What will happen in the world of financial advisors for 2013? OnWallStreet.com talked with people in the financial services industry about what to expect next year. Here are some of their thoughts:

Joe Masterson of Diversified said that specialist retirement advisors will get a larger share of retirement plans. This will mean that this part of the industry “is about to embark on a new era of growth and development,” OnWallStreet.com says.

Paul LaPiana of MetLife said that there will be some new products being rolled out in 2013, due to low interest rates. In addition, he said that financial advisors will pay attention to tax-efficient methods to help their clients with all the pending tax changes.

Joe Hurley of SavingForCollege.com said that there will be additional fee-based 529 plan share classes, as well as increased interest in 529 plans. And Jason Hsu of Research Affiliates said that equities in emerging markets could be a good place to invest in as opposed to U.S. equities.

Written by Lisa Swan

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So much for those transparency promises that Republicans made when they took over the U.S. House of Representatives in 2010, in which they said that any bill they proposed would  be posted online 72 hours in advance of any vote. Investment News notes that with the legislation the Republicans proposed to solve the fiscal cliff issue, that promise was not kept. That’s because the two bills were only posted 24 hours before a vote.

The article says that “as we reach the end of the fiscal-cliff hanger, it’s becoming clear that the transparency promise is being violated.” Investment News says that “both parties are adept at keeping the public in the dark about what’s going on in the capital.”

As it turns out, House Republicans rejected Speaker of the House John Boehner’s so-called “Plan B,” so the point may be moot. But the issue is still one that matters as far as keeping promises.

In addition, as the publication notes, it’s not only Republicans who are keeping citizens in the dark. Investment News notes that President Barack Obama’s own fiscal cliff plan is hard to find details on, with most details coming from “leaks from administration aides that are then published in the media.“

Written by Lisa Swan

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There are over 1,000 independent broker-dealers out there, notes Ned Van Riper of OnWallStreet.com. So how do financial advisors decide which one to go with?

Van Riper notes that many advisors will choose a broker-dealer based on things like going with the first recruiter who calls, or checking an industry publication to see which one ranks highest on some metric like which one has the most advisors.

He says that unfortunately, some advisors go with who offers the biggest financial reason, even though this could tie them up financially with the broker-dealer even though it doesn’t ultimately work for them. Van Riper writes that “reality hits advisors after 12 months and they realize they affiliated with a firm whose culture, strategic direction or business mix does not align with their own.”

Instead, advisors should look for the broker-dealer that best fits their own vision. The author says that it is important that advisors do their homework, much like their clients do their own homework on hiring advisors, to find the best broker-dealer for themselves and their own clients.

Written by Lisa Swan

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The movie Lincoln is a big hit at the box office, and it is also a favorite with the critics. But as Danielle and Andy Mayoras noted in an OnWallStreet.com column, Abraham Lincoln was also noteworthy for something related to financial planning. He died without a will. 

 So OnWallStreet.com took a look back in history to see what happened to Lincoln’s estate after his passing. After his father was assassinated in 1865, Robert Lincoln sent a telegram to Justice David Davis of the U.S. Supreme Court about his father, asking him to take over the 16th president’s financial affairs.

Davis became administrator of the estate and said that it was worth $85,000 (several million in today’s dollars.) Ultimately, the estate would be divided between Robert and Thomas Lincoln, the Lincolns’ other living son, as well as Mary Lincoln. In addition, Congress gave Mary Lincoln a lump sum closely equivalent to $25,000, Lincoln’s yearly salary as president. 

 The estate was divided up in 1867, with it ultimately being worth $110,296.80, divided among the three heirs. In addition, Mary could have gotten extra money as a cash allowance because of her being the widow, but she turned that down. For his part, Davis, a close friend of the family, did his legal work for free, even though he could have earned $6,600 for it. 

 It is shocking that Lincoln did not have a will, but it’s even more shocking that between 55% and 67% of all adult Americans do not have a will either. While Lincoln’s situation worked out, most real-world cases today without a will would involve hiring lawyers, and paying big legal fees. As the article notes, “Estates with no wills can be extra complicated and sometimes messier.  Not every family has a Supreme Court Justice willing to step in and help.” An important key to financial planning is having a will.

Written by Lisa Swan

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In order to be on track for 2013, you should tell your financial advisor what life changes you have had in 2012. In addition, there are some questions you really should ask your financial advisor at the end of the year. Here is what The Daily Finance thinks you should talk about:

  • Do you need to make portfolio changes? Perhaps it’s time to think about new asset allocation distribution.
  • What about tax-deferred accounts? Maybe you should add money to thinks like IRA s and 529 plans. Perhaps it’s time to change your regular IRA to a Roth IRA. Also ask your advisor about your 401(k), if you have one.
  • Do you need to do any new tax strategies before the end of the year? Keep in mind that taxes could be higher in 2013.
  • How did your portfolio do this year? You need to know if you made money or lost money, and how your portfolio did as compared to other people and benchmarks. You also need to see if you are on track to make your financial long-term aspirations.
  • How much are you paying in fees for your portfolio? You want to make sure you are not paying too much to have your portfolio. Ask your advisor for a breakdown of the fees.
  • What can you do to have a great 2013? You want next year to be financially fruitful for you. Learn from your mistakes, get advice from your financial advisor, and move on.

Written by Lisa Swan

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According to a new survey, financial advisors could be missing out on younger clients if they don’t keep up with technology.  Financial-Planning.com reports that a study by Cisco Internet Business Solutions Group says that younger investors want to see their financial advisors use the latest in technology.

The study reported that 20% of what they call “Wealthy Under-55s” were planning on switching financial advisors over the next year. In addition, the lack of technology use by some financial advisors could be a deciding factor.

Robert Waitman, who directs Cisco IBSG Financial Services Practice, says that “some advisors don’t favor using the new technology.” He said that “they may feel that no changes need to be made in the way they run their practices.” Waitman said that “many investors want video in t, he mix.”

Some investors would like webinars or video conferencing, the survey says. But Waitman told tFinancial-Planning.com that financial advisors should make sure their technology is up to snuff before diving in.  He said that financial advisors who want to use video “should choose high-quality equipment, to look and feel professional.”

Written by Lisa Swan

 

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There are tax changes expected in Washington, D.C. in the near future, and many investors are concerned about it, says a new survey. Yet most of them are not planning to talk to their financial advisors about it, which could be a missed opportunity.

Financial Advisor Magazine writes on a report by Nationwide Financial. According to the survey, 63 percent of high-net-worth investors are concerned about what is going on in Washington over taxes, yet most of them are not thinking about talking to their financial advisors about it. Nor do the investors think that they can do anything about the shenanigans in Washington.

In addition, according to this survey, which talked to 751 investors who had $250,000 or more a year of annual income, 56 percent think that their tax rates will be raised.

Eric Henderson of Nationwide said that “there is a huge opportunity for advisors to proactively engage clients in a discussion about how tax code changes may impact their portfolio.” He suggested that advisors who are proactive on this issue can build trust with their clients and foster long-term relationships. 

Written by Lisa Swan

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A new survey reveals that millionaire men and women have very different opinions when it comes to getting financial advice. Financial Advisor Magazine writes about Fidelity Investments 2012 Millionaire Outlook Study, which shows how each gender deals with financial advisors.

According to the study, women take less risks, and are more focused on “holistic planning,” the article says. On the other hand, men are more focused on the return on investment. Men are almost twice as likely as women to be concerned about investment returns.

In addition, women are more likely to rely on financial advisors than men, according to the survey. They are also tied to specific advisors more than men. The study, which spoke with 1,520 people, including millionaire investors, showed that 45 percent of women would move firm to follow their financial advisor if the person went elsewhere, while only 23 per cent of men would do so.

Alexandra Taussig of National Financial, a Fidelity company said that “based on these findings, it is important for financial advisors to recognize that women may be looking for different investment strategies or have a different set of financial concerns that deserve consideration.”

Written by Lisa Swan

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Republicans and Democrats have been squabbling over what to do about the fiscal cliff, and how to deal with the nation’s finances. Whether there should be higher taxes, or reduced spending, or both, is an issue. So what does this mean for investors and financial advisors? OnWallStreet.com takes a look at the issue.

There is the likelihood that capital gains taxes may be increased, as well as an increase in dividend taxes. Without a deal, capital gains taxes will go up to 20%, and dividend taxes will be treated like regular income. With a deal, the taxes still could go up. In addition, a 3.8% Medicare surcharge will also be included.

According to a survey by the Financial Services Institute, financial advisors are confident that a deal would be made to resolve the fiscal cliff issue. Seventy-nine percent say that they think a fiscal cliff deal will be made by the end of the year.

In addition, 70% of the advisors say that they opposed raising taxes on the rich, and 68% say that higher taxes would cause fewer people to invest or to save.

Written by Lisa Swan

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A new survey seems to suggest that younger investors are more comfortable with risk. OnWallStreet.com  reports that the risk level of younger investors in mutual funds is now higher than the level seen before the financial crisis in 2008.

The Investment Company Institute surveyed four thousand households in May and discovered that 39% investors under 35 were able to tolerate “above-average or substantial financial risk” in order to get the returns they want. This is up from 31% in the previous two years and is even a little higher than the 37% level in May of 2008, just before the recession.

On the other hand, the risk tolerance of those 65 and older is much lower – 13% as of May 2012, which is similar to the 14% number in May 2008.

“Willingness to take financial risk is strongly affected by age, but has also varied over time within age groups,” said Sarah Holden, who is the organization’s Senior Director of Retirement and Investor Research. She said that “between 2011 and 2012, the willingness to take investment risk among all but the youngest shareholder group fell or remained about the same, while the youngest age group’s risk tolerance increased.”

According to the survey, 53.8 million American households own mutual funds. That adds up to 44.4% of all U.S. households.

Written by Lisa Swan

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