Weekend Reading for Financial Planners (Feb 19-20)

Weekend Reading for Financial Planners (Feb 19-20)

Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that, according to population and moving data with increased relocations during the pandemic’s era of remote work, the states that lost the most population in 2021 were those with the highest personal income tax rates (and likewise, the states that gained the most population were those with the lowest tax rates), which, while not definitively proving that tax rates were a primary factor for remote workers taking advantage of the freedom to live and work anywhere, does show that Southern and Western states (which make up the majority of lower-tax states) continue to hold allure for workers seeking a lower cost of living or better economic opportunity.

Also in industry news this week:

  • The CFP Board issued new guidance and case studies focusing on satisfying their “fiduciary-at-all-times” duty of care, navigating the seven-step financial planning process as a solo advisor, and managing conflicts of interest in compliance with the Code of Ethics and Standards of Conduct that has been in force since June 2020
  • A new research study from TIAA concluded that high school coursework on personal finance has no impact on a student’s likelihood to eventually save for retirement or own a home (though previous research has suggested that financial literacy education can at least improve young adulthood credit and debt behavior)

From there, we have several articles on client communication:

  • An extensive new study from FPA concluding that advisors may overrate their own communication skills, as compared to how clients view them, suggesting the need for a more systematic approach to gathering both quantitative and qualitative client data to understand clients’ personal and financial priorities in more depth
  • Why, when clients of financial advisors fail to act on recommendations, it may not be a sign of their being unwilling to act so much as not (yet) being ready to act – and how pushing the client to take the “right” action can actually have the opposite effect (and cause the client to even further delay a needed course correction)
  • How the nature of financial advice is expanding beyond the strictly financial aspects of clients’ lives (although clients may not yet be willing to go too far beyond the boundaries of their financial lives)

We also have a number of articles on retirement:

  • How data from both the United States and United Kingdom show that average annual spending after inflation declines throughout retirement, and the implications for creating financial plans
  • Why mini-retirements can not only be relaxing, but also create significant tax planning opportunities in the low-income years (that can even help to offset the long-term cost of taking extended time off from work!)
  • How advisors can apply the lessons of those pursuing financial independence at an accelerated pace, not just in terms of savings habits, but the mindset it takes to FIRE early (from ignoring social comparisons to getting clearer about what is ‘Enough’)

We wrap up with three final articles, all about how negative emotions can actually lead to self-improvement:

  • How experiencing sadness, anger, and anxiety can actually make you happier and smarter in the long run
  • Why learning to get comfortable with the loss of the known (as opposed to reducing future uncertainty about the unknown) may be the key to getting comfortable with change
  • How addressing, rather than avoiding, regrets can lead to self-growth, and perhaps fewer regrets in the future

Enjoy the ‘light’ reading!

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