Outside voices and views for advisers

May 22, 2017, 1:41 PM EST

How over-emphasizing tax deductions can get your clients into trouble


By Jonathan Albano

Now that the tax season is over, this is perhaps the slowest time on the calendar for many financial advisers. Some big financial planning and tax-related decisions have just been made, and while other important ones loom, many clients prefer to put those off until later in the year.Before too much time passes, though, it's important to schedule follow-up sessions. It's a good way to not only do a quick post-mortem of a client's recently concluded filings, but also to lay the groundwork for the rest of 2017 and beyond.(More: Changing state residency: Tax planning headaches and opportunities)Recently, one of the things we have discovered in these types of meetings is that some of our clients have become far too preoccupied with scoring large tax deductions — even when it's to the detriment of their long-term financial plan and could lead to a liquidity crisis further down the road. In particular, it's common to confront small... Read full post

May 17, 2017, 3:42 PM EST

How to serve clients during a Trump presidency


By Damian Ornani

Since last November's presidential election, politics have dominated so many conversations. Investing, of course, is no exception. Many investors question what a Trump presidency means for markets. Some worry he'll introduce sweeping changes. Others hope he will. Recent data like consumer confidence surveys support this: Respondents increasingly see markets and the economy as an extension of their political views. But your clients' financial needs likely didn't change on Nov. 8, 2016, and neither did the considerations most relevant to meeting those needs. This brings up a challenge: How can you best counsel clients when the subject of their concern is so charged? A measured approach hinging on active listening and continuous education is key. (More: Markets fall in reaction to Trump turmoil)REMEMBER YOUR ROLEFirst, know what you should and should not weigh in on as a financial adviser. The majority of contentious political topics... Read full post

May 16, 2017, 1:47 PM EST

Courts' interpretations of 401(k) fiduciary laws are changing


By Marcia S. Wagner

It appears that laws of fiduciary prudence under ERISA are evolving. A recent district court decision, in Lorenz v. Safeway, demonstrates this point."What is good for the goose is good for the gander" is not a common legal maxim, but the District Court in the Northern District of California essentially used it when determining whether certain fees were excessive and resulted in a breach of the duty of prudence.The court began its analysis by holding that the failure of the defendant, Safeway Inc., to offer the investment option with the lowest expense ratio wasn't sufficient, on its face, to plausibly state a claim for breach of the duty of prudence. It cited the opinion of the Seventh Circuit in Hecker v. Deere, which said "nothing in ERISA requires every fiduciary to scour the market to find and offer the cheapest possible fund (which might, of course, be plagued by other problems)." It explained that there are too many relevant... Read full post

May 11, 2017, 5:06 PM EST

Most estate plans aren't dealing with digital assets properly


By Jamie Hopkins

Estate planning is an unpopular topic because it often deals with the harsh realities of loss and death. Far too many people do not have an updated estate plan that meets their current needs, goals or desires. However, having a written estate plan in place is crucial to protecting your client's family, wealth and their own peace of mind. Technology, often seen as a means to ease our burdens, has created new challenges for estate planning. In fact, the need for estate planning for digital assets has rendered many of the existing estate plans, wills and trusts in the United States ill-equipped to handle the full range of an individual's assets. So, what are digital assets? Most likely, when you hear "digital assets," what first comes to mind are smart phones and computers. However, digital assets are not these storage and display devices, but rather, the information stored on them and online. For example, the information and property... Read full post

May 11, 2017, 11:30 AM EST

Private equity adds fuel to 401(k) record-keeper consolidation


By Fred Barstein

Just as 401(k) record keepers cry poverty, claiming there are no profit margins left and fueling consolidation, private equity has jumped in, perhaps seeing value that traditional record keepers are missing. What's causing this consolidation and what does private equity see that the rest of the industry doesn't?Just like with the airline industry five years ago, 401(k) record keepers have been selling fast, though there have been fewer deals recently. There were more than 100 national record keepers over a decade ago, but money managers with little or no relevant skill sets dropped out to focus on asset management, selling their funds on other providers' platforms. Market saturation and the high cost of technology and distribution have led to excess capacity and falling prices, and savvy advisers have used cost-cutting as an effective prospecting tool. The result: The ranks of national 401(k) record keepers have dwindled to roughly 40, ... Read full post

May 10, 2017, 1:48 PM EST

MLB managers can coach advisers through the robo-revolution


By Michael Conway and Zachary Conway

As the Major League Baseball season kicks off every April, team managers begin the tedious tasks of posting lineup cards, pointing to bullpens and stepping up to post-game microphones. Since the birth of the sport, managers proved their worth with mysterious baseball instinct earned over a long career of watching and playing the game. Thanks to the rise of Sabermetrics, some say managers have become little more than high-paid robots programmed to execute choices based on statistical analysis. Today, nothing needs to come from the gut of a former player past his prime. Instead, teams can rely on the numbers to determine batting orders, position placements and defensive tactics.(More: Hall of famer Mike Piazza's 'distant cousin' leaves Merrill Lynch for Raymond James)As baseball managers apparently face obsolescence, financial advisers must contend with similar technology disruption, particularly in the form of robo-investment services.... Read full post

May 8, 2017, 5:22 PM EST

The conundrum of state-run retirement plans


By Terry Dunne

Last Wednesday, the Senate narrowly voted to overturn a Department of Labor policy that would help states offer retirement savings plans. The policy had created a safe harbor that essentially would have exempted states from complying with ERISA rules and requirements. It is widely expected that President Donald J. Trump will sign the repeal measure.While states can still offer these retirement plans — and at least seven have already passed legislation to do so — their options appear to have gotten a little more complex. The state retirement plan rule has clearly been divisive — the Senate vote was 50-49 to overturn the rule. Most would agree, however, that offering retirement plans to the estimated 55 million Americans who don't have access to workplace plans would be a good thing. But some opposed to state-run retirement plans argue that these types of plans should be handled by the private sector rather than the... Read full post

May 8, 2017, 4:23 PM EST

What women want from financial advisers


By Elizabeth Griffith

Financial advisers understand that nurturing a mutually productive relationship is the nature of the business. Twenty years ago, investing was more of a man's game and though the number of female advisers is meager (only 14%), the number of female investors has skyrocketed, with American women projected to control upwards of $22 trillion by the year 2020. These days, there is a very good chance that a woman will be the primary decision maker in the household regarding finances. Here are several ways financial advisers can reexamine how they serve female clients.(More: Why Social Security is so important to women)AVOID STEREOTYPESI made a quick trip with a co-worker to a car dealership. The sales rep automatically assumed we were husband and wife and literally didn't listen well enough to hear us mention co-workers. He proceeded to ask me multiple questions about my preference in various car colors (interior colors, exterior colors). He ... Read full post

May 1, 2017, 4:50 PM EST

Advisers getting left behind as broker-dealers respond to Finra priority letter


By Jodie Papike

When the Financial Industry Regulatory Authority Inc. released their exam priority letter in January of this year, they made it very clear their target is on rogue or recidivist brokers and the broker-dealers that supervise them. By many accounts, this is a positive move that will hopefully weed out the registered reps in the business who have no place giving clients advice, but what about the quality advisers who are being terminated for misunderstandings or things beyond their control? Is the industry in such a rush to pacify the regulators that they are throwing undeserving advisers under the bus?Take, for example, an adviser I recently assisted in changing broker-dealers. David had been at his current firm for more than 20 years. His health took a bad turn in 2013, and, as a result, he ended up with two tax liens. As his health rebounded, he put a payment plan in place to start repaying the liens. His broker-dealer had known about... Read full post

Apr 27, 2017, 5:58 PM EST

Conduct due diligence on bond funds beyond a performance review


By Todd Rosenbluth

When sorting through the bond mutual fund universe, what's inside may be different than you expected and can be harmful (or rewarding) for your client's portfolio.Despite increased pressure from lower-cost passive mutual funds and ETFs, actively managed products continued to gather new money in the past 12 months. According to Morningstar, active taxable bond funds gathered $96 billion of new money in the one-year period ended March 2017. While this lags the $165 billion gathered by passive funds, it is much stronger than the $270 billion of net outflows experienced by active U.S. equity funds.(More: Think you're an expert on market sentiment? So does everyone else)While finding a fund with past performance success is important, as it signifies that management has demonstrated skills to running the portfolio, advisers need to dig deeper. To generate an attractive yield, bond mutual funds can take on more credit risk or interest rate... Read full post

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