Efficient Advisors

Measuring a client's tolerance for risk is an essential step in onboarding. It's impossible to make any sort of recommendation if you don't understand how comfortable they may be when their portfolios experience volatility. ? But clients who claim that they can tolerate a high level of risk may behave quite differently during periods of higher volatility. ? Meghaan Lurtz, a Professor of Practice at Kansas State University, says that this is because a client's true relationship with risk can only be partially uncovered through the results of a questionnaire alone. ? "Risk is a story," she writes. So while an advisor has tools for collecting risk data, they need to remember that every number has a story behind it. ? In order to help the client uncover their personal story, Lurz recommends a series of open-ended discussion questions. ? Read the full article to see all five questions. The link is in the comments. ? #financialadvisors #financialservices #financialplanning #evidencebasedinvesting #efficientadvisors

How do you tell when the conventional wisdom around some aspect of investing is completely wrong? ? John Rekenthaler, vice president of research for Morningstar Research Services, says that it often takes time to sort out the truth from the fallacies. ? As examples, he gives three dominant investment beliefs of the late 1980s, which he immediately encountered upon starting his career. They were all widely known “truths.” And it turns out they were all false. ? Fallacy 1: Social Security’s Demise - The fund would soon fail. Fallacy 2: Lower Equity Returns - The stock market’s glory days had come and gone. Fallacy 3: The Limit of Indexing - Indexing's success could not be repeated in other marketplaces. ? Needless to say, these “truths” haven’t stood the test of time. ? "I am fascinated by the instances when reality and perception diverge," says Rekenthaler. ? Read the full article. The link is in the comments. ? #financialadvisors #financialservices #financialplanning #evidencebasedinvesting #efficientadvisors

When saving for retirement, is it better to pay taxes upfront, or as you withdraw? The answer may surprise you. ? A new report from the American Accounting Association finds that paying taxes on retirement accounts upfront will help retirees stretch their money longer than those who pay later. Researchers found that currently-taxed accounts like Roth IRAs tend to outlast tax-deferred accounts like 401(k)s with similar balances. ? Why? The researchers found that participants spent money at similar rates regardless of their type of account. As a result, those using deferred-tax accounts tended to exhaust their savings more quickly than those using currently-taxed accounts. ? "Our findings suggest people with deferred accounts may need to save more than they think," said Marcus Doxey, a professor of accounting at the University of Alabama and co-author of the report. ? Read the full article. The link is in the comments. ? #financialadvisors #financialservices #financialplanning #evidencebasedinvesting #efficientadvisors

According to a survey by Gartner, 36% of U.S. employees surveyed reported that the topic of the U.S. presidential election had led them to avoid talking to or working with a coworker because of their political beliefs. ? Writing for Harvard Business Review, Ron Carucci, co-founder of Navalent, and Caroline Mehl, executive director of the Constructive Dialogue Institute, recommend that instead of banning all political discussions, employers set ground rules for the constructive expression of divergent views. ? Among their recommendations: - Embrace discomfort: Hard conversations are where we learn the most. - Be respectful: Communicate your perspective with the intention of being understood, not agreed with. - Give others the benefit of the doubt: Listen with curiosity first rather than judgment. - Speak for yourself: Use “I” statements rather than speaking on behalf of others. ? Read the full article. The link is in the comments. ? #financialadvisors #financialservices #financialplanning #evidencebasedinvesting #efficientadvisors

People know they ought to be saving for retirement. They have money to invest. Yet they avoid acting in their own best interest. Why? ? Amos Nadler, who has a Ph.D. in behavioral finance and neuroeconomics, says that people are afraid of complexity. ? On a very basic level, people who put off doing essential financial tasks have the same fears as those who can't bring themselves to start an exercise routine — they don't want to make a mistake or feel foolish. ? Just as someone might say they don't know the first thing about how all that fancy gym equipment works, a financially avoidant person might say, "'Man, this is over my head,'" says Nadler. "'I'm just not a numbers person.'" ? Feeling this way about money is tied closely with another common cognitive bias known as risk aversion. In addition to the fear of screwing up, you also fear that you'll lose out on money you put time and effort into accumulating. Let us know how you overcome these biases - is it using an advisor? ? Read the full article. The link is in the comments. ? #financialadvisors #financialservices #financialplanning #evidencebasedinvesting #efficientadvisors

Less than half of working women feel prepared for retirement and of those already retired, fewer than one in five have found retirement to be exactly what they expected. ? The "2024 Women Speak Out on Money Matters" survey from Corebridge Financial found that just 46% of women in their working years feel like they are on the right track for retirement. Of those retired, only 19% find retirement to be exactly what they expected. ? What is the most common retirement surprise? Cost. 50% of retired women say retirement is more expensive than anticipated. ? The survey also asked women what they had done right in preparing for retirement. Top three answers: -Working with a?financial professional -Saving early -Contributing more to their employer retirement savings plan ? Did you know that nearly 60% of women who work with an advisor rate their financial health positively, compared to just 33% who do not? ? Read the full article. The link is in the comments. ? #financialadvisors #financialservices #financialplanning #evidencebasedinvesting #efficientadvisors

A crucial yet often overlooked aspect of an advisor's role involves planning for clients’ changing mental capacity as they age. ? It's a sensitive subject that must be addressed in order to safeguard both the client and their advisor. ? Carolyn McClanahan, founder of Life Planning Partners Inc., emphasizes the importance of being proactive. The best time to address potential mental decline is well before it becomes an issue. Advisors should initiate an aging plan for clients in their 50s or early 60s. The idea is to start the conversation early, allowing clients to engage thoughtfully in discussions about their future needs and preferences. ? Advisors should encourage clients to identify three to four individuals—such as family members or close friends—who can be contacted in case of suspected cognitive decline. This trusted contact network serves as a protective layer against potential exploitation or mismanagement of finances. ? Read the full article. The link is in the comments. ? #financialadvisors #financialservices #financialplanning #evidencebasedinvesting #efficientadvisors

An estimated $84 trillion of wealth will change hands by 2045, with the majority going to Gen X and millennial heirs. ? However, families are avoiding the main thing they need to do to prepare: Talk about money. ? Stacy Francis, a financial planner and CEO of Francis Financial, says that when families don't communicate on this subject, expectations can be far from reality. "In some cases, adult children are not inheriting as much as they think," she said. ? Another problem is that some think it costs too much to pay an attorney to draft key estate planning documents that dictate their wishes, such as a will, trusts, or a health-care proxy. ? But a proper estate plan can “make or break the financial values that you want to impart to your children,” Francis said. “Online tools are great, but they don’t take the place of a very smart advisor to help you do this planning.” ? Another basic step many people neglect is double-checking their beneficiary designations on all financial accounts. Have you reminded your clients lately to review their account information? ? Read the full article. The link is in the comments. ? #financialadvisors #financialservices #financialplanning #evidencebasedinvesting #efficientadvisors

We give thanks for all the support we’ve received this past year; we are looking forward to another successful year in 2025! To start off the New Year, we will be closed on Wednesday, January 1st - wishing everyone a happy and healthy #NewYear holiday.

Our offices will be closed on Wednesday, December 25th in observance of #Christmas. Wishing you all warmth and happiness this holiday season.