The CFP Board debuted its Center for Financial Planning late last year with the goal of furthering the development of the advisory profession. The Center’s latest effort is a series of books, to be published by John Wiley & Sons, for faculty, students, practitioners and researchers who work within the financial planning profession. The initiative kicks off in early 2017 with the release of the first book, Communication Essentials for Financial Planners: Strategies and Techniques, by Dr. John Grable and Dr. Joseph Goetz of the University of Georgia. The book will include online videos showing different interactions between the client and planner. The center will continue to release books over the next five years aimed at expanding the body of knowledge for financial planners. "The series will address both traditional subject areas that are associated with financial planning, as well as new topics and concepts that can advance both financial planning practice and how we educate the next generation entering the workforce,” said Dr. Charles Chaffin, director of the academic home for the Center for Financial Planning, and editor of the series.
Fiduciary responsibility is the most important reason plan sponsors hire advisors, according to the Fidelity Investments Annual Plan Sponsor Attitudes study. And that's a first since the study's inception seven years ago. Thirty-eight percent of surveyed plan sponsors indicated concern about their fiduciary responsibility, an increase of 14 percent from 2015. And while 72 percent of sponsors said they are satisfied with their advisors, 23 percent—another first—are actively looking for a new one. Yet another new high, 69 percent of respondents said an advisor acting as a formal fiduciary is important. What does that mean for advisors in a post-DOL world? “The Department of Labor’s rule on investment advice gives specialist plan advisors the opportunity to raise the game,” said Jordan Burgess, head of specialist field sales overseeing defined contribution investment only (DCIO) sales at Fidelity Institutional Asset Management. “If they are successful at demonstrating their knowledge, these plan advisors could potentially expand their share of the market and become even more competitive.”
Non-professional investors may be losing more than they realize simply because they are bad at math. According to a study of 3,500 people by the UK’s University of Stirling, the vast majority of individuals underestimate the difficulty of breaking even after a financial loss. For example, many people assume that after a 50 percent loss, they only need a 50 percent gain to break even and mistakenly believe their investment is worth more than it is. No matter what percentage loss was given to participants, a “worrying number” continued to get it wrong. A professor at the school said the study confirms the difficulty most people have with financial products and the need to help them understand the price risk and returns of investment products. Philip Newall, a PhD student in behavioral science at Stirling Management School, added, “It's important that we can correctly assess the risks tied to different investments before disaster strikes, and understand what we need to do to ensure our assets are worth as much as we think."