How Registered Investment Advisers Became Financial Advisors

Some job titles don’t tell you much.

In the decades following the crash of 1929 and the Great Depression, stockbroker was an off-putting term. To improve their image, wirehouse brokers began referring to themselves as financial advisors. Would the public confuse financial advisors with actual investment advisers? Of course.

Regulators and consumer advocates have been trying to dispel the confusion ever since. This year, the SEC’s Regulation Best Interest generally will bar brokers from referring to themselves as advisors or advisers unless they actually wear two hats and have registered as investment advisers.

A generation ago, that SEC requirement might have been helpful. In our age of passive investing, what’s the point?  Advisers no longer need to give much investment advice. What clients mostly require is financial guidance, usually tax related. Where to stash their investments, for instance: Taxable account? Roth IRA? 529 plan? Revocable trust? Special needs trust? GRAT? Donor advised fund…?

A small advisory firm that creates investment programs with index funds recently opened an office in our fair city. One Day in July (bet they can tell you a good story about that name) doesn’t identify itself as a registered investment adviser. In mailings and on their web site, they're financial advisors.

Where the Primary is Early but Trusts Last Forever

Tuesday brings New Hampshire’s “first in the nation” primary, after which hordes of political operatives and mainstream media types will move on.

What happens the rest of the year? Trusts. New Hampshire boasts dozens of trust companies, all eager to help wealthholders take advantage of the state’s willingness to let trusts last forever.

New Hampshire’s seal honors
Portsmouth’s shipbuilding heritage.
Best known: John Paul Jones’ Ranger.

As this well-crafted promo from Fiduciary Trust  indicates, New Hampshire also offers other incentives for trustors. Freedom from state income tax on trust income, for instance. (Your obedient blogger pays New Hampshire income tax on his dividends and interest, but irrevocable trusts have an exemption.)

The politicians, pollsters and pundits who descend on New Hampshire every four years give the state economy a significant boost. Does tolerance for perpetual trusts also pay off? Some have their doubts.

Help Your Kids be Millionaires

Randy Cassingham’s examples of the advantages gained by investing early and often may not be quite realistic, but they are inspirational.

Wouldn’t it be cool if stocks went up almost 30% every year?