Home > Aspiring RIAs > News Roundup: How to acclimate new advisors; Morgan Stanley’s Broker Protocol Exit; and Spousal stretch and roll-over rules

News Roundup: How to acclimate new advisors; Morgan Stanley’s Broker Protocol Exit; and Spousal stretch and roll-over rules

Practice Management

Expecting new advisors to start working with clients almost the day they walk in the door will set them up to fail, notes industry consultant Angie Herbers in a column at Investment Advisor magazine. Instead, she suggests a six-week training period to cover firm information in six areas: the company overview, administrative procedures, client experience procedures, marketing procedures, the new client process, and ongoing client management. See the details below. Also, Christine Benz, director of personal finance at Morningstar, warns that this could be another particularly bad year for mutual fund shareholders from a capital gains standpoint. The strong equity market and active asset outflows may trigger big capital gains distributions, which can be problematic in taxable accounts. She lists recent distribution estimates from mutual fund companies in her column at Morningstar. See the link below.

How the Magic Six Can Empower Your Firm

By Angie Herbers

Source: ThinkAdvisor

With the independent advisory industry booming, many firms are scrambling to hire professionals who have the training and ability to work directly with clients from day one. Unfortunately, that’s just what many firms do: start newly hired professionals working with clients almost as soon as they walk in the door. This is unfortunate because it sets up these professionals to fail — or at least to underperform the expectations of their new bosses. In my experience, when professional financial advisors start a new job, it’s not just a matter of doing what they know how to do in a new office. They are also working in a new business — with new people, a new culture, new systems, new procedures and of course, new clients.


Brace Yourself for Another Nasty Capital Gains Season

By Christine Benz

Source: Morningstar

What’s not to love about a rising stock market? Big tax bills for some mutual fund shareholders, that’s what. Mutual fund firms have begun publishing their estimated capital gains distributions in recent weeks. While it’s too early to conclude that 2017 will be a particularly bad year from the standpoint of outsize distributions, the same factors that led funds to make big distributions in 2016 are in place again this year.


Aspiring Advisors/Breakaways

Morgan Stanley announced recently that it will leave the Protocol for Broker Recruiting, and that decision will likely make it harder for its advisors to go independent, according to ThinkAdvisor. A statement from Morgan Stanley said: “Exiting the protocol will allow [Morgan Stanley] to invest more heavily in its world-class advisors and their teams, helping drive additional growth opportunities.” Read the full story below. Also, one way for associate planners to put their career development plans in action is to take on managing their firm’s internship program, writes Caleb Brown of New Planner Recruiting. Those who are looking to become lead advisors may also pursue other ideas such as sharpening a particular technical skill or performing software trial programs to ensure the firm is using the best in class. Read more of Brown’s suggestions in his Investment Advisor magazine column below.

What Morgan Stanley’s Broker Protocol Exit Means for Advisors

By Janet Levaux

Source: ThinkAdvisor

Morgan Stanley, which saw its total advisor headcount drop slightly in the third quarter, says it will leave the Protocol for Broker Recruiting as part of its drive to make new investments in its advisors. It had 15,759 financial advisors as of Sept. 30 vs. 15,777 on June 30 and 15,856 a year ago.


Climbing the Ladder

By Caleb Brown, Partner, New Planner Recruiting

Source: Investment Advisor magazine

Setting goals is an important part of any client’s financial plan, but the benefits aren’t unique to clients. They’re equally relevant for an advisor’s own career development plan. If you are an Associate Planner with your sights set on a Lead Advisor role, here are ideas to help set and achieve your goals.


Retirement Planning

The tax code provides “unique preferential treatment” for a spouse who is the beneficiary of a retirement account, notes Michael Kitces, but it’s important for clients and advisors to understand the tradeoffs when selecting a stretch IRA (and stretch 401(k)) option versus a “roll over.” There are a number of nuances involving RMDs, withdrawal penalties and other factors. See Kitces’ column at his Nerd’s Eye View blog below. Also, a new law allows victims of three recent hurricanes to tap into their retirement accounts and company plans and not pay an early withdrawal penalty, among other provisions. However, IRA expert Ed Slott cautions that there are risks and drawbacks to taking advantage of the emergency relief. In some cases it might be better to seek a loan from a commercial lender or through an emergency government-sponsored lending facility or to consider other options. Read the details in his column at Financial Planning.

Spousal Rollover And Stretch Rules For Inherited Traditional And Roth IRAs

By Michael Kitces

Source: Nerd’s Eye View blog

The key benefit of specialized retirement accounts are their tax preferences – from the upfront tax deduction and tax-deferred growth of an IRA or 401(k), to the opportunity for tax-free growth from a Roth. Such tax benefits are intended to encourage and incentivize workers to save for retirement, and to make retirement at least a little more affordable. The caveat, though, is that if all the assets are not actually used for retirement, the retirement account – whether an employer retirement plan or an IRA, Roth or traditional – must be unwound, as eventually the Federal government does want to collect its share! Accordingly, IRC Sections 401(a)(9) and 408(a)(6) prescribe a series of somewhat-complex rules to determine exactly how fast a tax-preferenced retirement account must be liquidated after the death of the original owner, allowing the beneficiary in most cases to stretch out the tax impact over time (dubbed the “stretch IRA” strategy).


Hidden risks of hurricane tax relief

By Ed Slott

Source: Financial Planning

Victims of Hurricanes Harvey, Irma and Maria — who may need to tap their retirement savings, including IRAs and company plans to rebuild after the storms — have received help from Congress. Whether or not to accept it is more complicated than you might think.