Weekend Reading for Financial Planners (Dec 1-2)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a new proposal from the CFP Board to allow CFP certificants with a public disciplinary event (that culminated in a public letter of admonition or one-year suspension of their CFP marks) to potentially scrub their records clean after 5-10 years… raising the question of where the financial planning profession should balance forgiveness and the recognition that people can and do change against the need for consumers to be aware of a potentially problematic history that could indicate a higher risk of recidivism.

From there, we have a number of practice management articles, including a look at when/why an advisory firm should consider hiring a Chief Operating Officer (COO), the questions to ask when interviewing an advisory firm CEO, a fascinating research look from the Harvard Business Review at how real CEOs manage their time, and a good reminder about how if advisory firm owners want their employees to “act more like owners” they need to be given opportunities and pathways to actually become owners (and see that their behavior can be rewarded).

We also have several financial advisor marketing articles this week, from a look at how most advisory firms don’t effectively allocate their marketing budgets, to the best (and worst) kinds of content to buy/use when marketing online, how to handle your social media presence during the holiday season (hint: clients and prospects tend to be on social media sites more during the holidays, so don’t take a holiday from your own social media accounts!), and some helpful tips and considerations when buying holiday gifts for clients (or referral sources, or centers of influence).

We wrap up with three interesting articles, all around the theme of the internet and how we interact with it: the first is a fascinating look at how internet technology is so lowering the costs to deliver goods and services, that startups are now finding ways to leverage the internet to serve the poorest 2 billion people of the world cost-effectively and even profitably (and without requiring them to have smartphones that most of the world’s poor still do not); the second provides a fascinating look at how the first era of the internet was all about decentralized protocols (on which platforms like Yahoo and Google and Facebook were built), how the pendulum has swung to more centralized platforms as those companies built their own proprietary layers on top (potentially limiting innovation), and how decentralized networks like blockchain may bring about a third (more open and more innovative) era of the internet; and the last explores how our behavioral biases not only adversely impact our investing behavior, but can cause us to misperceive the current state of the world, especially in a social media environment where platforms have an incentive to hold our attention (even if it means stoking our biases instead of helping us to overcome them), and how in the process we may be missing out on how incredibly positive world progress has actually been in recent decades!

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-dec-1-2-2/

What Does My New Health Insurance Mean for My Taxes?

In an effort to keep health insurance premiums more affordable, switching policies has become practically an annual event. This is true with many employer-sponsored plans, but you might even make a switch with an individual plan. Chances are, you began...

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source https://blog.turbotax.intuit.com/health-care/what-does-my-new-health-insurance-mean-for-my-taxes-41991/

How Do I Tell My Client’s CPA Or Attorney That They’re Wrong?

One of the most interesting aspects of being a financial advisor is the ability to gain insight into all sorts of different areas of clients’ lives. Far from the domains of “just” insurance and/or investments in the early stages of the industry, today, a true advisor helps define goals and aspirations, identify challenges, take advantage of opportunities, and optimize the accumulation and distribution of assets.

In fact, a favorite industry analogy is that a financial advisor acts as a sort of “quarterback” for their clients, giving impartial and helpful advice and acting as a trusted intermediary for a wide variety of relationships and interactions. And in order to provide the best advice and service to clients, advisors often gain, at the minimum, a working knowledge of a number of areas that fall outside the realm of traditional finance, including tax and legal issues.

Unfortunately, however, that disciplinary overlap has the potential to create interprofessional conflict, particularly when a client’s accountant or attorney might not be giving them the best advice possible, or worse, is simply wrong. Which in turn, raises the question: How do you, as a financial advisor, tell your client that their CPA or attorney is wrong?

In this week’s #OfficeHours with @MichaelKitces, my weekly broadcast via Periscope and guest hosted this week by Jeff Levine, we discuss potential pitfalls when addressing the issue of a client getting incorrect advice from another professional, specific steps to take in such a situation, and ways to ensure a positive outcome for everyone involved.

Because, even though you’re not trying to make anyone look bad, there are all sorts of problems that might arise if you don’t handle the situation properly, including: running into compliance issues by providing “legal or tax advice”; offending the accountant or attorney, because, after all, they’re the licensed experts in their respective field, not you; and, upsetting your client, since they might feel you’re calling into question the trust they’ve placed in their CPA or lawyer.

The question then is: How do you handle such a situation? Often it’s best to follow a three-step process, where the first step is to reach out to the professional in private and, while deferring to their expertise, indicate that there may be a misunderstanding or some miscommunication regarding the issue at hand. Next, refer to an outside source, preferably a thought leader, or notable expert in their field (i.e. a well-known attorney if you’re talking to an attorney, or a well-known CPA if you’re reaching out to a CPA – people tend to respond better from “advice” from their own profession) as the catalyst reaching out, and finally (and this is key), asking them for their thoughts, because (again) it’s important to defer to their expertise.

Because, ultimately, doing what’s best for the client sometimes require Solomonic tact, and ensuring that everyone involved saves face is the easiest way to do that. And, as an added bonus, you then might even have an opportunity to develop a new relationship with a center of influence after helping them navigate a potentially problematic situation.

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source https://www.kitces.com/blog/communicate-with-client-when-cpa-attorney-wrong/

I’m Donating to Charity This Winter, Will I Still Get a Deduction?

Giving Tuesday officially kicks off the season of giving. If you plan to donate to a charity before year-end, you may be wondering how the new tax law affects your tax deduction for charitable donations. Here’s the scoop! Charitable donations...

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source https://blog.turbotax.intuit.com/tax-reform/im-donating-to-charity-this-winter-will-i-still-get-a-deduction-42146/

TurboTax Live Offers CPAs to Answer Your Tax Questions and File Your Taxes

As this year comes to an end, it’s time to prepare for new resolutions, big life events, and yes…even a new tax season! When you get ready to file you may be wondering about how your taxes are going to...

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source https://blog.turbotax.intuit.com/turbotax-news/turbotax-live-offers-cpas-to-answer-your-tax-questions-and-file-your-taxes-42163/

End-Of-Year Contribution And Distribution Planning For Tax-Favored Accounts

Of the many ways that financial advisors try to provide demonstrable value-added services for their clients, one of the most effective is making the most efficient use possible of tax-advantaged savings accounts, for the hard-dollar tax savings it can create. And while it often takes consistent planning through the year to make the most of those accounts, the end of the year provides the opportunity to make a number of last-minute changes, not only in order optimize contributions and distributions, but potentially to avoid any unnecessary and preventable costs as well.

For those with the means to do so, the first, most obvious first step is to make sure that they’ve contributed as much as they can to any available qualified retirement plans through their employer(s), and even consider establishing (or changing) a separate employer retirement plan for any side businesses that the individual may own in order to take advantage of the (non-coordinated) employer limits for defined contribution plans, which in 2018, stands at up to $55,000 per non-related business (plus catch-up contributions!).

Meanwhile, those 70 1/2 or over have the opportunity to manage their tax exposure by making (up to) $100,000 in Qualified Charitable Contributions (QCDs) from pre-tax funds in their IRA, which counts towards their Required Minimum Distribution obligations as well (thus allowing them to minimize both their taxable income and their Adjusted Gross Income). Especially since QCDs have become even more valuable following the passage of the Tax Cuts and Jobs Act… as with the steep increase in the standard deduction, most taxpayers won’t itemize deductions in the future, and therefore taking RMDs and then donating to charities won’t provide any offsetting deduction on their tax return in the future (but donating from an IRA via a QCD is still a perfect pre-tax donation!).

Continuing in that same post-Tax-Cuts-and-Jobs-Act-landscape vein, year-end Roth conversions are now even more valuable from a planning perspective. Because, even though the overwhelming majority of taxpayers will have lower tax bills in 2018 than in 2017, the most impactful cuts for individuals are scheduled to expire in 2025, which means that they have a relatively limited window in which they can make Roth conversions at a lower rate than would otherwise be possible in the future. Yet going forward, taxpayers may increasingly need to wait until the end of the year to decide exactly how much to convert, as TCJA also eliminated Roth recharacterizations (making the Roth conversion itself a one-time irrevocable decision).

And, although much of the focus at the end of the year is on optimizing savings, advisors should also pay attention to any tax-favored funds individuals may have in a healthcare flexible savings account (FSA) that should be spent before the end of the year, given their inherent “use-it-or-lose-it” provision. And while some employers may give employees the option to carry over up to $500 on a year-to-year basis, or utilize a 2 1/2 month grace period the following year, the fact is that money inside an FSA needs to be spent… preferably in a way that doesn’t involve negative outcomes for the individual’s well-being.

Other planning options advisors have at their disposal for end-of-year tax planning include rolling over employer retirement plans to an IRA in anticipation of purchasing Qualified Longevity Annuity Contracts in 2019, and (when appropriate) utilizing Achieving a Better Life Experience (“ABLE” or 529A) accounts, which are accounts that allow for tax-deferred growth and distribution of funds used for ongoing disability expenses for those who were disabled prior to age 26.

But, ultimately, the key point is to recognize that year-end planning around tax-advantaged accounts is just another way that advisors can provide great service for their clients… with real tangible hard-dollar savings. And while some of these planning issues may be relatively straightforward, the fact is that optimizing the use of tax-advantaged accounts often requires a nuanced look and properly navigating what are sometimes complex rules and provisions.

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source https://www.kitces.com/blog/end-of-year-contribution-distribution-deadline-requirements-ira-401k-fsa-qcd-529a-able/

How to Tackle Holiday Debt Before It Begins

As the air turns crisp and the leaves change color, you realize that the holidays are right around the corner. If you’re planning to celebrate this year, here are some ways to have a great time this holiday season without...

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source https://blog.turbotax.intuit.com/income-and-investments/how-to-tackle-holiday-debt-before-it-begins-32426/

#FASuccess Ep 100: Scaling A Financial Life Management Firm By Starting With Client Intentions Instead Of Goals with Joe Duran

Joe Duran. Joe is the founder and CEO of United Capital, a national independent RIA that oversees nearly $25 billion of assets under management. It’s one of the largest independent wealth management firms in the country.

What’s unique about Joe, though, is that he doesn’t view his own advisory firm as being in the wealth management business but instead in the financial life management or FinLife business instead, where, as Joe puts it, the primary focus is to help clients live richly, not die richly.

In this episode, we talk in depth about United Capital’s financial life management offering, why the firm starts by talking to clients not about their goals but about their values and their intentions instead. The unique tools that United Capital developed specifically to facilitate the values and priorities conversations with clients, and especially couples.

How United Capital standardized the value-add of their financial planning process even while allowing their advisors to choose from multiple financial planning software platforms. And why Joe believes it’s not wise to force every client to go through a comprehensive financial plan up front even for firms that are otherwise very financial-planning-centric.

We also talked about the evolution of United Capital itself, why the secret to scaling an advisory business is moving beyond what Joe calls a cult of personality business centered around the founder/owner to a cult of company business, where both clients and talented employees want to work for the company itself. How United Capital began to charge standalone financial planning fees to reflect their financial planning value, but ultimately shifted back to charging AUM fees instead.

And why asking two simple questions, “Will this help us serve more people?” and, “How would we beat United Capital if we were making a competitor to ourselves?” has guided United Capital’s evolution from being an RIA aggregator to a single advisory firm with a unified client experience to increasingly becoming an advisor technology platform company instead.

And be certain to listen to the end as Joe shares the advice he wishes he could go back and tell his younger self. That in the end, you have to keep focusing on the process of serving clients and not the results. Because you can’t control the results, only your inputs. Even a steady focus on the right inputs has allowed United Capital to grow an advisory firm with more than $200 million of revenue in under 15 years. And so with that introduction, I hope you enjoyed this episode of the “Financial Advisor Success” podcast with Joe Duran.

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source https://www.kitces.com/blog/joe-duran-united-capital-financial-life-management-finlife-technology-platform/

Nerd’s Eye View 2018 Reader Survey – Your Input Is Requested!

Every year, we make new reinvestments back into Kitces.com and the Nerd’s Eye View blog to make it an ever-more-valuable resource for the financial advisor community, and especially all of you, our readers. Which we do first and foremost by asking you, every year, what you want to make this website even better for you!

Over the years, your reader feedback has shaped everything, from the visual design of the blog (from its original dense small font!) the comment system we use, to the expansion of our Members section to offer CFP and IMCA/IWI CE credits, and now CPE credits for accountants as well for Nerd’s Eye View blog posts, the launch of the Financial Advisor Success podcast, and more, allowing us to be recognized in 2017 by Erdos & Morgan as the #1 digital media brand amongst financial advisors for influence, objectivity, credibility, and outright usefulness to an advisor’s daily work!

But I know there’s still more we can do. Which is why, every year, we conduct a feedback survey for all of you who read this blog, to get your thoughts and feedback about everything we currently offer, your perspective on some new ideas we’re considering, and take in whatever other input you’re willing to share (good or bad!) about what we could do to make this a more valuable site (and a better user experience) for you.

So regardless of what kind of reader you are: an advisor, an individual consumer who reads this blog for your own benefit, a related professional that works with financial advisors, or you’re associated with a vendor who serves advisors… I hope you’ll participate in this year’s survey. It’s only 12 questions, should take no more than a few minutes, and will remain open until the end of next week.

Thanks in advance for taking a few minutes to click through on the “Read More” link below to access our reader survey, and share your feedback! 🙂

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source https://www.kitces.com/blog/nerds-eye-view-2018-reader-survey-your-input-is-requested/

Self Employed – Small Business Saturday and Giving Back

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. As we enter the season of...

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source https://blog.turbotax.intuit.com/self-employed/self-employed-small-business-saturday-and-giving-back-32612/

Weekend Reading for Financial Planners (Nov 24-25)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the latest round of public hearings in New Jersey regarding its coming 2019 proposal to issue a state-level fiduciary rule, as fiduciary advocates suggest that it may be necessary given the SEC’s non-fiduciary “Regulation Best Interest” proposal, while the product distribution industry objects on the grounds that it will create an untenable regulatory burden between state and existing Federal regulations.

Also in the news this week was an indication from Congresswoman Maxine Waters, who will soon take over the powerful House Financial Services Committee (which oversees the SEC itself) as the Democrats take control of the House, and has already proposed changing the existing “Capital Markets, Securities, and Investment” subcommittee to instead become the “Investor Protection, Entrepreneurship, and Capital Markets” subcommittee with a particular focus on fiduciary and annuity issues (setting up for a new conflict over the SEC’s proposed Regulation Best Interest rule in 2019?). And industry commentator Bob Veres shares his (very concerning) first take on the new OneFPA Network initiative, raising the question of whether FPA National’s growth problem is really a result of “dysfunctional” chapters or because National hasn’t figured out how to manage its own business model woes in the face of declining revenues from Journal advertisers and conference sponsors.

From there, we have a number of articles on advisor marketing and referrals, including: how to actually handle the conversation with a prospect you’ve been referred to in order to ensure they actually set a meeting to learn more about your services; how introverts can succeed in business development by creating and sticking to a clear and consistent process; how to stop using “filler words” (like Um, Uh, and Like) to sound more professional; why some advisors adopt a “by referrals only” growth strategy, the potential problems with doing so, and how to do it successfully (for those who really want to); and why it’s important to remember that even prospects who don’t turn into clients still might in the future (so be certain to be cordially helpful to all prospects you interact with!).

We wrap up with three interesting articles, all around the theme of personal change and improvement: the first looks at how despite a historical view that human traits are fixed (i.e., you’re either “born with it,” or you’re not), in reality the plasticity of our brains means we can and do learn new skills and abilities and can even change our personalities (which means it’s less about having the right traits or not, and more about how to cultivate them in yourself); the second is an interesting look at how adopting a more “analogy” processes around managing your tasks for the day can actually help you be more mindful (and ultimately more productive); and the last provides a powerful reminder that, while our brains can rewire themselves to break old habits and build new ones, it still requires a concerted and willful effort to do so… although the good news is that, because our brains can be re-wired into new habits, the change you’re trying to accomplish does eventually get easier to maintain!

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-nov-24-25-2/

10 Commonly Overlooked Tax Deductions

April brings showers, flowers…and taxes! Although we are not near the tax deadline, now is a good time to start thinking about tax deductible expenses so you can start gathering receipts for expenses you paid so you can make an...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/10-commonly-overlooked-tax-deductions-19501/

End-Of-Year Medicare Planning Opportunities During The Open Enrollment Period

The final weeks of the year are some of the busiest for financial advisors as they help their clients not only plan for the upcoming year but wrap up their planning for the current year before it ends. Often, that work is often heavily geared towards end-of-year tax planning strategies, such as partial Roth conversions, tax loss (or gains) harvesting, and now deduction bunching under the Tax Cuts and Jobs Act. But the end of the year also offers advisors the opportunity to help clients over 65 potentially save money (or preserve access to key doctors) during the Medicare Open Enrollment Period, which runs each year from October 15 through December 7, by making changes to their coverage (which then take effect on January 1) that generally can’t happen during the other 44 weeks of the year.

The first key adjustment opportunity – and important annual review process – is to assess whether any changes need to be made to a Medicare enrollee’s Part D prescription drug plan, as provider do change formularies (the list of available favorably-priced drugs) from year to year, and failure to monitor the situation can lead to a spike in medical costs if key drugs are suddenly no longer covered.

For those who are over age 65 and don’t have a Part D prescription drug plan, the next option during the annual Open Enrollment Period is to add one. The caveat, however, is that, for individuals that did not sign up for Part D during their initial enrollment period (which is a six-month window spanning the three months prior to and after their 65th birthday) they will almost certainly have to pay an ongoing “late enrollment penalty” in addition to their regular premiums, unless they have “creditable coverage” from another prescription drug plan in retirement. Though for those who already face a late enrollment penalty, waiting further will just further increase the penalty from here!

In some cases, though, the key Medicare change opportunity is not just to switch Part D prescription drug plans, but to change the entire Medicare plan itself – from original Medicare to a Medicare Advantage (Part C) plan, or vice versa. Medicare Advantage plans are offered through various private insurance companies (rather than through the Federal Government) and are often lower cost than traditional Medicare (with often an even wider range of benefits, including not only Part B and Part D coverage but sometimes even dental and vision coverage as well). However, Medicare Advantage plans encourage (or really, require) individuals to utilize providers with whom the carriers have negotiated concessions and discounts (i.e., in the Advantage plan’s “network”)… which means it’s necessary to monitor the plans each year to ensure that the desired doctors are available, or otherwise switch plans to another that includes the desired doctors. And those who relocate may wish to switch altogether into (or out from) a Medicare Advantage plan, as the quality of network (and therefore popularity of the plans) varies tremendously from one geographic region to another.

Ultimately, though, the key point is simply to recognize that, while the last couple of months of the year are especially hectic, there are several opportunities for planners to add real value for their clients. And for older clients, it goes beyond just end-of-year tax planning, but also helping them perform an annual “check-up” on their Medicare coverage, which can end up saving them not only time and money, but can ensure that they continue to see the doctors they want to see (and take the prescription drugs they want/need to take) in the first place!

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source https://www.kitces.com/blog/2018-medicare-open-enrollment-period-oep-annual-election-planning-for-2019/

How to Tackle Holiday Debt Before It Begins

As the air turns crisp and the leaves change color, you realize that the holidays are right around the corner. If you’re planning to celebrate this year, here are some ways to have a great time this holiday season without...

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source https://blog.turbotax.intuit.com/income-and-investments/how-to-tackle-holiday-debt-before-it-begins-32426/

Are Black Friday and Cyber Monday Deals Really Worth it?

With Thanksgiving approaching this week, you might be thinking about a strategy for your Black Friday and Cyber Monday shopping and ending up with a few questions. Are the deals really worth it? How can I make sure I’m getting the...

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source https://blog.turbotax.intuit.com/income-and-investments/are-black-friday-and-cyber-monday-deals-really-worth-it-18369/

#FASuccess Ep 099: Finding Better Alignment Of Values And Belief Systems By Focusing On A Religious Niche with Rob West

Welcome back to the 99th episode of the Financial Advisor Success podcast.

This week’s guest is Rob West. Rob is the president of Kingdom Advisors, a membership organization that supports financial advisors who want to serve Christians as their niche market segment. What’s unique about Kingdom Advisors, though, is that they’ve formed not only a community of 2,600 financial advisors from all the different industry channels all serving the niche segment of Christian clients, but they’ve also developed a training program and supporting CKA designation, short for Certified Kingdom Advisor, to be, as they put it, the gold standard for delivering biblically wise financial advice.

In this episode, we talk about what it really means to serve Christians as a niche segment. How you can even have a niche in a target market that’s technically 67% of all Americans, according to the Pew Research Religious Landscape Study, the way that Kingdom Advisors integrates their faith and nearly 23,000 passages from the Bible about money and possessions into their financial planning conversations with clients, and why despite the traditional view that politics and religion should be forbidden subjects to discuss with clients, that the advisors with the CKA designation have actually been able to find success specifically because holding out as a Christian financial advisor helps to connect with clients who share similar values and belief systems.

We also talk about the evolution and growth of Kingdom Advisors itself as the industry has transitioned from its generalist roots to be increasingly focused on niches and specialization. How Kingdom Advisors as an organization focuses on four core pillars of advocacy for Christian financial advisors, that includes a radio show to more than 1,500 Christian radio stations to attract Christian consumers to advisors with the CKA designation, training with both the CKA designation itself and monthly virtual educational programs, community with more than 200 study groups and a 1,500-attendee annual conference, in an effort to become the recognized organization of distinction when it comes to biblically wise financial planning.

And be certain to listen to the end, where Rob reconciles the biblical concepts of stewardship and the industry’s current debates about the fiduciary duty, and why in the long run Kingdom’s focus is really simply on helping advisors discover how their work can be aligned with their own purpose and significance.

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source https://www.kitces.com/blog/rob-west-certified-kingdom-advisor-christians-cka-designation-biblically-wise-financial-advice/

I Started Investing This Year, What Do I Need to Know Come Tax Time?

When I first started investing in the stock market, I wasn’t quite sure what I was doing. I wasn’t sure if my purchases would lose value the moment I bought them or if they would grow into exponential figures. I was also...

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source https://blog.turbotax.intuit.com/income-and-investments/401k-ira-stocks/i-started-investing-this-year-what-do-i-need-to-know-come-tax-time-41918/

Revenue Productivity Ratios: The 3 Most Important Numbers To Manage In An Advisory Firm

As advisory firms grow, it’s crucial to both measure and manage the productivity of the firm. At the individual level, productivity is typically measured by evaluating the amount of time it takes to complete various key tasks. At the firm level, it’s measured through key “revenue ratios” that become Key Performance Indicators (KPIs) for the entire business.

The first key revenue ratio that all advisory firms should measure is revenue per client – literally, by dividing the total revenue of the firm by the number of clients. The significance of revenue/client is that it is the most straightforward way to understand an advisory firm’s “typical” clientele, to immediately identify clients that may unprofitable (i.e., significantly below-average revenue/client), and to determine which clients are so far above the firm’s average that it may be worthwhile to segment them and then provide additional services to them. In addition, given that the typical solo advisor only ever has the capacity for 50-100 clients in total, understanding the advisor’s revenue/client provides an indication of his/her maximum earning potential as well (at least until/unless lower-revenue clients are replaced by higher-revenue ones!).

As advisory firms grow, and become multi-advisor, so too does the next revenue ratio for productivity shift, from revenue/client (for an individual advisor’s clients), to revenue per advisor themselves. By measuring revenue/advisor, it’s quickly possible to see which advisors in the firm are more efficiently servicing their clients (and the associated revenue), by literally handling more revenue per advisor. On the other hand, extreme deviations in revenue/advisor can also provide an indicator of not just efficiency and productivity, but significant over- or under-servicing of clients as well.

And for the largest advisory firms, the key measure of productivity becomes revenue per employee, the most straightforward way to quantify, in the aggregate, how much staff it takes across the enterprise to service each segment of the firm’s clients and revenue.

In turn, advisory firms that measure these three Key Performance Indicators of advisor productivity can then evaluate how they compare to other firms at a similar size, using industry benchmarking studies. Which actually show that when measured on these key productivity measures, advisory firms may not actually benefit much at all from growing larger and gaining economies of scale, as larger firms tend to attract more affluent clients (with higher revenue/client) that demand additional services which in turn fully offset any size-based efficiencies!

The bottom line, though, is simply to understand that as advisory firms grow as businesses, it is feasible to benchmark the productivity of the firm in the aggregate… and then take the necessary steps to manage it accordingly!

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source https://www.kitces.com/blog/revenue-per-employee-client-advisor-productivity-kpi-metrics/

The Four M’s Of Finding “Limitless” Success As A Solo Advisor

The traditional view of business is that the best way to grow a better business is to implement better business methods, often gleaned from industry benchmarking studies that try to identify the “best practices” being used by leading firms. Yet while it certainly is important to implement effective business tactics, the reality is that especially in solo advisory firms, the business itself is often a reflection of the owner and his/her mindset. When the owner has a good day, the business has a good day. When the owner has a bad day, the business has a bad day. And any mindset limitations of the owner become mindset limitations of the business.

In this guest post, practice management consultant and coach Stephanie Bogan explores how the foundation of an advisor’s mindset ultimately defines his/her practice, and how changing your business methods isn’t nearly as powerful as changing your own mindset to improve the current state and health of the business, especially for those who want to pursue a highly leveraged “lifestyle” practice for themselves.

To break through to the next level, Bogan advocates focusing on what she calls the “Four M’s” of Mindset, then Mapping (towards real goals of the advisor), then Methods (which can’t change the direction of your business, but can multiply the results once you know where it’s heading), and finally building Momentum to accelerate progress in the direction that has been mapped out (and not succumbing to distractions of other ideas or business opportunities that don’t actually help achieve that focused goal).

The bottom line, though, is simply to understand that often the greatest challenge in achieving a more efficient “lifestyle” practice as a solo financial advisor, earning more dollars while spending less time in the business, isn’t about finding the “right” technology or the key best practice, but changing your mindset to shed the limiting beliefs that you “can’t” achieve the success you want in the first place!

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source https://www.kitces.com/blog/limitless-adviser-bogan-four-m-mapping-mindset-methods-momentum-solo-advisor/

Weekend Reading for Financial Planners (Nov 17-18)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the fascinating news that #4 independent broker-dealer Commonwealth Financial is launching a standalone RIA services division, not just to service its sizable base of dual-registered advisors but a growing segment who have dropped their FINRA licenses altogether… but want to stay with the broker-dealer anyway for their non-broker-dealer RIA support services instead, as the brokerage industry increasingly reinvents itself for a more RIA-fiduciary-centric future!

Also in the news this week is the news that Interactive Brokers is scaling up its RIA services division (at least for RIAs that are still primarily in the business of actively managing client portfolios and want ultra-low trading costs), and the announcement that Edelman Financial Engines is launching a new RIA custody relationship with Trust Company of America now that the latter is part of E-Trade… to get access to a soon-to-be-launched (and likely-to-be-lucrative) E-Trade Advisor Network as E-Trade mimics the successful advisor networks of Schwab, Fidelity, and TD Ameritrade (at least, for the susbet of advisors who can participate).

From there, we have a number of investment-related articles this week, including a look at how advisory firms are choosing their investments these days (hint: it’s all about fees, performance, and brand trust), a Morningstar highlight of Vanguard’s TIPS fund as CPI slowly but steadily starts to rise, and a look at how the growing number of firms beginning to automatically convert their C-shares to A-shares after 7-10 years may itself accelerate firms to transition to the advisory model to maintain their revenue (for which the end of the year is a good time to take a fresh look at the advisor’s own book of clients still holding C-shares). Also in the discussion of investments this week is a look at the “good” that Wall Street does accomplish, how to handle the situation when a couple don’t align on their risk tolerance, and why webinars can be a particularly effective method to reach (lots of) clients in times of market volatility.

We wrap up with three interesting articles, all around the theme of pricing model innovation amongst financial advisors: the first highlights a new Simon-Kucher study on advisory firm pricing models that finds it’s not actually so difficult to serve Millennials profitably… it just requires not using the AUM model and shifting to a more direct fee-for-service model instead; the second looks at some of the caveats of shifting to a flat-fee model, and how to build in ‘stabilizers’ to ensure that the advisor/client relationship doesn’t get too out of whack; and the last is a fascinating exploring of the “Good-Better-Best” approach to pricing models, where businesses offer three tiers and empower consumers choose which they want for themselves.

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-nov-17-18-2/

Christmas & New Year Opening Times at Taxfile

Please take a look at the calendar above and note our opening times over Christmas and New Year. As you can see, we’re closed on several days over the festive period. This is particularly important for those who need to come to see us for help with time-sensitive accounting and tax-related services in the run-up […]

source https://www.taxfile.co.uk/2018/11/christmas-new-year-opening-times/

I’m Projected to Owe Taxes Next Year – What Should I Do Now?

As 2018 wraps up, many are starting to think about their plans for next year and how to prepare for the new tax season. Given the passing of tax reform last year, you may be wondering how your taxes are...

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source https://blog.turbotax.intuit.com/tax-planning-2/im-projected-to-owe-taxes-next-year-what-should-i-do-now-41979/

3 Reasons Why The Financial Advisor Market Size Isn’t Actually Shrinking

With Cerulli Associates estimating that nearly 50% of all financial advisors are over the age of 55, the headcount of financial advisors is projected to shrink, potentially quite substantially, in the coming decade. Which can trigger more industry consolidation (mergers and acquisitions) and succession planning (as existing clients of advisors leaving the industry will need go somewhere else for advice), but also risks further slowing the amount of technology development and new businesses entering the marketplace to serve financial advisors (as many investors don’t want to fund businesses in a shrinking marketplace! Yet as it turns out, looking at the total number of “financial advisors” may actually be the wrong way to measure the trajectory of the financial advisor marketplace to begin with… and when viewed properly, the opportunities for serving (real) financial advisors is actually on the rise!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1 PM EST broadcast via Periscope, we discuss why it’s so difficult to estimate the number of existing financial advisors in the first place, why many of the predictions regarding the trajectory of the financial advisor headcount aren’t taking into account some key drivers, and why, ultimately, looking to the number of CFP certificants may offer the best perspective on the opportunities within the industry… and whether the number of people offering (real) financial advice is decreasing or actually increasing.

Cerulli Associates, who delivers some of the best industry research out there, estimates that there are just over 300,000 financial advisors – a surprisingly difficult number to estimate given the overlap of advisors across RIA, broker-dealer, and insurance channels. The caveat, though, is that fewer than half of them even state that they actually give financial planning advice… suggesting that the majority are “financial advisors” in name only but are still predominantly focused on the sale of insurance and investment products. This isn’t entirely surprising, though, given that there are only about 82,000 CFP certificants (and not all of those are practicing or, if they are, offering “real” financial planning)!

Nonetheless, the industry projection is that the advisor headcount “must” inevitably decline, given how many of the 300,000 financial advisors are over age 55. Yet the reality is that financial planning isn’t a career that you retire from simply because you’re eligible for Social Security and Medicare. Retirement as a concept was introduced during the industrial age when most people worked with their hands, and after a certain age, people weren’t able to meet the physical demands of their jobs anymore. However, providing financial advice is an intellectual, not manual, endeavor. And when you consider the fact that highly experienced financial planners on average make over $400k after 30 years of experience and that, by the time they reach 65, they’re not really working at the same pace that they did in their 30s, it just doesn’t make sense that a lot of folks would simply walk away from that sort of job until they had no other choice!

The other reason that the declining headcount may be overstated is that it’s based on the assumption that the industry won’t be able to attract enough new financial advisors. On the one hand, it’s easy to understand why Millennials are reluctant to join an industry that’s still seen as primarily sales-driven, but the projections don’t take into account the number of industry entrants who are career-changers. Because, the financial industry isn’t alone in dealing with the effects of automation, and the earnings potential as an advisor makes it an appealing option for those who are mid-career and looking for new opportunities… especially for attorneys and accountants, who are already in roles that oftentimes overlap with financial services, and are facing even more pressure from technology (e.g., TurboTax and LegalZoom) against their more-transactionally-oriented services.

Of course, some have suggested that it doesn’t matter how many financial advisors are coming into the industry or not because they just won’t be needed in the age of “robos” and automation. Yet the rise of technology and automation doesn’t always play out as expected. The introduction of ATMs in the 1970s resulted in an unexpected increase in the number of human bank tellers, rather than the decline that was predicted at the time, because the technology made banking so much more efficient it expanded the reach of advisors and increased human job opportunities (on top of all the ATMs!). Similarly, automation in the financial services industry has the potential not to make human advisors obsolete, but rather could spur potentially exponential growth in financial planning by allowing advisors to efficiently serve larger segments of the population… recognizing that the true number of households being served with real financial planning is at best only about 15% of all the households in the US. Simply put, there’s a huge opportunity out there to leverage technology and hire more human financial advisors serve the other 85% of the households that aren’t being served today. Not to mention that as technology puts more pressure on advisors to justify their fees in the first place, more and more advisors are starting to offer comprehensive financial planning, which is why (despite the lack of growth overall in the financial advisor headcount) a record number of people have been sitting for the CFP exam for the first time in recent years.

Ultimately, the key point is to recognize that overall industry trends about the “shrinking” headcount of financial advisors may be misunderstood. Despite projections that the industry will shrink in the coming years, there are plenty of good reasons to be optimistic about opportunities for financial advisors. The retirement wave will take much longer to materialize than first thought, and instead of being a threat to financial advisor jobs, technological efficiencies will help the industry expand into underserved markets and will end up increasing the demand for financial advice in the long run. Which helps to explain why the number of financial advisors is up over the past 5 years, despite the anticipated wave of retirees and the rise of the robo-advisor movement!

In the meantime, for those who really want to get a handle on the opportunities in the financial advice industry and the advisor marketplace, perhaps it’s time to stop looking at the number of people called “financial advisors” who are simply registered to legally sell insurance and investment products, and look to the number actually being trained to give and get paid for financial planning advice (through programs like CFP certification)… which shows that the market for financial advisors has never been bigger and stronger than it is today!

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source https://www.kitces.com/blog/financial-advisor-headcount-total-addressable-market-tam-technology-hiring-growth/

SEC Cybersecurity Requirements for Registered Investment Advisors (RIAs)

Over the past few years, several high-profile data breaches have hit major US corporations, including Target, Home Depot, and Equifax, bringing into sharp focus the need for individuals and businesses to protect and defend their personal data. And the matter is especially important for financial advisors, both given the importance of financially-related personal data in particular and the fact that the SEC and FINRA have been increasingly aggressive in enforcing against RIAs and broker-dealers with lax cybersecurity. And in fact, the SEC itself suffered their own data breach in 2016, despite numerous warnings from the GAO about potential security lapses.

Yet while keeping client data secure is an integral part of an RIA’s compliance requirements, there’s little explicit guidance from any regulatory body as to what, exactly, advisory firms are realistically expected to and need to do in order to meet those requirements.

Fortunately, there are steps that RIAs can take to develop, implement, and maintain a cybersecurity program that meets SEC requirements. In this guest post, Patrick Cleary, Chief Operations Officer at Alpha Architect, uses the concept of “brilliance in the basics,” a core tenet in the Marine Corps, to explain how paying attention to basic (but important) details, being proactive, defining the specific reasons why cybersecurity is so crucial, and (most importantly) avoiding complacency at all costs, is at the core of any successful cybersecurity program for an advisory firm.

And while historically financial advisors have had to choose between either outsourcing the task of building out a cybersecurity program, or trying to decipher a mountain of regulatory material that’s heavy on concept but extremely light on actionable information, Patrick details the specific steps that any advisor can take to develop a cybersecurity program. Starting with the National Institute of Standards and Technology’s (NIST) comprehensive Cybersecurity Framework, Patrick provides explicit step-by-step guidance that advisors can take to understand what it is that they should really be managing in the first place, how to develop proper safeguards for client data, how to identify a breach when it does occur, and what actions to take during and after any cybersecurity events.

While there are no silver bullets, or one-size-fits-all approach or solution, the key point is to recognize that, by using the NIST framework and Patrick’s actionable guide, advisors can put themselves in a much better position to protect their clients’ data as well as the viability of your business. So whether you are looking for a framework to develop a cybersecurity program, want to stay up to date with a constantly evolving and important aspect of practice management, or want to better familiarize yourself with the subject before talking to a third-party provider, then we hope you find this comprehensive article from Patrick to be helpful!

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source https://www.kitces.com/blog/sec-cybersecurity-requirements-for-registered-investment-advisors-rias/

TurboTax Live Tax Experts Available For Free Tax Reform Consultations

With tax season right around the corner, we know that you may be wondering about the best way to prepare your 2018 taxes now. Whether you have a specific tax reform question, need advice, or just want to chat, our...

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source https://blog.turbotax.intuit.com/turbotax-news/turbotax-live-tax-experts-available-for-free-tax-reform-consultations-42071/

#FASuccess Ep 098: Deepening Client Relationships With A Political Niche To Find Shared Beliefs with Zach Teutsch

Welcome back to the 98th episode of the Financial Advisor Success podcast.

This week’s guest is Zach Teutsch. Zach is the founder of Values Added Financial, an independent RIA in the D.C. area that has quickly grown to more than $300,000 in recurring retainer fees since launching under 18 months ago. What’s unique about Zach, though, is that, in a world where we as financial advisors are typically trained to never talk about religion or politics with clients, Zach has specifically formed a niche in working with progressive Democrats, which undoubtedly drives some prospects away, but has also quickly accelerated the growth process for his firm in reaching the primary clients he wanted to work with anyway.

In this episode, we talk in depth about how picking a niche, even based on politics, can actually be quite effective, precisely because it helps to deepen the relationship with clients by having a shared set of beliefs. The kinds of clientele that Zach has been able to attract by focusing on a political niche, the way he’s created a sliding scale retainer pricing model specifically to fit his target clientele, and how he’s now developing his investment process specifically to combine impact and ESG investing, tax-loss harvesting, and an additional layer of charitable giving that his clients are uniquely engaged in.

We also talk about the rest of Zach’s financial planning process with clients, which isn’t just about working with progressives, but also simply the fact that most of his clients are high-income professionals in their 30s and 40s. The way he’s developed a list of what he calls financial planning interventions that he uses to demonstrate why his average financial planning retainer fee of $10,000 a year is still so worthwhile to his clients, how Zach has developed a unique exercise of helping clients prioritize with a deck of custom cards with financial planning needs and goals written on them, the kinds of career-related advice that he often talks about with his clients, and the way that Zach handles budgeting conversations with his younger clientele.

And be certain to listen to the end, where Zach talks about how he balances out his own needs to generate income from his practice while giving back to his community with pro bono services, and how the way that he’s chosen to structure his firm has, in his own words, gotten him to the point where he no longer feels like he has to choose between work that feels good and being financially successful.

And so with that introduction, I hope you enjoy this episode of the “Financial Advisor Success” podcast with Zach Teutsch.

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source https://www.kitces.com/blog/zach-teutsch-values-added-financial-planning-for-progressives-niche/

Autumn Newsletter 2018

Those of you who are not on our mailing list may be unaware of our latest newsletter. So, we thought we’d post a little about it here, along with a link where you can download an Acrobat PDF version, which you can read at your leisure. Keep on Top of your Taxes The Autumn 2018 […]

source https://www.taxfile.co.uk/2018/11/autumn-newsletter-2018/

The Defining Personality Traits Of (Successful) Financial Planners

The conventional view in the financial services industry is that financial advisors must be extraverted to be successful so that they can find and develop a steady stream of new clients to work with. Prospective advisors who weren’t highly extraverted were often cautioned away – or outright avoided in the hiring process – and over time, an increasingly high volume of extraverts came to dominate the field.

Yet in our recent research study on the Financial Planning Process, a detailed look at the personality traits of 1,000+ financial advisors – using the “Big Five” framework of extraversion, conscientiousness, openness, agreeableness, and neuroticism – finds that in reality, extraversion is not the biggest predictor of success and staying power amongst financial advisors! Instead, while the majority of financial advisors are extraverted (and more so than the general population) the biggest traits that defined the longest-standing and highest-income financial advisors were being highly conscientious and very agreeable (but not necessarily extraverted!)!

In addition, the results of our research suggest that one of the biggest “deal-breaker” traits for success as a financial advisor is that they must have very low neuroticism (i.e., especially high emotional calm). In other words, not only do financial advisors often describe one of their key value propositions as helping clients to stay the course in times of difficulty and market volatility, but the most successful financial planners appear to be uniquely suited to do so with an unusually high level of emotional calm and low neuroticism as one of their natural personality traits!

Of course, the reality is that statistics describing a large swath of the population are still not necessarily definitive of the success or failure of any one individual. Yet nonetheless, it turns out there really is a “typical” profile of a financial planner, who is far more than just being extraverted… successful financial planners are also extremely conscientious, highly agreeable, and especially good at remaining calm during emotional times. Which suggests that perhaps it’s time to take a fresh look at how we identify and hire financial planners into the industry in the first place?

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source https://feeds.feedblitz.com/~/579768138/0/kitcesnerdseyeview~The-Defining-Personality-Traits-Of-Successful-Financial-Planners/

Observe Veterans Day with 7 Savings and Tax Deductions Available for Military Families

Veterans Day is a day of celebration and remembrance for all of the Veterans who served our country and those military members still serving our country. In honor of our military members and their families, we would like to share...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/observe-veterans-day-with-7-savings-and-tax-deductions-available-for-military-families-20592/

Weekend Reading for Financial Planners (Nov 10-11)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the huge news that the FPA will be reorganizing its entire chapter structure, effectively disbanding its independent chapters and consolidating them into a single centralized “OneFPA Network” to leverage shared resources (from technology to accounting) and create better alignment from National to its chapters… though in a world where many FPA members were already citing that their local chapter presence was the primary reason they joined and stayed, it’s not entirely clear whether FPA’s planned change really addresses the organization’s root challenges to remedy its waning membership and share of CFP certificants in the first place.

Also in the news this week is the latest news about wirehouse grid coming changes for 2019 that are taking a striking focus on both investing into their advisors (with higher payouts for earning CFP certification) and also more of a tech focus (with grid bonuses to advisors who get their clients to increase their digital engagement as well), and a preview of the SEC’s coming changes to its advertising rules next spring that many hope will provide better clarify (and simply more reasonable regulation) when it comes to social media and digital advertising.

From there, we have a number of investment articles this week, from an interesting recent study by Fama and French showing that, even over a decade-long period of time, there’s a material chance that value, small-cap, or even stocks overall fail to outperform (and that therefore even the past decade’s underperformance of value could easily be just statistical noise), a review from Morningstar of the best 529 college savings plans (all of which are direct-sold, although the Utah my529 plan now has an advisor-supported option), and a good reminder of when and how to get more proactive in communicating with clients about rising market volatility (and when, perhaps, you shouldn’t, as it may be more likely to alarm clients than reassure them!).

We also have a few articles about industry changes around the broker-dealer community, including suggestions on what brokers should consider when they get the news that their broker-dealer is being sold (or even if they just fear it might happen soon), how shifts in wirehouse culture over the past 10-20 years have undermined their retention efforts, and how last year’s decision of Morgan Stanley and UBS to leave the Broker Protocol may ultimately be looked back upon as a major milestone in the industry… the point at which wirehouses in the aggregate recognized that their culture had become so watered down that they decided it was better to cut back on recruiting amongst one another altogether than risk continuing to lose brokers in the aggregate to the independent channels!

We wrap up with three interesting articles, all around the theme of the office spaces in which we work: the first is a look at how “natural light” has become one of the #1 perks in office space; the second explores how office space designers are looking at a possible future where there are no more desks and chairs in office spaces at all, shifting instead to a range of sofas of “softer” working spaces more conducive to personal interaction; and the last looking at the latest research on standing desks and finding that there may be more health benefits to them than recent critics have been suggesting after all!

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-nov-10-11-2/

Broker-Dealers Can’t Compete Until They Treat Advice As A Value-Add Not A Liability

Notwithstanding their commission-based roots as a product distribution intermediary, this year’s Financial Planning magazine survey of the top 50 independent broker-dealers showed that in the past year they generated more revenue from fees than from commissions. Yet even as broker-dealers transition from their commission-based roots to the fee-based model and provide more and more advice, the challenge remains that when historically broker-dealers went out of their way to not provide advice (to avoid the RIA registration requirements and advice liability that may result), too many broker-dealers still treat the growing volume of advice from their advisors as a liability to control and minimize, rather than a value-add to enhance… which will make it increasingly difficult for them to compete, even as they transition to the fee-based model.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1 PM EST broadcast via Periscope, we explore the roots of why broker-dealers historically have tried to prevent their representatives from providing advice, the ways that broker-dealers have tried to limit the scope of their representatives giving advice (from centralized planning departments to tech-delivered financial plans), and why the future of broker-dealers managing the liability exposure of providing advice is not about limiting the ability of their representatives to give advice but rather about investing in the training and education of their advisors to ensure they have the knowledge to give the right in the first place!

The trend of broker-dealers towards fee-based advice has been incredibly strong over the past decade, as the top-50 independent broker-dealers have risen from having fee-based revenue that is just 1/3rd of commissions, to surpassing it in the past year. And the trend appears to only be accelerating, due to both the simple realization that recurring AUM fees is just a much more stable and sustainable (and higher-valuation) business model, and the emerging trend of both US-based and global fiduciary regulation that threatens to curtail commission-based compensation and its conflicts of interest anyway.

The caveat, however, is that too many broker-dealers still don’t treat advice itself as a valuable service to amplify, but instead manage it as a liability exposure to be minimize. In order to mitigate that risk, some broker-dealers have created centralized planning departments, which often aren’t just about leveraging advisor efficiency, but instead are built to produce standardized “financial plans in a box” with formulaic advice that the “advisor” then (just like a pre-packaged product that they’d sell) “presents” to the client customer (removing the actual advisor from the advice equation!). And more are now looking to adopt technology that can further “standardize” the advice their advisors provide, eliminating the ability of the advisors to actually create more value-add with client-specific advice!

Which means broker-dealers risk unwittingly amplifying the breakaway broker trend to RIAs, even as they adopt their own fee-based models, not because their advisors want to transition to fee-based advice, but simply because their advisors want the freedom to actually give advice, customized to their individual clients. Especially as competition increasingly pressures advisors to move towards niches and specializations beyond mere “cookie-cutter” comprehensive financial plans.

Ultimately, though, the key point is simply to recognize that for firms that actually want to build value in an advice-centric future, advice should be treated as a value-add, rather than a liability. Which means the path to minimizing liability exposure is not to limit the ability of advisors to give advice, but to invest into their training and education with CFP certification and advanced post-CFP designations to ensure that they give the right advice in the first place, and form specializations (from student loan planning to retirement distribution planning) that further enhances their domain expertise and thereby reduces the risk of giving the “wrong” advice that creates liability for the firm!

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source https://www.kitces.com/blog/broker-dealers-cant-compete-until-they-treat-advice-as-a-value-add-not-a-liability/

Coordinating Contributions Across Multiple Defined Contribution Plans

For most workers, employer retirement plan limits are what they are, with a salary deferral cap of $18,500 (in 2018), and the opportunity for employers to add even more on top in the form of matching, profit-sharing, and similar contributions (up to an aggregate limit of $55,000 in 2018). The general rule typically boils down to “save as much as you can, and be certain to capture any matching contributions at a minimum”.

However, for a subset of workers, there is a possibility of being covered by two (or more) different defined contribution plans at the same time. Either for those who have an employee job with two different businesses (each of which provides a 401(k) or similar defined contribution plan). Or because they have a “side hustle” in the gig economy that allows them to create their own “employer” retirement plan as a self-employed individual. Which raises the question of how to coordinate between the two (or more) plans.

The first limitation on employer retirement plan contributions, under IRC Section 402(g), is the salary deferral limit of $18,500/year, plus a catch-up contribution of up to $5,500. This limit applies once per taxpayers across any/all plans they’re involved with (except for 457(b) plans, which are counted separately, and IRAs, which have their own standalone contribution limits).

The second limitation is known as the 415(c) overall limit, which is the (currently $55,000, plus any catch-up contributions) cap on the aggregate total of all contributions that go into the plan (including both salary deferral contributions by the employee, after-tax employee contributions, and any/all contributions from employers, from profit-sharing to matching contributions). However, unlike the 402(g) limit which applies once across all plans, the 415(c) overall limit applies separately for each plan.

The caveat to the overall limit, though, is that if the employers are “related” to each other (either as a parent-subsidiary or brother-sister controlled group, some combination thereof, or an affiliated service group), the overall limit (along with other employer retirement plan testing rules and requirements) is applied once across all plans as well.

Which means that while individuals who work two employee jobs at independent companies can receive contributions from each, and employees who have their own side hustle can still create their own self-employed retirement plan with its own overall limit, entrepreneurs who own multiple businesses must be cautious not to run afoul of the controlled group requirements that would require them to aggregate all their businesses together and not “double-dip” by trying to reach the overall limit across multiple retirement plans from each separate-but-not-really-separate business!

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source https://www.kitces.com/blog/coordinating-contributions-multiple-employer-sponsored-defined-contribution-plans-401k-defined-benefit/

Skip the Gift-Buying Splurge! Here’s How to Save this Holiday Season

Can you believe it? We only have one month left and then we’re wrapping up this year! My husband and I sat down to look over our plans. Besides having my mom come up for a few days, we’re also...

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source https://blog.turbotax.intuit.com/uncategorized/skip-the-gift-buying-splurge-heres-how-to-save-this-holiday-season-41964/

Qué Gastos Médicos son Deducibles de Impuestos?

Incluso con un buen seguro y un pequeño monto deducible, nadie realmente disfruta de pagar facturas médicas. Lo positivo de tener facturas grandes es que te dan la oportunidad de reclamar tus gastos médicos como una deducción de impuestos en...

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source https://blog.turbotax.intuit.com/uncategorized/que-gastos-medicos-son-deducibles-de-impuestos-41934/

¡No te pierdas el próximo lanzamiento del Blog Bilingüe de TurboTax!

¡Somos bilingües! Así es, en enero del 2019, relanzaremos nuestro blog de TurboTax como un centro de información completamente bilingüe. Podrás obtener consejos sobre impuestos, utilizar nuestras herramientas y recibir las últimas noticias en tu idioma preferido, ya sea inglés...

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source https://blog.turbotax.intuit.com/uncategorized/no-te-pierdas-el-proximo-lanzamiento-del-blog-bilingue-de-turbotax-42040/

Does Tax Reform Impact How I Claim Standard vs. Itemized Deductions?

On December 22, 2017 the biggest piece of tax legislation in about three decades was passed.  One of the biggest changes to the new law nearly doubles the standard deduction and eliminates or limits a number of common itemized deductions...

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source https://blog.turbotax.intuit.com/uncategorized/does-tax-reform-impact-how-i-claim-standard-vs-itemized-deductions-41902/

#FASuccess Ep 097: Transitioning From Financial Coach to Financial Planner Serving Underserved Communities With Phuong Luong

Welcome back to the 97th episode of the Financial Advisor Success podcast.

This week’s guest is Phuong Luong. Phuong is the founder of Just Wealth, an independent RIA specifically focused on working with younger clients in their 20s, 30s, and 40s who are still in the wealth building phase of their careers, and with whom Phuong meets entirely virtually using video conferencing tools, even though most of her clients are actually in the Boston area where she’s located as well. What’s unique about Phuong, though, is not just her virtual practice, but that she comes from a background of doing financial coaching and counseling, and as a result, more than half her practice is working with clients who are below the median household income in Massachusetts, about $75,000 a year, for whom she charges an ongoing monthly retainer fee of 1.5% of their monthly income.

In this episode, we talk in depth about what it’s like doing financial planning for lower and middle-income families. Why they really are willing to pay for financial planning advice despite being of limited means, how the focus typically is not actually on budgeting and household cash flow planning, but on building up their balance sheet instead, and why until those clients build up their personal balance sheet, it’s necessary to understand the community balance sheet of local programs and resources to help.

We also talk about the progression from financial education to financial coaching to financial counseling to financial planning. The differences in each of those terms, not just in regards to the income or affluence of the clients being served, but the mindset of the educator or coach or counselor or advisor working with the client, and the appeal for someone with a financial coaching background like Phuong to come into the financial planning world in the first place.

And be certain to listen to the end, where Phuong talks about the challenging ways that stereotypes about race and low-income individuals can become blocking points to giving them effective advice. How many of the financial challenges of working with people of color in her community can be traced back to institutional and government policies from decades ago that still have lasting effects in the compounding of income and wealth inequality, which in turn may be both limiting the reach of financial planning to minority communities, and our ability as a profession to attract people of color to become financial planners in the first place.

So whether you’re interested in learning about actions you can take to help improve diversity in the financial planning profession, Phuong’s unique career journey that brought her to financial planning or how she’s built a successful business helping underserved communities, then we how you enjoy this episode of the Financial Advisor Success podcast.

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source https://www.kitces.com/blog/phuong-luong-just-wealth-financial-coaching-counseling-diversity-systematic-inequality/

Cómo Se Paga Impuestos a las Ganancias de Juego?

La mayoría de las personas no piensa en impuestos cuando va al hipódromo o al casino, pero lo que parecería simplemente una oportunidad de ganar algo de dinero extra, en realidad, tiene importantes consecuencias tributarias. Como suele ocurrir, los Gobiernos...

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source https://blog.turbotax.intuit.com/uncategorized/como-se-paga-impuestos-a-las-ganancias-de-juego-41936/

TurboTax Bilingual Blog Launch Scheduled for January 2019

We are bilingual!  That’s right – in January 2019, we will be relaunching our TurboTax blog as a completely bilingual hub. You will be able to get relevant tax tips, tools and the latest news in your language of choice,...

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source https://blog.turbotax.intuit.com/announcements/turbotax-bilingual-blog-launch-scheduled-for-january-2019-41940/

10 Consejos de Fin-De-Año Para Aumentar Tu Reembolso de Impuestos

El artículo a continuación está actualizado según las más recientes leyes sobre impuestos. Es preciso para los impuestos de 2018, que presentarás antes de que finalice el plazo en abril de 2019. Obtén más información acerca de la reforma fiscal aquí....

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source https://blog.turbotax.intuit.com/uncategorized/10-consejos-de-fin-de-ano-para-aumentar-tu-reembolso-de-impuestos-41938/

An Overview of 2018 Tax Reform Changes [Infographic]

On December 22, 2017 the new tax reform law was passed, which will affect the taxes of most taxpayers beginning with their 2018 (the ones filed in 2019). If you’re wondering how you’re affected, don’t worry, we have your back...

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source https://blog.turbotax.intuit.com/tax-reform/overview-of-2018-tax-reform-changes-infographic-41908/

The Latest In Financial Advisor #FinTech (November 2018)

Welcome to the November 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 that Fidelity has rolled out a new open architecture marketplace aptly called Integration XChange, in what is both a major shift for the RIA custodian towards a more open architecture, a substantial potential threat to TD Ameritrade’s marketplace differentiator, a huge new opportunity for FinTech upstarts to have a second go-to-market channel for RIAs besides Veo, and a creative way to feed Fidelity’s new Consolidated Data initiative.

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

• Riskalyze rolls out a new “GPA” scoring system to evaluate how efficiently a prospect’s (or advisor’s) portfolio allocation maximizes its return potential for a given level of risk tolerance.
• eMoney Advisor launches a new Foundational Planning module that takes a bizarre step into MoneyGuidePro’s past, just as FiServ launches a new Financial Advice Management module that also bear eerie similarities to the MGP interface
• Edmond Walters re-emerges after a 3-year hiatus with digital marketing platform AdvisorStream to potentially continue what he started with eMoney’s Advisor Branded Marketing
• AdvicePay announces new integrations with both TD Ameritrade’s Veo, and Orion, to more easily facilitate fee-for-service billing of financial planning and retainer fees alongside an advisor’s AUM fees

Read the analysis about these announcements in this month’s column, and a discussion of more trends in advisor technology, including Vestmark’s acquisition of Adhesion and the rollout of Orion Enterprise, YCharts’ new Model Portfolio tracking and analysis tools, Redtail’s new AI system for advisors and what it might someday do, Hearsay’s CRM overlay system to make it easier for advisors to manage tasks and workflows directly from their smartphone, SigFig’s new CoPilot solution to replace more back- and middle-office functions for human advisors, and the rollout of CapGainValet’s 2018 estimates of end-of-year mutual fund distributions for advisors.

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-november-2018/

Daylight Savings Time is Ending: Save Money with These Energy Tax Tips

As the days draw shorter and Daylight Savings Time draws to an end, we're reminded that the end of the year is almost here. You've probably already turned on the heat for the first time this winter and it's time to start thinking about energy bills. There are a number of energy-saving ways to improve your home’s tax efficiency. Here are two of the tax breaks available for 2016.

source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/home/daylight-savings-time-is-ending-save-money-with-these-energy-tax-tips-15573/

Weekend Reading for Financial Planners (Nov 3-4)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the announcement that Schwab is launching a new “Center of Excellence” that is intended to push forward internal innovation, including ways to better support “smaller” advisors with $25M to $100M of AUM that still form the bulk (70%+) of advisor assets but tend to get the least support due to their small individual size, in what may signal a broader shift of RIA custodians to put more resources to “downmarket” advisors in addition to competing for the small subset of the largest firms.

From there, we have a number of articles looking at broad industry trends, from an interesting look at the 50-year anniversary of a number of major independent broker-dealers (who all formed in 1968 as insurance company subsidiaries after a major court case and regulatory ruling required them to do so to continue offering early-stage variable annuities), to a discussion about the rising trend of private equity firms investing into broker-dealers, why perhaps it’s time to shift our current industry disclosure approach to providing more standardized data that third-party sites can better package for consumers (instead of regulators trying to design the ‘optimal’ disclosure), a discussion of how direct-to-consumer “Insurtech” providers are trying to disrupt life insurance companies the way online discount brokers disrupted the traditional stockbroker, and an interesting “call to action” to RIA custodians about what they need to improve to better support younger/newer advisory firms.

From there, we have a number of tax planning articles as well, including: pending guidance from the IRS that will affirm that meals do remain deductible even though entertainment expenses aren’t deductible anymore (even if the meal itself is tied to an entertainment event); how the Tax Cuts and Jobs Act is shifting the focus of estate planning away from estate taxes and towards income tax planning and asset protection instead; and what to watch out for if clients want to do a “temporary loan” to themselves using the IRA 60-day rollover rules.

We wrap up with three interesting articles, all around the theme of connecting better with others: the first delves into the research about how we actually form close friendships, and what it takes to speed the process of finding and establishing close friends; the second offers up some useful tips on how to better write persuasive emails that connect (and are less likely to be misunderstood); and the last explores the research on what it takes to be perceived as more charming, which as it turns out has little to do with being perceived as more competent and instead is driven almost entirely by being perceived as more “warm”, which means trying to be more welcoming to the other person who may be equally nervous about being perceived as charming themselves!

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-nov-3-4-2/

10 Easy End of Year Tax Tips to Increase Your Tax Refund

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. It’s hard to believe that we...

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source https://blog.turbotax.intuit.com/tax-planning-2/10-easy-end-of-year-tax-tips-to-increase-your-tax-refund-20523/

The TurboTax Guide to Marketplace Open Enrollment

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. Marketplace Open Enrollment for 2018 health...

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source https://blog.turbotax.intuit.com/health-care/the-turbotax-guide-to-marketplace-open-enrollment-20386/

(When) Will CFP Certification Ever Become A Licensing Requirement Like The CPA?

Historically, the competency standards to become a “financial advisor” have been very low. After all, technically in order for someone to hold themselves out as offering “comprehensive financial advice” and get paid for it, all they really need to do is pass a 3-hour regulatory exam that takes just a week or few of preparation. In the meantime, though, salespeople who are “only” licensed to sell insurance or investment products and technically can’t be paid for their advice itself can also still publicly call themselves financial advisors as well. Which is why it’s so difficult for consumers to tell which is which, and for comprehensive financial planners themselves to differentiate their services from the army of other “advisors” out there who say they do the same thing… even though they don’t, and can’t actually be paid for it in the first place. That challenge, in turn, has led many to wonder if there’s a path for regulators to enact (and enforce) rules requiring anyone who says they provide comprehensive financial advice to actually be trained and educated to do so, and whether it might make sense to someday require a minimum standard like CFP certification as a licensing requirement to provide financial advice.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we discuss how the CFP marks are not a license to practice now, the differences between the CFP certification and a bona fide license like the CPA, possible avenues to transition the CFP certification from a trademark into an actual license, a few of the many hurdles such a potential transition would encounter… and why it still might be a worthy goal to pursue anyway.

It’s important to understand that, unlike a CPA license – which is granted by a state certifying body and grants accountants legal authority to perform certain tasks (e.g., attesting an audit) that they wouldn’t be able to do otherwise – the CFP certification does not fall under any state or federal regulatory body, and instead is a trademark that the CFP Board allows advisors to use if and only if they agree to honor the Board’s Terms and Conditions (which happen to include following the Four E’s of the CFP education, exam, experience, and ethics requirements). But that also means that financial advisors aren’t required to obtain CFP certification, or any substantive education or experience, in order to hold out as providing (and get paid for) financial advice, and instead need only to pass some very basic licensing exams.

In the past, this wasn’t a big deal, as the industry was focused primarily on selling investment and insurance products in the first place, for which financial planning was an effective sales strategy. However, in a world where products are increasingly accessible through technology itself, the value that advisors must bring to the table has less and less to do with financial products that are sold, and more and more to do with the quality of advice itself. Yet without the proper education, examination, experience, and ethics requirements that could be prescribed (and then overseen) by a regulatory body, financial advisors aren’t being held to the sort of standards common to professionals in other industries where the advice provided often makes such a significant impact on clients’ lives (and where the depth of expertise of the professional makes it difficult for consumers to vet who is “good” or “bad” in advance).

Unfortunately, the pathway towards turning the CFP certification into a required license to provide financial advice is difficult, as it must fall under the purview of either state or Federal regulators, and both have their own unique challenges. State regulation is often easier to implement – at least something – but rarely ends out being uniform, in a world where advisors are increasingly likely to work with clients across state lines. Federal regulation allows for uniformity across all 50 states, but can be difficult to prevail against concentrated industry lobbying forces, and ironically existing regulators themselves may not want to see their existing regulatory purview entrenched upon!

Nonetheless, the transition to higher competency standards for financial advisors might become inevitable, given the accelerating rate of adoption of the CFP certification itself amongst advisors. Because at some point, the CFP marks will become so ubiquitous that it will be “easy” for the industry to demand that anyone getting paid for providing financial advice should be required to have CFP certification to do so… simply because most advisors already will have it at that point (and the majority will then require the rest to conform).

Ultimately, though, the key point is simply to recognize that CFP certification is not a license today, and realistically can’t become one while it’s still only held by a minority (about 30%) of all financial advisors. But ironically, the best path to enshrining a minimum competency standard like CFP certification into licensing regulation may simply be to support its continued and ever-broadening adoption – which appears poised to accelerate further as it becomes a “mainstream” certification – because at the point most advisors have voluntarily adopted the standard anyway, it’s not a big leap to make it official… and set a formal competency standard akin to other recognized and true professions!

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source https://www.kitces.com/blog/when-will-cfp-certification-ever-become-a-licensing-requirement-like-the-cpa/