Financial Advisor Reading List: February 2023

Feb 13, 2023 | Blog Posts

Time flies! We’re already halfway through the shortest month of the year.  From the rapid rise in artificial intelligence (AI) to layoffs in the tech sector, there’s a lot of interesting news that you may be coming across on mainstream media circuits. These themes have a ripple effect on society at large — and are getting a lot of attention.  Given how much is changing — and how much stress Americans are under—how can advisors best focus their attention to have more meaningful interactions with clients? Here are a few interesting articles that our team recommends checking out in the days ahead. 1. Good Financial Planning Is Good Storytelling Source: VettaFi ETF Trends As a financial advisor, you’re often immersed in the analytical world of numbers and knowledge. It’s important to remember that “people are storytellers, not calculators,” explains writer and reporter James Comtois for VettaFi. “While numbers confound us, stories define us. And yet, this fundamental observation about human nature is largely missed by the wealth management industry, to the detriment of both client and advisor.” If you’re looking for more detail regarding the power of storytelling in the financial advisory profession, you can read  the article here. 2. About Half of High Net Worth Retirees Are Considering Hiring a New Financial Advisor Source: Snappy Kraken According to one survey of 800 financial advisors, about half of retirees and pre-retirees earning $200,000 or more per year are considering hiring a new financial advisor within the next 18 months.  “The survey responses also indicated that strong client service and constant communication are the keys to maintaining and expanding an advisor’s client base during tough markets and economies,” explains the report. One key recommendation from the survey is to proactively acknowledge clients’ fears.  “Advisors who fail to address their clients’ unspoken fears might lose them to competitors who understand the powerful emotions that economic and market challenges can evoke,” says the report. You can read more here. 3. Tax Strategy: Retirement change from SECURE 2.0 Source: FinancialPlanning You may have heard that SECURE 2.0 was enacted on December 29, 2022 as part of the omnibus spending legislation. This legislation follows up on the SECURE Act, which was enacted in 2019 to update and improve the retirement provisions of the Tax Code. Here’s a summary from FinancialPlanning. “SECURE 2.0 is very broad in scope, involving nearly 100 provisions. In this column, we will focus on the more significant provisions effective for 2023. Other provisions become effective over the next five years.” Be sure to bookmark this guide if you need help navigating this legislation. 4. How a debt ceiling crisis could hit retirees’ benefits and portfolios Source: Financial Planning It’s understandable that financial advisors are having tough conversations with clients these days. Especially since COVID-19 began, a lot more people have been navigating compounding stressors in their lives In the words of Nathan Place, retirement reporter at FinancialPlanning: “Here we go again. Congress appears to be drifting toward yet another battle over the U.S. debt ceiling, and average investors — including retirement savers — are likely to get caught in the crossfire.” 6. Redefining the Optimal Retirement Income Strategy Source: Financial Analysts Journal  Right now, the topic of retirement is on a lot of investors’ minds. If you’re researching new model portfolios for your financial advisory toolkit, you might find this research study interesting. Here’s the abstract. “This paper introduces a cohesive series of models designed to improve retirement income projections. First, the retirement income goal (i.e., liability) is decomposed based on assumed spending elasticity (e.g., “needs” and “wants”). Second, spending is assumed to evolve throughout retirement using a dynamic withdrawal strategy leveraging the funded ratio concept. Third, optimal strategies are determined using an expected utility model based on prospect theory, which also yields a client-friendly outcomes metric. Overall, this framework can result in advice and guidance that is notably different than models using more basic (and common) assumptions, especially approaches relying on probability of success-related metrics. You can read the full article at Financial Analysts Journal. 7. Advisors Moving Toward Servicing Entire Households Source: Financial Advisor Magazine To build thriving practices, financial advisors build thriving financial advisory practices. One topic on advisors’ minds is how to build more sustainable, effective business models. Householding is becoming an important strategic business move.  “Householding—providing services not just to individual accounts but to all the accounts held by a household—is being applied to a small percentage of client assets across the industry, but more than 70% of wealth managers say they’re moving in that direction, according to a Cerulli Associates report.”  You can learn more about the trend here. 8. Why Your Next Go-To CPA Partner Could Be Offshore Source: ThinkAdvisor A lot of advisors may be noticing a shortage of CPA talent. It turns out that you’re not alone. “An emerging lack of certified public accountant talent is starting to seriously concern financial planning industry leaders,” writes John Manganaro for ThinkAdvisor. “In fact, accountants are leaving their jobs in unprecedented numbers, the AICPA data shows. Professionals are leaving roles in corporations, audit firms and planning shops alike. Many are retiring or simply seeking a less demanding profession, and compounding this high turnover is the declining number of accounting majors since 2020.” Keep reading about the CPA shortage here. Learn more about CircleBlack CircleBlack helps financial advisors build stronger client relationships and more prosperous advisory practices, as a result. Our next-generation, all-in-one software gives you the exact tools you need to grow your RIA. You can get in touch to request a demo of our platform.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice.

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