Financial Advisor Reading List: June 2023

Jun 7, 2023 | Blog Posts

There’s a popular saying that it’s hard to tell we’re in a moment in history when you’re in it. But we’re certainly in one. What will be our memory of summer 2023 when we reflect upon the decisions we’ve made, the guidance we’ve provided to our clients, and the changes we’ve navigated? How ready are we to support our fellow Americans with respect to what comes next geopolitically.

Here’s a look into the themes we’re watching at CircleBlack, heading into June.

1. Uncertain economy has derailed retirement planning for many Americans, study says

Source: Financial Advisor Magazine

Everyday rising costs are impacting peoples’ daily lives. With so many Americans focused on getting by ‘right now,’ it’s getting harder to focus on the long term according to research from Allianz Life Insurance Company of North America.

“Conducted in February and March, the national online study of 1,000 adults further found that 49% of respondents cited rising everyday costs as one of the greatest risks to their retirement income. That percentage has climbed from 44% in 2022 and 38% in 2021, the study noted.”

Conventional wisdom may no longer be applicable to everyday investors who are adapting to a new economic landscape. So how should financial advisors adapt in alignment?

Read more about the study and corresponding analysis.

2. Getting ahead of the market’s next challenges, according to a top financial advisor 

Source: CNBC

The financial advisor profession is a community oriented sport — especially for independent RIAs.

One of the best ways for financial advisors to learn, to stay ahead of trends in the market, is from each other. So if you’re wondering what steps to consider taking to support clients in challenging times, just listen to your peers.

Consider this CNBC interview with Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners.

“As financial advisors, it is crucial for us to not only hear but truly listen to cues of stress and emotions from our clients. While we may perceive a financial decision as clear and straightforward, our clients may still feel hesitant. There are underlying truths and emotions behind their reservations, and it presents an opportunity for us to ask questions humbly and gently in order to understand their concerns better.”

Read more perspectives from Sun here

3. Democratizing financial knowledge with ChatGPT by OpenAI: Unleashing the power of technology

Source: SSRN

One of the biggest challenges that RIAs navigate is client education. It’s well known that financial knowledge can be tough to grasp. Can AI help?

“By offering personalized investment advice through a conversational interface, ChatGPT by OpenAI has the potential to provide a cost-effective method to address the issue of information asymmetric in financial investment and help to level the playing field for individual investors,” explains a team of researchers in a recent academic paper.

But how effective is AI? Is the tool ethical to use? Will it make financial advisors’ jobs easier or harder?

“The results show that ChatGPT has great potential as a tool for explaining complex financial concepts to a wide range of target audiences,” concludes the researchers.

Read more about the topic in this free to access research paper.

4. Five dos and don’ts about using artificial intelligence for financial advisors

Source: VettaFi ETF Trends

Adapting to new technologies is good for your business. According to Fidelity’s 2022 RIA Benchmarking study, RIAs that consider themselves tech embracers had a higher 3-year CAGR in assets, clients, and revenue compared to those that didn’t.

So should you use AI in your financial advisory practice?

This roundup of dos and don’ts can help you make the right decision for your specific business.

Gather more perspective to inform your judgment about AI.

5. Common mistakes RIAs make hiring and returning next-gen advisors

Source: WealthManagement 

Given the pace of technological advancement and the rise of younger investors, many RIA firms are evaluating how to hire more millennial and gen Z financial advisors in their practices. Despite these needs, generational clashes can often get in the way of successful working relationships.

“Advisors should expect to spend at least the first year just getting the new advisor acclimated to the practice and the role; helping them with their language and approach, teaching them about the clients you serve, and ultimately helping them co-create and execute a plan for what success looks like in their role.”

This article outlines common mistakes that advisors make when hiring new advisors and developing them for success. Read more from WealthManagement.

6. When to teach kids about money, according to the experts — and how to do it

Source: CNBC

While it’s understandable for parents to shield their kids from stressful topics, money is something that is inescapable from the human experience.

“But being financially confident and literate can be key to securing them a happy, comfortable future,” writes Sophie Kiderlin for CNBC.

This article includes tips for teaching kids about money, at every age.

You can consider sharing this article with clients who are young parents.

Read more about the topic.

About CircleBlack

CircleBlack is an all-in-one technology platform for relationship-focused financial advisors. To learn how our software can help you build, manage, and grow your wealth management practice, get in touch to request a demo.

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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