Headlines you need to know this week

June 11, 2019

Retirees need tax advice

A recent survey found that 70% of retirees are only “somewhat knowledgeable” or “not knowledgeable at all” about tax planning. Retirement can be a particularly challenging period as investors are faced with decisions about how much income to withdraw and from which accounts. The survey also found that retirees may need more clarity on the tax treatment of Social Security in retirement.

Advisors look to data to differentiate their services

As financial advisors face increased pressure to differentiate themselves, they may gain an edge by learning more about their clients. Some advisors are turning to data to help deepen their knowledge about clients. Implementing a tool or questionnaire that focuses on clients’ financial behavior patterns, goals, risk tolerance, and approaches to decision-making can be a place to start.

SEC approves Best Interest regulation

The Securities and Exchange Commission last week approved a series of rules including a Regulation Best Interest, which sets new conduct and disclosure standards for broker/dealers. The rule also requires that advisors share a Form CRS when starting a client relationship. The form is a summary of the relationship, including details about fees, costs, conflicts of interest, and code of conduct. The rules take effect 60 days after publication in the Federal Register. Firms will have until June 30, 2020, to comply.
June 4, 2019

Gig workers say they need financial advice

Gig workers — individuals engaged in short-term contracts or freelance work — may face challenges to saving, but acknowledge they could use financial advice, a recent study found. About 31% of households work in the gig economy. Individuals between the ages of 21 and 39 had more investing experience than those in the non-gig economy but were more anxious about their financial future, according to the report. Still, 19% of younger workers said they had difficulty choosing investments and planning for retirement. The majority of respondents noted that they were likely to use many sources of advice, including financial professionals (81%) and online tools (80%).

Colleges launch financial planning studies as advisor shortage looms

About 40% of financial advisors plan to retire in the next 10 years, Cerulli reported. The CFP Board stated that there are more certified financial planners over the age of 70 than under 30. As a result, it may become more difficult to recruit as older advisors retire. In response to this trend, a growing number of colleges are offering programs to help students become financial planners.

Gender is a key issue for impact investors

More investors are interested in making a difference with their investments, and so-called impact investing is growing. Gender-focused investing is a growing trend, according to a recent report. The analysis found increasing awareness that investing in women and minority-led businesses is key to building more fairness in the world. In addition, women make up larger percentages of impact investing asset management teams.
May 28, 2019

DOL to consider fiduciary rule in December

The Department of Labor’s updated agenda set a target date of December 2019 to issue a Notice of Proposed Rulemaking. The DOL noted that the agency is considering regulatory options following a June 2018 ruling by the 5th U.S. Circuit Court of Appeals that vacated the fiduciary rule. The original rule required financial advisors providing retirement advice to follow a fiduciary standard.

House passes retirement bill in near-unanimous vote

The House passed the SECURE Act last week by a vote of 417 to 3. The bipartisan “Setting Every Community Up for Retirement Enhancement Act” would allow small businesses to join together to offer multiple employer plans. The bill would also raise the ages to contribute to IRAs and take required minimum distributions. The bill now moves to the Senate.

Trade tensions weigh on optimism

Investor optimism about the stock market declined sharply in a recent AAII Investor Sentiment Survey. News about continued trade tensions likely contributed to the drop of 5.1 percentage points in bullish sentiment, the report noted. Bearish sentiment — the expectation that stock prices would fall in the next six months — declined by 3.2 percentage points, but remained at an elevated level.
May 21, 2019

CFP Board announces new rules planned

The CFP Board recently introduced new rules for fee-only advisors. The rules, which take effect in October, detail how planners must disclose and manage conflicts of interest. The organization already has a fiduciary standard for individuals who hold the CFP designation.

Growing trend in niche markets

There is a growing trend among financial advisors to establish themselves as experts in a niche market. An increasing number of advisors are marketing services to a specific demographic, defined by gender, social, professional, or hobby-related associations. CEG Worldwide research noted that 70% of advisors earning $1 million or more annually focus on a niche market to differentiate themselves from the competition. Cerulli found that 15% of U.S. financial advisors concentrate on a niche group.

New retirement bill would raise the RMD age

A bill recently introduced in the Senate would raise the minimum age to 75 for required minimum distributions in retirement. The Retirement Security and Savings Act of 2019 would also allow employers to contribute to an employee’s 401(k) to match a student loan payment.
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