Inside Information

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Have you ever wondered why, every five to ten years or so, there is a major scandal among brokerage firms? [Read more »] 

Why the Eurozone financial crisis is about to heat up again. [Read more »] 

This issue of the Journal will be remembered for two things: first, the first article we've seen in this space that uses brain scanning technology to help understand how behavioral finance issues work in the complex minds of clients and investors. We are starting to see these instruments used in financial research, and I have a feeling that they will eventually replace questionnaires and other imprecise instruments that have been used by researchers in the past.

Second, the article by Wade Pfau creates something new: an efficient frontier for clients in the decumulation phase of retirement, which mirrors the efficient frontier calculation for accumulators, but uses different parameters. Here, the client's Monte Carlo chances of failure is set at 10% (based on forward-looking returns), and then thousands of different portfolio mixes are modeled, giving the client a chance to select along a risk-reward spectrum that takes into account the severity of failure and the expected percentage of the initial portfolio that will be left to heirs. Clients have a choice of how much risk they want to take within a relatively safe parameter--and of course you can change those parameters (and, of course, the asset mixes) based on what you know about the client. As you read the review, you'll be surprised at the optimal portfolios, and you can click through to see the full scatterplot of portfolio mixes below the frontier. [Read more »] 

Are you still not paperless? Chances are you're not, and if so, David Lawrence outlines a plan for you to get your documents scanned and into a CRM system. And Roy Diliberto makes a modest proposal: before you can advise clients on how to achieve a great, prosperous life, you have to walk the talk and live one too.

At the end, Nick Murray goes into bombast mode about how the naysayers said that 2012 would be a lousy investment year, and look how dumb they were. I have no problem with not listening to naysayers, but Murray is the opposite, a persistent yeah-sayer who should be waving pom-poms. [Read more »] 

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Are people moving away from high-tax states to places where the state tax burden is lower? [Read more »] 

Here's a website that illustrates the future cost of some of our incidental spendings. [Read more »] 

After all the years of accumulating a retirement portfolio, we face new challenges in retirement. [Read more »] 

Congress has finally made the estate tax exemptions permanent--at a surprisingly generous level. [Read more »] 

Take a look at Mark Tibergien's and Angie Herbers' columns in this month's issue of Investment Advisor, and see if they aren't basically saying the same thing--and pointing out a huge blind spot in the planning profession's practice management practices. Advisors apparently haven't learned a basic skill that other professions have mastered: teaching not only the skills of the profession--planning--but also teaching how to manage a professional firm. There is an assumption that these skills should be acquired through some other means.

I also liked the point made by Dan Skiles, that you are probably doing a better job managing your clients' plans than your own business plan; that you should measure and monitor progress toward your practice management goals. This, too, is a skill that advisors tend to neglect, even though you probably do it extremely well for clients. [Read more »] 

Is the advice you're giving your clients about their home loans and other debt defensible by the numbers? [Read more »]