A roundup of the latest news and reports of interest to financial advisers.
10 New Tax Numbers to Know for 2022: Check out ThinkAdvisor’s list of the IRS tax inflation adjustments for 2022.
What 8 Advisers Will Do Differently in 2022: Advisors' Advice: ThinkAdvisor asked advisers through the Financial Planning Association and the XY Planning network: In terms of investment strategies or running your business, what do you plan to do differently in 2022? Their answers may surprise you.
Advisers Say Rise In At-Home Drinking Is Its Own Epidemic: Advisers need to protect client assets from the cost of dependency or addiction, according to Financial Advisor.
Is SEC Telling Advisers Not To Call Themselves Fiduciaries In Relationship Summaries? —Industry attorneys say advisers and compliance experts are confused by the SEC's guidelines, according to Financial Advisor.
Where Americans Moved To Retire In 2021: The number of retirees who moved in 2021 was the lowest in seven years, writes Volodymyr Kupriyanov.
America Would Be More Happy With More People: Stagnant demographic growth could have negative long-term repercussions for the U.S. economy, writes Tyler Cowen.
Inflation? There's Another Explanation For Rising Housing Costs: The housing market could be on the cusp of a fundamental shift with long-lasting implications for the U.S. economy, writes Karl Smith.
Avoiding The Social Security Tax Torpedo: Taxable income can generate a need to pay taxes on more of Social Security benefits, writes Wade Pfau.
Are Alternative Investments The Answer? — With rising concerns about the aging bull market, these diversified assets are moving into the spotlight, writes David Sterman.
Keeping An Eye On ILITs: It's time to revisit a common and popular estate planning tool, according to Financial Advisor.
Most UHNW Investors Want Tangible Assets Included on Their Balance Sheet: Report— While only about half of financial advisers treat assets such as property and art as part of their UHNW clients’ wealth, 87% of the clients do, according to a report from insurance firm Chubb.
‘iTDFs’ Smooth the Bumps of Retirement Income: A former chief actuary of Denmark seeks a U.S. target date fund company that might use his technology, the 'iTDF,' to create a seamless transition from pre-retirement savings to safe income during the first 20 years of retirement, according to Retirement Income Journal.
‘Retirement Bonds’ could increase income, lower risk: EDHEC—Similar to the SeLFIES proposed by Robert Merton and Arun Muralidhar, the Retirement Bonds proposed by Lionel Martellini and Shahyar Safaee of France's EDHEC Risk Institute would guarantee safe income over the first 20 years of retirement, according to Retirement Income Journal.
Why AUM Pricing is Fair for Fiduciaries and Clients: The value for clients is higher with larger portfolios than small ones. The fees should be higher too, writes Dan Danford.
The Wrongheaded Rhetoric on Climate Change: Celebrated venture capitalist John Doerr’s new book, “Speed and Scale,” offers a solution to the threats posed by climate change. But it is so mired in the swamp of the terms of the discussion that its proposed solutions will go unnoticed and have little impact, writes Michael Edesess.
How Index Funds Stole Trillions from Wall Street: The best tribute to Vanguard founder John C. Bogle near the end of his long life cannot be repeated without heavy censorship, writes Michael Edesess.
The Best and Worst Investment (and other) Books of 2021: It has been Larry Swedroe tradition to informally rate the investment-related books he’s read in the past year. Here’s his list of winners and losers.
Dealing with the Demise of the 4% Rule: Media attention has focused on the long-standing “4% rule” and how economic and demographic realities have reduced that guideline. This article by Dave Evans discusses related considerations and provides opportunities for retirees dealing with the new normal.
Don’t Fear the Meter: The Inescapable Future for the Hourly Revenue Model: Is it possible that, as the planning profession matures, all planners will eventually follow the same path that every other profession has followed, and charge on an hourly basis for the advice they give – like lawyers, tax professionals and accountants? Read Bob Veres’s take on the subject.
Is It Now the “3.3% Rule”? — Recently, a highly respected financial publisher issued a research paper claiming that the “safe” withdrawal rate could be as low as 3.3%. Bill Bengen recently increased his estimate of the “worst-case” withdrawal rate to 4.7%. Bengen answers the question: How do we make sense of these two widely disparate results?
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Research of Interest
Investing Other People’s Money
When it comes to risk-taking behavior, experimental economics research is mainly concerned with how people take (financial) risks for themselves. However, a significant part of a financial professional’s role is taking financial decisions on behalf of third parties. Experimental finance provides controlled environments to test how remuneration structures affect investment decisions for real people. This chapter discusses recent findings of experimental studies on investment decisions made for other people.
How Competitive Are Income Annuity Providers Over Time?
The 2019 SECURE Act provides safe harbor protections to employers who evaluate the costs of providing guaranteed income including gathering information on competing providers. Annuities can be more difficult to evaluate than mutual funds because annuity expenses can be opaque, financial strength matters, and insurer competitiveness can change over time. The researchers find in this paper significant variation in the payout rates across providers over time. While the payout rankings of annuity companies (e.g., best to worst) are fairly sticky over the short-term, over the full period of the analysis the correlation declines effectively to zero (versus the initial rankings). This suggests individuals or institutions who choose a single annuity provider based on income payout should revisit the decision regularly to ensure the quotes are still competitive. Companies for which immediate annuities are a higher fraction of total sales tend to rank higher and remain so more persistently over time.
