The Social Security Administration has announced a 2.8% cost of living adjustment (COLA) for benefits beginning in January 2026. This is up from the 2.5% increase for 2025 but lower than the longer-term average of 3.1%.

This 2.8% COLA will bring the average monthly Social Security benefit to $2,071 for an individual and $3,208 for a couple.

SSA’s COLA is based on a particular version of the consumer price index, CPI-W, generated by the US Bureau of Labor Statistics from the third quarter to third quarter each year. CPI-W tracks spending on a basket of goods by urban wage earners and clerical workers and covers roughly 30% of the population. This contrasts with CPI-U, the widely reported inflation metric that tracks urban consumers and covers over 90% of the population.

The inflation metric being used is important for the obvious reason that a higher number means more money for Social Security beneficiaries the following year. But it also means, more or less, an additional drag on the Social Security “trust fund” we hear so much about.

Long-term funding problems for Social Security are nothing new. According to the recent annual trustees report to Congress, Social Security’s reserves are projected to be depleted by 2035, a year later than last year’s projection but still only ten years out. Benefit payments would be impacted if nothing is done between now and then, according to the trustees. But the trustees forecast the problem over a 75-year timeframe, so it isn’t like benefit payments would simply stop in 2035. Instead, the trustees speculate there might be a cut of 25% to future benefits. That’s probably the worst-case scenario given that current income for the plan is nearly enough to cover expenses, but the “nearly” part really adds up over time.

So there needs to be better alignment of income and expenses within the projections to close the current and projected annual deficit. Social Security trustees have repeatedly suggested to Congress that raising payroll taxes and reducing benefits could solve the problem, but there hasn’t been much political will for either regardless of which party is in power.

This is where tinkering comes in, or wonky changes around the edges of the problem to help bend the curve, so to speak. Examples include raising the full retirement age from 67 to 68 (it was originally 65 anyway) or older and maybe indexing it to longevity (I’m unsure how they’d do that, but it’s an interesting concept). There could be various forms of means testing, such as limiting benefit growth for higher income people, assessing higher payroll taxes on higher earners or a mix of tweaks, all trying to peck away at the big changes nobody in power wants to make.

Another example of tinkering is changing which CPI metric is used to calculate the annual COLA. The replacement metric often discussed is “Chained CPI”, or C-CPI-U. Chained CPI is preferred in some circles to CPI-U because its methodology captures consumers substituting cheaper items for more expensive ones as inflation heats up, reducing the overall inflation number. This potentially lower inflation reading would reduce COLAs and trust fund expenses by incrementally reducing benefits, especially over a 75-year period. That cherry-picking of data might seem a little underhanded but if it ultimately helps support the system, maybe that justifies the means? Others suggest using CPI-E, an inflation gauge targeted on spending by seniors. While that makes good sense at a higher level because it more accurately reflects the inflation being seen by actual beneficiaries, it could lead to higher COLAs and more of a drag on the system, so that’s probably a nonstarter. Can you sense the irony there?

I think (and hope) Congress will eventually figure this out because they need to. It’s just a question of exactly what they do and when, so plan ahead for various contingencies.

Ultimately, Social Security beneficiaries are getting a pay raise next year and that’s great. However, it’s wise to factor some sustainability stress tests into your plan if you’re currently receiving benefits or plan to do so soon. Tests could be lower COLAs over time to match up with Chained CPI, benefit reductions in 2035 and beyond, and so forth. I usually do this for clients anyway, but it never hurts to keep checking!

And for those who are still working for the foreseeable future, I suggest continuing to factor Social Security into your plans, just don’t rely too heavily on it. Test your plan for this and make strategic decisions as needed. And remember that Social Security was never meant to replace all of your pre-retirement income – it’s one leg on the retirement income stool and you should try to have as many legs as possible.

Have questions? Ask us. We can help.

It’s that time of year when many of us start fretting about year-end deadlines. Ensuring that impacted clients have taken their RMDs by December 31^st is a big one, but another is completing Roth conversions. I’ve discussed conversions before and the article below will go into more detail, but the concept is a moving target when it comes to retirement strategy and taxes.

Roth conversions sound straightforward – you’re prepaying taxes now on money you’ve saved in your tax deferred accounts like 401(k)s and Traditional IRAs, hopefully at a lower rate than in the future. Sounds simple, right?

But how do you know what your tax rates will be years from now? Do you know what your income will be? How about tax deductions and law changes that might impact your situation? Add the mental gymnastics needed to navigate our tax code and you’ve got a challenging planning landscape. However, there are benefits to converting traditional retirement money into a Roth IRA, so we shouldn’t let complexity dissuade us.

What follows is most of a recent article from Ed Slott, a nationally recognized expert on retirement-related taxes, addressing how recent tax law changes impact Roth conversions. Unsurprisingly, the new law didn’t reduce complexity. There’s a lot of interplay within your tax return and conversions can easily create unanticipated consequences, so don’t make conversion decisions in a vacuum, the author says.

You can and should consult with your tax preparer about this. And I have software that can help, so read on and reach out if you’re interested in getting a Roth conversion done by year-end.

From Ed Slott…

For retirement planning, a key part of the One Big Beautiful Bill is that it permanently extended reduced federal income tax rates enacted in the Tax Cuts and Jobs Act of 2017. Those lower brackets included rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%, all of which were set to expire in 2026. (The rates that prevailed before 2017—and would have prevailed again—were 10%, 15%, 25%, 28%, 33%, 35% and 39.6%).

Of course, “permanence” in tax law lasts only until a future Congress changes the rules. Still, given today’s political situation, it’s likely that the current relatively low tax rates will be in effect through at least 2026 and likely beyond.

So what does this have to do with retirement planning?

The answer lies in the nation’s future liabilities and its debt, especially as the U.S. looks for ways to keep supporting programs such as Social Security and Medicare. Because of those obligations, some observers expect tax rates to rise again sharply in the future, perhaps in a way that affects the high-income taxpayers most likely to use financial advisors and tax professionals.

In particular, there are concerns about people who hold pretax retirement accounts and face required minimum distributions every year once they reach their 70s (the exact start date depends on their year of birth). Hefty withdrawals by that time may be taxed at steep rates.

If current owners do not deplete their tax-deferred accounts, the RMDs will pass to their beneficiaries, who could then owe the resulting tax in addition to their own obligations. Furthermore, the SECURE Act has accelerated those distributions to beneficiaries, which could mean more taxes bunched into more years.

Roths To The Rescue

Roth IRA conversions are an appealing way to trim these deferred taxes, and if the conversions are done prudently, they could keep people’s tax bills in the 24% bracket (or even the 22% one) for as long as the One Big Beautiful Bill is in effect. This year, a married couple could have up to $394,600 in taxable income (after deductions) and owe no more than 24 cents on each taxable dollar. But after a Roth conversion, qualified distributions (including any post-conversion gains) are tax-free for account owners and their beneficiaries. Then the owners don’t face required minimum distributions at any age.

Therefore, a plan that calls for cautious annual Roth conversions, within moderate tax brackets, eventually could reduce or even eliminate RMDs. The trap, though, is that a current Roth conversion must occur during the taxable year (by December 31, 2025, say). That’s a problem, since a person’s exact numbers on their taxable income for that year won’t be known until after that (say, by April 15, 2026) when the return is filed. That means if they want to shift dollars to the Roth side they’ll have to do some guessing with the numbers they know in order to keep their reported income within a desirable bracket.

Creating Complexity

However, the One Big Beautiful Bill also came with tax benefits, which can have a flow-down impact on the taxation of Roth conversions.

One of the most notable changes is the increase in the state and local tax deduction. Since the Tax Cuts and Jobs Act took effect, people who itemize deductions on Schedule A of IRS Form 1040 could deduct only $10,000 for all taxes (income, property, etc.) imposed by states and localities (for both single taxpayers and those filing jointly). Many instead shifted away from itemizing and took the standard deduction.

There’s a case for continued itemizing under the new law, however. For the tax years 2025 through 2029, the SALT deduction rises to $40,000 […]

The combination of tax cuts and Roth conversions sounds like a potent one-two punch. But there’s a catch: The higher SALT limit starts to phase out and goes to 30 cents on the dollar for those whose modified adjusted gross income is $500,000 to $600,000. When MAGI [Modified Adjusted Gross Income] rises above $600,000 or more in 2025, the state and local tax deduction cap reverts back to $10,000 […]

If a taxpayer’s MAGI falls in the phaseout range, though, Roth conversions might create the same sort of “tax torpedo” that happens when IRA withdrawals are added to Social Security benefits—it leads to a spike in marginal tax rates […]

Tackling the Trade-Offs

Beyond the SALT changes, taxpayers may want to consider other provisions of the One Big Beautiful Bill when making Roth conversion decisions. They might, for example, take into account the 20% qualified business income deduction, which also has been made “permanent” for now. For the self-employed individuals and small business owners who qualify for the deduction, the income limits have been expanded.

In 2025, the 20% deduction applies for single filers with taxable income of up to $197,300 or joint filers with income of $394,600. The deduction starts to shrink for the next $50,000 of income (for single filers) or $100,000 (for joint filers). It disappears when singles make $247,300 or joint filers make $494,600. With higher taxable income, there is no qualified business income deduction for certain personal service businesses (which are called “specified service trades or businesses” by the IRS and apply to fields like health, law and accounting) […]

A 20% tax deduction can be appealing, but its availability makes Roth conversion decisions difficult. Such conversions will increase taxable income … and also increase the QBI deduction! But if the Roth conversion puts taxable income over the upper number, the qualified business income deduction might be lost altogether. Fine-tuning is necessary, especially considering that a person’s actual taxable income for 2025 won’t be known until a tax return is filed in 2026.

Yet another innovation of the new law is a $6,000 senior deduction for people age 65 and older (up to $12,000 for married couples) that’s in effect from 2025 through 2028. Again, there is a MAGI phaseout, which runs from $75,000 to $175,000 for singles and from $150,000 to $250,000 for joint filers. Taxpayers who qualify can take the deduction even if they itemize.

With relatively low MAGI limits, Roth conversions might push reported income over the high end of the phaseout range, zeroing out the senior deduction. But people edging out of the phaseout range probably will be in the 22% tax bracket, for a maximum per person tax savings of $1,320 (22% times $6,000). In the long-term, the benefits from a substantial Roth conversion might be worth losing the short-term tax savings.

Final Thoughts

These provisions of the One Big Beautiful Bill must be taken into account for retirement planning, with taxpayers carefully considering the differing MAGI limits and effective dates. Roth conversions are likely to deliver long-term, tax-free benefits. Yet they may result in short-term losses of MAGI-based tax deductions.

The key takeaway is that Roth conversions cannot be done in a vacuum. Taxpayers and their advisors should look at the full array of tax benefits generated by the new law, year after year, and decide how to proceed in order to optimize their overall retirement and estate plans. 

Here’s a link to the full article if you’re interested.

https://www.fa-mag.com/news/how-new-tax-law-affects-roth-iras-84152.html?section=2

Have questions? Ask us. We can help.

Market resilience was a theme during the third quarter (Q3) of 2025, buoyed by investor enthusiasm about AI-related spending, an overall healthy economy and, perhaps ironically, an interest rate cut by the Federal Reserve. Investors contended with any number of crazy headlines and a federal government shutdown as the quarter ended but still managed to keep major stock indexes in “overbought” territory for most of Q3.

Here's a summary of how major market indexes performed during the quarter and year-to-date, respectively.

• US Large Cap Stocks: up 8.1% and up 14.7%
• US Small Cap Stocks: up 12.5% and up 10.4%
• US Core Bonds: up 2% and up 6.1%
• Developed Foreign Markets: up 4.5% and 25.6%
• Emerging Markets: up 10.7% and 28.9%

US stocks performed well during Q3, as did stocks overseas. Generally speaking, investors continued moving past concerns about tariffs and inflation while shifting focus toward declining interest rates, government spending plans here and abroad, and corporate spending on AI-related infrastructure. According to Bespoke Investment Group, the big five AI-related companies (Meta, Google, Microsoft, Oracle, Amazon) spent roughly $40 billion on US data centers in July alone, with plans to spend around $1 trillion over the next year. Others suggest this spending could grow to several trillion by the end of the decade. More data centers are necessary to power the proliferation of AI models and their ability to “reason” which, according to NVIDA, could need over 100 times the power of earlier AI models.

All this growth impacts market dynamics. There are now nine publicly traded companies with $1+ trillion market valuations and eight of those are tech-related and the Technology sector makes up nearly 36% of the S&P 500. Add that to Communication Services (which includes AI “hyperscalers” Google and Meta) and we’re at 46% of the market’s primary benchmark for just those two sectors, up from about 30% pre-ChatGPT’s launch in 2022. The S&P 500 is organized based on a company’s market capitalization (value) so index returns get skewed by larger weightings. For example, AI-related stocks generated nearly all of the S&P 500’s return of about 3.5% in September.

Also lifting the spirits of investors during Q3 was a progression of generally positive economic news followed by a highly anticipated interest rate cut by the Federal Reserve in September. The cut was pretty much a given but there was some doubt because inflation was still above the Fed’s target and the economic outlook was favorable (September GDP surprised to the upside, rising at an annualized 3.8% vs 1.5% expected). However, labor market weakness was the main reason offered for the Fed’s rate cut. Investors ended the quarter expecting multiple quarter-point rate cuts from the Fed going into 2026 even though there’s low risk of major slowing or recession in the months ahead. This would, at least in theory, act as additional tailwind for the economy and markets.

Expectations for lower rates helped drive the yield on the benchmark 10yr Treasury note from about 4.5% in July to nearly 4% during September before climbing back to almost 4.2% as Q3 ended. Falling yields mean higher bond prices so this helped fuel the 2% return for core bonds mentioned above. This also helped reduce the average rate on a 30yr fixed mortgage to around 6.3%, which led to an uptick in purchase applications across the country. This pent-up demand was good to see given how much the wealth effect impacts consumer spending. We also learned that average home equity is at multi-decade highs. That might sound reminiscent of the Great Financial Crisis but homeowners have a mortgage on about 27% of their home’s value, according to Bespoke Investment Group. (Average mortgage debt was over 80% in 2007.) That’s just an average and home equity doesn’t help consumers who rent, but it helps support consumption for those who do, especially as interest rates fall.

So Q3 was a good quarter during a good year, but what does that mean going forward? Taking a contrarian view is prudent here. Numerous analysts suggest that we may only be in the middle of the game when it comes to AI’s development, and that could keep fueling returns for a while but how long is anyone’s guess. The economy is doing reasonably well, with positive indicators seeming to match or even outweigh negative ones. This could also last a while assuming rates continue moving down in the months ahead. Taken together, it’s a good situation that grows precarious as values rise and parts of the market get overextended, or more so depending on one’s perspective.

This type of environment cries out for incremental rebalancing. If you’re retired, trim from your winners to help fund your lifestyle, pay down debt, add to your emergency fund, buy some bonds, or all of these. If you’re still working and saving, keep it up but get prepared for volatility – it’s just a question of when and what the catalyst will be, and it will create opportunities for smart and patient investors.

Another theme for rebalancing is to consider incrementally moving some of your broad market-cap weighted holdings into equal-weighted funds to reduce your exposure to overheated sectors. One popular index fund from Invesco (ticker symbol RSP) that equal-weights the S&P 500 members contains only 17% in Tech and 5% in Communications Services as of this writing. Swapping a portion of a cap-weighted fund with something like this in your IRA or Roth IRA would be an easy way to diversify without near-term tax impacts. I may do something like this on your behalf if I'm managing your portfolio.

Have questions? Ask us. We can help. 

There are a variety of things percolating this morning. I’ll share some below, although there’s no clear throughline.

The Federal Reserve meets again this week for another decision on its short-term interest rate benchmark. As I type there’s a 99% chance of a quarter-point rate reduction. Then there’s a 94% chance of another quarter-point reduction at the Fed’s last 2025 meeting in December. Odds of further reductions even out quickly into the new year, but three rate reductions (including September’s) would be a large puff of wind into the economy’s sails.

The stock market is currently pricing those changes in. That, plus giddiness from softening rhetoric related to trade negotiations with China is helping lift major indexes to new highs. Eventual confirmation of these factors should keep investors happy but any contrary whiff will create volatility. Remember that the fourth quarter is usually the best quarter for stocks all year, but it also tends to be one of the most volatile.

Should You or Shouldn’t You when it comes to doing a Roth conversion? Our individual goals and tax situations are unique but there’s enough common ground to develop a short-hand for whether you should consider converting money from a traditional retirement account into a Roth. Here are a few questions to ask, in order of priority. Answering yes to one means you should consider a conversion and more yesses mean the obvious.

Look at your 2024 tax return. Were you in the 22% or lower Federal tax bracket?

Is your income roughly the same this year?

Or will your income be lower? Maybe you’ll show a large loss or you’re expecting more deductions?

Are you anticipating, for whatever reason, that your tax rate will be higher in the future?

When it comes to Roth conversions, we’re looking for calendar years when your taxable income is lower than it would otherwise be, or maybe it’s low for an extended period. A simple way to measure this is by tax bracket. The lower brackets, 10% and 12%, are no-brainers when it comes to considering a Roth conversion. From there the brackets jump to 22% and 24%, before jumping again to 32% and higher. Staying within the 22% bracket is usually solid for conversions, while the 24% can still make sense – it depends on your situation.

Essentially, we’d backfill “missing” income to the top of the bracket you’d otherwise be in since converted dollars are taxed as ordinary income. You can go into the next higher bracket, of course, but don’t do so by mistake.

You’d then plan to leave the converted dollars in the Roth for at least five years (and to at least age 59.5) for the money never to be taxed again. Given enough time, this Roth conversion process could grow your savings substantially to be spent by your surviving spouse or even your kids or other beneficiaries. The alternative is leaving the money to grow in your tax deferred accounts to eventually be required to be withdrawn and taxed later. That’s certainly not a horrible outcome, just potentially more expensive.

And if you’re younger and answer yes to the above questions, focus on making Roth contributions instead of traditional. That way you won’t need to convert, or at least not as much, because you’ll already be there.

JPMorgan’s asset management arm has been banging the drum for allocating beyond a typical 60/40 stock/bond portfolio for a while. Their recent research suggests that adding “alternative” asset classes like private credit, private equity, real estate and precious metals to name a few, can help achieve better risk-adjusted performance. The thinking is to take 5% from the stock side of your allocation and 5% from bonds and add to alternatives. Doing so has back tested well and could provide additional hedges over the next 10-15 years. Their 60/40+ portfolio concept could generate an extra 0.2% return over that sort of timeframe. Frankly, I think it speaks to diversification in general and making sure that everything in your investment portfolio is there for a reason. But back testing is tricky since, as we all know, past performance is not indicative of future results. And do you need expensive actively-managed funds and less liquid investments to accomplish what could be a marginal improvement? I’m not entirely sold on this but it’s an interesting idea to explore during the weeks ahead.

The Shutdown Snowball. According to my research partners at Bespoke Investment Group, impacts from the federal government shutdown continue to widen given that SNAP (“food stamp”) benefits for November likely won’t be disbursed for the roughly 40 million Americans, on average, who receive them monthly. These folks are geographically dispersed and SNAP dollars flow directly into the economy. Apparently Walmart alone collects about 25% of this spending, which makes sense. Bespoke doesn’t suggest that Walmart will suffer because of this lost consumer spending, but the longer the government shutdown goes, the closer it will feel to more Americans.

Personal politics and the understanding of political maneuvering aside, I vividly remember living off food stamps as a kid so it’s hard not to imagine the impact this will have on millions of households, even if it’s only one missed month. Add that to the myriad other issues impacting low-income Americans, and it could be a gloomy holiday season for many families. Consider donating to your local food bank – nonperishable food donations are good but, as I recall, cash is king because food banks can buy bulk food cheaper than you can.

Have questions? Ask us. We can help.

Why should we invest in public markets when there’s so much uncertainty? I’ve heard different versions of this question lately so I wanted to explore the topic again due to recent market activity.

You’ve likely heard how a social media post from the White House on Friday quickly pushed major stock indexes down in the afternoon from 2% to over 3%, and 7% to 25% in the crypto space. Stocks made about 60% of that back yesterday, depending on the index. That’s a good Monday snapback as the news cooled off over the weekend but, as I type pre-market on Tuesday, stocks look set to open lower again. Ups and downs like this aren’t a huge deal in the grand scheme of things. Still, unexpected shots of volatility are unsettling for a lot of people, regardless of one’s political perspective, so the “why are we even doing this?” question is reasonable.

This is a huge issue by itself and I don’t intend to cover all the angles in this short post. Whole books have been devoted to this topic and I try to keep these posts to about two pages.

Anyway, let’s consider the main reason we invest in public markets in the first place: growth of our savings that exceeds the inflation rate over time. That’s obvious but can be overlooked. We’re not trying to get rich quick by speculating. We’re trying to accumulate value, often over many years, with the plan to spend it intelligently during retirement and maybe leave something behind for the next generation. We choose to do so via the public markets because they’re readily available, relatively cheap, the most transparent in the world (don’t laugh, it’s true), and easily accessible when needed. Roughly 65% of Americans are homeowners and nearly that percentage participate in the stock market, so we’re in good company.

What are some alternatives?

We could leave our money in the bank. This is safe and returns are predictable, which can be comforting. The problem is that safe + predictable = low return, it’s just the way our system works. While cash in the bank can outperform stocks and bonds during times of market stress, those periods tend to be short and eventually leave cash growing slower than inflation. This erodes the purchasing power of your savings. Most people understand this superficially but the risk/reward tradeoff often gets colored by whatever is going on in the world at the time.

We could start our own business or invest in the privately-held businesses of others. Starting a business is one of the riskiest financial moves you can make but it also has the highest potential reward. While the overwhelming majority of small businesses don’t grow into multinational juggernauts, many thrive and create meaningful value for owners, employees, and their communities. The internet suggests there are about nine nonemployer businesses (an owner with no paid staff) per 100 people in the US. Add that to small businesses with just a few employees and you’re in good company there as well. You’re also a risktaker because roughly 20% of small businesses fail in the first year and 50% fail during the first five. Beyond the risk of outright failure, owners have to contend with liquidity issues, legal problems, eventual staffing concerns, and various other issues along the way (I certainly have). The list is long so you had better choose this path for reasons besides simply making more money.

Privately-held investments are another option. This could be direct investments in local businesses, putting money into an apartment or office building (or a bunch of them) owned by a real estate investment trust, or even buying trust deeds. A big issue with private investments is being able to get your money back when needed, aka “the return of versus the return on” your principle. These investments require you to give up control of your cash for a sometimes-lengthy period, and you usually have to ask permission to get some of it back. Maybe the ultimate return justifies the liquidity risk but that’s not guaranteed.

We can directly invest in real estate. For lots of Americans this means owning (and yes, paying a lender for the privilege) their own home. Home equity gains help drive the wealth-effect which drives consumption in our consumer-based economy, so that’s a good and necessary thing. Owning one or more rental properties is an extension of this and is similar to owning a small business. It can be expensive, however. You’ll have mortgage costs (presumably), insurance and maintenance costs, legal expenses, plus large transaction costs along the way. There are lots of risks but probably the biggest practical one again deals with your personal liquidity. Imagine getting into a cash crunch and finding it hard and/or impractical to borrow against or sell your property to access equity (assuming you have some after expenses). Still, personally owning rental real estate can be a great financial move if you play your cards right.

We can invest in non-standard asset classes. What on earth does that mean? While real estate was alluded to above, other “alternatives” include collectibles, precious metals and commodities, private equity and a favorite these days, cryptocurrencies. Each amplifies liquidity risk and comes with various costs, potential tax issues, plus a steep (though often rewarding) learning curve.

So those are a handful of options beyond or in place of investing in public markets. Which sounds more appealing? And for extra credit and a bit of a loaded question, which do you still think is immune from risk?

Ultimately, the categories I mentioned should be thought of as tools – some are more specialized but all can serve a purpose. You decide which tool is right for the job and learn how to leverage it to the best of your ability. You may find you need multiple tools. Obviously my opinion is biased but I think investing in public markets is probably the most fundamental tool in your toolkit and can be supplemented by others.

Part of the challenge is bringing all this together in a way that’s appropriate for your situation. Focus on that, on the structure of your overall household portfolio and the tools you use to build and maintain it, and less on the news of the day. You’ll be on a much better financial path and hopefully be able to sleep better at night.

Have questions? Ask us. We can help.

We’re in the final hours of another good quarter. I’ll send out my Quarterly Update next week but I can’t help starting this post out with some appreciation for how resilient the markets have been.

In just the past three months we’ve had tariff news, mixed economic messages, acts of domestic terrorism, whacky headlines, and now a potential shutdown of the federal government (at least as I type). The major indexes have risen through it all, with the S&P 500 up around 8% this quarter. Foreign stocks are up nearly 5% and bonds are up almost 2%. It’s amazing how investors (collectively) can look past these issues, but that’s the public markets for you. I find this collective rationality comforting in an otherwise crazy time.

Okay, this morning I’d like to share some inside baseball after attending an industry conference in New Orleans last week. The conference had less to do with market predictions and more to do with the planning profession itself – where we’re headed with tech innovations, how to serve clients better, and so forth. This is different from my typical post but maybe it helps you understand what professional planners are talking about.

First I’ll say that New Orleans is an interesting town. I had never been before so I spent time on several occasions walking throughout the French Quarter. It was a good way to process conference sessions while getting my steps in each day. I’m not much of a drinker but I still traversed the length of Bourbon Street several times as I crisscrossed the Vieux Carré – wow, it certainly lived up to its reputation! Conferences tend to be in places like Denver, Phoenix, or San Diego, so being in NOLA added an interesting twist. Beyond the craziness of Bourbon Street, there was plenty of architectural beauty and centuries of history to soak up. Unfortunately there wasn’t time for an organized tour. Maybe next time.

The conference, known as the Insider’s Forum, was hosted by a long-time industry journalist and publisher of Inside Information. This has nothing to do with insider trading or other nefarious market conduct. Instead, for decades the newsletter and associated conferences have covered the evolution of the planning profession and the firms and service providers moving it forward.

As you’d probably imagine, the rise of artificial intelligence permeated just about every conference session. There was worry and concern, but otherwise the sentiment around AI was positive. The number of planners who are trying to leverage (or at least learn more about) AI rose substantially from last year’s conference, with maybe 90+% now in that camp.

The primary use of AI currently is as a notetaker, which is considered the simplest way to integrate it into our back offices. There were two AI notetaker vendors at the conference and the idea is that they are linked to our phone system and Zoom (or other video conferencing app) and transcribe conversations. One company stores the video and audio while the other only transcribes and autodeletes the original. Each service can then do all sorts of things with the data, like linking the notes to a client’s file, creating summaries and follow-up tasks. I’ve seen both companies at another conference earlier this year and the feature sets have expanded dramatically since – that’s how fast the tech is improving.

I’m waiting and watching services like these because the regulatory, security, and quality issues are in flux. Early adopters at the conference spoke of transcription errors and other issues, although not as many as you might imagine. I may end up adding this in the months ahead but only when I feel confident that data security is rock solid.

Other AI use cases centered around client experience. For example, some firms are now (or planning on) using AI to write blog posts and newsletters and even respond to client emails. Apparently this is pretty basic in terms of AI capability, but the aforementioned security and quality control issues still have to be addressed.

There was much discussion about the importance of understanding prompts to get accurate information from AI platforms. We’ve all heard stories about how ChatGPT, etc, can hallucinate answers or simply be inaccurate. This is often due to the end user misunderstanding how to guide the tool through its “thought” process. We also need to be specific about where to find our information versus telling the AI engine to search the whole web. Otherwise, it’s garbage in and garbage out, and it can be impossible to tell what’s garbage if you don’t already understand the context.

Apparently, in the short-term (some now and others over the next year or so) we’ll see more industry-specific AI versions. Your information could reside in a “data lake” that reaches across platforms to be accessed by AI agents (“Agentic AI”, like a digital employee), presumably provided by third-party industry-specific apps. Essentially, one information request could search multiple data providers simultaneously and make back-office tasks much faster.

There was lots of discussion around trust. Data governance and who’s ultimately responsible for it is obviously critical. Various panelists and presenters suggested that trust will come with time and understanding. It was suggested that everyone learn more about these technologies, at least in general, because they’re here to stay and the growth rate is so rapid that many of us are being left behind, we just don’t know it yet.

We also discussed job security. Our collective opinion may be biased but the thinking is that human experts will become more valuable as we rely more on technology. If true, this bodes well for financial planners who can leverage these changes in a prudent and secure way. However, the more basic customer service tasks will be done by AI in the very near future – the agentic IA already mentioned. Traditional client service roles would obviously be impacted by this.

Other discussions included:

Integrating crypto currencies into our firms – pros and cons, regulatory issues, etc – “be very cautious” was the main takeaway.

AI will assist in determining long-term care coverage and creating cost-effective estate planning documents. An interesting company, Waterlily, recently came to market and was at the conference. More to come on this in a future post.

Big custodians like Schwab (and new entrants like Goldman Sachs and Wells Fargo) want to increase their profit margins by asking us to offer banking products to our clients.

We discussed cybersecurity and how current threats are often fancy versions of old threats, such as getting us to click links in phishing emails. Fraudsters are using AI to impersonate emails, phone calls, even adding in human tells like throat clearing to fool people. I’m considering keeping track of unique verbal code words that we’d verify prior to starting any new request.

Beyond that, I kept coming back to one thought throughout the conference: It’s good to be small. There’s so much change happening that it’s good to be nimble and unconstrained by bureaucracy and outside interests. The best technology, consulting, and security measures alluded to above are available to me, even as a small firm.

Another thought is that I’m definitely mid-career, although I’ve been doing this for over 20 years. Technology will keep improving and change can be scary, but I’ll keep adapting and improving along with it. We all will. That’s empowering as I look ahead to a long career.

Otherwise, please know that I won’t use third party AI services until I feel confident about the security of your information. And I won’t use AI to write these posts, even if it has better grammar.

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