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Financial Planning > Charitable Giving

The Back to Basics Cycle

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There’s a pas de deux that occurs when I interview someone for the Web or the magazine. In such a conversation, I will proceed to ask the interviewee about the presenting issue–perhaps it’s a new product or service, like Schwab’s new lineup of no-transaction-fee ETFs that it announced in early November (a pretty significant move, I’d argue), or a Web-based demonstration of a nifty multidimensional-modeling portfolio analysis tool from Gravity Investments, a Denver-based financial engineering firm (look for a short item in this month’s news section, and likely more from Gravity in the coming months).

Sometimes, however, the interviewer becomes the interviewee. That happened in the roundtable that appeared in the November 2009 issue, when advisor Jonathan Krasney turned the tables after I asked the assembled eminences grise what the big issues would be for them in the near future. “What do you think are the big issues, Jamie?” he asked. While I attempted to demur at first, I quickly warmed to the subject, not least because I’ve been thinking big thoughts about the future as this franchise prepares to celebrate its 30th birthday in 2010. The big, influential trends moving into the future will highlight our coverage of you and the industry throughout next year, so you’ll have to wait.

However, you won’t have to bide your time to be informed of some notable trends by Tere D’Amato, whose listening post job as head of advanced planning at Commonwealth Financial gives her a unique and authoritative insights into what advisors need help with now (Tere is also, by the way, a regular contributor to these pages: see her Expert’s Corner column this month on charitable giving on page 97). She told me in an early November interview that in all her time she had never seen so much interest in, well, the basics. Advisors found themselves returning to their early days as financial planners, and instead of advanced planning issues, are finding themselves helping clients do budgeting, and get a handle on their debt management.

This back-to-basics movement is a good thing, I believe, and part of a cycle that tends to follow market cataclysms or personal tragedies. While it’s true that complexity tends to increase as a client’s assets rise, it’s also true that if you don’t start, and monitor, the wealth management process by hewing to the financial planning equivalent of blocking and tackling, you haven’t served your clients well. This is certainly true in investment management, which was first brought into sharp relief for me at a Commonwealth Chairman’s Retreat last January, in which some quite successful Commonwealth representatives stood up and announced that they were abandoning their practice of outsourcing money management and were assuming those responsibilities themselves. Whether those specific advisors followed through on that promise or not, I’m convinced that the market meltdown has led the majority of advisors to rethink what they thought they knew about Modern Portfolio Theory and diversification and asset allocation.

I would argue, however, that it is the process of rethinking and reimagining, of challenging conventional wisdom, that is the hallmark of an engaged advisor who is never satisfied with the status quo. I’m convinced as well that engaged advisors are successful advisors, for both themselves, their colleagues and employees, and their clients.


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