Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that as total household financial wealth grew to a record high of $90 trillion at the end of 2024, so too did the number of households advancing up the wealth ladder, with the High-Net-Worth (HNW) category of households with at least $5 million seeing a significant gain. Which could create opportunities for firms to seek opportunities to move ‘upmarket’ by trying to add new HNW clients who might not have an advice relationship (or whose current advisor doesn’t provide sufficiently comprehensive service). Which, according to Kitces Research on Advisor Productivity, can lead to higher productivity for advisor teams (but can require an investment in staffing and higher-end planning services to meet their complex planning needs).
Also in industry news this week:
- According to a recent survey, 40% of financial advisory clients would switch to an advisor who offers estate planning services, with help with specific tasks like beneficiary designations or tax strategies as the most sought-after service among respondents
- RIA M&A activity set a first-quarter record to start the year (following a record-setting 2024), as private equity-backed buyers and sellers looking to grow within a larger firm have driven the deal market
From there, we have several articles on investment management:
- An analysis of a variety of portfolio rebalancing strategies finds that not rebalancing at all could lead to the highest returns (particularly for clients with longer investment horizons)
- While a review of research on the topic suggests that portfolio rebalancing might not lead to better risk-adjusted returns, it could still prove to be a valuable tactic for advisors, particularly when it comes to aligning a client’s portfolio to their risk tolerance and capacity
- How portfolio rebalancing can provide a psychological (and potentially financial) return for clients during market downturns, particularly for those nearing and in retirement
We also have a number of articles on cash flow planning:
- How financial advisors can help clients evaluate the decision of whether to pay off their mortgage early
- The financial (and psychological) considerations surrounding the decision of whether to put down more than 20% when buying a new home
- While clients might think buying stocks on margin is too risky, they might not realize they are engaging in similar risk-taking behavior when they do so “on mortgage”
We wrap up with three final articles, all about having ‘enough’:
- How the “Jevons Paradox” explains why, despite many technological advances over the past century that have made work and other tasks more efficient, many people are busier than ever before
- Why having an “outcome orientation” could be a solution to information overload in the modern age
- Why finding a purpose after achieving financial independence can help individuals get off of the path of always seeking ‘more’
Enjoy the ‘light’ reading!
