Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that a recent study by Cerulli has shown a sharp increase in the number of affluent investors willing to pay for advice, which on the one hand reflects the increasing financial complexity in peoples’ lives (while they’ve also gotten busier than ever at work and at home) to the extent that they’re more willing to work with someone to navigate those financial challenges; while also highlighting the progress advisors have made in providing more value beyond ‘just’ portfolio management – and in demonstrate that value to the public.
Also in industry news this week:
- As brokerage firms have faced a wave of lawsuits regarding the low interest rates paid on cash sweep accounts, some legal experts believe that RIAs could also be targeted for legal action if they allow clients’ uninvested cash to sit in a cash sweep account rather than investing it or moving it to a higher-yielding cash account
- In a recent SEC panel discussion, the CFP Board pushed back against claims by the broker-dealer and insurance industries that a uniform fiduciary duty would impose a heavy cost burden on commission-based advisors (and therefore restrict access to financial products and advice for lower- and middle-income consumers) with data showing that CFP certificants, who are held to a fiduciary standard, actually earn more income on average while still serving lower-income clients
From there, we have several articles on investing in the wake of the Federal Reserve’s recent decision to cut interest rates:
- How the Fed’s rate cuts will translate into lower interest rates on cash products like savings accounts, CDs, and money market funds (meaning cash may no longer be a ‘free’ source of 5%+ returns)
- How markets have historically tended to fare surprisingly well following rate cuts, providing some comfort for long-term investors even in the midst of short-term economic uncertainty
- Why there’s little that investors can do today to take advantage of the recent rate cut (since it was already largely priced into markets) – but it may not ultimately matter much to investors with a longer time horizon, for whom a rate cycle is just a blip in the long-term picture
We also have a number of articles on Mergers & Acquisitions:
- Why firms seeking to pursue growth inorganically via M&A will be more successful if they can first figure out how to achieve sustainable organic growth
- What business owners (including RIA owners themselves, as well as business owners whom advisors serve) can consider when planning a business exit strategy, and why it’s best to start planning several years before the date of the expected sale
- How the headline “multiple” of an M&A deal can be misleading, since it may contain caveats like unrealistic performance-based incentives that make the true economics of the deal less attractive for the seller
We wrap up with 3 final articles, all about advisor dress and office decor:
- Why the once-ubiquitous necktie has fallen out of fashion, even amid formal attire (although in the end it’s not so much about what’s in fashion as about what the advisor can wear to feel their best in front of clients)
- How advisors use their office décor to project their unique attributes and spark conversations with clients, from personal mementos to an outdoor natural environment
- Why even though advisors may feel most ‘authentic’ in casual attire, they may still find it easier to land clients (particularly if they have less experience or professional accomplishment) if they dress similarly to what clients may expect an advisor to wear
Enjoy the ‘light’ reading!
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