Tax Reform 101: How the Tax Reform Law Impacts Self-Employed

Currently, there are about 55 million people in the self-employed community and with one in five taxpayers becoming self-employed every day, that number is expected to grow. If you have taken the plunge into being a business of one or...

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source https://blog.turbotax.intuit.com/tax-reform/tax-reform-101-how-the-tax-reform-law-impacts-self-employed-41705/

Weekend Reading for Financial Planners (Sep 29-30)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big industry news that the CFP Board has stated it will “affirmatively oppose” any states that attempt to regulate financial planning, in light of the potential cost and regulatory patchwork that could otherwise emerge with different states that have different standards… but without actually setting forth what the organization thinks the ideal Federal regulation of financial planning would look like, and setting the CFP Board at odds with the Financial Planning Association, which has spent years building and deepening its state-level advocacy relationships and capabilities.

Also in the news this week were several other articles about the CFP Board, including the kick-off of the CFP Board’s public forums discussing the new Standards of Conduct to take effect next October of 2019 (and what CFP certificants want in terms of education, support, or simply clarification regarding those rules between now and then), and another article questioning whether the CFP Board has spent too much in time and resources promoting the high standards of the marks and not enough actually enforcing those standards to clean up bad actors (though the CFP Board indicates that it plans to enforce more effectively once the new standards take effect next year).

From there, we have several articles around cash flow and budgeting strategies with clients, including one on how to help clients better track and categorize their spending (based not on wants versus needs to determine what’s essential and what’s discretionary, but simply by helping them reflect on what they spent that actually brought them enjoyment, and what they subsequently regretted, and focusing there first to figure out what to cut), a second on how retirees might plan their retirement expenses based not on their estimated spending habits in retirement but instead based on how they plan to spend their time in retirement (and then figure out what those lifestyle activities will cost), and the last exploring what it really means to be “middle class” (and the challenges in seeing high-income households as “middle class” even though they work in a high-cost-of-living area that means their dollars really don’t go very far).

We also have a few additional articles around credit cards and borrowing, including a look at whether it’s worthwhile to have all clients freeze their credit reports now that it’s free (by national law) from all three major credit bureaus, the prospective benefits of “credit card churning” to rack up travel points with new-card bonuses, and why parents with college-aged children should be filling out the FAFSA even if they don’t think they’ll be eligible for financial aid (because many discover they actually were eligible after the fact, as even some merit-based aid programs also require a FAFSA to be filed!).

We wrap up with three interesting articles, all around the theme of building relationships (with friends, or with clients): the first looks at how the single greatest driver to turning an acquaintance into a friend and then ultimately a confidant is simply spending enough time (which could amount to dozens or hundreds of hours) to really deepen the relationship; the second offers up some better questions besides “What Do You Do?” to more quickly build rapport with someone you’re meeting the first time (in an effort to create more ‘multiplex’ ties beyond just the context of work); and the last looks at what it really takes to create a powerful mentor relationship, which is about more than just finding someone who wants to mentor you, but finding someone who is just far enough ahead of you on the journey to be able to provide insight about what comes next, but is close enough to where you are now to still remember what it was like to be there, too.

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-sep-29-30-2/

The Section 199A Tax Benefits Of REITs Over Direct Real Estate Investments

While there are many tax and investment benefits to investing directly in real estate, not everyone wants to be a hands-on landlord. For those who buy a substantial amount of real estate, it’s often cost effective to hire a property manager to delegate such management tasks to. For everyone else, the most appealing option is simply to become a “pooled” real estate investor with others, through a Real Estate Investment Trust (REIT), which allows some of the pass-through tax benefits of real estate investing, but with better management economies of scale and more diversification than what most investors can feasibly access with limited dollar amounts to invest.

Under the Tax Cuts and Jobs Act of 2017, though, REITs have been afforded a new tax preference: the IRC Section 199A deduction for “pass-through” businesses, that allows for a 20% deduction of any qualified REIT dividends against that very income, resulting in an effective 20% reduction in the tax rate on REITs (where the top 37% tax rate becomes “just” 29.6% instead).

Notably, the new Qualified Business Income (QBI) deduction under Section 199A is available for direct investments in real estate as well. However, direct real estate investments only qualify for the deduction if the amount of real estate investment activity amounts to a real estate “business” (where purely passive real estate investment income may not count), and is further limited for certain high-income individuals due to wage-and-depreciable-property tests that apply to married couples with taxable income above $315,000, and all other filers with taxable income about $157,500. By contrast, qualified REIT dividends simply obtain the 20% Section 199A deduction, implicitly counting as a real estate “business” (by virtue of a REIT’s size and scale), and without any high-income limitations on the deduction!

Of course, in the end, an investment in a REIT should be evaluated by its overall investment merits, and not just its tax treatment alone. Nonetheless, for otherwise equal real estate investments, going forward, REITs will be substantially easier to qualify for the full Section 199A deduction with fewer limitations for high-income individuals, and a tax benefit sizable enough that REITs almost (but not quite) enjoy tax benefits similar to the preferences for long-term capital gains and qualified dividends. Which means at a minimum, the relative improvement of tax treatment for REITs will mean they deserve a “fresh look” from an investment perspective… along with a re-evaluation of where they should be held from an asset location perspective (given that REITs held in a tax-preferenced retirement account will lose out on the new Section 199A deduction!).

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source https://www.kitces.com/blog/reit-real-estate-investments-section-199a-qbi-deduction/

Tax Reform 101 for Families

The new tax reform law that was signed into law on December 22, 2017, changed taxes for the majority of taxpayers beginning in tax year 2018(the taxes you file in 2019). How Are Families Impacted? The following infographic provides a...

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source https://blog.turbotax.intuit.com/tax-reform/tax-reform-101-for-families-33144/

#FASuccess Ep 091: Increasing The Value Of Advice By Focusing On Life-Centered Planning For Transitions Not Goals with Mitch Anthony

Welcome back to the 91st episode of the Financial Advisor Success podcast.

This week’s guest is Mitch Anthony. Mitch is the founder of an eponymous training and coaching firm for financial advisors on how to ask the right questions to have better conversations with clients. What’s unique about Mitch, though, is his truly unique gift for finding the right words for effective client conversations. From describing the value of financial planning itself based on the six principles of helping clients with their organization, accountability, objectivity, proactivity, education, and partnership, to simply making the point that in the end, the role of a good financial planner is to help clients find the balance between vocation and vacation and ensure that clients prepare so they don’t have to repair instead.

In this episode, we talk about the importance of language in financial planning. The difference between having good rapport with clients and really building a relationship with them, why asking clients the right questions is all about engaging them by making them feel like they’re answering the questions they’ve always wanted to talk about anyway, and why the best way to demonstrate the ongoing value of financial planning is not about helping clients to reach their goals, but instead helping them to prepare for and then navigate the never-ending stream of transitions that life throws at them anyway, which are also great opportunities for advisors to demonstrate our value and grow our businesses because money goes in motion when life goes into transition.

We also talk about how the real value of a financial advisor should be measured by their ability to impact a client’s return on life and whether they’re living the best life they can with the money they have, rather than the traditional focus on benchmarking and advisor’s return on investments, which as Mitch puts it, Standard and Poor’s is a poor standard for measuring value, how the life-centered planning approach helps to address the common client question of, “What have you done for me lately,” and the platform that Mitch is building aptly called ROL Advisor, to provide coaching and tracking tools that advisors can use with their clients to demonstrate these ongoing values.

And be certain to listen to the end, where Mitch shares his key insight for how new advisors, in particular, can set themselves on a better track to long-term success by doing whatever it takes to, as he puts it, surround themselves with greatness and find opportunities to learn from best advisors they can before starting out on their own.

So whether you’re interested in learning about how “life-centered” planning improves client relationships, the “major motivator” for saving (other than retirement), or the best way to demonstrate the ongoing value of financial planning, then we hope you enjoy this episode of the Financial Advisor Success podcast.

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source https://www.kitces.com/blog/mitch-anthony-value-of-advice-life-centered-planning-transitions/

Celebrating Hispanic Heritage Month

This post can be found en Español here. Celebrating the culture and contributions of those who make up our diverse workforce is an important part of our corporate culture. Every year from September 15 to October 15 our country comes...

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source https://blog.turbotax.intuit.com/announcements/celebrating-hispanic-heritage-month-41661/

Tax Reform 101: 5 Reasons You Should Start Planning for Next Year Now

Even if you didn’t owe money this past tax season it’s more important than ever to plan for next tax season now. The idea of tax planning isn’t anything new, but with so many changes under the new tax reform...

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source https://blog.turbotax.intuit.com/tax-reform/tax-reform-101-5-reasons-you-should-start-planning-for-next-year-now-40971/

Financial Advisor Success Requires Just 50 Great Clients

For many businesses and industries, it’s crucial to do a proper analysis up front to estimate the size of the “target market” – how many total potential customers are there and how much would they spend on your products or services, so the company can figure out if there’s a big enough market opportunity amongst those tens or hundreds of thousands of consumers (or more) to make it worthwhile to launch that new product or service for them.

In the context of a financial advisor, though, the reality is that the sheer intensiveness of the time it takes to serve financial planning clients in an ongoing advice relationship means most advisors will struggle to ever handle more than about 50-100 “real” client relationships on an ongoing basis. And even if the advisor gets highly efficient – e.g., through technology – there’s some evidence to suggest that our brains themselves simply may not be able to keep track of materially more than 100 client relationships (on top of all the other family/friends relationships in our lives).

The good news, though, is that the limitation of “just” 100 clients still leaves ample room for the typical advisor to serve the nearly 30 million mass affluent (or wealthier) households and earn a very successful living. After all, an advisor spending “just” 12 hours per year on each client (which across 100 clients is 1,200 hours/year), and charging $150/hour for their services (whether via an hourly fee, annual or monthly retainer, or AUM fees) can generate $180,000/year of revenue, and the most efficient advisors would be able to take home nearly 80 cents on the dollar (or almost $150,000 of it) after business expenses.

And for advisors who can move “upmarket” and serve even more affluent clientele, the requisite number of clients just drops further – and/or the advisor has even more earning potential. After all, 50 retiree clients paying “just” $5,000 per year (as an annual retainer, or perhaps in AUM fees from their $500,000 retirement rollovers?) gives an advisor a potential of $250,000 of gross revenue and take-home pay of more than $200,000 annually! And the higher the average revenue per client from there, the more the earning potential, even with “just” 50 great clients!

Of course, the caveat is that it can still take a long time to get to that 50-100 clients. Adding 1 client every month would still take 8 years to reach a 100 client capacity; even if the pace of new clients accelerates after the first few years, it may still take 5-6 years to build that client base. And trying to reach 50 more affluent clientele may still take just as long, as there are fewer clients needed, but they may be harder to reach (or it takes longer to establish the credibility to attract and retain them).

On the other hand, the fact that it “only” takes 50 great “A-level” clients for financial advisor success means that advisors have the luxury to pick almost any conceivable niche specialization… because it takes no more than 50 people on the planet, who are willing to pay to have that particular problem solved, to be financially successful as an advisor! And the more those niche clients can afford to pay, further increasing revenue/client, the more the upside income potential of the 50-great-client practice!

So who will you find to be your 50 great clients?

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source https://www.kitces.com/blog/50-great-clients-how-many-clients-does-a-financial-advisor-need/

How to Save Before the Holiday Season is Here

Are you ready for the holidays? We don’t mean “have you bought all your presents.” The question is, have you done your financial planning for the holidays? Huh? That’s not something most people think about, but it is critically important...

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source https://blog.turbotax.intuit.com/tax-planning-2/how-to-save-before-the-holiday-season-is-here-24585/

3 Ways to Save on Staying in Shape This Fall

Just because beach getaways are fading away along with the summer season, that doesn't mean you have to give up on being fit and outside. It's easy to get and stay in shape while saving money if you have your plans ready now.

source https://blog.turbotax.intuit.com/income-and-investments/3-ways-to-save-on-staying-in-shape-this-fall-17903/

Weekend Reading for Financial Planners (Sep 22-23)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the industry buzz that TD Ameritrade is increasing the AUM threshold of its AdvisorDirect referral program to affiliated RIAs from a $500,000 minimum to $750,000 instead, while also more fully aligning its branch representative compensation above the threshold to compensate brokers equally for referring to TDA’s in-house managed accounts or RIAs in AdvisorDirect, as yet another example of how RIA custodians with a retail presence are moving more and more into the mass affluent space themselves while segmenting off only their most affluent customers to affiliated RIAs… a potential boon to “up-market” independent RIAs that can receive such referrals, but a rising competitive threat and channel conflict for the remaining RIAs that are aiming to serve the mass affluent clientele that retail brokerage firms are increasingly trying to serve themselves with their own managed accounts.

From there, we have several insurance-related articles this week, from a look at how the most comprehensive Medigap supplemental Plan F policies will soon be going away (for new enrollees after 2019) but how the cost savings of almost-similar Medigap Plan G may be more appealing anyway, to the major shift of John Hancock to only sell “interactive” life insurance going forward that will give policyowners the opportunity to obtain premium discounts or other incentives to wear fitness tracking devices (e.g., a Fitbit or Apple Watch) and actually demonstrate they’re adopting healthy exercise and lifestyle habits, a look at how popular universal life policies from 30+ years ago are “suddenly” starting to blow up for retirees in their 70s, 80s, and 90s due to the multi-decade decline in interest rates, and an overview of how hybrid long-term care insurance policies are increasingly replacing the use of traditional LTC insurance… but only for the most affluent clients.

We also have a few investment-related articles, including: an overview of the world of cryptocurrencies and blockchain as they relate to financial advisors; a look at whether consumer adoption of ESG investing is really sluggish, or if advisors are just failing to communicate the opportunity to clients to draw in their interest; a fascinating discussion about what really matters most (and what doesn’t) when it comes to generating long-term investment results; and an evaluation of why individual bonds may not really be any better (and could be worse) than just owning bond funds in the face of a potential rising rate environment.

We wrap up with three interesting articles, all around the theme of how hard it is to change someone’s mind (whether it’s about politics, or how they spend their money): the first looks at how getting people to change their minds on major issues requires them to not only understand new facts and information, but also change their “tribe” and personal identity (such that if we have to change our mind at the cost of our social ties, we’ll often choose factually incorrect information over “loneliness”); the second explores how the best way to win a divisive argument is not to try to prevail on facts and persuasiveness alone but to connect your points to the other person’s frame of reference (which, notably, requires having some empathy for them to better understand their situation in the first place); and the last examines a recent study finding that people are much more likely to change their minds and take in new information when it is presented visually as a chart or graphic than just text… ostensibly because it’s a lot easier to simply ignore text, but incredibly difficult to forget a memorable image once it’s seared into our minds?! All of which is again relevant not just in the era of polarized modern politics, but simply getting clients to change their point of view and adopt better money habits, too!

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-sep-22-23-2/

Assessing The Recent Proposals To Reduce RMD Obligations

In recent weeks, there has been a flurry of proposals to potentially modify Required Minimum Distribution (RMD) obligations, from President Trump’s Executive Order, to legislative proposals in both the House and the Senate. In some cases, the proposals would provide some “RMD relief” for those who don’t want or need to take withdrawals during life, although another proposal would actually increase required minimum distributions for beneficiaries after death!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1 PM EST broadcast via Periscope, we examine the arguments for updating the RMD rules, delve into the proposed changes from both President Trump and Congress, discuss why the media hype over “RMD relief” might be much ado about nothing, and why despite the recent discussions of RMD relief that the greater risk is still for a potential RMD crackdown (especially on stretch IRAs) in the coming year or few!

The first proposal to consider is President Trump’s recent Executive Order, which focused mainly on MEPs  (Multiple Employer [Retirement] Plans), but also included a directive to the Treasury Department to update the life expectancy tables used to calculate required minimum distributions. Which is arguably overdue, as the last time the tables were updated was 16 years ago, and recent medical advances have certainly increased life expectancies since then. Which means, at least ostensibly, that there’s an increased risk that RMDs will deplete retirement accounts too quickly.

However, the reality is that life expectancy increases have not been terribly dramatic – no more than about 2 years of joint life expectancy for a 70-something retiree. Which means, on a percentage basis, the first RMD would actually decrease only about 25 basis points – from 3.65% of the account balance to just 3.4% instead – or a whopping $250 of reduced RMDs per year on an account with a $100,000 balance. And of course, the taxes due on that RMD at a moderately affluent 22% tax rate is only $55 of real tax savings. Which itself is just tax deferral (since the taxes on the IRA will still be due someday, RMD or not!).

And unfortunately, the other leading proposal for RMD “relief” isn’t much better. In the House, Congress is currently considering a package of the three pieces of legislation, colloquially know as “Tax Reform 2.0”, which mainly seek to make last year’s Tax Cuts and Jobs Act permanent, but also propose to create a new Universal Savings Account (USA) for tax-free savings (with a $2,500 per year contribution limit but no limitations on how withdrawals must be used), and more importantly for retirees would eliminate RMDs on employer retirement plans with balances under $50,000 (along with repealing the age limit on regular IRA contributions for 70-somethings who are still working to allow them to still contribute while also taking RMDs).

Yet again, while these additional RMD proposals make sense, none of them would make a material difference for most clients of financial advisors, especially when we consider that RMDs on a $50,000 401(k) are relatively small to begin with, and IRA contributions must come from earned income (and not that many 70-somethings are still in the workforce) and still may not be enough to offset RMDs anyway.

Meanwhile, what hasn’t received much attention at all is a far more important proposal buried in the Retirement Enhancement and Savings Act of 2018 (RESA), currently under consideration in the Senate, which would eliminate the stretch IRA for most non-spouse beneficiaries, who would then be subject to the far-harsher 5-year rule instead!

The bottom line, though, is simply to understand that the RMD relief proposals that have been getting the most attention lately won’t likely have any meaningful impact for most clients, while the impact from the one that would make a material difference from a planning and tax perspective would be very negative indeed! Of course, there’s no telling how long Congress will continue to kick the can down the road – proposed legislation can linger for months, or years, or “forever” before ever actually being passed into law – but the point remains that despite the recent buzz for RMD relief, the greater risk for those with sizable retirement accounts is still that RMDs may become more restrictive in the future, not less!

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source https://www.kitces.com/blog/proposal-reduce-rmd-obligation-update-life-expectancy-eliminate-age-limit-50000-threshold/

Spent Too Much Getting Your Dorm Ready? 4 Savings to Help College Students (or Parents)

With a new college school year underway, it’s comforting to know that you could get some help from Uncle Sam in dealing with the blizzard of college-related expenses that are hitting. The IRS provides a number of education tax credits...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/education/spent-too-much-getting-your-dorm-ready-4-savings-to-help-college-students-or-parents-20108/

Advising Clients On Becoming Reimbursed As Family Caregivers Under Medicaid’s “Cash And Counseling” Program

The number of people who, in a relatively short period of time, will require daily long-term care is increasing by the day, and while some have purchased long-term care insurance, the reality is that many more have not, and will instead have to rely on other means of paying for care, including their own personal assets and Medicare, and potentially Medicaid.

For those who have no choice but to turn to Medicaid benefits, oftentimes family members attempt to intervene and provide care themselves instead, which in turn can put a strain on their own personal finances. Fortunately, under certain circumstances, family caregivers may actually be eligible for some level of reimbursement from Medicaid for the time they spend caring for family members!

In this guest post, Rafael Bernard of In Good Company details the rules and planning issues when trying to qualify for “Cash and Counseling,” a Medicaid program that provides for a monthly budget for people on Medicaid whereby they can reimburse family caregivers for providing Activities of Daily Living (ADL) assistance services (albeit with rules that vary state by state).

The essence of the Cash and Counseling program is for an individual who already otherwise qualified for Medicaid to obtain a “waiver” that will allow them to use their Medicaid reimbursement payments to compensate a family member or friends for care. Unfortunately, securing the proper waivers is no easy feat, and even then, some states limit the total number of waiver enrollments, which could mean that the Medicaid recipient gets put on a waiting list. In addition, many states will not permit spouses to be reimbursed for ADL services, only other members (leading to the rise of a phenomenon known as “Medicaid divorce”). Additionally, to qualify, family members themselves first need to get training and then be approved by the state as a Personal Care Attendant (PCA).

To help protect themselves from Medicaid later re-labeling Cash and Counseling payments as inappropriate gifts, it’s advisable for the Medicaid recipient and family caregiver to meet with an Elder Law attorney to draw up a formal caregiver contract, and to meet with a financial management service company (FMC) to help with calculating payroll taxes and with tracking hours worked to respect the formalities of the program.

Ultimately, family members who decide to become caregivers will still face challenges of their own, especially since the Cash and Counseling reimbursements to family PCAs are not intended to be a “good” wage, but simply to help partially ameliorate (and buffer the financial opportunity cost of) what is otherwise an even more damaging family cost of taking time off to provide care during one’s peak earnings years. Nonetheless, with Medicaid recipients who receive in-home care from family members reporting a higher quality of life versus a nursing home, and many family members feeling an obligation to help provide care where at all feasible, the Cash and Counseling program may make it at least a little more economically feasible for family members to help their loved ones receive the care they wish to give themselves.

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source https://www.kitces.com/blog/cash-and-counseling-medicaid-reimbursement-for-family-caregivers/

A Tax Guide for Landlords with Holiday Lets

Do you have a holiday cottage, flat or apartment that you rent out to holidaymakers? If so, our handy 'Holiday lettings' guide for landlords could be very useful to you — and it could save you money. It's packed full of useful information and tax tips that will help you to make the most of your holiday property, at the same time as keeping on the right side of the tax man.

The Pros

We've written a section all about the tax breaks that apply to qualifying holiday lets. These include capital allowances for things you pay for when fitting out your holiday property, the tax treatment of expenses, the ability to pay pension contributions on your profits, several types of relief (some of which may affect your exposure to Capital Gains Tax) and small business rate relief.

The Cons

There's also a section in the guide that covers some of the downsides to tax on holiday lettings. These include the need to get your VAT Registration status and charges right (where applicable) and also the tax treatment of any trading losses.

Qualifying Conditions

Lastly, there's a section that outlines the qualifying conditions that apply if you want to treat your property as a holiday let rather than as an ordinary rental property. That's important because different tax rules apply to each category and you could miss out on some excellent tax breaks if you don't get it right. For example, the holiday rental property must be fully furnished and allow for self-catering holidays. Also, the property must be available for a particular number of days per year and be rented out in a particular way. It should not be occupied by the same tenant(s) for more than

source https://www.taxfile.co.uk/2018/09/tax-help-for-holiday-lets/

How to Balance Your Budget During College Savings Month

Student loan debt is a huge burden for many families and students. In fact, the average debt for the class of 2017 is just over $39,400. As parents, we’d like to spare our kids from having too much debt when they graduate...

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source https://blog.turbotax.intuit.com/tax-planning-2/how-to-balance-your-budget-during-college-savings-month-41587/

Scaling An Advisory Firm Beyond Yourself By Systematizing The Soft Skills

Welcome back to the 90th episode of the Financial Advisor Success podcast.

This week’s guest is Julie Murphy. Julie is the founder and chief visionary officer of JMC Wealth Management, a dual-registered advisory firm in Chicago with a team of 7 that serves more than 200 active clients with $200 million of AUM, on top of generating nearly $300,000 a year in recurring financial planning fees. What’s unique about Julie, though, is her focus on what she calls “financial healing,” with financial planning conversations that are heavily focused around the intersections of money and our emotions and our energy flow to the point that Julie is not only traditional strategic alliances with attorneys and CPAs, but also has what she calls more esoteric strategic alliances with psychologists and meditation specialists as well.

In this episode, we talk about how Julie has structured her unique advisory firm practice with a combination of quarterly retainer fees that clients pay for ongoing financial planning, separate implementation revenue that clients pay to have their portfolios managed as well, Julie’s three-meeting planning process and how she charges for each, and the software tools that Julie uses to implement her process.

We also talk about how she’s been able to generate a steady flow of new clients. How Julie authored a book to establish and demonstrate her expertise, the way that she separated her writing activities into an outside business activity to manage the compliance concerns, the way she built up 50,000 followers on Facebook and the kinds of posts that she’s found to be most successful, and how Julie was able to accelerate her success and growth by doing what she calls “letting her freak flag fly,” by simply being her authentic self and allowing clients who are interested in what she has to offer to be drawn to her rather than trying to advertise out to them, because in the end, most advisors attract and develop best rapport with clients who are a reflection of themselves anyways.

And be certain to listen to the end, where Julie discusses how she’s systematizing the soft skills of her financial planning process to train new advisors. How she aims to transition all of her clients to other advisors so she can do the part of the process that she enjoys most, which is meeting with and working with the challenges of new clients, and why she decided to write another book not just for marketing purposes, but also because the process of writing about her planning approach is actually helping her to figure out how best to systematize it.

So whether you’re interested in learning about Julie’s “esoteric” strategic alliances, how she is creating a process to systematize the soft skills of financial planning to build a strong bench of like-minded advisors, or how’s she’s managed to gather 50,000 followers on Facebook, then we hope you enjoy this episode of the Financial Advisor Success podcast.

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source https://www.kitces.com/blog/julie-murphy-financial-healing-emotion-behind-money-jmc-wealth-management/

Competition For Talent And The Rising Shortage Of Next-Generation Financial Advisors

With the average age of a financial advisor over 50 and nearly 1/3^rd of all financial advisors projected to retire in the next 10 years, there is a rapidly rising demand for next-generation talent to replace them. And the demand is only further amplified by the ongoing shift of the advisory industry from commission-based compensation to (recurring) AUM fees, which for the first time make it viable for advisory firms to hire a deep bench of Support and Service advisors to retain existing clients without any need to be responsible (or successful) at finding their own new clients.

Unfortunately, though, the past two decades of a rising movement of independent advisors amongst both the independent broker-dealer and independent RIA channels has drastically reduced incentives for firms to develop their own talent. Creating a prospective next-generation talent shortage at the exact moment it’s needed most.

And the rising talent shortage is increasingly evident in the latest industry benchmarking data of the 2018 InvestmentNews Compensation and Staffing study, which shows that advisory firms are being forced to hire Service advisors from outside the industry and poach Lead advisors from competing firms just to fulfill their talent needs, due to the lack of up-and-coming next-generation Support advisors. And the shortfall is especially evident amongst the largest independent advisory firms that are experiencing the fastest growth rates and are overwhelmingly seeking to hire Support and Service advisors to deepen their bench.

Fortunately, though, the model of gaining “professional leverage” by using support professionals to improve the efficiencies (and economics) of partners is well entrenched in most professional services firms, from doctors (that typically have several nurses per doctor), to accounting firms (that have as many as 10 employees per partner), and law firms (which sometimes have as many as 25 employees per partner). Which suggests that, as advisory firms continue to transition to recurring revenue advice models, there is still ample room for further hiring and talent development to occur, especially in a world where 76% of advisory firms still have more Lead advisors and Partners than Support and Service advisors to work with them. Nonetheless, the apparent rise of a talent shortage means that the advisory industry may witness substantial upward pressure on advisor compensation in the coming years until it can attract enough next-generation advisors to fulfill the demand!

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source https://www.kitces.com/blog/competition-for-talent-and-the-rising-shortage-of-next-generation-financial-advisors/

Weekend Reading for Financial Planners (Sep 15-16)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big news that the first independent study on the SEC’s proposed Form CRS disclosures on the relationship differences between working with an advisor or a broker… which finds that not only do consumers fail to understand the differences in obligations between the two as “explained” by Form CRS, but they misinterpret Regulation Best Interest as being comparable to a fiduciary standard when it’s not, and couldn’t even articulate the differences in costs and services between brokerage versus advisory accounts after reading Form CRS in depth.

Also in the news this week was fresh buzz about the potential for “Tax Reform 2.0” legislation, including a push to make all of the “temporary” sunsetting provisions of the Tax Cuts and Jobs Act permanent… with the caveat that the legislation (or what is actually a combination of three different bills in the House) is viewed as likely being dead-on-arrival in the Senate, and that realistically any further momentum on tax reform won’t likely happen until 2019 at best (and then will depend on the outcome of the midterm elections).

From there, we have several more articles about the Tax Cuts and Jobs Act and recent IRS guidance and planning strategies, from a discussion of the new Kiddie Tax rules and how they work for dependent children, to new IRS guidance on some of the 529 college savings plan provisions of TCJA (in particular, that any type of public, private, or religious school counts for the new opportunity for up-to-$10,000/year of tax-free distributions for K-12 expenses), and a look at how a 50-year-old crackdown on Controlled Foreign Corporations (CFCs) may suddenly be experiencing a revival as a proactive tax planning strategy in a world where top individual tax rates are 37% but the top corporate tax rate (including on CFCs) is “just” 21% now.

We also have a few practice management articles, including: how to tell when advisory firm owners may be “starving” their advisory firm’s growth opportunities by taking too much out of the business (hint: if the owners extract more than 40% of revenue in some combination of compensation and profits, it may be getting “over-milked”); how to formalize the structure of a firm-wide compensation plan for employees so they better understand their upside career opportunities; why the biggest blocking point to better advisor technology is no longer the lack of advisor tech innovation but the struggles of individual advisory firms to effectively adopt the software; and why large financial services firms should consider establishing a “Chief Planning Officer” (CPO) role to better shepherd the transition from traditional financial services product sales to an advice-centric planning business.

We wrap up with three interesting articles, all around the theme of working with couples where the wife outearns the husband: the first explores how marital strife and divorce rates appear to be higher amongst the nearly one-third of couples where the wife earns more; the second covers another recent research study finding that when wives earn more, they tend to downplay her income while overstating his income to narrow the perceived gap (even when reporting to government entities like the Census Bureau!); and the last provides some recommendations of what to consider and bear in mind when providing financial advice to and working with couples where she earns more (and the importance of not making any assumptions about their money dynamics based on who happens to be the primary breadwinner).

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-sep-15-16-2/

Are The Accredited Investor Rules Unfairly Limiting Access To Good Investment Opportunities?

In what is ostensibly an effort to increase consumer interest and access to investment opportunities, SEC Commissioner (and Chairman) Clayton has recently floated several ideas to ease the so-called “Accredited Investor” rules and limitations, which have come into sharp relief with a growing number of high-profile private companies like Uber and Airbnb that have chosen for various reasons not to make an Initial Public Offering that would make their stocks available to the average “Main Street” investor. Yet ultimately, it’s not clear whether the Accredited Investor rules really need to be changed, or if consumers (and the media) have distorted the perceived opportunities of private investing by focusing on the few biggest successes, and not the amount of risk and opacity that otherwise lurks in the world of unregistered securities (with ‘disasters’ only rarely occurring as publicly as Theranos did).

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1 PM EST broadcast via Periscope, we discuss the original objective and purpose of the “Accredited Investor” rules, where they might have possibly gone awry, and ways to re-align the Accredited Investor requirements so that they can accomplish their original goals.

At first blush, it’s not difficult to understand the desire to make capital markets even more egalitarian than they already are, by giving “mom-and-pop” the ability to get in on the ground floor with companies with tremendous growth potential like Airbnb and Uber (or Facebook and Twitter from several years ago). But, like every single other investment opportunity, greater potential reward always carries increased risk, and it’s the elevated risk that these Accredited Investor rules were intended to address in the first place.

Accordingly, the SEC’s “Accredited Investor” rule states that, in order to purchase unregistered (and less regulated) securities, an investor must have either $200,000 per year of earned income (or $300,000 with a spouse) for each of the prior two years and the current year, or have a net worth of over $1 million (excluding the value of their primary residence).

These requirements help ensure that investors who tie up their capital in unregistered securities should at least have the financial ability to absorb any losses should the venture go south, and ideally will have the financial sophistication to be able to evaluate whether the investment opportunity is really a good deal in the first place (or not).

However, $1 million in net worth isn’t the same hurdle it one was in 1982 (when the rules were first formed), and in today’s world that nest egg can’t even generate a median household income in retirement! Moreover, these investment opportunities – the vast majority of which will never actually pan out – are often marketed in a way that highlights the “special opportunities available only to the super-wealthy” aspect of the Accredited Investor limitations, while downplaying the fact that they are extremely risky and require extensive due diligence and that the real purpose of requiring “financial sophistication” is because it’s so hard to sniff out what’s actually “BS” in the first place (as even “sophisticated” Theranos investors discovered too late).

Accordingly, perhaps it’s actually time to increase (not lower) the thresholds for Accredited Investors to purchase unregistered securities – to ensure they’re limited to those who really can afford to take the risk and the potential losses – but at the same time, separate out the pretense that having a certain amount of money in the bank or via a paycheck automatically makes the investor “sophisticated” enough to evaluate potentially opaque private investment opportunities, and instead evaluate financial sophistication more directly (e.g., via a questionnaire or by requiring a third-party fiduciary advisor’s involvement).

Of course, the ultimate the problem with many companies building wealth in private markets and shunning public markets and isn’t about “accredited investor” rules at all, it’s about cumbersome regulations that have made going public overly restrictive and unappealing for many businesses in the first place. But to the extent that the Accredited Investor rules may be modified and recalibrated, it’s time to get real about what it really takes to evaluate the risks of private investments, beyond a presumption that how much an investor can afford to lose has any relationship to being “sophisticated” enough to understand the investment risks involved for the potential rewards that may (or may not) be available.

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source https://www.kitces.com/blog/accredited-investor-limits-private-securities-access-sophisticated-investor/

Can I Get a Tax Break for Supporting My Alma Mater’s Football Team?

Last year, if you made a donation to a university that gave you the right to buy tickets to a sporting event, sometimes known as personal seat licenses (PSL), you could deduct 80% of that donation from your taxes. If...

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source https://blog.turbotax.intuit.com/tax-reform/can-i-get-a-tax-break-for-supporting-my-alma-maters-football-team-41531/

Direct Real Estate Investing And Claiming The Section 199A Qualified Business Income (QBI) Deduction

In addition to having unique income-plus-appreciation-potential investment characteristics as an asset class unto itself, one of the primary benefits of directly investing in real estate is its favorable tax treatment, where capital gains are deferred until sold (and potentially further deferred with a 1031 exchange), and ongoing rental income can be at least partially offset by depreciation deductions.

In December of 2017, the Tax Cuts and Jobs Act further extended the benefits of investing in real estate by introducing a new “qualified business income” (QBI) deduction under IRC Section 199A that further reduces net rental real estate income by up to 20%.

The caveat, however, is that recent Treasury Regulations have clarified that not all direct real estate investing will actually qualify for the Section 199A deduction. Instead, investors must be able to demonstrate that they are operating a real estate “business” in order to qualify and show that either they personally, or other employees of the business, are spending a substantial amount of time actually engaged with the real estate (to differentiate a business from a mere real estate “investment” instead).

Furthermore, the QBI deduction for real estate investors may be further limited by the so-called “wage-and-depreciable property” test, which for high-income taxpayers (married couples filing joint returns with taxable income above $315,000, and taxable income above $157,500 for all other filers) typically partially or fully caps the maximum deduction at 2.5% of the original (i.e., “unadjusted”) basis of the property, plus 25% of the wages paid to employees in the business.

Nonetheless, the opportunity to deduct 20% of a real estate business’s net income provides substantial potential tax savings, making direct real estate investing even more appealing. Especially since, for those truly engaged in a real estate business with multiple properties, aggregation rules make it possible to group real estate investments together in a manner that at least eases the challenges of navigating the wage-and-depreciable-property test in the first place!

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source https://www.kitces.com/blog/real-estate-aggregation-section-199a-qbi-deduction-rules/

Self-Employed? Don’t Forget About the Estimated Tax Deadline

The article below is up to date based on the latest tax laws. It is accurate for your 2018 taxes, which you will file by the April 2019 deadline. Learn more about tax reform here. If you’ve taken the plunge into...

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source https://blog.turbotax.intuit.com/self-employed/self-employed-dont-forget-about-the-estimated-tax-deadline-19852/

#FASuccess Ep 089: The Truth About Advisor Marketing And The Scalable Delivery Of Financial Advice with Ric Edelman

Welcome back to the 89th episode of the Financial Advisor Success podcast.

This week’s guest is Ric Edelman. Ric is the founder and executive chairman of Edelman Financial Services, a mega-independent RIA with more than $22 billion of assets under management with 165 advisors serving 36,000 clients across 43 office locations from coast-to-coast. What’s unique about Ric, though, is that he started out like any other financial advisor, selling mutual funds in the 1980s as an individual advisor, doing financial education seminars to local elementary school PTA groups to meet prospective clients and just trying to survive. But in the 30 years since, Ric grew an advisory firm that far outgrew his own capacity to serve clients, ultimately building a marketing machine that brought in a whopping 45,000 prospects to the firm last year alone.

In this episode, we talk in depth about how Ric grew and scaled Edelman Financial over time. How they’ve been able to build a $22 billion firm while staying focused squarely on the mass affluent and not increasing their asset minimums, why Ric is adamant about keeping the firm’s minimums as low as $5,000 for a new client, how the firm successfully justifies a fee schedule that still starts at 2% AUM fee, and why he considers it the firm’s job to bring in new clients and the role of advisors to simply service those clients rather than being burdened with the time and effort of getting their own.

We also talk about how Ric scaled and evolved the marketing of the firm over the years. From starting out conducting seminars to local PTA groups then getting a guest spot on a radio show that ultimately turned into a radio show of his own, which led him to writing a book, followed by eight more, and now is expanding digitally as well, all with the theme of providing free financial education to those who need it, and recognizing that many will simply be helped with the information, but a few will inevitably reach out to the firm to ask for help and become prospects in the process.

And be certain to listen to the end, where Ric talks about how he’d build his marketing differently if he were starting fresh today, why he sees such an opportunity with Edelman Financial’s merger with Financial Engines, and why he believes that most advisors are still grossly underestimating how much the best advice for clients and the advisory business itself will change in the coming decades as medical advances materially increase the typical client’s life expectancy.

So whether you’re interested in learning about how Ric structures advisor compensation to encourage great client service, where advisors add the most value (and why they’re typically unaware of it), or what Ric sees as the biggest changes for the planning profession in the coming years, then we hope that you enjoy this episode of the Financial Advisor Success podcast.

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source https://www.kitces.com/blog/ric-edelman-truth-about-money-edelman-financial-group-scalable-advice/

Step-By-Step Guide To Hiring A Great Client Service Associate

Given how much a good and efficient financial advisor must rely on a team for support, making a good decision on hiring a new client service associate is critical. Unfortunately, though, finding a good – or better yet, great – client service associate can be a real challenge, and getting it wrong with a hiring mistake is inconvenient at best (and disastrous at worst). Which makes finding the right client service associate – either to fill a vacant spot on the team or because you’ve reached capacity and need to expand further – a rather high stakes proposition.

In this guest post, practice management consultant Teresa Riccobuono of Simply Organized shares the most important factors for successfully hiring a great administrative employee, including developing not only an effective job description and also a functional job posting (which is not the same thing and can help save a tremendous amount of time). She also provides tips on how to give detailed instructions for candidates to submit their applications, where the best places are to post the opening, and some pitfalls to avoid in the process.

From there, Teresa gives guidance on what to do once the resumes start pouring in (because there are usually a lot of applicants for administrative positions), how to stay focused on the end-goal even in the initial phase when you may see a lot of resumes from unqualified candidates, and when to be critical (but not too critical!) in reviewing and screening resumes from qualified candidates.

Finally, Teresa walks through an actual interviewing process, from preliminary preparation, to setting up initial phone interviews, conducting face-to-face interviews (including some possible pitfalls and yellow lights to watch out for along the way), and ultimately making your final decision (and how to then let the others on your “short list” know that you’re moving forward with a different candidate).

While hiring may not ever be particularly easy (or enjoyable for advisors who set out to serve clients, not hire and manage people!), and it might turn out to be a better decision to outsource the process to a recruiter, there are strategies you can use if you’re doing the hiring process yourself to become more efficient and effective (and make the process a little less painful). By doing so, you can increase the odds of finding a great candidate, lessen the chances of making a hiring mistake, and get back to what it is you and your team do best… helping your clients!

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source https://www.kitces.com/blog/hiring-registered-client-service-associate-for-financial-advisor-job-postings/

Weekend Reading for Financial Planners (Sep 8-9)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the recent announcement that President Trump has issued an Executive Order for the IRS and Department of Labor to review (and ease) the rules around Multiple Employer [retirement] Plans (MEPs) as a way to expand small business access to employer retirement plans, ideally bringing down costs through greater economies of scale, and at the least giving 401(k)-centric advisors a new way to work with small business owners (by creating and offering their own Open MEP solution?!).

From there, we have several articles about advisor marketing this week, from a look at how it’s not enough to just have a good value proposition for clients if you can’t also explain the process you’ll use to achieve it and provide some “proof” (e.g., sample deliverables) to show your results, to how to engage in a formal “marketing makeover” for your firm (which starts with crafting your own one-page marketing “messaging brief” before you hire anyone to help you implement it, why it’s so important to keep asking “why” (literally, over and over again) to prospects to truly understand their needs, and the reason that advisory firms doing in-person seminar marketing are now turning to Facebook digital advertising as a more cost-effective path to get prospects to attend their seminars in the first place.

We also have a few practice management articles, including: how to think through different types of financial advisor business models based on what’s actually being provided to clients (e.g., investment-only, investments with some planning as needed, planning with some investments as needed, or financial consulting only); why it’s crucial for advisory firm owners to separate out their compensation for the work in the business from their profit distributions for the income from the business; what it takes to successfully take a 6-week sabbatical away from your own advisory firm; and the issues to consider when your multi-advisor partnership actually has to “vote a partner off the island” and remove a partner from the business (without collapsing the business itself in the process!).

We wrap up with three interesting articles, all around the theme of better understanding our own motivations and focus: the first explores fascinating research that finds one of the best ways to help people improve their situation is not for them to receive good advice but actually for them to give to others, which actually cements their own confidence in their knowledge and helps them formulate a specific plan of action (the one they’re recommending to others as well!); the second looks at how in the end, there really are no “natural born salespeople”, just people who have a natural desire to help others and learn the very learnable sales skills and conversations it takes to succeed; and a fascinating look at how the popular wisdom to “find and pursue your passion” is awful advice, because, in reality, passions are more likely to evolve from something we actively do, not be something that already exists that we decide to pursue and do more of (which means it’s better to just start doing something you’re interested in and let the passion develop, rather than trying to intuit your passion in the first place).

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-sep-8-9-2/

My Clients Pay Me Through a Mobile Payment Service- What Does This Mean for My Taxes?

Running a business has changed dramatically in the last few years. For myself, one of the biggest shifts I’ve seen is the rise of mobile payments. When I first started as a freelancer, I remember having to prepare and format...

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source https://blog.turbotax.intuit.com/self-employed/my-clients-pay-me-through-a-mobile-payment-service-what-does-this-mean-for-my-taxes-41585/

Why President Trump’s Executive Order on Multiple Employer Retirement Plans May Not Improve Access to Retirement Plans

Last week, President Trump signed an Executive Order which directed both the IRS and DOL to review certain rules regarding both required minimum distributions and the ways which small business can team up to offer retirement plans to their employees.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope and guest hosted this week by Jeff Levine, we discuss what multiple employer retirement plans are, how President Trumps recent Executive Order might improve retirement plan access for employee’s of small businesses, and why these proposed changes might ultimately have unintended consequences.

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source https://www.kitces.com/blog/mep-multiple-employer-retirement-plan-small-business-access/

Why (Prudent) Spending Rates Matter More Than Savings Rates

The media provides no shortage of articles giving recommendations of how much households should save to afford retirement, from rules of thumb like “save 10% to 15% of your annual income” to more detailed research studies providing “precise” savings guidelines based on age, income level, and targeted retirement income replacement rates. The caveat to all of these tools, though, is that they presume the household has flexible discretionary dollars available to save in the first place.

Yet in reality, most households struggle to save because there is no money left at the end of the month to save in the first place. Because technically their problem isn’t a savings rate that’s too low; it’s a spending rate that’s too high, in one or more categories, that is causing all of the available household income to be consumed before the end of the month is even reached!

And sadly, there is remarkably little guidance available to households about what a prudent spending rate should be in the first place. In some of the largest categories, that tend to be financed with debt – e.g., homes and automobiles – lender guidelines place some restriction on the maximum amount of spending in each of those key categories. With the caveat that lenders don’t lend based on what is prudent for the borrower, but what will result in a permissible level of defaults and losses for the lender. Or stated more simply, borrowing guidelines are based on what the lender believes will extract the maximal amount of interest with an acceptable level of defaults… despite the fact that many of those borrowers will be in over their heads and struggling just to make their repayments!

A somewhat better data set for households to evaluate the prudence of their spending comes from comparing an individual’s spending to the Consumer Expenditure Survey from the Bureau of Labor Statistics, which details what households spend in various categories, segmented by income level (as fixed expenses not surprisingly consume far more of a lower-income household’s budget than those with higher income levels).

Of course, comparing one’s spending by category to average spending rates (by income level) still doesn’t necessarily reveal what is prudent and what a household should spend, especially when recognizing that the national savings rate is already a dismally low 3.2% (which means comparing to CES data in the end simply compares to a national set of households that already are spending “too much” and not saving enough!).

Nonetheless, focusing on spending rates at least puts the focus back on what households can control – what they spend, and what they earn – rather than focusing on or criticizing a savings rate that ultimately is more a result of other decisions than a decision unto itself. And also helps to recognize that for most middle-income households where spending is challenging, it is actually far better to focus on housing and transportation costs than trying to trim vacations, clothing, lattes and avocado toast from the budget.

But the question still remains: what is a prudent spending rate for typical household expenses, and how do you figure out what is or is not an appropriate amount to spend in the first place (that “lives within your means” and leaves an available dollar amount of savings left over)?

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source https://www.kitces.com/blog/spending-rate-matters-more-than-savings-rate-housing-transportation-spending-guidelines/

How to Get Your Financial Resolutions Back on Track

Did you ever try to lose weight this year? Maybe some of you succeeded, but for most of us, what seems like a good idea at the beginning falls off our list of priorities. New Year’s resolutions are much the...

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source https://blog.turbotax.intuit.com/income-and-investments/how-to-get-your-financial-resolutions-back-on-track-41523/

#FASuccess Ep 088: Learning A More Genuine Sales Conversation Approach To Better Turn Prospects Into Clients with Nancy Bleeke

Welcome, everyone. Welcome to the 88th episode of the “Financial Advisor Success” podcast. My guest on today’s podcast is Nancy Bleeke. Nancy is the founder of Sales Pro Insider, a sales training platform for financial advisors that teaches how to better turn prospects into actual clients. What’s unique about Nancy, though, is her somewhat non-traditional sales training approach, which isn’t about pushing features and benefits and going for the hard close, but simply about having a structure to the conversation that occurs in an approach talk with the prospect to ultimately help them make a decision or take an action at the end. Because the reality is, even if you’re in the business to get paid for your advice and not to sell your company’s products, you still have to sell someone on the reason why they should hire you and pay your fee in the first place.

In this episode, we talk in depth about Nancy’s WIIFT structure to the sales conversation, which is both focusing on the “what’s in it for them” of the WIIFT acronym, but also a five-step conversation process of wait and prepare, initiate, investigate, facilitate, then consolidate. The importance of asking more questions to really understand a prospect’s context so that you can refine and right-size the information that you give them, and the dangers of giving prospects more information than they actually need in a manner that can just put them into analysis paralysis instead of helping to motivate them to take an action or make a decision.

We also talk about the actual key questions to ask a prospect throughout the meeting process. From setting an agenda with them in advance of every meeting to ensure you’re really discussing what they want to discuss, asking what it is that brought them to the meeting to begin understanding what their real problems, opportunities, wants, and needs are, asking prospects for feedback about how your services and proposal sound to them as you describe it to them, and being certain at the end of a meeting to actually ask for their business and making it crystal clear what the next step would be in order for them to proceed.

And be certain to listen to the end, where Nancy explains why the biggest and most common problem that financial advisors make in trying to get new clients is our tendency to try to convince clients that they need a financial plan in the first place, instead of listening to what they actually want and need and relating the benefits of financial planning to their problems and concerns.

So whether you’re interested in learning about building a more effective framework around your conversations with clients, how to demonstrate your expertise in a way that builds trust, or how to structure meetings to increase conversion rates, then we hope that you enjoy this episode of the Financial Advisor Success podcast.

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source https://www.kitces.com/blog/nancy-bleeke-sales-pro-insider-conversations-that-sell/

The Latest In Financial Advisor #FinTech (September 2018)

Welcome to the September 2018 issue of the Latest News in Financial Advisor #FinTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors and wealth management!

This month’s edition kicks off with the big news from Schwab that, after years of promising that it is working on a next-generation multi-custodial replacement to PortfolioCenter, the new PortfolioConnect solution will only work directly with the Schwab custodial platform… but will be more deeply integrated, and more importantly free to Schwab advisors, in what could become a major inducement to advisory firms to join or consolidate with Schwab given that portfolio accounting software is the most expensive line item in most RIAs’ technology budgets. In the meantime, for those who want to remain multi-custodial, Schwab noted that PortfolioCenter will also be receiving an upgrade this fall, to ostensibly remain as the multi-custodial server-based alternative that independent RIAs can choose to purchase separately.

From there, the latest highlights also include a number of interesting advisor technology announcements, including:

• JPMorgan Chase launches a new “YouInvest” trading platform that will provide 100 trades for free with no account minimums, and indefinite free trades to those in its Private Client group, putting newfound pressure on independent RIA custodians to justify why their advisors should be at a competitive disadvantage.
• RightCapital launches the first dedicated student loan planning module in a financial planning software package
• MoneyGuidePro deepens its integration with WealthAccess as advisors and clients apparently prefer the third-party PFM solution to MGP’s own client portal
• Galileo Processing announces a new debit card structure that can allow clients to spend directly from an investment account that stays fully invested without the need to hold any cash aside in advance

Read the analysis about these announcements in this month’s column, and a discussion of more trends in advisor technology, including Orion adding its own “planning light” tool in partnership with FinMason, UBS deciding to wind down its internally built SmartWealth robo platform and go all-in with its SigFig partnership, FMGSuite acquires Platinum Advisor Strategies to build out its “HubSpot for Advisors” content marketing platform (as ousted former Platinum co-founder Robert Sofia spins up his own HubSpot-for-Advisors competitor SnappyKraken), and the CFP Board demonstrates a novel application for applying blockchain in financial services: a public ledger to verify who is a CFP certificant, replete with an authenticated “digital CFP certificate” that advisors can use on their websites and in their email signatures.

And be certain to read to the end, where we have provided an update to our popular new “Financial Advisor FinTech Solutions Map” as well!

I hope you’re continuing to find this new column on financial advisor technology to be helpful! Please share your comments at the end and let me know what you think!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to TechNews@kitces.com!

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source https://www.kitces.com/blog/the-latest-in-financial-advisor-fintech-september-2018/

Football Season Savings: National Tailgate Day

Football season is finally back! I think we can all agree that nothing goes better with football than food and friends. As fun as tailgating can be, without careful planning and shopping it can get very pricey. Luckily, there are...

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source https://blog.turbotax.intuit.com/income-and-investments/football-season-savings-national-tailgate-day-24003/