Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the news that while it appears the Department of Labor is not going to defend itself against the recent 5th Circuit Court of Appeals loss that would vacate its fiduciary rule, a coalition of three state attorney generals (from California, New York, and Oregon) are petitioning the court to be allowed to defend the fiduciary rule in the DoL’s stead, and mega advocacy organization AARP has also filed a similar petition to take up the case, requesting an en banc review of all 17 appeals judges (beyond just the 3 who made the original ruling). Also in the news this week is turmoil in Australia over its fiduciary rule that took effect several years ago, as it turns out that just banning commissions and having a best interests obligation may not be enough to protect consumers, without actually breaking up vertically integrated product manufacturers and distributions that, even without commissions being paid, are still finding ways to incentivize their advisors to give overly conflicted advice (and providing a potential roadmap for the next stage of the fiduciary debate in the 2020s!?).
From there, we have several practice management articles this week, from a look at why the top producers are the least happy in broker-dealers (when normally businesses would try their hardest to make their top producers the most satisfied!), to a discussion of the key issues to consider in finding a new broker-dealer that might make you happier in the long run, why it’s a bad idea to focus on trying to be the “best” at what you do (and instead focus on the standards, process, or habits that will get you to being the best), and why even great financial advisors often hit a wall in their businesses (because eventually, it’s not actually about being a great/better financial advisor, but learning to be a great/better business owner and CEO of an advisory business!).
We also have several tax-related articles, including: a discussion of the confusion that has emerged since the Tax Cuts and Jobs Act eliminated the entertainment deduction for businesses but kept the meals deduction (leading to questions of when a meal is “entertainment” and when it’s just a meal); an analysis trying to quantify the economic value of using retirement accounts (finding that it’s mostly about the ongoing tax deferral of interest, dividends, and capital gains, and not about the tax deduction you get up front for contributing!); and the last looks at how estate planning is changing since the adoption of the Revised Uniform Fiduciary Access to Digital Assets Act (or RUFUDAA for short) to facilitate digital estate planning.
We wrap up with three interesting articles, all around the theme of behavioral finance and decision-making: the first looks at how natural selection appears to favor getting larger (in both nature, and in business), yet ultimately larger species (and businesses) tend to get so large they accelerate their own demise and extinction, which means that while the key when you’re small is to get bigger (for safety and economies of scale), the key when you’re big is to be paranoid about avoiding the potential extinction event you may not otherwise be able to adapt to quickly enough; the second explores our human tendency to explain “lucky” events with narratives, to the point that we seem to discount the value of efficient algorithms in part because they’re so efficient there’s no compelling narrative to explain them; and the last looks at fascinating research that finds the decisions we make actually change our own preferences, causing us to repeat similar decisions in the future (even if we don’t remember the original one), which helps to explain why small bad choices can often compound into big ones, but similarly suggests that making small positive choices can compound into highly favorable long-term outcomes!
Enjoy the “light” reading!
source https://www.kitces.com/blog/weekend-reading-for-financial-planners-apr-28-29-2/?utm_source=rss&utm_medium=rss&utm_campaign=weekend-reading-for-financial-planners-apr-28-29-2
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