Category Archives: Random Stuff

How Financial Advisors Can Help Retain Female Clients

No advisor wants to hear the words: “You’re fired!” — but you are more likely to hear them when a female client becomes a widow. According to the guide Women Are Not a ‘Niche’ Market, 70% of women fire their current male financial advisor after the husband dies, and 90% of those women hire a female advisor. Considering that women control $18.4 trillion in consumer spending and 30% of global wealth, this is a segment which advisors can’t afford to lose. But it’s not all bad news. According to the Journal of Financial Planning, “Women believe advice from a financial advisor is the most important factor when making investment decisions.” There are steps you can take to retain these women and be the financial advisor they seek, and you can start that process now.

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Financial Advisor Compensation

People often wonder about the different ways financial advisors get paid. The issue is discussed not only by investors but also within the industry by professionals as compensation methods have been hotly debated over the past decade. I thought this would make an interesting post because I’m in touch with many different advisors and have a good knowledge of how they earn a living and what the average fee schedules look like. Let’s start with the first important breakdown: fees vs. commissions.

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Debating the Capital Gains Tax

It’s exciting when you buy a stock which goes up. Some of that excitement dies down when you sell the stock and realize that you didn’t hold it for at least 1 year and therefore are paying a 40%+ tax rate on your gain, especially if you live in a place like New York or California. The Capital Gains tax has been a volatile and debated tax going back nearly 100 years. Because the majority of capital gains taxes collected are on assets held more than one year, the long-term capital gains rate is at the center of this tax debate. Up through 2012 we had a somewhat friendly rate of 15% due on long-term capital gains. However, that amount jumped to 20% recently and is even higher (23.8%) if you earn a decent living and are subject to the Affordable Care Act surcharge. Capital gains taxes are collected at the state level as well, adding another layer of pain if you live in a state which imposes this tax. At the heart of the capital gains debate is the question: do capital gains taxes harm economic growth and reduce the rate of savings and investment?

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Financial Advisors and “Dual Registration” – Understanding the Jargon

When people ask me what I do, it’s easy enough to respond “I’m a financial advisor.” But the technical explanation as to how my organization operates is more complicated. I figured why not write an article about it because it reflects an industry trend and may be interesting to my clients and other readers. My firm (Premier Wealth Advisors, LLC) is an RIA (Registered Investment Advisor) which provides fee-based advisory services. However, we are also licensed as registered representatives of First Allied Securities, Inc., an independent broker/dealer firm. Through First Allied we are able to offer an additional array of commission-based products including life insurance and annuities. While fee-only advisors are the rage these days, I thought it was important to be dually registered so that I can continue to offer a full slate of investment and advisory products and services to my clients. Why send my clients to another advisor to buy insurance when we can do it here? As a comprehensive wealth management firm, our clients should be able to get everything they need here from investment and insurance services to tax and estate planning.

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Featured in Financial Advisor Magazine!

I don’t usually blog about my press mentions, but this month I had a pretty cool feature in one of my industry’s most prominent publications. Financial Advisor Magazine interviewed me for a story on social media and how advisors are dealing with the opportunities and challenges it presents. As a blogger, I’ve always been an advocate of using the Internet as a tool for helping advisors grow their business. However, the social media movement takes web marketing opportunities well beyond that of a traditional website or blog. Advisors who follow the new and very specific rules about how to use social media may have a leg up on those who rely strictly on more traditional methods of client acquisition and retention. The only problem is that it can be time-consuming to sort through all the information about becoming more Internet-savvy. You still have a business to run, after all. One effective option is to consult a social media expert for help growing your business. He can show you the tricks of the trade and help you attract more clients.

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Advisors & Social Media

At this point most people in sales and relationship-oriented businesses realize that social media IS the future when it comes to improving brand image and marketing products and services. If not already as important as print and e-mail advertising, your social media profiles are quickly gaining traction. Plus, I feel they’re a much stickier medium for communicating since most people engage their social media outlets daily. Unfortunately for us in the financial advising community, social media within our industry is a grey area and has remained so for years. Advisors are genuinely getting fed up at this point and it seems financial regulators are gradually starting to cave in.

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Organize Your Financial Life Using MoneyCapsules

In the financial planning profession, many advisors focus on investment management. The focus is often so strongly on managing investments that all the other components of financial planning which people want and need are ignored. In today’s post I’d like to discuss MoneyCapsules, a process-oriented strategy devised by an advisor in my office which focuses on careful management of one’s entire financial life. It’s a service many people want but don’t explain clearly enough to their financial advisor to get it right. I’ve seen it first hand: once people get a handle on their full financial picture, anxiety levels decrease and decision making becomes much easier.

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Fundamental Indexing Shines in Volatile Markets

If you’re a client of mine, or have ever engaged in a conversation with me about managing investments, then you know I’m a big fan of indexes and low-cost investing. I’m still a fan of the occasional manager who consistently outperforms his/her benchmark but I’m still skeptical that it’s worth the added expense over a long period of time. Today’s post is specifically about fundamental indexing. For those of you out of the loop about fundamental indexing, it’s a strategy which equal-weights the stocks in an index instead of weighting the index holdings based on market capitalization. When you weight based on market cap the way major indexes such as the S&P 500 do, your index inevitably invests the majority of its money in the top holdings. For example, the 20 largest companies in the S&P 500 comprise just over 32% of the index. The other 480 stocks comprise just under 68% of the index. While these market-cap indexes may be more accurately reflecting the economy, they may not be helping your portfolio…

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Is Holiday Gift-Giving a Waste of Money?

When I do budgets with my clients, I’m frequently shocked at the annual outlay for gifts. After housing and food, gifting is one of the larger annual expenses for individuals in terms of percentage of income dedicated to it. For one of my clients who earns around $100,000 per year gifts accounted for roughly $3,500 (3.5%) of her gross income. For another client who only earns around $60,000 gifts accounted for almost $2,400 (4%) of her annual income. And that’s after taxes! The percentage of income dedicated to gifts was noticeably higher for people in their late 20’s and early 30’s when wedding season tends to hit hardest. So the question begs itself: does gift giving come back to reward you, or bite you?

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