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RMD Rules, Fiduciary Exemption News for Financial Advisers

Latest for financial advisers: SECURE Act’s 10-year RMD rule, fiduciary exemptions, ESG investing.

A roundup of the latest news and reports of interest to financial advisers.

Many affluent retirees reluctant to draw down savings: Some leading retirement experts are questioning whether advisers should rethink their assumptions about retirement spending when creating financial plans, according to Mary Beth Franklin.

IRS: SECURE Act’s 10-year RMD rule is not what you thought: The IRS released its interpretation of the SECURE Act’s rules for post-death payouts on IRAs and surprised everyone — and not in a good way, according to Ed Slott.

New DoL guidance seems to strengthen fiduciary exemption: Advocates hope the Labor Department's first clarification on the Trump-era advice rule is the beginning of a series of steps to improve advice standards, according to Kenneth Corbin.

Quantifying the Tax Benefit of Retirement Accounts for Better Client Decisions: How should clients use tax-advantaged accounts? By quantifying the tax benefits of those accounts, Peter Hoffman writes that we can refine recommendations on asset location and the traditional-versus-Roth decision. Specifically, low-return assets, even if otherwise taxed at high rates, may not benefit much from being placed in tax-advantaged accounts. Also, the choice between traditional and Roth contributions is asymmetric: Traditional accounts provide an opportunity for a higher tax benefit, but risk incurring a tax cost. Roth contributions provide greater certainty of a positive tax benefit.

The Transformational Decade Ahead for the Planning Profession: Bob Veres writes that he’s never seen as many signs of change in the planning/advisory profession as he sees right now. Entrepreneurship and creativity across the advisor ecosystem will result in big changes down the road.

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10 Podcasts Advisors Love: With podcasts all the rage these days, ThinkAdvisor asked advisors from the Financial Planning Association and XY Planning Network to submit their favorite podcasts, whether they were for business or fun. Here’s is a slimmed-down list of the many podcast recommendations ThinkAdvisor received.

Here's What's Wrong With Raising RMD Age to 75, According to Retirement Experts: Jeff Berman writes that the proposed increase of the required minimum distribution age from 72 to 75 inspired a spirited debate on Twitter as retirement experts weighed in on the issue.

Advisors underestimate interest in ESG investing: Cerulli: “Asset managers and advisors are discounting the interest from a broad swath of the investing public,” according to a recent Cerulli report. “Both asset and wealth managers should seek to make ESG investing more accessible across wealth tiers.”

Positive ESG Ratings Decrease Returns to Investors: Theory predicts and research has shown that positive ESG scores correlate with a lower cost of capital for companies, lowering the expected return on stocks, writes Larry Swedroe. New research shows a similar effect in the bond market, with positive ESG scores correlated to smaller credit spreads, decreasing the yield to investors.

Rebalancing Frequency and Safe Withdrawal Rates: Safe-withdrawal rate (SWR) research has traditionally assumed annual portfolio rebalancing, and this is the frequency suggested by many advisers (although some suggest quarterly, monthly, or even daily rebalancing!), writes Ryan McLean. But is such frequent fiddling necessary? Based on his research, McLean argues against the notion to rebalance often.

How Advisers Can Evaluate Stable Value Investments: Experts say advisers should consider performance, risk mitigation, team and process—as well as how the accounts are managed, how assets are protected and what termination rights they offer to sponsors, according to PlanAdviser.