In 2011, the oldest baby boomers reached the traditional retirement age of 65, and through 2029, about 8,000 boomers will reach that milestone every day. This aging of America will result in a significant shift in mature industries such as financial services because the average financial planner is currently 57.

As they reach their “golden years,” many of these professionals, who have worked hard to build successful practices, will choose to leave them — ideally in the capable hands of colleagues who’ve been trained to step into their shoes. While there’s no substitute for experience, building a strong team and ensuring clients are taken care of over the long term are two responsibilities all professional services providers must take very seriously. In the midst of running a successful practice, succession planning may not be something high on priority lists — but it should be.

Identifying younger team members who fit the future leader mold is an important step for all practice owners. (read more…)

A collection of stories from SmartBrief publications and around the web…

Stumbling Stress Tests: Now that the convoluted results of stress tests conducted by U.S. Federal Reserve are in, all eyes can shift to Europe as the European Central Bank and European Banking Authority prep for their own brand of testing. However, Mayra Rodríguez Valladares from MRV Associates is rather pointed in her skepticism of the Europeans’ methods: “Given banks’ enormous data collection and aggregation challenges and the fact that the stress tests are likely to rely on a risk-weighted asset framework where banks get to pick a lot of the risk drivers for the models, no one should hold their breath about the validity of those stress tests.”

Adding insult to injury: All those Bank of America shareholders who were angered by the actions of Ken Lewis during the firm’s takeover of Merrill Lynch have got to be smoldering yet again. (read more…)

A collection of stories from SmartBrief publications and around the web…

OCC says Volcker implementation to cost banks between $412M and $4.3B: That price tag sounds shockingly low. Considering all the fuss Wall Street has raised over the past few years desperately trying to beat back Volcker, that range is downright amazing. The estimate is for the cost spread across only the banks the OCC regulates. I would venture to guess those firms have spent somewhere in that range breathlessly lobbying against Volcker.

Wait … Goldman Sachs is calling for more regulation?: In this Wall Street Journal op-ed, Goldman Sachs President and COO Gary Cohn offers a pretty detailed plan for curbing some aspects of high-frequency trading. Outgoing CFTC Commissioner Bart Chilton probably thinks this is some kind of going away present from Cohn. A more cynical view would be that Goldman traders aren’t exactly the fastest “cheetahs” on the street, so Cohn is really just trying to level the playing field. (read more…)

David Koenig serves as Investment Strategist on the Research and Innovation team for Russell Investments’ family of global indexes. In this email interview with SmartBrief, Mr. Koenig talks about the development of indexes and how the process has changed over time.

Question: What are the potential benefits of including small cap stocks in an investment portfolio?

David Koenig: Significant investigation into what is now commonly referred to as the “small cap risk premium” has shown that small cap stocks have distinct risk-return characteristics that may provide diversification benefits and potentially enhance returns over time.

Among the earliest research was a 1981 paper by Rolf Bänz, which found that “smaller firms have had higher risk-adjusted returns, on average, than larger firms.”[1] Bänz referred to this performance difference as a “size effect.” And of course perhaps the best-known research into the small cap premium is that of recent Nobel Prize winner Eugene Fama and research partner Kenneth French. (read more…)

More and more financial advisors are adopting social media to help build their business. SmartBrief recently chatted with Melissa Socci, senior vice president of brand and analytics for LPL Financial, to get her insight on best practices for advisors as they delve into social media. The following is an edited transcript of that conversation.

LPL was a relatively early adopter of social media within the finance space. What lessons did you learn early on about getting advisors to embrace social media?

Our advisors have been able to use social media for about 4 years now and we continue to work with them to help them understand it. These are numbers people so they want to know what the hard ROI numbers are. They want success stories about what has worked from Day One right up until now.

Social media is part of a larger mix of an advisor’s marketing plan. It is not a plan in and of itself. (read more…)