuations may already have reached lofty levels. Loathe to miss out, investors pile in anyway, hoping there may be some steam left.
2015-08-14 00:00:00 Happy 80th Birthday, Social Security! Here’s to Many More by Gail Buckner of Franklin Templeton Investments
Americans are worried about whether they can count on Social Security—both today and in the future. I believe Congress needs to act sooner rather than later.
2015-08-12 00:00:00 Watch the Retirement Risk Gap by Glenn Dial of Allianz Global Investors
Choosing the right glide path isn't just about getting the most return for a certain level of risk anymore, writes Glenn Dial, Head of US Retirement Strategy at Allianz Global Investors. There's a sizeable disparity between what retirement savers are willing to do and what's needed to hit their goals.
2015-08-12 00:00:00 A Framework for Handicapping the Presidential Candidates by Andy Friedman of The Washington Update
Last week, a total of seventeen Republican presidential candidates engaged in the first debates of the nascent presidential campaign. We are not here to pick winners and losers at this very early stage. (We do predict, though, that Donald Trump will be but a memory when the convention rolls around next summer – unless he chooses to run as an Independent, in which case he likely will cost the Republicans the election.) Instead, my colleague Jeff Bush and I want to provide a framework for evaluating the candidates going forward.
2015-08-04 00:00:00 Why Bond Funds Don’t Belong in Retirement Portfolios by Wade Pfau (Article)
Income annuities provide payments precisely matched to a client’s longevity while stocks provide opportunities for greater investment growth. The question remains whether clients should hold bond funds in their retirement income portfolio.
2015-08-04 00:00:00 What Drives Risk Tolerance by Daniel Solin (Article)
To be a successful advisor, you need to understand how risk affects the decisions investors make and what you can do to make those decisions more objective and responsible. Demonstrating value at a time when investments are becoming more of a commodity is a popular topic in advisor-industry circles.
2015-08-04 00:00:00 Niche Marketing with Cathy Curtis by (Article)
Cathy Curtis, president and founder of California-based Curtis Financial Planning, discusses how she built a successful practice targeted to women in transition.
2015-08-03 00:00:00 Retired Investors Don’t Buy Bonds Until? by Chuck Carnevale of F.A.S.T. Graphs
The primary attractions supporting investing in bonds or other fixed income instruments have traditionally been high income and safety. People invest their principal in bonds and receive a stated interest rate (coupon) over the life of the bond and are given the promise of having their principal returned at maturity. Under normal times, bonds would typically pay a higher rate of interest than the dividend rate on stocks. Consequently, bonds have acquired the reputation as low risk and high income instruments.
2015-07-28 00:00:00 Are Managed-Payout Funds Better than Annuities? by Joe Tomlinson (Article)
Managed-payout funds promise to meet retirees’ need for sustainable lifetime income without relying on annuities. To see whether this promise can be fulfilled, I’ll answer three questions: What’s the best design for such funds? How do they compare to annuities? Can retirees do even better by combining managed-payout funds and annuities?
2015-07-24 00:00:00 Is Social Security on Life Support? by Gail Buckner of Franklin Templeton Investments
The benefit of securing your future by building your own financial nest egg goes without saying, but developing a Social Security strategy can be a key part of the equation that can help lead to a less stressful future.
2015-07-21 00:00:00 How to Use a Prospect’s Biases to Your Advantage by Daniel Solin (Article)
Jiu-jitsu is a gentle art. Instead of meeting force with greater force, skilled practitioners use their opponent’s force against them. Advisors can learn a lot from this principle.
2015-07-21 00:00:00 Intergenerational Wealth Transfer – How to Preserve Your Family’s Hard Work by Cary Williams (Article)
Money, religion and politics – the trifecta of inappropriate discussion topics that destroy dinner party conversations. But what about family issues? When client families discuss what they want to achieve with their wealth, equally unsettling themes may arise.
2015-07-17 00:00:00 ProVise Bullets by Team of ProVise Management Group
In just a few short days, the comment period will close on a controversial proposal proffered by the Department of Labor (DOL) which would require virtually all financial advisors to adhere to a fiduciary standard of care when giving clients or prospective clients advice on their retirement plans, including IRAs. Ironically, most Americans believe that the advice that their financial advisor provides is already held to this high standard.
2015-07-14 00:00:00 Fees vs. Commissions: Why An Old Debate Is New Again by Bob Veres (Article)
Robo-advisors are forcing us to revisit the ancient fees versus commissions debate. New data and new circumstances have changed the debate in powerful ways.
2015-07-08 00:00:00 The Futility of Retirement Calculators by Roger Nusbaum of AdvisorShares
USA Today syndicated a post from Motley Fool that did a good job taking down the concept of retirement calculators. The two big points made were that these calculators make an assumption based on people needing a percentage of their pre-retirement income, which does not take into account the particulars of individual circumstances, and that the calculators often overlook other sources of income including, in some cases Social Security.
2015-07-01 00:00:00 Obamacare Upheld Again: Consequences for Business Owners and Investors by Andy Friedman of The Washington Update
Last week the Supreme Court ruled that all qualifying Americans are entitled to receive subsidies to purchase health insurance under the Affordable Care Act, regardless of where in the country they live.
2015-06-30 00:00:00 Evaluating Investments versus Insurance in Retirement by Wade Pfau (Article)
In the past, I’ve described two fundamentally different philosophies for retirement-income planning: probability-based and safety-first. Those philosophies diverge on the critical issue of where an individual must place their trust: in the risk/reward tradeoffs of an equity portfolio, or on the contractual guarantee of insurance products. Here’s how to overcome that challenge and integrate the two approaches in a retirement plan.
2015-06-30 00:00:00 Stop Ignoring Millennials: They’re The Future of Your Company by Lauren Hong (Article)
Millennials are bucking trends day-in and day-out. As of 2013, they’re officially the largest, most diverse generation in the U.S. As a financial advisor, you cannot ignore them. Here’s how to include millennials in your marketing plan.
2015-06-23 00:00:00 Richard Thaler’s “Misbehaving” and Implications for Investors and Advisors by Joe Tomlinson (Article)
Richard Thaler is out with a new book, Misbehaving, tracing his career in behavioral economics. It offers an appealing combination of entertaining writing and serious discussion of the many areas he has researched. The book is a natural complement to Daniel Kahneman’s classic, Thinking, Fast and Slow. I’ll briefly compare these two books and then address what Thaler’s work says about two issues particularly important to financial advisors.
2015-06-22 00:00:00 Why It’s Time to Stop Reading About Robo Advisors by Patty Quinn McAuley of Clark Capital Management Group
Rather than just reading about the robos from third party sources, it’s important to do some first-hand research for yourself to truly understand the value proposition of online automated financial advice platforms.
2015-06-19 00:00:00 Rising Rates Don’t Spell Doom for GRATs by Tara Thompson Popernik of AllianceBernstein
Do higher interest rates really mean the end of the golden years for grantor retained annuity trusts (GRATs)? The Wall Street Journal took this view in an article published on June 15, but we think GRATs can still play a major role in estate planning for wealthy families as rates rise—if they are structured right.
2015-06-10 00:00:00 5 Investing Myths by Lance Roberts of Streettalk Live
One of the biggest myths perpetrated by Wall Street on investors is showing individuals the following chart and telling them over the “long-term” the stock market has generated a 10% annualized total return. The statement is not entirely false.
2015-06-09 00:00:00 The Importance of Knowing Your Ideal Client by Teresa Riccobuono (Article)
When I start working with a client, one of the first things they want me to do is help them develop a personalized marketing plan. To set the foundation for that plan, we first must determine their ideal client.
2015-06-09 00:00:00 Precision in Your Retirement Short Game by Glenn Dial of Allianz Global Investors
Getting the asset allocation right as plan participants close in on retirement is critical, writes Glenn Dial, Head of US Retirement Strategy at Allianz Global Investors. And professional advice can help them find that pinpoint accuracy.
2015-06-09 00:00:00 The Importance of FIFA by Bill O’Grady of Confluence Investment Management
Swiss authorities recently arrested several top officials affiliated with FIFA on various charges, mostly related to corruption. The ongoing investigation continues to unfold, so we will not spend much time on arrests or new charges. Instead, we offer a short overview of the arrests and the election and resignation of FIFA President Blatter, discussing FIFA’s structure and how the organization is prone to corruption. We follow this discussion with the most important part of the report, the extension of U.S. law enforcement into the international realm as a function of the superpower role.
2015-06-08 00:00:00 Why Stocks are Not "Cheap Relative to Bonds" by John Hussman of Hussman Funds
One of the constant refrains we hear at present is that while stocks may be richly valued on an absolute basis, they are “cheap relative to bonds.” At least one professor recently told students that valuations are meaningless because the P/E on cash is 100. Technically, with T-bill yields at just 0.01%, the P/E on cash is more like 10,000, but let’s not quibble. Using simple P/E ratios or inverted interest rates as a standard of value only makes sense if you have no appreciation for how securities are valued.
2015-05-31 00:00:00 When Paper Wealth Vanishes by John Hussman of Hussman Funds
As in equal or lesser speculative bubbles across history, there’s a common delusion that elevated stock prices represent wealth to their holders. That is a fallacy, and we can hardly believe that given the collapses that followed the 2000 and 2007 extremes, investors (and even Fed policymakers) would again fall for that fallacy so readily. The actual wealth is in the cash flows that are ultimately delivered into the hands of shareholders over time.
2015-05-29 00:00:00 Capital Sigma: The Sum of the Various Sources of Advisor-Created Value by Jianan Du, Yinsi Qi, Brandon Thomas, Janis Zvingelis of Envestnet
An ongoing debate among investment advisors and their clients centers on value: creating it, preserving it, and perpetuating it. Each faces a different challenge: Advisors are tasked with delivering worth to their clients, and clients need to understand what they can expect for the dollars they spend.
2015-05-26 00:00:00 The Most Important Step to Convert Prospects by Dan Richards (Article)
Most advisors using traditional mass-marketing methods without building early credibility will see heightened struggles to get a return on their effort. Fortunately, once the will and priority is in place, there are some proven models to successfully build credibility.
2015-05-21 00:00:00 The Student Debt Dilemma and the Role of 529 Plans by Roger Michaud of Franklin Templeton Investments
While loans can be useful in bridging the gap between savings and final costs, a college degree doesn’t have to come with a mountain of debt. Develop a multi-pronged strategy, and hopefully you or your children can enjoy the fruits of a college education for decades to come.
2015-05-21 00:00:00 The 3 R's of a Winning Retirement Plan by Glenn Dial of Allianz Global Investors
There's a new paradigm for enhancing plan design, and therefore improving outcomes for plan participants, writes Glenn Dial, Head of US Retirement Strategy at Allianz Global Investors. It's not just about the 3 F's anymore (fiduciary responsibility, fees and funds). Learn why you should look to the 3 R's instead: results, reliability and risk.
2015-05-19 00:00:00 Financial Strategies for LGBT Couples by Holly Hanson (Article)
When talking with clients about the merging of their life with another person and financial strategies to help protect them, LGBT individuals and couples are subject to more complex considerations than heterosexual couples. In this article, I've broken down some of the most common questions that these specific individuals ask when it comes to setting up accounts and documentation within the relationship.
2015-05-16 00:00:00 Align the Design: Considering and Evaluating Target-Date Glide Paths by Stacy Schaus and Ying Gao of PIMCO
Few responsibilities are as important to defined contribution (DC) plan sponsors as selecting a default glide path that best maximizes a participant’s odds of retiring on time and with sufficient lifetime income. The goal, put simply, is to maximize asset returns while minimizing volatility relative to the retirement liability – precisely what Objective-Aligned Glide Paths aim to achieve.
2015-05-14 00:00:00 Wake Me Up When September Ends by Andrew Friedman of The Washington Update
In my legislative update early this year, I noted that ongoing acrimony between Congressional Republicans and the Obama White House likely precludes agreement on any broad new legislative initiatives this year. Instead, Congress and the White House are likely to reach agreement only in the face of “forcing events” – deadlines that compel action to ward off a draconian result.
2015-05-12 00:00:00 The Best Approach to Adjustable Retirement Withdrawals by Joe Tomlinson (Article)
A great deal of recent research has focused on strategies that adjust withdrawals in retirement depending on investment experience. But such strategies disrupt retirement plans by causing withdrawals to vary a lot from year to year. I'll examine the prominent approaches for determining what will work best for clients.
2015-05-12 00:00:00 How to Make Your Message Persuasive by Daniel Solin (Article)
We all want to make our message persuasive, but few advisors pay attention to the peer-reviewed studies identifying the most efficient methods for doing so.
2015-05-12 00:00:00 Five Reasons to Adopt "Legacy Planning" over Estate Planning by Mark Davis (Article)
Legacy planning - providing advice to intergenerational clients that extends beyond wealth transfer - is a critical strategy for retaining client relationships and assets for the long-term.
2015-05-12 00:00:00 The Future of Investing ESG Portfolios: Changing Beliefs, Perceptions and Goals by Sponsored Content by ClearBridge Investments (Article)
Investing consistent with environmental, social and governance (ESG) principles can no longer be dismissed as a short-term fad. Assets under management are growing steadily, accompanied by a rise in the number and type of investment options across asset classes. Clearbridge's research explores how institutions are investing with impact today.
2015-05-11 00:00:00 Taming Longevity Risk by Patrick Drum of Saturna Capital
"In spite of the cost of living, it's still popular." - Kathleen Norris. These words offered by Kathleen Norris decades ago carry more weight than ever before, particularly within the realm of financial planning and saving for retirement.
2015-04-29 00:00:00 Do More Americans Feel Confident About Retirement? by Gary Halbert of Halbert Wealth Management
More Americans say they are feeling more confident about their retirement. That’s according to the results of the latest “Retirement Confidence Survey” conducted each year by the non-profit Employee Benefit Research Institute (EBRI). The Washington-based EBRI is the leading source for data on savings, retirement, health and related issues.
2015-04-29 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
Harold Evensky presents his quarterly newsletter.
2015-04-28 00:00:00 Build Your Business by Being Charitable by Teresa Riccobuono (Article)
One of the unintended benefits of being charitable is being exposed to new business opportunities. Let's discuss a few ways to become involved.
2015-04-24 00:00:00 Attractively Valued Ameriprise Financial: a Long-Term Total Return Opportunity Raises Dividend 16% by Chuck Carnevale of F.A.S.T. Graphs
Ameriprise slightly missed their earnings estimates for the first quarter of fiscal 2015, and the stock has dropped over 3%. However, their return on equity increased to a record high 23.1 % and operating earnings were up 7%. Management appears to remain confident about the future as evidenced by the raising of their quarterly dividend 16% to $0.67 per share. Consequently, I consider the recent weakness an excellent opportunity for long-term oriented investors desirous of earning an above-average total return.
2015-04-22 00:00:00 How Organization Promotes Successful Outcomes by Patty Quinn McAuley of Clark Capital Management Group
By delivering a realistic road map to clients, illustrating their financial future, you can help them remain confident and on course toward successful outcomes.
2015-04-21 00:00:00 The Best Asset Allocation for Retirees by David Blanchett (Article)
In this article, I determine the optimal glide path for retirees using varying initial bond yields and stock market valuations.
2015-04-21 00:00:00 Closing the Retirement Gender Gap by Jeff Briskin (Article)
New research shows how a lack of "retirement readiness" puts many women at risk of financial hardship during their retirement years, especially since most will outlive their spouses.
2015-04-14 00:00:00 New Research: Reverse Mortgages, SPIAs and Retirement Income by Joe Tomlinson (Article)
Retirees need longevity protection and additional funds. Annuities and reverse mortgages can meet those needs. While annuities have been researched extensively, reverse mortgages haven't received as much attention. We need research on how to fit these two products together in overall retirement plans. I'll launch that effort here.
2015-04-09 00:00:00 It’s Time to Make Taxes Less Taxing by Michael Allison, Peter Crowley, Jim Evans, Tom Metzold, Rey Santodomingo of Eaton Vance
Can a strategy based on asset allocation, asset location and asset management increase the tax efficiency of your portfolio?
2015-03-31 00:00:00 The Final Say on Spending Rules by Laurence B. Siegel (Article)
After decades of focused research, why can't finance experts decide on a safe withdrawal rate for retirement? It is time to refocus this debate by asking a slightly different question: Is there a spending rule that retirees can use over a fixed time horizon? There is and I call it "the only spending rule you will ever need."
2015-03-31 00:00:00 Why 2015 Will Be the Year of the Roth: Meet the “Freight Entrance” Roth 401(k) Conversion by John H. Robinson (Article)
Two new tax rules will affect the treatment of 401(k) monies. Taken individually, the rules were not particularly far-reaching or noteworthy, but together they will reshape the retirement-planning landscape. Roth IRA conversions that previously trickled through the cumbersome "backdoor" will be supplanted by a new wave moving through the "freight entrance."
2015-03-31 00:00:00 Two Routes to Compelling Value by Dan Richards (Article)
Low-cost alternatives for financial advice and investing are forcing advisors to articulate why clients should pay a premium to do business with them. This week's article features two different approaches that could help you communicate your value to prospective and existing clients.
2015-03-31 00:00:00 Are You Building a Harley Davidson Practice? by Teresa Riccobuono (Article)
Harley Davidson is the only company I know of whose customers permanently tattoo its name on their body. What is it that makes Harley Davidson customers want to show their support in this way? Bad-boy image, reputation, quality products, exceptional service?
2015-03-24 00:00:00 How do Deferred-Income Annuities Stack Up Against Rival Products? by Joe Tomlinson (Article)
Deferred-income annuities (DIAs) have received a lot of attention with new Treasury Department regulations encouraging their use. Many tout them as providing the most cost-effective way to generate retirement income. But retirement products are not one-size-fits-all. I'll show where DIAs fit among the products and investment solutions available to advisors.
2015-03-17 00:00:00 The Art of Pension Hopping by Antolin Du Bois, CFP® (Article)
Clients who are unlikely to complete a traditional 30-year defined-benefit pension and are willing to pursue an un-orthodox strategy of switching work locations, continually re-purchasing prior service completed in another location will increase their work options, their retirement security and their overall pension income.
2015-03-10 00:00:00 The Hidden Peril in Sequence of Returns Risk by Wade Pfau (Article)
Should retirees place greater faith in stocks' ability to outperform bonds over reasonable holding periods or in insurance companies and bond issuers' ability to meet their contractual guarantees? Your position on this fundamental question will determine how you choose to build retirement income strategies for your clients.
2015-03-10 00:00:00 Use "Self-Distancing" to Make Better Decisions by Daniel Solin (Article)
Before I became a consultant and coach to a number of financial planning firms, I used to run my own investment advisory firm. I believe the advice I give today is far superior to the actions I took when I managed my own firm. Now I understand why.
2015-03-04 00:00:00 The Millennial Obsession by Jerry Wagner of Flexible Plan Investments
You cannot pick up a business publication, tune into a financial news program, or glance at any news website without confronting yet another story on Millennials.
2015-03-02 00:00:00 Obama Comments on IRA Fiduciary Rules by Andrew Friedman of The Washington Update
Last week the President gave a speech in which he focused on forthcoming Labor Department rules intended to ensure that IRA holders receive investment advice unencumbered by financial advisor conflicts of interest. In conjunction with the President’s speech, the Labor Department will be re-issuing proposed rules addressing the extent to which financial advisors may receive compensation in connection with investments made by IRAs and other retirement accounts they advise. The new proposed rules should be available in the next 60-90 days.
2015-02-24 00:00:00 A Fresh Look at Life Settlements in 2015 by Stephen Terrell (Article)
Rather than let unneeded term policies expire, clients may be able to sell them to a life insurance settlement provider. Life settlements were historically limited to whole-life policies, but new developments offer advisors greater flexibility to access cash for a variety of insurance products.
2015-02-17 00:00:00 Robo-Advisors Are Not New But They Foretell the Future of Financial Advice by Joe Tomlinson (Article)
So-called robo-advisors have been heralded as the next generation of technology that will transform the financial advice industry. Underneath the considerable debate that has emerged over their potential impact, an obvious fact has been overlooked: Much of what they offer is distinctively "old school."
2015-02-10 00:00:00 Harold Evensky - Nine Key Communication Points by Robert Huebscher (Article)
Advisors should put their mouths where their money is, according to Harold Evensky. Educating and preparing clients for what advisors will ultimately deliver must be a core principle of every practice. In a recent presentation, Evensky described nine key ways that advisors should interact with clients, the media and their peers.
2015-02-06 00:00:00 Global Opportunities: The Next Leap Forward for Defined Contribution Investment Menus by Charles Roth of Thornburg Investment Management
Under ERISA, fiduciaries are obligated to ensure plan menus provide diverse investment options to help minimize the risk of long-term losses in account values. Global, non-traditional equity and fixed income options are sorely lacking in Defined Contribution (DC) plan menus. These op-tions can offer both lower correlation to U.S. markets and potentially strong returns, which par-ticipants increasingly need given the uncertainty surrounding Social Security’s future benefit levels.
2015-02-04 00:00:00 Is It Time for Our Industry To Embrace Mass Personalization? by Patty Quinn McAuley of Clark Capital Management Group
Nike. Coca-Cola. Oakley. They are all top brands in the global marketplace and they have all led the charge towards mass customization and personalization. You can build a custom pair of Nike Free Run sneakers online, incorporating your favorite designs and colors. You can put your name on a virtual Coke bottle and “share” it on social media. You can even custom-build your own shades on Oakley.com, creating your own unique pair of sunglasses.
2015-02-03 00:00:00 How to Link Retirement Strategies to Sustainable-Spending Rates by Wade Pfau (Article)
Last week, my article introduced the Retirement Accumulation and Retirement Affordability indices, which help clients determine if they are retiring at a good time. In this article, I will present my new Retirement Dashboard. More specifically, I will explain how advisors can determine the appropriate sustainable-spending rate based on their client's desired spending pattern.
2015-02-03 00:00:00 Doing Business Through the Know, Like, and Trust Process by Teresa Riccobuono (Article)
We have all heard the phrase, "People like doing business with people they know, like and trust." But how does one get to the point of trust in a relationship?
2015-02-03 00:00:00 Making Your Practice a Magnet for Seniors by Dan Richards (Article)
Many advisors believe that their practice is senior-friendly if their office doesn't require climbing a flight of stairs and their client newsletters are in large type. To test that premise, recently I hosted a roundtable lunch for several advisors who've built a niche working with seniors.
2015-01-30 00:00:00 Finding Tax-Free Transfer Opportunities in Undervalued Energy Stocks by Carin Pai, Elisa Shevlin Rizzo of Fiduciary Trust Company International
In the past few weeks, crude oil has extended its biggest price slump since the 2007-2009 global financial crisis, dropping to the lowest levels since 2009 amid signs of softer demand growth from major economies, strong output from the US and steady output from the rest of the world.
2015-01-27 00:00:00 Introducing the Retirement Wealth and Affordability Indices by Wade Pfau (Article)
How can you help clients determine if they are retiring at a good time? I aim to answer that with my recently developed Retirement Accumulation Index and Retirement Affordability Index. Let me explain how those two indices work and how you should use them with clients.
2015-01-27 00:00:00 11 Investing and Personal Finance Hacks by Roger Nusbaum of AdvisorShares
You?ve probably seen one or two of the listy articles about life hacks which are little tricks that can make the day to day routine a little easier. Some are for very mundane aspects of life like using a paper clip to mark the spot where the roll of tape starts or laying a wooden spoon across a pot of boiling water to prevent it from boiling over. I saw one of these lists a few days go where one of the hacks was a little off the beaten track, suggesting you always carry bolt cutters with you.
2015-01-23 00:00:00 Obama tax proposal by Andy Friedman of The Washington Update
In conjunction with his State of the Union address, President Obama proposed new taxes on the wealthy to raise $320 billion in revenue, to be spent on new government programs to help the middle class and working families.
2015-01-20 00:00:00 Retiring in a Low-Return Environment by David Blanchett, Michael Finke and Wade Pfau (Article)
Low bond yields and high equity valuations suggest lower spending for retirees. Prior research forecasted the impact on safe-withdrawal rates (SWRs), but a more sophisticated model can improve the accuracy of those predictions. We show just how low the SWRs should be for today's retirees.
2015-01-20 00:00:00 Are You Considering a Client Advisory Board? Here's What You Need To Know. by Teresa Riccobuono (Article)
As part of your 2015 marketing calendar, consider including a client-advisory board.
2015-01-13 00:00:00 The Advantages of a Dynamic Retirement Income Strategy by Joe Tomlinson (Article)
Retirees will adjust their spending depending on investment experience. But most research uses withdrawal strategies that are fixed at inception, such as the 4% rule. I'll show that when spending can adjust each year, retirement outcomes will improve. I'll also show the gains that can be achieved by adding annuities.
2015-01-13 00:00:00 Women: Overlooked, Disenfranchised and High-Value by Jack Singer, Ph.D. (Article)
Women are earning more, inheriting more and controlling more wealth than ever before. This is a huge, untapped demographic cohort awaiting every financial advisor who understands some key points about women's needs and desires.
2014-12-30 00:00:00 The Ten Best Articles You Probably Missed by Robert Huebscher (Article)
Great articles don't always get the readership they deserve. Here are 10 that you might have missed, but I believe merit reading
2014-12-30 00:00:00 Qualified Charitable Distributions by Tim Steffen (Article)
The Qualified Charitable Distribution rules allow taxpayers to make IRA distributions payable directly to a qualified charity without treating the distribution as taxable income. The QCD rules have expired and then extended periodically over the years, and were recently extended again through 2014 with the passage of the Tax Increase Prevention Act of 2014. These rules do expire again after 2014, meaning taxpayers will enter 2015 with the same uncertainty they had throughout the prior year.
2014-12-27 00:00:00 Epic Price Reversal for Commodities in 2014 by Frank Holmes of U.S. Global Investors
If you want to know what happened in 2014 with regard to gold and oil, it?s important to appreciate the inverse relationship between the U.S. dollar and commodities.
2014-12-23 00:00:00 Tax Increase Prevention Act of 2014 by Tim Steffen (Article)
In the waning days of the Congressional year, the House and Senate gave new life to more than 50 tax provisions that had expired at the end of 2013, giving them all a one-year extension through 2014. Included in this extension were popular individual tax breaks, including the ability to make charitable gifts directly from an IRA, an option to deduct state sales tax rather than income tax and an above-the-line deduction for tuition costs. The bill also created a new tax-favored savings account for those with disabilities.
2014-12-23 00:00:00 Three Reasons why Robo-Advisors are a Huge Benefit to the Advisory Profession by Bob Veres (Article)
It's time to change our thinking about the so-called robo-advisory firms that are moving into the financial planning landscape. They are going to be far more beneficial to the planning/investment advisory profession than any innovation in recent decades. Let's explore three ways these firms are changing the planning ecology, and note that all of them are not just positive, but significantly positive.
2014-12-16 00:00:00 How Much Risk Should Clients Take? by Joe Tomlinson (Article)
Determining the degree of risk that is appropriate and tolerable in clients' financial plans is central to an advisor's role. I will show how advisors should deconstruct risk into six components and then integrate them using a framework to provide the best recommendations for clients.
2014-12-16 00:00:00 Financial Planning for an Uncertain Energy Future by Richard E. Vodra (Article)
Advisors hearing optimistic forecasts of plentiful new supplies of oil that may last for decades may be encouraged to make aggressive projections for their clients. It is critical to understand the role oil plays in the economy and the factors that will affect future supplies. Advisors should "drill down" beneath the slogans to see both risks and opportunities upon which to base their recommendations.
2014-12-16 00:00:00 Why I'm Concerned about Stock Market Valuation Levels by Ron A. Rhoades, J.D., CFP® (Article)
Looking at a range of valuation metrics, long-term investors have good reason to worry about the U.S. equity market. They can take comfort, however, in the fact that certain asset sub-classes are less overvalued that others.
2014-12-16 00:00:00 Increase the Emotional Connection with Your Prospects by Daniel Solin (Article)
To convert prospects into clients, you need to make an emotional connection. Lecturing, educating, presenting data or otherwise demonstrating your superior expertise in financial planning and investments will not achieve that goal.
2014-12-09 00:00:00 The Hidden Value of a Reverse Mortgage Standby Line of Credit by Wade Pfau (Article)
Recent research has investigated how opening a standby line of credit through a reverse mortgage and strategically spending from this line of credit can help improve the sustainability of retirement income strategies. In this article, I show that the benefits of opening a home-equity conversion mortgage (HECM) line of credit extend beyond meeting spending needs.
2014-12-09 00:00:00 Capital Gains and Losses - Timing Is Everything! by Glenn Frank (Article)
This article will lend insight into one of the few areas that investors actually can control in our new American Taxpayer "Relief" Act environment.
2014-12-09 00:00:00 How to Deal with Unresponsive Clients by Teresa Riccobuono (Article)
We all have clients who, for whatever reason, become unresponsive to our calls and emails. Here's a process that will address those unfortunate situations.
2014-12-09 00:00:00 Designing Balanced DC Menus: Considering Equity Investments by Stacy Schaus, Ying Gao of PIMCO
Defined contribution investment lineups typically provide numerous equity choices but still may lack adequate diversification and return potential. Participants may benefit by accessing high-growth markets such as emerging markets and tapping in to dividend-paying stocks. Retirement outcomes could improve further by including portfolios structured using fundamental measures rather than market capitalization.
2014-11-19 00:00:00 Investment Implications for UK DC Schemes in Light of Tax and Regulatory Changes by William Allport of PIMCO
With greater flexibility and choices available to DC savers in the latter stages of their career, we believe DC schemes need to reconsider their traditional pre-retirement approach to providing low-risk, income-orientated and pre-retirement investment portfolios. The primary immediate challenge for UK DC schemes is navigating the need for capital stability versus a portfolio that can generate a sustainable income stream for DC savers in retirement.
2014-11-19 00:00:00 Understanding Investor Anxiety: A Perspective on Diversification by Doug Short (Article)
Diversification is a cornerstone of Modern Portfolio Theory and risk management. We spread our investments across a range of asset classes, rebalancing periodically, to ensure participation in the upside and reduce exposure to the downside. This is a time-honored strategy that works ... most of the time. But during the epic market downturn of the Financial Crisis, equity asset classes essentially marched in step to the same dismal drumbeat.
2014-11-18 00:00:00 Why the Risk-Reduction Benefits of Bond Ladders Have Been Overstated by Joe Tomlinson (Article)
Proponents of bond ladders argue that they will significantly improve the security of financial plans. Others contend that the risk reduction benefits are merely a mirage. I side with the latter view and will explain why.
2014-11-17 00:00:00 The Hypocritical Assertions of CFP Lobbyists CFP Lobbying Organization Calls Out RIAs by John H. Robinson (Article)
Recently released research from the Financial Planning Coalition is likely generating the desired attention its media-savvy crafters intended, but an informed reading of the materials reveals a campaign that is at odds with the ethical preaching of its three member organizations.
2014-11-07 00:00:00 Retirement Planning: Millennials vs. Boomers by Noah Beck of Research Affiliates
Rob Arnott and Lillian Wu recently wrote that young workers are more likely than older ones to lose their jobs in an economic downturn.They are also prone to draw on their 401(k) plan to meet basic living expenses while they are unemployed. Given these facts, the early-phase concentration in equitieswhose market prices are roughly correlated with the business cyclemakes target-date funds inordinately risky for young investors. In this article, Noah Beck considers TDFs in the broader context of workers total assets, including their own human capital.
2014-11-06 00:00:00 A Republican Congress Awaits But First the Lame Duck Session by Andy Friedman of The Washington Update
Destiny became reality in the midterm elections as the Republicans gained a majority of the Senate and widened their lead in the House to historic proportions. The Republicans now must decide the mix of confrontation and collaboration that will define their leadership. Due to variations in beliefs and campaigning strategies, the rank-and-file members of the two chambers might see this ideal mix differently. A new update discusses the dynamics surrounding the election and enumerates the items Congress must address in the lame duck session taking place in December.
2014-11-04 00:00:00 Identifying and Communicating Your Key Differentiators by Kristen Luke (Article)
Let's look at how advisors can communicate the ways in which they are different - a common struggle for many firms.
2014-11-04 00:00:00 It's Time to Shift from Pink to Purple by Sponsored Content from Transamerica (Article)
With the end of National Breast Cancer Awareness Month in October, we turn our attention to National Alzheimer's Disease Awareness Month and National Caregiver Month in November. Throughout the month, the New Age of Advice will feature blog posts with insights about Alzheimer's designed to help advisors gain a better understanding of this devastating disease.
2014-11-04 00:00:00 Outrunning the Bear: An Active Managers Survival Guide by William Smead of Smead Capital Management
Two long-time friends go up in the mountains on a hunting trip. At 4:30 A.M. of the second day, one of the men wakes up at one end of the tent to find his buddy dressing and putting on his running shoes at the other end. He asks him what he is doing. His friend says, There is a bear outside our tent. The other guy exclaims, You cant outrun a bear! His friend replies, I dont have to outrun the bear, I just have to outrun you.
2014-10-30 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
Harold Evensky presents his quarterly newsletter.
2014-10-28 00:00:00 Five Holiday Marketing Tips by Megan Elliott (Article)
The holiday season is an ideal time to reach out and remind people what you do in a more personal, less sales-focused way than you might at other times of the year.
2014-10-22 00:00:00 Retirement: How To Avoid Outliving Your Savings by Gary Halbert of Halbert Wealth Management
With over 10,000 Baby Boomers retiring every day, a pattern that will continue for the next 20 years, retirement savings continues to be one of the most important issues of our day. With 76 million Americans born between 1946 and 1964 the Baby Boom Generation saving enough for retirement is critically important.
2014-10-21 00:00:00 The Wrong Question to Ask About Marketing by Mandy Fisher (Article)
When confronted with a marketing decision, the first thing most advisors ask how much it will cost. But that's the wrong question.
2014-10-21 00:00:00 The Tool that Will Transform Firmwide Financial Planning by Bob Veres (Article)
Alex Murguia, founder and CEO of InStream Solutions, may be the most creative visionary in today's advisor software ecosystem. And like all people who think outside the box, sometimes he discovers that his best ideas have far better uses than he intended.
2014-10-21 00:00:00 Advising Clients about When to Retire by Joe Tomlinson (Article)
Clients are often surprised to learn that delaying retirement can increase retirement income by a lot. Although each case will be different, I'll present an example to provide some general insights.
2014-10-14 00:00:00 Bill Sharpe on Retirement Planning by Robert Huebscher (Article)
Bill Sharpe discusses topics at the forefront of financial-planning research: The role of annuities in a retirement portfolio, the proper glidepath for target-date funds, if investors should anticipate mean reversion in market returns and whether ESG- and SRI-oriented portfolios make sense.
2014-10-14 00:00:00 How to Promote Your Case Studies by Elizabeth Snyder (Article)
If you don't promote your case studies effectively, they won't help you achieve your marketing goals.
2014-10-08 00:00:00 Why Do Investors Really Underperform Over Time? by Lance Roberts of Streettalk Live
There have been numerous articles written as of late that have chastised individuals for "missing out on the bull market" which was only slightly worse than "not beating it." The reasons were chalked up to bad investment advice and paying "too much" in fees which caused the underperformance. While both of those reasons may be contributors to the problem, they are in reality on very small components of the problem when compared to the three single largest contributors to investor underperformance over time.
2014-10-07 00:00:00 The Five Biggest Ways Your Practice Needs to Change by Bob Veres (Article)
Telling you to brace for change, over and over again, isn't exactly helping you make concrete plans. With the constant demands on your time, it would be helpful to know: What are the new realities to which you must adapt? Where are the transitions going to impact your practice? What old ways are you going to have to abandon, and what new ones will you have to adopt? Here's my list, including five that are either urgent or high-priority changes.
2014-09-30 00:00:00 Why You Should Stop Blogging About Investing by Megan Elliott (Article)
Now that virtually every advisor is a blogger, it's harder to stand out. There's no shortage of people expounding on financial planning and investing online. Here's what to write about instead.
2014-09-27 00:00:00 The Elephant Leaves the Room by Robert Isbitts of Sungarden Investment Research
The news was greeted with shock by some, while others wondered what took so long. In perhaps the first of many shoes to drop on the hedge fund industry, the largest U.S. pension fund, Calpers announced it will sell all of its hedge fund investments within 12 months. Media stories on this announcement were quick to cite lagging performance of these funds over the past year, but it appears Calpers was more concerned with the level of fees and lack of transparencythat is, they did not know what the heck was going on inside of many of the funds.
2014-09-24 00:00:00 Open Sesame by Brian Andrew of Cleary Gull
Often times, investors are interested in pursuing investments in the hottest asset class. The hype surrounding the Alibaba IPO is an example of how a sector gets a boost from a hot new stock. The fact that the stock traded up almost 40% in the first day of trading is an indication that the sector is hot. It is difficult not to want to add more capital to that portion of your portfolio that is performing best while ignoring the portion that isnt performing as well. Of course that is exactly what you are supposed to do and what rebalancing is all about.
2014-09-23 00:00:00 Jeremy Siegel vs. Zvi Bodie: Does Equity Risk Decrease Over Time? by David Blanchett, Michael Finke and Wade Pfau (Article)
Stocks should be the asset class of choice for the long run, according to Wharton Professor Jeremy Siegel - and he has provided the data to prove it. But that paradigm has been challenged by Boston University Professor Zvi Bodie and others, who have shown that stocks become riskier the longer one owns them. Either view has profound implications for whether equity allocations should increase or decrease over time. Using Monte Carlo simulations, we provide guidance for the advisory profession.
2014-09-17 00:00:00 Median Household Incomes by Age Bracket: 1967-2013 by Doug Short of Advisor Perspectives (dshort.com)
Earlier today I updated my commentary on household income distribution to include the Census Bureau's release of the 2013 annual data. My focus was on arithmetic mean (average) household incomes by quintile (and the top 5%) over the 46-year history of this data series. The analysis offered some fascinating insights into U.S. household incomes.
2014-09-16 00:00:00 The Key Problem with Monte Carlo Software - The Need for Better Performance Metrics by Joe Tomlinson (Article)
Popular financial-planning software packages have shortcomings in the metrics they use to evaluate the outputs from Monte Carlo simulations; other metrics provide more useful information. I will address how to measure the performance of financial plans when variable investment returns and longevity are introduced and demonstrate that the most-commonly used measures have weaknesses.
2014-09-16 00:00:00 Now is the Time to Build Your 2015 Marketing Plan by Mandy Fisher (Article)
There are four building blocks that create a well-balanced marketing plan for financial advisors: infrastructure, awareness, lead generation and conversion. I will walk you through each block so that you have a clear understanding of what they are and how you can build your 2015 marketing plan.
2014-09-09 00:00:00 What is "Fee-Only?" Is the CFP Board Taking the Right Approach to Defining it? by Bob Veres (Article)
Which is more important to your advisory practice - your CFP designation or your fee-only status? Before you answer, consider this: Your CFP mark says very little about whether you adhere to a fiduciary standard, and less about your mode of compensation. Those issues are at the forefront of an ongoing controversy pitting the CFP Board against a prominent advisor, and there is little sign that its outcome will resolve the ongoing debate about how to define a fee-only professional engagement. If anything, it raises more questions than answers.
2014-09-09 00:00:00 The #1 Hot-Button Topic for Wealthy Families by Dan Richards (Article)
The financial and emotional cost when important topics go undiscussed is so great that in many cases, facilitating that conversation is the No. 1 way that advisors can make a positive impact in the lives of wealthy clients.
2014-09-08 00:00:00 Correlation Convergence is Hurting Your Investment Performance by Vern Sumnicht of iSectors
Correlation is a statistical term that helps describe the relationship between two investments, enabling an investor to determine how similar two investments are to each other. By understanding the correlation between the investments in a portfolio, an investor can understand how likely it is, for example, for two or more of those investments to gain or lose money at the same time.
2014-09-02 00:00:00 Ranking the Top 10 "Differentiators" for Advisory Firms by Bob Veres (Article)
If we have a clear idea of what foregrounds one advisory firm ahead of others, then we can deliberately cultivate those characteristics. The problem is, nobody has ever compiled a comprehensive list of differentiators, much less ranked them according to importance. So, to fill that obvious void, I've ranked the top 10 differentiators that I've personally seen advisors use in their positioning and marketing.
2014-09-02 00:00:00 Can Retirees Still Use a 4% Withdrawal Rate? Practical Applications of Monte Carlo Analysis by Wade Pfau and David Blanchett (Article)
Some advisors remain critical of Monte Carlo simulations, instead preferring to use analysis based on rolling historical periods or specific pre-defined scenarios. We believe Monte Carlo is a superior tool for measuring the uncertainties in long-term financial planning. As an example, we use it to predict the likelihood of a successful 4% withdrawal rate under today's market conditions.
2014-09-02 00:00:00 How to Raise Sensitive Issues with Clients by Dan Richards (Article)
Important issues - so-called elephants in the room - threaten the financial futures of clients and their families. Clients and advisors normally recognize these issues, but because they are emotionally charged, they are difficult to discuss. Here are three steps to talk about these subjects.
2014-09-02 00:00:00 Your Clients Don't Care About You by Megan Elliott (Article)
Conversations with clients should be about them, not you.
2014-08-26 00:00:00 The Power and Limitations of Monte Carlo Simulations by David Blanchett and Wade Pfau (Article)
Explaining the past is much easier than predicting the future. This uncertainty raises a significant number of issues when creating a financial plan for a client. Monte Carlo simulations will illuminate the nature of that uncertainty, but only if advisors understand how it should be applied - and its limitations.
2014-08-26 00:00:00 Why Germany's Economy is So Strong by Marianne Brunet (Article)
After spending more than a month this summer living in a rural part of Eastern Germany, I discovered that the source of Germany's economic strength extends far beyond the fields at the World Cup.
2014-08-26 00:00:00 Successful Succession Planning - Building Your Legacy and Keeping It by Alan Rosenfield (Article)
RIAs need a succession plan. But what does that mean, and how can you get one?
2014-08-26 00:00:00 These Four Mistakes Will Shipwreck Your Email Marketing Campaign by Alan Del Rosario (Article)
Here are four common mistakes that will shipwreck your email marketing campaign.
2014-08-19 00:00:00 How to Choose the Right Fixed-Income Strategy by Joe Tomlinson (Article)
The fixed-income portion of retirement portfolios is just as important as the equity allocation, yet far less research has been devoted to it. Advisors must decide whether to pursue active or passive strategies and which types of bonds to recommend. I'll address those strategic choices and argue that the best approach is the simplest, lowest-cost one.
2014-08-05 00:00:00 Ten Reasons the Advisory Business is Unlike Any Other by Bob Veres (Article)
The business dynamics that an advisory firm faces are so fundamentally different that any small business owner, dropped into your executive chair, would feel like she had been transported to another planet. To see how exceptional your business climate really is, let's take a quick tour of some of the differences between an investment advisory firm and a typical member of the business landscape.
2014-08-05 00:00:00 The Toughest Conversation with Clients by Dan Richards (Article)
Good advisors are used to challenging conversations with clients about unrealistic expectations and sticking to plans in tough markets. But going forward, no conversation will be more difficult than the one about how much you charge - especially when we enter the next market downturn. You need to do three things to handle those conversations effectively.
2014-08-02 00:00:00 Index funds beat active 90% of the time. Really? by Robert Isbitts of Sungarden Investment Research
My last article suggested six ways in which retired and retiring investors may be lulling themselves into a false sense of comfort. They do this by adhering to ideals that were originally postulated many years ago, and which today still have some merit. But theyve become clichs to a point where their foundation is no longer questioned when it needs to be. They are myths which need to be busted
2014-08-01 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
Earnings season got started on the right foot with Alcoa, the company that traditionally reports first, handily beating expectations and then company after company following. That is not to say that all companies beat expectations, but many surprised to the upside. Standard & Poors now expects earnings for the S&P 500 companies to come in at $29.12 for the second quarter which is a 10.4% improvement over the $26.36 during the same period last year. S&P is projecting total earnings for 2014 at $119.18 versus $107.30 for 2013, or an increase of 11%. The projection for 2015 is
2014-07-30 00:00:00 High Stock Dividends: A Competitive Retirement Income Solution by C. Thomas Howard of AdvisorShares
Sufficient yield, keeping up with inflation, and outliving the funds available are three major concerns facing investors who are building a retirement portfolio. A high dividend yield equity portfolio can provide a competitive approach to addressing each of these concerns.
2014-07-29 00:00:00 20 Predictions for 2039 by Dan Richards (Article)
The shifts in the next 25 years will be just as substantial as those in the previous 25 years, and the most successful advisors will be those who are able to anticipate and adapt to these changes. Here are 20 predictions for what the financial-advising business will look like in 2039.
2014-07-25 00:00:00 The 401(k) Event Horizon by Scott Klimo of Saturna Capital
Who would have guessed in 1973 that Roger Waters' meditation on life's fleeting passage would describe the dilemma faced by many today as they consider how best to save for retirement? The good news is that missing the starting gun doesn't prevent you from joining the race. We have all seen the calculations of how big our nest eggs could be if we started saving and investing at a young age, but those unable to do so still have an opportunity to build substantial savings.
2014-07-22 00:00:00 How to Choose the Best Retirement Income Strategy by Joe Tomlinson (Article)
In the competition among retirement-planning methodologies, systematic withdrawals have been winning the battle against the essential-discretionary approach. But given today's low interest rates, the essential-discretionary approach may work better for many clients, especially if SPIAs are used.
2014-07-16 00:00:00 Danger of Increased Risk Taking as Markets Boom by Geoff Davey of FinaMetrica
While some investors (and their advisors) believe risk tolerance changes with major events such as a stock market correction, typically it is an investors perception of risk that changes, which results in a change in their behavior. At the moment, many investors are buying stocks with elevated P/E ratios. Prices are going up a lot faster than corporate earnings and the risks are getting bigger. Yet people are still buying stocks.
2014-07-15 00:00:00 Retirement Planning with Annual Available Spend by John Craig (Article)
Sound financial planning requires neither the determination of safe withdrawal rates nor the use of Monte Carlo simulations. Relying on the past to predict the future is unnecessary. Instead, one must focus on how much can be spent each year, given expected returns and inflation, and then consider how negative and worst-case scenarios would affect retirement planning. That is the basis for the annual available spend methodology I describe here.
2014-07-15 00:00:00 Survey Best Practices, Part 2: Question Intent and Types by Elizabeth Snyder (Article)
Here are some tips that will increase your chances of gathering meaningful survey results.
2014-07-08 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
Hi! I hope you had a great 4th and youre having a great summer. Its been a busy one at E&K as youll see from my closing note and a fun one for Deena and me as we recently returned from a cruise to Reykjavik, Iceland, a most charming city but a bit off-putting with over 20 hours of sunlight.
2014-07-07 00:00:00 The Prudent Investor’s Approach to Retirement Income by Kendall Anderson of Anderson Griggs
Each day, ten thousand people reach the age where retirement is a possibility. For some the choice is optional, but for others it is mandatory. A lively debate is taking place among academics and professionals in the investment industry regarding what the proper approach is for meeting financial needs in retirement.
2014-07-01 00:00:00 What an Elite Group of Younger Advisors Has to Say by Bob Veres (Article)
I recently served as a facilitator for the annual NexGen conference, this year held on the campus of Augustana University in Moline, IL. I was able to gain insight into the very different way that the financial planning landscape looks through the eyes of younger advisors just starting their careers - and in many cases, from the bottom end of a planning firm's organizational chart.
2014-07-01 00:00:00 New Research on How to Choose Portfolio Return Assumptions by Wade Pfau (Article)
Care must be taken with portfolio return assumptions, as small differences compound into dramatically different financial outcomes over a lifetime. My research shows just how big those differences are and how they vary in the pre- and post-retirement phases.
2014-07-01 00:00:00 Five Social-Media Timesavers by Sarah Scorgie (Article)
Save time on your social-media efforts by planning ahead and using online tools.
2014-06-21 00:00:00 What Are Your Chances? by Robert Isbitts of Sungarden Investment Research
Todays blog is an excerpt from our whitepaper, The Sungarden Study which addresses the retirement income crisis, standard solutions, and offers a recommended alternative to traditional approaches. To request a copy of the study, please use the Contact Us tab at www.sungardeninvestment.com .
2014-06-19 00:00:00 Designing Balanced DC Menus: Considering Inflation-Hedging Strategies???? by Stacy Schaus, Ying Gao of PIMCO
Inflation-hedging strategies are fundamental to DC investment lineups and participants? need to build and preserve purchasing power in retirement. Plan sponsors should evaluate these assets separately and in combination before adding them to core lineups and target-date strategies. Selected assets or blends should be designed to deliver the primary benefits of inflation responsiveness, diversification relative to stocks, volatility reduction and downside risk mitigation.
2014-06-17 00:00:00 Retirement Income Strategies: How to Improve on the 4% Rule by Joe Tomlinson (Article)
In the past few years, the 4% rule has been challenged by those who claim its premise of 4% inflation-adjusted withdrawals is too optimistic under today's market conditions. Others assert that more sophisticated approaches will yield better-than-4% results. I'll evaluate two alternatives - economic utility maximization and required minimum distributions - and also discuss the practical implications for advisors.
2014-06-17 00:00:00 A Simple Explanation for DALBAR's Misleading Results by Michael Edesess, Kwok L. Tsui, Carol Fabbri, and George Peacock (Article)
For a number of years, DALBAR has been publishing a report that purports to show that investors make bad decisions and, as a result, their investments underperform the market by several percentage points. It has captured headlines for years, perpetuating the myth that individual investors invest poorly, and therefore they do much worse than the market average. There's just one thing, the DALBAR result is wrong.
2014-06-17 00:00:00 Seven Tips for Delivering Bad News by Megan Elliot (Article)
You can better communicate bad news to clients by keeping the following seven tips in mind.
2014-06-12 00:00:00 Midterm Election Update by Andy Friedman of The Washington Update
With many of the state primaries now behind us, Im writing to update my March white paper on the midterm elections.
2014-06-10 00:00:00 Six Questions for the Future of the Planning Profession by Bob Veres (Article)
A few weeks ago, I asked for your help as we created the scenario learning session for the Insider's Forum conference in September. We're going to map out some possible futures that you can prepare for, using as raw material the crowdsourced thoughts and ideas that you provide to us. Here are six questions that have been raised and addressed about the future in the first round of our exercise.
2014-06-10 00:00:00 Survey Best Practices, Part 1: Designing Your Survey by Elizabeth Snyder (Article)
If you are not accustomed to regularly surveying your clients, here are some basic guidelines to consider when it comes to survey design, layout and structure.
2014-06-05 00:00:00 Q2 2014 Investment Letter by Sean Butson of DC Capital Management
The S&P 500 is now more than 5 years into the bull market that started on March 9, 2009 Historically, buying the S&P 500 at high valuations and low dividend yields has resulted in sub-par investment returns on average The S&P 500 is currently overvalued based on 7 different metrics, implying that future long-term returns are likely to be disappointing Overvaluation is not limited to the S&P 500, as a number of recent technology valuations are reminiscent of the late 1990s tech bubble We believe a bear market within the next few years is likely
2014-06-03 00:00:00 The Pros and Cons of Target-Date Funds in the Accumulation Phase by Wade Pfau (Article)
Target-date funds are criticized for not being customized or tailored to individual situations. But this is unfair, as they are meant to serve as default investment options for individuals who are otherwise unwilling or unable to put in the effort to obtain a better result. Nonetheless, the debates around TDFs provide an opportunity for advisors to make clear how they can serve their clients.
2014-06-03 00:00:00 The Value of a Secondary Call to Action by Sarah Scorgie (Article)
In today's technological world, email has become the easiest way to connect with potential clients. With Web-based email marketing services, it's easier than ever to communicate with leads - but are your calls to action making the most of your campaigns?
2014-05-30 00:00:00 Real Median Household Income Fell 0.42% in April by Doug Short of Advisor Perspectives (dshort.com)
The Sentier Research monthly median household income data series is now available for April. The nominal median household income was down $84 month-over-month and up only $1,420 year-over-year. Adjusted for inflation, it was down $222% MoM and only $409 YoY. The real numbers equate to a -0.42% MoM decline and a 0.78% YoY increase.
2014-05-27 00:00:00 Defensive Position Rotation: Achieving Financial Goals with Less Volatility by Dale W. Van Metre, Ph.D., CRPC®, APMASM (Article)
Defensive position rotation is an alternative to MPT. It is a portfolio-construction philosophy that adapts to changing market conditions and can increase risk-adjusted returns over time.
2014-05-21 00:00:00 Interest Rates Have To Go Up. The "Bond King" Says No by Gary Halbert of Halbert Wealth Management
The prevailing view on Wall Street and Main Street is that medium and long-term interest rates have to go higher in the months and years ahead. Interest rates have to get back to normal at some point, so were told. Yet in the last several months, yields on 10-year Treasury notes and 30-year Treasury bonds have fallen rather significantly. Whats up with that?
2014-05-20 00:00:00 Creating Error-Free Marketing Materials by Megan Elliot (Article)
Here's how to avoid marketing mistakes that will negatively affect your firm's credibility.
2014-05-13 00:00:00 Why SPIAs are a Good Deal Despite Low Rates by Joe Tomlinson (Article)
SPIAs have been out of favor in the current low-interest-rate environment. But my new research indicates that they still offer especially attractive opportunities for retirees. One of the key reasons is that typical advisor clients will, on average, live longer than the overall population.
2014-05-13 00:00:00 The Virtues of Rebalancing by Craig L. Israelsen, Ph.D. (Article)
Does rebalancing improve portfolio performance? Yes - but it takes time for the benefits of rebalancing to be fully manifested, at least in the case of a broadly diversified 12-asset portfolio.
2014-05-13 00:00:00 When a Colleague Just Isnt Listening by Beverly Flaxington (Article)
One of our more senior financial advisors struggles with communication. He knows what he wants to say, but he doesnt convey his ideas in a clear and thoughtful way. He just doesnt listen well and thats why his responses are not strong and clear. Is it possible to teach listening skills?
2014-05-13 00:00:00 Revisiting the Research on SPIAs in Retirement Portfolios by James Shambo, CPA/PFS (Article)
The conclusions drawn by Michael Kitces and Wade Pfau in their paper, The True Impact of Immediate Annuities on Retirement Sustainability, are flawed.
2014-05-06 00:00:00 Ten Ways the Next Generation of Financial Planners Will Change the Profession by Bob Veres (Article)
I have distilled ten key themes that illustrate how the next generation of advisors will change the profession when they take the reins.
2014-05-06 00:00:00 A Simple Technique to Convert More Prospects into Clients by Dan Solin (Article)
To become great at converting prospects into clients, remember these two words
2014-05-06 00:00:00 Fighting Financial Advisor Anxiety: Part Two by Sarah Scorgie (Article)
Last month, I discussed how to calm clients’ nerves with educational marketing strategies. Now, I’ll discuss strategies for making your practice more relatable.
2014-05-02 00:00:00 Views of the Insane on Diversification by Kendall Anderson of Anderson Griggs
I recently read this quote from Craig L. Israelsen, a Financial Planning contributing writer in Springville, Utah. Granted, I have never met, nor have I had any conversations with Mr. Israelsen, but he seems to be a competent professional. According to his bio, he is an executive in residence in the personal financial planning program in the Woodbury School of Business at Utah Valley University. However, his statement still bothers me a bit, as he is saying that any other investment approach must be insane.
2014-04-29 00:00:00 How to Help Business Clients Unlock Wealth by Bob Veres (Article)
Is there a way to help your business clients diversify their holdings, take some risk off the table and create a side investment portfolio that will sustain them if their business runs into trouble? Is there a way you can help your clients find capital when they need it most?
2014-04-29 00:00:00 Three Strategies for Working with Older Clients - And Preserving the Relationship by David Solie (Article)
Recent statistics confirm the magnitude of the loss: 70% of widows change financial advisors within six months of their husbands’ deaths. Is this an unavoidable reality of being a financial advisor, or are there steps that can be taken to preserve these accounts? In my opinion, many of these losses can be avoided if advisors follow three preservation strategies with their older clients.
2014-04-29 00:00:00 Content Marketing: The Long and Short of It by Meghan Elliot (Article)
While capsulated content - tweets, Facebook posts, 30-second videos and snappy emails - has an important place in your marketing strategy, you have to make room for longer content that educates and informs on more complex issues.
2014-04-22 00:00:00 Why Annuities HATE Ken Fisher. And you should too. by John H. Robinson (Article)
Before we commend Ken Fisher for his vitriolic antipathy toward variable annuities, there is one little problem we need to recognize. Fisher’s claims are at odds with a growing body of empirical research published in peer-reviewed academic and professional journals.
2014-04-22 00:00:00 The Surprising Number One Driver of New Clients by Dan Richards (Article)
Among sophisticated clients, referrals arent the most important determinant in deciding on an advisor. Heres what is.
2014-04-22 00:00:00 What SEC Social Media Guidance Means for You by Kristen Luke (Article)
Recently, the SEC published new testimonial and social media guidelines that cleared the way for advisors to use social media review sites like Yelp and Angie’s List. Such sites were previously restricted because they provided content that was generally seen as testimonials. While the new guidance may seem like a big leap forward for financial advisors who use social media, there are still many restrictions, so it is important to understand what you can and cannot do.
2014-04-22 00:00:00 The State of the CFP Board Registered Financial Planning Programs? by Caleb Brown (Article)
Each year I spend several days visiting various Certified Financial Planner Board-registered programs throughout the country to ensure that as an industry, we are continuing to source, screen and integrate the best available talent for the financial planning firms we represent. On the plus side, I found many students are ready and eager to enter the financial-planning world. But there were also ominous signs for the future of our profession.
2014-04-22 00:00:00 Letters to the Editor by Various (Article)
Readers respond to three recently published articles, and the authors of those articles respond to those letters.
2014-04-15 00:00:00 Our Most Read Article from Last Week: Do Small Cap-Value Stocks add Value in Retirement Portfolios? by Joe Tomlinson (Article)
Research going back to Fama and French in the early 1990s has shown that small-value stocks have produced superior returns. Subsequent debate has centered on whether this superior performance will continue and if investors should tilt portfolios to capture those returns. Ill examine the historical evidence, incorporate it in retirement examples and discuss the future prospects for small-cap value.
2014-04-08 00:00:00 Do Small Cap-Value Stocks add Value in Retirement Portfolios? by Joe Tomlinson (Article)
Research going back to Fama and French in the early 1990s has shown that small-value stocks have produced superior returns. Subsequent debate has centered on whether this superior performance will continue and if investors should tilt portfolios to capture those returns. Ill examine the historical evidence, incorporate it in retirement examples and discuss the future prospects for small-cap value.
2014-04-08 00:00:00 How to Get Chatty Clients off the Phone by Beverly Flaxington (Article)
My clients are very happy - I know because they call me with every little question and I respond. Some just call to talk about Obamacare or the market trends. Its not that I dont enjoy the conversations, but it gets very difficult to plan my day with this much chatting.
2014-04-08 00:00:00 Adding Direct Mail Advertising to Your Marketing Mix by Elizabeth Snyder (Article)
Advisors rarely generate the positive activity necessary to make direct mail worthwhile and cost effective. But they have an opportunity to capitalize on direct mail as a marketing strategy, especially since it offers advantages over electronic marketing (such as email): Direct mail reaches people directly in their homes and provides physical documents that recipients can save and refer to later.
2014-04-07 00:00:00 The Doubt of Appearances by Dimitri Balatsos of Tesseract Partners
Households have made significant progress mending their balance sheet in the post-crisis period. Assets have been boosted on the back of higher home values and stock prices, while liabilities have been trimmed, mostly mortgages, thanks in large part to widespread home foreclosures.
2014-04-03 00:00:00 Fiduciary vs. Suitability Standards-Your Need to Know the Difference by H. William Wolfson of American Financial Advisors
Beth Banker, a successful business woman, has been having ongoing neck and back issues. She decided to access web based information as to obtain self treatment options. Upon her reading, she realized that her condition, although appearing musculoskeletal in nature may be more involved with underlying pathologies. Although her intent was to heal herself, in reality she became more concerned and stressed as to the amount of research and data that existed?which she didn?t understand.
2014-04-03 00:00:00 ProVise Bullets by Team of ProVise Management Group
During the Great Recession, America laid off two million factory workers and factory output fell 20 percent. Before the Great Recession, of course, manufacturing jobs were headed overseas. As we have slowly emerged from the Great Recession, its a little surprising to some that manufacturing has led the way, outpacing overall GDP growth. This year it looks like manufacturing could add 3.5 percent in growth. Is this just a replacement of jobs that were lost during the Great Recession?
2014-04-01 00:00:00 Milliman Managed Risk Strategy-A Closer Look by (Article)
The Milliman Managed Risk Strategy is an intelligent institutional quality risk management strategy that seeks to stabilize volatility around a target level, capture growth in up markets and defend against losses during major market declines. The strategy has been in place since 1998, and is used in a variety of funds and investment products in an attempt to help investors weather market turbulence and improve the overall likelihood of meeting retirement income goals.
2014-04-01 00:00:00 The Alpha Strike Zone by Michael Finke (Article)
Investors have known about mutual-fund style boxes for a long time, but few understand their purpose. Should an advisor identify the best fund in each of the boxes? Should they attempt to capture equal exposure to all styles?
2014-04-01 00:00:00 Fighting Financial Advisor Anxiety by Sarah Scorgie (Article)
Here’s how to help prospective clients educate themselves before walking into a meeting with you.
2014-04-01 00:00:00 More Ticking Time Bombs that Threaten Your Business by Dan Richards (Article)
Last week I discussed four inevitable changes in how Americans invest. This week and next, I’ll focus on four aspects of advisory practices that are unsustainable. These four issues will cause significant changes in the next 10 years - or perhaps sooner.
2014-03-26 00:00:00 Looming Retirement Crisis ? Boomers In Big Trouble! by Gary Halbert of Halbert Wealth Management
Let?s face it, we all know this country is facing a retirement crisis. The first of the Baby Boomers turned 65 and started retiring in 2011. The number of Boomers retiring each year will rise rapidly over the next decade or more. Before the end of this decade, Boomers will be turning age 65 at the rate of 8,000 per day.
2014-03-25 00:00:00 Milliman Managed Risk Strategy by (Article)
With two significant stock market corrections in the past decade and turbulent times facing the world economy, many investment advisors are under a great deal of pressure to bring risk management solutions to their clients. This video focuses on the Milliman Financial Risk Management and its effort in solving the retirement income problem in America.
2014-03-25 00:00:00 Rethinking your Newsletter by Megan Elliot (Article)
Newsletters, once a cornerstone of advisor marketing, now look a bit old-fashioned. Compared to Facebook, Twitter, videos, blogging and other flashier marketing strategies, many simple newsletters look boring and dated. But newsletters can still have a place in your marketing repertoire, provided you approach them in the right way.
2014-03-21 00:00:00 Retirement Savings: How Much Is Enough? Part 2: Good News Not Good Enough by Jon Vogler of Invesco Blog
This second blog in a two-part series about retirement readiness discusses whether 401(k)s and Social Security can adequately meet retirement income needs. Part 1 looked at the rule-of-thumb numbers cited as guidelines for income replacement in retirement.
2014-03-18 00:00:00 How Reverse Mortgages Improve Sustainable Withdrawal Rates by Joe Tomlinson (Article)
Standby reverse mortgages (SRMs) have been viewed as a product only to be utilized late in life, after other retirement funds have been depleted. But new research shows that SRMs are a useful tool during retirement to increase sustainable withdrawal rates. I’ll describe how the SRM works and highlight key findings from the research.
2014-03-18 00:00:00 The Misconceptions About Selling that Impede Success by Dan Solin (Article)
RIAs who generate meaningful assets under management can significantly increase their earnings. Every RIA appreciates this. Many believe superior knowledge and expertise is key to capturing more business, but they often overlook other factors. There are also some misconceptions about selling that actually impede success. Here are some examples.
2014-03-18 00:00:00 How to Help Clients Prepare for End-of-Life Decisions by Emir Phillips (Article)
End-of-life decisions should be addressed by all financial planners. People are dying more from chronic illnesses, and deaths are increasingly occurring in institutions, where individuals and their families may incur significant expenses. Those costs could be substantially mitigated with proper advance-directive planning initiated and guided by a caring financial planner.
2014-03-17 00:00:00 Retirement Savings: How Much Is Enough? Part 1: 70%, More or Less? by Jon Vogler of Invesco Blog
This first blog of a two-part series about retirement readiness looks at the rule-of-thumb numbers cited as guidelines for income replacement in retirement. Part 2 will discuss how adequately 401(k)s and Social Security will meet those target numbers.
2014-03-17 00:00:00 Recalibrating the Retirement Clock: Should 75 Be the New 65? by Nick Kaiser of Saturna Capital
Retirement sounds pretty sweet, doesn't it? Exotic holidays. Finally writing that novel. Never having to rely on an alarm clock to wake up early. Being your own boss. Retirement goals are as varied as people themselves.
2014-03-15 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
Harold Evensky's quarterly letter to his readers.
2014-03-13 00:00:00 Investment Portfolios Need Someone to Take Fiduciary Responsibility by William Wolfson of American Financial Advisors
There is a protocol to follow after a new patient enters your office. Staff is expected to meet, greet, welcome and have a patient fill out forms. This allows the Doctor of Chiropractic (D.C.) to ascertain demographics, responsibility of payment, the patient?s primary complaint and reason for visiting the office. Similar to that of a Doctor of Chiropractic who cares for a patient and follows the oath to do no harm, a Certified Financial Planner (CFP), parallels the doctor?s fiduciary responsibility.
2014-03-11 00:00:00 Why You Should Stop Asking For Referrals by Elizabeth Snyder (Article)
I hear it all the time: I ask my clients and centers-of-influence (COIs) to think of me if they know anyone who many benefit from my services, yet I never receive any referrals. What am I doing wrong? What should you do if you find yourself in this position?
2014-03-04 00:00:00 Does International Diversification Improve Safe Withdrawal Rates? by Wade Pfau (Article)
Safe withdrawal rate (SWR) studies have been based on a few asset classes and rarely incorporated international diversification. This is problematic, as an SWR depends on portfolio return and volatility, and broader diversification can extend the efficient frontier toward better retirement outcomes. To determine the benefits of international diversification, I looked at the relative performance of withdrawal rates in 20 developed-market countries.
2014-02-25 00:00:00 Five Technology Trends that are Reshaping the Industry by Bob Veres (Article)
Recently, I spent a couple of days at the annual T3 conference - the financial planning professions version of the Consumer Electronics Show. The conference brings together tech vendors offering planning software, CRM, portfolio tracking, rebalancing and trading, outsourcing, hosting and screening. Here are five trends that will help all of us put the new technology into perspective.
2014-02-25 00:00:00 The Stereotypes to Avoid When Marketing to Women by Kristen Luke (Article)
Many financial advisors dont have marketing materials that appropriately address todays affluent female market. To make a genuine connection with women, choose images for your marketing materials that show you understand who they really are.
2014-02-18 00:00:00 Five Tips for Telling Your Marketing Story by Megan Elliott (Article)
A great story makes your firm stand out. Many financial advisors struggle with storytelling, which can seem vague or touchy-feely, especially if they’re more comfortable focusing on the technical side of wealth management. But telling great stories is easier than it seems. Here are five tips to you get started.
2014-02-18 00:00:00 Building a $250 Million Practice from Scratch by Dan Richards (Article)
We can learn from rookie advisors who, despite all the obstacles, are building large practices from scratch. To achieve a peak level of success entering the financial advisory space today, you have to get a lot of things right. I’ll cover four foundational decisions today and wrap up with some others in next week’s column.
2014-02-18 00:00:00 Congress Raises the Debt Limit: Is This the End of the Budget Battles? by Andy Friedman of The Washington Update
Last week Congress - faced with an impending snow storm and a desire to get home for the Presidents Day holiday - hastily passed legislation permitting the federal government to continue to borrow funds through March 15, 2015. Coupled with the agreement reached last December to fund the government through September 30, 2015, this action eliminates the prospects of additional fiscal showdowns for at least the remainder of 2014.
2014-02-14 00:00:00 Many Reasons for Rates to Rise by Robert Isbitts of Sungarden Investment Research
There are a number of scenarios and events that could cause rates to rise in the next several years. Increasing economic growth in the United States would mean that the Federal Reserve no longer needs to keep market interest rates artificially low. Central banks around the world have been buying debt to spur economic activity, with mixed result at best. When there is no longer a need to purchase more debt, the massive, coordinated demand for that debt will fall. And when that happens... uh-oh.
2014-02-11 00:00:00 Providing Better Social Security Advice for Clients by Joe Tomlinson (Article)
Delayed claiming of Social Security benefits makes overwhelming sense, as do strategies that coordinate claiming by couples. But such strategies are unpopular, despite numerous consumer-finance articles highlighting their advantages. Advisors can add significant value for clients by explaining the benefits of these strategies.
2014-02-11 00:00:00 Monthly Letter to Our Clients & Friends by Kendall J. Anderson of Anderson Griggs
Although the rest of America may need a manufacturing revival, mutual fund manufacturing is not in need of help, as the business has been growing continuously for three decades. Because of the sheer number of funds and the amount of investment dollars they control, there is a very high probability that we are buying new positions and selling existing positions to one or more mutual fund companies.
2014-02-04 00:00:00 The Actions that Lead to Top Performance by Dan Richards (Article)
In my 30 years of experience dealing with successful advisors, I’ve seen as many paths to success as there are successful advisors. And for those advisors with a well-established practice, that’s actually a good thing - if there was a simple formula for success, the barriers to entry for new advisors would go way down and the flood of successful competitors would put downward pressure on pricing and compensation. Despite the lack of a universal route to success, I have found that successful advisors engage in nine key activities.
2014-02-04 00:00:00 Want to Achieve Marketing Success? Assign Responsibility by Kristen Luke (Article)
Develop a marketing strategy that works for you and your business. Once you find a strategy that works, implement it consistently. But with numerous other responsibilities and distractions, many financial advisors stumble when it comes to implementing their marketing plans. As a result, they do not see the results they anticipated.
2014-01-28 00:00:00 Looking Back at the Advisory Profession 20 Years from Now by Bob Veres (Article)
Ive powered up my time-travel hardware to take a clear look at the year 2034. Ive received budgetary approval to make a long-distance phone call into the future, and conduct a real interview with a successful advisor in that time period. Yes, it was expensive. But nothing is too good for our readers.
2014-01-25 00:00:00 A Grim Intermediate Outlook for High-Quality Bond Returns by Robert Isbitts of Sungarden Investment Research
Rates have been steadily falling since the 1980s. A simple "reversion to the mean" in which rates rise toward their long-term average (the average 10 year U.S. Treasury rate since 1926 according to data sourced from the St. Louis Federal Reserves website) would mean that rates would rise to about 5%. Thats almost a 2% increase from where we are right now. We suspect that would be more than enough to spur a dramatic change in investors attitudes toward bond investing, and to increase interest in viable alternative strategies for retirement income.
2014-01-25 00:00:00 Wealth Services at Banks Come Under Central Bank's Scanner by Rajat Dhar of Cogent Advisory
RBI, the central bank of India, made critical observations of way in which wealth services were being practised at banks. Also, the clear note was made with respect to the rising cases of misselling at banks. This market commentary covers the draft guidelines issued by RBi and tries to uncover the reason for the same and the way forward for the clients. This has been the first time ever that separate guidelines have come for banks and independent financial advisors or advisory firms in India; and this article covers the wealth services being offered by banks in India.
2014-01-23 00:00:00 Tacking Through the Banking Headwinds by John Loesch of Diamond Hill Investments
Pick up nearly any financial publication these days and it is bound to have one, if not several, stories about the headwinds facing the banking industry.
2014-01-21 00:00:00 Superstition Ain't the Way by John Hussman of Hussman Funds
When you believe in things that you dont understand, then you suffer.
2014-01-21 00:00:00 Take Me to Your Leader by Kerry Pechter of Retirement Income Journal
The retirement industry resembles a Tower of Babel today. Thats not necessarily a bad thing. But when blocs with overlapping interests want to achieve interlocking goals, its often best to sing in the same language from the same hymnbook at the same time.
2014-01-21 00:00:00 Turning Asset Allocation Upside Down by Roger Nusbaum of AdvisorShares
After the second 50% drawdown of the US equity market in one decade, the investment industry began to reassess the idea of what asset allocation should look like. Unlike the 1980s and 1990s, financial professionals can no longer rely on an almost static 60/40 or 70/30, watch the equity portion triple in 15 or 20 years and then flip the whole thing to fixed income for a safe 6%.
2014-01-17 00:00:00 Chutes and Bond Ladders by Robert Isbitts of Sungarden Investment Research
At most, a laddered bond approach should be a modest allocation within the total retirement strategy. In our opinion its value is in its emotional comfort to the investor as opposed to the merits of the strategy itself.
2014-01-14 00:00:00 Five Opportunities for Advisors to Add Value by Joe Tomlinson (Article)
Advisors need to determine where they can add the most value in helping clients achieve their financial goals. Surmounting this challenge is central to a successful business strategy.
2014-01-14 00:00:00 Michael Porter on the Fundamental Problem for Investors by John Heins (Article)
Harvard Business School Professor Michael Porter’s seminal work on competitive dynamics and the strategies companies can employ to positively impact their competitive positions revolutionized managerial thinking. In this recent interview in Value Investor Insight, however, he’s even more interested in speaking about investing - not all of which is particularly flattering to investors.
2014-01-14 00:00:00 Should Advisors Write a Book? by Megan Elliott (Article)
Not every book becomes a best seller, especially those written by financial advisors. Before you sit down to pound out your opus, step back and evaluate whether writing a book makes sense for you and your financial advisory business.
2014-01-14 00:00:00 Letters to the Editor by Various (Article)
Several readers respond to Wade Pfaus article, How to Use Bond Ladders in Retirement Portfolios, which appeared last week. Readers also respond to two recent market commentaries.
2014-01-10 00:00:00 A Preview of the Sungarden Study by Robert Isbitts of Sungarden Investment Research
Next week, my team and I will release Sungardens first major whitepaper. It assesses the retirement income problem, reviews existing solutions and presents a framework for how investors and financial advisors can pursue a solution with confidence.
2014-01-07 00:00:00 Ten Predictions for Advisors in 2014 by Bob Veres (Article)
Nobody can predict the markets. But it is possible to forecast the challenges that financial advisors and planners will face in the next 12 months, or at least provide a warning system for impending threats. Here are my top 10 issues to think about as we enter 2014 - offered with humility and respect for the world’s ability to surprise us.
2014-01-07 00:00:00 How to Use Bond Ladders in Retirement Portfolios by Wade Pfau (Article)
Should bonds be kept in mutual funds or purchased as individual securities and held to their maturity dates? The former option receives much far more attention, as managers compete in a performance-driven marketplace. But investing, especially for retirement, shouldnt be driven by maximizing risk-adjusted returns. Advisors must focus on securing a clients future spending needs. I will investigate the role of bond ladders in retirement and which ladder length is best for clients.
2014-01-06 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
To say that 2013 was an interesting year would be a bit of an understatement. We learned a long time ago not to make predictions about the stock market because no matter what is predicted, it is likely to be wrong. Even if we get lucky one year, we are not likely to even get close the following year. We do try to give guidance, however. Last year we suggested that, given the late run in the market in 2012 and its 15% return, investors should be happy with a return of 8 to 10% in 2013. Obviously, investors enjoyed much better returns.
2014-01-03 00:00:00 Hedged-Dividend Investing: The Debate Starts by Robert Isbitts of Sungarden Investment Research
Lively debate is common in our business and it existence promotes exactly what investors are looking for - flesh and blood people who can do the research for them, the planning with them and be willing to stand by their beliefs and act in their clients best interests.
2013-12-31 00:00:00 The Ten Best Articles You Probably Missed by Robert Huebscher (Article)
Great articles don’t always get the readership they deserve. We’ve posted the 10 most-widely read articles for the past year. Below are another 10 that you might have missed, but I believe merit reading.
2013-12-26 00:00:00 Creating a Reliable Lifetime Income by Ken Mungan of Milliman Financial Risk Management
With the baby boomer generation rolling into retirement, financial advisors have been faced with increased demand to assist with retirement income planning. As the financial advisory community struggles to address this demand, advisors are realizing that their traditional planning techniques must improve. In this white paper, we analyze the problem of providing a reliable lifetime income. We compare several approaches and demonstrate that risk management is a key element to a successful investor outcome.
2013-12-26 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
I admit it, I do occasionally pick on Money Magazine and other consumer financial publications, but as Ive written in the past, for the most part, Money does a great job of educating consumers. Its story on Lessons from the Crash "Lehman Brothers collapse in September 2008 sent stocks on a terrifying ride. A year-by-year look back reveals five key takeaways you need to heed today" is an excellent example. Here are Moneys "Lessons."
2013-12-24 00:00:00 The Key to Creating Better Marketing Materials by Elizabeth Snyder (Article)
For your New Year’s resolution this year, consider updating or creating new marketing materials for your firm. Do you know how to communicate your preferences to your creative team?
2013-12-23 00:00:00 401(k) Makeover: Future Trends by Jon Vogler of Invesco Blog
Retirement experts believe your 401(k) plan will take on a new look and focus over the next few years as the industry introduces changes aimed at getting participants to save more money and do more planning for retirement.
2013-12-17 00:00:00 Optimizing Asset Location: Is It Worth the Effort? by Joe Tomlinson (Article)
Asset location - the choice of whether to hold stocks and bonds in taxable or sheltered accounts - is receiving increased attention as advisors seek more ways to add value. New research has challenged long-held beliefs. I’ll examine that research and answer a question that should concern every advisor and client: Does the value provided by asset-location advice justify the fees for the work involved?
2013-12-13 00:00:00 Hedged Dividend Investing: The Best Strategy You've Never Heard Of? by Robert Isbitts of Sungarden Investment Research
Our industrys challenge: How to deal with that via creation of intelligent investment strategies that allow advisors and their clients to follow through on their desire to skirt both the bond and stock bubbles of the future, while still striving for a competitive yield for their retirement portfolios.
2013-12-12 00:00:00 A Budget Compromise is Reached, But Unresolved Issues Remain by Andy Friedman of The Washington Update
The agreement reached last October to raise the nations debt ceiling established a bipartisan committee to negotiate a budget to run the federal government in 2014 and 2015. The committees primary focus was to replace the next round of across-the-board "sequestration" cuts, which otherwise would significantly reduce spending on defense and domestic programs during those years.
2013-12-10 00:00:00 How Much Can Clients Spend in Retirement? A Test of the Two Most Prominent Approaches by Wade Pfau (Article)
In my last article, I described research-based innovations for variable withdrawal strategies from retirement portfolios. In this article, I put Guyton’s and Blanchett’s strategies to the test. My results provide planners with a better understanding about the potential spending paths generated by these different approaches.
2013-12-10 00:00:00 Six Things Every Advisor Must Have on Their LinkedIn Profile by Megan Elliott (Article)
An optimized LinkedIn profile is an essential part of any financial advisors marketing efforts. But putting together a great LinkedIn profile involves more than just copying and pasting information from your resume. To get the most out of this professional social networking site, here are six things you need in your LinkedIn profile.
2013-11-29 00:00:00 From the Taj Mahal to Westminster Abbey: Notes from a Global Investor by Frank Holmes of U.S. Global Investors
I recently returned from India, a nation where an incredible 600 million people are under the age of 25. That?s nearly double the entire population of the U.S.
2013-11-29 00:00:00 "Fixed" Income Investing is Broken by Robert Isbitts of Sungarden Investment Research
Back in June of this year, the Fixed Income (a.k.a. bond) market may have experienced the defining moment of this generation of investors. The yield on the 30-year U.S. Treasury bond moved above 3.50% for the first time since the summer of 2011. It stands at about 3.80% now. After many fake-outs, this could be the start of a long-term trajectory higher.
2013-11-26 00:00:00 How to Develop a Fee Schedule by Teresa Riccobuono (Article)
Too many advisors share a reluctance to charge what they are worth. That fear is both a philosophical and a business issue. To overcome it, here are several factors to consider when designing your fee schedule.
2013-11-22 00:00:00 50 Years Later: JFK and the Misery of Rising Interest Rates by Robert Isbitts of Sungarden Investment Research
On the 50th anniversary of one of the most tragic events in U.S. history, I took a quick look back at investment market history around that time. As it turns out, the stock and bond markets had done quite well in recent years and by mid 1963, the 10-year Treasury was a bit under 4% (around the lowest rate in about a half-decade) and the stock market was near its all-time high. Whether it was a direct result of the calamity of Kennedys death or other factors, late 1963 was a turning point for the U.S. stock and bond markets.
2013-11-19 00:00:00 Thoughts from Top Advisors on Building a Physician Niche by Greg Stokes (Article)
Since most doctors are smart and wealthy, they are ideal candidates for a lifetime client-advisor relationship. Three prominent advisors told me how they built and grew a successful practice that catered to physicians.
2013-11-19 00:00:00 New Research on How Much Clients can Spend in Retirement by Wade Pfau (Article)
A major problem remains unsolved in the discipline of financial planning: How should clients adjust their spending patterns in response to changes in the value of their retirement portfolios? The original research on this topic was based on a fixed percentage of assets, adjusted for inflation. Numerous refinements to that model have been proposed, and I will look at how the updated models can help clients maintain their desired standard of living without depleting their assets.
2013-11-18 00:00:00 Schwab Impact Conference 2013 - Finally! Some Good News from D.C. by Rob Isbitts of Sungarden Investment Research
Earlier this week my wife (who doubles as Sungardens Director of Operations) joined me for three days in Washington D.C. at the Schwab IMPACT conference for investment advisors. To me, this is the biggest show of the year in our industry and the Capital edition continued the traditional mix of new ideas, networking and a feeling at the end once described by David Letterman as Im tiredbut its a nice kind of tired. Here are some brief highlights and what I think the implications are (if any) for what we are doing for our clients now and in the times ahead.
2013-11-12 00:00:00 Beware of Financial Plannings Misguided Rules-of-Thumb by Joe Tomlinson (Article)
Lacking better insights, financial planners cling to rules of thumb, such as allocating a percentage of assets to fixed income based on a clients age. More recently, those rules have been institutionalized through products like target-date funds, which maintain a fixed glide path for all investors. But new research has led to the development of software products that allow advisors to easily improve on the suboptimal outcomes to which clients were previously destined.
2013-11-05 00:00:00 Three Trends That Will Change the Game for Advisors by Steve Lockshin (Article)
This article is excerpted from Steve Lockshins new book, Get Wise to Your Advisor. This book makes an impassioned argument as to why clients should choose independent advisors who adhere to a fiduciary standard.
2013-10-29 00:00:00 Why Deficits Don?t Matter by Bob Veres (Article)
Stephanie Kelton, Associate Professor of Economics at the University of Missouri/Kansas City, believes that the root of our deficit problems can be found in a fundamental misunderstanding ? shared by Democrats, Republicans and mainstream voters alike ? about the government?s balance sheet. She argues, plausibly, that the whole idea that we should control the deficit at all is costing our nation trillions of dollars in lost output. The result is lost income, savings, wealth and prosperity.
2013-10-29 00:00:00 Seven Resources to Make You a Better Writer by Megan Elliott (Article)
Whether youre crafting client emails, blog posts or market commentaries, you want your writing to be read, understood and (if youre lucky) enjoyed by your intended audience. If youre looking for inspiration, encouragement or just some basic writing tips, check out these resources.
2013-10-22 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
Last month, a Wells Fargo/Gallup survey of non-retired investors showed just how lingering the hangover is from the financial crisis five years ago. Much like the Great Depression financially scared their great grandparents and grandparents, the Great Recession is impacting investors expectations about the future.
2013-10-22 00:00:00 Recession-Proof Your Marketing by Kristen Luke (Article)
The choices you make and actions you take today will influence how your business fares following the next market crash. Here are two marketing strategies you can implement now to prepare for the future.
2013-10-21 00:00:00 A Last Minute Deal Averts Default - For Awhile by Andy Friedman of The Washington Update
With the deadline for the United States to avoid defaulting on its debt fast approaching, Congress reached another late night compromise to reopen the government and raise the nations debt limit. The deal also called for yet another bipartisan committee to try to set a budget for future government spending. Before discussing what that committee is likely to do, lets compare the predictions Ive been making since early this year against the reality of what ultimately occurred.
2013-10-17 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
Last month, a Wells Fargo/Gallup survey of non-retired investors showed just how lingering the hangover is from the financial crisis five years ago. Much like the Great Depression financially scared their great grandparents and grandparents, the Great Recession is impacting investors expectations about the future. 41% indicated they were concerned about another global crisis during their retirement years, and 28% were convinced they would have a lower standard of living during retirement.
2013-10-15 00:00:00 A Better Way to Measure Risk Tolerance by Joe Tomlinson (Article)
In building financial plans, asset-allocation recommendations must recognize the clients ability to absorb risk. To aid in this assessment, advisors often use risk-tolerance questionnaires, but these tools have shortcomings. The evolving field of brain science can help to design better questionnaires.
2013-10-08 00:00:00 The Futility of the Endowment Model by Robert Huebscher (Article)
In the past two decades, the so-called endowment model has been adopted by hundreds of endowments, foundations and advisors ? particularly those serving ultra-high-net-worth clients. By aggressively allocating to illiquid alternative asset classes, those investors hoped to duplicate the results of Yale and other top-tier institutions. New research exposes the futility of those efforts.
2013-10-08 00:00:00 When Your Succession Plan Is Derailed by Beverly Flaxington (Article)
I hired a young guy in three years ago with the expectation I would give him ownership and have him eventually take over the business. I want to wind down and have been giving him a large percentage of my clients to manage. Lately he has been talking about moving back to where his wifes parents live. He said he isnt sure if this business is right for him. How do I get him to make a decision?
2013-10-07 00:00:00 Auto Focus: Voluntary Plans Morphing to Mandatory? by Jon Vogler of Invesco
The American private retirement system has historically been voluntary. Employers first decide whether theyre going to sponsor a plan and then select the plans features. But over the last several years, focus has intensified on two criticisms of the voluntary system.
2013-10-02 00:00:00 Handing Down Your Legacy - A Special Gift For Readers by Gary Halbert of Halbert Wealth Management
No one likes to talk about death. Many people put off planning for this contingency because its just not pleasant to think about. Additionally, most young people think that death is a long way off, so they have plenty of time to plan for it. But as we all know, accidents happen and no one knows exactly when their time will come.
2013-10-01 00:00:00 The Federal Government Shuts Down: Now What Happens? by Andy Friedman of The Washington Update
Washington insanity reached new heights yesterday as Congress failed to agree on an appropriations bill to keep the federal government running, even though it had known the September 30 deadline for over six months. This inaction brings Washington dysfunction to a new high (or low). Up until now, Congress had arrived at each fiscal precipice and averted catastrophe with a compromise. Now, finally, Congress has gone over the edge.
2013-09-27 00:00:00 Achievement Awards Announced at the 2013 Insiders Forum Conference and Leadership Forum by Bob Veres (Article)
The first annual Insiders Forum conference attracted more than its share of industry leaders. But two of its more prominent attendees received special recognition for their contributions to the financial planning/investment advisory profession.
2013-09-24 00:00:00 Why Retirees Should Choose DIAs over SPIAs by Wade Pfau (Article)
Retirement portfolios can be constructed from a mix of asset classes, including stocks, bonds and annuities. In the past, I’ve shown that retirees achieve some of the best outcomes by allocating a portion of those assets to SPIAs. In this column, I extend my analysis to show that DIAs work even better than SPIAs, by providing more liquidity and better longevity protection at a lower cost.
2013-09-23 00:00:00 Enhanced Dividend for Income by Jim O'Shaugnessy of O'Shaughnessy Asset Management
It is axiomatic in the financial planning canon that investors searching for a steady source of income should rely heavily on bonds. Stocks are for capital appreciation and bonds for income. The practice is so ingrained, that I have not heard of many investors who would make the case for using an equity portfolio to generate income. Bonds also appeal to advisors because of their inherent principal protection advantage. As a bond owner, you are a creditor, not an owner.
2013-09-18 00:00:00 Newsletter September 2013 by Harold Evensky of Evensky & Katz
SAY IT ISNT SO... Investment News headline Ex-J.P. Morgan broker: Firm pushed house funds. The story went on to report: Claims reps didnt get commission on trades of outside funds. A former J.P. Morgan broker has filed an arbitration claim alleging that the banks securities unit encouraged sales of proprietary funds by withholding commissions from brokers on trades of outside funds.
2013-09-17 00:00:00 The Fiduciary Pyramid: Demystifying the Fiduciary Landscape by Seaborn Hall (Article)
The term fiduciary is at once accessible, familiar and confusing. We hear it often and think that we know what it means. But do we? Consider this assertion: A fee-only registered investment adviser (RIA) is at the top of the fiduciary pyramid. Is this a valid, provable statement?
2013-09-17 00:00:00 How One Advisor Attracts HNW Clients by Dan Richards (Article)
Recently, a California-based advisor explained how she shifted her practice to focus on affluent clients. Her success was the result of a simple but thoughtful five-step plan.
2013-09-10 00:00:00 A New Tool to Calculate Long-Term Care Needs by Joe Tomlinson (Article)
Health-care crises can destroy retirement plans, yet advisors and clients often avoid discussing long-term care (LTC) insurance. Part of the reason ? aside from a natural reluctance to contemplate such tragedies ? is the lack of data needed to evaluate the LTC risk. That data deficiency can now be overcome, thanks to a pioneering product that provides customized projections for clients.
2013-09-05 00:00:00 Congress Returns from Recess to Face Fiscal Deadlines by Andy Friedman of The Washington Update
Congress returns from its August recess facing two imminent deadlines.First, Congress has appropriated funds to keep the federal government operating only through September 30, 2013.If Congress does not appropriate additional funds during September, on October 1 the federal government will shut down.House Speaker Boehner has said he will propose short term stop gap legislation without conditions that would fund the federal government for a few more months at 2013 levels.If Congress adopts such a resolution, the funding deadline will be pushed later into 2013.
2013-09-03 00:00:00 Getting Prospects to Respond to Your Emails by Dan Richards (Article)
The chances that a prospect will open an email from someone they dont know are slim. Advisors who rely on mass emails are increasingly challenged to find creative ways to get their message through. But a few advisors who are succeeding in attracting clients via email invitations told me of five ways they get past inbox filters.
2013-09-03 00:00:00 How a Menu of Services Generates Revenue by Teresa Riccobuono (Article)
Very few advisors do as good a job as possible articulating their value proposition and the ways they can be of service to their clients. If clients purchase products or services from competitors, it may be because they are unaware of the full range of your offerings.
2013-08-26 00:00:00 Could Clarity Confuse? The Industry Strikes Back by Jon Vogler of Invesco Blog
The intention of the Department of Labor (DOL) proposal to illustrate lifetime income streams on 401(k) statements is to clarify retirement income status for participants. But according to industry and trade groups, the requirement may have the opposite effect, creating more confusion than clarity.
2013-08-20 00:00:00 Target-Date Funds: Why Higher Equity Allocations Work by Joe Tomlinson (Article)
Following the 2008 financial crisis, target-date funds (TDFs) were criticized for exposing investors nearing retirement to excessive equity allocations. Were those criticisms justified? How well do TDFs stack up against the venerable strategy of matching one’s bond allocation to one’s age? My research has yielded surprising answers to those questions and to the proper role of single-premium immediate annuities (SPIAs) alongside TDFs.
2013-08-20 00:00:00 Five Ways to Get Families to Talk About Finances by Dan Richards (Article)
Every financial advisor sees clients lack of communication with family members as a problem. Here are five ways one group of successful advisors is addressing this gap.
2013-08-20 00:00:00 How to Evaluate Event Marketing by Kristen Luke (Article)
If your firm uses event marketing, then it is critical to evaluate the success of your efforts. I recommend asking attendees to fill out an evaluation form at the conclusion of each event. This feedback will help you make necessary tweaks to improve future events and collect valuable contact information from attendees. The following tips will help you create a useful event evaluation form.
2013-08-20 00:00:00 Letters to the Editor by Various (Article)
A reader responds to Bob Veres article, Envisioning the Planning Firm of the Future, which appeared last week. A reader responds to Dan Richards article, How to Fix the Flaws in Financial Planning, which appeared on July 30, and a reader responds to Bob Veres article, The Price You Pay for Poor Management, which appeared on July 23.
2013-08-14 00:00:00 Macro View...In Microwave Time (Part 2 of 2) by Rob Isbitts of Sungarden Investment Research
Todays blog post picks up where last weeks left off by updating the 13 key points for investors I laid out in an article in RIABiz.com on January 14 of this year. These were and are the most significant data and forces for investors to track today, to pursue long-term growth and sidestep major losses. As I did last week, I will also note whether I think each point is a positive or negative (or other) for investors now that we are about 3/5 of the way through 2013. The six areas covered last week were generally positive. Lets see about the final seven on the list
2013-08-13 00:00:00 Envisioning the Planning Firm of the Future by Bob Veres (Article)
Virtually all advisors operate with a value proposition built on bettering their clients financial future through management of their assets. But trends in the workforce and capital markets will force advisors to rethink those assumptions and, if Richie Lee is right, the planning firm of the future will adapt a four-factor service model that places much greater emphasis on helping clients maximize their human capital.
2013-08-13 00:00:00 Letters to the Editor by Various (Article)
A reader responds to Wade Pfaus article, Unlocking the Two Mysteries behind SPIAs, which appeared last week, and readers respond to the commentary, Whats Wrong With Indexes?, by Brian Evans of AdvisorShares, which was published on July 29.
2013-08-08 00:00:00 Investment Advice Technology and How to Lose Money in the Coming Years by Kendall Anderson of Anderson Griggs
Adventures are good for my soul. They create wonderful memories, both of where I have been and all the effort it took to get there. All of us have memories, both good and not so good. I am a bit worried about the near term future.
2013-08-06 00:00:00 Unlocking the Two Mysteries behind SPIAs by Wade Pfau (Article)
Two mysteries confound planners who purchase single-premium immediate annuities (SPIAs) for their clients: Why does the present value of a SPIA often exceed its cost, and why do equity allocations appear to increase when a SPIA is purchased? Unlocking those mysteries requires advisors to use a different framework ? based on the household balance sheet ? for the withdrawal phase of retirement.
2013-07-30 00:00:00 The Power of Diversification and Safe Withdrawal Rates by Geoff Considine (Article)
When Bill Bengen published his seminal research in 1994, a 4% safe withdrawal rate (SWR) was clearly attainable with a variety of asset allocations. But bond yields are lower now than they were then, and equity returns for the next 20 years are unlikely to exceed those of the prior two decades. Indeed, a new paper by three highly respected researchers showed that SWRs for stock-bond portfolios are well below 4%. But as I will demonstrate, a 4% SWR is still possible with a more diversified portfolio ? and without subjecting clients to additional risk.
2013-07-30 00:00:00 How to Fix the Flaws in Financial Planning by Dan Richards (Article)
Four-in-five financial planning recommendations dont lead to action, according to a Forbes column. Our industry needs a fundamental reappraisal of how to create plans that translate into action and positive outcomes.
2013-07-30 00:00:00 Five Web Metrics Advisors Should Be Tracking by Kristen Luke (Article)
Do you look at your website analytics report and have no idea what it means? Don’t worry. Unless you are a professional web marketer, most of the data you see on those reports won’t impact your business in any significant way. But that doesn’t mean you should ignore your website statistics all together.
2013-07-30 00:00:00 How to Change the Conversation with your Clients by Beverly Flaxington (Article)
Are we, as advisors, doing a disservice to our clients if we simply focus on answering financially related questions?
2013-07-25 00:00:00 Retirement: The Vacation of a Lifetime by Team of Franklin Templeton Investments
Most of us plan for our vacations with giddy anticipation. We pore over glossy travel magazines and surf web sites for the perfect place to pursue our passions, or to just put our feet up and relax. And, if were responsible, we save our pennies, sometimes years in advance, to make our dream a reality. But when it comes to the ultimate vacation retirement many people are far less prepared. You probably have a good idea of how to finance a weeks vacation, but do you have a viable plan for a vacation that can last decades?
2013-07-23 00:00:00 The Price You Pay for Poor Management by Bob Veres (Article)
If you have 100 client meetings a year and could net an additional $65,000 to $70,000 out of them, how much effort would you be willing to put into achieving that?
2013-07-23 00:00:00 If Only Clients Came With Instruction Manuals by Teresa Riccobuono (Article)
If you never have had a client relationship start off strong and then fizzle out, congratulations. For those of you who have, read on. I am going to help you put together a client instruction manual.
2013-07-09 00:00:00 Retirement Portfolios: Fears over Rising Rates are Overblown by Joe Tomlinson (Article)
The second quarter saw increases in interest rates, losses in every category of bonds and investors abandoning fixed-income markets. The distress has been particularly acute among retirement investors who considered bond funds to be safe. But are fears of bond losses overblown? I will make the case that the rise in interest rates is actually good for retirement portfolios. To see this, one has to look beyond the quarterly statement losses and focus on overall retirement outcomes.
2013-07-09 00:00:00 Assessing Healthcare Expenses in Retirement by Dan McGrath, Paul Seidel and Josh Jackson, CAS, ALMI (Article)
In the wake of the Affordable Care Act and its accompanying deluge of regulation, advisors are helping baby boomers prepare for retirement in more ways than ever before. But our industry continues to overlook a significant threat to clients continued comfortable lifestyles: out-of-pocket healthcare costs.
2013-07-08 00:00:00 Widening the Search for Income: Beyond Traditional Bonds by Team of Forward Management
Multisector bond market strategies may provide an opportunity to capitalize on differences in relative value. A more refined and global approach may generate yield with dividend-paying stocks. Emerging market (EM) corporate bonds feature attractive fundamentals and have increased in popularity as an asset class.
2013-07-02 00:00:00 Insiders Forum Conference Names Advisor Perspectives Exclusive Media Partner by Advisor Perspectives (Article)
The Insiders Forum conference, to be held this year in Dallas, TX, September 17-19, has announced an exclusive media partnership with Advisor Perspectives.
2013-06-25 00:00:00 Strategies for the Retirement Red Zone by Joe Tomlinson (Article)
The retirement red zone is the critical years immediately before and after retirement, when financial plans are highly vulnerable to adverse market movements. In many previous articles, I have examined strategies to reduce risk after retirement, but here I will focus on the decade before retirement. Ill compare strategies that rely on traditional stock-bond portfolios with those using various types of annuity products.
2013-06-25 00:00:00 The Price Your Clients Pay for Using Safe Withdrawal Rates by David B. Loeper (Article)
Safe-withdrawal rates (SWRs) are perhaps the most extensively studied topic in financial planning literature. But applying a single SWR-driven methodology to all clients neglects their unique and individual needs. A better approach is for advisors to assist clients in defining their ideal and acceptable goals and the relative priorities among them. Then they can demonstrate through Monte Carlo simulation the likelihood of the recommended plan becoming over- or under-funded relative to those goals.
2013-06-25 00:00:00 Letters to the Editor by Various (Article)
Adam Apt responds in the latest exchange of letters on the topic of socially responsible investing. A reader responds to Geoff Considines article, A Better Alternative to Cap-Weighted Bond Indices, which appeared June 11. A reader responds to Wade Pfaus article, Retirement Income Designations ? Which Should You Choose?, which appeared last week.
2013-06-24 00:00:00 "Fixed" Income Investing Is Broken by Robert Isbitts of Sungarden Investment Research
Herb Brooks, who coached the 1980 Miracle on Ice U.S. Olympic Hockey Team to its unlikely win over the Soviet Union, included that quote as part of what I consider to be the best motivational speech in sports history. He was talking about his team and their Russian opponents. He might as well have been talking about bond investors on June 20, 2013.
2013-06-20 00:00:00 Why Wellness Matters: The Real Cost to Employers of Unhealthy Employee Behaviors by Team of Manning & Napier
It is no secret that health care costs have ranked among the top concerns of employers for much of the last decade. There is good reason for this concern, as health care costs have outpaced inflation for years, and employers often bear the brunt of these costs for their employees and dependents. Employers looking for ways to stem the tide of runaway health plan expenses should investigate wellness programs designed to impact the source of the costs unhealthy behaviors.
2013-06-18 00:00:00 Retirement Income Designations ? Which Should You Choose? by Wade Pfau (Article)
With more than 50 certification programs based on the withdrawal phase of the planning lifecycle, advisors are faced with a paralyzing choice about which designation provides the most valuable curriculum. Here’s some guidance on choosing the right program for advisors.
2013-06-18 00:00:00 Three Time Bombs that Threaten Retirement Plans by Dan Richards (Article)
Three poorly understood developments threaten secure retirements ? without wishing to be alarmist, I will call them time bombs. These developments will change the retirement dynamic for many Americans: increasing lifespans, escalating medical costs as people age and safe withdrawal rates on savings dropping from historical levels.
2013-06-18 00:00:00 What Advisors Need to Know about Health-Care Planning by Dinesh Sharma (Article)
Guiding clients through the maze of the health-care choices retirees face is a way advisors can provide meaningful value. Here’s an overview of the Medicare and Medicaid programs to help advisors understand the key economic considerations that will impact their clients.
2013-06-18 00:00:00 Newsletter June 2013 by Harold Evensky of Evensky & Katz
Do you remember hiding under the sheets listening to radio when your parents thought you were asleep? If so, I have an unbelievable collection of all the old-time radio shows we listened to when we were kids, if you have about six months? spare time. Find your favorite, click on it, and it lists literally hundreds of episodes you can re-live.
2013-06-04 00:00:00 Your Value Proposition: A Precursor to the Elevator Pitch by Teresa Riccobuono (Article)
Every business should stand on four legs: values, a mission statement, a vision statement and a value proposition. This fourth item, a value proposition, must provide concrete data about your organization, why it exists and who you serve.
2013-05-30 00:00:00 Global DC Plans: Similar Destinations, Distinctly Different Paths by Stacy Schaus, William G. S. Allport, Justin Blesy of PIMCO
DC plans in in the U.S., Australia and the U.K. may benefit from better aligning asset allocation defaults to workers needed outcome: purchasing power in retirement. Focusing on needed outcomes would suggest a higher allocation to real assets, earlier de-risking and consideration of tail risk hedging.
2013-05-24 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
The two Asian giants have a challenging year ahead. The Fed will be challenged to keep the bond market under control.
2013-05-21 00:00:00 Do Annuities Reduce Bequest Values? by Joe Tomlinson (Article)
The widely held view that annuities reduce bequest values is too narrow. Adjustments can be made in retirement portfolios to reduce retirement risk without sacrificing the value of ones bequest. Heres how retirees can purchase annuities, adjust allocations in remaining assets and achieve improved retirement outcomes.
2013-05-20 00:00:00 The President's Proposed Future Tax Changes and Some Questions About Past Ones by Andy Friedman of The Washington Update
The United States government has once again hit its borrowing limit. The government is permitted to borrow through May 18, after which it can continue to operate without additional borrowing for about three months. By fall, Congress will have to raise the debt limit to prevent the United States defaulting on outstanding debt.
2013-05-16 00:00:00 Saving for College: A Family Affair by Team of Franklin Templeton Investments
The language of personal finance isnt especially racy, but debt certainly has taken on the negative tone of other four-letter words. Even so, with college costs on the rise and many parents feeling especially pinched in this challenging economic environment, student loans rather than college savings have become the solution for many.
2013-05-08 00:00:00 Is Your Investing One Dimensional? by Jerry Wagner of Flexible Plan Investments
At the National Association of Active Investment Managers (NAAIM) Uncommon Knowledge Conference in Denver last week, a reporter from Financial Planning magazine asked us, What is active investing? Many confuse the phrase with the simple act of running a mutual fund populated with stock picks within the strict guidelines of a prospectus, as opposed to running an index fund, where the manager simply buys and holds the shares making up a particular stock or bond index.
2013-05-07 00:00:00 Breakaway Brokers: What the Data Really Say by Bob Veres (Article)
For the past 15 years, and especially since 2008, few assumptions have been accepted as widely or confidently in the financial services world as the idea that brokers are leaving the wirehouse environment in increasing numbers ? and taking their clients with them. Underlying that assumption is another: that the trend is accelerating, and will continue to do so until the brokerage industrys retail footprint has been severely diminished. The more extreme projections see the entire brokerage asset gatherer/sales model following Lehman, E. F. Hutton and Bear Stearns into extinction.
2013-04-30 00:00:00 The Best Solution for Protecting Retirement Portfolios: Put and Call Options versus GLWBs by Joe Tomlinson (Article)
Retirees cannot be exposed to severe ? or even modest ? market losses. They need to protect their savings in a cost-effective manner. I will compare the projected outcomes for two types of strategies: options, which can reduce volatility, and products that guarantee lifetime income, such as variable annuities with guaranteed lifetime withdrawal benefits.
2013-04-30 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
With the passage of the American Taxpayer Relief Act of 2012, a lot of people felt that things were set as it related to estate taxes. Apparently everyone believed that except the President, who has proposed several changes to estate tax law in his fiscal 2014 budget.
2013-04-24 00:00:00 The 2030 Non-state World by Bill O'Grady of Confluence Investment Management
Several weeks ago we started looking at the alternative world scenarios as projected by the National Intelligence Council (NIC). The NIC issues a long-term strategic outlook every five years and projects a forecast from this analysis for the following 15-20 years. In the most recent report, Global Trends 2030, the NIC proposes four alternative world scenarios. We are now turning to the last projected outlook, the Non-state World. Under this scenario non-state actors aided by emerging technologies will have increasing influence, as the importance of traditional nation-states decays.
2013-04-23 00:00:00 Create Mission and Vision Statements That Drive Your Business by Teresa Riccobuono (Article)
We often hear that advisors should create mission and vision statements for their businesses. I agree, but with one caveat.
2013-04-09 00:00:00 Four Bold Innovations that will Revolutionize Financial Planning by Bob Veres (Article)
What it would be like for an advisor in the 1980s to be magically transported to our 21st century? The changes would be dazzling: the Internet and social media, exchange-traded funds and Morningstar data, Skype conferences and the virtual cloud, plus a few million mobile device apps that do everything but vacuum your house.
2013-04-09 00:00:00 Four Steps to Becoming the Primary Advisor for Top Clients by Dan Richards (Article)
Recently, an advisor who had successfully persuaded an investor with many millions of dollars to open an account asked me how to turn this foothold into a larger share of this client’s assets.
2013-04-09 00:00:00 Tips for Building a Compelling Web Site by Wendy Cook (Article)
Is your current website still living in the “online brochure” days or even non-existent? Don’t dwell on what’s been holding you up. Let’s move your site ? and you along with it ? into the 21st century.
2013-04-09 00:00:00 The Big Lie of COI Referrals by Beverly Flaxington (Article)
Several weeks ago I responded to an advisors question about increasing center-of-influence (COI) referrals. The advisor was frustrated that seemingly good relationships with COIs were not translating into more referrals. I received a response to that column from Scott Johnson, director of sales and marketing for My Perfect Client, a provider of training programs for financial advisors. Scott shared some interesting insights about his approach to COI referrals and I thought readers could benefit from these ideas.
2013-04-01 00:00:00 Plan Sponsors and Participants Need HELP by Jon Vogler of Invesco
The Senate Committee on Health, Education, Labor & Pensions (HELP Committee) held a hearing titled Pension Savings: Are Workers Saving Enough for Retirement? on Jan. 31, 2013. Witnesses shared successful initiatives and highlighted areas that need improvement to help workers achieve a financially secure retirement.
2013-03-27 00:00:00 RISE Survey Reveals Some Somber Retirement Realities by Team of Franklin Templeton Investments
As numbers go, 1% and 99% have gotten more than their fair share of media attention, but if youre one of the millions who hope to retire someday, you may want to pay attention to another figure: 21%. According to the 2013 Franklin Templeton Retirement Income Strategies and Expectations (RISE) survey, thats the percentage of retirees who have no savings to speak of. So how do you avoid falling into this statistical group? Thats the $64,000 question thats worth much more than thatits the price of your future.
2013-03-26 00:00:00 How to Invest Like Buffett by Robert Huebscher (Article)
Listen to Jim Cramer or his cohorts on CNBC and you’ll hear statements like, “Don’t settle for the mediocre returns of a market index!” and “It’s not that hard for investors to pick stocks that will beat the market!” Unless you possess the skills of Warren Buffett, that’s not true. But in the book Think, Act and Invest Like Warren Buffett, Larry Swedroe says you indeed can invest like Buffett ? just not by stock-picking.
2013-03-25 00:00:00 Congress Avoids a Government Shutdown; Up Next, the Debt Limit by Andy Friedman of The Washington Update
Congress cleared another hurdle last week, passing a bill (a continuing resolution) to keep the federal government operating for six months past its current funding deadline of March 27.
2013-03-22 00:00:00 Happy Clients; Terrified Prospects by David Edwards of Heron Financial Group
Four years ago, on March 9th, 2009, US stocks collapsed to a 12 year low. A financial crisis rooted in overleveraged purchases of junk (or even fraudulent) securities claimed, in quick succession, Bear Stearns, Lehman Brother, Merrill Lynch (forced into a shotgun marriage with Bank of America) and AIG. Investors panicked, selling good securities at deep discounts to fair value.
2013-03-19 00:00:00 How My Firm Hires Great Employees by Teresa Riccobuono (Article)
Adding a team member is a big decision. If you are thinking the time is right to add to your roster, here are a few things to consider.
2013-03-14 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
In the latest edition of his client newsletter, Harold Evensky highlights a number of interesting bits of news, including a must-see destination for your friends, your kids and your grandkids, some advice from Warren Buffett, a tip from Albert Einstein and the latest data on hedge fund performance.
2013-03-12 00:00:00 Three Ways to Turn Referrals into Clients by Dan Richards (Article)
In the perfect world, every prospect who's been given your name would immediately call you. But the real world doesn't work that way, something I was reminded of by a recent email from a financial advisor. Here's how to address that situation.
2013-03-12 00:00:00 Client Communication beyond the Newsletter by Beverly Flaxington (Article)
You have written about the importance of communicating with clients in a variety of ways. What are some examples of things that work best, other than the standard newsletter?
2013-03-12 00:00:00 Letters to the Editor by Various (Article)
Two readers respond to Joe Tomlinson's article, Can Advisors Add Value Through Fund Selection?, which appeared on February 26, and a reader responds to Wade Pfau's article, Breaking Free from the Safe Withdrawal Rate Paradigm: Extending the Efficient Frontier for Retirement Income, which appeared last week.
2013-03-12 00:00:00 The Retirement Income Problem by Rob Isbitts of Sungarden Investment Research
The most vital and pervasive issue investors will face in the next decade is how to wring out enough income from the savings they have amassed to maintain or enhance their lifestyle. To do so, they will need to be far more flexible in their investment approach. They also must adapt to an environment for "high quality bonds" (Treasuries, Municipals and Corporates) that does not at all resemble that which they are accustomed to.
2013-03-05 00:00:00 Breaking Free from the Safe Withdrawal Rate Paradigm: Extending the Efficient Frontier for Retiremen by Wade Pfau (Article)
The traditional safe withdrawal rate approach that relies on a portfolio of only stocks and bonds produces among the worst possible outcomes for meeting spending needs and preserving financial assets for other uses. My research demonstrates there is a better approach.
2013-03-05 00:00:00 You?re The Cream of the Crop: Key Findings from the 2012 Advisor Perspectives Reader Survey by Jeff Briskin (Article)
Experienced. Results oriented. Focused on serving the needs of individuals and families. Confident in your abilities. Eager to expand your knowledge. If this sounds like you, you're not alone. These are the traits that stand out among Advisor Perspectives readers, based on the findings of our 2012 Reader Survey.
2013-03-04 00:00:00 The Sequester Cuts Take Effect: Now What Happens? by Andy Friedman of The Washington Update
On March 1, the government spending cuts known as the "sequester" took effect without any action from Congress. Below I discuss what those cuts mean and what is likely to follow as Congress wrestles with additional deadlines. But before we get to the sequester, a number of you have asked for a understandable summary of the elements of the fiscal cliff compromise reached on New Year's Eve.
2013-02-26 00:00:00 Can Advisors Add Value Through Fund Selection? by Joe Tomlinson (Article)
Low-cost index funds will beat the average actively managed fund after expenses. But can advisors identify superior active funds to overcome this disadvantage? Advisors who believe they can choose those funds will be challenged by the results of two studies from the defined-contribution industry.
2013-02-12 00:00:00 Staying Active on Social Media: Ten Ways to Generate Relevant Content on a Frequent Basis by Kristen Luke (Article)
One of the most difficult aspects of social media marketing for financial advisors is staying active. For advisors who already have a hectic schedule, how do you generate relevant content and maintain an active presence? Here are 10 tips to help you get started.
2013-02-12 00:00:00 Manage Your Time More Effectively with a Model Week by Teresa Riccobuono (Article)
We cannot manage time. The clock keeps ticking whether we want it to or not. What we can manage is our activity. Instead of time management, think activity management.
2013-02-12 00:00:00 Can a Salesperson Help ? or Hurt? by Beverly Flaxington (Article)
I just hired a successful sales guy. He has been in the industry for 15 years and knows what to do. Our advisors will not allow him access to their clients; they prevent him from attending meetings and are generally usurping his role. How do I get him integrated into our practice?
2013-02-05 00:00:00 Comparing Advisors to Jim Cramer: Measuring your Professional Alpha by Bob Veres (Article)
Jim Cramer, Suze Orman and other so-called investment pundits and gurus are constantly telling consumers that they can do a great job of managing their portfolios on their own. Let's look at what the research has to say about the various investment performance benefits that advisors should be able to give their clients during the accumulation phase of their lives ? excess returns above what do-it-yourself investors could obtain on their own. I call those excess returns 'professional alpha.'
2013-02-01 00:00:00 The Myth of the Nest Egg by Seth Masters of AllianceBernstein
For decades we've focused on the nest-egg notion as the goal for retirement saving, benchmarking our progress in relation to that lump sum. But it has no context other than probably being the single biggest "paycheck" most of us will ever see. That lump sum may sound great to me, but what does it mean for my spending over 20 or even 30 years without a paycheck?
2013-01-29 00:00:00 Predicting Asset Class Returns: Recommendations for Financial Planners by Joe Tomlinson (Article)
Developing reasonable estimates for stock and bond returns requires more than just historical data or the assumptions provided in financial software packages. Inappropriate assumptions can doom retirees to outliving their savings or forgoing a life style they could otherwise afford. There are better ways to forecast, and in this article I'll suggest a few of them.
2013-01-29 00:00:00 Are Planners Worth the Fees they Charge? by Wade Pfau (Article)
Could financial advisors who offer comprehensive services be doing a better job? Two recent studies shed a positive light on the potential of the financial planning profession to do right by their clients.
2013-01-22 00:00:00 Puppet Show by John Hussman of Hussman Funds
What's fascinating is that in the presence of what are not thin strings, but massive cables supporting the economy like a puppet, the only response that Wall Street can muster is "Hey! He's walking!" as if the puppet is capable of motion without being propped up to a nearly reckless extent.
2013-01-17 00:00:00 The Fiscal Cliff: Overview of Tax Implications by Team of Neuberger Berman
The fiscal cliff bill, formally titled "American Taxpayer Relief Act of 2012" ("Act"), was signed into law by the President on January 3. The Act extends certain tax relief provisions enacted in 2001 and 2003, and contains numerous other tax provisions.
2013-01-15 00:00:00 Demographics and the Decline of Equity Mutual Funds by Paul Franchi (Article)
Until the last few years, mutual fund flows followed performance. Recently, however, money has flowed disproportionately into bond funds and out of US equity funds despite a strong rally in the equity markets. Changing demographics explain this shift, which has important implications for advisors and the mutual fund industry.
2013-01-15 00:00:00 Five Key Marketing Trends for Advisors in 2013 by Kristen Luke (Article)
It is a new year and time to experiment with fresh marketing ideas. Keeping up with trends isn't just a way to tell your colleagues you are on the cutting edge of marketing. You need to understand how consumers are changing and how you can keep your message delivery relevant. If your marketing is getting stale, here are five marketing trends for 2013.
2013-01-10 00:00:00 Finally, a Solution to the Income Investing Dilemma by Gary Halbert of Halbert Wealth Management
There's an endangered species in the investment industry today and it goes by the name of "yield." With continued downward pressure from the Federal Reserve, both short-term and long-term interest rates have been held to artificially low levels. And each new announcement from the Fed seems to extend the outlook for low interest rates farther into the future.
2013-01-04 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
As always I hope you will enjoy this issue, as much as I have enjoyed putting it together. Most important though I wish one and all a very happy, prosperous and healthy new year!
2013-01-03 00:00:00 Fiscal Cliff Compromise by Andy Friedman of The Washington Update
Happy New Year. We begin this year as we ended the last approaching another cliff. To start the year off right, I appeared yesterday on CNBC to discuss the ramifications of the fiscal cliff compromise.
2013-01-02 00:00:00 Getting the Most from Your Investment Committee by Bob Veres (Article)
Investment committees are a little bit like fingerprints: they come in all shapes and sizes, and no two are exactly alike in form or function. So advisory firms that have investment committees ? or are considering creating one ? can learn a lot from one another. My research has identified some best practices for this flexible management tool, by comparing notes among advisors on how they are managing their IC teams.
2012-12-26 00:00:00 The Ten Key Benefits of Investment Committees by Bob Veres (Article)
In this first part of a two-part report, I'll identify ten core purposes that investment committees serve in different types of firms, ranking them in order of the number of responses I received. If your investment committee is serving all ten purposes, based on the survey, you're among a select minority - which means that many advisors may find new ways to use this versatile new tool in their RIA practices.
2012-12-18 00:00:00 Comparing Long-Term Care Alternatives by Joe Tomlinson (Article)
Should clients buy expensive long-term care insurance they might never need, or go without insurance and risk a big hit to their life savings? For advisors whose clients face this critical dilemma, there's now a third option: life insurance and annuity products that also incorporate long-term care insurance.
2012-12-11 00:00:00 The Next Generation of Income Guarantee Riders: Part 3 (The Income Phase) by Wade Pfau (Article)
In this third and final installment in my series on guarantee riders, I'll focus on the post-retirement income supported by income guarantee riders for variable annuities (VA/GLWBs), stand-alone living benefit riders (SALBs), and an unguaranteed portfolio of mutual funds. I'll highlight how differences among these products affect their end results, while also investigating what roles guarantees can most appropriately play in a retirement portfolio.
2012-11-20 00:00:00 President Obama?s Re-Election and the Impact on the U.S. Economy by Eaton Vance Distributors, Inc. (Article)
President Obama?s re-election resolves a major element of uncertainty that has hung over the political landscape. But what kind of impact will his victory have on the economy and the markets, especially with the House still in Republican control? We posed that question to a roundtable of five investment professionals from Eaton Vance Management, Hexavest and Richard Bernstein Advisors.
2012-11-20 00:00:00 Are Inflation-Adjusted Annuities Right for Clients? The Product and Its Prospects by Joe Tomlinson (Article)
Many economists and retirement experts favor inflation-adjusted SPIAs, but advisors and the investing public have never shared their enthusiasm. Detractors contend that the product is fundamentally flawed and will never gain broad acceptance. My own view is more optimistic, but significant obstacles will, nonetheless, continue to impede wider adoption.
2012-11-20 00:00:00 Letters to the Editor by Various (Article)
Readers respond to our articles, The Downside to Socially Responsible Investing, which appeared last week, and, Lacy Hunt on Our Economic Future, which appeared on November 6.
2012-11-20 00:00:00 The Fallacies in Today?s Retirement Plan Assumptions: Putting the Hedonic Pleasure Index to Work by Bob Veres (Article)
Are you dramatically underestimating your clients' retirement lifestyle expenditures when you use Monte Carlo software? If you stop and look at a number of important assumptions hidden in the current models, you'll suddenly have a lot less confidence in the retirement plans you?re mapping out for your clients.
2012-11-15 00:00:00 Post Office Reports Record Loss of $15.9B by Doug Short (Article)
First Class Postage Across Time
Earlier this year I spotted a fascinating study at The Economist of the cost of snail mail in Europe, North America and Australia. Of the eighteen countries documented in the article, the US has the cheapest first class stamp.
So it came as no surprise when I saw this morning's news item that the US Post Office reported a record loss $15.9B for their fiscal year, which ended on September 30th.
2012-11-13 00:00:00 How Well Does the Next Generation of Guarantee Riders Protect Your Income? Part 2 - Starting the Inc by Wade Pfau (Article)
Unlike traditional VA/GLWBs, the future payments from stand-alone income riders are tied to 10-year Treasury rates. That's bad news for retirees, who may find their future benefits compromised if interest rates remain at historically low levels - regardless of how the stock market performs.
2012-11-06 00:00:00 Asset Location: Nine Tips to Create ?Tax Alpha? by Glenn Frank (Article)
With campaign season finally over, taxes are going to dominate the debate in Washington in the months ahead ? however things shake out at the polls today. It's going to be confusing; it's going to be uncertain. But many of the most critical questions advisors will ask can be answered with an analytical approach to deciding where to 'house' assets ? in taxable or tax-sheltered accounts.
2012-10-30 00:00:00 The Next Generation of Income Guarantee Riders: Part 1 - The Deferral Phase by Wade Pfau (Article)
Clients no longer need to move their assets to a variable annuity with a rider to guarantee lifetime withdrawal benefits, thanks to the RetireOne stand-alone living benefit (SALB) rider from Aria Retirement Solutions, which can be applied to a portfolio of mutual funds and ETFs. Despite this enticing promise, however, the SALB may not offer as much downside protection as advisors and clients expect.
2012-10-30 00:00:00 Letter to the Editor by Various (Article)
A reader responds to a discussion from last week, which was in response to Joe Tomlinson's article, We Need a Bold Solution to Fix the Retirement System, which appeared on October 9.
2012-10-23 00:00:00 How to Change the Regulatory Debate - Before it's Too Late by Bob Veres (Article)
After almost a decade of lobbying, arguing, and posturing, the long fight on Capitol Hill over who will regulate RIAs and how to define 'fiduciary' is approaching a close. Within the next six months, there will no longer be any real excuse to put off a decision, and new players, both in Congress and at the SEC, will be eager to start fresh.
2012-10-23 00:00:00 Letter to the Editor by Various (Article)
A reader responds to Joe Tomlinson's article, We Need a Bold Solution to Fix the Retirement System, which appeared on October 9.
2012-10-22 00:00:00 The Benefits-and Risks-of Gifting Before Year-End by Daniel Eagan of AllianceBernstein
With gift and estate taxes poised to rise meaningfully and the exemption scheduled to plummet, high-net-worth families should consider giving to family and philanthropy this year, even if that's sooner than they'd anticipated.
2012-10-09 00:00:00 We Need a Bold Solution to Fix the Retirement System by Joe Tomlinson (Article)
Our retirement system is broken. The average American isn't saving enough to comfortably retire, and the fault lies in our reliance on defined-contribution (DC) plans, such as 401(k)s. Tinkering with DC plans won't solve the problem, and the other extreme - a federally mandated guarantee - isn't likely to gain support. But a number of compromises that lie between those approaches offer a better way forward for future generations.
2012-10-09 00:00:00 Letter to the Editor by Various (Article)
A reader responds to Rob Arnott's commentary, The Glidepath Illusion, which was published on September 25.
2012-09-19 00:00:00 Boomer Demographics: The Shift Ahead by Doug Short (Article)
Following up on my posts yesterday on the Census Bureau's latest data for household incomes (by quintile and age bracket), I've now updated my U.S. population pyramids based on Census Bureau's historical data and estimates.
I've been maintaining a set of these pyramids to give us snapshots at 10-year intervals spanning seven decades. My pyramids differ from the ones available at the Census Bureau website in one key respect.
2012-09-18 00:00:00 Your Clients' Toughest Retirement Decision by Wade Pfau (Article)
Want to trigger an impassioned debate? Ask a group of advisors about the choice between systematic withdrawal plans and single-premium immediate annuities. Fee-only advisors are loath to cede control of client assets to an insurance company that might someday default, while annuity advocates fire back that only their strategies provide a lifetime income guarantee.
2012-09-05 00:00:00 Eye on Friday's Employment Report by Doug Short (Article)
Friday's Employment Situation report is the big economic indicator this week, especially in the context of the presidential election and the Democratic National Convention, which ends the night before the August employment numbers are release. The most recent unemployment rate, through July is 8.3%, up from 8.2% the month before. The best post-recession number was 8.1% in April. The Briefing.com consensus is for the August report to show 130K new jobs, down from 163K last month, and for the unemployment to rate to remain unchanged.
2012-09-04 00:00:00 New Research - How to Help Clients Make Better Decisions by Joe Tomlinson (Article)
Making decisions is not something human beings are very good at. We do a poor job of predicting what will make us happy in the future, we often misjudge our ability to handle risk, and our decisions are plagued by subtle biases that throw us unwittingly off course. Because the essence of financial planning is making decisions about the future, it's critical that clients and advisors understand how decision-making biases can be identified and overcome.
2012-08-28 00:00:00 Why Don't Your Female Clients Like You? by Kathleen Burns Kingsbury (Article)
Over the next 40 years, women will inherit 70% of the $41 trillion in intergenerational wealth transfers, and the first thing they will probably do after receiving the money is fire you. The reasons are not what you think: not poor investment performance, not lack of expertise.
2012-08-21 00:00:00 The Profession's Faulty Assumptions: A Top Ten List by Bob Veres (Article)
In the financial planning profession, we make a lot of assumptions about the world in order to run spreadsheet models, retirement projections and sufficiency analyses, and generally determine how much a client should save and invest for the future. But many of the industry-standard inputs into our models are (how can I say this delicately?) garbage. Here are my top ten garbage inputs, with an explanation of how we might possibly improve on them.
2012-08-21 00:00:00 Letters to the Editor by Various (Article)
A reader responds to the commentary, Maybe This Time is Different, by Andrew Redleaf of Whitebox Advisors, which was published on August 14, and a reader responds to Michael Edesess' article, Why Hedge Funds Destroy Investor Wealth, which was published last week.
2012-08-14 00:00:00 How Safe are Annuities? by Joe Tomlinson (Article)
For many advisors, the possibility that insurance companies will run into financial difficulties makes recommending annuities a nonstarter. But annuities are the best way to mitigate longevity risk, which may pose a greater danger, and advisors can take steps to help protect clients from insurers' financial problems.
2012-08-07 00:00:00 Letter to the Editor by Various (Article)
A reader responds to Bob Veres' article, The Alternative to AUM-Based Fees: The Total Profitability Retainer Formula , which was published last week.
2012-07-31 00:00:00 The Alternative to AUM-Based Fees: The Total Profitability Retainer Formula by Bob Veres (Article)
Many - perhaps most - advisors are overcharging a few of their clients and undercharging the rest. In other words, a small number of investment advisor clients are subsidizing the services that the others are receiving. Here's a way to address that.
2012-07-24 00:00:00 Optimal Strategies for Secular Market Cycles by Michael Kitces (Article)
With alternative investments and active management strategies growing ever more popular, an advisor recently told me, 'It's just a fad and will end with heartache as all investment fads do. I've watched it play out over and over during my 30-year career.' But I am not persuaded. The secular market cycle today is different from the bear market 30 years ago, and not all market cycles favor the same investment strategies.
2012-07-22 00:00:00 How 5 Seriously Overworked Buzzwords Can Come Between You and Your Client by Rob Isbitts of Sungarden Investment Research
In my experience, several investing buzzwords have done more harm than good for investors. While they are important concepts, they have been so commoditized by the financial planning industry that their true meaning has been misinterpreted. All the while, Wall Street firms have reaped the benefits by mass-customizing portfolio management. What started as a concerted effort to help investors has been reduced to a marketing pitch and investors keep falling for it.
2012-07-17 00:00:00 Should You Wait to Buy a SPIA? by Joe Tomlinson (Article)
Advisors may be reluctant to recommend single-premium immediate annuities (SPIAs) with interest rates currently so low. It may be better to wait for rates to rise, which will bring more attractive SPIA pricing. But that leaves the question about how long we will wait for better pricing. In this article, I'll show how the decision to delay can turn out well or poorly, depending on the timing and size of rate increases.
2012-07-10 00:00:00 Letters to the Editor by Various (Article)
Several readers respond to Bob Veres' article, The Profession's Faulty Assumptions: A Top Ten List, which appeared last week. Also, a reader responds to Joe Tomlinson's article, How Safe are Annuities?, which appeared on August 14, and a reader responds to Beverly Flaxington's column, Dealing with Gossip in a Small Firm, which appeared last week.
2012-07-10 00:00:00 Why Are Advisory Fees Lower Than They Have To Be? by Bob Veres (Article)
How much should you charge for your services? Is there any way to objectively calculate a fair price? Doctors, lawyers and accountants all charge relatively similar prices for their services. Why does the financial planning profession have fees that are all over the map?
2012-07-10 00:00:00 Benchmarking Your Retirement Portfolio With a Risk-Free Strategy by Laurence B. Siegel (Article)
Making the savings from 35 or 40 years of work pay for a retirement of the same length is a real challenge. At a zero real rate of return, you would have to save half of your income to enjoy a retirement that long without taking a cut in your living standard. There is, of course, a better way - judicious use of TIPS and annuities. A riskless strategy using those asset classes can safeguard one's retirement assets and can serve as a benchmark against which riskier portfolios can be measured.
2012-07-03 00:00:00 The Value of Planning by Bob Veres (Article)
How much do you charge for your services? When you look hard at the value you provide, the answer may be: 'not enough.'
2012-06-19 00:00:00 Retirement Floors and Implications for Evensky's Cash-Reserve Strategy by Wade Pfau (Article)
Does sensible retirement planning call for funding basic needs with less volatile assets and investing more aggressively for aspirational goals? Or, with client goals clearly defined and prioritized, does sensible planning call for a total returns approach? Multiple schools of thought have emerged, but there is not yet any consensus about what constitutes a proper retirement income floor. These lingering unresolved disagreements reinforce the benefits of Harold Evensky?s and Deena Katz? popular strategy.
2012-06-12 00:00:00 Investing for Retirement: SPIAs, TIPS, Stocks and the 4% Rule by Joe Tomlinson (Article)
Relying only on stocks and bonds to fund a decumulation strategy may no longer be feasible, given today's low interest rate environment and the prospect of muted returns from the equities market. Investors should instead consider using single-premium immediate annuities (SPIAs) to fund at least a portion of retirement needs.
2012-06-12 00:00:00 The Problems with Trying to Benchmark Unconstrained Portfolios by Ken Solow (Article)
Benchmarking unconstrained, 'go-anywhere' managers is difficult. Common methods to determine an appropriate benchmark - such as an ex-post regression of how the fund was invested - can obscure the actions of the manager. Is the only solution to simply select an arbitrary benchmark and proceed accordingly?
2012-06-05 00:00:00 What Mark Zuckerberg Can (Still) Teach You by Dan Richards (Article)
As CEO, Mark Zuckerberg did many things right. But one particular aspect of his approach was critical to Facebook's success - and advisors can learn from it.
2012-05-29 00:00:00 What Does a Dividend Tax Hike Mean for Dividend-paying Stocks? by Steve Chun (Article)
The Bush tax cuts are due to expire at the end of this year, but owners of dividend-paying stocks need not be afraid. Historically, changes in tax regimes have had little effect on the value of the aggregate stock market. Historical data show that even vulnerable asset sub-classes - high-yield stocks, for example - have not lost value long-term as a result of similar tax increases.
2012-05-25 00:00:00 Loss Capacity Drives 401(k) Investment Default Evaluation by Stacy Schaus and Ying Gao of PIMCO
Based on our research, we believe retirement plan participants capacity for loss may be much lower than many investment default options accept as tolerable. Regardless of asset allocation structure, an investment default option should maximize the likelihood that each plan participant will meet his or her retirement income needs. One of the keys to meeting a set income replacement goal is to understand how much plan participants can afford to lose at every age as they approach retirement.
2012-05-15 00:00:00 Optimizing Social Security Benefits by Wade Pfau (Article)
My dissertation was about Social Security reform, so I've read more of the Social Security Handbook than any human being should be forced to digest. Despite this background, William Reichenstein and William Meyer's new book, Social Security Strategies: How to Optimize Benefits, taught me a lot about how to strategize to get the most out of Social Security.
2012-05-08 00:00:00 Annuities versus Systematic Withdrawals: Understanding Tax Effects by Joe Tomlinson (Article)
Given the complexity of most annuities, analysis of them typically only considers pre-tax results. But taxes matter. As we will see, tax impacts vary by the specific type of annuity you're considering, and will make the difference between annuities being cost effective or a drain on cash flow.
2012-05-01 00:00:00 The Asymmetric Value of Delaying Social Security Benefits by Michael Kitces (Article)
Despite a compelling body of research arguing that most retirees would benefit by delaying the onset of Social Security payments, the majority who are eligible still elect to begin receiving them as early as possible. But delaying Social Security benefits is one of the best triple-hedges available to any retiree - simultaneously protecting against poor returns, high inflation, and longevity.
2012-05-01 00:00:00 Making the Right Wager on Client Longevity by Manish Malhotra (Article)
Using annuities to fund retirement is anathema to most advisors, who view the loss of control over one's capital and impossibility of a bequest as nonstarters for their clients. But as clients reach the later stages of their retirement, those arguments no longer apply. A single-premium immediate annuity is superior to a TIPS ladder or a systematic-withdrawal portfolio for funding the last phase of retirement.
2012-04-24 00:00:00 65+5+Dividends: The case for quality dividend stocks in the first five years of retirement by Legg Mason ClearBridge Advisors (Article)
Retirees are living longer than ever before, and for many, outliving their money is a real concern. A good reason to consider quality large-cap dividend stocks in the early years of retirement - which have historically offered higher returns than fixed income with lower volatility than equities overall.
2012-04-17 00:00:00 Rethinking Safe Withdrawal Rates: The Meaning of Failure by Wade Pfau (Article)
Merely knowing the probability that an investor's wealth will be depleted at some point is not enough to build a retirement strategy. That is the traditional measure of failure in safe withdrawal studies, and it's time to move beyond it.
2012-04-10 00:00:00 HBS Research: The Role of Business in Society by Michael Edesess (Article)
Many people believe that society needs to change for market capitalism to be sustainable - and it turns out a surprising number of business leaders are among them. That's the finding of a recent series of forums, organized by three Harvard Business School professors. Based on these discussions, the HBS professors advance a bold proposal - that business itself - not government, or even public-spirited nonprofits - should lead the charge to make the necessary changes to our capitalist system.
2012-03-20 00:00:00 Hot Buttons that Motivate Prospects by Dan Richards (Article)
If you spend $12,000 to promote an event for prospects, you should expect results. That didn't happen for an advisor whose recent prospecting events failed. Here's how he could have created a successful event - by focusing on the hot buttons that motivate prospects.
2012-03-13 00:00:00 How Do Spending Needs Evolve During Retirement? by Wade Pfau (Article)
Most people's spending patterns change over the course of retirement - expenses look very different at 90 than they do at 65. Yet most research on retirement withdrawal rates relies on constant inflation-adjusted withdrawals to develop a client's forward-looking budget. Such an unrealistic, one-size-fits-all approach can be disastrous if a client inadvertently retires with insufficient savings. Is there a better way?
2012-03-13 00:00:00 Letter to the Editor - Tactical Asset Allocation v. Behavioral Finance by Various (Article)
Ken Solow, Michael Kitces and Sauro Locatelli respond to Christopher Sidoni's article, The Conflict between Tactical Asset Allocation and Behavioral Finance, which appeared on February 21.
2012-03-06 00:00:00 New Tools to Manage Longevity Risk by Joe Tomlinson (Article)
If you could guarantee yourself an inflation-protected stream of income for the rest of your life, would you take it? For many retirees, the answer is yes, and that is rightfully sparking new interest in deferred-income annuities (DIAs). By combining a DIA with a TIPS ladder or more aggressive equity-centric investments, retirees can obtain inflation-protected lifetime income. But they will face important tradeoffs, as I will explain.
2012-03-06 00:00:00 The Biggest Celebrity Estate Planning Disasters by Robert Huebscher (Article)
The lives of socialite Brooke Astor and the Grateful Dead's Jerry Garcia may have had little in common, but what happened after both of their deaths is unfortunately similar. A look at the disastrous probate wars that engulfed them ? and other celebrities ? carries important lessons for all of us.
2012-02-28 00:00:00 Letters to the Editor by Various (Article)
Readers respond to Christopher Sidoni's article, The Conflict between Tactical Asset Allocation and Behavioral Finance, which appeared last week, and to Simon Johnson's commentary, Too Big to Jail, which appeared on February 21.
2012-02-21 00:00:00 The Conflict between Tactical Asset Allocation and Behavioral Finance by Christopher J. Sidoni, CFA, CFP (Article)
How?s this for irony? Certain investor behavior creates the conditions for a tactical asset allocation strategy to succeed ? but the same behavior simultaneously Increases the likelihood that clients will not follow the strategy. Recent research by Ken Solow, Michael Kitces and Sauro Locatelli identified a promising approach to tactical portfolio strategy, but our firm?s experience indicates clients will be reluctant to follow this approach ?particularly when the expected payoff is highest.
2012-02-14 00:00:00 The Safety-first, Goals-based Approach to Financial Planning by Wade Pfau (Article)
Little of what is taught in traditional investment textbooks is of value in personal financial planning. Risk is not standard deviation; it is the probability and consequences of not meeting one's goals. That real-world perspective animates a new book by Zvi Bodie and Rachelle Taqqu that implores advisors and their clients to lock in the funding of their essential expenses before worrying about their discretionary goals.
2012-02-14 00:00:00 Letters to the Editor by Various (Article)
A reader responds to Larry Siegel's article, Jeremy Siegel, Rob Arnott and Other Experts Forecast Equity Returns, and another reader responds to Joe Tomlinson's article, An Innovative Solution to Retirement Income, both of which appeared last week.
2012-02-07 00:00:00 An Innovative Solution to Retirement Income by Joe Tomlinson (Article)
Generating lifetime income is the ultimate goal of retirement planning. Why is it, then, that two of the most compelling mechanisms for doing just that are shunned by the investing public, despite overwhelming support from experts? I'm talking about immediate annuities and delayed claiming of Social Security, both of which are remarkably effective at securing retirement needs.
2012-02-07 00:00:00 Jeremy Siegel, Rob Arnott and Other Experts Forecast Equity Returns by Laurence B. Siegel (Article)
A forecast of the equity risk premium (ERP) tells you how much to save, how to allocate assets between equities and fixed income, and how much you can consume. Given its great importance, the CFA Institute recently convened a group of top-level academics and practitioners to forecast future ERPs - and to reflect on similar predictions they had made a decade ago.
2012-02-01 00:00:00 Will I be able to retire ever? Answers to our clients #1 question! by David Edwards of Heron Financial Group
Our clients are divided between those who are at least 65 and already retired (30%) and those clients aged 35-65 for whom retirement seems like an ever receding mirage. In this commentary, we will concentrate on the mechanism that we use to implement a clients retirement income strategy, review how this strategy has performed since January 2000, and review the lessons learned.
2012-01-24 00:00:00 New Tools to Help Clients with Retirement Decisions by Joe Tomlinson (Article)
Our clients face a range of financial planning issues, and the arrival of retirement typically involves making numerous decisions. Here is a set of tools that provide useful information to professionals who work with clients on the verge of retirement - especially financial advisors, accountants and lawyers.
2012-01-17 00:00:00 Income Annuities versus GLWBs: A Product Comparison by Joe Tomlinson (Article)
The variable annuity with a guaranteed lifetime withdrawal benefit (VA/GLWB) has become the most popular form of annuity, as retirees seek income protection and equity-market participation. But VA/GLWBs are often costly, and the typical purchaser has few tools with which to assess the costs. Investors need a straightforward way to gauge the fees for VA/GLWBs versus other retirement income alternatives.
2012-01-10 00:00:00 Safe Withdrawal Rates: A Do-It-Yourself Approach by Wade Pfau (Article)
Reconciling the assumptions that underpin safe withdrawal rate studies with one's own capital market expectations and constraints is a daunting task, since those studies rarely reflect the practical realities of an advisory practice. But new research now provides a generalized framework for determining a safe withdrawal rate for a given retirement duration, acceptable failure probability, asset allocation and capital market expectations. Advisors no longer must be constrained by the assumptions and choices of others.
2012-01-10 00:00:00 How an Advisor Doubled New Clients by Dan Richards (Article)
It's not always the bold strategic initiatives that pay dividends; rather, executing the little things makes a big difference. In the fall of 2010 I ran a workshop for advisors in which I discussed a regular focus on a short list of high priority prospects. An attendee described how he'd used this idea last year as the jumping off point to add 15 minutes to his Monday morning team meeting - and doubled the number of new clients.
2011-12-27 00:00:00 The Ten Best Articles You Probably Missed by Robert Huebscher (Article)
Great articles don't always get the readership they deserve. Here are 10 articles that you might have missed, but I believe merit reading.
2011-12-27 00:00:00 Letters to the Editor by Various (Article)
Readers respond to three recent articles and commentaries: Wade Pfau's article, GLWBs: Retiree Protection or Money Illusion?, which appeared on December 13; PIMCO's commentary, Hot Potato, which appeared on December 21; and Kay Conheady's commentary, Does the Trend Matter?, which appeared on December 20.
2011-12-20 00:00:00 Wall Street Journal: Three Words of Advice for Million-Dollar Producers by Dan Richards (Article)
The financial advisor careers section of Wall Street Journal asked 60 advisors from all over the U.S. for suggestions to new advisors starting in the business whose goals were to be million-dollar producers. Their advice came down to three words.
2011-12-13 00:00:00 Has Financial Planning Made Itself Appealing Only To Risk Takers? by Michael Kitces (Article)
Financial planning advice may be so equity-centric, that people who don't want equity-style investment risk forgo the use of a financial planner altogether, as a recent Journal of Personal Finance article revealed.
2011-11-22 00:00:00 A Bond-Based Financial Planning Framework by Stan and Hildy Richelson (Article)
Plain vanilla bonds have proven themselves to be the best investments available, and we wholeheartedly agree with Andrew Mellon's prescient late-1920s observation that 'gentlemen prefer bonds.' We believe that ladies should, too.
2011-11-15 00:00:00 Are TIPS Really Safe and Worry-Free? by Wade Pfau (Article)
The Fed's aggressive monetary easing has many investors considering TIPS as a cornerstone of their retirement strategy. While TIPS' unique ability to protect against CPI-based inflation is undeniable, many investors neglect to consider the risks they pose, particularly for those who have not yet reached retirement.
2011-11-08 00:00:00 An International Perspective on Safe Withdrawal Rates by Wade Pfau (Article)
Prospective retirees must consider whether they are comfortable basing retirement decisions on the impressive but perhaps anomalous numbers found in historical US data. What has been safe for US retirees in the past has been far less secure for their foreign counterparts.
2011-11-08 00:00:00 Is One Better than Three? by Dave Loeper, CIMA, CIMC (Article)
One way to 'juice' a portfolio is by increasing allocations to small- and mid-caps, as one recently published paper contends. But a careful analysis - properly adjusting for risk - shows how that seemingly appealing approach can destroy client wealth.
2011-11-01 00:00:00 A Better Way to do Financial Planning by Robert Huebscher (Article)
Simplicity is dangerous when it comes to financial planning. Easy-to-use tools that project your retirement savings based on minimal inputs such as your income and savings rate amount to a ?bait-and-switch,? according to Larry Kotlikoff, a Boston University professor of economics. To properly prepare for retirement, one should focus on maintaining a constant standard of living throughout their life ? what economists call consumption smoothing.
2011-11-01 00:00:00 Regulatory Armageddon by Bob Veres (Article)
Suppose you were somehow able to convince 40 advisors, who are all well-known thought leaders in the profession, to gather in the same room for a six-hour brainstorming session. The goal: to identify the single most important thing that the financial planning profession should be thinking about now. What do you think they'd come up with? Fasten your seat belts, because this may be the most important report you'll read all year.
2011-10-18 00:00:00 How to Fix Our Dysfunctional Tax Code by Robert Huebscher (Article)
Give an economist a clean slate, unencumbered by political ideology or allegiance, and charge him or her with designing an ideal tax system. What emerges will look nothing like the dysfunctional personal and corporate tax codes now administered by the IRS. Instead, it could resemble Larry Kotlikoff's 'purple tax plan,' one of five economic reform plans he designed to appeal to both Democrats and Republicans alike.
2011-10-07 00:00:00 Rewriting the 4% Rule by Kevin Feldman of iShares Blog
Is there a safer and simpler way to plan retirement distributions? If youve saved more than you need for retirement and can live on 3% plus an inflation adjustment each year, you have the past century of data on your side suggesting that your nest egg will not outlast you. For most of us though, this is an unrealistic drawdown rate, so you will likely need some professional financial planning help to map out a withdrawal plan that meets your retirement goals. Like all rules that try to simplify complex questions, 4% is just thata number, which may or may not be your number.
2011-09-27 00:00:00 Top 10 Websites for Financial Advisors by Various (Article)
In a recent survey conducted in partnership with Cerulli Associates, we asked our audience to list the sources they frequent for investment commentary and content on a regular basis. Here is a list of the top ten.
2011-09-06 00:00:00 Predictably Incorrect by Bob Veres (Article)
I had to read through this commentary by behavioral economics researcher Dan Ariely twice before I was willing to draw the obvious conclusion. It's the biggest bunch of hooey I've ever read in the financial planning press.
2011-09-06 00:00:00 How Advisors can Improve Client Returns by Dan Richards (Article)
There's a growing body of behavioral finance research on what investors can do to improve the performance of their portfolios. But how about advisors - what can they do to improve investor returns? Some new research answers that question.
2011-08-30 00:00:00 Errata and Letters to the Editor by Various (Article)
We correct a couple of errors which appeared in our article last week, The Simplest, Safest Withdrawal Strategy. A reader also responds to that article, and two readers respond to other recent articles.
2011-08-23 00:00:00 The Simplest, Safest Withdrawal Strategy by Robert Huebscher (Article)
Few financial planning topics have garnered as much attention as safe withdrawal rates, but a key question remains unanswered: Can retirees sustain a 4% withdrawal rate with minimal risk? With the recent introduction of 30-year TIPS, the answer is now yes.
2011-08-09 00:00:00 America's Tarnished Credit Rating by Bob Veres (Article)
In this letter designed to be sent to clients, Bob Veres explains the impact of S&P's downgrade of the US sovereign debt rating.
2011-08-09 00:00:00 A New Retirement Management Profession is Emerging by Francois Gadenne (Article)
The shift from accumulation to distribution is changing the investment industry's dominant business model from gathering assets to writing monthly checks to clients. Success in this environment will accrue to those advisors who act as true retirement professionals rather than to those who take a technician-oriented approach.
2011-08-02 00:00:00 Solving the REAL Debt Crisis by Michael S. Falk, CFA, CRC (Article)
Now that the debt ceiling impasse (circus) has been resolved, it's time to address this country's real debt crises. Our leaders need to conquer the far more daunting entitlement issues we face. Our choice is simple - either reduce costs and face austerity, or raise taxes. Those alternatives need not be as painful as you or they might think, as I will demonstrate.
2011-07-19 00:00:00 Sorting Out the Annuity Puzzle by Joseph A. Tomlinson (Article)
Why do so few people buy annuities? Economic theory would predict robust demand for this financial product, especially as the workforce ages, but the reality is quite the reverse. Most efforts to explain this have focused on buyer behavior. But to better understand the annuity puzzle, we need to study the sellers.
2011-07-19 00:00:00 Retirement Planning and Worst-Case Scenarios by Wade Pfau (Article)
New research suggests that skepticism in a 4% safe withdrawal rate (SWR) is well justified. It is perhaps due to good luck that American retirees have not yet experienced a withdrawal rate below 4%. But a better approach than worrying about SWRs is to focus on the savings rate needed to meet your retirement spending goals, not on what the safe withdrawal rate is.
2011-07-12 00:00:00 Harold Evensky on the New Rules for Wealth Management by Robert Huebscher (Article)
If you don't have a copy of The New Wealth Management on your bookshelf, you should. From gauging the risk tolerance of your clients to measuring the performance of their portfolios, this book provides comprehensive guidance for virtually every aspect of a financial advisory practice. Harold Evensky, the lead author, spoke with me last week and highlighted some key themes in the newly released second edition.
2011-07-08 00:00:00 Taxes, Entitlements and the Federal Debt Crisis by Doug Short of Doug Short
Let's take a closer look at Uncle Sam's balance sheet for last year and the official government projections for 2011 and the decade beyond. With the looming congressional showdown on the debt ceiling, it seems particularly appropriate to understand the broader context. For a quick review of 2010, here is a slide I created for a presentation at the Retirement Income Industry Association (RIIA) conference. 2010 entitlement costs exceeded the entire tax revenue for the year. However, according to the Congressional Budget Office, entitlements only accounted for about 55% of 2010 spending.
2011-06-28 00:00:00 How to Get in Front of High-net Worth Prospects by Dan Richards (Article)
Last week, I got a call from an advisor who used a simple idea to set up meetings with three $2 million prospects. This advisor used some research from one of my recent columns to jumpstart conversations about critical issues for the wealthy.
2011-06-28 00:00:00 Letter to the Editor: Equity-Indexed Annuities by Various (Article)
A reader responds to our article, Fantasy-world Returns for Equity Indexed Annuities, which appeared May 31.
2011-06-21 00:00:00 Women Want to Leave a Legacy by Kristan Wojnar and Susan Turnbull (Article)
Want to broaden the conversation with your wealthy female clients? Introduce them to an idea that will strike them as beautiful, sensible and meaningful - creating a personal legacy document.
2011-06-07 00:00:00 Letters to the Editor - Equity-Indexed Annuities by Various (Article)
A number of readers responded to Robert Huebscher's article, Fantasy-world Returns for Equity Indexed Annuities, which appeared last week.
2011-05-31 00:00:00 Fantasy-world Returns for Equity Indexed Annuities by Robert Huebscher (Article)
When research fails to meet the basic standards of academic rigor, its conclusions should be questioned. One such case is a recent paper, Real-World Index Annuity Returns, whose conclusions you should trust at your own risk.
2011-05-31 00:00:00 Doubling the Turnout to Client Events by Dan Richards (Article)
Many advisors are puzzled and frustrated by just how hard it is to get clients to show up when they organize events for them. Achieving great turnout isn?t easy, but it can be done - I recently spoke to an advisor who made a couple of simple changes to his annual event and doubled attendance as a result.
2011-04-26 00:00:00 How to Take Advantage of the CFP Awareness Campaign by Kristen Luke (Article)
If you are a CFP, you will be directly affected by the Let's Make a Plan campaign, even if you take a passive role. Those who take a more active role can use the toolkit provided by the CFP Board to promote themselves in local markets. Here's what's entailed and what you can personally do to take advantage of the campaign.
2011-04-20 00:00:00 Understanding Your Capital by Doug Short of Doug Short
For many years financial planners embraced the image of a three-legged stool to explain sources of retirement income: Social Security, Pensions, Personal Savings. Of course, as we all know, for most people the stool now has only two legs, making it a rather wobbly support. Over the past few decades, private pensions have essentially disappeared. They may still be available for government and some union employees, but pensions in the world of private business are generally available only to a shrinking number of older workers who were grandfathered into a now closed system.
2011-04-05 00:00:00 A Close Look at the PIMCO-Met Life Retirement Strategy A Marriage Made in Investment Heaven? by Michael Edesess (Article)
If you embrace their recently announced co-marketing strategy, when you're relatively young you use PIMCO's Real Income Funds for stable income in the near term. When you're older Met Life's Longevity Income Guarantee kicks in and takes it from there. You're set with secure income for life. We examine these products more closely and analyze whether they are good deals, either separately or together.
2011-03-22 00:00:00 Japan Update by Bob Veres (Article)
This letter, suitable for sending to clients, explains the consequences of the tragedy in Japan and how investors should gauge its economic impact.
2011-03-08 00:00:00 Letters to the Editor and a Final Thought on VAs with GMWBs by Various (Article)
We received a record number of letters in response to Robert Huebscher?s article, Understanding Variable Annuities with GMWBs, and to Peng Chen?s response, The Real Flaws ? A response to 'Understanding Variable Annuities with GMWBs,' which were published last week. We also provide a final thought on this subject.
2011-03-07 00:00:00 U.S. Household Incomes: A 42-Year Perspective by Doug Short of Doug Short
In preparation for a presentation at the Retirement Income Industry Association later this month, I've been researching household incomes in the United States. My data source is the Census Bureau, which has a quintile breakdown of data from 1967 through 2009. The pie chart here shows that the top fifth of households in 2009 took home 50% of the nation's income. The middle fifth received 15% and bottom fifth 3%. The charts below show income growth over the complete data series. In addition to the quintiles, the Census Bureau includes the mean income for the top five percent of households
2011-03-01 00:00:00 Women?s Views of Wealth and the Planning Process by Kristan Wojnar and Chuck Meek (Article)
Women don?t think like men, especially when it comes to money. As women control a growing share of wealth in the years ahead, advisors will need a new paradigm in their practice, one that reflects an emphasis on values over goals.
2011-03-01 00:00:00 Understanding Variable Annuities with GMWBs by Robert Huebscher (Article)
It's very tempting: a variable annuity with minimum lifetime payout that can increase - but never decrease - based on market performance. That temptation comes in the form of an increasingly popular variable annuity rider known as a guaranteed minimum withdrawal benefit. We explain the flaws in a widely publicized study by Morningstar/Ibbotson, and provide our own analysis of the product.
2011-03-01 00:00:00 The Real Flaws ? A response to 'Understanding Variable Annuities with GMWBs' by Peng Chen (Article)
Peng Chen challenges our analysis of variable annuities with guaranteed minimum withdrawal benefits.
2011-02-22 00:00:00 Toward an Understanding of Risk - Part 2 by Robert Huebscher (Article)
How should clients think about risk in their portfolios? Advisor Perspectives put that question to a cross-section of prominent advisors and academics. Their answers encompassed diverse opinions and underscored how crucial that question is to the investment process. In part one of this series, which appeared last week, we heard from seven practitioners in the financial planning community. This week, we hear from seven well-known academics, including two Nobel Prize winners.
2011-02-22 00:00:00 Stop Wasting Time and Money on Client Communication by Dan Richards (Article)
The world has changed in all kinds of ways. What worked in terms of client communication as recently as five years ago doesn't work nearly as well today. As a result, you need to fundamentally change how you communicate with clients.
2011-02-15 00:00:00 Toward an Understanding of Risk by Robert Huebscher (Article)
How should clients think about risk in their portfolios? Advisor Perspectives put that question to a cross-section of prominent advisors and academics. Their answers encompassed diverse opinions and underscored how crucial that question is to the investment process.
2011-02-15 00:00:00 David Laibson on the Hidden Challenges of Aging Clients by Dan Richards (Article)
In this interview, Harvard economist David Laibson discusses his research into the challenges of helping elderly clients with their financial planning. He also discusses how to overcome the procrastination and laziness that often result in inferior investment decisions. This is a transcript of the interview.
2011-02-15 00:00:00 David Laibson on the Hidden Challenges of Aging Clients - Videos by Dan Richards (Article)
In this interview, Harvard economist David Laibson discusses his research into the challenges of helping elderly clients with their financial planning. He also discusses how to overcome the procrastination and laziness that often result in inferior investment decisions. This is a video of the interview.
2011-01-13 00:00:00 Post Time by Michael Dana of Dana Investment Advisors
The financial markets by themselves do not recognize time. It doesn?t matter if it is August 9 or January 2. Time does, however, matter to investors. There are always tax considerations, window dressing, estate planning and numerous other factors that coincide with the end of the year and the beginning of a new year. For many (particularly mutual funds or investment advisors) it is a horse race. Anyone in the investment business is judged on performance. In order to retain and attract new clients one must consistently outperform the popular market indexes. So here we are again: it?s post time.
2011-01-11 00:00:00 Tactical Asset Allocation and Market Timing: What's the Difference? by Nancy Opiela (Article)
Why is it that the industry dismisses significant changes to portfolio allocations as "market timing" transactions but embraces the subtler "tactical shifts" many advisors are making in the current, transitional market? As advisors debate the nuances of that question, the more relevant question may be: How would you respond if a client asked you to explain the difference between market timing and tactical asset allocation?
2010-12-14 00:00:00 What the Music Business Taught Me about Selling by Justin Locke (Article)
You provide a service to each of your clients, some of whom may have similar needs but all of whom are unique. Asking your clients what more you could be doing for them is the only way to make sure you're offering the advice they truly want.
2010-11-30 00:00:00 QE2: Beware the Perils of its Success by Vitaliy Katsenelson (Article)
QE2 is like a drug prescription that comes with a list of side effects that are often worse than the disease it was supposed to cure. It is difficult to know the unintended consequences of QE2, but it may result in a substantial decline in the dollar, stagflation, lower economic growth and much higher interest rates.
2010-11-23 00:00:00 Five Words that Get Emails Opened by Dan Richards (Article)
The escalating volume of email means that fewer and fewer emails are being opened. A key challenge is creating a sense of urgency around opening your emails - something that can be achieved with five key words in the subject line.
2010-11-16 00:00:00 A Reading List for 2010: Part 2 by Vitaliy Katsenelson (Article)
Updated for 2010 and in time for the holidays, here is the latest installment of my recommended books. I originally wrote this list in 2008 and again last year. I intend to keep adding to and revising it every year. It contains seven sections: Selling, Think Like an Investor, Behavioral Investing, Economics, Stock Market History, Risk and Books for the Soul. The first three sections were presented last week and the remaining four are presented here.
2010-11-09 00:00:00 A Reading List for 2010 by Vitaliy Katsenelson (Article)
Updated for 2010 and in time for the holidays, here is the latest installment of my recommended books. I originally wrote this list in 2008 and again last year. I intend to keep adding to and revising it every year. It contains seven sections: Selling, Think Like an Investor, Behavioral Investing, Economics, Stock Market History, Risk and Books for the Soul. The first three sections are presented below and the remaining four will be presented next week.
2010-11-09 00:00:00 The Most Neglected Marketing Principle by Kristen Luke (Article)
Often, advisors lack a strategy for following up with prospects if they are not immediately interested in hiring your firm. As the authors of a recent book state, "81% of sales that close, close on or after the fifth contact." It is imperative that you integrate a follow-up strategy in your marketing plan.
2010-10-19 00:00:00 Developed Markets and Capitalism in Crisis by Robert Huebscher (Article)
We are not in a globalized world today, according to Ian Bremmer. "The state is back," said the 40-year old president and founder of Eurasia Group, a political consulting firm. Both in the U.S. and throughout the world, governments are exerting their influence through regulation, trade restriction, subsidies, and bailouts, and are threatening the nature of free markets.
2010-10-19 00:00:00 Bernanke's Impossible Dilemma by Robert Huebscher (Article)
David Wessel, economics editor of the Wall Street Journal, examines the challenge Ben Bernanke faces. His goal is to provide full employment and price stability. Yet he faces a slowly growing economy, unemployment close to 10%, consumers deleveraging and spending frugally, renewed fears of banking system instability, and the threat of an asset bubble is growing somewhere in the markets. Monetary and fiscal policy options have been seemingly exhausted, and the public is losing confidence in all aspects of government.
2010-10-12 00:00:00 Does Your Marketing Match Your Business Structure? by Kristen Luke (Article)
Marketing strategies differ depending on the structure of a firm, writes Kristen Luke. Solos and silos focus on marketing the individual advisor while ensembles market the firm. Ensembles also tend to have more sophisticated marketing campaigns since they generally have larger marketing budgets and higher revenue streams.
2010-10-12 00:00:00 The Perfect Storm: Threat or Opportunity by Dinesh Sharma and Michelle Goldstein (Article)
Our primary client base, baby-boomers, is quickly sliding into retirement, leaving us to question where our growth will come from. And now we have the uncertainty surrounding the Dodd-Frank Wall Street Reform and Consumer Protection Act and the anxiety that comes with it. Financial advisors can choose to see the convergence of these factors as a threat to their well-being or as an opportunity to prosper.
2010-10-05 00:00:00 Five Strategies to Land a $50 Million Client by Dan Richards (Article)
The fact that you have a $50 million prospect is a positive sign, writes Dan Richards. He offers five strategies for demonstrating value for truly big prospects. When investors have this kind of wealth, there are often things beyond returns that concern and motivate them - your task is to find out what these are.
2010-09-28 00:00:00 Unraveling the 12b-1 Debate by Robert Huebscher (Article)
The SEC has proposed sweeping changes to the way commission-based advisors will be compensated for the services they provide. Those changes will rename and modify the 12b-1 fees that many mutual funds now charge. To understand their impact, we spoke with Avi Nachmany of NY-based Strategic Insight, whose clients include the largest mutual funds.
2010-09-14 00:00:00 What the Taylor Rule Says about Interest Rates by Charlie Curnow (Article)
The Taylor Rule, a widely cited forecasting tool, predicts that the current inflation rate of 1.2 percent and the unemployment rate of 9.6 percent will keep the target federal funds rate in the range of -3.5 to -4.5 percent. We report on a presentation last week by an official at the Boston Federal Reserve Bank.
2010-08-31 00:00:00 Double ?Bubble,? Toil and Trouble by Sam Bass (Article)
The latest economic prophecy, which has gripped investors' fears for the past three years and counting, is that a 'bubble' in US Treasury bonds is about to burst. Hyperinflation is just around the corner, the prediction goes, and US Treasury bonds, driven up in price to record levels by unprecedented policy measures, are about to crash. In this guest contribution, Sam Bass writes that advisors shouldn't follow the advice of these "seers."
2010-08-24 00:00:00 What Investors Really Want by Robert Huebscher (Article)
Using a mean-variance optimizer to construct a retirement portfolio that sits on the efficient frontier is tantamount to dining on a well-prepared meal that was pureed in a blender, believes Meir Statman, a professor of finance at Santa Clara University. Statman's research focuses on behavioral finance, and how advisors can help investors make smarter decisions.
2010-08-17 00:00:00 A New Framework for Retirement Income Planning by Manish Malhotra (Article)
In this guest contribution, Manish Malhorta proposes a new framework to solve many problems associated with retirement income planning, one that answers questions investors often ask, such as: "How much retirement income can I have with only a 10% chance of failure?" and "How much do I need to have now to draw $50,000 for 30 years with full certainty?"
2010-08-17 00:00:00 Cerulli Survey Results: New Themes in Advisors? Portfolio Strategies by Bing Waldert (Article)
New ideas, such as tactical asset allocation and the use of alternatives, have seen some uptake even before the market crisis, particularly within large institutions, but they are receiving increased attention as solutions for risk-averse clients. This article examines some of the evolutions, using data from a Cerulli Associates survey of Advisor Perspectives readers conducted in June and July of 2010.
2010-08-17 00:00:00 A Proven Path to Gaining Client Assets by Dan Richards (Article)
When Dan Richards talks to successful advisors about their business objectives, for most increasing assets is at the top of their list. Some advisors mistakenly believe, though, that winning a greater share of assets from existing clients is driven by performance.
2010-08-11 00:00:00 Real Real Returns Study by Team of Thornburg Investment Management
This commentary features Thornburg's annual look at what investors are left with after expenses, taxes and inflation take a bite out of nominal returns. Once again, common stocks and municipal bonds are the best performers. This year's study also looks at implications for retirees, a group for whom nominal returns don't mean much, since they need to be concerned about actual spending dollars to protect against outliving their retirement income.
2010-08-10 00:00:00 Zvi Bodie on Stocks and Annuities in Retirement by Dan Richards (Article)
In this interview, retirement expert Zvi Bodie discusses the role of stocks and annuities in a retirement portfolio, and how advisors and clients should think about risk. This is the transcript of the interview.
2010-07-30 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
The two most important aspects of the financial reform bill: (1) Congress told the SEC to come up with rules for a common version for a standard of care when providing personalized investment advice to individuals; making everyone (financial planners, stockbrokers, insurance agents, etc.) who provide these types of services do so with a fiduciary standard of care; (2) a mandate from Congress to the GAO to do a six month study about the regulation of financial planning as a distinct business. Recent data on retirement readiness is summarized and several other topics are covered.
2010-07-20 00:00:00 A Marketing Guide for RIAs: Part 5 ? Become an Expert by Kristen Luke (Article)
In her series on low-budget marketing for startup RIA firms, Kristen Luke discusses how to become an expert in your market niche.
2010-07-13 00:00:00 A Marketing Guide for RIAs: Part 2 ? Craft Your Message by Kristen Luke (Article)
As part of her series on low-budget marketing for startup RIA firms, Kristen Luke discusses how to craft your message.
2010-07-13 00:00:00 A Marketing Guide for RIAs: Part 3 ? Build a Website by Kristen Luke (Article)
Kristen Luke discusses the steps to take to build your website.
2010-06-29 00:00:00 Timber as an Asset Class: If a Tree Falls in the Forest, Should you Buy It? by Charlie Curnow (Article)
"If the sun shines and it rains, the trees grow about on schedule," wrote Jeremy Grantham, chairman of Boston-based investment firm GMO, in his quarterly newsletter in April 2007. Grantham's enthusiasm for timber, which remains true to this day, may be excessive, despite the fact that, on the surface, historical data seems to support his optimism. If a tree falls in the forest, should you buy it?
2010-06-22 00:00:00 Inexpensive Protection Against Rising Rates by Geoff Considine, Ph.D. (Article)
As is too often the case, the biggest risks are those that we discount. The possibility of a surge in interest rates appears to be today's ignored risk, despite the warnings of many experts, including David Einhorn, Bill Gross, and Seth Klarman. We discuss an inexpensive strategy to protect your portfolios from the tail risk of rising rates.
2010-06-01 00:00:00 Three Ways to Improve Safe Withdrawal Rates by Geoff Considine, Ph.D. (Article)
Using Monte Carlo analysis, Geoff Considine examines three ways safe withdrawal rates can be increased beyond the baseline 4% guideline. He compares and quantifies the benefits of increasing diversification beyond equities and bonds, increasing allocations to fixed income, and employing tactical asset allocation.
2010-06-01 00:00:00 Social Media & Reputation Management for Financial Advisors by Dan Sommer (Article)
As a financial advisor, your reputation is one of your most important prospecting tools. While the internet presents a wealth of marketing benefits, one downside is potentially losing control of your reputation. In this guest contribution, Dan Sommer shows how to make sure that doesn't happen.
2010-05-18 00:00:00 Search Engine Marketing for Financial Advisors by Dan Sommer (Article)
How do you take advantage of search engine marketing as a financial advisor? The goal of search engine marketing is to ensure that your website appears on as many results pages as possible for queries that relate to your business, and in this guest contribution Dan Somer explains the details of Search Engine Optimization (SEO) and Pay-Per-Click (PPC) advertising.
2010-05-11 00:00:00 Talking to Clients about Expected Returns by Dan Richards (Article)
Of all the assumptions that go into clients' retirement plans, none has a bigger impact than the expected return on their investments, says Dan Richards. That number determines how much investors need to save, when they can afford to retire and the kind of lifestyle they can anticipate. Richards provides a context for discussing expected returns with clients.
2010-04-27 00:00:00 The Four Horsemen of Growth: David Kelly?s Guide to Markets by Katie Southwick (Article)
With unprecedented volatility now largely behind us, J.P. Morgan's Chief Investment Strategist David Kelly believes that the economy is entering a period of recovery. To move forward, we must abandon our negative mindsets and focus on opportunities for expansion.
2010-03-30 00:00:00 Seven Tips for a Successful Family Foundation by Nancy Opiela (Article)
Managing a foundation's assetswins you the cachet of being seen as helping your clients fulfill their philanthropic goals, and it is extremely lucrative work that can create a practice-building bridge to the next generation.The administrative aspects, as Nancy Opiela writes, can be daunting and she offers seven tips for a successful family foundation.
2010-03-23 00:00:00 The Best Books on Passive Investing by Indudeep Chhachhi & Edward R. Wolfe (Article)
Two finance professors, Edward Wolfe and Indu Chhachhi, survey the literature on passive investing and offer their recommendations for authors and books. Whichever side of the active-passive debate you take, these books should be required reading. The evolution through which the literature on passive investing has gone is striking. Early writers started out with a point to prove: that passive investing is the only way to invest that makes sense. Today, the writing in this area has moved beyond "proving a point" to expanding on what is a settled issue.
2010-03-16 00:00:00 The New Investment Paradigm: Graham Meets Markowitz by Bob Veres (Article)
Broadly speaking, the financial services industry has been divided into two competing paradigms since roughly 1950. One, articulated by Harry Markowitz, suggests advisors add value through diversified portfolios optimized along the efficient frontier. The other, advocated by Benjamin Graham, says advisors add value by purchasing assets at prices less than their fair value. Bob Veres reconciles those views and describes the New Paradigm that has emerged.
2010-02-16 00:00:00 Changing the Rules: The Roth IRA Conversion Opportunity by Various (Article)
The only individual retirement account that allows for tax-free growth has gotten even better. The rules governing conversions to Roth IRAs have changed -- and that's good news for your clients and for you. Janus can help you take advantage of this ideal opportunity to connect with your high net worth clients and to share your expertise on financial and investment issues. We thank Janus for their sponsorship.
2010-02-09 00:00:00 6 Ways to Make the Most of your Web Site by Nancy Opiela (Article)
Whether your web site is an online brochure to attract prospects or tool to enhance client communication, small changes can generate big returns. Even if your site already has the right look and feel, here are six ways it can still be improved.
2010-02-09 00:00:00 Transforming Your Business with an Integrated Solution by Marie Swift (Article)
Marie Swift evaluates the various systems and processes that are kicked-off at a typical firm from one of the most common client interactions - an inbound call. Many firms work with disparate software systems and utilize far too many manual tasks - resulting in duplicate data entry and poor customer service. Conversely, Marie evaluates this same scenario utilizing an integrated software and services solution, Tamarac Advisor 9, and finds dramatic gains in efficiency, accuracy and overall firm profitability. We thank Tamarac for their sponsorship.
2010-02-09 00:00:00 China?s Quest for a Shortcut to Greatness by Vitaliy Katsenelson (Article)
The Chinese economy must be getting out of control, because the Chinese government is doing the unthinkable: It is desperately trying to put the brakes on its economy. Author and fund manager Vitaliy Katsenelson looks back at how China got into this trouble and looks forward to China's prospects.
2010-02-02 00:00:00 Return Distributions and the Shiller P/E Ratio by Keith C. Goddard, CFA (Article)
Keith Goddard expands on ideas developed by Joe Tomlinson in a series of recent articles on the topic of the Shiller P/E Ratio as a predictor of future returns in the stock market. Specifically, this article looks at the distribution of three-year returns in the stock market following different starting points for the Shiller P/E ratio to illustrate that the historical distribution of rolling three-year returns in the stock market is not random.
2010-02-02 00:00:00 Who will Pay for the Burlington Acquisition? by Vitaliy Katsenelson (Article)
According to investment manager Vitaliy Katsenelson, Warren Buffett overpaid in Berkshire's acquisition of Burlington Northern. He states, "Though I agree with Buffett's assessment of the Kraft-Cadbury deal, I fear that investors and media are completely ignoring Berkshire's own, $30-billion-plus acquisition of a very cyclical, capital-intensive, not terrifically high-return-on-capital business - Burlington Northern."
2010-01-30 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
This client-oriented letter comments on a number of financial planning topics: the benefits of marriage (men now benefit more than women), the rise in scams due to low interest rates, the implications of volatility and how individual investors should view the market, new proposals for 401(k) plans, and a few others.
2010-01-26 00:00:00 Punctuated Equilibrium by Dan Richards (Article)
Dan Richards says we're dealing with a more fundamental issue than the recent market turmoil. "We're going through one of those rare periods of ground-shaking change that have taken place throughout history, something that was in the works well before last fall's market excitement," he says, and explains how advisors should deal with more demanding customers, new technology and global competition.
2010-01-05 00:00:00 Another Sample End-of-Year Letter by Bob Veres (Article)
Bob Veres provides another of his sample end-of-year letters as part of the new client service he is introducing.
2009-12-29 00:00:00 End-of-Year Letter Templates by Bob Veres (Article)
Bob Veres is the editor and publisher of Inside Information, a publication focused on practice management and related issues for the financial planning profession. He just introduced a new monthly service, Client Articles, which will contain articles (and cartoons) that can be sent to clients, for example as part of your quarterly newsletters. He provides two sample letters.
2009-12-22 00:00:00 Six Words that Open the Door to Accountant Referrals by Dan Richards (Article)
Put together a list of the things that frustrate advisors targeting high-end clients and roadblocks to referrals from accountants are sure to be close to the top. Successful advisors recognize the power of a recommendation from a HNW prospect's most trusted advisor, and Dan Richards reveals the six words that facilitate those referrals.
2009-12-08 00:00:00 The 529 Dilemma by Mary Ann Lambert (Article)
The recent market decline coupled with, tax, custodial, management fees and estate planning issues make the decision to use a 529 plan less than straightforward. In this guest contribution, advisor Mary Ann Lambert briefly reviews the history of college savings plans and shows how the current landscape favors 529s for some clients but not for others.
2009-12-01 00:00:00 Ten Ways to Connect with Your Clients? Children by Nancy Opiela (Article)
When you work with a top client throughout his or her life, you have an opportunity to ensure that the client's family stays with your firm beyond the current generation. Financial legacies are often lost when wealth passes from generation to generation, so building intergenerational connections can ensure both a successful transfer of assets - and an advisory relationship that endures after your original client passes on.
2009-12-01 00:00:00 To Roth or not to Roth, That is the Question by David B. Loeper, CIMA, CIMC (Article)
With the new Roth conversion rules about to be lifted next year and a "one-time special offer" available to allow investors to spread the tax bite of conversion over two years, more and more Roth conversion calculators are showing up every day. Be wary, says Dave Loeper of Wealthcare Capital. If you use one of these calculators, don't say he didn't warn you about how misleading the results can be.
2009-11-24 00:00:00 Tapping into Today?s Number One Client Concern by Dan Richards (Article)
Larry Porcelli, the head of the private client group for US fund giant BlackRock said that their research shows that 70% of Americans are willing to move their accounts if another firm or advisor offered expertise on constructing portfolios to avoid running out of money. Dan Richards identifies two things advisors need to do to capitalize on this opportunity.
2009-11-17 00:00:00 Our Steroidally Challenged Economy by Vitaliy Katsenelson (Article)
Vitaliy Katsenelson writes that the US economy is like a marathon runner who, after suffering an injury, takes steroids in order to return to racing. His performance is fine, but what don't see are the risks, just as our economy is now "steroidally challenged."
2009-11-03 00:00:00 I am a Fiduciary Financial Advisor by Ron A. Rhoades, J.D., CFP (Article)
The fiduciary standard of conduct is necessary to properly align investors' interests with those of the advisors who serve them, says Ron Rhoades in this guest contribution. Moreover, the fiduciary standard of conduct is not onerous and should not be feared. Advisors who embrace a fiduciary standard of conduct must simply follow the guidelines he sets forth.
2009-11-03 00:00:00 Alpha or Wealth? by Sam Bass (Article)
It is widely accepted that ETFs offer significant advantages over mutual funds, especially lower costs and taxes. But, as advisor Sam Bass argues in this guest contribution, the mutual fund industry may be all the more concerned that increasing numbers of investors are accepting the view that ETFs, and passive strategies in general, are better for wealth accumulation than active management - even if one assumes active strategies can generate positive alpha over extended periods of time.
2009-10-20 00:00:00 Life in and after the NBA Financial Planning for Professional Athletes by Robert Huebscher (Article)
During a 13-year career that began in 1987, Chris Dudley was called on to defend some of the greatest centers in NBA history - among them Shaquille O'Neal, Robert Parish, and David Robinson. While developing a reputation as an exceptional shot-blocker and rebounder, Dudley also devoted time to preparing for his post-basketball career - as a financial advisor - and he shares with us his thoughts about financial planning for the professional athlete.
2009-10-20 00:00:00 Advice as Art by Jason K. Branning, CFP (Article)
Giving advice to clients is a delicate art, like creating a beautiful symphony from a group of musical instruments. In this guest contribution, advisor Jason Branning explains how you can offer advice to clients that transcends mere projections or proposals, and becomes something more.
2009-09-29 00:00:00 A Tale of Two Investors by Brian Murphy (Article)
Just as Dickens contrasted the fortunes and misfortunes in England and France in his classic novel, A Tale of Two Cities, today the divergence is painfully apparent in those who plan to accumulate wealth for their retirement and those who seek excess returns in their portfolios. In this guest contribution, advisor Brian Murphy tells the tale of two clients - one who aggressively sought alpha and the other who passively built retirement wealth.
2009-09-22 00:00:00 Three Ways to Market Your Business Using Facebook by Kristen Luke (Article)
Kristen Luke explains three ways advisors can promote their practice through Facebook: utilizing a basic personal profile, creating a business page and creating a group page.
2009-09-08 00:00:00 Advisor Survey Shows Best Ways to Business Growth by Michael Slemmer, CFA (Article)
Many investment advisory and wealth management firms have struggled to increase assets in the recent difficult markets. In order to understand how advisors feel they are faring - and the keys, and obstacles, to success - we partnered with Advisors Trusted Advisor to survey advisors on the state of their business-building efforts.
2009-09-01 00:00:00 Shiller P/E's and Predicting Returns by Joseph A. Tomlinson, FSA, CFP (Article)
It becomes clearer every day that the stock market does not follow a random walk and that there may be some predictability in long-term returns. But there's little agreement on how best to make such predictions. In this guest contribution, advisor Joe Tomlinson takes a look at using price/earnings ratios to predict future stock market performance.
2009-09-01 00:00:00 The Levers to Financial Freedom by Russ Thornton (Article)
Virtually the entire financial services industry is built upon spending vast amounts of time, money and other resources on things over which we have absolutely no control - like attempting to manage investment returns. In this guest contribution, advisor Russ Thornton shows that, by focusing on those things you can control, you as a financial planner can build better, more resilient plans for your clients.
2009-08-25 00:00:00 Building a Practice in America?s Fastest Dying City by Robert Huebscher (Article)
While many - perhaps most - advisors use client appreciation programs as part of their marketing efforts, Mo Young has embraced this idea and made it his sole marketing focus. Young's practice is based in Youngstown, Ohio - which has the distinction of losing population more rapidly than any other city in the US - yet Young has added several hundred new clients over the last four years with his strategy.
2009-08-18 00:00:00 A Crash Course in Investing Six Lessons from the Market Meltdown by Dougal Williams, CFA (Article)
The market decline from October 2007 to early March 2009 was the worst since the late 1930's. Stocks dropped 60%, investor uncertainty skyrocketed, and trust and confidence were shattered. The age-old rules for personal investing are now being questioned: Is Buy-and-Hold dead? Has Asset Allocation outlived its usefulness? Does Diversification still work? In this guest contribution, Dougal Williams provides answers to these questions that can serve as a guide for long-term investment success.
2009-08-11 00:00:00 What the New Normal Means for Asset Allocation by Geoff Considine, Ph.D. (Article)
Bill Gross of PIMCO forecasts a New Normal - slow economic growth, higher inflation, and increasing correlations among asset classes. If this view is correct, what should investors do? Geoff Considine examines the implications for asset allocation and financial planning by stress-testing some well-known asset allocations to see how well they will serve investors in the forecast environment.
2009-07-28 00:00:00 Moving Average: Holy Grail or Fairy Tale - Part 3 by Theodore Wang (Article)
Buy-and-hold remains deeply entrenched in the financial planning community, despite many of the flaws Ted Wong's previous articles have illustrated. Although many financial advisors suffer dearly from their buy-and-hold practices, they are reluctant to change their approach. Who dares to challenge investment sages like Bogle, Siegel, and Malkiel who emphatically support this long-standing investment principle? Academic research studies overwhelmingly endorse buy-and-hold. How can they all be wrong?
2009-07-28 00:00:00 Which Social Media Tool is Right for You? by Kristen Luke (Article)
Kristen Luke's philosophy is that the best marketing activities are the ones that are in line with the advisor's preferences and interests. Social media offers a rich array of tools - all you have to do is choose the one that best fits your personality and preferences.
2009-07-21 00:00:00 The Retirement Portfolio Showdown: Jeremy Siegel v. Zvi Bodie by Geoff Considine, Ph.D. (Article)
When investing for retirement over long time horizons, advisors can choose from two apparently conflicting approaches. They can follow the advice of Wharton professor Jeremy Siegel, who has steadfastly advocated equity-centric portfolios, most notably in his highly popular book, Stocks for the Long Run. Or they can listen to Boston University professor Zvi Bodie, who says equities are simply too risky over the long term, and the core of a retirement portfolio should be Treasury Inflation Protected Securities (TIPS). Geoff Considine's article shows how to resolve this conflict.
2009-07-21 00:00:00 SIFMA?s Proposed by Ron Rhoades (Article)
On July 17, 2009, the Securities Industry and Financial Markets Association ("SIFMA") announced that its Private Client Group Steering Committee unanimously supports a new federal fiduciary standard for broker-dealers and investment advisors, embracing a proposal advanced by the Obama administration a week earlier in a draft of the "Investor Protection Act of 2009." Ron Rhoades looks at whether this shift in direction by SIFMA poses a radical change in business models, or whether the "new federal fiduciary standard" is something else in disguise.
2009-06-23 00:00:00 New Rules for Growing Your Book of Business: Reach Clients and Prospects Through Their In-Boxes by Dan Sommer (Article)
E-mail marketing is no longer a new marketing channel, but if used effectively it can become a powerful marketing and relationship building tool for financial advisors. In this guest contribution, Dan Sommer explains the benefits of e-mail-based marketing and provides tips to get started down this path.
2009-06-16 00:00:00 New Target-Date Fund Research from Janus by Janus (Article)
New research shows widespread target-date fund misuse and misperceptions by defined contribution plan participants. Janus Investments' white paper shows that investors misunderstand the role of target date funds in their overall portfolio and rely heavily on their employer for investment advice. We thank them for their sponsorship.
2009-06-16 00:00:00 What Separates Great from Ordinary CRM Systems by Gary Kinghorn (Article)
In this guest contribution, Gary Kinghorn of AdviceAmerica says that effective CRM system must be centralized applications where all team members can view, share and update information, such as client tasks, documents, data and portfolios. This ensures everyone has current and accurate information at a glance.