Inside Information - Journal of Financial Planning

MEDIA REVIEWS - August 16-23, 2010

nospam@example.com (Admin) — Mon, 16 Aug 2010 16:30:30 -0400

This month's issue of the Journal of Financial Planning includes a couple of nice columns, one on the protocol for your relations with people who have recently lost a loved one, another on how to hire younger advisor employees. But the real fireworks this month is a blockbuster expose by Rolling Stone's Matt Taibbi on how Congress chewed up the financial reform bill, and how it's far less protective of the public than it was originally intended to be. Both Republicans and Democrats participated in the watering-down of the measure, and although there is no mention of fiduciary, you get a glimpse of how hard it is to get meaningful consumer protections through Congress in this environment.

It makes for depressing, and very enlightening, reading.
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MEDIA REVIEWS - July 24-31, 2010

nospam@example.com (Admin) — Sat, 24 Jul 2010 15:12:00 -0400

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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MEDIA REVIEWS - June 24-30, 2010

nospam@example.com (Admin) — Tue, 15 Jun 2010 23:07:57 -0400

I find myself wondering what the staff meeting must have sounded like where it was concluded that the FPA adds value to your life and practice by polling Journal readers and asking questions like: "Are you confident in the investments you are recommending to your clients?" or: "Are you reevaluating your asset allocation mix?" But I may have been a bit cranky when I picked up this issue of the Journal of Financial Planning, because once again the cover art reflects a cartoonish understanding of the financial planning world. FPA members deserve so much better than they're getting from their professional publication...

But the magazine still has its useful moments, thanks to the generosity of a handful of practitioners. In this issue, Jon Guyton has contributed an excellent column proposing a withdrawal policy statement for retiree clients, and there's a pretty good evaluation of a complex little corner of the rules governing Social Security payments.

The Economist, meanwhile, gives us a bit of an insider's look at the resignation of the Japanese prime minister, the new coalition government in Britain, venture capital in Europe, the new labor issues in China, and whether it's a good thing (or not) that unemployment benefits have not been extended here in the U.S.

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MEDIA REVIEWS - May 23-31, 2010

nospam@example.com (Admin) — Tue, 18 May 2010 10:41:39 -0400

Harold Evensky is about to turn his quarterly column over to the academics, which might not be a good thing, since he has been such an effective filter of the noise (and there is SO much of it) in the academic journals. In this issue of the Journal, he summarizes articles which say something similar to what Mohamed El-Erian has said: that we are slouching toward a "new normal" economic and investment world. It would be nice if he'd tell us exactly what returns will be in various asset classes.

Meanwhile, tech consultant Bill Winterberg does a nice job of teaching us about the unfamiliar world of social media, and a former director of risk analytics at Merrill Lynch walks us through the unfamiliar universe of puts and calls, options and futures, trying to help us make sense of it all. (Hint: reduced volatility and equally-reduced long-term returns. The options markets seem to be highly-efficient.)

I was disappointed in the focus of the cover article (are ETFs alternative investments?), but in execution, it is far better than what we've grown used to from the Journal's cover articles. Let's celebrate progress where we can...
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MEDIA REVIEWS - April 8-15, 2010

nospam@example.com (Admin) — Thu, 08 Apr 2010 15:28:00 -0400

Ross Levin and Jon Gallo offer interesting comments on, respectively, the idea of moving on instead of trying to change the past and defining how investment responsibility should be handed out to trustees. But the real action in this review is in the Economist articles. The first offers an outside-the-country view of the recent health care reform package, and the conclusion is cautiously optimistic--although, as you'll see from reading the review, the impact of some of the most important provisions won't be known for a decade. Meanwhile, there is evidence that America's economy is completely remaking itself into a less consumer-driven, higher exporting, more energy-independent, and generally more urban society. Britain, meanwhile, faces years of recovery. And the final article offers a glimpse of the politics of the future, and some of the issues that we may all be debating as more voters get older.

I hope your tax season is winding down, and that it generally went smoothly, and that you were able to get your quarterly reports out on time. For the planning profession generally, this may be the most stressful time of the year--but, as you know, much of the stress will soon be over.

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MEDIA REVIEWS - March 24-31, 2010

nospam@example.com (Admin) — Wed, 24 Mar 2010 20:18:00 -0400

Vern Hayden is surely right when he says that your subjective and qualitative services are less likely to be commoditized than the calculations and numbers side of things, and he offers us a model for deciding where to store your value as advisors. There are two very interesting academic contributions here as well: the first looks at target date funds from a new perspective, arguing that they provide undisclosed risks to their investors, and suggesting a model for measuring that risk and helping investors think through their choices. The other looks at a whole lot of options for taking Social Security benefits, and then does what few other Journal articles do: tells us, after a lot of analysis, what the best solution is, and how to add value when you advise clients.

Already my picks in the NCAA tournament are in trouble. Who knew that a Monarch (Old Dominion) would beat a Fighting Irish (Notre Dame) in a fair scuffle?
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MEDIA REVIEWS - February 24-28, 2010

nospam@example.com (Bob Veres) — Mon, 22 Feb 2010 00:37:00 -0500

As you'll see in a minute, I'm extremely skeptical of one of the contributed articles in this month's issue of the Journal of Financial Planning, the more so because the assumptions for its conclusions are never provided, the even more so because its conclusions are at odds with what I regard as common sense and most other analyses. But if you want to sell variable annuities, articles like this provide support and cover.

Meanwhile, there's an excellent article on incorporating a psychologist into your client interactions, and a pretty interesting study of an investment strategy that would require a LOT more study before you should attempt it on behalf of clients. See for yourself.
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Media Reviews - January 24-31, 2010

nospam@example.com (Bob Veres) — Sun, 24 Jan 2010 15:29:00 -0500

Normally, each magazine issue has a small number of "high" relevance articles flagged near the top, and the bulk of the magazine articles are listed below, with low or moderate relevance ratings. But this issue of the Journal of Financial Planning is reversed; a majority of the articles are unusually relevant.

The degree varies; Dan Moisand makes some good points about the incredibly lax attitude of our regulators when it comes to brokers gleefully exercising their conflicts of interest, and Bonnie Hughes is surely right that we need to create a workable business model for serving the middle market. Dennis Stearns does a great job of pulling the tastiest nuggets from Jim Collins' latest management book, and the contributed article on how to work with widows--a potentially huge subset of the planning clientele as baby boomer men fall into declining health--offers some great suggestions.

However, the highlights of the issue are Harold Evensky's review of various professional articles, including how to navigate through four different kinds of markets, and the article that examines the ability of various portfolios to grow and survive decumulation. And the final article offers an interesting new model for working with clients at a depth which is at least two long steps beyond the industry standard.
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