Outside voices and views for advisers

Aug 17, 2017, 2:35 PM EST

Fiduciary double standard gives robos a free ride


By Scott MacKillop

Direct-to-consumer robo-advisers are not being held to the same fiduciary standard as human advisers. This fact is unfair to human advisers and ultimately harmful to the investing public.In February 2017, the Securities and Exchange Commission issued a guidance update designed to highlight unique issues that robo-advisers face in meeting their fiduciary duties under the Investment Advisers Act of 1940. In it, the SEC observed: • "Some robo-advisers provide investment advice directly to the client with limited, if any, direct human interaction between the client and the investment advisery personnel." • "Robo-advisers may provide investment advice based primarily, if not solely, on client responses to online questionnaires."• "Some of these questionnaires are not designed to provide a client with the opportunity to give additional information or context concerning [their] responses. • "Robo-advisers may not be... Read full post

Aug 16, 2017, 4:48 PM EST

401(k) DCIOs: Some are folding, holding and doubling down

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By Fred Barstein

All segments of the 401(k) market are going through the early stages of maturity, led by record keepers and broker-dealers, with advisers and asset managers following. Maturity is causing money managers focused on the defined contribution market – the so-called defined contribution investment-only shops — to either hold, fold or double down. Why? And why should advisers care?DCIO success can come from owning a record keeper or having viable target-date or index funds. Only one firm, Vanguard, has all three, and, not coincidentally, is the leading DCIO. Firms like Fidelity, BlackRock, T. Rowe Price and American Funds have two of the keys to success, as do relatively new entrants SSgA and TIAA.Firms like New York Life, BNY Mellon, Natixis, Russell Investments and, in previous years, Eaton Vance, Thornburg and Lord Abbett, have folded or pulled back from the DC market. There are signs some may re-enter, though more carefully.... Read full post

Aug 15, 2017, 4:13 PM EST

How to select the right TDF for a 401(k) plan


By Blaine F. Aikin

Target-date funds are an attractive option for both plan advisers and participants. The promise of TDFs is that they are designed to protect investor assets from the risk of large losses stemming from inadequate or improper portfolio diversification. For advisers, this is directly aligned with the obligation under the Employee Retirement Income Security Act of 1974 to protect assets. For participants, the funds simplify investment decisions. But simply choosing any TDF won't do, because there are underlying risks of choosing the "wrong" TDF relative to other available options. In his book "Start With Why," Simon Sinek makes the case that good decision-making is about answering the right questions in the proper sequence. The book stresses the importance of (1) understanding your purpose — your "why" — before you can reasonably determine (2) a strategy ("how") to best achieve success and (3) a set of specific actions or... Read full post

Aug 11, 2017, 4:39 PM EST

Dividend investing in the Trump era: Dispelling three misconceptions


By Derek Anguilm and Lisa Ramirez

It's easy to feel good these days as stocks keep hitting new highs. But seasoned advisers know there's plenty of uncertainty out there ? a tumultuous political environment, the Federal Reserve revving up its tightening cycle, federal spending and tax plans constantly evolving, geopolitical turmoil, etc. ? that could wreak havoc on even the best-constructed portfolios. We believe there's an asset class that can potentially help keep diversified portfolios resilient in the face of uncertainty: small- and mid-cap dividend-paying stocks.Setting the record straightThe case for small- and mid-cap dividend-payers starts with the case for dividend investing generally, which suffers from three common misconceptions. We'd like to dispel these misconceptions and set the record straight.1. Too expensive. Many investors believe that the quest for higher yields has made dividend-payers more expensive than non-dividend-payers. This simply isn't true: ... Read full post

Aug 11, 2017, 4:28 PM EST

Help your clients avoid disastrous mistakes when filling in college funding gaps


By Jonathan Albano

For parents sending their kids to college this year, the numbers are staggering: The average out-of-state tuition for a four-year public institution is nearly $25,000, according to the College Board. After factoring in other expenses, including room, board and books, the yearly price tag is about $37,000, which over the course of four years comes to roughly $150,000. And, as we all know, it's typically far more expensive to attend a private school. So even if a client did all the right things from the outset – whether it was starting a 529 plan, creating an UTMA account (or both), or pursuing another savings route – there's still a decent chance that they won't have quite enough to cover all their children's college-related expenses. Meanwhile, for other parents, the cause of their college savings shortfall may be a bit different. Perhaps they got a late start on planning, lost their job at some point along the way or were... Read full post

Aug 10, 2017, 2:37 PM EST

The character of your content

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By Megan Carpenter

Are your ears ringing? They should be. Because right now, someone you don't know is probably talking about you. Or checking out your profile on LinkedIn. Or reading something you've written, trying to decide how smart you sound.It's 2017, and yet advisers are still surprised to hear that their social media feeds are being pored over by prospects. Why wouldn't they be? Don't you do the same thing? If you get a call from home about a burst pipe, don't you immediately type "plumbers" into DuckDuckGo or Google? If you're interviewing candidates for a new position, don't you look at their social media posts? Don't you ever check LinkedIn or Facebook to find out more about your clients?Of course you do. Everybody does, including your prospects. Even if they come to you through referrals, they aren't going to blindly rely on what their friends and accountants tell them. They're doing their own online research—whether you realize it or... Read full post

Aug 9, 2017, 5:40 PM EST

What would Steve Jobs do if he ran the 401(k) business?


By Aaron Pottichen

Steve Jobs was a master at getting people to buy into the Apple ecosystem. It's why so many of us have purchased not just an iPhone, but an iPad and a Mac computer, too, and have done so multiple times (in my case, at least).Steve Jobs got people to vote with their wallets by continuously rolling out new products and features, having those products work easily together and making things simple. How would the Apple visionary have applied those principles to improve the retirement plan market? Get your customers to buy the latest product One of the issues with retirement plans is the lack of annual change among employers. This is partly due to the way the retirement plan system works. A company hires a financial adviser and record keeper, and off they go. There is no requirement for the employer to move to a new record-keeping system or add certain features. Plan sponsors can keep the same setup for years and years, and are okay as long... Read full post

Aug 9, 2017, 4:01 PM EST

The latest in financial adviser #FinTech (August 2017)


By Michael Kitces

This month's edition kicks off with a look at Morgan Stanley's rapid pace of reinvention as a tech-savvy wirehouse since hiring away Schwab's Naureen Hassan to become the firm's chief digital officer in early 2016. Since then, the company seems to be rapidly overcoming the traditional "Not Invented Here" mentality of wirehouses, forging partnerships with a number of outside providers, even as they build a fascinating vision of a robust tech-augmented human adviser platform, where the software continuously monitors and analyzes the situation for all clients and nudges the adviser with "Next Best Action" ideas that the adviser can take to the client (queued up with pre-written communication templates that the adviser can easily modify and adapt to individual client circumstances).From there, the latest highlights also include a slew of companies announcing new "platform" initiatives, including:• FinFolio launches Wealthlab.io, a... Read full post

Aug 4, 2017, 5:54 PM EST

Four tech tools for communicating with clients


By Joe DiMauro

Technology affects the way we communicate and build relations with our clients. Interacting with clients regularly and gaining their trust and loyalty are important. I have a degree in computer engineering, but pursued a career in wealth management. I never thought I would get much use out of my degree, but I'm finding over time the opposite is true. Using my degree together with my passion for technology is allowing me to help communicate and interact with clients in a faster and more engaging way. Here are four technologies we are using with great success in our firm: Custom Newsletter & Mail ChimpNewsletters are a great way to inform clients of developments in the markets and your firm. Customizing the design and content allows you to keep the reader engaged and is the key to success.We use Mailchimp to manage our newsletter process. Start by designing a custom template that may have your company colors, logo or even a theme based... Read full post

Aug 1, 2017, 12:17 PM EST

The upside-down 401(k) world is about to change

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By Fred Barstein

When industries are on the precipice of transformation, the market is ready to turn upside down. In the early 1990s, Nicholas Negroponte, founder of the Massachusetts Institute of Technology's Media Lab, declared that media and technology were about to go through a transcendent change, which he predicted would result in devices that were wired (telephones), becoming wireless, and wireless devices (broadcast television) getting wired (fiber-optic cable).In the next three years, defined contribution plans will go through a similar transformation, driven by new laws and technology, whereby what is currently customized (plan design, investment menus and fiduciary services) will be mass produced and what is mass produced (participant services) will be customized.Today, most companies and organizations must create and run their own DC plans, including custom plan design, participant education and investment selection. Though they can... Read full post

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