Enjoy the current installment of “Weekend Reading For Financial Planners” – this week’s edition kicks off with the news that while the Securities and Exchange Commission has withdrawn several rules proposed under previous Chair Gary Gensler (regarding firms’ use of outsourcing custody, and the use of predictive analytics), some compliance experts suggest that an assumption that the regulator might take a lighter touch when it comes to examinations and enforcement might be misguided, highlighting several enforcement actions taken this year (related to breach of fiduciary duty, failure to disclose conflicts of interest, Reg S-P violations, and violations of the SEC’s marketing rule, and more). Also, while the SEC continues to deliberate potential rules specific to investment advisers’ use of Artificial Intelligence (AI) tools, these experts suggest firms could use the current period to take inventory of their current AI use and set consistent firmwide policies and standards to ensure the extent of their use of AI is represented clearly to prospects and clients and that client data is protected.
Also in industry news this week:
- A survey of advisors and investors suggests that the former are more tolerant of drawdowns and prefer planning for longer retirements, highlighting the value of clear communication about underlying preferences and assumptions between advisors and their clients
- A study finds that career changers from outside the financial services industry represent a significant (and perhaps underutilized) source of talent for financial planning firms, as they can bring transferrable professional experiences and skills from their previous roles to the table
From there, we have several articles on investment planning:
- A group of researchers highlight the potential benefits of a 100% equity portfolio for investors across the age spectrum, with international stocks replacing a bond allocation
- Given that investors will only experience their own investment timelines (and might not be willing to take high-probability bets that come with significant potential downside), many might choose a more conservative investment approach (even if it isn’t expected to lead to the greatest total return over time)
- How financial advisors can communicate the “cost of certainty” to clients when considering different options for generating retirement income
We also have a number of articles on cash flow planning:
- While the number of millionaires in the United States has grown rapidly in recent years, much of this wealth is held in relatively illiquid assets or accounts, highlighting the value advisors can provide through cash flow planning services
- How a “0.01% Rule” can help nervous clients avoid spending too much time contemplating relatively small spending decisions
- How, amidst elevated interest rates, client cash management has become an increasingly valuable service for advisors to provide their clients
We wrap up with three final articles, all about effective use of AI tools:
- While there has been much discussion about the potential for AI to take over different kinds of jobs, “primal intelligence” gives humans a distinct advantage in solving problems where volatility and uncertainty are involved
- Four “anchors” professionals can use to evaluate the output of AI tools to ensure its accuracy and completeness
- Why the sense of meaning that can come from reciprocal interpersonal relationships can be much more fulfilling than conversations with AI chatbots
Enjoy the ‘light’ reading!
