What Does an IPO Mean for Employee Taxes?

As you’ve probably seen, there’s a wave of tech companies with hotly anticipated Initial Public Offering (IPO) announcements expected this year which could have the effect of creating thousands of millionaires overnight and countless more who’ll see their financial situation...

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source https://blog.turbotax.intuit.com/income-and-investments/401k-ira-stocks/what-does-an-ipo-mean-for-employee-taxes-30159/

Weekend Reading for Financial Planners (Mar 30-31)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big news that Charles Schwab is launching a new financial-planning-for-a-monthly-subscription-fee solution as a new “Premium” version of its Schwab Intelligent Portfolios solution, providing full access to a CFP professional for ongoing financial planning advice, and accelerating consumer awareness of the new and increasingly popular financial advisor business model (particularly for ‘next generation’ clients who are willing to pay for financial advice but don’t have investment accounts large enough to merit a financially viable AUM relationship).

Also in the news this week was an announcement that FINRA is considering whether to modify or even just consolidate its suitability rule once Regulation Best Interest comes out, noting the similarity and overlap between the two… and ironically showing, by FINRA’s willingness to consolidate the suitability rule into Regulation Best Interest, that Reg BI apparently really isn’t a material improvement or change to broker-dealer standards in the first place (or it would be deemed ‘too disruptive’ to the industry to even try to consolidate the standards!).

From there, we have a number of articles around practice management, and specifically how to attract and retain top talent, including one article looking at the rise of “student loan repayment” as a popular new employee benefits to attract young talent, a second highlighting that more flexible paid time off (or flex time in general) is also an increasingly popular perk, best practices in how to structure interviews for prospective hires, and a fascinating look at how digital-media-savvy Ritholtz Wealth Management has been able to leverage its blog and social media presence to attract good advisors to the firm.

There are also several investment-related articles, from a look at the potential recessionary implications of the recent inversion of the yield curve (from the researcher who first pioneered the study showing how inverted yield curves can foreshadow recessions), to a new BlackRock study suggesting that there might not actually be an “illiquidity premium” after all (but that there is a premium for complexity and more challenging due diligence and governance in private markets that also often happen to be illiquid), and a discussion of how structured products are once again making a resurgence, not to the levels they peaked at in 2007, but driven this time around not only by investors who may be nervous about markets and want more downside protection, but also a number of new technology platforms that are trying to make it easier for advisors to shop more efficiently for structure note solutions in the first place.

We wrap up with three interesting articles, all around the theme of how to be more efficient and effective when running meetings: the first looks at some of the scientific research studies on how to run better meetings (along with a study that shows the leader of the meeting is not actually very good at judging the quality of their own meeting!); the second provides some tips about how to carve out or break up meetings that may have gotten “too big” (as invitee-lists tend to expand over time!); and the third provides a series of detailed tips on how to not just make meetings more efficient, but to literally make them more effective, from how the meeting itself is run to be inclusive of all participants, to more carefully considering the invitee-list to the meeting, and simply being especially cognizant of why the meeting is being called, its ultimate purpose, and whether it really needs to happen in the first place (or if another medium, from email to company intranet, would be better to accomplish the same meeting goal).

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-mar-30-31-2/

3 Tools Every Self-Employed Business Owner Should Start With

Congratulations on recently starting your own business! By now making daily decisions that affect the business may seem routine, but we know that with every decision, you’re trying to make the business a success. You may feel like most of...

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source https://blog.turbotax.intuit.com/self-employed/3-tools-every-self-employed-business-owner-should-start-with-43394/

Kitces & Carl Ep 04: Does Social Media Really Matter For Financial Advisors

Despite the recent public scrutiny of various social media platforms, the number of active users on mediums like Twitter, Facebook, LinkedIn, and Instagram continues to grow exponentially, making social media an increasingly attractive channel for financial advisors to not only reach prospective clients and centers of influence, but to nurture relationships with existing clients as well. Yet, it’s also incredibly easy to spend a lot of time (and potentially money) on social media, only to find that your efforts have been for naught, leading many to wonder if social media really matters for financial advisors at all.

In our fourth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss the question of the extent to which financial advisors should or “have to” participate in social media (or not), why it might be a worthwhile endeavor if done correctly, some ideas that advisors can use immediately to get more out of their social media efforts, and why, ultimately, using social media successfully is ultimately about a series of “micro interactions” to better connect with other individuals.

The first question to consider is whether or not it’s absolutely essential for financial advisors to build a social media presence to begin with. As while there are numerous stories of advisors landing multi-million-dollar clients solely through social media, the reality is that the only non-negotiable virtual presence that every advisor must have is a modern, professional-looking website (not a social media account). Because, in a world where consumers are far savvier and more informed than they’ve ever been, the one thing you can count on is that a prospective client will have done their due diligence on you before they decide to book that first meeting, and there’s no better way to throw ice water on a warm prospect than an outdated website… or one that prominently features a sailboat, lighthouse, or long, winding road tapering off towards the horizon, that doesn’t really connect with prospects today.

Beyond that, though, for financial advisors, the task of getting in front of prospective clients has always been primarily a social endeavor, and at its core, social media is an avenue for humans to communicate and interact with each other. Which means that social media can not only augment and amplify how you present yourself to the public, but it can be a particularly effective means of connecting with others… especially if you have yet to crack the code of networking events or other organized social activities. In other words, whether face-to-face or through “the interwebs”, authentic communication is the best pathway for developing relationships, and social media is simply one of many channels to do so.

And when it comes to social media, a side benefit is that even those you’re not interacting with can see how you communicate with others, and can form their own opinions about you and decide whether or not they want to learn more about you and your services. Because one of the most powerful aspects of developing a social media presence is that it allows you to reach a much larger audience than would be possible by concentrating solely on in-person events. Moreover, social media can also open avenues of access to centers of influence and other people in your target market that you might not have access to otherwise.

Ultimately, though, the key point is to recognize that developing a quality social media presence takes time. There are no overnight successes, and you won’t miraculously have a line of people who want to hire you banging on your door because you sent out a tweet or few, but (as is the case when helping clients build their own solid financial foundations) small actions taken repeatedly can still lead to massive changes. Or stated more simply: repeated authentic interactions compound over time, whether in-person or via social media. In other words, regardless of the way in which you make it happen, in the end, communicating authentically with others is the most reliable and effective way for any financial advisor to build a successful practice. Social media just happens to be a particularly efficient channel to do so. At least for some advisors.

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source https://www.kitces.com/blog/kitces-carl-richards-marketing-communication-social-media/

Financial Planning Research Highlights From The 2019 CFP Board Academic Research Colloquium

From February 19th through February 21st, the CFP Board’s Center for Financial Planning hosted their third annual Academic Research Colloquium (ARC) for Financial Planning and Related Disciplines in Arlington, VA. This year’s event saw a 20% increase in attendance, bringing together roughly 230 attendees, of which about 35 were practitioners, to share and discuss research relevant to the financial planning profession, as a part of the CFP Board Center’s longer-term goal of establishing itself as the “academic home” for the financial planning profession.

In this guest post, Derek Tharp – lead researcher at Kitces.com, and an assistant professor of finance at the University of Southern Maine – provides a recap of the 2019 CFP Academic Research Colloquium, and highlights a few particular research studies with relevant takeaways for financial planning practitioners.

The 2019 CFP Academic Research Colloquium again had a strong showing from CFP Board-Registered Ph.D. programs, with scholars from Missouri, Texas Tech, Georgia, and Kansas State producing nearly 32% of all research (when weighted by type of presentation and authorship rank). Additionally, Ohio State, Alabama, and the College for Financial Planning contributed another 13% of total research. Despite the concentration among top programs, the ARC remains an academically diverse event, drawing in scholars from a total of 69 institutions, including Harvard, Wharton, and Stanford.

The colloquium featured a wide breadth of topics. Some particularly relevant themes for financial planning practitioners included a number of studies on financial psychology of both clients and practitioners, including measuring brain activity during financial conversations to determine whether planning or emotional areas of the brain were activated during financial conversations, examining the tools that do (and do not) work for measuring risk-taking behavior, assessing perceptions of success and satisfaction among female advisors, and identifying gaps between perceptions of both financial planning graduates and employers regarding student preparedness for a career in financial planning. In addition, there was research on the impact advisors may have on clients- both good and bad – including differences in financial decision-making among households that use a financial planner versus a transactional advisor, the use of municipal bonds among advisor-assisted investors, and the characteristics of those who report being victims of investment fraud.

Overall, the third Academic Research Colloquium again brought together a strong mix of academics and practitioners to present and discuss financial planning research. However, some considerable challenges and opportunities going forward include continuing to develop Financial Planning Review into a high-impact journal, dealing with (potentially) declining institutional and sponsorship support, and the Center’s general push to continue to establish the ARC as the “academic home” of financial planning. Only time will tell if the Center for Financial Planning will be successful in their pursuit, but the ARC continues to be a conference worthy of attending for both academics and practitioners who wish to engage in academic research.

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source https://www.kitces.com/blog/cfp-board-center-academic-research-colloquium-2019-recap-financial-planning-review-launch/

#FASuccess Ep 117: Forming A Specialized Advice Process To Add Real Value In Serving Small Business Owners. with Josh Patrick

Welcome back to the 11tth episode of Financial Advisor Success Podcast!

Welcome, everyone. Welcome to the 117th episode of the “Financial Advisor Success” podcast. My guest on today’s podcast is Josh Patrick. Josh is the founder of Stage 2 Planning, an independent RIA in Burlington, Vermont that specializes in working with small business owners.

What’s unique about Josh, though, is the way he’s been able to leverage his own personal experiences as a small business owner, before transitioning into financial planning as a second career, to create a deeply specialized advice process for small business owners and command retainer fees in excess of $50,000 a year from his clients.

In this episode, we talk in depth about exactly what Josh does to earn monthly retainer fees of $4,000 to $5,000 per month from small business owners, the 5 core areas that he advises them on, including setting clear values and culture, becoming operationally irrelevant in your business, learning how to really delegate effectively, how to set up effective business systems, and how to divide up the profit of the business into cash flows for lifestyle, emergency funds, business growth, and a retirement plan, and the way he’s made his expertise known through a combination of blogging, podcasting, and public speaking to create a steady flow of small business owners who seek him out and are willing to pay his fees for the value they perceive.

We also talk about how many of these same business management principles map onto the business of being a financial advisor as well, where most financial advisors hit the ceiling themselves by failing to apply Josh’s 5 principles of effective business, Josh’s strategy for advisors to differentiate their firms while not making the firm too reliant on any one key employee or advisor, how advisors can create a guarantee that reduces a prospect’s fear of signing on but without running afoul of regulators, and how most experienced advisors could apply a version of the 80/20 rule to their own practices to make themselves significantly more financially successful while simultaneously lessening the demands of the business on themselves.

And be certain to listen to the end, where Josh talks about the biggest challenge that he sees most financial advisors struggle with, the inability to delegate key tasks in client relationships, and how to overcome it by recognizing that in the end, even if team members make mistakes, there’s still crucial learning opportunities, especially since the truth is that in the end, clients will rarely actually leave over a single mistake anyway, and whether they do or not is primarily a result of how the firm handles the mistake, not the mere fact that it happened in the first place.

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source https://www.kitces.com/blog/josh-patrick-stage-2-planning-partners-small-business-owner-niche/

How Does the New Tax Law Affect My Health Insurance?

Tax Reform made changes to the tax law effective in the 2018 tax year for the majority of taxpayers. A few of the changes include the reduction of five of seven tax brackets, an increase in the standard deduction, and...

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What I Learned Over 10 Years Of Recruiting The Next Generation Of Financial Advisor Talent

As advisory firms grow and accumulate clients, they inevitably reach the point where it’s necessary to either stop growing, or start hiring staff members to expand the capacity of the firm. Initially, the first hire or two is usually administrative support staff, who are responsible for completely relatively well-defined, standardized, and repeatable tasks – key tasks for a financial advisor to delegate, but ones that are relatively straightforward to train on, and even re-train in the event of staff turnover.

However, when it comes to the next stage – hiring associate advisors and paraplanners who may someday take over client relationships (or even the entire firm) – the process of training and even hiring itself is far more difficult. Not only because the stakes are higher – as it’s more costly to the firm to have a financial advisor turn over, especially once they’ve begun to develop direct relationships with clients – but also because the development curve of a financial advisor is so long (taking years or even a decade to fully develop), that it’s difficult to be certain who will end out being a good advisor in the first place.

In the guest post, New Planner Recruiting co-founder Caleb Brown shares his perspective on what it takes to find, attract, and retain top next generation advisor talent, based on his own experience on the front of lines of recruiting young talent for the past 10 years. From what really is most predictive of candidate success (the effort they put into getting the job in the first place, and their “why” for becoming a financial planner), to the reasons that certain firms have more trouble than others in attracting and retaining talent to begin with (the unfortunate reality: your firm may not really be as “great” of a career opportunity as you think, relative to the other options available for top talent!).

The good news, though, is that the rise of financial planning in undergraduate degree programs means that today’s rising talent is, truly, the best trained and capable young talent the profession has ever produced. Which doesn’t mean every hire will be perfect, or even that everyone will work out (for any number of other life transitions that happen to people in their 20s and 30s), but for those who are willing to put in the time and effort, the rewards of hiring next-generation talent have never been better!

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source https://www.kitces.com/blog/recruiting-financial-advisor-next-generation-talent-gen-y-millennial-hiring-screening/

Weekend Reading for Financial Planners (Mar 23-24)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the latest release of FINRA’s 2019 budget, which one again shows flat revenue as broker-dealers struggle with stagnating growth and a decline in the number of people taking licensing exams to become brokers, forcing to FINRA to rely on as much as $185.8M of its reserves this year just to meet its operating and capital expenses… and raising the question of whether FINRA will eventually be forced to restructure, or substantially increase member fees to broker-dealers… which in turn may only further accelerate the broker-dealer decline as regulatory costs rise.

From there, we have a number of articles around household cash-flow planning, including a fascinating new job-skills training program that focuses on those with problem-solving and perseverance skills and has lifted low-income individuals from an average of $18,000 to $85,000 of income, some tips to keep “lifestyle inflation” in check as income grows, the dynamics of trying to transfer not just financial assets but instill financial and other values for the children of affluent households, and how it’s increasingly necessary to look not just at a household’s own budget and cash flow but also to ask about their potential obligations for other family members (from children who may need to support elderly parents, or parents who may need to support adult children).

There are also several marketing-related articles this week, from tips to quickly and easily adapt “generic” marketing content into something more customized (and more likely to be effective) for clients, “growth hacks” that can accelerate a firm’s marketing success, how the techniques of a hostage negotiator (who must build rapport quickly in high-stakes situations) can inform the way we try to introduces ourselves and connect to prospects, and tips on how to respond to the infamous conversation-ender where you introduce yourself as a financial advisor and someone quickly responds “I already have a financial advisor!”

We wrap up with three interesting articles, all around the theme of how we spend our time and focus our attention: the first explores the benefits of doing a “time audit” to better understand how you really spend your time (and whether it’s truly on the important tasks, including not just the urgent but also the long-term important ones); the second looks at how scheduling free-time and leisure activities actually reduces their enjoyment (because then it’s just another scheduled task/chore to do!), and why “rough scheduling” with flexibility timing is better; and the last provides a fascinating look at the importance of being cognizant of and deliberate in what you really “measure” in your life (and how that impacts the way you focus your time and effort).

Enjoy the “light” reading!

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source https://www.kitces.com/blog/weekend-reading-for-financial-planners-mar-23-24/

10 Things You Need to Know About Divorce and Taxes

Divorce may not be as inevitable as taxes, but it certainly brings complications to tax filing. Follow these ten tips, and the process should go smoothly in the future. Once your divorce questions are answered, TurboTax can handle your tax return.

source https://blog.turbotax.intuit.com/tax-tips/divorce-and-taxes-4018/

Why Our TurboTax Live Experts Love Helping People Like You!

TurboTax Live experts have one of the best jobs on the market! They get to provide live, on-demand tax advice to friendly taxpayers like YOU. Whether you’re yearning to ask a question about your taxes or just need a little...

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How FPA Could Constructively Address Its Financial Accounting Concerns

Last week, this Nerd’s Eye View blog highlighted a series of discrepancies between the published Audited Financial Statements of the Financial Planning Association (FPA), and an alternative version of FPA’s finances that were presented to chapter leaders in its recent “Overview of National Finances” webinar. With a gap of nearly $8M between what FPA’s Audited Financials reported in the past, and what the FPA was currently reporting, the discrepancy raised concerns about both where the “missing” dollars actually were, as well as why the FPA would be reporting financials to members that differed from the organization’s already-published Audited Financial Statements.

In a response to members, the FPA has clarified that (as predicted in the prior blog post itself) the financial reporting gap can be largely explained by a change in FPA’s method of accounting with respect to how the chapter portion of annual dues are collected and remitted to chapters, which led to a previously undisclosed and unpublished restatement of FPA’s financials for 2007 to 2012. Such that, fortunately, it appears there is no “missing” money.

However, rather than following up by proposing changes to adjust FPA’s financial and audit controls to ensure that, in the future, members do have access to all relevant financial information about FPA’s financial health, the FPA leadership chose instead to personally attack this blog, questioning the accuracy of our numbers (even though all the numbers were quoted directly from FPA’s own Audited Financial Statements!) and our integrity for not “fact-checking” those Audited Financial Statements. Apparently forgetting that the organization’s Audited Financial Statements are supposed to be the factually accurate statement of record in the first place, such that “fact-checking” them should never be necessary, and that it is not a best practice – nor consistent with FPA’s own Information and Transparency Policy for members – to keep a second, unpublished, undisclosed set of restated books for prior financial years. Even if those books are otherwise financially accurate.

The FPA also objected to the fact that our prior article pointed out how non-standard and non-transparent financial reporting practices can also lead to or be associated with fraud, and in turn interpreted the article as an accusation of fraud. Yet the reality is that the article was not an accusation of fraud – thus why it correctly posited an alternative explanation about the financial discrepancy in the first place – but nonetheless engaging in non-standard and non-transparent financial reporting is a fraud risk for the organization. Which is why it is standard practice (and indeed, part of FPA’s own Information and Transparency Policy) to procure and publish Audited Financial Statements to members to begin with. In other words, pointing out that poor accounting practices can lead to fraud isn’t an accusation of fraud; it’s an explanation of why adopting best practices in accounting standards is so important to maintain the financial integrity of the organization in the first place. The entire foundation of an organization having its own financial statements audited is to trust… but also verify.

Accordingly, in today’s blog post, we have published a “hypothetical” response – that I would have hoped to see from the FPA leadership to acknowledge the changes that it still needs to make with respect to its financial and audit oversight controls to ensure better financial transparency to members – along with the FPA’s actual response to our previous article (for those FPA members who wish to understand the further details). Because in the end, I am still first and foremost a dues-paying member of the FPA, and the only reason I take the time to raise concerns about the organization is that I believe it’s crucial for the profession for the FPA to succeed as an organization. Which starts with being financially transparent and accountable to its members in the first place, in accordance with accounting and audit best practices, and FPA’s own Core Value of Stewardship.

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source https://www.kitces.com/blog/a-core-values-response-for-fpas-financial-accounting-concerns/

You Can Still Take Advantage of TurboTax Free Edition – No Strings (or Money) Attached!

Tax Day is right around the corner! Don’t stress, TurboTax has got you covered. If you’re a taxpayer with a simple tax situation, there is still time to file your federal and state tax returns for free – guaranteed with...

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source https://blog.turbotax.intuit.com/turbotax-news/absolute-zero-free-turbotax-absolutely-no-strings-attached-18720/

Tax Rules And Strategies For Claiming 2018 Cryptocurrency Loss Deduction

On October 31, 2008, the person (or persons) going by the name of Satoshi Nakamoto first posted the paper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System.” Within months, the first Bitcoin had been “mined” setting off a technological and cultural revolution. And over the next decade, Bitcoin and other cryptocurrencies would see a dramatic rise in distribution and price, culminating in an epic 2017 that saw the value of many cryptocurrencies grow by more than 1,000%!

Unfortunately, just as public infatuation with cryptocurrencies seemed to reach a peak, so did its price, leading to a disastrous 2018. During the year, many cryptocurrencies lost upwards of 80% of their value, leaving investors with sizeable losses, and questions about what to do, if anything, to make the most of their losses (at least from a tax perspective).

Fortunately, to that end, back in 2014 the IRS released IRS Notice 2014-21, providing its first substantive guidance on the taxation of Bitcoin and cryptocurrency transactions. Notably, the IRS determined that cryptocurrencies are “property” for Federal tax purposes, and not currency. Thus, the sale of cryptocurrency results in capital gains and losses, rather than ordinary income.

In general, the basis of a taxpayer’s cryptocurrency is the price paid to acquire the currency (in U.S. dollars) from its previous owner, typically via an exchange. In other words, the basis of an investment is what you paid to acquire it. In the context of cryptocurrency that is mined, though, there is no “purchase” transaction in the first place. Instead, the act of mining itself is treated as an income-producing activity, such that the fair market value of the cryptocurrency is included in gross income when it is mined. In turn, that fair market value becomes the miner’s cost basis in the cryptocurrency property going forward.

For taxpayers who liquidated cryptocurrency positions at a loss in 2018, the “planning” options are unfortunately somewhat limited. At this point, the best that can be done is to use any 2018 cryptocurrency losses to offset other 2018 capital gains and up to $3,000 of ordinary income. Any additional (cryptocurrency and other capital) losses must be carried forward for use in future years.

Taxpayers who currently hold cryptocurrency positions with unrealized losses can still choose to liquidate those positions in 2019 and use those losses to offset other portfolio gains (e.g., enabling investors to minimize the impacts of rebalancing out of other investment positions that have accrued substantial capital gains).

Unfortunately, though, harvesting cryptocurrency capital losses may be easier said than done, particularly for long-term cryptocurrency investors whose early purchases have accumulated in value, as FIFO tax treatment for multiple lots of cryptocurrency is likely required. On the other hand, because cryptocurrency is “property” but not (at least at this point) treated as an investment security, it appears the Wash Sale Rule does not apply to sales of cryptocurrency. Thus, positions with losses can be sold in order to be able to use the loss for planning today (or to “bank” the loss for future use), and still repurchased shortly thereafter (for those who want to continue to HODL), enabling the investor to continue to participate in future appreciation (at least if they’re still optimistic about cryptocurrency investment potential in the first place).

Finally, it’s worth noting that the digital nature of cryptocurrency makes it more susceptible to theft-by-hack (or other means), while its ethereal nature makes it more likely to be truly lost (via lost keys or cold-storage hardware) than other assets. Which is important because unfortunately, such losses would be treated as casualty losses which, after the Tax Cuts and Jobs Act, are generally no longer deductible at all!

Many crypto-advocates believe its long-term growth potential and viability as an asset class remains strong. Nevertheless, many investors first entered into the crypto-game in 2017 – when interest in the asset class grew exponentially due to its dramatic rise in price – and are now left trying to make the most of their losses.

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source https://www.kitces.com/blog/2018-cryptocurrency-bitcoin-loss-deduction-tax-rules/

#FASuccess Ep 116: Building A Consumer Media And Author Presence To Gain Credibility As A “Small” Independent Advisor, With Harold Evensky

Welcome back to the 116th episode of Financial Advisor Success Podcast!

My guest on today’s podcast is Harold Evensky. Harold is the co-founder and chairman of Evensky & Katz / Foldes Financial, an independent RIA in South Florida that oversees nearly $3 billion in assets under management.

What’s unique about Harold, though, is that he was one of the early pioneers to financial planning under the RIA model all the way back in the 1980s, and taking a holistic goals-based wealth management approach to portfolio design in the 1990s, having literally written the book on it 22 years ago in 1997.

In this episode, we talk in depth about what it was like to start an RIA in the early days of the independent advisor movement before platforms like Schwab Advisor Services even existed. The way Harold hustled with seminar marketing up to six nights a week in the early days just to get clients and survive, how Harold engaged early on with the media as a means to establish credibility for the firm in its efforts to compete against mega-wirehouses of the time, and how becoming fee-only in the early 1990s helped the firm to differentiate itself, because back then, being a fee-only fiduciary actually was a niche.

We also talk about how the firm grew and evolved over time. What it was like to transition from an advisory practice to a business, how Harold thought through the process of introducing next-generation partners and beginning to relinquish control of the firm, the way Evensky and Katz instituted a formal management committee to separate management and ownership of the firm as the number of partners proliferated, and how the firm made an all-in bet on the shift from AUM fees to retainer fees, and then unwound the entire change and went back to charging AUM fees for wealth management less than three years later.

And be certain to listen to the end, where Harold talks about the evolution of the financial planning profession. The CFP Lite controversy of the 1990s, whether the CFP Board and FPA have lived up to their expectations, and what it will really take for financial planning to truly be recognized as a profession by the public.

So whether you’re interested in hearing about what it was like breaking away from the brokerage world when an AUM structure was still a novel idea, how the financial planning profession has evolved over the past few decades, and where it may be headed, then we how you enjoy this episode of the Financial Advisor Success podcast.

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source https://www.kitces.com/blog/harold-evensky-katz-wealth-management-texas-tech/

6 Tips to Help Side Hustlers and Self-Employed Bosses Stay On Top of Their Taxes

Drive for a ride-sharing company or sell homemade trinkets on Etsy as a way of pocketing a little extra cash? If you are side hustling on an ongoing basis and your goal is to make a profit you are considered...

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source https://blog.turbotax.intuit.com/self-employed/6-tips-to-help-side-hustlers-and-self-employed-bosses-stay-on-top-of-their-taxes-43273/

How Much Your March Madness Bracket Will Cost You at Tax Time

Last year, ESPN estimated that March Madness bets would total to the whopping amount of about $10 billion. That’s real money, and real money comes with real tax implications. How much your March Madness bracket will cost you at tax...

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source https://blog.turbotax.intuit.com/income-and-investments/how-much-your-march-madness-bracket-will-cost-you-at-tax-time-33586/

How Do Financial Advisors Actually Spend Their Time And The Limitations Of Productivity?

Financial advice, like so many forms of advice, is a uniquely human endeavor. While the internet has a virtually unlimited depth of raw information to access and apply to one’s self, the opportunity to get perspective on your situation from someone else, who can read between the lines and help you recognize what you may not even understand about yourself, requires another human being (ideally one who has a little more expertise than you to help with such realizations). Which, along with the human-to-human accountability that is hard-wired into our brains as herd animals, is what helps financial advisors to withstand the threat of robots.

Yet notwithstanding the fact that financial advisors are paid to give advice to their clients in meetings with clients, the latest Kitces Research study reveals that the typical financial advisor spends no more than about 50% on direct client activity-related tasks, and barely 20% of their time actually meeting with clients! In fact, the typical financial advisor spends as much time searching for the next new client (i.e., prospecting and marketing for business development) as he/she does meeting with all their existing clients from week to week. A phenomenon that has only recently begun to shift with the rise of the recurring-revenue fee-based model, that puts less emphasis on continuous business development for new clients relative to the ongoing servicing (and retention) of existing clients.

Still, the fact that so much of an advisor’s time is not spent directly on client activities, and that even the majority of client-related tasks are more “back office” in nature (e.g., client servicing, meeting preparation, and doing various analyses) suggests that there is room for a significant increase in advisor efficiency, either through delegation to staff, better technology, or both.

And fortunately, the data reveals that advisors who delegate to support staff are able to generate significantly more revenue and generate a higher income… except as it turns out, this is largely accomplished by providing more time and more services to clients in the aggregate (between the advisor and his/her support staff), which allows the advisor to move “upmarket” and attract more affluent clients (who each pay a greater fee). Similarly, the rising use of more capable financial planning software amongst advisors doesn’t appear to be generating any time savings efficiencies, and instead is being leveraged by financial advisors to go deeper with clients and do more in their financial plans (rather than simply doing the plans faster).

All of which raises the question of whether the limitation on a financial advisor’s time and client-facing activities is really a matter of technology and staff efficiency in the first place, or a more “human” limitation on how many relationships any one person – or any one advisor – can manage in the first place. As thus far, the inexorable rise of technology continues to not lead financial advisors to service more clients, but instead to provide more and deeper services to their clients. Which suggests, in the extreme, that ongoing technology efficiencies may not increase advisor productivity, and instead will simply bring down the cost of financial advice and make it more accessible… which in turn will only further exacerbate the existing talent shortage of financial advisors in the coming decade?

Read More…

source https://www.kitces.com/blog/how-do-financial-advisors-spend-time-research-study-productivity-capacity-efficiency/

I Claimed Exempt, Can I Still Get a Tax Refund?

Normally, since you didn’t pay taxes, you aren’t eligible for a tax refund. But there are conditions that can result in being able to receive a tax refund, even if you are exempt from paying taxes.

source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/i-claimed-exempt-can-i-still-get-a-tax-refund-9999/

Get Refund Lucky with These Top 8 Tax Deductions & Credits

Happy St. Patrick’s Day! Just like finding $20 in your coat pocket, getting a big tax refund can feel pretty lucky. Alas, luck has nothing to do with it! Knowing the tax deductions and credits available to you is a...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/get-refund-lucky-with-these-top-8-tax-deductions-and-credits-19270/

Weekend Reading for Financial Planners (Mar 16-17)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the mega-news that Envestnet is buying PIETech, the maker of MoneyGuidePro, for a whopping $500 million as Envestnet seeks to further expand itself into a holistic “financial wellness” technology platform.

Also in the news this week was the news that the SEC’s “Share Class Selection Disclosure” initiative has culminated in 79 investment firms agreeing to return $125 million in inappropriately collected or improperly disclosed 12b-1 fees in their hybrid broker-dealer relationship with the client, another study reinforcing that while consumers still don’t trust the financial services industry they overwhelmingly (97%) trust their own individual financial advisor, the revelation that this week’s College Admissions scandal actually emerged as a tip-off to Federal investigators from someone seeking leniency in a securities fraud case, the news that Ameriprise is getting ready to launch a retail bank (so their advisors will be able to offer banking products to their clients), and a new advisory firm loan platform from SkyView Partners that will allow firms looking to merge, acquire, or complete a succession plan to bid out their loan needs to more than a dozen different banks at once.

From there, we have several insurance-related articles this week, including the news that Genworth (the largest long-term care insurer) is indefinitely suspending sales of traditional long-term care insurance through advisors and instead will rely solely on direct-to-consumer telesales instead (a potentially chilling trend for the availability of long-term care insurance to advisors from other carriers in the future), a good primer on the rise of “structured annuities” with various Buffer and Guard strategies to partially protect against downside, and an interesting look at how a decade of “unexpectedly low” interest rates have caused life, annuity, and long-term care insurers to make changes to their policies and premiums that have adversely affected by advisors and their clients.

We wrap up with three interesting articles, all around the theme of the brain and how it works: the first takes an interesting look at the connection between our brains and exercise, particularly running, and the ways that running appears to stimulate our brain functions (for which we may have had an evolutionary bias in the first place); the second explores the emerging research on why the brain is so “noisy”, and how the difficulty in being able to silence our brains may not necessarily be a result of ‘faulty wiring’ but instead part of the brain’s learning mechanisms and how it is able to take in so much information in a wide range of contexts; and the last looks at how, because human beings must take in information to survive, but also exist as “herd animals”, that sometimes our need to be right can conflict with our need to feel socially connected… thus helping to explain why sometimes we’ll ignore factual information that might otherwise change our beliefs (because it would also disrupt our social connections), and how the key to really changing someone’s mind is to start by being more connected to them socially so the ‘leap’ to new information doesn’t require such a socially disruptive leap of faith as well.

Enjoy the “light” reading!

Read More…

source https://www.kitces.com/blog/weekend-reading-for-financial-planners-mar-16-17-2/

Have Your Pi and Eat it Too: Five Mistakes to Avoid and Boost Your Tax Refunds

Today is Pi Day, an annual celebration on March 14 (3.14), of the first three digits of Pi. In our own celebration of Pi Day, we offer you five ways to avoid mistakes and boost your tax refund, thus having...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/have-your-pi-and-eat-it-too-five-mistakes-to-avoid-and-boost-your-tax-refunds-19234/

CIS Tax Rebates

The Construction Industry Scheme (CIS) is where a construction contractor deducts, at source, a portion of the money due to their subcontractor. Whatever amount is deducted is then passed directly to HMRC which is then counted towards the tax and National Insurance of a subcontractor. This effectively pays the tax element in advance. How much […]

source https://www.taxfile.co.uk/2019/03/cis-tax-rebates/

Making Tax Digital for VAT

From 1st of April 2019 HMRC’s VAT Notice 700/22 will come into effect; Making Tax Digital (MTD) for Value Added Tax (VAT).  The MTD initiative is believed to benefit HMRC on two levels. It will help to ensure the correct VAT is being paid to HMRC, & seeing that VAT accounts for the highest unpaid […]

source https://www.taxfile.co.uk/2019/03/making-tax-digital-for-vat/

10 Popular Tax Myths Busted by Actress Jenny Lorenzo

We are only a month away from Tax Day (April 15th)! Which means most of us have already filed our taxes or are almost there. You may have heard a couple of tax myths, such as: “You don’t have to...

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source https://blog.turbotax.intuit.com/tax-tips/10-popular-tax-myths-busted-by-actress-jenny-lorenzo-43226/

Why You Should File your Taxes Regardless of your Immigration Status

Whether you recently moved to the United States months ago or many years ago, if you have earned any sort of income, cash or check, it must be reported to the IRS regardless of your immigration status. This is the...

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source https://blog.turbotax.intuit.com/tax-planning-2/why-you-should-file-your-taxes-regardless-of-your-immigration-status-43217/

How Can FPA National Account For Its Chapters When It Can’t Account For Itself?

When the Financial Planning Association recently announced its OneFPA Network initiative to consolidate its chapters, a key aspect was to gain operational efficiencies and leverage the FPA’s economies of scale by fully centralizing the accounting of all 86 of its chapters. The systems overhaul would require a substantial initial investment – estimated at more than $300,000 – but with the end result of all chapters being relieved of the burden of chapter accounting and instead simply receiving monthly financial reports directly from National.

Yet part of the controversy of the OneFPA Network initiative is that FPA has been experiencing its own deterioration of financials over the past decade, with revenue down by millions of dollars since the financial crisis impacted the financial advisor community, raising questions of whether the FPA is simply trying to consolidate its chapters finances so it can get access to available chapter cash reserves and annual surpluses.

To rebut concerns about FPA’s financial state of affairs, the organization conducted in late January a first-ever “Overview of National Finances” to its chapter leaders, which did candidly acknowledge that the organization’s revenue has dropped by nearly $4M from a decade ago, but noting that membership revenue is actually up over that time period, and emphasizing that FPA’s finances have stabilized since the downturn. Except, as it turns out, the historical trends that the FPA presented didn’t even match its own published Audited Financials, to the tune of nearly $1.5M revenue per year for several years, and a cumulative mismatch of nearly $8M of “missing” revenue over the past decade.

In addition, it’s notable that since 2015, the FPA stopped distributing its Audited Financials to members altogether – ironically a self-violation of the FPA’s own “Information and Transparency Policy” – and only began distributing a more limited financial summary in its Annual Report. Which itself was excluded from its just-released 2018 Annual Report, leaving FPA’s own membership entirely in the dark about its current financial state (except, again, for a recent webinar that reported numbers failing to match FPA’s already-published Audited Financials to the tune of $8M of missing revenue). Even as the webinar did concerningly highlight a substantial $700k drawdown in FPA’s available cash over the past year, which appears to be attributable primarily to a significant decrease in the FPA’s deferred revenue… a potential signal that its actual revenue is about to deteriorate further.

Fortunately, the reality is that the FPA does have a demonstrated track record of managing its expenses (i.e., cutting staff and costs) in-line with its revenue, and as a result, its available reserves have remained stable throughout its financial turmoil of the past decade. Which suggests that the FPA may not literally be in any kind of “financial distress,” but simply that the organization’s revenue is declining more substantially than it has previously implied… which should be a concern for a National Board that, thus far, has not held its staff leadership accountable for the decline.

More broadly, though, the key question is simply this: how can the FPA move forward with the OneFPA Network and confidently and transparently account for its chapters – which is at best an extremely time- and labor-intensive tasks when committed to monthly reconciled reporting – when the National organization can’t even effectively (and transparently) account for itself?

Read More…

source https://www.kitces.com/blog/fpa-national-audited-financials-mismatch-overview-national-finances-membership-transparency/

Snap A Pic of These Tax Deductions Photographers Can Take

One of the most lucrative side hustle businesses to start is a photography business. With the right amount of training and equipment, anyone can be a photographer. There are no licensing rules and few relevant certifications — it basically comes...

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source https://blog.turbotax.intuit.com/self-employed/snap-a-pic-of-these-tax-deductions-photographers-can-take-43176/

How The Tools Of Financial Therapy Can Improve The Delivery (And Follow-Thru) Of Financial Planning Advice

The fundamental purpose of financial planning is to help clients make better financial decisions to achieve their financial goals – and hopefully to feel happy or empowered along the way by having made those decisions. Yet as most financial advisors know from experience, getting clients to make better decisions (and ones that they feel happy about) is not so easy in practice.

Clients do not always listen. Clients don’t always follow through on the advice they are given. And sometimes clients even do things that truly worry us, and actually endanger their financial health in the process. And unfortunately, there is remarkably little training on what financial advisors should actually do in such instances!

In this guest post, Meghaan Lurtz, our Senior Research Associate at Kitces.com, explores how the tools and techniques of Financial Therapy could be that research-based solution that financial planners may want to give some serious consideration to for training on how to deliver better advice that actually sticks, and to learn to better help clients actually help themselves. Perhaps even more so than the recently in-vogue Behavioral Finance research, which in practice is more focused on categorizing the problem behaviors that clients tend to express, than what financial advisors can and should actually do about it.

For instance, Financial Therapy utilizes techniques like Solution-Focused Therapy (SFT) to help clients figure out what skills they may already possess to overcome their own (financial) challenges. Financial Genograms provide a means to unearth clients’ financial family history and how the relationships around them may be influencing their money behaviors. And exercises like “What Do You Believe” help to unearth and explore money scripts that may cause clients to get stuck in a financial rut, as their sometimes subconscious limiting beliefs sabotage their ability to make good financial decisions.

Of course, the reality is that at some point, problematic financial behaviors cross the line from something that a financial planner can help with (even one trained in financial therapy techniques), into a bona fide psychological disorder that merits a referral to a qualified mental health professional. Nonetheless, a wide range of financial therapy tools and techniques can be applied by financial planners in their routine work with clients, in an effort to help ensure clients actually follow-through on the advisor’s recommendations, and the client’s own financial decisions and commitments.

And fortunately, with the rise of organizations like the Financial Therapy Association, and new educational programs like the Certified Financial Therapist (CFT) designation, there are more opportunities than ever for financial planners to explore the tools and techniques of financial therapy and how they can be applied in a financial planning context with clients!

Read More…

source https://www.kitces.com/blog/financial-therapy-association-tools-techniques-solution-focused-therapy-sft-financial-genogram/

4 Tips on Saving Up for Your Spring Break Getaway

Even though we love to be frugal, there are times we also like to splurge and vacations are one of those times. Spring is coming up in a few weeks and with it, spring break. Our oldest is out of...

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source https://blog.turbotax.intuit.com/tax-refunds/4-tips-on-saving-up-for-your-spring-break-getaway-43148/

Sweepstakes: Share Your #AdultingWins This Tax Season

Tax Day is right around the corner, and what better way to adult than by getting your taxes done? Whether you’ve filed your taxes yet or not, there are plenty of ways you can conquer adulting on a daily basis,...

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source https://blog.turbotax.intuit.com/tax-news/sweepstakes-become-the-masterofadulting-this-tax-season-40572/

#FASuccess Ep 115: Building The Confidence To Turn A Personal Mission Into An Advisory Firm Niche, With Hilary Hendershott

Welcome back to the 115th episode of Financial Advisor Success Podcast!

My guest on today’s podcast is Hilary Hendershott. Hilary is the founder of Hendershott Wealth Management, an independent RIA based in San Jose, California that oversees nearly $75 million of assets under management.

What’s unique about Hilary, though, is the way she’s crafted a niche of not just serving, but trying to empower women clients, with a combination of both her traditional financial planning offering, a coaching program for women trying to accumulate wealth, and a very successful podcast focused on empowering women to take control of their finances.

In this episode, we talk in depth about how Hilary has been able to bring in an average of nearly $20 million of assets per year for the past 3 years through her podcast and website. What she talks about on the podcast to connect with her listeners and who it is she tries to attract, how she set up and launched her podcast, even though she’s not a techie herself, and how she overcame her impostor syndrome fears to launch the podcast in the first place.

We also talk about the initiatives that Hilary has launched to try to further scale her services to clients. From a series of one-to-many online courses to teach wealth building skills, to a service called Ignite Investing that heavily leveraged technology to support working with smaller client accounts, to her current coaching program called the $50K Wealth Multiplier Experience, where Hilary does deep-dive coaching with women building wealth and is successfully charging $10,000 per year for her financial coaching services, entirely outside of her traditional financial planning offering.

And be certain to listen to the end, where Hilary shares how her own role as a business owner has evolved over the years. How she built her own self-confidence as a financial planning professional, why Hilary no longer works with a business coach herself and what she’s doing instead, and why she continues to stay rooted in her financial planning practice, even as she continues to try to build more courses and grow her coaching clients as well.

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source https://www.kitces.com/blog/hilary-hendershott-wealth-management-profit-boss-radio-empowered-women-niche/

Navigating the Financial Planning World as a Person of Color

Despite the financial services industry’s ongoing efforts at improving racial diversity, only 3.5% of CFP professionals are black or Latino … a revealing statistics for not only the underrepresentation of people of color in the industry but that simply trying to expand awareness of financial planning and invite more diversity into the industry is not enough to move the needle.

In this guest post, Eugenié George, a prospective new financial advisor studying for her CFP certification to enter the industry, shares her own perspective on the real-world challenges in entering financial planning as a person of color. Starting with the understanding that, due to a history of financially-related racial discrimination in the US over the past 200 years, many communities of color do not have the same accumulated wealth and positive connection to the financial services industry in the first place. And it’s hard to enter financial planning – and have support from family, friends, and your community to enter financial planning – when the community’s history with the financial services industry is so negative in the first place.

In addition, Eugenié shares her own path and journey into the financial services industry, how she has built a “network map” of people to reach out to and connect with to mentor and find opportunities, how to identify your own “superpower” skills that will help you get your foot in the door for a job opportunity, how to navigate the financial challenges of taking one step back to take two steps forward into the industry, and how to manage the fact that, as a person of color, you will inevitably “stand out” in an industry that is still more-than-90% white.

Fortunately, though, a growing understanding of the historical context and challenges of communities of color with the financial services industry provides a foundation for today’s existing advisors to become “allies” and help to build more effective pathways and support for people of color to become CFP professionals of color in the future.

Read More…

source https://www.kitces.com/blog/people-of-color-navigating-finanical-planning-allyship-eugenie-george/

Spender or Saver? Tips For What You Should Do with Your Tax Refund

My husband and I just checked our bank accounts this week and noticed that our federal tax refund came in! Even before it came in, we sat down to talk about how we’d like to use that money as we...

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source https://blog.turbotax.intuit.com/tax-refunds/spender-or-saver-tips-for-what-you-should-do-with-your-tax-refund-43096/

Weekend Reading for Financial Planners (Mar 9-10)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with yet another round of warnings from the SEC at a recent compliance conference that they continue to scrutinize hybrid RIAs for whether they’re using the appropriate (lowest-cost) share class for any mutual fund held in an advisory or wrap account for which the advisor is already receiving a separate fee (including now when it comes to 529 plans as well).

Also in the news this week were two proposed bills in Congress that would ban mandatory arbitration (not specifically targeted at financial services, but nonetheless potentially disrupting industry-standard mandatory arbitration clauses in brokerage and many advisory agreements), and a new succession planning program from Wells Fargo that could make it feasible for wirehouse brokers to get paid as much as an independent RIA does to sell their practice (but without needing to leave the wirehouse in order to do so)!

From there, we have several articles around practice management and employee development and retention, including a discussion of what it means to craft a good employee experience, how to more effectively make new employees feel included from day 1 (so they don’t get disengaged as leaders/managers tend to take input more from existing employees who have existing relationships), the rise of in-house “universities” at larger advisory firms to both develop their talent and better attract next generation advisors, why even though toxic employees tend to be more productive than average their cost to the firm in the aggregate still exceeds their productivity benefits, the business impact of having stressed-out workers, and why despite their popularity advisory firm bonuses for business development often don’t work (especially if their purpose is to get advisors not already doing much of any business development to try to start).

We wrap up with three interesting articles, all around the theme of how the industry itself is changing: the first looks at how, as the role of the financial advisor changes, so too is the requisite skillset to succeed as a financial advisor of the future; the second explores whether wirehouses can really be successful in launching their own RIA platforms to try to prevent their entrepreneurially-minded brokers from leaving to start their own independent RIAs; and the last raises the question of whether the real transformative opportunity in the industry is not to lift the fiduciary duty of loyalty (that advisors must act in their clients’ best interest and mitigate conflicted compensation), but simply to lift up advisors’ educational standards so it’s more likely that when a consumer engaged a financial advisor, he/she really has the “substance” to deliver in-depth quality financial advice in the first place!

Enjoy the “light” reading!

Read More…

source https://www.kitces.com/blog/weekend-reading-for-financial-planners-mar-9-10-2/

Maximizing The Pre-Tax Treatment Of Investment Advisory Fees After TCJA

One of the many changes made by the Tax Cuts and Jobs Act of 2017 was the repeal of miscellaneous itemized deductions through 2025… which was especially concerning to many financial advisors, as it included the elimination of the deduction for investment advisory fees! Of course, the reality is that not all taxpayers were eligible to claim a deduction for advisory fees in the first place, as not only did it require the taxpayer to itemize, and exceed 2% of the taxpayer’s AGI along with other miscellaneous itemized deductions… but even then, could be lost to the alternative minimum tax (AMT). Still, though, many clients of advisors have been impacted by the loss of the deduction for advisory fees… and are now looking for any opportunity they can find to reduce the repeal’s impact and still get at least some tax benefit for advisory fees paid.

One “simple” way to help clients retain the pre-tax nature of advisory fees is to find a bona fide way to continue deducting the expenses. For instance, although advisory fees are no longer deductible as miscellaneous itemized deductions, ordinary and necessary expenses of a business continue to be deductible under IRC Section 162. Thus, for clients who are small business owners, a portion of the total advisory fee may be deductible as a business expense, at least to the extent that business-related advice (i.e., succession planning, retirement plan services, business-related tax strategies, etc.) has been provided. Though notably, only payments made from taxable accounts (i.e., not retirement accounts) could potentially qualify for this treatment, and deducting advisory fees from the business may be even more complex for those who are not sole proprietors, and must logistically manage to pay the advisory fee (or a portion thereof) from a business account and not the owner’s individual investment account.

Another way that advisors can help clients mitigate the impact of the loss of the deduction for advisory fees is to help client’s pay fees from the most efficient source. As fortunately, AUM-style investment advisory fees for a client’s retirement account (i.e., a traditional IRA or a Roth IRA) can actually be “pulled” directly from the applicable retirement account, allowing the expense to continue to be paid with pre-tax dollars (at least when pulled from a pre-tax retirement account in the first place).

Hybrid advisors (i.e., those with both an RIA and broker/dealer affiliation) may also wish to reevaluate when it is in a client’s best interest to have them pay for the advisor’s services with advisory fees, as opposed to commissions. As ironically, while the financial “advice” industry has steadily been moving away from commissions and towards fees, the Tax Cuts and Jobs Act gives a distinct tax preference paying advisors via commissions over fees! Because while commissions are not deductible, per se, they can add to the cost basis of a position (such as a commission paid for the purchase of an individual security), reduce the proceeds of a sale (such as a commission paid for the sale of an individual security), or reduce the amount of taxable income produced by an investment (such as the 12b-1 fee commission paid by mutual funds) before the income is in turn passed through to the investor. All of which are more tax-efficient means of compensating a financial professional than advisory fees.

And when it comes to standalone RIAs, while they cannot receive commissions for the sale of securities (to get pre-tax treatment for their clients), RIAs may still benefit from the use of mutual funds or ETFs, by turning their investment models into such funds. By doing so, RIAs can bill their advisory fees as a management fee to the fund itself, which means clients effectively pay the RIA’s fee via the mutual fund/ETF’s expense ratio on a pre-tax basis. Unfortunately, though, the creation and maintenance of a mutual fund or ETF – and potentially multiple funds for multiple advisor model portfolios – can add a significant level of operational overhead to a firm. And even for larger firms that may be able to absorb such costs, there are still other issues to contend with, including up-ending the firm’s entire business model, and the fact that packaged funds, when held in taxable accounts, are generally not as tax-efficient as separately-managed accounts holding identical positions (from a tax loss harvesting perspective).

Alternatively, some advisory firms may look to limited partnerships as another potential method of mitigating the loss of the deduction for advisory fees, by again trying to claim the RIA’s fees as a “management fee” for the business, rather than a pass-through expense of the investment partnership. Though whether or not such a partnership would qualify as a true business – as opposed to an investment – would be of the utmost importance (as absent business status, expenses of the partnership would again be deemed non-deductible personal investment expenses), and is unfortunately a very grey area. A clearer path would be for advisory firms to instead opt to be compensated via a “carried interest” as a general partner, which is effectively treated on a pre-tax basis for the client… except even in the best of circumstances, such partnerships would likely be operated as private securities (limiting their availability to primarily high-net-worth and other accredited investors), and by definition a carried interest payment is a performance-based fee (that most advisory firms wouldn’t want to operate by in the first place?).

The bottom line, though, is that while the loss of the deduction for investment advisory fees may be painful for many, there are still at least some ways that financial advisors and institutions can help their clients pay investment related expenses in a tax-efficient (pre-tax) manner!

Read More…

source https://www.kitces.com/blog/investment-advisory-fee-deduction-post-tcja-ira-expense-ratio-etf-limited-partnership/

Sweepstakes: Share How It Feels To Get Your #TaxesDoneFree

You’ve finally done it! You’ve filed your simple tax returns using Turbo Tax Free Edition, and not only did it cost you $0, it was just so easy, and simple, too. What could be better than that? How about the...

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source https://blog.turbotax.intuit.com/announcements/sweepstakes-share-how-it-feels-to-get-your-taxesdonefree-43088/

Multigenerational Families: Top Family Tax Deductions and Credits You Should Not Miss

The article below is accurate for your 2018 taxes, the ones that you file this year by the April 2019 deadline.  This post can be found en Español here. For practical, cultural, and personal reasons, more families are living in...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/multigenerational-families-top-family-tax-deductions-and-credits-you-should-not-miss-29816/

#FASuccess Ep 114: Why Creating A Great Client Experience Is About More Than Just Great Service, with Dennis Moseley-Williams

Welcome back to the 114th episode of Financial Advisor Success Podcast!

My guest on today’s podcast is Dennis Moseley-Williams. Dennis is the founder of DMW Strategic Consulting, a boutique consulting firm that works with financial advisors in how to design and deliver a great client experience.

What’s unique about Dennis, though, is that he’s not simply focused on how to improve client service, but that he’s trained and studied under Joseph Pine, author of the seminal book, “The Experience Economy,” and has specialized in applying “The Experience Economy” concepts specifically to the domain of financial advisors.

In this episode, we talk in depth about the difference between simply giving better client service and a truly distinct client experience. How the focus of better service is to save client’s time and money, but a great client experience is about ensuring that the client’s time is well spent. How the delivery of a great client experience starts with viewing everything about your financial planning process as an experience to be staged for clients, and why in the end it’s not just about what you do for clients but what change for the better you help to create in their lives.

We also talk about the practical steps to take to start adapting your firm towards delivering a better client experience, starting with how to more effectively target who you want to serve by taking a niche, niche, weird approach to identifying your target clientele, why it’s so important to develop a theme to the experience you’re trying to create for your ideal clients, why you should think of your advisory business as a stage and industry products and your financial plan itself as props in that staged experience, and how the challenge of creating a unique client experience that there’s no clear instruction manual for how exactly to do it for your particular ideal clientele is part of what makes it so profoundly unique and differentiating in the marketplace.

And be certain to listen to the end, where Dennis talks about the importance of finding your own true authenticity and crafting unique client experience, and how in the end, building an advisory firm and a great experience for clients is really just about doing one great thing for one particular type of ideal client and then really going all in to own it.

So whether you’re interested in learning about how you can leverage “the experience economy” for your advisory business, why discovering your “theme” as a financial advisor is so important, or actionable steps you can take to improve your clients’ experience with you and your practice, then we hope you enjoy this episode of the “Financial Advisor Success” podcast.

Read More…

source https://www.kitces.com/blog/dennis-moseley-williams-client-experience-economy-financial-advisors/

3 Important Tax Reform Tips To Get the Filing Party Started

Can you believe that it’s March? Not only is the year flying by, but that means we’re in the middle of tax season too. If you have been waiting to file your taxes, don’t! Now is the best time to...

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source https://blog.turbotax.intuit.com/tax-reform/3-important-tax-reform-tips-to-get-the-filing-party-started-43083/

The Latest In Financial Advisor #FinTech (March 2019)

Welcome to the March 2019 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 mega-news that Envestnet has acquired PortfolioCenter from Schwab, and in the process, has stirred up a feeding frenzy of what may be once-in-a-lifetime deals as all the major portfolio performance reporting solutions compete for the nearly 2,000 legacy PortfolioCenter users that are now in transition.

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

• Commonwealth spins off its proprietary broker-dealer operating system and advisor tools into a standalone entity, Advisor360, and then promptly licenses it out to MassMutual’s 9,000 brokers
• Cetera stakes a new direction in the post-product future of the broker-dealer model with a “fee-for-service” advice initiative using AdvicePay
• OnPointe Risk Analyzer launches a new Riskalyze alternative that aims to compete not just on risk tolerance assessment but marketing capabilities as well
• FA Match raises a $500k seed round and builds a broker-dealer recruiting matchmaking platform for independent brokers looking to make a switch

Read the analysis about these announcements in this month’s column and a discussion of more trends in advisor technology, including the latest new “Multiple Opinions” and “Timeline” features announcements from Riskalyze, Chalice Financial Network’s acquisition of SuccessionLink as a channel to recruit new advisors, PreciseFP launches a standalone “digital onboarding” solution with SSG that does not require advisors to change client portals and portfolio performance reporting solutions, and Yourefolio launches a new drag-and-drop estate plan flowcharting tool (at least for the subset of advisors still doing estate planning flowcharts!).

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-march-2019/

Weekend Reading for Financial Planners (Mar 2-3)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with a fascinating study from Morningstar, which finds that even as financial advisors increasingly frame “behavior management” as a key value proposition, consumer research ranks “helping me control my emotions” as dead last amongst the benefits of working with a financial advisor, instead showing a preference for more tangible benefits like the advisor’s relevant skills and knowledge, how well the advisor communicates, performance results, and actually achieving financial goals.

Also in the news this week was a big announcement that Bank of America is dropping the Merrill Lynch name from its investment banking unit, consolidating the Merrill Lynch Private Banking and Investment Group (PBIG) into just Merrill Private Wealth (removing the “Lynch”), and retiring the 165-year-old U.S. Trust brand altogether… and raising the question of whether the days are numbered for the entire Merrill brand itself. And there’s a fascinating discussion from Bob Veres about whether FPA chapters should consider “seceding” from the FPA to form a new “CFP Society” that would fulfill the original founding vision of the FPA to be the home for CFP professionals (while the FPA itself has declined from nearly 50% to barely 20% market share of CFP certificants since 2000).

From there, we have several articles on spending and cash flow decisions, from research that suggests social media (and the rise of modern media in general) may be helping to drive the ongoing decline in the National Savings Rate in recent decades, the rise of “stealth wealth” behavior for those who don’t want to live ostentatiously (whether to avoid being solicited as a “wealthy” person, or simply to help find social circles that don’t encourage profligate spending), research on the habits of wealth accumulators that differ from everyone else, a fascinating series of interviews with people who had “sudden wealth” events about how they really handled the money, the ways our spending does (or often doesn’t) really align with our values (as an alternative way to determine whether we’re “living within our means”), and why perhaps society needs to become more cognizant of – and more sympathetic towards – the fact that even households living within their means and exercising financial discipline are often still exposed to significant “financial fragility” as well.

We wrap up with three interesting articles, all around the theme of finding and building our own career path: the first explores the research of what it really means to “find your passion” or calling, and how it turns out that you’re more likely to find a passion by simply engaging in something that’s aligned with your values and having your passion for it build as you succeed (rather than trying to identify the passion and find the ‘perfect’ passion job in the first place); the second provides a powerful reminder that almost by definition, you can’t learn from experience until you’re willing to do and experience something different than what you already do (which is why experimentation is so crucial); and the last is a fascinating reminder that while most people try to be good workers in their jobs, and find a good company to work for, that ultimately it’s finding the right industry that may actually be most important to long-term career success, as even the best companies and workers may struggle in an industry that is shrinking, while a rising/growing industry tends to lift all boats (while providing an outsized reward to the top performers in particular).

Enjoy the “light” reading!

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

Train Your Own Gym Clients? Make Sure You’re Snagging These Tax Breaks

If you are a personal trainer, you know what it takes to keep your body fit. But what about your self-employed business? Often personal trainers don’t even think of themselves as being in business, but they are. As a self-employed...

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source https://blog.turbotax.intuit.com/self-employed/train-your-own-gym-clients-make-sure-youre-snagging-these-tax-breaks-43091/