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A couple of weeks ago, I was talking with my business coach, CJ McClanahan, and he said something that struck me: “People don’t have a vision for what the effort is going to deliver.”   If you think about that statement, it applies to several parts of our lives as financial planners.     Vision for Your Practice In today’s increasing regulatory environment, we tend to focus our attention on fighting the U.S. Department of Labor rule. In practice, the rule has already taken effect as clients are already asking planners if they are fiduciaries. For the last nine months, banks and wire houses have been converting their clients, for better or worse, to ...
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In 2014, the U.S. Treasury Department released new rules around Qualified Longevity Annuity Contracts or QLACs. After an initial increase in utilization, the focus and attention dwindled over the past two years. Today, the sale of all deferred income annuities remains stagnant and far below expectations from 2014. This gift that the government provided remains largely unused in the planning community.    As I prepared for a presentation recently, I asked our team to update our research on the use of QLACs at different ages and for different risk allocation models. The results were similar to an earlier study we did in 2015. In fact, the results from 2017 ...
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We’ve been talking about the market forces within the financial services industry that are moving us toward a new fiduciary environment. Because even though the U.S. Department of Labor Fiduciary Rule seems to be delayed until summer, what started in late 2016 continues to gain momentum.    What We’ve Already Seen At the end of last year, several firms announced strategies to mitigate conflicts of interest, and news articles have been asking consumers to ask their advisor if they are a fiduciary. Several advisors have told me that prospects have asked them on the phone if they are fiduciaries before making an appointment.    It is clear that changes ...
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As I was traveling around the country attending conferences, The New York Times published an article that caught the attention of many people in our industry. The 21 Questions Youre Going To Need To Ask About Investment Fees, points out questions we all need to get comfortable answering.* Better yet, we should prepare to discuss them upfront with our clients The article is a perfect example of the market effects taking place in the financial services industry. While the U.S. Department of Labor Fiduciary Rule has been delayed, our industry has already started a transition that is unlikely to be reversed. Our clients have been exposed to many of the ...
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On April 7, the U.S. Department of Labor (DOL) will likely publish an official delay of its fiduciary and conflicts of interest rule. Many in our industry have been waiting for this rule to be delayed, but several points around the fiduciary rule remain uncertain. Industry experts predict a further delay, allowing the DOL to fully complete President Trumps requested review of the rule. I want to stress to all who work in our industry that many aspects of the rule will go into effect June 9, 2017. Most notably, impartial conduct standards must be adhered to on any qualified sale after the delayed implementation date. Although the Best Interest Contract ...
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March Madness is the most exciting time of the year for me even more exciting than Christmas. You see, this time of year always brings back memories of Indianas run to the national championship in 1987. As a student manager, I can remember preparing the bench for the national championship game at the Superdome in New Orleans, Louisiana. I was extremely anxious everyone was. And, as I walked back into our locker room for the last time before warm-ups, what I saw made me even more anxious. Coach Bob Knight was laying on the training table. Hed folded his famous red sweater into a nice, neat pillow I couldnt believe he seemed to be resting peacefully ...
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If you read much about the U.S. Department of Labor Fiduciary Rule, you know many people are saying its unworkable. While I agree the rule may be overreaching and it will be difficult to meet all the disclosure requirements, I think its clear the effects of the rule are making a difference already. FINRA has fined an institution for creating conflicts and incentives to sell one product, and clients are asking prospective planners if they are a fiduciary. Still, many advisors feel like cannot work as a fiduciary. I believe with the right focus, you can. Defining Success As a student manager at Indiana, I worked in one of the most competitive ...
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Last year, I heard Robbie Bach speak at a carrier meeting. His story stuck with me it might stick with you, too, and inspire you to change your business model for a post-fiduciary world. If youve never heard of Robbie, hes the former leader of Microsofts Mobile Entertainment and Device division and was responsible for developing and bringing Xbox to the market. The console was eventually a success, but at one point, Robbie thought about resigning. Hed lost nearly $6 billion and was unable to penetrate the Japanese gaming market. To better fit his markets wants and desires, Robbie created an interactive, subscription-based business model. For ...
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Since Feb. 3, when the president signed a memorandum asking the Department of Labor to review the Fiduciary and Conflicts of Interest Rule, Ive talked to agents and advisors from around the county. Many feel a great sense of relief that the rule is likely to be delayed many believe this is the beginning of the end for the rule. Regardless of a potential delay or revision, I don't believe we can afford to move backward in how we interact with our clients. The fiduciary standard is here to stay market forces and regulatory agencies already act as if the rule is in effect. I think its vital to prepare for running your office as if you are a fiduciary. ...
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Today, the U.S. Department of Labor (DOL) is likely to post the proposed delay to the Fiduciary and Conflicts of Interest Rule on the Federal Register. You can read the full 31-page document at www.federalregister.gov . The delay pushes the applicability date to June 9, 2017, which amounts to a 60-day delay to the rule. This is significantly less than what many industry professionals hoped for after President Trumps memorandum on Feb. 3, 2017. As the Fiduciary Rule continues to evolve, I want to stress that many aspects of the rule have already been implemented by the marketplace. Firms have created policies and procedures to mitigate the conflicts ...
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Ive been traveling this past week to several different conferences, and have already picked up some great ideas to share with our advisers. Through my travels, I was struck by a couple of comments that really hit meabout the simplicity and authenticity of business. Im always surprised about how the simplest and most direct statements are often the most valuable. I had the great honor of speaking at The Society of Financial Service Professionals (FSP) Arizona Institute. As I was preparing for the event, I remembered that FSP played a large part in one of the largest sales during my retail career. After receiving a large lump sum of money that increased ...
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The 10-year Treasury has jumped nearly 75bps since Donald Trumps election. If you talk with some economists, theyll say the rate increase will continue; others predict a softening of rates back to the average over the past three years. The Fed has indicated they would like to see rates above 3 percent by 2019. In reality, we simply do not know where rates are goingshort term or long term. So, what should you do with your clients in an uncertain rate environment? I suggest you take advantage of this uncertainty and talk to your clients about how to properly mitigate interest rate risksnow and in the future. As rates were falling In the first half ...
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Part of my presentation at The Arizona Institute focused on the demographic changes over the last 20 years, changes that are likely to impact the retirement income space for several decades. Some changes are the costs associated with increased longevity. Others are the rate of savings in the United States, which has been declining since the late 1970s, resulting in smaller asset values to work with as we seek to generate future income. But, I think the one change not discussed enough is the shift from defined benefit to defined contribution plans we have seen over the past 20 years. Defined contribution plans continue to grow in popularity due to ...
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In 2016 we experienced a large rise in the sale of fixed annuities. This makes some sense as we moved through an uncertain political landscape in a falling interest-rate environment ... clients were looking for safety and guarantees. However, the use of fixed indexed annuities can provide the same downside safety and produce similar, if not better, returns than a traditional fixed annuity. Our office took a look at the past 30-year-returns of a fixed indexed annuityusing current cap ratesand compared the results from a multi-year fixed rate annuity. The results surprised me. With a 5.25 percent cap rate in years 1-4; a 5.00 percent cap rate in years ...
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Momentum continues to move toward the advisory business. I think there are two reasons for this. First, we have unprecedented potential regulation coming in April 2017 favoring advisory business with fees tied to assets under management. Secondly, we are seeing a continued industry shift to more passive investments and lower cost modelsboth are forcing advisers to use the lower fee structures found in advisory models. Many industry experts expect those fees to continue to be driven down over the next 24-36 months due to regulation and market forces. I agree. So, how can we prove our value to our clients and prospects and protect our revenue while ...
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I recently listened to a 30-minute podcast featuring Jeb Banner, CEO of Smallbox. Smallbox develops web sites and consults on transformative ideas like putting employees first. The owner works with clients on Factory Days and/or Weeks. At their core, Factory Days are about reinvesting in yourself and your support staff. Smallbox shut down its business for the first time in 2011 for a Factory Week, allowing everyone to get away from the business and work on themselves. And, of course, we can all use time to improve ourselvesrecuperate, recharge, relearn and discover new possibilities. Although the experiment was not perfect, it did focus on the ...
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As many know, I am a big college basketball fan. When you look at some of the most successful programs in the country, youll find one thing in common: consistency in coaching. Coaches like Roy Williams at North Carolina, Coach K at Duke, Bill Self at Kansas and Rick Pitino at Louisville have all been at their schools many years. Some years have been better than others at those schools, but no one can deny those programs have stamina and a level of excellence that is well above the average college program. Even with successful programs that have seen coaching changes over a period of years, the same culture will likely exist throughout the program. ...
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If you ask most people what the biggest change the financial services industry is facing, they will likely say regulation. The DOLs fiduciary standard and conflicts of interest rule has certainly captivated everyones attention for more than a year. Regardless of implementation date, firms across America are already changing how they conduct business. But, regulation is only a small percentage of the changes that likely will force us to change our practicesand for the better. Several trends will impact the expectations of our clients in the future as they plan for retirement. Each creates a certain amount of risk, but three in particular will force ...
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Im not sure about you, but the Garmin advertising campaign excites me every time I see it. It works around the idea of beating yesterdays performance. As I train for a half marathon, Im constantly reminding myself that its about getting better after several years away from running. Regardless of where your financial services practice is today, you should adopt the same philosophy when it comes to preparing for the new fiduciary and conflict of interest rule. With more than 1,000 pages of text, the new rule can be overwhelming. At times, I find myself wondering how our firm will be able to adapt to all our interpretations of the rule. But, growth ...
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Living in Fort Wayne means I can usually find very few direct flights. On a recent connection at a national hub airport, my plane was running a few minutes late. So I had a chance to sit down, eat my dinner of M&Ms Id bought at a kiosk, and relax for about 20 minutes. I chose a bench facing the middle of the concourse and began watching people pass me one-by-one. Some were running to their next connection; others dragging their children through the concourse. A few were simply strolling through the airport, while most were walking briskly. One poor soul was just leaning against the handrail on the moving sidewalk after an exhausting day of travel. ...
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