Check out two recent media placements that Jason was featured in regards to the DOL:
IMOs Call DOL Fiduciary Exclusion Unworkable
Check out two recent media placements that Jason was featured in regards to the DOL:
IMOs Call DOL Fiduciary Exclusion Unworkable
We are excited to announce that The Low-Cost Referral Builder is now available on c2ptraining.com!
This program is a powerful low cost, high volume method for generating more attendees to your seminars. Leonard Parson and Kyleah Parson will explore the process for implementing the Low-Cost Referral Builder program. The session includes strategies for reaching out to groups and associations in your area to create raffle programs, tickets for seminars, team training for distributing the tickets, and best practices to book and keep more appointments from each seminar.
In continuation of highlights from our most recent Mastermind Collegium event, today we share our opening updates and innovations with the latest resources available to Mastermind members.
As we enter into tax season, get the critical, step-by-step training you need through our fully-updated Tax Practice Builder e-Learning course!
The content debuted at The Tax Practice Builder Annual Training is now available online for you and your team to review on-demand. Each of the eight steps has been updated by our subject-matter experts, so whether you are introducing tax preparation to your firm for the first time or are a seasoned veteran wanting to refine your tax delivery conversions to holistic planning clients, be sure to log in and review the new training and resource materials available to you!
P.S. For additional tax delivery training, click here to review Charles Welde’s Tax-Efficient Roadmap delivery process.
Remember to join us for The Tax Practice Builder Study Group on Tuesday, February 28 at 3:00 pm ET.
Click here to access the GoToMeeting!
After returning home from our 2017 Advisor Connection Trip in Costa Rica, we wanted to personally thank all the advisors that produced a tremendous amount of new business to earn qualification for that amazing trip! 2016 was a great year for PCA in many ways. Going into 2016 we had a strong focus on improving operational efficiency and the investment philosophy. We invested heavily in technology and people, focused on building better processes and accountability, streamlined communication, and continued to make it easier for all of you to do business with PCA. We also invested heavily in unifying our investment philosophy. We added a new co-chairman of the PCA Investment Committee, Jerry Herman, CFA who brings decades of experience in portfolio analysis and investment management. We strengthened our relationship with Dimensional Fund Advisors (DFA) by becoming one of 16 (one of 6 with national capabilities) approved TAMPs (Turnkey Asset Management Providers), which opens new capabilities and resources. We captured an immense amount of advisor feedback on ways to streamline and strengthen trading, rebalancing, billing, and model construction. 2016 proved that hard work pays off. We grew the RIA by a record $184,551,150 in new AUM, surpassing just over $670M in total AUM at year end, so thank you for entrusting us with your clients’ money!
That said, one of our biggest wins was staying true to the philosophy upon which PCA was founded. As you all know, The Bucket Plan® is the foundation of our planning philosophy. It is the asset-positioning philosophy to which we all subscribe. Evidence-based investing is the investment management philosophy. The core of our evidence-based investment philosophy states that we will tilt our portfolios toward factors that are proven to produce higher expected return over time. It specifies that we will not chase fads or trends, the next hot fund manager, or try to time being in and out of the market. While at times evidence-based investing doesn’t seem to be the most popular or sexiest approach to managing money because of it’s requirement for patience and discipline; 2016 certainly rewarded that patience and discipline.
PCA shares in DFA’s belief that there are 4 proven factors (evidence) of higher expected returns over time:
If we look back over 2016, the markets really tested money managers. Results in early January 2016 appeared to confirm the pessimists’ viewpoint as markets fell sharply around the world; the S&P 500 Index fell 8% over the first 10 trading sessions alone. The 8.25% loss for the Dow Jones Industrial Average over this period was the biggest drop throughout the 120-year history of that index.* For fans of the so-called January Indicator, the outlook was grim.
Then things seemingly got worse. Oil prices fell sharply. Worries about an economic debacle in China re-entered the news cycle. Stock markets in France, Japan, and the UK registered losses of more than 20% from their previous peaks, a customary measure of a bear market.** Plunging share prices for leading banks had many observers worried that another financial crisis was brewing. As US stock prices fell for a fifth consecutive day on February 11, shares of the five largest US banks slumped nearly 5%, down 23% for 2016. By mid-year, we encountered Brexit which sent markets spiraling through the evening before US markets opened.
Despite all of this noise, the S&P 500 returned 11.9% for the year and international stocks returned 4.4% for US dollar investors, helping to illustrate just how difficult it is to outguess market prices. Once again, a simple strategy of embracing sensible asset allocation and broad diversification was likely less frustrating than fretting over portfolio changes in response to news events.
*www.djaverages.com, accessed January 6, 2017.
**Michael Mackenzie, Robin Wigglesworth, and Leo Lewis, “Stock Exchanges across the World Plunge into Bear Market Territory,”Financial Times, January 21, 2016.
If we look at the tilting factors, here are some results from 2016:
***Returns of the Fama/French US Big Robust and WeakProfitability Research Index are through November 30th, 2016.
We mentioned earlier that patience and discipline rewarded this evidence-based investment philosophy in 2016. We share these results, not to tout this will happen each year because we all know it probably will not, but rather to illustrate a very important lesson on how patience and discipline needs to be applied in two areas when it comes to evidence-based investing. Discipline paid off by not panicking when the market took a tumble in Q1 2016. While it would have been easy for us as advisors to waiver and flip flop to more conservative allocations or even cash, those who stayed the course were rewarded. Luckily, The Bucket Plan® helps control investors from acting irrationally, giving them the confidence to stay the course and remain invested because they have a Now Bucket and a Soon Bucket in place. Patience paid off in terms of the multi-factor evidence-based investment philosophy. This can be seen most effectively in the small company return premium vs large company in 2016. The returns of small companies (Russell 2000 Index) vs large companies (Russell 1000 Index) leading up to the Presidential election looked like this:
If we look at returns of small companies (Russell 2000 Index) vs large companies (Russell 1000 Index) in the month of November alone, you can see how quickly this small company premium hit:
We hope this speaks to you as much as it spoke to us. By staying true to the investment philosophy through volatile market conditions and tilting toward factors that can be proven through evidence, you can produce value to the client. However, you must be patient and disciplined because it can come very quickly and without any warning, such as the the case with the 7.67% size premium from small companies vs large companies, which was produced in less than 30 days.
So what did this mean for the PCA Models in 2016? While you can find the performance of all of our portfolios on the Advisor Drive, here are some quick reference points of the PCA Portfolio Returns net of our 50bp PCA fee:
*Benchmark returns are blended between the MSCI World Index Net Return for equities and the Bloomberg Barclays Global Aggregate Bond Index for fixed income.
**You cannot invest directly in an index.
***Portfolio returns are net of PCA 50bp Management fee, but not advisor fee.
****Performance returns are from 01/01/2016 – 12/31/2016.
So what is in store for 2017 at PCA?
First, we will remain true to the evidence-based investment philosophy within the portfolios we manage. The investment committee is remaining focused on creating low-cost, efficient, globally diversified portfolios that capture long-term equity, size, value, and profitability premiums. As research determines additional factors, we will continue to evaluate whether they should be added to the portfolios. We recommend updating your clients’ Bucket Plan annually so they understand the importance of their Now Bucket and Soon Bucket, which provides the client the luxury of being able to invest the rest of their money in the Later Bucket without having to worry about short-term volatility.
Second, PCA will be launching an ETF portfolio line which will become available for new money in February. While the Dimensional mutual fund portfolios (Pre-Tax, Post-Tax, and Global Portfolio lines) will continue to be the core strategies PCA manages, we realize that in certain cases clients seek diversification of fund families (they don’t want 100% of their AUM in Dimensional) or the client isn’t a believer in mutual funds and seeks an alternative to help achieve their financial goals and objectives. More details on this ETF portfolio line will be made available by February 1, but the underlining philosophy of the portfolio line will mirror the evidence-based philosophy we deploy within the DFA portfolios.
Third, PCA will be launching an AaPM (Advisor as Portfolio Manager) option. In an effort to open more investment options for our advisors and their clients, we are giving certain advisors the ability to access the AaPM option. AaPM will give the advisor the ability to manage clients’ money their own way, within certain compliance limitations. PCA’s Investment Committee will produce an approved fund list comprised of mutual funds and ETFs that have met screening criteria of the investment committee. From that list, the advisor can construct their own portfolios for their clients. PCA will still apply our platform fee of 50bp, 40bp, 30bp, or 25bp depending on household size.
Fourth, PCA will be launching an Office Retention Bonus program. Prior to the implementation of this bonus program, PCA offered a discounted fee structure based on the household size of the client (50bp, 40bp, 30bp, or 25bp depending on household size) but we didn’t offer a discount based on the total AUM an advisor’s office had with PCA. We have always wanted to be an RIA that supported entrepreneurial-minded, growth-oriented advisors. The Office Retention Bonus program will allow advisors to share in PCA’s revenue as they grow their AUM at PCA. Under the new Office Retention Bonus Program, offices affiliated with PCA will be able to participate in as much as 41% of our fee revenue. You can download a calculator here to determine what your bonus would be: https://c2p.box.com/s/ce6c55bbci7pl9eqbkf6v1sfkq551kjs. We recorded a quick 5 minute video explaining how to use the calculator here: https://c2p.box.com/s/0r4sx3jx3x9k69kfgn5b5fmotdg2ed38. This bonus program is effective 01/01/2017. If you are an IAR with PCA, it is already approved. If you are with a Broker-Dealer or another RIA, it must be approved by your financial institution. This bonus is only payable to a licensed advisor.
Last, PCA will be issuing a monthly compliance fee for all IARs (This section is not relevant to solicitors or sub-advisors of PCA). Historically we bundled the compliance fee with the portfolio management/platform fee so IARs did not have an out of pocket compliance fee to be registered under PCA. Because we are now offering the Office Retention Bonus program as a way for advisors to share in our revenue as they grow their AUM, we need to separate the compliance cost to supervise our IARs separately from what we charge as our platform and management fee. Going forward, all IARs will be subject to a $250 per month compliance fee. While we certainly understand no one wants to pay fees, it is a necessity to continue to support the buildout of a strong compliance department that is here to protect all of our businesses. In addition, we have strategically created the Office Retention Bonus program and the compliance fee hand-in-hand so that an advisor with $5,000,000 invested at PCA would generate a quarterly bonus of $750, which would essentially offset the compliance fee. For anyone over $5,000,000 of AUM (generating PCA 50bp), then the advisor will be “in the money” when it comes to the Office Retention Bonus. If an advisor opts to utilize the AaPM strategies mentioned earlier, the monthly compliance fee would be $500 per month to account for the increased risk and liability our RIA faces having to supervise outside strategies. Advisors can pay the fee in one of three ways: Credit Card Debit form (Required for all advisors with <$5m AUM), deduction from quarterly advisor fees, or deduction from the quarterly Office Retention Bonus. In addition to the compliance fee for IARs, PCA will now be required to supervise fixed indexed annuities for our IARs. In response to our recent SEC examination comments, PCA is setting up a centralized suitabilty review desk. This means that all annuity business written by an IAR of PCA must be processed through our office in Cleveland. C2P and PCA hired a new team member with over 15 years of experience in annuity case management and suitability who will be leading this new initiative. While we have a few months to satisfy the SEC, we wanted to give everyone advanced notice. If you are an IAR under PCA and currently doing annuity business outside of C2P, we need to schedule a call to discuss your options. If you would like to discuss how these changes could specifically impact your office, please schedule a call with Dave Alison and we can review the exact compliance fee, Office Retention Bonus, and annuity processing.
We look forward to helping you achieve your 2017 goals and having your best year to date. There are a lot of changes going on in our industry, and our commitment to you is to ensure we keep you ahead of the curve with all of the tools you need to dominate your marketplace.
We wanted to pass along this article on InvestmentNews concerning a phishing scheme with tax preparation. Please click below to read the article in its entirety.
We are excited to provide you with the January 2017 Training Corner. In this edition, there have been several updates to key documents and the introduction of three new e-learning modules.
Please click here to read the January 2017 Training Corner.
As introduced in the breakout sessions of our most recent Mastermind Collegium, College Funding Solutions, Inc. is a strategic partner available to you through Clarity 2 Prosperity to further enhance your service offerings. To give you the expanded resources needed to better understand this incredible relationship building opportunity, and to learn just how easy it can be to add college planning to your practice in 2017, join us for our upcoming webinar:
Relationship Building with College Planning
Noon ET / 9 a.m. PT
Tuesday, January 31
On this webinar, you will learn how to:
We invite you to expand or enhance your service and revenue opportunities for your firm through our strategic partnership with College Funding Solutions, Inc.
Please be advised of the following Martin Luther King, Jr. Holiday Markets Schedule for TD Ameritrade:
Friday, January 13, 2017:
Monday, January 16, 2017:
Please note: Trades will not be processed, and distributions will not go out on Monday, January 16.
We are excited to share that our most recent Mastermind Collegium was our most action-packed event yet! It was great to see so many of you there, and we look forward to seeing you again June 22-23 in Cleveland, Ohio.
We will be kicking off the New Year delivering highlights from the event in bite size recaps you can review and implement immediately. With Trump’s inauguration around the corner, perhaps the biggest question we all are asking: what will be the impact on the implementation of the DOL Rule taking effect in just four short months? In this week’s recap, view highlights of Jason’s presentation where he breaks down:
Over the past year, Clarity 2 Prosperity has been leading the way by initiating direct communications with both the DOL and SEC to get the answers needed for successful, proactive adaptation to stay ahead of legislative changes. We will continue to be your source for the latest information and turnkey, best interest processes.