Outside voices and views for advisers

Jun 19, 2018, 1:39 PM EST

When your client dies, who gets their airline miles?


By Amy Florian

When your client dies, who owns the pictures on their Facebook page? Who has control of their electronic bill-payment sites or bitcoin account? Who is responsible for shutting down or memorializing social media sites? Digital rights ownership is an increasingly complex issue as our online lives continue to expand. Are your clients prepared to safeguard these assets after they die? If your client does nothing in advance, disposition of digital assets goes according to the terms of service of each individual site, which vary widely. In fact, many survivors have been shocked by sites that do not allow transfer of ownership or access upon death, or that complicate the settlement of the estate. Rules have been more flexible for minors in states that allow parents or guardians to manage deceased children's accounts. Yet some families have had to get court orders to obtain rights to their loved one's digital accounts, a process that can take... Read full post

Jun 18, 2018, 3:40 PM EST

Going independent: Which business model is right for you?


By Ben Harrison

As wealth managers consider a move to independence, they come to Pershing with questions about the economics of different business models. And rightfully so, because of all the issues advisers have to address in a transition, nothing comes close to the importance of deciding on the business model. Over and over again, we find that owning a business is uncharted territory for many advisers. Making the transition involves careful self-reflection, research, and planning. As such, we work with advisers to assess the scale of their practice and client needs, risk tolerance, ideal client experience, and level of autonomy they can afford to help them pick the right model for their needs.For example, if an adviser wants full independence — starting their own firm from scratch and having full control — they need to have both an entrepreneurial mindset and the willingness to take responsibility for every single decision. This is a... Read full post

Jun 12, 2018, 10:11 AM EST

SEC best-interest proposal doesn't affect 401(k) brokers


By Fred Reish

When it comes to big news, it doesn't get much bigger than the last few months. First, the 5th Circuit Court of Appeals threw out the Department of Labor fiduciary rule; then a month later, the Securities and Exchange Commission issued its best-interest proposals for broker-dealers and registered investment advisers. The 5th Circuit Court of Appeals decision "vacates" the fiduciary rule (although we're still waiting for the court to enter that order). In other words, it's as if the fiduciary rule had never taken effect. Because of that decision, we are, and we have been — even though we didn't know it — under the old DOL regulation that defines fiduciary advice: the five-part test. While that may help broker-dealers avoid fiduciary status in some cases, it does not provide much relief for RIAs. That's because in the typical situation, the services of an investment adviser will satisfy each of the five parts in the old... Read full post

Jun 12, 2018, 10:54 AM EST

Michael Kitces: The Latest In Financial Advisor FinTech — June 2018


By Michael Kitces

Welcome to the June 2018 issue of the Latest News in Financial Advisor #FinTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors and wealth management!This month's edition kicks off with the buzz from the Envestnet Advisor Summit… that Envestnet is shifting from a focus on investment management, financial planning, and wealth management, towards a new category it calls "Financial Wellness." Which is not meant to be the employer-delivered-financial-education version of a Financial Wellness program, but a more holistic adviser technology platform aiming to cover all of the relevant areas of a client's financial health, including not only planning, investments, and insurance (protection), but also credit/debt, and budgeting/cash flow as well. Which leaves Envestnet incredibly well positioned for the ongoing shift ... Read full post

Jun 11, 2018, 4:55 PM EST

5 characteristics of growth-restrained RIAs


By Shirl Penney

With competition for assets intensifying across the registered investment adviser marketplace, CEOs of successful RIAs are increasingly focused on aggressive growth strategies to bolster their competitive advantage and add significant value to their businesses. RIAs that are struggling to compete, and are at risk of losing market share, frequently exhibit one or more of the following characteristics that are impeding their ability to grow. These issues are largely interrelated, but luckily, each can be corrected. The sooner they are ameliorated, the sooner a growth-restrained RIA can unlock its potential and drive toward a successful future over the next five years. 1. Leadership bogged down by administrative duties and can't find time for growth. Growth takes focus. It takes a strategy. Above all else, it takes time — time many RIA CEOs say they don't have.Those same CEOs say they have never been busier, and yet they are not... Read full post

Jun 11, 2018, 12:58 PM EST

How advisers can navigate ESG investing in 401(k) plans


By Blaine F. Aikin

Despite three attempts in the last four years by the Department of Labor to clarify if, when and how environmental, social and governance (ESG) factors can be used in the investment due-diligence process for retirement plans, advisers are still confused. According to the Callan Institute's 2017 ESG Survey, institutional investors cited "my fund must consider ESG factors as part of our fiduciary responsibility" as the most common reason for incorporating ESG. In direct contradiction, apparent fiduciary concerns topped the list of reasons for not using ESG factors.DOL guidance on ESG investing in recent years has focused primarily on setting a tone. A field bulletin released in April didn't make substantive change to standing policy on ESG investing, but warned that "fiduciaries must not too readily treat ESG factors as economically relevant to the particular investment choices at issue when making a decision." Obama-era DOL guidance... Read full post

Jun 8, 2018, 3:42 PM EST

Why saying goodbye to your clients and business is hard


By Joni Youngwirth

Boomers, do you look your age? If so, clients have likely been wondering how long you will be around to help them with their financial future — and they have probably been wondering this for longer than you think! In fact, clients often feel a sense of relief when their adviser brings up the topic of their own retirement and when it will (or will not) happen.One of the unique aspects of our profession is that it allows advisers to continue working past the "traditional" retirement age. With many choosing to work into their 70s and 80s, though, clients will likely have questions:• How available will my adviser be going forward?• Will my adviser be as sharp as he or she used to be?• Will my adviser work as hard on my plan as in the past?If retirement is on your horizon, it's important to consider these questions. But, equally important, you must also consider the challenges you may face when retiring — as... Read full post

Jun 8, 2018, 11:58 AM EST

Tax planning doesn't stop on Tax Day


By Paul R. Samuelson

My father, Paul A. Samuelson, and I shared the same name and a strong interest in personal investing. While his primary job was professor of economics at MIT, he took on various investment advisory roles and served for many decades as a trustee of TIAA-CREF. As a young portfolio manager and MIT finance Ph.D., I could give him some practical insights into how trading was done and investment strategies were managed and sold, while he as a noted economist and Nobel Laureate could provide insights on every financial topic. We talked a lot about personal investing and what advice to give family and friends that they might follow. Our investment problem was simple. We had a long investment horizon and high risk tolerance so we could buy and hold diversified stocks, combining U.S. and international index funds, and Berkshire Hathaway because it paid no dividends and made no other distributions. Our investment expenses were less than .2% and... Read full post

Jun 7, 2018, 2:06 PM EST

Funds like Magellan need gamblers like Bill Gross


By Nir Kaissar

I know why investors don't care about Fidelity Magellan's comeback.As Bloomberg reported on Monday, the mutual fund made famous by hall-of-fame stock picker Peter Lynch is enjoying a resurgence after years of mediocre performance. The fund fell into a "15-year funk" after Mr. Lynch's successor, Jeffrey Vinik, left in 1996. But ever since current manager Jeffrey Feingold took over in September 2011, "Magellan has bested the S&P 500 index every full year but 2016." The fund has also "outdone more than 90% of funds with a similar investing style over the past one, three, and five years."Despite Mr. Feingold's apparent success, however, investors are yanking money from the fund. The knee-jerk explanation is that investors have lost faith in active management, no matter what the results. A more accurate one is that investors no longer need the vast majority of actively managed funds, including Magellan.Here's why: According to Bloomberg's... Read full post

Jun 7, 2018, 10:53 AM EST

Cyber assailants targeted in important new security sweep


By Guy F. Talarico

According to compliance and cybersecurity experts, financial industry regulators are embarking on a new cybersecurity sweep, with a focus on registrants' data loss prevention, oversight of third-party service providers and incident response planning. And with good reason. Cyber assailants continue to perpetrate increasingly sophisticated attacks on U.S financial institutions, including exploiting weaknesses to steal valuable data and breaching third-party information service provider systems. Yet many firms remain woefully ill-prepared to fend off the latest threats and lack actionable incident response plans to recover from a breach.In the wake of minor malware attacks just five years ago, a newer breed of cyberthreats is a growing national concern. The latest of these include opportunistic phishing attacks, which are broad efforts to infect as many computers as possible. In contrast, more targeted "spear-fishing" attacks focus on... Read full post

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