Home > Aspiring RIAs > News Roundup: Is AUM an archaic metric?; company traits to look for; new Medicare card coming

News Roundup: Is AUM an archaic metric?; company traits to look for; new Medicare card coming

Practice Management

The wealth management industry still seems to rely heavily on “assets under management” as a business metric (and even a conversation ice-breaker), but Financial Planning columnist Bob Veres asks industry thought leaders to weigh in on a less “crude” measurement tool. One of the responses comes from Dan Inveen, co-author of the annual FA Insight study, who said his preferred metrics are growth rate and profitability. “Ranking firms purely by AUM doesn’t tell you anything about how healthy the firm is,” he explained. Read more discussion on the AUM question in Veres’ column below. Also, artificial intelligence is gaining acceptance among financial advisors as a way to understand clients’ risk profiles and spending habits, but there can be pitfalls, notes an article at ThinkAdvisor. “AI can only work when you have good data,” said Georgtown University professor Reena Aggarwal. The data has to be timely and accurate. Read the full story below.

The dysfunctional approach to AUM

By Bob Veres

Source: Financial Planning

When financial planners meet at industry conferences, they need a quick shorthand way to gauge how relevant a conversation with this interesting stranger would be. So the first question I hear them ask is … What’s your AUM? Meanwhile, industry surveys rank the top wealth management and planning firms by their assets under management. There are a variety of reasons that I think these behaviors are dysfunctional.


As Advisors Jump Into AI, Experts Warn About Data

By Ed Silverstein

Source: ThinkAdvisor

Artificial intelligence (AI) is seen as becoming an increasingly important tool for financial advisors, but thought leaders in the field urge firms to use caution despite the lure of potential rewards. It is likely that AI – as it continues to be developed – can help financial advisors better understand a client’s risk profile and spending habits.


Breakaways/Aspiring Advisors

One of the big questions facing a newly minted financial advisor is: What is the best type of company to work for? In a post at his Nerd’s Eye View blog, Michael Kitces delves into this question and draws from personal experience. He writes that the best financial companies have three traits: “a recurring revenue business model, a healthy growth rate, and some size and scale to have a deep bench of new opportunities.” See his complete post below. Also, Sean Hanlon of Hanlon Investment Management urges advisors not to get caught up in their fears when considering a move to independence. “These days it’s easier and a lot quicker to build an independent practice on your own terms,” he writes in a column at InvestmentNews. See the link below.

How To Find The Best Financial Advisor Companies To Work For

By Michael Kitces

Source: Nerd’s Eye View blog

With the number of different financial advisor business models and firm types that are in existence, prospective financial advisors have a lot of options when it comes to finding “real” financial planning jobs – the kind that don’t have sales requirements, and are really focused on (learning to give) financial advice. And the reality is that not all financial advisory firms are equally great to work for. But the good news is that the best financial advisor companies to work for do share a number of common traits, that can make them easier to identify.


Taking the plunge and becoming an RIA

By Sean Hanlon

Source: InvestmentNews

We have nothing to fear but fear itself. Franklin Roosevelt said that to a troubled nation in the depths of recession many years ago. Although my experience is by no means comparable, when I first decided to “go independent” I felt like the weight of the world was on my shoulders. A lot of fear is involved in striking out on your own. The fear, more than the actual process, is what keeps most advisers from fulfilling their greatest potential as an RIA.


Retirement Planning

Advisors are increasingly helping clients with all aspects of retirement, and that includes offering tips or guidance on enrolling in Medicare. That means they need to be aware of new identification cards that will be issued, which will help guard against identity theft. ThinkAdvisor explains the card conversion plan and offers pointers on how advisors can prepare clients for the change. See the link below. Also, Oregon’s state run retirement plan, considered the “guinea pig,” is now in its second pilot and has 52 employers, 2,300 eligible employees, and $46,000 saved so far, according to WealthManagement.com. The plan is for employees who don’t have access to workplace plans. Read more details below.

Meet the New Medicare Card

By Allison Bell

Source: ThinkAdvisor

Medicare program managers are preparing to begin a massive health insurance card conversion in April. The program will start mailing new identification cards to Medicare enrollees, in an effort to get Social Security numbers off the cards, to give the enrollees a little extra protection against identity theft.


Inside the First State-Run Retirement Plan

By Diana Britton

Source: WealthManagement.com

Five states have enacted legislation to create state-run retirement plans for employees who don’t have access to workplace plans, including Illinois, California, Oregon, Connecticut and Maryland. Oregon is the first out of the gate, with its OregonSaves program already in its second pilot. It has 52 employers, 2,300 eligible employees and $46,000 saved to date.


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