A Change, Another Change, and Some More Changes.

The first change that I would like to tell you about has to do with my function as a Missouri insurance producer.¹ I have been a licensed Missouri insurance producer since 1979, licensed to kill. No, wait. That’s not right. That’s James Bond. My licenses allowed me to sell insurance products in the state of Missouri, but not to kill. As of a few weeks ago I voluntarily allowed my Missouri insurance producer license to lapse. I did this for marketing reasons. There have been times when potential clients have not chosen to use my financial planning and asset management services because some of my compensation might come from insurance sales commissions. The assumption is that a financial adviser who might receive a commission is unlikely to give unbiased advice. In fact, very little of my income has come from insurance commissions, and, for the record I have always made client recommendations based solely on client needs, never on whether or how much commission would be received by me.

I have considered moving to fee only compensation every year for many years now, but have not made the change in part because the implementation of insurance recommendations that I make for my clients will now require assistance from a licensed insurance producer who might not be as trustworthy as I would be, and because I continue to teach a university class about financial planning and insurance. However, the time has come to take advantage of the marketing benefits associated with advertising my services as “fee only.”

So, what about my clients who have purchased various insurance products through me? Never fear. My ongoing relationship with my clients will continue and my advice regarding insurance needs and applications will continue. The only thing that will change is that future service work concerning existing policies will be fulfilled through a trustworthy producer that I will recommend. And when I recommend insurance purchases to my clients in the future I will be available to discuss my recommendations with the producer of their choice, or to suggest a producer to them. If you are one of my clients and you have questions or concerns about this matter please give me a call. And please know that I am not abandoning you, just bringing in another person to help with future service work.

The second change that I would like to tell you about has to do with our asset management services. We have finally found the right software to assist us with the portfolio rebalancing function. This process has taken more than two years! We initially thought that the Morningstar rebalancing application would work well for us. After all, we use Morningstar software and data for much of our research and office automation functioning. We found that their solution was lacking. We then researched and implemented a Schwab rebalancing solution. This, too turned out to be insufficient. After more research (and more $$) we have found and implemented a software application which does everything that we require to continue to give individual care to a growing body of investment portfolios, including tax lot accounting, good integration with existing providers, good analysis of category substitutions, etc., etc. It allows me to use a very complex decision algorithm to manage multiple portfolios in much the same way that I would manage only one. Yay!! We have been using our rebalancing software for a number of months now and believe that we have successfully completed our search. In a future blog post I will discuss some of the many considerations required to successfully manage an investment portfolio.

The final change that I would like to mention today has to do with where we are in history. This is not something new to my readers. I have stated many times before that I think we are in a period of accelerating change. And, so, just to add a bit more to the confusion I would like to list just a few of the interesting headlines that I have seen recently. Most of the pieces associated with the headlines contain some good information, however, wading through the mass of information and misinformation which cascades through the ether these days is a challenge, especially for an investor. Here are a few thought provokers:

I should mention that contradictory and controversial statements about most topics have been published almost every day for at least the past several decades. But today, IMHO² things are changing more and more rapidly. We continue to do our best to understand where we are on the time/space continuum in order to serve our clients as well as possible.

In the midst of accelerating change, I hope that some things never change.

Many things change. Some things stay the same.

Many things change. Some things stay the same.

PS. If you have a question or comment concerning the content of this blog entry you may post it in the space below.

¹The state of Missouri, along with a number of other states changed the status of insurance agents and brokers a few years ago. All are now deemed to be “producers” and are considered to be agents as opposed to brokers. At a later time I will post a bit more about this, but for now I just felt the need to briefly mention this change.
²Surely you know what this stands for. No? Really?³
³In my humble opinion.


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