Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that Fidelity is planning to raise its minimum asset threshold for RIAs on its platform to $100 million, with affected firms having until June 30, 2027 to reach this minimum or start the process of finding a new custodial home. While this move is already leading to competition amongst other RIA custodians to serve the (few hundred) affected firms, more broadly it demonstrates the consequences of the current RIA custodial model (where neither RIAs nor their clients pay a direct fee to the custodian but rather ‘pay’ through the services clients use [e.g., relatively low-rate cash sweep accounts and lending products]) and suggests that an approach with more explicit fees could potentially serve custodians, RIAs, and individual clients alike.
Also in industry news this week:
- The Securities and Exchange Commission (SEC) this week released a new examination handbook that offers fresh insights into how it determines which RIAs to examine each year
- The SEC also released a proposed framework for advisor custody of clients’ cryptoassets, which could provide greater assurance for advisors interested in doing so
From there, we have several articles on Health Savings Accounts (HSAs):
- Why having an HSA ‘succession plan’ can help avoid the loss of attractive tax benefits associated with these accounts
- While the types of services and products eligible for reimbursement using an HSA might be broader than many clients expect, pushing the boundaries could lead to undesired penalties
- How families can execute an HSA “deathbed drawdown” to get assets out of an account in a hurry and avoid negative tax repercussions when an HSA is inherited by a non-spouse individual
We also have a number of articles on the elevated interest rate environment:
- Strategies for families to support children or grandchildren with the purchase of a home amidst elevated home prices and interest rates, including intra-family loans and disclaimers
- A recent study finds that a significant portion of homebuyers are ending up with higher rates and mortgage costs by not shopping around (with those with higher income and credit scores particularly prone to do so)
- An in-depth look into how financial advisors can support clients deciding whether to pay points to receive a lower interest rate on their mortgage
We wrap up with three final articles, all about wealth:
- Recent data indicate that the wealth of the top 0.1% of households has diverged from that of those in the next wealth bracket, creating a subgroup of astronomically wealthy households
- While the wealthiest households in the United States have seen their net worth soar during the past decade, those further down the wealth spectrum (including those in younger generations) have seen gains as well (perhaps opening new opportunities for financial advisors)
- How the difference between absolute and relative wealth (and the relationship between income and wellbeing) can be instructive at a time when certain individuals have seen their wealth explode
Enjoy the ‘light’ reading!
