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May 10, 2013

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A weekly digest of news and industry updates for the financial planning community

Top Story

Financial advice boosts retirement confidence, survey finds
Having a financial adviser provides increased peace of mind regarding retirement, according to a study by Age Wave for Merrill Lynch Wealth Management. "People definitely benefit from professional assistance when it comes to saving for retirement," said Ken Dychtwald, CEO of Age Wave. "We found that those who use professional assistance, such as advisers, were 1.5 times more likely to get better results in planning and saving for retirement versus those that tried to do it on their own." PlanAdviser.com (5/7)

Policy Watch

SEC's no-guilt settlement policy is under review, White says
The Securities and Exchange Commission is examining the practice of settling cases with defendants without requiring an admission of guilt, SEC Chairwoman Mary Jo White told a congressional panel this week. White also defended the policy, saying it allows money to flow to investors quickly. The Washington Post/The Associated Press (5/7)

White asks Congress for 26% boost in SEC budget
Securities and Exchange Commission Chairwoman Mary Jo White went before a Senate appropriations subcommittee this week, asking for a 26% increase in the budget for her agency. She told lawmakers the bump in funding for 2014 was needed "to keep pace with the growing size and complexity of the securities markets." The New York Times (tiered subscription model)/DealBook blog (5/7)

Practice Management

Define goals, expectations when mentoring junior advisers
Mentoring junior advisers requires establishing clear roles or duties that they are expected to assume, writes Joni Youngwirth, managing principal of practice management at Commonwealth Financial Network. "Often, senior advisers have very different ideas about the skills they want a junior adviser to develop," Youngwirth writes. She provides a checklist of possible responsibilities the junior adviser can assume in this post. FPAnet.org/Practice Management Center blog (5/7)

Landing top advisers means winning over families, poll suggests
A Fidelity Investments poll indicates that a key to landing a high-performing adviser is influencing that person's spouse. Forty percent of advisers who switched firms in the previous five years had the encouragement of their families, the survey showed. Firms trying to retain top advisers also should pay attention to spouses, Fidelity's Sanjiv Mirchandani says. Financial-Planning.com (5/8)

Industry Report

How 401(k) fees can diminish retirement savings
Just 1% more in 401(k) fees can lower a plan balance by 28% at retirement, according to one scenario cited by the U.S. Labor Department. The American Savings Education Council urges investors to closely examine investment, administrative and individual service fees in their plans. Financial-Planning.com (5/6)

Dealing with the higher tax rate for trust income
The American Taxpayer Relief Act of 2012 applies a 3.8% net investment income tax to trusts and estates that produce $11,950 or more in income in a year. Grantor trusts and a shift in underlying investments are two ways to minimize tax liability, experts say. InvestmentNews (free registration) (5/8)

Pool of financial advisers will keep shrinking, Cerulli says
U.S. financial advisers decreased by about 4,000 in 2011, and the total is likely to decline an additional 18,600 during the next few years, according to Cerulli Associates. "The continual aging of the industry is not being offset by the influx of new talent," Associate Director Tyler Cloherty said. "The wire houses are starting to train people again, but it's just not enough to make up for the number of advisers retiring and leaving the industry." InvestmentNews (free registration) (5/7), Financial Advisor online (5/7)

FPA News

Attend FPA Residency 2013 at the University of Georgia
Join us July 14 to 19 for FPA Residency 2013 at UGA. Residency bridges the gap between technical knowledge and client relationships for new planners who are eligible to sit for the CFP® Certification Examination or who passed the exam within the last three years. Earn continuing education credits or three months of experience. Register today at registration@georgiacenter.uga.edu.

Controlling the Urges: How Biases Influence Our Investment Decisions
Behavioral biases are traits or tendencies that influence us to think and act in certain ways. Financial advisers can provide tremendous value to their clients by understanding what biases influence them and helping reduce the influence of those biases. All people have some combination of behavioral biases -- they contribute to our individuality, and when it comes to investing, our irrationality. Read the full May issue of the Journal of Financial Planning online.

SmartQuote

I don't wait for moods. You accomplish nothing if you do that. Your mind must know it has got to get down to work."

--Pearl S. Buck,
American writer

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