Wealth Management
Given their widespread popularity lawmakers have scrambled to put together a series of changes to a popular retirement product in the last year and it looks like more are coming. There appears to be bi-partisan support for the additions building on the 2019 Secure act which tried to increase retirement security. The House and Senate bills both include changes that would remove the maximum amount on the Qualified Longevity Annuity Contract. Previously it was capped at the minimum of $135,000 or 25% of your retirement accounts. The Senate provision also bumps the minimum up to $200,000. The new provisions also include auto enrollment in 401(k) plans and a student loan exchange in existing 401(k) plans. The final piece to the provisions is an increase in catch-up contributions for existing 401(k) plans that could further bolster retirement savings.
FINSUM: One of the underappreciated aspects of the Biden administration is the expansion of savings vehicles for retirees across many income earners.
The cloud has been the latest computing craze financial firms have been chasing but it was mobile control that just got the latest expansion in portfolio management software. Enfusion Inc. is a leading provider of cloud based financial software and they are pushing through several new alterations to their mobile platforms. Mobile users will have personalized reports and real-time access to their market exposures. Additionally, they will have a variety of compliance management features including monitoring and overriding exceptions. Finally, a variety of managed services like secure document sharing and profit and loss statements optimized for mobile platforms will be available.
FINSUM: Companies with an advantage in cloud computing will make the quickest transition to mobile products because of the large data they can provide at the snap of their fingers.
The Security and Exchange Commission just issued a slew of new regulatory changes that would impact current trading standards. New changes could come into vote if they have majority support among the five commissioners and two others. Chairman Gensler stated he wants the public and markets to have fair material information. Essentially there is no public disclosure form when a plan to schedule share purchases takes place which can ultimately give insiders an advantage on the trading block. The research in academia has confirmed these trades are more beneficial in the ability to avoid losses inside a 60-day window.
FINSUM: These changes could lead to substantially less stock buyback plans in the coming years as insiders could face more symmetric returns.
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Investors need to be more active with their finances and taxes as they enter retirement because it's not the time to coast as many presume. One of the areas retirees underestimate the costs of retirement and permanently puncture their safety net is in healthcare. Hefty premiums hit most Americans due to the Affordable Care Act once you hit 50, and most Americans who retire before Medicare will face a shocking bill. There are lots of healthcare tax credits available for those with low and middle incomes, and bigger benefits if healthcare costs breach 7.5% of adjusted income. Finally, Roth conversation ladders will dramatically impact your healthcare costs.
FINSUM: It’s critical to be informed about all of the tax benefits those approaching or entering retirement can take advantage of pre-Medicare.
Diversity, Equity and Inclusion approaches are key parts of finding new financial advisor talent in today's world. Comments at the CFP Board by Akeiva Ellis stressed that firms evaluate their DEI policies and procedures, and more importantly the culture if they want to hire and retain employees. Executives at T. Rowe Price have emphasized plans for advancement within the company as a strategy to retain employees. Specific step by step paths that allow them to know their metrics and execute are the best way to retain and attract talent. Finally, underserved groups don’t often have the same access to the personal feedback that allows them to flourish so specific habits surrounding performance are critical for keeping diverse talent.
FINSUM: DEI is becoming a critical part of recruitment and retention, and an edge up could provide the strongest advisors in the market.
Biden recently made his pick for a critical new position at the DOL: head of the Employee Benefits Security Administration. Lisa Gomez has been nominated and is likely to get bipartisan confirmation. Gomez is seen as critical to the redrafting of the fiduciary rule that is taking place at the DOL. Most industry insiders expect the new version of the fiduciary rule to be much tougher, more akin to the original Obama era rule than the currently in-effect Trump version.
FINSUM: The reality is that if a critical new person is being brought on board to lead the effort, it is likely to push back the timeline, or so says Brad Campbell, leading regulatory lawyer at Faegre Drinker, a leading law firm in our space.