Inside Information

This issue of the Journal of Financial Planning features three articles which reinforce, in interesting ways, things you probably already know but may not be giving enough attention: the messiness of financial planning, and how you can turn that to your advantage in client relationships: the messiness of client thinking about investments and how you can protect your client relationship from it; and Vern Hayden talks about the essential core of your business and invites you to put more attention there, rather than on a lot of inessentials which probably take up most of your day.

I thought the article on using options to hedge client portfolios was interesting for two reasons: first, it found that hedging (buying options) all the time is prohibitively expensive; when markets are volatile, the cost exceeds the benefits. And second: it found that if you hedge in a disciplined way, only when the costs are low, you might be able to add risk-adjusted return to client portfolios.

The Economist articles warn us to brace for two major transitions in the Middle East; the leaders of both Egypt and Saudi Arabia are ailing, and there is no clear succession plan. And it tells us that the most recent bond auction selling Greek (and Spanish) debt went off without a visible hitch, which may mean the worst of the crisis in Euroland is over.
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Philip Palaveev responds to the Future of the Financial Advisory Business white paper, and delivers several warnings about things you probably haven't thought about. [Read more »] 

The July issue of Investment Advisor includes a package of feature articles on transition planning, but... There's one excellent article (the first reviewed here), and after that the others look like filler or an afterthought. I included the final article in the package among the "high" rating articles because it offers some (albeit sketchy) actual case studies, which is valuable material that the magazines, for whatever reason, have drifted away from.

As usual, Mark Tibergien, Angie Herbers, Dan Skiles and Tom Giachetti offer real insight and advice; I suspect most readers turn to their columns before they read anything else. [Read more »] 

Mike Martin is a very thoughtful advisor who has been writing some pretty pessimistic assessments of the global economic scene and the investment opportunity set. He's one of those people who foresaw the meltdown in 2008, which may or may not recommend him now, but I think his analyses are always well-intentioned, thoughtful, and a good addition to the Financial Advisor article lineup. I also liked Bernie Clark's writeup of his/Schwab's latest poll of advisors, who (on average) spend 30% of their time on operational issues in the office.

I've also included articles from The Economist on the turmoil in Central Asia (conclusion: it's not going away soon), on the future (or lack thereof) of the European Union, and on the prospects of gold based on a pretty detailed supply and demand analysis. The gold article is something you could share with your most conservative (or frightened) clients.
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How do you start transforming your practice into a business? [Read more »] 

Marie Swift's feature article in this month's issue of Financial Planning magazine talks about what we hope will be the final aftershock of the market meltdown: restoring client loyalty or watching clients whose confidence was shaken walk out the door. A number of commentators imply that your relationship standards with clients are at least one notch higher now than they were pre-crash, and that may be a permanent change. Another permanent change: one of the largest investment platforms in the dually-registered world has adopted a number of fiduciary-friendly features, suggesting that regardless of the SEC's actions, the fiduciary future may be upon us already.

Martin Shenkman and Ed Slott do their usual thing: offer advanced planning tips, while Stephanie Bogan identifies the stages that each advisory firm passes through if it is to evolve beyond the lifestyle practice. And Thornburg's George Strickland says that carefully-laddered individual muni investments may provide a better hedge against inflation AND rising interest rates than TIPS. It's an interesting argument. [Read more »] 

After the planning regulation effort in Congress, it may be time for the profession to start speaking out on some broader (and more important) issues. [Read more »]