Outside voices and views for advisers

Feb 14, 2018, 5:36 PM EST

Don't sell your soul for a large transition package


By Trent Gain

In the 16th century book, Faust sells his soul to the devil, Mephistopheles, in exchange for 24 hours of tutelage in black magic. It was a decision he would later regret. As a financial adviser in today's world, you may be "tempted" with very attractive offers to move your practice from your current home to another firm. But before accepting any offers, consider the following so you may avoid the fate of Faust.... Read full post

Feb 14, 2018, 11:01 AM EST

Why defined-contribution plan innovation is so slow


By Fred Barstein

At a recent defined-contribution industry conference, the topic presented by one of the panels, which included an executive from a company that sponsors a large retirement plan, was "radical innovation." Before the discussion could begin, the plan sponsor warned that anyone coming to his organization suggesting "radical innovation" would be shut down before they could even present their idea.That, in a nutshell, explains why innovation is so slow for 401(k) and 403(b) plans. Major change comes with significant risk in the view of most senior managers while providing minimal benefit — not a recipe for success.DC plan sponsors have a "herd" mentality and try to stay as close to the middle as possible. Leaders and laggards get picked off by predators like plaintiff's attorneys and regulators. There are other barriers to change, including opinionated and vocal plan participants, as well as the lack of time and training among DC plan ... Read full post

Feb 14, 2018, 10:37 AM EST

Life insurance 'advice' in an era of fake news


By Barry Flagg

Fake news is an opinion presented as if it were fact. It's driven by both the high demand for content to fill the 24-hour news cycle on hundreds of cable channels and the supply of content from anyone with an opinion they can present in a blog or video on social media without regard for journalistic standards that require independently verifying relevant facts. While fake news can be appealing to those seeking confirmation of their own biases, it fosters division and confusion that hinders debate about our collective best interests. Likewise, the life insurance industry is rife with "fake reviews" — life insurance policy reviews or so-called "policy audits" that are presented as a factual analysis of policy economics, but instead are hypothetical opinions without regard to the standards of care expected from advisers who have clients' best interests at heart. The prevalence of fake reviews is similarly driven by the many agents, ... Read full post

Feb 14, 2018, 10:16 AM EST

4 ways to build a 401(k) for baby boomers


By Aaron Pottichen

Retirement plan advisers need to start thinking about how to design 401(k) plans to reflect the increasing numbers of baby boomers in the workforce. There was a nearly 50% jump in people over the age of 75 in the workforce between 1996 and 2016. Further, only 54% of baby boomers had any retirement savings in 2017, according to a recent Insured Retirement Institute study; that was the lowest level in the seven years IRI has published the report. These numbers tell us two things. First, participants in 401(k) plans are likely to start resembling those whom we expect to be retired. Second, many plan designs and products need to be updated for a part of the population that is older. Here are a few things for advisers to keep in mind. Allow in-plan Roth conversions.A surprisingly large number of retirement plans that we review don't allow participants to convert pretax dollars to Roth after-tax dollars. Such a feature can be a valuable... Read full post

Feb 8, 2018, 1:38 PM EST

Tax bill's implications for retirement planning


By Jamie Hopkins

The Tax Cuts and Jobs Act, passed into law in late 2017 and mainly taking effect in 2018, will be transformative for many Americans and businesses. For the most part, tax laws relating to retirement plans and retirement planning were left alone, with no major modifications. This came as a bit of a surprise as there had been much conversation and numerous proposals regarding tax reforms that could have drastically changed retirement planning in the United States. But, as the final bill rolled out, very few of these changes made the cut. Below you will find a summary of changes that directly impact retirement planning, as well as a general discussion on the overall impact of the new tax bill on retirement planning. The goal is not to identify the numerous ways that income taxes and tax reform will impact retirees, but instead to focus on the tax laws that more specifically target retirement plans and retirement planning. The nine major... Read full post

Feb 7, 2018, 3:53 PM EST

How to access the high-net-worth space

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By Michael Kim

As industry pressures intensify for advisers, high-net-worth investors represent a "sweet spot" given their substantial investible wealth, which can provide a great boost to advisers' businesses. However, competition is steep: while 13 percent of advisory firms report an increased focus on high-net-worth clients, those with $1 million or more in liquid assets, they may not realize that this demographic accounts for less than 1 percent of the overall U.S. population. Competition for this slice of wealthy clientele is not expected to diminish, so it is important that advisers master the range of skills necessary to serve high-net-worth investors, set themselves apart and move upmarket.... Read full post

Feb 6, 2018, 11:00 AM EST

The latest in financial adviser #FinTech

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By Michael Kitces

Welcome to the February 2018 issue of the Latest News in Financial Adviser #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 advisers and wealth management!This month's edition kicks off with the big news that "robo-adviser-for-advisers" AdvisorEngine has acquired Junxure CRM, it what appears to be both an effort to expand its investment management platform to include a core CRM component… and also perhaps an effort to turbocharge its own growth by trying to acquire a base of (Junxure) CRM users to cross-sell AdvisorEngine. Though it remains to be seen whether advisory firms will be willing to adopt AdvisorEngine's basis-point pricing for a back-office technology solution!From there, the latest highlights also include a number of interesting adviser technology announcements, including:• Overstock.com... Read full post

Feb 1, 2018, 2:54 PM EST

Why technology transformations fail

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By Jim DeCarlo

Most change initiatives – whether intended to boost quality, improve culture, or re-engineer technology – generate only lukewarm results. Many just simply fail. The reality is that no adviser business survives over the long term if it can't reinvent itself. Over the last 25 years I've been blessed to work with financial advisers around the globe as they strive to build a better business, aspire to create greater internal efficiencies, and assemble a form of scale to their client experience that will improve their brand and increase their profit. Too often, I've seen these adviser dreams be built on legacy technologies with outdated interfaces that do not scale. Typically, the principal of the firm is desperately seeking a change, but is unskilled at implementing it. This is a global phenomenon that I've witnessed from Salt Lake City, Utah, to Sydney, Australia.Our Maryland-based RIA learned a few key lessons when we... Read full post

Feb 1, 2018, 8:59 AM EST

When to bring a new employee on board

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By Joni Youngwirth

When is it time to hire a new employee? This is a common question asked by advisers. Should you hire early to prevent a crisis or wait to see whether an existing employee can take on extra work? Are things so dire that a new employee — and the related costs — is truly needed? Most experienced advisory business owners agree that it is preferable to hire before chaos breaks out. But there are some interesting nuances regarding the timing of making the new hire.... Read full post

Jan 31, 2018, 2:05 PM EST

401(k) advisers vs. institutional consultants: On a collision course?

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By Fred Barstein

At a recent industry conference that primarily attracted consultants and providers for the largest retirement plans, a Willis Towers Watson representative asked me in the elevator where I was from. I answered, "The dark side." He laughed, but the truth is, that's not far off from how the institutional defined-contribution market views the retirement plan advisers who proliferate in the small and midsize DC market.Just what is the difference between institutional consultants and retirement plan advisers, and are their worlds about to collide or merge?Institutional consultants and providers, who primarily work with plans that have more than $500 million, know very little about the retail DC market and how it works. Which is fair because few retail DC advisers and providers cross over to the institutional world, and most have very limited working knowledge of how mega plans work.A few money managers and even fewer record keepers work in... Read full post

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