Weekend Reading for Financial Planners (Oct 16-17)

Weekend Reading for Financial Planners (Oct 16-17)

Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the announcement from Schwab Advisor Services that it will be requiring the 13,000 RIAs on its platform (including those migrating from TD Ameritrade) to hold at least $1 million of Errors & Omissions (E&O) insurance coverage, in the latest attempt by a major custodian to reduce its own liability risk by requiring its advisors to better protect themselves against money movement errors and wire fraud… though, of course, E&O coverage can also be beneficial to the advisors themselves by sheltering their assets from legal claims resulting from any mistaken advice they give, making E&O coverage a good idea for advisors even before Schwab’s mandate to hold it.

Also in the industry news this week:

  • In a reversal of Trump-era regulations, the Department of Labor is proposing a new rule allowing ERISA-covered retirement plan fiduciaries to consider Environmental, Social, and Governance (ESG) factors in their investment selections after all
  • SEC Chair Gary Gensler confirms that the SEC will be looking into the psychological ‘nudges’ that online brokerage firms (e.g., Robinhood) use to suggest trades, and when those practices constitute a ‘recommendation’ or ‘advice’ (and trigger a higher standard of care)

From there, we have several articles on different fee structures used by RIAs, including:

  • A study showing that fee-only RIAs experienced double-digit percentage growth in 2020, both in the total number of firms and in the total amount of assets under management, higher than any other channel of advisors
  • A profile of several firms successfully using a flat-fee model instead of (or in addition to) AUM, and how those firms use the flat-fee model to focus their own value proposition around financial planning
  • A commentary on the value of financial planning in the accumulation and decumulation phases of life, and why the increasing complexity of the decumulation phase suggests perhaps advisors should be charging more for their advice to retiring clients in that phase?

We’ve also included a number of Social Security-related articles:

  • A research study showing that the framing of media coverage around the financial health of Social Security can affect individuals’ decisions on when to file
  • How to incorporate Social Security into financial planning for clients (particularly younger ones) who are concerned about the long-term viability of the Social Security system
  • New research showing that the percentage of individuals filing for Social Security benefits early has declined significantly in the last two decades

We wrap up with three final articles about managing the flood of email in our lives:

  • The problems with sending “after-hours emails”, which can stress out the recipient when they mistakenly interpret it as urgently requiring an immediate response, even if the sender doesn’t expect one
  • The ways that time spent on email increases our anxiety, and how some ‘hacks’ and the use of other means of communication can decrease our everyday reliance on email in the first place
  • Quantifying the time we spend on email every day (particularly the ‘wasteful’ tasks like searching and filtering out irrelevant emails) and a list of practices to increase the effectiveness of the time we do spend on email.

Enjoy the ‘light’ reading!

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