Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Financial Planning > Tax Planning

A financial planning Christmas Carol

Your article was successfully shared with the contacts you provided.

In his day, Lynn Hopewell was among the most prominent financial planners in the country, having served on the CFP Board and as editor of the Journal of Financial Planning. He was a recipient of the FPA Lifetime Achievement Award and was named by Money magazine and Worth (by me) as a top advisor. He had also been somewhat of a mentor to me when I started covering the financial planning world back in the early 1980s, sharing his many insights and experiences, and serving as a sounding board as I was figuring out the financial services industry.

Lynn Hopewell is no longer with us. I suppose I should admit that I have no first-hand knowledge of his demise, but back in 2006, I did read a number of reliable announcements of it. Yet there was Lynn, on my computer screen as if I was Skyping with him, which I wasn’t (and as if my computer were set up to Skype, which it isn’t).

But, it had been a long day. It was already dark out, and I still had a blog to crank out. I must confess that while I was moved to see Lynn’s balding pate and scraggly white beard once again, I also felt some irritation with my computer for choosing that moment to malfunction with an image from who knows when and disrupt my increasingly fragile train of thought.

However, when he spoke to me, I realized that I had finally gone ‘round the bend that I had been flirting with for some years, and said so; more to myself than to the image on the screen. In his typically bottom-line manner, Lynn pointed out that my mental state was of little consequence at that moment, and as I was, in any event, having this vision, I might as well listen to what he had to say. He always was hard to argue with.

Having taken his point, I stammered out a litany of questions such as how he was, where he was, how this was possible, etc., which he quickly brushed aside.

“I want to talk to you about the profession of financial planning,” he said in a grim voice. “As you know, it’s been on shaky ground since its creation back in the early 1970s, but I’ve always felt it was moving in the right direction — until recently. I’m hoping that you and some others can nudge planning back on track before it’s too late. But my time grows short: They don’t give us a lot of leeway for this kind of thing up here, you know? You’ll be visited by the ghosts of three clients who will show you what you need to know about where financial planning came from, the challenges it’s facing at present and what its future holds if it continues on its present course. What financial planners do about it will be up to them.”

With that, my computer screen returned to the blog that I’d been trying to write, which suddenly seemed a lot less important — and a lot less likely to get finished that night. Flooded by the nostalgia of the many conversations I’d had with Lynn over the years, juxtaposed with the conviction that I needed to start getting more sleep, I decided to call it a night and headed off to bed.

Surprisingly, sleep came easily that night. How long I slept I can’t say, but slowly I was coaxed awake by the vibrating of the iPhone on the nightstand. As I fumbled for the infernal device, I struggled to comprehend the image before me of a mustachioed, youngish man in what appeared to be a neon blue leisure suit and a bad haircut.

“Hey, baby. What’s happenin’?” he asked. Not waiting for a response, which my still-sleeping brain was having a hard time coming up with, he introduced himself. “I’m Dr. Dorian. Together with a couple of other plastic surgeons, I just launched the most happenin’ private practice in Beverly Hills,” he explained. “Me and my pards are rolling in dough, and I just dropped in to remind you what financial planning was like when you started a financial planning magazine in 1984.”

Still trying to get my brain around the vision on the phone, Dr. Dorian didn’t give me a break: “To handle our windfall, we have the coolest financial planner on the West Coast. He lives in The Jackson Five’s old mansion. Our biggest problem is that we make too much money, and with the top tax bracket at 70 percent, we don’t want to pay most of it back to Uncle Sam, you dig? So our planner created a ‘diversified’ portfolio for us, equally divided between oil and gas tax shelters, real estate tax shelters and gold coins. What’s our planner’s commission on all that? Heck, I don’t know — somewhere around 10 percent maybe — but he’s saving us so much money, he’s worth it.”

Finally, Dr. Dorian said he had to go, but not before he gave me a rundown on all the work he was doing on a young starlet named Angelina Jolie; said even her father, Jon Voight, doesn’t recognize her. As I lay back in the darkness, memories of the lavish industry conferences paid for by the tax shelter syndicators and all the stories I’d written about the collapse of many of those tax shelters only a few years later flashed in my mind, and I wondered how Dr. Dorian and his partners made out.

Just as I was dozing off, my iPhone started buzzing again, but this time, I was less startled. Sure enough, it was Ghost No. 2: a 40-something business executive named Todd, in an expensive suit, an understated tie, and with a wife and three kids who were approaching college age. Todd told me that he was there to be sure I understood what it’s like for financial planning clients today. Despite the fact that it was 2:00 a.m., I could see that Todd was an earnest man who took his familial responsibilities seriously.

Todd told me that he works with a CFP and tries to learn as much as he can about personal finances. He and his wife save as much as they can, but he knows putting his kids through college won’t be easy, and he is trying to make their money work as hard as it can. He said his financial planner is helpful, but he’s still confused about the advice he gets. He was shocked to learn that all “advisors” don’t have to put the interest of their clients first, but couldn’t remember the legal term for that.

That’s why he chose a financial planner — because he read that they have to put their clients first at all times. But when he recently raised the issue with his CFP, who’s a broker at a wirehouse, the planner responded by saying he’s only required to put the clients first with whom he has a financial planning relationship and that his relationship with Todd doesn’t fall under that definition. Now, Todd told me, he doesn’t know whether the advice he got or the investments he bought were good for his family, or whether his costs were as low as possible.

I could still see Todd’s troubled face as I tried to get back to sleep, but it was not to be. Before my head even dented the pillow, my phone rang again. This time, it was Angelina on the line. She apologized for the early call, but said in 2024, most people have to put in 12-hour days to get by, and with two young kids and a freelance journalism business, she needs to get an early start.

“So, I have to make this quick,” she said between gulps of coffee. “Here’s the deal: Back in 2016, Wall Street turned the Dodd-Frank Act on its head, first by getting SEC approval for a fiduciary standard that exempts costs and conflicts of interest, and then by getting oversight of independent RIAs and putting them out of business by escalating compliance costs. With all advisors now working for brokerage firms, they quickly took over the Internet by offering ‘free’ advice and using computer models to sell heavily loaded products. After two more stock market busts depleted retirement portfolios, health care and college became unaffordable for most people.”

“So,” Angelina went on, between bites of what sounded like a granola bar, “Wall Street was able to buy out most mutual fund companies, ETFs and some banks. Now they sell heavily loaded investments, fixed annuities, health care plans and variable-rate college loans back-loaded with balloon payments. The FPA and NAPFA are out of business, and the CFP Board, which was purchased by FINRA in 2020, now oversees 250,000 broker CFPs, who still are required to put their clients’ interests first at all times, except when recommending investment products or managing portfolios.” I didn’t get back to sleep, nor have I slept well since.

For Lynn Hopewell and the other luminaries who created the financial planning profession, I hope that the ghost of Christmas future was only a mirage.

Have a Merry Christmas.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.