Weekend Reading for Financial Planners (Apr 17-18)

Weekend Reading for Financial Planners (Apr 17-18)

Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that Gary Gensler, known for his aggressive enforcement at the CFTC a decade ago, has officially been confirmed by the Senate as the next SEC Commissioner… setting the stage for what may be a significant uptick in the enforcement of Regulation Best Interest amongst broker-dealers as the world of brokerage and investment advice continues to converge.

In addition, there are several other notable regulatory news items this week, including:

  • Robinhood sues the state of Massachusetts to overturn its state fiduciary rule, claiming that Massachusetts’ recent enforcement actions against Robinhood’s trading practices aren’t valid because the firm is “just” a self-directed brokerage firm and not providing retail advice
  • The Department of Labor issues a new FAQ on the recently updated ERISA fiduciary rules signaling more aggressive enforcement of its fiduciary framework on brokers that recommend IRA rollovers

From there, we have several interesting consumer and advisor studies:

  • How generational preferences for financial advice are increasingly gapping apart according to J.D. Power, with 52% of those under 40 preferring an advisor committed to ESG and 73% preferring to pay for advice on a monthly subscription basis (compared to only 24% and 34%, respectively, of those over age 40)
  • Unlike prior bear market cycles, the majority of investors who made portfolio changes became more aggressive in 2020 (not more conservative)
  • A new consumer survey from Cerulli finds that 44% of consumers would prefer to invest according to their ESG preferences, while ‘only’ 14% of advisors indicate their clients have a moderate preference for doing so

We’ve also included a number of articles on investment trends:

  • Steps that advisors can begin to take to implement an ESG investment approach with their clients (on more than just a one-off accommodation basis)
  • What to do if parents accumulate “too much” money in their 529 college savings plan
  • Real-world results of a firm that implemented Direct Indexing in 2020 and got to see first-hand how much additional tax-loss harvesting can occur in volatile markets

We wrap up with three final articles, all around the theme of adapting ourselves for greater success:

  • Why it’s important to have “strong opinions, weakly held” by being confident in what we know but also very open to new information that could change our recommendation
  • How “feedback” is crucial to making long-term improvements beyond just trying to research for ourselves what we “should” do
  • Why the long-term key to success in growing a business is all about staying as close as possible to the end client, and not allowing your team or various intermediaries to put too much distance between the advisor and their end clients

Enjoy the ‘light’ reading!

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