Weekend Reading for Financial Planners (Nov 20-21)

Weekend Reading for Financial Planners (Nov 20-21)

Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that CFP Board is increasing its efforts to enforce its requirement for CFP certificants to report information about their own misconduct or ethical violations… by increasing the sanction for failure to report the information from a private to a public censure. Notably, however, CFP Board will not (yet?) be imposing a fine or “administrative fee” on certificants for failure to report, as was proposed earlier this year. But it is reportedly still evaluating the measure, which would have broad implications, since imposing a fine positions the CFP Board as more of a regulator, and not “just” a standards-setting nonprofit organization?

Also in industry news this week:

  • The House Financial Services Committee approved a bill that would end the practice of mandatory arbitration clauses in brokerage and advisory client agreements, but the bill faces stiff opposition from the financial industry and Republican lawmakers (that makes its passage unlikely at this point)
  • FINRA released an overhaul of its Continuing Education requirements, increasing the frequency of its Regulatory Element requirement from once every three years to once per year, and creating a new program enabling individuals who temporarily terminate their registration to reinstate their qualifications within 5 years by completing CE requirements

From there, we have several articles on (the hidden costs of) investing, including:

  • How “free” investment services often obscure hidden costs, as highlighted by the recent class-action lawsuit against Schwab’s Intelligent Portfolio recommendation of high allocations to its proprietary (and profitable) cash sweep account
  • Why the practice of Payment-For-Order-Flow remains controversial and highly scrutinized by regulators, even when (as brokerage firms argue) it may actually result in better trade pricing for retail investors
  • How mutual funds can (and sometimes do) choose benchmarks that make their own performance look better by comparison, and even switch benchmarks to boost their relative historical returns after the fact, potentially misleading investors yet without violating any existing securities regulations

We also have a number of articles on how advisors can approach the upcoming holiday season:

  • A rundown of the types of gifts different advisors give to clients, from custom-made chocolate to donations to a client’s favorite cause
  • Why giving experiences rather than “stuff” is more likely to provide a happiness boost to the client who receives the gift
  • How advisors can write an effective and engaging holiday letter to clients

We wrap up with three final articles, all about the wide range of experiences Americans from different backgrounds have with money and the financial industry:

  • How culture and identity can impact an individual’s attitudes and behaviors toward money
  • A survey showing the disparate experiences individuals of different races have with the financial services industry
  • A study showing how the racial wealth gap could expand in the future, and potential ways advisors can improve financial outcomes for historically underserved groups

Enjoy the ‘light’ reading!

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