Private Wealth Roundup: Positivity, Pot Trusts, and Successful People

News junkies have had their fill over the past couple of weeks with Hurricane Isaac making landfall in Louisiana on the anniversary of Hurricane Katrina, the RNC in Tampa, Florida, and the DNC in Charlotte, North Carolina. In between the political headlines were plenty of good stories for financial advisers. Here are some of my favorite reads, in case you missed them.

Behavioral Finance

• Carl Richards, writing for the Bucks blog, uses the example of Facebook’s stock price to explain the pernicious effects of anchoring. (New York Times)
• If you’d like to learn more about anchoring, check out Tim Richards’s 2009 post, “Anchoring, The Mother of Behavioral Biases.” Richards is a technologist (career), psychologist (academic), and über-behavioral-finance blogger (fun?). (Psy-Fi Blog)

• Apparently a simple nudge like getting people to sign documents at the top (not the bottom), might encourage them to behave more honestly. Could it be that simple? (Wired Science)
• How are you feeling today? Positive? Then stop reading. Now. Tim Richards (of the “anchoring” post above) reviews Smile or Die: How Positive Thinking Fooled America and the World by Barbara Ehrenreich and notes that “frankly it’s hard to find anything positive to say about positivity.” (Psy-Fi blog)
• On that happy note, you may also want to check out “Toxic Optimism: The Dutch-French Disease, Facebook Face-Plant, and How to Profit from Delusion.” (MarketPsych)

Wealth Management Services

• In an effort to woo the ultra-rich, U.S. brokerages are increasingly offering loans collateralized by works of art to their favored clients, according to “More Brokers Let Clients Borrow against Their Bruegels.” (Reuters)
• The private bank of Goldman Sachs “is quietly beefing up its lending to wealthy individuals with a host of new loan products and credit offerings.” (Financial Times)
• Advisers who manage mutual-fund and ETF portfolios may be doing their clients a disservice, according to “Cerulli: Advisers Should Think Twice about Running Money.” (InvestmentNews)
• If you’re interested in brushing up on risk management, check out Bob Seawright’s four-part series “Reckoning with Risk.” (Above the Market)

Practice Management and Process

• Most financial advisers would like to know how to build successful referral relationships with CPAs and attorneys. Here’s how one adviser did it: He set up a study group with local professionals to discuss hypothetical case studies and potential solutions. (LifeHealthPro)
• What are your investment beliefs? Tom Brakke points out in a blog post that while it’s a simple question, most market participants find it difficult to answer. And yet “an exploration of beliefs is a necessary precursor to improving an investment decision process.” (The Research Puzzle blog)

Retirement

• How much should a new retiree spend each year? Mike Finke tackles this question in a piece on balancing retirement risks. (AdvisorOne)

Investing in Real Assets

• Is there a bubble in farmland investing? U.S. Trust Specialty Asset Management group believes the answer is no. But if the question is “Are some people paying bubble prices?” the answer is yes. (U.S. Trust Strategic Insights)

Trust and Estate Planning

• Should your client set up a pot trust for his or her children? A what? Relax, as attorney Jeramie J. Fortenberry points out, “this has nothing to do with illegal herbal recreation. . . . Pot trusts are designed to equitably distribute assets to a group of children with a range of ages.” (Death & Taxes)

Tax Planning

• Few people expect any big tax legislation before the November presidential election. After that, time will be short. So how should you and your clients prepare for the uncertain months ahead? Tax experts surveyed by the Wall Street Journal offered several dos and don’ts. (Wall Street Journal)
• In a similar vein, if you missed CFA Institute’s annual conference in Chicago, you may want to view Robert N. Gordon’s presentation “What You Need to Do Now Before U.S. Taxes Increase in 2013,” which is now available as a video webcast. He also addressed this topic in a guest article in the April issue of CFA Institute’s e-newsletter Private Wealth Management, “U.S. Income Taxes: What 2013 Might Bring and What You Need to Do About It Now.”

And now for something completely different:

• Note to self: Don’t check email for the first hour of the day. And make sure to do the “big, shoulder-sagging stuff” first. Those are two of the tips in an article exploring what successful people do with the first hour of their work day. (FastCompany)
• This summer’s (somewhat unexpected) best read: “What’s a Monkey to Do in Tampa?” (New York Times Magazine)

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Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.