Category Archives: Random Stuff

Going Independent? Is it Better to be an RIA or IAR?

There was a great article in last month’s Financial Advisor magazine which compares RIAs and IARs. To anybody reading this article not in the financial services industry those anagrams probably mean almost nothing. However, they represent important operational choices which an advisor must make when venturing out of the wirehouse channel and into smaller, independent firms. RIA stands for Registered Investment Advisor. This is generally considered to be the most free and flexible business structure which an advisor can choose to reduce his/her exposure to onerous regulatory oversight and obtain more freedom in terms of clearing firm options, investment products and payout percentage. The choice to become an IAR (Investment Advisor Representative) may be viewed as somewhere in between total freedom and partial oversight. The difference is that IARs can rely on the back-office support offered by broker/dealers. As the article in Financial Advisor concludes, plenty of advisors are moving into the broker/dealer channel rather than opening up their own RIA, the result of a tighter compliance environment and a slumping economy.

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Do Financial Advisors Utilize the Same Strategies which they Recommend to Clients?

Have you ever pondered the question… does my financial advisor practice what he/she preaches? Do they utilize the same investment products and strategies which they suggest to everyone else? Do they follow the same asset allocation guidelines which they are recommending to others? I think you’ll find the results of my study quite intriguing. Over the past month I’ve spoken with a random handful of financial professionals whom I’ve met over the years to ask them how they invest personally and plan for retirement:

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Enough is Enough with Social Networks

What is it about Twitter that people think their businesses can flourish based upon it? As a long-time blogger with solid experience marketing myself online, I just don’t get the whole Twitter-for-business model. Scratch that—I get it, but I don’t think it has long-term potential. Most of the time it’s simply advisors sending around links to their own websites trying to get their followers to sign on as clients. Taken directly from Twitters homepage, their mission statement reads: “Twitter is a service for friends, family and co-workers to communicate and stay connected through the exchange of quick frequent answers to one simple question: What are you doing?” Employees are trying to do more than just “stay connected” with friends; they are trying to create new friends, otherwise known as clients. When I got a call recently to comment on an article regarding marketing through Twitter, I responded that I’m not jumping on that bandwagon until it becomes mainstream and an absolute necessity for my business.

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Teaching Financial Literacy to a Younger Generation

Why don’t we teach personal finance in high school? When I was 17 I learned about double shifts in the supply and demand curve in AP Economics before I was formally taught the difference between a stock and a bond. I learned how to mathematically determine how a business should set its price points based on consumption patterns before I knew how to balance a check book. Do you see where I’m going with this? I truly believe that teaching personal finance to children and teenagers could have positive, long-term effects to both the economy and the general population. Perhaps some of the crippling financial errors people make (such as buying homes they can’t afford) can be avoided in the future with some simple education.

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Certified Financial Planner Earnings Drop 30%

Financial Advisor Magazine reported this month an average earnings drop of over 30% this year for financial planners.* Yikes! Why is my industry suffering? Don’t people need the help of skilled advisors now more than ever? My suspicion is that these stats are reflecting changes in the industry rather than a decline in the overall popularity of professional help. In fact, the story confirms that the average lower earnings are reflective of more advisors entering the profession at younger ages, which has the effect of lowering the average earnings figures. What a relief.

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A Blog Which I Enjoy

I came across a great blog while doing research for my book which I’d like to share with my audience. It’s www.pensionriskmatters.com, written and maintained by Susan Mangiero. Based on the title, you may have caught on to the blog’s theme–mainly pension plans and the host of factors which affect them. The topic spectrum is fairly broad, such that anyone from a pension manager, plan sponsor, attorney, financial advisor, or even individual investor can learn something.

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Charles Schwab to Focus on Younger Investors

Would you consider it worthwhile for major brokerage firms to focus marketing dollars and valuable time on investors in their 20’s and 30’s? Perhaps more squarely phrased: Does this demographic have any money to invest? If you simply view the past behavior of major financial firms, you’ll find them targeting mostly those aged 50+ in terms of product construction, speaking engagements, and the direction of marketing dollars. An interesting example lies in the prime advertising spaces purchased by financial firms showcasing aging professionals relaxing by the beach after a seasoned advisor helps them quantify and realize their retirement dreams. The implication here is that retirement is a hot topic among aging professionals who seemingly have big bucks. Besides the fact that they are passing what we call “accumulation phase” and quickly entering the “distribution and gifting phase,” many are also the beneficiaries of inheritances left by those passing away in their 80’s. So, why are some financial firms shifting their focus over to a younger and less profitable generation?

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The 5th Annual Integrated Wealth Management Forum

The 5th Annual Integrated Wealth Management Forum is coming up September 10th-12th at the Union League Club in New York City. For those unfamiliar with this unique event, it brings together great financial minds to discuss issues and ideas regarding wealth management. Included on the impressive roster of speakers this year will be Robert Arnott, the father of fundamental indexing, Daniel Kahneman, a Princeton professor and recognized expert on behavioral science, Jean Brunel, editor of the Journal of Wealth Management, and Charlotte Beyer, CEO of the Institute for Private Investors. The event should provide a great educational resource and networking opportunity for those who deal with high net-worth clients in their practices.

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