Tag Archive for: wealth management

Time to invest in frontier market stocks

“If you remember China 20 years ago, you get a sense of the potential for frontier markets today.” 

This quote from Larry Speidell, chief investment officer of Frontier Market Asset Management, kicks off my article on “Time to invest in frontier market stocks?” in Advisor Perspectives.

Are YOU ready to invest in frontier market stocks? Leave your comments here. 

2008 World Wealth Report out from Merrill Lynch and Cap Gemini

The 2008 edition of the annual World Wealth Report is now available.

If you’re evaluating your firm’s business strategy, the report’s “Spotlight: Wealth Management Firms Adapt to Meet Unique Needs of Growth Markets” will interest you.

Obama vs. McCain on tax policy

Looking for an analysis of Obama vs. McCain on tax policy?

The Tax Policy Center offers a “A Preliminary Analysis of the 2008 Presidential Candidates’ Tax Plans.”

Having written about the alternative minimum tax (AMT), I was interested to see that both candidates would make the AMT “patch” permanent. By the way, I developed a lot of respect for the Tax Policy Center as a resource when I did research on the AMT. The center pulls together information that’s not available elsewhere.

Take the rancor out of divvying up an estate

You’ve probably seen family members fight or sulk over the disposition of personal possessions after a loved one passes away. Estate planning and elder law attorney Susan J. Shipley‘s article below describes a website that may reduce the pain.

Have you used eDivvyup.com? Please comment on your experience.
Web Site Aims to Take the Rancor Out of Dividing Up an Estate

Dividing up family heirlooms after the death of a loved one can be a difficult business. Wills often deal only with financial assets, not personal possessions. The resulting infighting between family members over who gets which personal item can damage relationships for years to come.

Now there is a web site that may help families avoid acrimony and make the process of dividing up possessions in an estate easier. The site, eDivvyup, allows family members (and friends of the deceased) to divide up a relative’s personal estate using an auction platform similar to eBay’s. The estate’s executor gives family members non-monetary points which they can use to bid on estate items that can be listed and pictured on the site. Bids reflect a family member’s desire to own an item. eDivvyup seems particularly well-suited for families that are geographically dispersed, as many are.

The cost of the service is $49 to list 50 items. Additional item listings can be purchased as needed. For more information, go to: www.eDivvyup.com.

Why baby boomers will NOT offer a gold mine for financial services

If your business strategy depends heavily on Baby Boomer-driven rapid growth in the number of retirees, it’s time to re-think your approach.

That’s according to “The Baby Boomer Retirement Fallacy and What It Means to You,” which appears on a blog on the Harvard Business Publishing website.

Over the next 25 years, the number of retirees will grow at a rate of zero to 4% per annum, according to Kevin P. Coyne and Shawn T. Coyne, the management consultants who coauthored the blog post. The Coynes say the hype around Baby Boomer retirement fails to take into account the fact that people are staying in the work force later in life.

They’re selling versions of their study, “Smaller than You Thought: Estimates of the Future Size and Growth Rate of the Retirement Market in the United States” for prices ranging from $950 to $2,850.

The charitable trust that’s best in a low-interest rate environment

Now is a great time to create a charitable lead trust, assuming it would further your client’s estate planning goals.

That’s according to Nadia Yassa, Director of Estate and Gift Planning for the Boston Foundation. She spoke on “Tax Benefits of Charitable Trusts” to the Boston Security Analysts Society on May 13.

Why now? Because when interest rates are low, the IRS will value the non-charitable remainder interest at a lower value, using the IRS discount rate in effect when the trust is established. That’s regardless of what the actual value is when the transfer occurs. The bottom line: Ultimately, more of your assets will reach your beneficiaries because any growth in the trust above the discount rate passes free of gift tax to heirs. As Yassa explained, “A low Section 7520 discount rate allows donors to ‘freeze’ estate and gift values to minimize overall transfer tax liability.”

A non-grantor charitable lead trust provides income to one or more qualified charities for a preset period. At the end of that period, the assets of the trust transfer to non-charitable beneficiaries. People often use this kind of trust to contribute to charity, while ensuring that their assets end up with family members at a lower cost in taxes.

On the flip side, low interest rates mean this is the least favorable time for creating a charitable remainder trust. However, in any case, taxes should not be your only consideration when establishing a charitable trust.

Want to learn more about planned giving, including charitable trusts? Check out the Planned Giving Design Center, suggested Yassa. “It’s a free on-line resource sponsored by the Boston Foundation. Go to www.tbf.org and click on the Professional Advisors section/Planned Giving Design Center. Advisors can register and have access to technical outlines, articles, rulings, news reports, and receive periodic emails with legislative updates, as well as the Section 7520 rate as it is announced each month by the IRS.”

Use personal stories in your communications

“In a sea of competition, you’ve got to capitalize on what makes you unlike anyone else.”

This advice from “Feel Great Naked: Confidence Boosters for Getting Personal” is aimed at bloggers. The author urges them to share personal stories. But it also applies to financial advisors, especially solo practitioners or small firms, when you communicate with your clients and prospects.

Sharing your personality—and even a bit of your personal story—can help you connect with your clients.

One advisor’s personal story

For example, in a sales letter, one salesman shared his story of how his family had suffered needlessly because of an estate planning mistake. That mistake fueled his passion for bringing new clients to his firm. After sharing that story, the letter shifted to discussing the benefits his firm could offer his prospects.

I’ll bet that personal story prevented some prospects from dropping the salesman’s letter into their wastebaskets.

Sharing your personal stories to connect

Don’t focus your communications exclusively on yourself. Ultimately, your client or prospect will care more about the WIIFM (“what’s in it for me”). But a bit of sharing can create a connection that goes deeper than dollar and cents.

Any financial advisor can heed this advice in one-on-one meetings. It’s more challenging when you work for a large firm and you get into written communications. There’ll probably be a company-wide communications policy that sets an impersonal tone. This gives an opening for advisors with smaller firms to outmaneuver their colleagues at larger firms.

Have you tried taking a personal tack? I’d like to learn what your experience has been.

If you enjoyed this post, you may also enjoy my two-part series on “How to add personality and warmth to your financial writing.”

NOTE: I updated this post in Jan. 2017.


Image courtesy of Master isolated images at FreeDigitalPhotos.net.

Morningstar Market Barometer, 2003-2007

Want to show your clients how equity styles and sectors perform differently over time?

The newly released 2-page Market Barometer from Morningstar can help.


Annuities gathering steam in professional journals

Annuities may be picking up steam among fee-only financial planners and investment advisors.

According to a press release from the Financial Planning Association:

Despite their tarnished reputation due to sleazy sales tactics, high expenses and weaker investment performance compared with mutual funds, popular variable annuities (VA) with “living benefit” riders may still be a sound choice for some retirees, concludes an article in the May 2008 issue of the Journal of Financial Planning, published monthly by the Financial Planning Association® (FPA®).

In his article, “A Context for Considering Variable Annuities with Living Benefit Riders,” John H. Robinson examines how the investment performance of a particular type of VA rider stacks up against an index mutual fund as each tries to weather two bear markets.

I’ve written earlier–in “CFA Institute: Consider annuities, even variable annuities” and “Financial Analysts Journal article favoring annuities about increasingly favorable coverage of annuities in the CFA Institute’s Financial Analysts Journal and other venues. More recently, annuities received favorable mention in the inaugural issue of the CFA Institute’s private wealth management e-newsletter.

The Journal of Financial Planning addressed this trend in “Variable Annuities: Emerging from the Dark Side?” by Nancy Opiela in March 2007.

But the barriers to acceptance by advisors remain, as “It’ll be tough to sell advisors on longevity annuities” suggested.