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How Next-Gen Advisors Do Business; Seeking Better 401(k)s: July Research Highlights—Slideshow

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The July 2014 issue of Research magazine looks at the future of financial advice from multiple angles. The cover story, “Next-Gen Advisors Have Arrived,” profiles four up-and-coming young advisors in the Los Angeles area. These are tech-savvy, forward-thinking pros who know how to attract a new generation of wealth creators.

This month’s Finke on Finance article, by Texas Tech Prof. Michael Finke, delves into “The Search for Better 401(k) Advice” and what will happen if new rules bring the era of non-fiduciary retirement plan advisors into eclipse.

Looking at clients’ personal futures, the question of how to not outlive one’s money is pressing, and is discussed by Ben Inker, GMO strategist, in an interview.

A new column, The Long View, by Senior Editor Kenneth Silber, focuses on long-term possibilties — in this case, on concerns that artificial intelligence on Wall Street could lead to dire consequences: “Are Killer Robots the Next Black Swan?” Other columns, by Marshall Jaffe and Alexei Bayer, also focus on tech changes and consequences.

This and much more is in the July issue. Click through the following slides for a preview.


Next-Gen Advisors Have Arrived

A new breed of young financial advisor is redefining and reshaping the profession that has been popularly called “stockbroker” ever since a group of Wall Street businessmen began trading securities 200-plus years ago.

To be sure, social and historical events—especially the financial crisis—have played a major role in what has become, increasingly, a shift from broker to advice giver.

Indeed, today’s next-gen FAs come equipped with an eagerness to develop and maintain client relationships. Further, they’re keenly aware of the importance of empathy to foster bonds and know that trust-building is crucial. Notably, these men and women are not “salespeople”; “financial coach” more accurately describes them.

Read the full article.

The Search for Better 401(k) Advice

Most Americans don’t get any professional financial advice about retirement. And boy, do they need it. Many small employers desperately want help initiating a 401(k) plan and wading through the myriad investment options they know nothing about. Employees have little idea how much to save or how to pick the right fund. Enter the financial advisor to save the day.

Or not. The American 401(k) system was never really constructed to provide the best retirement savings platform for individuals.

What started out as an executive tax shield evolved over time to provide retirement security for millions of American workers through changes in the marketplace and regulation. Average fees have fallen, services have been streamlined, and policy changes have improved savings and investing outcomes for participants. But it is obviously not perfect—it’s too expensive, leads to wide variation in outcomes, lacks effective decumulation strategies, and it has a big issue with financial advice. In many cases, the employers and employees who need hands-on help the most are least able to get it.

Read the full article.

Ben Inker: Don’t Outlive Your Money

Certainly no one wants to run out of money in retirement. But the majority of Americans — rich or poor — worry that they will.

GMO, the investment management firm co-founded by Jeremy Grantham, who is famed for forecasting market bubbles, addresses this critical planning issue in a new white paper with an unorthodox premise. GMO manages client assets of more than $112 billion.

“Investing for Retirement: The Defined Contribution Challenge” is written by Ben Inker, co-head of GMO’s asset allocation team, and Martin Tarlie, a global equity team quantitative researcher at GMO. They argue that dynamic asset allocation — a strategy of moving assets around in a portfolio — is essential to minimizing the chances of outliving one’s money.

Read the full article.

Are Killer Robots the Next Black Swan?

Computing and robotics advances in recent years have kindled worries that artificial intelligence (AI) someday will slip free to wreak destruction upon the world. Warnings about such scenarios can be found in recent works that don’t carry a science-fiction label, such as documentary filmmaker James Barrat’s recent book Our Final Invention: Artificial Intelligence and the End of the Human Era.

No less a scientific name than Stephen Hawking has been raising alarms about out-of-control AI. In a recent opinion piece, Hawking and several scientist co-authors warned: “One can imagine such technology outsmarting financial markets, out-inventing human researchers, out-manipulating human leaders, and developing weapons we cannot even understand. Whereas the short-term impact of AI depends on who controls it, the long-term impact depends on whether it can be controlled at all.”

Read the full article.

See the complete July issue.