The reality of the Trustees Report is actually that, even if we do nothing to resolve Social Security in the coming decades, that the system will still be able to pay out 77% of its projected benefits in 2033 when the trust fund is depleted, and continue to pay out more than 70% of its projected benefits for the remainder of the century. In other words, even if we do nothing to fix the system at all, today's Generation X and Y young adults would still be anticipated to receive about 3/4ths of their anticipated benefits for their entire retirement. 

And that's if nothing is done. If instead the woes of Social Security ultimately are addressed, through some combination of current and/or future benefit adjustments, and increases in the Social Security payroll tax rate, wage base, or the taxation of benefits, the shortfalls decline further and the ability to pay future benefits rises. Which means that ultimately, the most likely future outcome is a haircut of less than 23% of benefits for today's young adults, and that most future benefits will in fact still be funded. As a result, it's important to recognize the real state of the Social Security system, to ensure that clients receive appropriate advice in light of what isn't, and is, likely to be there when the time comes.

In this guest post, Gen Y advisor Alan Moore shares the comprehensive list of every software package and technology tool he's using to operate his new RIA, along with why he chose it and what it costs. It's a fascinating look at what a younger technology-inclined advisor sees and expects of today's technology marketplace for advisors.

If you're a newer advisor that recently started your own practice, or are thinking about going out on your own, this should be helpful to you as a starting point for solutions to consider and some ideas about what's important to focus on. And even if you're an existing advisor with an established practice, you may still be inspired to make a few changes or additions to your own suite of tools!

As an avid reader myself, I know I'm always eager to hear suggestions of good books to read, and I suspect many of you are often looking for ideas as well. Accordingly, I'm sharing my own list of 10 "summer reading books for financial planners" (at least, for those of you who are up for reading non-fiction books for fun!), from business and professional self-improvement books to the latest in behavioral finance and investment theory. 

I hope you find this book list to be helpful... and that you share your own suggestions of what you're reading in the comments at the end of this blog post! 

Beyond that, there are a number of articles about technology for advisors this week, including a review by Bill Winterberg of using live chat systems on your website for communication with prospects and clients, reviews by Joel Bruckenstein of portfolio tool Chaikin Analytics for iPad and separately the cloud-based virtual desktop solution External IT being rolled out by Fidelity Institutional Wealth Services. There's also a review of some of the interesting tech companies that were seen earlier this Spring at the Finovate conference for financial services tech innovation, and a look at some of the recent data from the InvestmentNews 2013 Advisor Technology Study revealing that "innovator" firms that aggressively adopt technology are showing gains in everything from revenue and profits to valuations and easier succession planning.

From there, we have several articles specifically looking at some of the challenges that insurance companies are facing these days, from a new warning that some insurers many be less secure than they appear due to a "shadow insurance" loophole where they are reinsuring themselves with their own subsidies, to a subset of long-term care insurance companies that have been creating a lot of claims hassles with fine print and red tape, to the recent announcement by The Hartford that it will force a large swath of existing variable-annuity-with-income-rider policyowners to effectively renew what was supposed to be a lifetime guarantee or it will be cancelled.

We wrap up with three final articles: the first is from Angie Herbers and suggests that perhaps the "slow to hire and quick to fire" management practice is not really the best approach; the second is a good reminder that even as the world goes more digital, it is important not to forget the human beings at the other end of your business; and the last provides an important reminder that while the facts about why clients should work with us are important that it's ultimately the emotional connections we make that lead to real trust. Enjoy the reading!

After all, separating health insurance from employment status by ensuring individual coverage is available directly from an exchange allows clients to be far more flexible with their job decisions. Deciding where to work will no longer need to be tied to the availability of health insurance, freeing clients to make job changes, start new businesses, or simply retire before age 65 Medicare eligibility, without worrying about how they'll get access to health insurance. How many clients would still be working where they are today if health insurance availability was guaranteed regardless of where (or whether) they worked?

On the other hand, the new health insurance rules will require new knowledge and skills for planners, as the health insurance exchanges will ensure access and availability to health insurance, but introduce complex rules regarding affordability. Helping clients understand how to pay for their newfound access to health insurance will require planners to learn how the new premium assistance tax credits work, and how to maximize them, along with helping clients to change their mindset about making job and career decisions separate from their health insurance coverage. In the long run, what results will likely be a more flexible and positive environment for clients to make good financial planning decisions... but the transition will require planners to get up to speed, and quickly!

Yet the reality is that the value of financial advice extends far beyond just a focus on investment returns. In this guest post, Bob Seawright explains what he thinks are the top benefits to financial advice, beyond just the investment selection and the passive/active debate. The value ranges from advisor insights about taxation and tax efficiency, to helping clients through a long list of their behavioral biases, to all the other parts of financial planning that matter besides just the money itself.

In a world where many financial advisory firms have become increasingly investment-centric, hopefully this will be a helpful reminder of all the other value that financial advisors bring to the table. For those who have maintained a more comprehensive focus to their financial advice all along, this may still be useful as a good recap of the benefits that your clients enjoy by working with you! Happy reading! 

To address this challenge, regulators - especially at the state level - has been trying to crack down, with tighter rules and greater enforcement. Yet thus far, the beneficial effect of such an approach appears to be limited, as many specious designations continue to exist, grow, and be attached to the business cards of questionable "advisors." In large part, this is because the underlying value of specious designations has not been addressed - as long as it's still valuable to have designations to imply expertise to consumers and there are no minimum standards, even a crackdown on the most questionable designation weeds will just result in new ones sprouting forth to replace them.

Instead, the real way to eliminate specious designations it to put forth a uniform minimum requirement rigorous enough to eliminate the value of such questionable programs. For instance, if CFP certification was a uniform minimum standard for all advisors who held themselves out as experts with advanced credentials, the marketplace for specious designations would vanish, as there's no benefit to adding an illegitimate designation after an advisor already has a rigorous and legitimate one! In the meantime, quality designations - that genuinely provide knowledge and expertise beyond the minimum - would have the opportunity to thrive, as they would be the only ones that have economic value as "post-CFP" education. While the reality is that implementing such a rule would require a reasonable transition process for existing advisors with bona fide advanced designations who shouldn't necessarily need to go back and get CFP certification now, the fundamental point is that by establishing one clear and credible minimum standard to connote an advisory professional, it may finally be possible to break free of the proliferation of questionable (marketing) designations!

From there, we have several technical articles this week, including a roundtable discussion about implementing a tactical asset allocation investment approach in your firm, a look from Moshe Milevsky at how in Chile the biggest annuity problem is that so many people choose to annuitize, a summary of some of the big changes coming to the healthcare system in 2014 as the major provisions of the Affordable Care Act kick in, and good overview of the health insurance exchanges in particular will work as they open up on October 1st, and an interesting warning from The Slott Report about clients who may be using their retirement plans to fund a business venture but are not reporting it properly on Form 5500 to the IRS.

We wrap up with two final articles: the first is a summary of a recent "Barron's top advisors" panel sharing what the keys to success were for them (most common theme: specialize); and the second is a good read from Jason Zweig of the Wall Street Journal about our shaken trust in the integrity of the financial system, and how important it is - due to our behavioral biases - that we continue to see ourselves living in a just world, which means it's still important for regulators to get more aggressive against wrongdoing, for Wall Street to show some contrition for its actions, or ideally both. Enjoy the reading!

LinkedIn is a powerful online resource for financial advisors. With over 225 million members who are active, engaged, and affluent, creating an influential presence on LinkedIn can help you take your business to the next level.

To tap into the business benefits of LinkedIn, you first need to make an investment in your presence that will position you as an influencer. In this guest post, Stephanie Sammons of Wired Advisor is going to explain how to do just that. Building influence on LinkedIn is a critical factor for expanding your visibility, developing new relationships, and creating business opportunities.

If you’re building influence, you won’t need to sell! Although building influence on LinkedIn takes time, it’s not only good business, but it’s the right approach to social media. As you demonstrate your online influence, you will drive more traffic, leads, and new client relationships into your business from your online presence.

Yet recent research suggests that perhaps the key to resolving this is to stop telling people to cut their spending now and save more, and instead to simply encourage them to save more tomorrow, instead. While this doesn't necessarily solve the challenge of the baby boomer who is already on the eve of retirement, the research suggests that for those in Generation X and Generation Y who still have years or decades until retirement, it may be a far more effective approach. The concept is rather straightforward - just commit to saving most of next year's raise, instead of cutting your spending now - yet the simple elegance is backed by a number of important behavioral finance concepts, including aversion to a loss of current lifestyle and taking advantage of our tendency towards hyperbolic discounting to make (future) saving less painful.

While there are some real world challenges to implementing a Save More Tomorrow approach - in part because planners lack some of the tools necessary to fully automate the process the way it's been done in the early research - it nonetheless raises the question of whether our "traditional" approaches to retirement advice, like "save more and spend less" or "save X% of your income every year" are due for a radical rethinking. By focusing on saving more tomorrow - and by not spending more tomorrow - perhaps we can actually find a better path to guide today's future retirees towards success. 

Imagine for a moment that you just got some terrible news: you have a serious and potentially fatal illness, that requires the attention of a world-class expert to cure. Where would you go for information to find the person you need to literally save your life?

The answer probably would not be just going to your friends and family for referrals. Sure, they’re helpful for some quick advice about what kind of fabric softener is best or where to get good Mexican food, but this is a life-or-death matter, and it’s not clear that any of them would even know who the specialists are for your disease, much less who’s the best to try to cure it.

There are several practice management and technology articles this week as well, including a good reminder about why it's so important to say "no" to the wrong prospects, the rising importance of getting involved with the Google+ social network as a way to grow your advisory business, some best practices tips on Twitter for advisors that are genuinely useful, a fascinating profile of what digital marketing for financial planning may look like in the future (and that a few advisors are already implementing today), and some data on how Millenials do and don't differ from older clientele and how advisors may (and may not) have to change to deal with their future clients.

We also have a pair of technical articles, including one looking at how the new health insurance rules will work for 2014 - open enrollment begins in October for millions of people! - and another on how the use of bypass and other estate planning trust strategies are changing as estate planning takes on a more income-tax-centric theme for the many clients who simply no longer face any kind of Federal estate tax liability.

Continuing the opening theme of emotional intelligence, we wrap up with three articles looking at the importance emotional intelligence, relationships, and the value we provide: the first is an interview with Doug Lennick, author of Moral Intelligence 2.0 and a consultant to advisors; the second is a meta analysis from the Harvard Business Review of all the research on emotional intelligence and what we can draw upon from it; and the last is a more general article about how just being in the information of dispensing expert information is no longer sufficient in today's world, and that everyone - including advisors - needs to get out of the business of trying to hoard increasingly commoditized information, and instead deliver real value through non-commodity service, customization, and making complex information relevant. Enjoy the reading!

In 2014, employers will first become responsible for payments for “shared responsibility” for health care coverage, or what is increasingly being called the “Employer Shared Responsibility Tax” (ESRT), as a part of the PPACA legislation, under the new IRC Section 4980H. The ESRT is also known as the “play or pay” tax, as it effectively requires employers to either “play” by offering employee health care, or pay a tax for failing to do so. The ESRT will apply to so-called "large employers" with more than 50 full-time (equivalent) employees.

What's significant about the ESRT, though, is the fact that while it does represent a potential new tax to manage or avoid, the reality is that for many employers the penalty tax may be less expensive than sharing in the cost of employee health care... which means over time, employers may increasingly choose to just pay the penalty and let their employees get their own coverage. While in the past this wasn't feasible - simply because health insurance was often viewed as a "mandatory" employee benefit, especially for highly competitive job markets or positions - the reality is that employees (and non-employees) will be able to get guaranteed issue insurance for standard policy types and rates without any limitations on pre-existing conditions beginning in 2014. Which means, simply put, that employees will no longer need to rely on employers for health insurance, at the same time that employers may find its cheaper to just pay the penalty and stop offering coverage to employees.

In the meantime, though, the transition may be challenging for employers, which must make a decision by the end of the year whether to change their approach to health insurance in 2014, and make some significant decisions with big economic ramifications (not to mention simply ensuring they properly comply with the rules so they don't offer health insurance to employees AND pay a penalty!). Nonetheless, the onset of the ESRT may mark the beginning of the end of health insurance being tied to employment, where employers instead just pay employees a little more (or not), and let them make their own health insurance choices. And although this may be a difficult transition for employees as well, in the long run many individuals may actually enjoy the greater flexibility to change jobs, start businesses, or just retire early, in a world where employment is simply no longer a requirement to get access to health insurance.

Yet the reality is that whether the goal is to maximize income or not, the profitability of an advisory firm matters, in far more ways than "just" the income paid out to the owner. The profit margins of a firm are also crucial to its value; in the case of a sale to a third-party, it may be the difference between selling or not finding a buyer at all, and even for an internal succession plan, a business that isn't profitable is simply unaffordable to the next generation at any price. And of course, if the owner's exit from the business is unexpected - for instance due to disability or death - the profitability of the firm has a direct impact on whether the surviving family members receive any value at all.

But beyond the financials of the advisory firm owner, family members, and successor owners, the profitability of an advisor firm matters for another reason as well: the stability of the practice helps it to retain its staff. After all, a firm that is only marginally profitable simply has no flexibility to deal with the vicissitudes of business; like living from paycheck to paycheck, it creates an environment where even a small disruption can have major ramifications, as many firms discovered when the 2008-2009 financial crisis forced them to fire staff and reduce services to clients at the exact time clients needed them the most.

And perhaps, ultimately, that's the real reason why running a firm with healthy profit margins matter: a firm that doesn't have a healthy profit margin as a cushion to deal with inevitable difficult times that can occur may be unable to sustain the quality of its services to clients... or at worst, may have to cease serving them entirely.

From there, we look at a few technical planning articles, including a recent study finding that health insurance cost inflation may be slowing, a discussion of whether it makes sense to shift from current health care coverage to the coming new "Obamacare" health plans coming in the insurance exchanges this fall, a look from David Blanchett at how the factors of alpha, beta, cash flows, and delayed retirement impact retirement success, and the latest from Michael Finke on how there may be too much emphasis on the 4% rule and not enough on balancing out the longevity and "upside" risks that are also embedded into its assumptions.

We wrap up with three more introspective articles: the first looks at some recent research suggesting that seniors may not quite have the memory and cognitive decline once believed but that instead they're just better at prioritizing what to remember and what's irrelevant; the second examines our tendency to underinsure ourselves against high-impact low-probability events and that sometimes we need insurance to be "sold" to us to overcome our biases; and the last is an interesting piece about how forcing people to give a small "prosocial" bonus to others can actually be more effective for team-building and business success rather than just giving employees bonuses they can spend on themselves. Enjoy the reading!