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Episode 27 - Modern Portfolio Theory [CFP CE Credit Eligible]

Stephen Craffen of Stonegate Wealth Management in Oakland, NJ joins Roger and Ben to discuss Modern Portfolio Theory, from its humble origins as a scrappy idea cooked up in a back room at the University of Chicago through its ascendancy and eventual dominance on every CFP and CFA multiple choice exam. And you thought you were done with this stuff!

We touch on a number of critical concepts, including:

  • The creation and important takeaways of Modern Portfolio Theory (MPT)
  • Thenecessary assumptions that make MPT "work" and the limitations thereof
  • Possible updates to Modern Portfolio Theory, including the Black-Litterman approach of portfolio allocation and making use of concepts like Conditional Value at Risk
  • Fat tails, extreme events (like 2008) and the challenge of serial correlation
  • Roger riffing on the Gaussian distribution

Links to Neat Things We Talk About

  • Stephen mentions the seminal work of Roger Ibbotsen and asset allocation. His regularly updated book on the returns of asset classes over time is a widely known, but did you know that the name of his current firm is Zebra Capital Management? How did we not know this! We're ZebraSmash!

  • Roger Lowenstein's When Genius Failed: The Rise and Fall of Long-Term Capital Management is another classic. It's always fun to read about how the economic system almost came crashing down.

Episode 26 - Risks in Advanced Age [CFP CE Credit Eligible]

We invited not one, but two academics in the field of financial planning to a panel discussion. Drs. Nathan Harness and Michael Guillemette joined us to talk about a paper Dr. Guillemette just finished up on the subject of aging clients. There's a lot of research on the subject of how client behavior changes as they reach more advanced years, and Michael took on the herculean task of trying to make sense of it all.

In this episode, we walk through the sections of the paper, with Ben and Roger offering up examples from everyday practice in the field of financial planning. Some elements of the research rung true, while other elements got a little pushback. That's right! This wasn't one of those panel discussions where everybody just agrees with each other.

If you're interested in checking out the paper we discussed, here is a copy. NOTE - This was not the final draft that went to print! We discussed a version that was not quite final.

Risks in Advanced Age - Michael Guillemette

(We'll link the final version of the paper once it's published.)

For more information on our panelists:

Dr. Michael Guillemette

Dr. Nathan Harness (Also a guest on Episode 13!)

Episode 25 - Financial Journalism, with Bob Veres

Bob Veres is one of the most easily recognized writers and commentators in the financial advisory world, and we were lucky to chat with him on the evolution, current state and (dare I say it?) future of financial journalism.

Bob tells us his story, from when he was a freelance writer in Atlanta known as the "writer of last resort," to his ascendancy to editing and resurrecting both Air Cargo and then The Financial Planner (known now as simply Financial Planning), and then finally to the creation of his Inside Information newsletter and other services.

Stay tuned to the end, when Bob Veres definitely says that Ben and Roger are, "...not doofuses." From your lips to God's ears, Bob!

Learn more about Inside Information and Bob's annual conference (Insider's Forum) at www.bobveres.com and the Insider's Forum website, and follow Bob on Twitter (@BobVeres).

Episode 24 - Required Minimum Distributions From Qualified Accounts [CFP CE Credit Eligible]

Our first ever "by request" episode! Dave O'Brien from Evolution Advisers challenged us some months ago to do an episode on required minimum distributions from qualified accounts, and after hemming and hawing we finally ran out of excuses. So here it is!

Join us on a whirlwind tour of the exciting world of RMDs, as we touch on:

  • How to calculate RMDs, including rules about determining account balances and participant ages
  • Different rules on when RMDs start, depending on employment status and type of qualified account
  • Qualified Longevity Annuity Contracts (QLACs) and Qualified Charitable Donations (QCDs).
  • Rules on post-death RMDs for a variety of beneficiaries
  • Challenges faced by beneficiaries who inherit Inherited IRAs

Neat Links:

  • Natalie Choate's Life and Death Planning for Retirement Benefits (7th Edition) is the end-all/be-all of all things RMD related. You can order it at Ataxplan Publications.
  • The IRS provides a shockingly good reference website document for RMDs:
  • Michael Kitces has written on a number of topics we touch on in this episode on his blog . Additionally, the most recent copy of his Kitces Report newsletter dealt exclusively with Required Minimum Distributions

Episode 23 - The DOL Fiduciary Rule with Cindi Hill (Hill Compliance Advisors)

The Department of Labor Fiduciary Rule is a mere 2 months old. But like any 2 month old, it causes anyone around it to lose quite a bit of sleep. And it tends to smell sometimes. And in particularly stressful moments, it makes you wonder if you have any idea what you're doing.

Well we found someone who knows what she's doing. Cindi Hill is the rare CFP(R) practitioner that liked compliance so much that she made it her primary business! Cindi has been following the rule, and she's got some updates and best practices to share with us. Hurry up and listen before they change all the rules again and we have to record an entirely new episode.


Places You Might Live If You've Never Heard of the DOL Rule