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Month: June 2010

June 24-30, 2010

I find myself wondering what the staff meeting must have sounded like where it was concluded that the FPA adds value to your life and practice by polling Journal readers and asking questions like: “Are you confident in the investments you are recommending to your clients?” or: “Are you reevaluating your asset allocation mix?” But I may have been a bit cranky when I picked up this issue of the Journal of Financial Planning, because once again the cover art reflects a cartoonish understanding of the financial planning world. FPA members deserve so much better than they’re getting from their professional publication… But the magazine still has its useful moments, thanks to the generosity of a handful of practitioners. In this issue, Jon Guyton has contributed an excellent column proposing a withdrawal policy statement for retiree clients, and there’s a pretty good evaluation of a complex little corner of the rules governing Social Security payments. The Economist, meanwhile, gives us a bit of an insider’s look at the resignation of the Japanese prime minister, the new coalition government in Britain, venture capital in Europe, the new labor issues in China, and whether it’s a good thing (or not) that unemployment benefits have not been extended here in the U.S.

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June 16-23, 2010

Despite Investment Advisor’s strong orientation toward promoting the independent broker-dealer community and serving as its mouthpiece, Financial Planning magazine’s annual broker-dealer survey is consistently much more comprehensive and interesting. You get the feeling that IA’s editors weed out anything in the data that one or another BD executive would rather the field force not hear about, while the FP editors seem to be looking for issues and anomalies. Case in point? FP notes that only three independent BDs showed revenue growth in 2009, and highlighted some firms which experienced dramatic decreases in revenue. In addition, it highlights how few firms still generate more than half their total revenues via fees; annuity commissions, in most cases, trump “fee-based” revenues, which may explain why the Financial Services Institute seems so alarmed whenever Congress or the SEC talk about a fiduciary standard. Meanwhile, the most interesting article in this issue is an analysis of two advisors who are buying small independent accounting firms. By far the majority of accounting firms are solo practices, whose owners face the same issues that advisors are facing: where do I find a successor? The firms are small enough to be purchased at reasonable cost and via some kind of earnout arrangement; more importantly, the acquiring advisory firm can begin to introduce a broader range of services to the accounting firm’s clients. You buy a profitable business and then expand the revenues–and take care of the founding accountant’s clients when he/she retires. The subject of the day, in practice management, is client segmentation and determining your ideal client. Both John Bowen and Gabriel Garcia (previewing an upcoming Schwab white paper) shed some interesting new light on how, exactly, to accomplish this in your own practice.

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June 8-15, 2010

Several of the articles in the June issue of Investment Advisor received “high” relevance ratings, not because you need to go back and read the whole article, but because they include something of interest, which I highlight here. In that category, put the Waddell article on Congressional action–it’s helpful to know that SEC chair Mary Schapiro is lobbying for the power to impose a fiduciary standard, and the Financial Services Institute (the independent broker-dealer trade group) is lobbying hard against all things fiduciary. Olivia Mellan’s interview with Dr. Robert Butler suggests that the U.S. medical system and the business sector are both ill-prepared for dealing with the aging baby boomer population, the latest installment of Michael Patton’s series has some interesting things to say about his brokerage experiences, and Bob Clark’s column introduces a platform that makes alternative investments accessible at a retail level. And you should know in passing that Bob Ketchum, CEO of FINRA, just will not stop talking about a fiduciary standard in the BD and brokerage business models, even if he seems a bit naive about what, exactly, the term “fiduciary” actually means. The articles that you might consider reading in their entirety include the broker-dealer survey rankings, not to learn who is bigger than whom, but to get a picture of which firms are growing and who isn’t, who seems to support fee-revenue activities and which firms have astronomically high turnover in their field force. Mark Tibergien, Angie Herbers, Dan Inveen and Eliza DePardo all provide thoughtful practice management advice, and the Dan Skiles article on when and how to upgrade to Windows 7 could have some immediate practical significance.

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June 1-7, 2010

If your only mission as an advisor is to collect as many assets under management as you can get your hands on, you might want to skip Roy Diliberto’s column in this month’s Financial Advisor. He argues, persuasively, that there is a fine balance between saving too much and spending too much, and many clients are kind of extreme in either direction. Advisors who are working hard for their clients have to rein in overspending, and may have to point out the lost opportunities that come with oversaving. Deciding when to tell clients to spend more of their portfolios (when your revenues may be affected) is yet another conflict of interest that advisors have to face. Elsewhere in this issue, Joni Youngwirth offers some advice on often-overlooked issues that come up when you’re transferring your business, Joel Bruckenstein reviews one of the few planning programs that can be used in conjunction with your clients, and Eric Reiner offers some insights into the new taxes connected with the health care reform package. If you’re interested, this issue also offers the broker-dealer rankings, one of three magazines now that collects data and offers rankings.

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