This previously published article is part of 12 Days of Wealth Management: The Year in Review.
It's easy to live in a world of information overload.
Emails are nonstop. You carry two cell phones in your pockets. You feel pressure to set up a Twitter account, because everyone else seems to be doing it.
One helpful way to cope with information overload is to filter. So, to add a filter to your day, here are 10 of some of the most influential bloggers for financial advisors.
This is surely not an exhaustive list. The number of blogs that have flourished in recent years, fueled largely by the questions and concerns that emerged following the financial crisis, are numerous. These bloggers, however, may serve to help you keep a better pulse on your industry day-to-day.
How were they chosen? Through a host of discussions with industry peers, assessing their industry footprints through their contributions to academic and professional literature, frequency of media appearances and their blog posts, influence at conferences and other events, and general accessibility (i.e. Twitter presence).
Many of these blogs you may already read, and others may be fresh names. To add to the discussion, I’d love to hear your view on the blogs you read, or plan to read, daily – ones that help you do your job better and why. (I’m just waiting for a financial advisor to pitch me PerezHilton.com.)
Fiduciary advocate Rhoades, program chair of the Alfred State Financial Planning Program – takes a more academic view with his blog, The Scholarly Financial Planner.
“I try to discuss concepts that may influence the debate on fiduciary standards and how financial planners should be regulated. I seek to promote the application of the fiduciary standard to all financial and investment advice,” he says.
Rhoades notes that he would love to see financial planning and investment advisor services become a profession regulated with peer review. As of today, however, he says that is simply a utopia, largely due to the disparate and often-inappropriate regulatory structures set up by the SEC, FINRA, and state securities regulators.
A look at one of his most popular blog posts: A New Paradigm for Regulation and Enforcement, which discuss flaws in the SEC examination process and outline changes to the regulatory structures that he says could improve the oversight of investment advisers.
Roche says he fell into the industry after working at Merrill Lynch for three years managing $500 million for clients, and becoming "disillusioned with the business model.”
"I had hoped I could build a business model that was more client-driven, so I started my own business as a registered independent advisor. Now, I do pure consulting for institutions and retail clients, and conduct macro research."
Like many other bloggers on this list, Roche's website, Pragmatic Capitalism, grew out of the financial crisis. Where did the traction come from? "I was extremely worried about the housing bubble between 2005 and 2008. My background has come from understanding the monetary system, getting down into the mechanics of the banking system, and I viewed what was going on in a different way from other people."
He continues: "I started working from the premise that the government was misinterpreting what was going on in the crisis because the diagnosis of the problem was wrong and the response was therefore misguided."
One of the reasons Roche transitioned to becoming an independent advisor was because of his perceived conflict of interests that exist at big Wall Street firms. "Those big firms are revenue-driven – they're fee generators. They're not able to do what's in their clients' best interest – a lot of the time the best interest of the client is to reduce fees," he notes. According to Roche, the financial advisor model needs to change, with more and more advisors needing to act as independent consultants or fee-only advisors. "I think the conflict comes mostly from the big wirehouses: public companies that need to maximize profits – profits largely derived from generating fees from clients,” he concludes.
Perhaps the most widely read by financial advisors in the country, Brown – a New York City-based financial advisor at Fusion Analytics -- began The Reformed Broker in November 2008, a date sandwiched in between Lehman's collapse and the Madoff scandal.
"I started writing to help people makes sense of what's going on," says Brown, also the author of Backstage Wall Street. "I'm a guy in the trenches, trying to understand like anyone else. I admit that I don't know what's going to happen, but I say 'look, here are three knowledgeable people who might have a better idea.'"
How did Brown develop such a loyal following? "I wrote for the Wall Street Journal's financial advisor blog before it went behind a pay wall and currently write for Investment News. I'm on TV four days a week--CNBC mostly," he says.
According to this blogger, "brutal honestly" drives his popularity rather than predictions. "My influence comes from not being afraid to talk about my own mistakes. When I started blogging, most 'experts' were professing to be able to see the future."
Check out this thought-provoking piece: “Go to Enough Doctors and You Will Eventually Get Your Tonsils Removed”. When it comes to questions over how a portfolio ought to be managed, Brown’s mantra is ‘less is more’.
He's the chief investment and information officer for Madison Avenue Securities, a broker-dealer and investment advisory firm headquartered in San Diego, California.
His most popular topics for his blog, Above the Market: financial planning, behavioral finance, and investment management.
His most popular post, thus far? “Investors’ 10 Most Common Behavioral Biases”. One of the more helpful ones for financial planners may be the “planning fallacy,” or the tendency to underestimate the time, costs, and risks of future actions and at the same time overestimate the benefits thereof. “It’s at least partly why we underestimate bad results,” Seawright says.
"In terms of my blog strategy--I don't have one. I've been told that if I broke my longer posts down into multiple smaller ones, I'd get more traffic. But I try hard to be thorough and complete, doing more sourcing and research."
He says he has found his blogging niche by writing about his interests, being what some may call long-winded, and more data-driven.
Geared more toward general investing, his blog – The Big Picture – is one of the most well-known in all of finance. Perhaps these numbers showcase why: Since starting his blog in the late 1990s, he now has 25,955 posts, 391,731 comments, 88 categories.
"When I started blogging, it was for very different reasons than my reasons today," says Ritholtz, who started his career in finance as a trader, moved to research and strategy, and published Bailout Nation in 2009 that came as a direct result from his blogging. "I'd write a research report, give a presentation, and all day people would be coming to me to ask questions about the report. I'd want to say 'stop wasting my time', so I started doing an email to avoid the 'please go away' circumstance."
That email soon turned into blog, back when it took about 20 minutes to write a post and two hours to code HTML, he notes. "Today, I use WordPress, which hardly involves any HTML," says Ritholtz with a sigh of relief.
Ritholtz is CEO of Fusion IQ, and guest commentator on Bloomberg Television. He is also a former contributor to CNBC and TheStreet.com. He’s used the blog to voice a macro perspective on the capital markets and the economy. "I think any success I’ve had with The Big Picture comes from an ability to question conventional wisdom, to think outside the box – and I’ve had opinions that were outside the mainstream that turned out to be right," he continues, highlighting his calls on Goldman Sachs and the “Fabulous Fab”. "I studied math and science in undergrad, switching my senior year to political science before going to law school, which has helped me comment on legal aspects of the investment world.”
Pfau is one of the leading and most widely visible researchers and academics specifically related to advisors. His Retirement Researcher Blog scrutinizes the literature on retirement income planning. According to one of his recent posts, for example, he notes that compound interest and wealth accumulation are not as easy as one might think.
“I recently read I Will Teach You to Be Rich by Ramit Sethi,” he writes. “In the book, he likes to use 8% as a portfolio growth rate assumption when providing examples about the power of compounding interest. Surely, if someone can earn 8%, getting rich becomes a lot easier.”
That percentage, Pfau asserts, is seemingly derived from U.S. historical data, with a 2% expected return more likely.
As a side note, he is a recipient of Financial Planning magazine’s Influencer Awards.
Nerd’s Eye View, which started in 2008, is geared toward two main themes of the financial planning industry.
“First, I try to figure out how the industry is changing and locate trends to help address the business of financial planning – broad practice management issues,” he says. “Second, I try to educate on technical topics and how we can improve the quality of financial planning.” Take one of his latest posts on the aspect of financial planning and behavior change:
“In financial planning, it's not just about having expert knowledge and wisdom to dispense to clients; after all, if clients don't ultimately implement the recommendations and change their behaviors, then their situations will not improve. In fact, many financial planners experience frustration when clients won't act, and view the failure of clients to implement recommendations as a sign that the people must be "bad" clients. The implication is that it may be more productive for planners to seek out "good" clients instead – those who act promptly and see the value in the planner and his/her advice.”
Kitces, a partner at Pinnacle Advisory Group, highlights that research from Dr. James Prochaska and his colleagues in the field of psychology at the University of Rhode Island suggests that “not only does it often take more than just one dose of good advice to bring about significant and lasting behavior change, but just because someone has a meeting with a professional does not necessarily mean that person is really even ready for change in the first place.”
The gist: We need to recognize that helping clients change their behaviors – and implement our recommendations – takes time.
Founded in 2008, Winterberg’s FPPad focuses on financial planning technology. (FPPad stands for Financial Planning, with Pad as a reference to the LeapPad Learning System product developed during his tenure at LeapFrog Toys.) For the average person, just the term “financial planning technology” would make them grab for a beer and mentally check out. But for financial advisors, this is a blog that speaks wholeheartedly to their everyday practice.
Top of mind for Winterberg as of late?
Lead generation for advisers: how to grow a prospect list and increase website ROI. According to this popular blogger, advisors can spend considerable time and money building an informative site, but if visitors only read information and never return, the investment fails to pay off.
"My strategy for my blog has been to focus on the ‘how’ rather than the ‘what’,” Brakke says of his blog, The Research Puzzle. The blog delves into specifically how investment organizations operate.
One of his most well-received posts is “I Don’t Know,” on the lack of certainty in the markets despite the fact that advisors are expected to have the answers. He writes:
“The investment professional is caught between two realities: Clients want answers and markets are unpredictable…Greater understanding of the task at hand and increased long-term trust result from honestly conveying the uncertainty, but there is a short-term cost, and if the business is lost because of that openness, it’s a high cost to pay.”
Viskanta says he believes his influence from his blog, Abnormal Returns, comes from his Hippocratic Oath of doing no harm.
"Anytime you write for the public on investment topics that could potentially be misinterpreted or misapplied, you need to be careful. When I do write, it's more of a cautionary tale than anything else. I focus on risk first and the investing philosophy as opposed to specific trades," he notes, pointing out that his blog's subtitle is "a forecast-free investment blog."
"Eventually you'll be wrong and do harm. My blog is an educational tool more than anything else," he concludes.
Check out one of his most popular posts here: "There Has Never Been a Better Time to Be an Individual Investor".