Home > Retirement Plans > News roundup: The risk of ‘custom’ advice, new financial life planning degree, and low financial literacy rate for older women

News roundup: The risk of ‘custom’ advice, new financial life planning degree, and low financial literacy rate for older women

Advisor Glenn Kautt warns that it can be risky business in a multi-advisor firm to offer “custom” or “individual” solutions to clients, calling that approach “inefficient, expensive and downright risky.” Instead, fast-growing firms need to use standardized procedures and service offerings to stay cost-competitive and provide superior service, he writes in a column at Financial Planning. See the link to his column below.  Also, the authors of a new white paper from Morningstar find “no relationship between any type of [fund] management change and future returns.” Still, many investors “overreact,” the paper finds, and “on average, investors penalize funds after portfolio-management changes.” Read the full column by Morningstar’s John Rekenthaler below.

Why your firm shouldn’t customize its advice

By Glenn G. Kautt, Savant Capital Management

Source: Financial Planning

As you add planners to your team, how do you know they’re advising clients correctly? As a firm grows, inconsistent decision-making also increases. That hampers efficiency, effective client service and scalability. This is the product of two factors: variances in judgment, or what I call noise, and inaccurate or inadequate information, processes or technology, which I group under the label of bias. To safeguard an advisory organization, owners and managers need to know how to recognize and overcome noise and bias.



What to Do If Your Fund Changes Portfolio Managers

By John Rekenthaler

Source: Morningstar

If your fund manager dies tomorrow, you really shouldn’t care. Such is the conclusion reached in Morningstar’s new white paper, “The Aftermath of Fund Management Change,” although the authors (Madison Sargis and Kai Chang) don’t phrase the matter that way. Rather more politely, they write, “We find no relationship between any type of [fund] management change and future returns.”



Breakaways/Aspiring Advisors

A master’s degree in advanced financial planning will soon be offered at Golden Gate University, reports InvestmentNews. The program places an emphasis on life planning and will include skills such as counseling and communications and “how to enable positive change” in clients’ lives, the article reports. See the full story below. Also, RIA platform provider HighTower has announced it plans to offer financing in the form of a five- to seven-year loan to qualifying advisor teams that affiliate with the firm, reports WealthManagement.com. Read the details below.

New master’s degree to teach advisers financial life planning skills

By Liz Skinner

Source: InvestmentNews

Golden Gate University is introducing a new master’s program focused on financial life planning and it requires students to have attained more than just a bachelor’s degree to begin. They also must have passed the Certified Financial Planner certification exam. Its M.S. in advanced financial planning degree, with a concentration in life planning, will teach many of the skills that advisers often say they have had to learn on the job, namely counseling and communications and a little positive psychology, said David Yeske, co-founder of Yeske Buie and director of financial planning at GGU in San Francisco.


HighTower Plans to Offer Startup Capital to Breakaways

By Diana Britton

Source: WealthManagement.com

HighTower is looking to bring more liquidity to the market for entrepreneurial advisors by supplying startup capital. The RIA platform provider will offer financing to new, qualifying advisor teams launching their own practices and affiliating with the firm.


Retirement Planning

Both men and women get low marks for financial literacy, but the scores of older women are particularly dismal. A study by the American College of Financial Services New York Life Center for Retirement Income found that only 35 percent of men and 18 percent of women (all age 60 to 74) were able to pass the test with 23 or more correct answers on a 38-question quiz, according to a Financial Advisor article. Read the details below. Also, research finds that money isn’t the strong work motivator that many have considered it to be, and that could put a different spin on the concept of retirement. In a column at his Nerd’s Eye View blog, Michael Kitces explores the idea that working to make enough money so that you can retire and not work doesn’t end up making people happy. Instead, he writes, retirement is more about “the ability to pursue work for non-financial rewards.” Read his column below.

4 Out Of 5 Older Women Flunk This Retirement Literacy Quiz

By Christopher Robbins

Source: Financial Advisor

What older women don’t know about retirement could certainly hurt them. Both men and women display startling low financial literacy, but women passed a simple test of financial knowledge at half the rate of men, according to a study focusing on Americans of retirement age by the Bryn Mawr, Pa.-based American College of Financial Services New York Life Center for Retirement Income.


The Complex Motivations Of Money And Retirement As The Freedom To Pursue Non-Monetary Work Rewards

By Michael Kitces

Source: Nerd’s Eye View blog

The traditional view of work is that it’s something we wouldn’t otherwise do, without the financial reward of getting paid… such that the whole point of work in the modern era is to earn and save enough to get to the point where you can “retire” and not need to work anymore. Yet research on what actually motivates us reveals that “money” is a remarkably inferior motivator (both to incentivize and reward desired behavior, and to punish bad behavior) compared to the motivation we derive from interpersonal relationships with other people. To the point that turning social connections into financial arrangements can reduce our motivation to engage in the desired behaviors.


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