News About IRS And Tax: 2017

Saturday, 30 December 2017

Tax Tips for the Self-Employed

Self-employed? There are special tax considerations for you.

source https://blog.turbotax.intuit.com/self-employed/tax-tips-for-the-self-employed-2297/

Friday, 29 December 2017

What is Mello-Roos? And Can I Deduct It?

Most taxpayers know that property taxes and mortgage interest are tax deductible, but until you move into a Community Facilities District in California, you probably haven’t heard of Mello-Roos before. When Proposition 13 was passed in 1978, it limited how...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/home/what-is-mello-roos-and-can-i-deduct-it-32746/

Weekend Reading for Financial Planners (December 30-31)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the stunning revelation from a Wall Street Journal investigative report that a substantial number of the Public Comments submitted against the Department of Labor’s fiduciary rule (and supporting its delay) were actually fake comments posted in the names of real people who didn’t even know their names had been used (and more often than not were actually in favor of the fiduciary rule as written). In the meantime, with the DoL fiduciary rule is delayed, New York’s Department of Financial Services has released its own proposed regulation to subject insurance and annuity agents in New York to a state-level fiduciary rule instead (after Nevada implemented a similar rule a few months ago). Also in the news this week was the release of updated “guidance” from the IRS clarifying that deducting a prepayment 2018 property taxes in 2017 is only permitted if the county had actually assessed (i.e., the homeowner had become liable for) the tax.

From there, we have investment related articles this week, from a look at the rise of “digital marketplaces” for alternative investments like iCapital and CAIS that aim to make it easier for independent uses to use alternatives, to a discussion of technology tools that are being developed to allow “direct indexing” (where clients own an index by using software to manage a portfolio of the underlying components of the index, without needing to pay a mutual fund or ETF), and a comparison of some of the most popular “model marketplaces” that gives advisors the opportunity to use third-party models by retain control of (and responsibility for) implementing the trades themselves.

We also have several retired planning articles, from an interesting discussion on the hazards of investing in the markets with the plan to buy “safe” (e.g., annuity) income later, Wade Pfau on strategies to manage sequence of return risk in retirement, and a discussion from Bill Bengen on how to monitor retirees’ ongoing current withdrawal rates to identify those who may be in trouble.

We wrap up with three interesting articles, all around the theme of the way our economy is being reshaped: the first looks at the rise of robots and automation in sectors that were previously thought to be less exposed (e.g., restaurants and hotels), finding that while some jobs may be eliminated, new ones are also being created, and the net job impact could actually still be positive; the second is an interesting 10-year retrospective look from the Cleveland Fed at the factors that led to the financial crisis, the impact of the aftermath, and how the Fed looks differently at the banking system and its risks today; and the last is a fascinating discussion of how in the past, local areas of economic opportunity could create “boomtowns” that attracted those in search of jobs and higher wages (e.g., Chicago grew from 30,000 people to over 2 million in just a few decades), but in today’s world interstate mobility is actually down, and the reason appears to be local housing policies in major metropolitan areas that have made it so expensive to move than people are not able to take advantage of the job opportunities there… which ultimately may help to explain why the U.S. has experienced more sluggish GDP growth in the aggregate over the past two decades!

Enjoy the “light” reading, and have a Happy New Year!

Thursday, 28 December 2017

Tax Reform 2017: Can I Deduct My Property Taxes I Prepaid in 2017 Under the New Tax Law?

On Friday, December 22, the President signed the largest piece of tax reform legislation in more than three decades. The new tax law will affect most taxpayers. One point to keep in mind, though, is that for the vast majority...

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source https://blog.turbotax.intuit.com/tax-reform/tax-reform-2017-can-i-deduct-my-property-taxes-i-prepaid-in-2017-under-the-new-tax-law-32922/

Are Broker-Dealers Drowning In Their Own Lowest Common Denominator Compliance Standards?

Earlier this month, TD Ameritrade did a survey study of breakaway brokers – specifically asking those who were breaking away why they were leaving – and overwhelming, the top challenge that breakaway brokers cited for the broker-dealer world is the current regulatory environment. In essence, the compliance and regulatory burden of working at a broker-dealer is slowly but steadily driving advisors to the independent RIA channel. Which is interesting given that the broker-dealer community maintains that a fiduciary rule (e.g., from the Department of Labor) is unworkable due to the regulatory and compliance burdens it creates… even as leading advisors at broker-dealers continue to leave and transition to the fiduciary RIA model!?

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we look at the interesting trend of advisors leaving broker-dealers to become fiduciary RIAs, why fiduciary regulation is actually easier to comply with than broker-dealer suitability, and why the real problem at broker-dealers is not the compliance burden of a fiduciary rule but the lax recruiting standards at many broker-dealers (which have brought them reps that don’t have the requisite training and experience to be fiduciary advisors!

There has been much discussion in the industry in recent years about how the fiduciary standard is a higher standard than “just” suitability. There’s more scrutiny on conflicts of interest, and an RIA’s Form ADV has a lot more required disclosures and cost details than typical broker-dealer agreements. And the Department of Labor’s fiduciary rule outright bans a lot of conflicted compensation arrangements. But indirectly… that’s the point of why it’s actually easier to comply with a fiduciary rule! When firms are required to disclose more details about their conflicted compensation, many simply stop doing it, and the result is business model that is much simpler to comply with the regulations. In fact, under principles-based fiduciary regulation, it’s not exactly clear where the line is between appropriate and inappropriate behavior… so advisors tend stay far away from that line, which ironically leads to fiduciary advisors often having lower E&O insurance costs than brokers. By contrast, under rules-based suitability regulation, in which FINRA lays out a clear line, brokers are invited to get really close to the line, and even allowed to be incentivized to step over the line. Which then means FINRA must focus a huge amount of its regulatory energy in trying to keep people right on that line, and punishing them whenever they do respond to incentives and step over the line.

In the end, there are actually two problems with this kind of regulatory approach. The first is that the industry is inevitably going to have a lot of people who do step over the line, which means a lot of regulatory fines, lawsuits that go to arbitration, and higher E&O costs. The second problem that crops up with this kind of regulatory approach, though, is what I call the lowest common denominator (LCD) compliance problem. In the broker-dealer context, lowest common denominator compliance means the compliance department writes all their rules and regulations for the lowest common denominator. Basically, whatever the one biggest idiot under the entire broker-dealer umbrella could possibly do to cause harm… the broker-dealer writes compliance rules to ensure that one person is “properly” overseen. Which means for everyone else – all the normal, high-quality honest and ethical advisors – are stuck complying with the rules written for the biggest idiot in the organization! And this problem is exacerbated by the fact that as the best advisors are driven away by LCD compliance standards, the quality of the average rep that stays behind is reduced, which means the broker-dealer has to tighten the compliance screws even further, and the problem just spirals downward.

Fortunately, I don’t think this necessarily means we’re at the beginning of the end of the broker-dealer model. While historically (and from a legal perspective) broker-dealers only exist to serve as an intermediary to facilitate the sale of commission-based brokerage products, broker-dealers have increasingly provided a second value proposition as well – they’re essentially “advisor support networks”. Many advisors are not interested in building their own business from scratch, and broker-dealers can continue to fill this void by providing tools, resources, and a platform. However, it will require broker-dealers to improve their recruiting standards, so that LCD compliance standards don’t make it so miserable for good advisors to stay in a broker-dealer!

But the bottom line is just to recognize that the regulatory woes of the broker-dealer environment aren’t really about the potential for a fiduciary standard to apply to them. What it’s really about is the fact that many broker-dealers have cast such a wide net in their recruiting process, that they’ve brought in some very low-quality reps. Which compels their compliance department to make lowest common denominator compliance rules, that make the lives of their best advisors miserable, and leads those advisors to leave and find “advisor support networks” that don’t come with the broker-dealer’s regulatory baggage. Which means broker-dealers need to find ways to screen out low-quality reps, get rid of bad ones, and lift themselves to a higher standard, so that they can retain good advisors who don’t like to be dragged down to LCD compliance standards!

Wednesday, 27 December 2017

How Tax Reform Impacts You [Infographic]

This week Congress passed the largest piece of tax reform legislation in more than three decades. The bill will affect the taxes of most taxpayers, but it’s important to keep in mind that for most people, the bill does not affect their...

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source https://blog.turbotax.intuit.com/tax-reform/how-tax-reform-impacts-you-infographic-32888/

Holiday Bonus Season: How Your Holiday Bonus is Taxed

December is a time for giving gifts, and some employers give year-end bonuses to their employees to show gratitude for a year of faithful service. If your employer has promised you a bonus, you likely are already thinking of all...

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source https://blog.turbotax.intuit.com/tax-planning-2/holiday-bonus-season-how-your-holiday-bonus-is-taxed-20760/

Volatility Drag And Its Impact On (Arithmetic) Investment Returns In Monte Carlo Analysis

In the investment world, it’s common to discuss average rates of return, both in a backward-looking fashion (e.g., to report investment results), and in a more forward-looking manner (e.g., to project the average growth rate of investments for funding future goals in retirement planning software). However, the reality is that because returns are linked to each other – the return in one year increases or decreases the available wealth to compound in the subsequent year – it’s not sufficient to simply determine an “average” return by adding up all the historical returns and dividing by how many there are.

Instead of this traditional “arithmetic mean” approach to calculating an average, in the case of investment returns, the proper way to calculate average returns is with a geometric mean, that takes into account the compounding effects of a series of volatile returns over time. Which is important, because in practice the geometric average return is never as high as its arithmetic mean counterpart, due to the fact that volatility always produces some level of “volatility drag”, which can be estimated by subtracting ½ of the investment’s variance (standard deviation squared) from its arithmetic return.

Fortunately, the reality is that most investment returns, as commonly discussed by financial advisors, are already reported as geometric returns, typically stated as either a Compound Average Growth Rate (CAGR), an annualized return, or some similar label. Which means, intended or not, most financial advisors already project future wealth values in a retirement plan using the (proper) geometric return assumption.

However, the variance drain on a sequence of volatile returns still matters when financial advisors use Monte Carlo analysis, which by design actually projects sequences of random volatile returns (based on the probability that they will occur) to determine the outcome of particular retirement strategies. Because the fact that volatility drag is already part of a Monte Carlo analysis means that the return assumption plugged into a Monte Carlo projection should actually be the (higher) arithmetic return, and not the investment’s long-term compound average growth rate. Otherwise, the impact of volatility drag is effectively counted twice, which can understate long-term returns and overstate the actual risk of the prospective retirement plan!

The good news is that some Monte Carlo software tools, recognizing that most financial advisors report returns using the industry-standard geometric averages, already adjusts advisor-inputted return assumptions up to their arithmetic mean counterparts. However, not all Monte Carlo software automatically makes such adjustments. Of course, in many cases, financial advisors may wish to use lower return assumptions in today’s environment, given above-average market valuations and below-average yields. Nonetheless, advisors should be cognizant of whether they are unwittingly entering lower-than-intended return assumptions into their Monte Carlo retirement projections, compounding geometric returns in a manner that double-counts the impact of volatility drag!

Tuesday, 26 December 2017

#FASuccess Ep 052: Why Today’s Technology Tools Are The Golden Age Of Advisor FinTech with Joel Bruckenstein

Welcome, everyone! Welcome to the 52nd episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Joel Bruckenstein. Joel is one of the industry’s leading advisor technology gurus, publisher of the Technology Tools for Today newsletter, and runs the popular T3 Advisor and T3 Enterprise technology conferences for the financial advisory industry.

What’s fascinating about Joel, though, is his nearly 20-year history of writing about and covering advisor technology trends, from publishing regular columns in Horsesmouth, Morningstar Advisor, Financial Advisor, and Financial Planning magazines, to his own newsletter and now his latest platform the T3 Tech Hub… which gives him an incredible perspective on the evolution of advisor technology tools over the years, and where the gaps still remain.

In this episode, we talk in depth about recent trends in advisor technology, the results of the latest Advisor Software Survey that Joel administers along with Bob Veres’ Inside Information, why Joel views today as the “Golden Age” of advisor technology, and what kinds of new trends in advisor technology we’re likely to see in the coming years.

We also talk about the real-world challenges of implementing advisor technology in the typical firm, why data migrations from one piece of software to another are so painful, and why many advisors may actually be trying too hard to find the best technology for their firm… when the real problem is a need for the firm to focus and systematize what it does just to make it possible for technology to help more in the first place.

And be certain to listen to the end, where Joel talks about the biggest areas where advisors can get better ROI from their technology… particularly when it comes to better utilizing CRM software for business intelligence purposes.

So whether you have been curious about the latest trends in advisor technology, are curious why Joel thinks we are living in the “Golden Age” of advisor technology, or have been wondering how you can better utilize your CRM and get a better ROI from your technology, I hope you enjoy this episode of the Financial Advisor Success podcast!

Monday, 25 December 2017

2017 Highlights – The Top 20 Nerd’s Eye View Blog Posts You Might Have Missed

As 2017 comes to a close, I am once again so thankful to all of you, the ever-growing number of readers who continue to regularly visit this Nerd’s Eye View blog, and have been kind enough to share the content with your friends and colleagues as well (which I greatly appreciate!). Over the past year, the cumulative readership of the blog has grown yet another 25%, with more than 200,000 unique readers coming to Nerd’s Eye View last month. And we’re gearing up for a number of major new upgrades in early 2018 as well, from new CE opportunities, to back-end changes to our platform that will help to further improve your own reader experience.

Yet notwithstanding how many of you have made reading the Nerd’s Eye View a weekly habit, I realize that the sheer volume of articles can feel overwhelming at times, and that it’s not always possible to keep up with it all. And once published, blog articles are usually quite quickly left in the dust as the next new one comes along.

Accordingly, just as I did last year and in 2015 and 2014, I’ve compiled for you this Highlights list of our top 20 articles of 2017 that you might have missed, including some of our most popular episodes of the Financial Advisor Success podcast. So whether you’re new to the blog and #FASuccess podcast and haven’t searched through the Archives yet, or simply haven’t had the time to keep up with everything, I hope that some of these will (still) be useful for you! And as always, I hope you’ll take a moment to share podcast episodes and articles of interest with your friends and colleagues as well!

In the meantime, I hope you’re having a safe and happy holiday season. Thanks again for another successful year in 2017, and I hope you enjoy all the new features we’ll be rolling out in 2018, too!

Saturday, 23 December 2017

3 Things You Can Do in Under an Hour to Save at Tax Time

The holidays are almost here, and I know you are busy baking cookies (and eating them!), decorating and shopping for just the right gifts for your friends and family. If you want to do something nice for yourself, take a...

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source https://blog.turbotax.intuit.com/tax-planning-2/3-things-you-can-do-in-under-an-hour-to-save-at-tax-time-32749/

End of Year Retirement Tips for Employees and the Self-Employed

Contributing to your retirement account is one of the best ways to reduce your taxable income and increase your tax refund. While some retirement accounts have year-end deadlines for contributions and required distributions, others give you extra time to make...

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source https://blog.turbotax.intuit.com/self-employed/end-of-year-retirement-tips-for-employees-and-the-self-employed-25404/

Friday, 22 December 2017

Weekend Reading for Financial Planners (December 23-24)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the passage of the Tax Cuts and Jobs Act of 2017 (which was formally signed into law by President Trump today), which will brings substantive corporate tax reform, and a slew of tax changes for individuals… many of which impact financial advisors directly, from the potential for a new deduction for pass-through advisory businesses (as long as their income remains below a certain threshold), to the repeal of the deduction for investment advisory fees.

Also in the news this week was the release of the 2nd version of the CFP Board’s proposed changes to the Standards of Professional Conduct (which would keep the “fiduciary at all times” rule, but removes the presumption that consumers can even rely on a CFP professional to actually be providing financial planning), a new TD Ameritrade study on breakaway brokers finding that they are increasingly forsaking the idea that broker-dealers will be able to successfully navigate the DoL fiduciary rule (and thus are opting for the RIA channel instead), the latest Fidelity RIA benchmarking study that finds advisory firm growth rates, profit margins, and fees are all under pressure, and a new Investor Bulletin from the SEC warning about hybrid B-D/RIA firms that may be inappropriately using (and/or failing to fully disclose) the costs of their wrap fees.

From there, we have several practice management articles this week, including guidance on why it’s so important to find a business focus in the face of declining profit margins for advisory firms, why RIAs need their own “Zillow” platform that can reasonably estimate a true value of the advisory firm in an increasingly unbalanced market of one-time sellers and experienced serial buyers, what advisory firms should be doing now (while times are good) to prepare for the next inevitable bear market (whenever it may occur), and the reasons why Millennials require a fundamentally different approach to engaging financial planners (because they don’t need advice on how to manage their accumulated resources… they need help developing policies that will allow them to accumulate those resources in the first place!).

We wrap up with three interesting articles, all around the theme of sexual harassment and diversity issues within our own financial advisory world: the first notes that recent sexual harassment revelations from Morgan Stanley’s Harold Ford, and Sallie Krawcheck’s #metoo story, may only be the tip of the iceberg in what is still a very male-dominated advisory industry; the second raises the question of whether sexual harassment in advisory firms may be even worse in the small-firm environment (where the harasser may be the boss and founder, and there’s no HR department to file a complaint with); and the last looks at how to better have these conversations about diversity and inclusiveness, which can be challenging and awkward even for those who are well-intentioned.

And be certain to scroll down to the end, for a light-hearted video on the ongoing Bitcoin crazy, as the cryptocurrency experiences yet another highly volatile week.

Enjoy the “light” reading, and have a happy holidays!

Schools Out for the Holidays! 6 Ways to Save On Childcare This Winter

With work, gift hunting, and out-of-town visitors looming over us this holiday season, it can be a scramble to find time to get anything done, especially when your kids are out of school! Before spending all your holiday savings, check...

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source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/family/schools-out-for-the-holidays-6-ways-to-save-on-childcare-this-winter-25217/

Holiday Donations and Tax Savings

Regardless of how you decide to give, it's important to do it the right way so you can save as much as possible on taxes. If the government is willing give you a tax break as you're helping others, it makes no sense not to take advantage of it, right?

source https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/holiday-donations-and-tax-savings-15473/

Thursday, 21 December 2017

First Look At CFP Board’s Revised Proposal For Professional Standards Of Conduct

Beginning with the CFP Board’s formation of the Commision on Standards back in late 2015, the CFP Board has been in the process of updating our Standards of Professional Conduct for CFP certificants for the first time since 2007. After an 18-month process, in early summer of this year, the Commission on Standards released its first proposal of the new Standards of Professional Conduct. Due to the complexity of adopting new standards for nearly 80,000 CFP professionals, the CFP Board put the newly proposed standards out for a 60-day comment period. During that time, the CFP Board received a lot of feedback (over 1,300 public comment letters), which was incorporated into a newly revised version of the Proposed CFP Standards of Professional Conduct. Yesterday, December 20th, the CFP Board released the 2nd version of these proposed standards, and announced that a second comment period will open on January 2nd and run for 30 days, until February 2nd of 2018.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we look at at the changes made in the 2nd version of the Proposed CFP Standards of Professional Conduct, including the things the CFP Board got right in the revisions, some things they unfortunately walked back on, and some areas of focus for those drafting comment letters for the second comment period beginning on January 2nd of 2018.

First and foremost, when you subject a 17-page standards document to 1,300 hundred public comment letters, there are a lot of small tweaks that get made. Fortunately, the CFP Board is taking feedback seriously and should be commended for this. In the latest revision, important adjustments include: clarification was provided to the gifts and other “benefits” CFPs cannot receive from clients if it will compromise their objectivity; the requirement that CFP professionals cannot use the term “fee-based” to imply they’re fee-only was expanded to stipulate that CFPs cannot use any other not-fee-only term to imply they are fee-only either; clarification that salary-based advisors who receive bonuses for product sales must still disclose this compensation as sales-related; and a new exclusion allowing advisors who use TAMPs to not run afoul of the fee-only rules simply for outsourcing investment management functions. Overall, these are good and reasonable changes.

However, there are a few areas in the new revised Standards of Professional Conduct that are more concerning. The first is that under the original proposal, the CFP Board significantly expanded the disclosure requirements for CFP professionals. Not only at the time the client engages the advisor, but also with a new “Initial Disclosure Information” document that would have to be provided to prospects, detailing the nature of the CFP professional’s services, a description of how they are compensated, and a summary of their conflicts of interest (basically an RIA’s Form ADV Part 2). But here, the broker-dealer community pushed back very hard in their comment letters, claiming that this new initial disclosure requirement would simply be too onerous for them. Which, in reality, really is hard to supervise, as this kind of upfront information document would likely itself be treated as “advertising” communication with the public under FINRA Rule 2210. And so the CFP Board backed off the upfront disclosure requirement, albeit while still keeping the requirement for disclosure at the time the client actually engages the CFP professional. Overall, it’s very unfortunate that the CFP Board backed off this initial disclosure requirement, but understandable, as higher standards do need to be administratively feasible.

The other, perhaps more concerning change that came through under the revised Standards of Professional Conduct, is a shift in the presumption of when a CFP professional is actually doing financial planning or not. This distinction has actually been a major issue under the CFP Board’s Standards of Conduct for a long time. Under the current rules, there is effectively a “loophole” that allows CFP professionals to escape their fiduciary duty under the CFP Board’s Standards, because the current rules state that a CFP professional only has a fiduciary duty to clients when doing financial planning or material elements of financial planning (which meant CFP professionals could avoid their fiduciary obligation by just not actually doing financial planning). Accordingly, it was a big deal that under the new Standards of Professional Conduct the new rule would become “fiduciary all the time” as a CFP professional, with a presumption that any time a CFP professional engages with clients, they are doing financial planning (unless proven otherwise). In the revised standards, though, the CFP Board has dropped this rebuttable presumption. As it stands, all CFP professionals will still be fiduciaries when providing financial advice – which includes product sales – but there’s no presumption that they’re actually doing financial planning just because they’re CFP professionals (which means they don’t have to adhere to the full Practice Standards for delivering financial planning). As a result, there are now basically have two types of CFPs: those who provide financial planning advice, and those who provide non-financial-planning financial advice and don’t have to adhere to the Practice Standards for financial planners. Confusing? Exactly.

In other words, all marketing to the contrary, the CFP Board’s revised standards are effectively telling the public “it’s not even safe to assume that engaging a CERTIFIED FINANCIAL PLANNER professional for financial advice will result in any actual financial planning.” Which is problematic both for the weakened consumer protection, and the fact that it’s not even clear how to apply a fiduciary duty to non-financial-planning financial advice, or what standards such a CFP would be held to.

If you agree that this is concerning as well, I hope you’ll submit a public comment letter next month. The point is not that every CFP professional must do financial planning for every client, but to emphasize to the CFP Board that when a CFP professional holds out to the public as a CFP, that the consumer should be able to safely assume they will be getting financial planning subject to the full standards that apply to financial planning, unless a clear advisory agreement and scope of engagement stipulates otherwise and the CFP professional clearly disclosures this is not financial planning advice. Otherwise, the CFP marks risk simply becoming a misleading marketing label that implies to consumers a breadth of financial planning expertise and advice that the CFP Board doesn’t actually require of those CFP professionals in the first place.

Christmas & New Year Opening at Taxfile

Taxfile will be open as usual until Saturday* 23 December. We then close briefly for Christmas Day and Boxing Day (Monday 25 & Tuesday 26 December respectively). We will be open again as usual from Wednesday 27th to Saturday* 30th December, then closed for the New Year's celebrations until Tuesday 2nd January 2018 when we re-open again —from that date it's back to our usual working hours. Here are the full details:

Thursday 21 December: open 9am - 5pm
Friday 22 December: open 9am - 3pm
Saturday 23 December: open 10am to 1pm (by appointment only)
Sunday 24 December: closed
Monday 25 December (Christmas Day): closed
Tuesday 26 December (Boxing Day): closed
Wednesday 27 December: open 9am - 5pm
Thursday 28 December: open 9am - 5pm
Friday 29 December: open 9am - 3pm
Saturday 30 December: open 10am -1pm (by appointment only)
Sunday 31 December: closed
Monday 1 January 2018 (New Year's Day): closed for the Bank Holiday
Tuesday 2 January onwards: open as usual Mon-Tues 9-6, Wed-Thur 9-5, Fri 9-3, Sat 9-1 (by appointment)

*Saturday morning opening is from 10am to 1pm and is for appointments only, so do book an appointment if you'd like to discuss anything with us at the weekend rather than during the normal working week.

Last few free 20 minute appointments - act fast if you'd like a free tax consultation!

If you would like a free 20 minute consultation for any tax matter, please book a date before the end of December as we pause free consultations during our busiest month of the year – in January we are swamped with tax return deadlines and have to concentrate on hitting those on behalf of our customers. Free 20 minute consultations will, of course, resume from 1st February. You can book an appointment online here or simply call 0208 761 8000 (07766 495 871 after office hours) to arrange one with our tax professionals. The Taxfile Team would like to wish all our readers and customers a very happy festive season and to pass on our very best wishes to everyone for the New Year. Thank you too for your custom during 2017 — we really appreciate it. Here's to 2018 when it arrives!

source http://www.taxfile.co.uk/2017/12/christmas-new-year-opening/

Tax Return Reminder: Beat the Last Minute Rush & Save Money!

Self-assessment tax return help from Taxfile

If you'd like our help with your Self-Assessment tax return, please do try to get your records and figures to us before 10th of January if you want to avoid the last minute rush and save money – there will be slightly higher charges for our help from that date (inclusive). This is to cover extra staff and overtime required during the the final part of January - our busiest time of the year - when we can deal with all the last minute returns for those who have left it until the last minute. So, save hassle, avoid the last minute bottlenecks and also save yourself some money by getting your records and figures to us well before 10th January if at all possible. We can still help thereafter, of course, but it'll cost you a little bit more. For individuals, your figures, records and, where applicable, receipts are required for the financial year 6 April 2016 to 5 April 2017. (For business accounts, of course, we will also need to do accounts based on the business's individual year end). Either book your appointment online at taxfile.co.uk/appointments/ or call the office on 0208 761 8000 (07766 495 871 after hours). If English is not your first language we can still help, as our team speaks a variety of languages. Please don’t leave it to the last minute – thank you.

source http://www.taxfile.co.uk/2017/12/tax-return-reminder-act-fast-save-money/

Wednesday, 20 December 2017

Tax Reform Bill Passed: Here’s What It Means for You

Today Congress passed the largest piece of tax reform legislation in more than three decades. The bill will affect the taxes of most taxpayers, but one key point to keep in mind is that for most people, the bill doesn’t...

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source https://blog.turbotax.intuit.com/tax-reform/tax-reform-2017-passed-heres-what-it-means-to-you-32864/

How to Spend Your Week on a $40 Budget

With the holidays approaching, it’s a great time to pad our pockets with a little extra cash before gift giving season arrives. So we tried out a little experiment: only spending $40 dollars for the whole week! Even though it was a...

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source https://blog.turbotax.intuit.com/tax-planning-2/how-to-spend-your-week-on-a-40-budget-24895/

Why Two Incomes Aren’t Always Better Than One

As gender dynamics in the home and workforce have continued to change (e.g., girls now outperform boys at every level of school and breadwinner mothers are increasingly becoming the norm), parents are no longer burdened with as strong of stereotypes influencing which parent (or both) should work. Which means parents have more opportunity than ever to be strategic in deciding how to structure their household, but with that increased flexibility also comes greater financial stakes – particularly for affluent households who are generally presumed to have both the most income potential as a dual-income household and the most opportunity to live off of one spouse’s earnings.

In this guest post, Dr. Derek Tharp – a Kitces.com Researcher, and a recent Ph.D. graduate from the financial planning program at Kansas State University – examines why having two household incomes is not necessarily better than one, particularly given the ways in which real-world households tend to structure their expenses, and the potential to leverage the “non-linearity premium” to boost lifetime earnings for households with one earner instead of two.

Households with two incomes are generally considered to be more financially secure than households with one. However, research from Elizabeth Warren and Amelia Warren Tyagi indicates that despite the dramatic rise in total household income as families moved from a single-earner to a dual-earner structure (from the 1970s to the early-2000s), total discretionary income actually declined over that same time period. Which means total fixed expenses also rose dramatically (primarily due to the need to purchase a second vehicle and housing inflation as parents engaged in bidding wars to get their children into the best school districts), at the same time that families were losing an important financial safeguard: the ability for a non-working spouse to enter the labor force during a financial shock. Ultimately, this leads to the counterintuitive insight that dual-income households may actually be more fragile when facing a sudden loss of one spouse’s income… but also an important corollary, that dual-income households can be most secure when they live off one spouse’s income instead of two!

Additionally, while it would seem that dual-income households have an obvious advantage in total earning potential, this isn’t necessarily the case. In some fields – particularly business, finance, and law – earnings potential exhibits what Harvard economist Claudia Goldin calls a “non-linearity premium”, which means that someone who works half-time is generally going to receive less than half-time pay, whereas someone who works double the normal hours has the potential to receive more than double the compensation. In other words, a lawyer working 80 hours per week will generally outearn two lawyers each working 40 hours per week, and this is particularly true considering that a lawyer working 80 hours per week can expect to “peak” much higher in their career (e.g., making partner at a prestigious firm) than two lawyers each working 40 hours per week and sharing household responsibilities.

Ultimately, there are many financial considerations for households contemplating a dual-income versus a single-income approach… from emergency fund savings and disability insurance, to maintaining the earning capacity of a non-working spouse and considerations for divorce… and there are certainly many other non-financial considerations as well, but the reality is that it’s not necessarily true that two incomes are always best. In terms of increasing financial stability and lifetime earnings potential, sometimes two incomes are not better than one!

Tuesday, 19 December 2017

How Will a Big Move Across the Country Affect My Taxes?

I was still in college when I first got married, and only had more year left, so we got a small apartment near campus. While we loved living right across the street from the beach, we knew once I graduated...

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source https://blog.turbotax.intuit.com/deductions-and-credits/how-will-a-big-move-across-the-country-affect-my-taxes-32744/

#FASuccess Ep 051: What Robo-Advisors Can Teach Human Advisors About Evidence-Based Behavioral Finance with Dan Egan

Welcome, everyone! Welcome to the 51st episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Dan Egan. Dan is the Director of Behavioral Finance and Investments at Betterment, the so-called “robo-advisor” that now manages more than $12 billion of assets under management for over 300,000 clients.

What’s fascinating about Dan, though, is not simply that he was an early employee and Director at Betterment as the company as grown, but specifically his role as the Director of Behavioral Finance at a robo-advisor. In a time when the primary criticism that financial advisors levy at robo-advisors is their supposed inability to help clients with their behavioral issues when it comes to investing.

In this episode, we talk in depth about the nature of the “robo-advisor” movement, why the reality is that Betterment and its ilk aren’t really in competition with financial advisors because they serve a different kind of consumer with different needs, how Betterment over the years has built an increasingly more robust goals-based financial planning process for its clients, and the challenges and opportunities that come with trying to deliver financial planning and investment advice at scale – in a world where Betterment serves more than 300,000 clients, while the typical advisory firm has no more than about 100 clients per advisor.

We also talk about what Betterment is doing specifically from the behavioral finance perspective, how Betterment is actually testing behavioral finance interventions to help their clients using a robust scientific process, the kinds of evidence-based insights they’re gleaning about how we can help clients better – including how the conventional wisdom of strategies like “proactively communicating with clients during times of market volatility” can actually backfire – and the ways that companies like Betterment may actually be better positioned to help clients with certain behavioral issues, because unlike most financial advisors Betterment doesn’t have to rely on third-party technology firms and instead can build its technology tools to nudge clients in the exact direction they need.

And be certain to listen to the end, as Dan discusses some of the insights he’s gleaned about where and how human advisors will continue to be superior to technology in some areas, even as technology makes other aspects of what advisory firms do less and less valuable and more automated for everyone.

So whether you have been contemplating offering your own robo-advisor solution, are interested in how you can better incorporate insights from behavioral finance into your practice, or are curious about the areas in which human advisors will continue to be superior to technology, I hope you enjoy this episode of the Financial Advisor Success podcast!

source https://www.kitces.com/blog/dan-egan-betterment-podcast-robo-advisor-evidence-based-behavioral-finance-research/?utm_source=rss&utm_medium=rss&utm_campaign=dan-egan-betterment-podcast-robo-advisor-evidence-based-behavioral-finance-research

Monday, 18 December 2017

Individual Tax Planning Under The Tax Cuts And Jobs Act Of 2017

Major tax reform typically only occurs once every decade or few. But after a tumultuous series of negotiations in both the House and Senate, a final reconciled version of the Tax Cuts and Jobs Act of 2017 appears to be heading shortly to President Trump for signature.

The legislation will result in substantive tax reform for corporations, with the elimination of the AMT and consolidation down to a single 21% tax rate, all of which are permanent. However, when it comes to individuals, the new legislation is more of a series of cuts and tweaks, which arguably introduce more tax planning complexity for many, and will be subject to a(nother) infamous sunset provision after the year 2025.

Nonetheless, the new tax laws have a lot to like for individuals, almost all of whom will see a reduction of taxes in the coming years (though not after the 2025 sunset). While 7 tax brackets remain, most are decreased by a few percentage points (to a top rate of 37%), along with the repeal of the Pease limitation. The AMT remains, but its exemption is widened. Most common deductions remain, though they are more limited, and an expanded standard deduction means fewer will likely claim itemized deductions at all in the future. A much wider range of families will benefit from a great expanded Child Tax Credit (with drastically higher income phaseouts). And a doubling of the estate tax exemption amount – to $11.2M for individuals, and $22.4M for couples with portability, will make estate tax planning irrelevant in 2018 and beyond for all but the wealthiest of ultra-HNW clients.

Of particular interest for financial advisors are a number of key provisions. The controversial rule that would have eliminated individual lot identification, and required all investors to use FIFO accounting, is out and not included in the final legislation. However, also out is the ability to deduct any miscellaneous itemized deductions subject to the 2% of AGI floor – which means all investment advisory fees will no longer be deductible starting in 2018. In addition, several popular Roth strategies will be curtailed by the repeal of recharacterizations of Roth conversions (although the backdoor Roth rules remain). And while the deduction for pass-through businesses remains in place in the final legislation, and may be appealing for “smaller” advisors whose total income is under the $157,500 for individuals (and $315,000 for married couples) threshold. Although for larger advisory firms, the service business treatment is so unappealing, that large RIAs may soon all convert to C corporations (or at least, become LLCs and partnerships taxed as corporations under the “Check The Box” rules).

Ultimately, the new tax rules are actually complex enough that it will likely take months or even years for all of the new tax strategies to emerge, from when it will (or won’t) make sense to convert to a pass-through business, to navigating the new tax brackets, and the emergence of strategies like “charitable lumping” to navigate a higher standard deduction. In the near term, though, most are simply focused on taking advantage of end-of-year tax planning… especially taking advantage of deductions in the next two weeks that may not be available after 2017 once the Tax Cuts and Jobs Act is signed into law.

On the “plus” side, though, at least ongoing tax complexity means there will continue to be value for tax planning advice?

Saturday, 16 December 2017

Happy Posada! 9 Ways to Host While on a Holiday Budget

December is here and the holiday season is upon us! Whether you’re celebrating Christmas, Hanukkah, or Mawlid, now is the time to enjoy traditions and festivities with family and friends. Chances are you have loved ones coming to town for...

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source https://blog.turbotax.intuit.com/tax-planning-2/happy-posada-9-ways-to-host-while-on-a-holiday-budget-25228/

Tax Reform 2017 Bill Finalized: Here’s What Goes to Vote For 2018 Taxes

Today Congress finalized the Tax Cuts and Jobs Act tax reform bill. The bill is due to go to the floor for a vote by the House and Senate early next week. The Tax Cuts and Jobs Act tax reform...

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source https://blog.turbotax.intuit.com/tax-reform/tax-reform-2017-bill-finalized-heres-what-goes-to-vote-for-2018-taxes-32800/

Friday, 15 December 2017

Weekend Reading for Financial Planners (December 16-17)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the buzz that last-minute changes to the pass-through provisions of the proposed Republican tax plan could have a major impact on broker-dealers and RIAs, given that the version as written would have a substantial bias for independent broker-dealers over employee brokers (as the former would be eligible for favorable pass-through treatment while the latter would not), and would present significant challenges for large RIAs (that may struggle to raise capital given their less preferential tax rates than other industries). With a final tax plan due “imminently” soon, we’ll see what the final outcome will be.

Also in the news this week was a fascinating consumer study, which finds that the rise of “robo-advisors” and digital advice tools isn’t causing consumers to move away from human financial advisors, and instead is leading self-directed investors to adopt a combination of human and digital solutions – the first indication that the rise of digital tools could actually be a boon for human financial advisors (particularly those positioned to add value on top of what increasingly sophisticated digital tools can already provide to consumers directly).

From there, we have several articles about (digital and content) marketing for financial advisors, including guidance on how to effectively design a real lead-generation process on your financial advisor website, the typical content marketing mistakes that most financial advisory firms make when they get started with digital marketing, how advisors need to focus more on the “triggers” that make prospects actually seek out a financial advisor in order to drive more new business, and some ideas about how advisors can change their marketing in a world where client referrals appear to be on the decline.

We also have a few practice management articles this week, from a look at the recent Investment News Advisor Compensation benchmarking study that shows financial advisor compensation is up significantly (good news for advisors) but that growth is declining (an ominous sign for many firms), to a discussion of the recently emerging trend of large RIAs forming their own subsidiary broker-dealers (to manage old legacy B/D business, or even to facilitate the offering of alternative investments to new clients), and a discussion of whether the introduction of private equity firms to the RIA space could ultimately threaten their growth trends by introducing new conflicts of interest (in a world where RIAs thus far have thrived in part from their sheer lack of conflicts relative to other advisor business models).

We wrap up with three interesting articles, all around the theme of managing your personal productivity and creating a structured schedule: the first explores how the classic 8-hour workday may be an anachronism of the modern world, as while it was a humane change to long factory hours, in the modern world of knowledge-based work, a structure of 1-hour-on-and-15-minute-break appears to be far more conducive to productivity; the second looks at how structuring your day can help to facilitate better personal productivity when working from home; and the last discusses how the “ideal structure” for your day varies dramatically depending on whether you’re a “maker” (a creative type, who needs long blocks of uninterrupted time) or a “manager” (who needs a highly structured schedule of short meetings to put out all the necessary fires and manage a team in the right direction)… and the conflicts that can arise when makers and managers don’t respect the fact that the other has a very different ideal schedule.

Enjoy the “light” reading!

Thursday, 14 December 2017

5 End of the Year Tax Tips for Newly Married Couples

With reality comes taxes and the challenges that a newly married couple must face. Once the honeymoon is over, it’s time to start getting serious about your finances as a couple. And that includes getting your tax situation in order. Remember that your marital status is determined by your status on December 31. As the year draws to a close, and as you consider your new married filing jointly status, here are five tips to keep in mind.

source https://blog.turbotax.intuit.com/tax-planning-2/5-end-of-the-year-tax-tips-for-newly-married-couples-12146/

The TurboTax Guide to Avoiding Estimated Tax Penalties

If you’re self-employed, estimated taxes are a part of your business life. This means you may need to send quarterly estimated taxes four times a year (in April, June, September, and January) since the United States works off the principle...

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source https://blog.turbotax.intuit.com/self-employed/the-turbotax-guide-to-avoiding-estimated-tax-penalties-32728/

Another Reason For Putting Your Advisory Firm Fees And Minimums On Your Website

The conventional wisdom amongst financial advisors is that the best place to talk about advisory fees and minimums is face-to-face with prospective clients, who are told “Come in for an introductory meeting and ‘we’ll talk’ about the cost to work together.” Doing so allows the financial advisor the opportunity to explain the nature of what he/she does, and the value of their services, to provide better context regarding their costs. And, if necessary, allows the advisor to make an on-the-spot decision about whether to grant a prospective client an exception when it comes to their fees or minimums. Except as it turns out, that also may be the biggest drawback to waiting until the first prospect meeting to discuss advisory fees and minimums, and can actually put us in situations where we make ‘business’ decisions we ultimately regret!

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we look at why it is important to put your advisory firm fees and minimums on your website up front, including why it makes you more referable, helps screen out non-qualified prospects, and can protect us from ourselves when it comes to making fee and minimum concessions just to get (bad-fit) clients!

The first issue with not publishing your advisory fees and minimums, though, is simply what it communicates to the client. After all, the RIA that doesn’t publish their fee schedule online is effectively saying: “We believe in fiduciary transparency. That’s why we won’t tell up front what we charge.” And the reality is that, when it comes to RIAs in particular, our fees are already publicly available through the SEC’s Investment Adviser Public Disclosure website anyway! Which makes advisory firms seems as though they have something they’re trying to hide by making already-required-to-be-public fee schedules and minimums difficult for prospects to find. And to make matters even worse, not putting your fees and minimums on your website makes it hard for other people to refer to you, as there’s nothing more embarrassing for a referrer than sending someone to you, only to have you reject them. As a result, referrers are tempted not to refer, because it’s safe to not refer to you than it is to refer and risk creating an awkward social situation if their referral doesn’t meet your minimums or can’t afford your fees!

Another important consideration is how listing your fees and minimums allows your website to screen out non-qualified prospects. And this is valuable for advisors, because one of the most wasteful things you can do, from a business development perspective, is to spend a lot of time meeting with prospects who aren’t actually qualified to do business with you. When prospective clients can see what you cost and what your minimums are, if it’s not a good fit for them, they’ll just move on. Perhaps every now and then you’ll miss out on a prospect you might have converted and convinced you were valuable enough and worth paying for if you met in person. But you’ll also save a lot of wasted meetings with people who were, realistically, never going to do business with you.

Perhaps most important, though, is the simple fact that as a helping profession, most financial planners want to help people. Which means it can be especially hard to tell someone “no” to their face in a meeting, leading to the temptation to discount fees, reduce minimums, or make other on-the-spot concessions. And even for otherwise qualified clients, it’s difficult in the moment to stand firm on your advisory fees if a prospective client questions them the first time they hear about the fee. But when advisory fees and minimums are disclosed on your website, prospects know the details up front – and if it’s not a good fit, they likely won’t contact you in the first place. Which reduces the risk that you put yourself in the awkward position where you make bad business concessions to a prospect simply because it felt too awkward to reject them (even if it would have been a good business decision to do so!).

Because in the end, actually putting fees on your website is not that hard. Just write “Our fee schedule is <blank>. The minimum to work with us is <ZZZ> of assets.” If you are concerned about the possibility that you might take a client with only $300,000 who was in their 40s, then go ahead and just write something like “Our minimums are $500,000 of investable assets. However, our services are also available to active accumulators under the age of 45 with only a $300,000 minimum.” In other words, if you have rules about how you decide which clients to take, or not, simply disclose it, and let prospective clients choose!

The bottom line, though, is simply to recognize that putting your advisory fees and minimums on your website is good business. Both because it helps to fulfill your brand promise of being a real fiduciary. And because it makes it easier to refer to you. But most of all, because it helps to screen out non-qualified prospects, so you don’t meet with them when you shouldn’t. Which at best wastes your time. And it worst puts you in a position where you can’t help yourself and allow your fees and minimums to be haggled down. Which is not good for your business in the long run!

Wednesday, 13 December 2017

Tax Reform Legislation 2017: What You Should Know

You may or may not have heard news about tax reform lately. If you have, you may be wondering if and when new tax legislation will pass and how it will impact you. As with previous years when we are...

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source https://blog.turbotax.intuit.com/tax-reform/tax-reform-legislation-2017-what-you-should-know-32765/

How The Proposed Pass-Through Rules Distort Income And Valuations Of Large Service Businesses

A key aspect of proposed tax reforms, ever since President Trump was on the campaign trail, was the possibility of reducing the tax rate on pass-through business entities like S corporations, LLCs, and partnerships. To some, the tax break was intended as an incentive for small business growth. For others, it was viewed as a necessity when proposed corporate tax reform and lower tax rates for C corporations would effectively put pass-through entities at a disadvantage without a similar break. Either way, there has been substantial momentum on the proposal, which was codified in both the House and Senate versions of the Tax Cuts and Jobs Act.

However, a key caveat of creating favorable treatment for pass-through businesses is to not unwittingly convert personal labor income – i.e., wages or self employment income – into pass-through income eligible for favorable rates. Which at the least can distort the relative incentives of being an employee (paid as wages) versus self-employed (paid through a pass-through business entity). And at worst could incentivize employees to literally quit their jobs and try to get rehired as independent consultants – and paid through shell pass-through businesses – just to obtain favorable rates.

As a result, both the House and Senate proposals under the Tax Cuts and Jobs Act would limit the availability of the pass-through for so-called “service businesses”, either by eliminating the favorable rates for those who are “active participants” in a pass-through service business (in the House version), or simply eliminating the preferential treatment altogether for pass-through service businesses (in the Senate version).

Yet in practice, the actual mechanisms that both the House and Senate have created impose substantial economic burdens on large service businesses. Founder/employees of large service businesses (e.g., with $10M+ of employment income) can actually face marginal tax rates of 100%, 200%, or more on their wages as a leader of the firm, because their employment in their firm converts all their non-wage business income into less-favored ordinary income (under the House proposal). And large service businesses that want to scale may struggle to attract capital if their profits are literally “less valuable” on an after-tax basis to outside investors when all service business income is taxed less favorably (under the Senate proposal).

Which means ultimately, if the goal is to reasonably separate “labor income” from “capital income” without distorting large service businesses, it’s necessary to adapt the rules further. One option is to simply codify a requirement that in service businesses, “reasonable compensation” must be paid (and taxed as wages), with only the excess eligible for favorable pass-through treatment (perhaps with a safe harbor to stipulate that any excess above a certain level of income is automatically eligible for pass-through treatment). Or alternatively, Congress could actually designate a “qualifying large service business” (e.g., with at least $10M of revenue and 30+ employees) that is automatically deemed to qualify its business income as favorable pass-through income (as such businesses typically already have governance mechanisms in place to ensure owner-employees are paid properly as owners for their labor, and separately for their pass-through business profits).

Without some solution, though, service businesses face substantial disadvantages in attracting capital, and/or outright disincentives for founders to continue to work – potentially with marginal tax rates in excess of 100%! Or alternatively, the current proposals may simply drive large service businesses to all recharacterize themselves as C corporations, in a world where the corporate tax rate would be dramatically lower (and even if the firm was deemed a Personal Service Corporation, would be taxed more favorably than a pass-through service business if top corporate tax rates are only 20%). Which would then disadvantage any service businesses that couldn’t effectively reorganize as a C corporation.

The bottom line, though, is simply to recognize that while it’s an important matter of tax policy to tax labor income as labor income, and business income as business income… the reality is that in large service businesses, the profits of the business are substantially attributable to investments in capital (albeit human capital), and not just the fruits of a owner-employee’s personal labor. Good tax policy must recognize that difference.

Tuesday, 12 December 2017

Want to win $1000? Enter the TurboTax AbsoluteZero Sweepstakes today!

What’s the best part of filing your taxes? Paying absolutely nothing. TurboTax Online is now open, and we’re once again giving more than 60 taxpayers filing a 1040A or 1040EZ the ability to easily file their federal and state taxes...

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source https://blog.turbotax.intuit.com/announcements/want-to-win-1000-enter-the-turbotax-absolutezero-sweepstakes-today-32751/

#FASuccess Ep 050: The Value Of Hiring A Financial Advisor Coach To Maintain Your Business Focus with Tracy Beckes

Welcome, everyone! Welcome to the 50th episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Tracy Beckes. Tracy runs an eponymous financial advisor coaching firm, and in fact was one of the very first coaches to specialize in working with financial advisors nearly 20 years ago.

What’s fascinating about Tracy, though, is not merely her history as a coach for financial advisors, but the way that she’s been able to systematize her coaching strategies into concrete tools and templates that she uses with her coaching clients to help them navigate the common challenges of trying to run what she calls an “Effortless, Outrageous” practice.

In this episode, we talk in depth about some of Tracy’s coaching tools, from the value of creating Engagement Standards with clients that set the terms of both what the advisor commits to doing for the client and what the client is expected to do to be a productive part of the advisor-client relationship, to why it’s so important to create a “cadence of accountability” within an advisory firm with a regular series of daily, weekly, and quarterly scheduled meetings, to the benefits of creating a one-page strategic business plan that sets forth the business’ Core Values, its Purpose, its Big Stretch Goal, and a series of 3-year, 12-month, and 90-day objectives, all built to help the firm create better focus in what it does… and how establishing a clear target market or niche can actually bring tremendous efficiency to an advisory firm and an advisor’s time in the business.

We also talk about what financial advisor coaching itself actually is, how it differs from training or consulting, why successful financial advisors so often seek out coaches – even when they’re already fairly successful in their businesses – and why the real secret to advisory firm growth is all about systematizing, developing people, and honoring the power of the 80/20 rule… which a financial advisor coach can help you to focus on.

And be certain to listen to the end, where we talk about how the real secret to having more productive team meetings is all about your ability to actually structure meetings to make key decisions or solve problems… and how advisors can better craft a meeting agenda process that helps to target the most important issues at every meeting.

So whether you have been considering hiring a financial advisor coach to maintain business focus, contemplating how you can better set and manage expectations for your relationships with clients, or interested in how you can have more productive team meetings, I hope you enjoy this episode of the Financial Advisor Success podcast!

source https://www.kitces.com/blog/tracy-beckes-associates-podcast-financial-advisor-coach-effortless-outrageous-lifestyle-practice/?utm_source=rss&utm_medium=rss&utm_campaign=tracy-beckes-associates-podcast-financial-advisor-coach-effortless-outrageous-lifestyle-practice

Monday, 11 December 2017

3 Real #FinTech Disruptions In The Financial Advisory Industry

While the accelerating pace of technological change has many industries buzzing about the risk of disruption – including the world of financial advice – in practice, many forecasted disruptions never come to pass. Sometimes, it’s because the new “innovation” isn’t really all that much better than the status quo – at least, not better-enough to convince people to make a change. In other cases, it’s simply because it’s a new solution that consumers aren’t yet accustomed to paying for.

In fact, often some of the most disruptive business models are the ones that succeed through the use of cross-subsidies – giving away “for free” something that consumers were previously paying for, because there’s an opportunity to make money in other ways instead. Or viewed another way – not every part of every business model must be compensated, as long as there’s at least one component that is valuable to someone who’s willing to pay enough to make it economically viable.

In the context of financial advisors in particular, the rise of technology and the opportunities of cross-subsidy models introduce the potential for numerous disruptions in the coming years. From an RIA custodian that gives away the actual custody services, trading, and execution for free (and gets paid for its technology platform instead), to model management software that makes it feasible to buy index ETFs (or factor-weighted smart beta, or portfolios with SRI tilts) without the need for a mutual fund or ETF itself, and even the possibility that in the future some financial advisors might stop charging for investment management altogether and instead charge fee-for-service financial planning and “give away” the investment management services for free!

Ultimately, the challenge of disruptive cross-subsidy models is that they still require finding someone who is willing to pay for a key component of value, potentially at a cost that is far higher (or at least far different) than what he/she was accustomed to previously. Nonetheless, from Google Maps disrupting Garmin, to Chance the Rapper and other musicians increasingly giving away their music for free (and getting paid for live performances and merchandising instead), the reality is that significant disruption can occur by finding the one most valuable component of a solution… and giving everything else away for “free” to support that core value.

Is it time for the industry supporting financial advisors – and the financial advisor business model itself – to experience such a disruption?

Friday, 8 December 2017

Weekend Reading for Financial Planners (December 9-10)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the “leaked” announcement that Merrill Lynch isn’t “currently” making plans to leave the Broker Protocol, while avoiding making any official statement that would foreclose on their ability to leave next year, even as rumblings begin that Wells Fargo might be thinking about whether to leave the Protocol instead, and use its FiNet platform as a way to retain its more independent-minded brokers without allowing them to be recruited away.

From there, we have several articles about advisor technology, including the results of the latest annual Advisor Technology survey from Financial Planning magazine (which unfortunately is no longer headed by advisor tech guru Joel Bruckenstein and doesn’t provide nearly as much useful information as it once did), a review of the MaxMyInterest platform that is using “robo” tools to automate maximizing cash yields for RIA clients (and self-directed investors), an overview of the tech strategies and roadmaps of the leading RIA custodians, a discussion of the ongoing rise of model portfolios (and the technology to execute them), and a good reminder of how challenging it is for financial advisors to switch financial planning software platforms.

We also have a few more technical tax-planning articles this week, from a great in-depth overview of year-end tax planning strategies, a reminder of why estate tax planning is still relevant for high net worth clients (even if the estate tax exemptions are increased or potentially repealed), and a list of “tax alpha” strategies that advisors can engage in to improve a client’s after-tax portfolio returns.

We wrap up with three interesting articles, all around the theme of the changing future of financial planning: the first looks at how the rise of digital personal finance tools is making it easier and easier for researchers to test new forms of “digital nudges” to help people improve their financial behaviors; the second explores the ongoing rise of financial planning academic, as the number of degree-based financial planning programs now exceeds adult certificate programs and more and more financial planning practitioners are becoming part-time professors; and the last provides a good reminder that, even as the RIA community worries about whether the SEC’s uniform fiduciary standard could lead to FINRA becoming a regulator of RIAs, that the SEC hasn’t done a particularly good job of regulating RIAs either… including the fact that if the Investment Advisers Act of 1940 was enforced as written, the majority of “advisors” at broker-dealers would already be fiduciary RIAs, and the entire DoL fiduciary rule would have been a moot point in the first place!

Enjoy the “light” reading!

How to Plan Your Holiday Party On a Budget

With so many family and friends gathering together for the holidays, it’s a season of parties and get-togethers. If you’re throwing a soirée yourself, you may be stressing out with all of the plans. Who should I invite? What food should...

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source https://blog.turbotax.intuit.com/income-and-investments/how-to-plan-your-holiday-party-on-a-budget-32722/

Thursday, 7 December 2017

Advisor #FinTech As A Distribution Channel For Insurance And Investment Products

The competition for getting a financial advisor’s attention has never been fiercer… which in recent years has led to an explosion of increasingly aggressive wholesaler efforts to try to get in front of advisors, especially in the RIA channel. The volume of inquiries has risen so much, most advisors don’t even have the time to politely say “no” to all the requests, and instead are increasingly adopting a “don’t call us, we’ll call you if we want information” approach, or simply going directly to the websites of product manufacturers for the information they need. Which means asset managers, insurance companies, and other financial services product manufacturers need to find new and innovative ways to reach advisors in the first place, to get their investment, insurance, and annuity products to market.

In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we look at an emerging trend of investment and insurance product distributioin: the idea of technology itself as a product distribution channel to reach advisors… and the opportunities, innovations, and conflicts of interest that arise from such arrangements!

The most apparent starting point for this shift of technology as a distribution channel was the rise of the robo-advisors. Robo-advisors first started gaining real momentum in 2014, and it was around this time that asset managers – particularly fund managers – began asking, “Do we need to launch our own robo advisors, or risk being excluded from the trend?” But the reality was that there was nothing unique about robo-advisors that required the use of ETFs. Effectively robo-advisor technology was simply a way to gather assets and execute a managed account, which means the technology was basically just another distribution channel for the asset manager – companies that could get their products into the managed account wrapper were the winners. And so, after Schwab picked up over $2B in assets in just their first 3 months of Schwab Intelligent Portfolios – comprised nearly 70% of Schwab’s own proprietary products – BlackRock decided to acquire FutureAdvisor to distribute their iShares ETFs, Invesco bought Jemstep to distribute PowerShares ETFs, and WisdomTree invested heavily into AdvisorEngine to distribute WisdomTree ETFs, as asset managers began seeking robo-platforms that they could put their funds on and offer the technology to advisors – turning the robo-advisor into a distribution channel (and owning your own robo-advisor as a vertically integrated distribution strategy).

Over the past year, this evolution of technology as a distribution channel has gone one step further, with the rise of the so-called “Model Marketplace”, where advisors can select third-party investment models, and then have trades automatically executed in the advisor’s own portfolio management or rebalancing software tools. The distinction from the early robo-advisors like Wealthfront, Betterment, FutureAdvisor, and Schwab Intelligent Portfolios was that advisors remain responsible for (and in control of) placing trades, although that trading is made very easy by the technology. However, the caveat for such portfolios was that in order to use them for free, advisors typically must use pre-fabricated models in the marketplace… which are often made by the asset managers, and include their own proprietary funds. In point of fact, the technology is so becoming a distribution channel, that now asset managers are starting to subsidize the cost of advisor technology, just to have a chance to get their funds into the hands of the advisors that use the technology! And notably, this trend isn’t unique to “just” rebalancing software and model marketplaces, as financial planning software such as MoneyGuidePro and Advizr have begun to partner with product companies to easily recommend appropriate insurance or investment products where the client can open the account or apply electronically on the spot from within the planning software itself!

And despite the rapid push towards new technology channels, I suspect we’re still in the early phases of this transition to the idea that Advisor FinTech itself can be a distribution channel. From the technology company’s perspective, the good news of this emerging channel is that it provides a new source of revenue for companies, especially since advisors have already shown far more willingness to have technology costs borne by the expense ratios of insurance and investment products, rather than by paying for the software directly from their own Profit and Loss statement.

However, with this new distribution channel will come new innovation, opportunities, and conflicts of interest – as technology companies struggle with everything from overcoming the same growth problems that robo-advisors faced in the first place (as it’s very hard to grow user adoption, and existing incumbents with existing brands can easily leapfrog new entrants), to technology companies navigating the mid-point between the conflicts of getting paid for product distribution and trying to satisfy independent fiduciary advisors (as the recent debacle of TD Ameritrade’s ETF Market Center illustrated).

The bottom line, though, is simply to recognize that a major shift is currently underway. As advisors increasingly adopt the technology, the technology itself is becoming a distribution channel for products that asset managers, insurance companies, and annuity companies, who seem very willing to pay for access in a competitive marketplace. Which means more new tools and innovation for advisors. But also tools with a whole new range of conflicts of interest that we’ve never had to deal with before!