Home > Aspiring RIAs > News Roundup: Start early with financial literacy, six types of advisors, and Roth IRA changes

News Roundup: Start early with financial literacy, six types of advisors, and Roth IRA changes

Practice Management

It’s never too early to help clients-to-be form good financial habits. According to one report, some financial behaviors in children are formed by the time they are age 7, notes an article at ThinkAdvisor. The publication spoke with several advisors who say that handing out children’s books with a financial message helps promote financial literacy and deepen relationships with clients and their families. See the full story below. Also, a new risk tolerance questionnaire, called Finworx360, uses behavioral finance concepts to develop a client risk profile, according to ThinkAdvisor. The Finworx questionnaire generates a report that ascertains a client’s investor persona, “which advisors can then use to design portfolios and segment clients for communications and marketing purposes,” the publications states. See the full story below.

Children Form Financial Behaviors By 7

By Asia Martin

Source: Financial Advisor

Prepping your clients’ children for the future can start way before the children apply for financial aid for college. And work with children can help you deepen your relationship with clients and invest in the future of their families. In 2013, the University of Cambridge released a report in conjunction with the U.K. government on how young children form lifetime habits and learn about money. The report, authored by Dr. David Whitebread and Dr. Sue Bingham, says there are certain financial behaviors in children that are typically shaped by the time they are 7.


New Tool Uses Behavioral Finance to Assess Risk Tolerance

By Bernice Napach

Source: ThinkAdvisor

How much risk are your clients willing to take to get the level of returns they seek? It’s a crucial question for financial advisors, especially now when the bull market is on the verge of entering its 10th year and interest rates are rising in the U.S. and other developed economies. Advisors typically use a risk tolerance questionnaire to make that assessment, and now there is a new one on the market, developed by Finworx, based on the tenets of behavioral finance.


Breakaways/Aspiring Advisors

Unless they’ve done a lot of homework, many consumers — and even professionals seeking a career in the financial services industry — may not be aware of all the different types of financial advisors in the industry today. In a column at ThinkAdvisor, Bryce Sanders provides a useful guide to six types of advisors and their attributes. See the link below. Also, Sara Grillo, a former advisor turned financial writer reflects on how she could have used her youth as a marketing strength when she started as an advisor. One of her do-overs would have been to dress more professionally, she notes in a column at Advisor Perspectives. Another reflection: She would have studied what the investment world would likely look like in 30 years “and then reverse engineered my service offering to meet that demand before anyone else …” See her column below.

6 Types of Financial Advisor

By Bryce Sanders, Perceptive Business Solutions

Source: ThinkAdvisor

Long ago, in a galaxy far away, bankers made loans, agents sold insurance and stockbrokers sold stocks. Everyone stuck to their turf. In the 1980s, everything changed. Stockbrokers started selling insurance. Banks offered investing advice. Insurance firms realized they had to compete, so they started offering investment products. They all had different cultures. Agents and advisors were caught in the middle.


Three Things I Wish I Knew as a Young Financial Advisor

by Sara Grillo

Source: Advisor Perspectives

I set out to be a financial advisor in my early 30s and getting started wasn’t pretty. Here’s my advice to my younger self about how to use youth as a marketing strength rather than as a detractor from your credibility.


Retirement Planning

Advisors will need to change their discussions with clients on Roth conversions because of the new tax law, writes IRA expert Ed Slott in a column at Financial Planning. That’s because starting this year, Roth conversions can’t be undone. Read the details below. Also, Alicia Munnell, director of Boston College’s Center for Retirement Research, shares with ThinkAdvisor her suggestions on fixing Social Security and improving 401(k) plans. In addition, she offers several pieces of advice for clients nearing retirement, starting with “control spending in your 50s.” See a link to the full Q&A below.

How the new tax law changes Roth IRA conversions

By Ed Slott

Source: Financial Planning

The new tax law signed in December may affect the way you and your clients evaluate the pros and cons of Roth conversions. Among the biggest changes: Beginning in 2018, Roth conversions cannot be undone. Lawmakers repealed Roth recharacterizations, which previously enabled Roth conversions to be reversed. Consequently, the discussion around Roth conversions will immediately need to change. Clients will require more advice, and their advisors will need to conduct more careful analysis before making any recommendations.


Alicia Munnell: The Social Security Fix No One Wants

By Jane Wollman Rusoff

Source: ThinkAdvisor

Most retirees’ eagerly anticipated golden years will be tarnished by insufficient income and a consequential decline in standard of living unless consumers and policymakers get cracking now to avert this bleak scenario. So says Alica H. Munnell, professor of management sciences at Boston College and director of its Center for Retirement Research, who, in an interview with ThinkAdvisor, discusses three critically important pieces of advice financial advisors can give clients who are nearing retirement.