Financial Advisor Reading List: March 2023

Mar 10, 2023 | Blog Posts

As we wrap up the first quarter of the year, a lot of financial advisors are finding themselves strapped for time. If you’re in this position, know that you’re not alone. It’s been a stressful year for a lot of people, especially in light of layoffs, inflation, and other economic challenges. Remember that as a financial advisor, it’s crucial to maintain a positive mindstate and optimistic stance — no matter what’s going on, your clients are relying on your guidance to maintain a sense of stability.

Here’s what we recommend reading this month, to help you empower your communications.

1. Tax Pitfalls Financial Advisors Should Avoid This Season
Source: Yahoo Finance!

With tax season around the corner, financial advisors may be hearing from clients — or their CPAs — with questions and concerns. It’s important to lean into these conversations to ensure the best possible outcomes for investors.

“As a financial advisor, you are responsible for the tax consequences of any recommendations you make,” writes Steven Jarvis, CPA, a columnist for SmarAsset.

This article provides recommendations for financial advisors to communicate about taxes with clients, proactively.

2. J.D. Power Study Finds that Financial Literacy Is Lacking
Source: Financial Advisor Magazine

A lot of Americans think they are more financially literate than they actually are, explains recent research. These knowledge gaps provide areas for financial advisors to build a stronger basis for educational communication. The problem is particularly pronounced with younger investors.

“An overwhelming majority of those surveyed, 91%, agreed that poor financial literacy is a problem with those under the age of 25, although 58% said they do not have any significant doubts about their own level of financial literacy,” writes Edward Hayes for Financial Advisor Magazine.

You can read more about the topic, along with communication recommendations to share expertise with your clients, at FA Mag.

3. Can ChatGPT or Other AI Platforms Give Decent Financial Advice?
Source: Morningstar via Dow Jokes

News about OpenAI’s ChatGPT and GPT-3 seem to be everywhere. 

As it turns out, this generative AI technology has the ability to pass law and business school exams. So what does the future look like for financial advisors? Will AI ultimately help or hurt the profession?

“ChatGPT, for its part, is modest about its financial advisory capabilities,” explains the syndicated article in Morningstar. “‘As a language model AI, I can provide information and insights on personal finance, but I cannot provide personalized financial advice,’” the algorithm said in a written interview.

As it turns out, financial advisors will always be valued for their ability to provide highly tailored, personalized recommendations.

Read more here.

4. The Shockingly Simple Way to Help Fix America’s Retirement Crisis
Source: Barron’s 

Countless Americans struggle to retire due to lack of available savings. As it turns out, financial advisors have a role to play in reversing this trend.

“A startling new research study has found that simply talking to a financial advisor may be enough to dramatically boost people’s savings rates,” writes Brett Arends for MarketWatch.

“People were 10 times more likely to open a retirement account in a month when they met with a financial advisor than in a month when they didn’t, the study found.”

More details about the study are available here.

5. ‘Making Financial Sense of the Future’: Actuaries and the Management of Climate-Related Financial Risk
Source: New Political Economy

Understandably, a lot of financial professionals are thinking about the impact of climate risks on the economy — and investment strategies, in particular.

“There is an increasingly prominent claim among financial regulators that climate change should be considered as an issue of financial risk and stability; it is argued that this will drive capital towards green ends, and an orderly low carbon transition,” writes Nick Taylor at Department of Politics and International Relations at Goldsmiths University.

He elaborates that the profession is moving towards scenario based tools that factor policy interventions and market reactions. Financial advisors will value keeping watch on the issue. Read more here.

6. Amid value drops and increased regulation, what’s the future of cryptocurrency?
Source: PBS

The topic of cryptocurrency is making waves in the media — and understandably, the general public is confused by resulting debates. What’s fact, what’s fiction, and what’s the throughline?

“To their proponents, cryptocurrencies are a democratizing force, wresting the power of money creation and control from central banks and Wall Street,” explains a recent PBS article. “Critics, however, say that a lack of regulation for cryptocurrencies empowers criminal groups, terrorist organizations, and rogue states, while the assets themselves stoke inequality, suffer from drastic market volatility, and consume vast amounts of electricity.”

There are no clear cut answers — and it’s difficult to answer questions that clients may have. In all of the confusion, one guiding principle remains clear: self-education will always provide the optimal path forward.

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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