FutureAdvisor became the first robo-advisor to offer an automated college savings plan Tuesday when it launched its new “Diplomas Without Debt” service. The service helps families find the best college savings accounts – a 529, Coverdell ESA, UTMA or UGMA – to fit their needs and builds a custom investment plan with tax strategy accounting for the number and age of the kids, the targeted school and the probability that children will actually attend. Investors pay the expenses of the underlying funds, but FutureAdvisor doesn’t charge management fees. Unfortunately, it can’t help with current student loans.
For many accounting firms, wealth management is a natural extension of the business, built as it is on trusted relationships with their clients. Affluent and business owners often call accountants first before any big decisions. But even the firms that have a wealth management platform, or a partnership with one, are not living up to the potential, writes consultant Russ Alan Prince on Forbes.com. These firms are leaving “an astounding amount of untapped business” on the table. Why? "They lack the processes to ... holistically understand" the wealthy clients and create effective financial plans for them.
Expecting to grow the business by buying another one? It often doesn't match expectations. About 73 percent of advisors expected an increase in revenue growth from a deal, but only two-thirds saw any actual benefit, according to a report released by Pershing Advisor Solutions on Tuesday. Inorganic growth like this may "test management capability" and expose the firm to "more variables that are difficult to control." Acquiring a solo advisor practice is the most common type of deal. Of the firms that experienced a transaction within the past five years, 60 percent reported making an acquisition of a solo practice, while 15 percent reporting acquiring a firm with multiple professionals present. Nearly one in five firms cited a merger or acquisition as one of their top three drivers for growth, according to Pershing.
Sometimes confirming the conventional wisdom is what "research" is all about. That's the case with the study produced by William Emmons, a senior economic advisor, and Bryan Noeth, a lead policy analyst, both at the Federal Reserve Bank of St. Louis' Center for Household Financial Stability, which found that wealth is strongly linked to education. According to the duo's research, the likelihood of a family without a high school diploma having at least $1 million in wealth was 1 in 110. The odds bumped up to 1 in 20 for high school graduates, 1 in 4.6 for college graduates and 1 in 2.6 for families with a professional/graduate degrees. Correlation is not causation, of course, as the researchers point out; it's just as likely to prove the rich are just more apt to send kids on to a higher education.