Financial Planners

The sector at a glance

Financial planning and wealth management is the business of advising households on what to do with their money — registered investment advisers (RIAs), wealth managers, independent broker-dealer affiliates and wirehouse teams who charge for advice on investing, retirement income, taxes, equity compensation, estate transfer and insurance. The field is layered: independent fee-only RIAs registered with the SEC or a state regulator, national aggregators rolling those firms up with private-equity money, custodians and broker-dealers that hold the assets and supply the platform, and a technology stack of planning, portfolio-accounting, CRM and tax software the practice runs on. Buyers are not shopping for 'financial planning' in the abstract — they are pre-retirees worried about running out of money, tech employees sitting on concentrated RSUs, business owners approaching an exit, inheritors and widows facing decisions once, and families that have outgrown a robo-advisor. What makes this cluster unlike any other on the network is that the marketing itself is regulated: SEC Rule 206(4)-1, the Marketing Rule, governs what an adviser may say in an advertisement, and the CFP Board governs how the marks may be used. Content that would be routine in another industry — a client quote, a performance chart, an award badge — is a compliance event here. Austin is the anchor market: an established set of independent fee-only firms serving wealth created by the tech sector, with the Texas State Securities Board headquartered in the city.

Topic guides

Concepts

SEC Marketing Rule (Rule 206(4)-1)

The rule under the Investment Advisers Act governing adviser advertisements. Adopted 22 December 2020 with a compliance date of 4 November 2022, it replaced the old advertising rule and the separate cash solicitation rule with a single principles-based framework covering any communication offering advisory services to more than one person.

Testimonials and endorsements

Client testimonials and third-party endorsements are permitted under the Marketing Rule, having been effectively banned before it. Permission is conditional: the adviser must disclose whether the speaker is a client, whether compensation was paid and any material conflicts, must oversee the promoter and, for compensated promoters over a threshold, must have a written agreement.

Promoter compensation and solicitor agreements

Cash and non-cash compensation paid for referrals — the old solicitor arrangement, now folded into the Marketing Rule as promoter compensation. Requires disclosure at the time of the endorsement, a written agreement for compensated promoters above a de minimis level, and disqualification screening for bad actors.

Performance advertising

Any presentation of investment results in an advertisement. The Marketing Rule imposes prescribed time periods, a prohibition on presenting gross performance without net, and a general requirement that presentation be fair and balanced. This is where most Marketing Rule enforcement has landed.

Net-of-fee presentation

The requirement that gross performance never be shown in an advertisement without net performance of at least equal prominence, calculated over the same period using the same methodology. A gross-only chart on a website is a per se violation.

Hypothetical performance

Model, backtested, targeted or projected returns. Permitted only if the adviser adopts policies ensuring relevance to the likely financial situation of the intended audience and provides sufficient information to understand the criteria and assumptions — which in practice makes it unsuitable for a public website open to anyone.

Extracted and predecessor performance

Extracted performance is the results of a subset of a portfolio, such as one sleeve or one holding, shown separately; it must be accompanied by, or offered alongside, the results of the total portfolio. Predecessor performance is track record carried from a prior firm, permitted only where the personnel and accounts are substantially similar and all relevant prior accounts are included.

Third-party ratings

Awards, 'best advisor' lists and rankings used in marketing. Permitted with disclosure of the rating date and period, the identity of the producer and whether compensation was paid to obtain or promote it — and the adviser must have a reasonable basis to believe the questionnaire was not designed to produce a predetermined result.

Cherry-picking

Selecting favourable results, periods, accounts or recommendations while omitting unfavourable ones. Prohibited both by the Marketing Rule's fair-and-balanced requirement and by the general antifraud provisions; a 'past recommendations' page showing only winners is the classic example.

Advertising books and records

Rule 204-2 obliges an adviser to keep copies of every advertisement disseminated, plus supporting documentation for any performance shown and records substantiating claims. In practice a compliance file mirroring the marketing calendar — the record, not the intent, is what an examiner tests.

Form ADV Part 2A and 2B

The narrative brochure. Part 2A describes the firm's services, fee schedule, conflicts, disciplinary history and affiliations in plain English; Part 2B is the supplement covering individual advisory personnel. Filed with the SEC or the state and delivered to clients, and publicly searchable — which makes it the document a prospect uses to fact-check the website.

Form CRS

The client relationship summary, a short standardised disclosure required of SEC-registered advisers and broker-dealers serving retail investors. Covers relationships and services, fees, conflicts, standard of conduct and disciplinary history, and includes prescribed conversation-starter questions.

Fiduciary duty vs Reg BI

An investment adviser owes a fiduciary duty of care and loyalty across the whole relationship. A broker-dealer is instead subject to Regulation Best Interest, which applies at the point of a recommendation. The practical distinction — ongoing duty versus transactional standard — is the central selling proposition of the independent RIA channel.

Custody rule and held-away assets

Rule 206(4)-2 defines when an adviser is deemed to have custody of client assets and triggers surprise examinations, qualified custodian requirements and account statement delivery. Held-away assets — 401(k)s, 529s and held-direct accounts the adviser advises on but does not custody — sit in a separate category with its own billing and discretion questions.

State vs SEC registration threshold

Advisers below a regulatory assets-under-management threshold generally register with their state; above it, with the SEC, with a mid-range buffer to prevent constant switching. The threshold determines the regulator, the examination regime and the applicable advertising rules — for a Texas firm, the Texas State Securities Board versus the SEC.

IAR licensing (Series 65 / 66)

Investment adviser representatives register at the state level, qualifying by the Series 65 exam, or the Series 66 combined with the Series 7, or by professional designation waiver where the state grants one for the CFP, CFA, ChFC, PFS or CIC. Many states also impose continuing education requirements.

CFP Board marks and sanctions

The CERTIFIED FINANCIAL PLANNER marks are certification marks owned by CFP Board and licensed under a Code of Ethics and Standards of Conduct that imposes a fiduciary duty whenever financial advice is given. Misuse of the marks, or a Code violation, is subject to a disciplinary process ranging from private censure to permanent revocation, published publicly.

AUM

Assets under management — the balance on which an adviser bills and the industry's default measure of firm size. Distinguish it from assets under advisement, which includes held-away or consulted-on assets, and from regulatory AUM, the specifically defined figure reported on Form ADV.

Fee-only, fee-based and commission

Fee-only means compensation comes solely from clients, with no commissions or third-party payments. Fee-based means a mix of fees and commissions. Commission-only means product compensation. The middle term is deliberately confusing to consumers and its correct use is a compliance and honesty matter, not a branding choice.

Advisory fee schedule and breakpoints

The published tiered percentage charged on assets, with the rate stepping down as the balance crosses breakpoints. Whether tiers are applied marginally or as a flat rate on the whole balance materially changes the bill, and the ADV Part 2A must describe which.

Flat fee, retainer, hourly and subscription planning

Pricing models that decouple advice from portfolio size — an annual flat fee, an ongoing retainer, hourly engagements, or a monthly subscription often paired with a onboarding project fee. Built for accumulators with high income and low assets, and the fastest-growing alternative to the AUM model.

Wrap account

A single bundled fee covering advisory services, trading and custody. Simplifies billing but obscures the components; the Marketing Rule and Form ADV both require care in showing performance and fees for wrap programmes, since the bundled fee must be reflected in net performance.

SMA and UMA

A separately managed account holds securities directly in the client's name under a single manager's strategy, allowing tax customisation the pooled fund cannot. A unified managed account combines multiple strategies, models and sleeves inside one account with overlay coordination of trading, rebalancing and tax management.

Model portfolio

A standardised target allocation, built in-house or licensed from a strategist, applied across many client accounts and maintained centrally. Delivers consistency and scale; the trade-off is customisation and the risk of a compliance gap between the model and what a given account actually holds.

TAMP

Turnkey asset management platform — an outsourced provider handling investment management, trading, rebalancing, reporting and often billing, so an advisory firm can focus on planning and relationships. Costs basis points and cedes some control over the client experience.

Rebalancing

Returning a portfolio to its target allocation after drift, on a calendar, on tolerance bands, or via cash flows. Bands generally beat the calendar; in taxable accounts the trade-off between drift and realised gains is a planning decision, not a mechanical one.

Tax-loss harvesting

Realising losses to offset gains and, within annual limits, ordinary income, while maintaining market exposure through a substitute holding. Constrained by the wash-sale rule, which disallows a loss if a substantially identical security is bought within 30 days either side.

Direct indexing

Holding an index's constituent securities directly rather than through a fund, enabling continuous loss harvesting at the security level and customisation for concentrated positions or values-based exclusions. Historically a high-minimum offering; fractional shares and zero commissions have pushed minimums sharply down.

Asset location

Deciding which account type holds which asset — tax-inefficient holdings in tax-deferred accounts, high-expected-return assets in Roth, tax-efficient equity in taxable. Distinct from asset allocation, and one of the few levers that adds after-tax value without changing risk.

Roth conversion and backdoor Roth

A Roth conversion moves pre-tax IRA dollars to Roth, paying tax now to buy tax-free growth — usually executed in low-income years such as early retirement before RMDs begin. The backdoor Roth is a non-deductible IRA contribution followed by conversion, used when income exceeds the direct Roth limits, and is distorted by the pro-rata rule if other pre-tax IRA balances exist.

RMD and QCD

Required minimum distributions are the annual withdrawals the tax code forces from pre-tax retirement accounts once the applicable age is reached. A qualified charitable distribution sends IRA money directly to a charity, satisfying part or all of the RMD while keeping the amount out of adjusted gross income — better than deducting a gift for most retirees who do not itemise.

SECURE 2.0

Retirement legislation enacted at the end of 2022 with provisions phasing in over several years — raising the RMD starting age, reducing the excise penalty for missed RMDs, creating a limited 529-to-Roth rollover, expanding catch-up contributions and requiring Roth treatment of catch-ups for higher earners. Its staggered effective dates make it a recurring planning topic rather than a one-time change.

Rule 72(t)

The exception permitting penalty-free withdrawals from a retirement account before age 59½ through a series of substantially equal periodic payments. Rigid: the schedule must generally continue for five years or until 59½, whichever is longer, and breaking it retroactively triggers penalties on prior distributions.

NUA

Net unrealised appreciation — the treatment available when employer stock is distributed in kind from a qualified plan. Ordinary income tax applies only to the cost basis; the appreciation is taxed at long-term capital gains rates on later sale. A one-shot election with strict triggering-event requirements and easily forfeited by an ordinary rollover.

Concentrated stock and Rule 10b5-1 plans

A single position large enough that its risk dominates the plan, typical of executives and long-tenured employees. Diversification tools include staged sales, exchange funds, collars and charitable transfer. A Rule 10b5-1 plan is a pre-established written trading schedule that provides an affirmative defence to insider-trading liability, subject to cooling-off periods and certification requirements.

RSU vesting and the 83(b) election

Restricted stock units are taxed as ordinary income at vesting on the fair market value, with statutory withholding that frequently under-withholds for high earners. An 83(b) election accelerates taxation to the grant date on restricted stock — not on standard RSUs — and must be filed within 30 days of the grant, a deadline with no relief.

QSBS

Qualified small business stock under Section 1202, which can exclude a substantial portion of gain on the sale of stock in an eligible C corporation held for the required period, subject to per-issuer caps and gross-asset, active-business and original-issuance tests. Failing a technical requirement is common and expensive, so eligibility is verified with counsel, never assumed.

Donor-advised funds and charitable remainder trusts

A donor-advised fund takes an immediate deduction on contribution while grants are recommended over time; funding it with appreciated securities avoids the capital gain and is the standard tool for bunching deductions. A charitable remainder trust pays an income stream to non-charitable beneficiaries for a term or life, with the remainder to charity — used to defer gain on a concentrated or illiquid asset.

Estate tax exemption sunset and step-up in basis

The federal estate and gift exemption was temporarily doubled and scheduled to fall by roughly half at the end of 2025, driving a wave of use-it-or-lose-it gifting before 2026 legislation replaced the cliff with a higher permanent, inflation-indexed exemption. Step-up in basis resets an asset's basis to date-of-death value, which means gifting appreciated assets during life can cost heirs more than holding them — the tension that makes lifetime gifting a genuine trade-off rather than an obvious win.

Revocable trust and beneficiary designations

A revocable living trust avoids probate and provides incapacity management, but only for assets actually retitled into it — the funding step is the one most often skipped. Beneficiary designations on retirement accounts, annuities and life insurance pass outside both the will and the trust, and a stale designation silently overrides an otherwise perfect estate plan.

Monte Carlo simulation

Running a plan across thousands of randomised return sequences to express the outcome as a probability of success rather than a single projection. Its usefulness depends entirely on the return, inflation, longevity and spending assumptions fed in; a probability presented without those assumptions, or as a promise, is an advertising problem as well as an analytical one.

Safe withdrawal rate

The initial withdrawal percentage, subsequently inflation-adjusted, that historically survived a given retirement length in backtests. Useful as a starting anchor and badly misused as a rule — real retirees adjust spending, face different sequences, hold different allocations and pay different fees than the studies assume.

Sequence-of-returns risk

The risk that poor returns arriving early in retirement permanently damage a portfolio because withdrawals lock in losses, even if average returns over the full period are fine. The reason the years either side of the retirement date carry disproportionate weight, and the argument for a cash or short-bond buffer.

Glide path

The planned shift in asset allocation over time, typically toward bonds as retirement nears. Target-date funds embed one, either 'to' or 'through' retirement; rising-equity glide paths that increase stock exposure after retirement are the counter-intuitive response to sequence risk.

Social Security claiming strategy

Choosing when to claim between the earliest eligibility age and age 70, where delaying increases the benefit for life. The analysis turns on longevity expectations, spousal and survivor benefits, other income and tax brackets — and the survivor benefit is why the higher earner's claiming decision matters most for a married couple.

Long-term care insurance and annuities

Long-term care coverage funds extended custodial care that health insurance and Medicare largely do not, now sold mostly as hybrid life or annuity policies after traditional standalone products repriced. Annuities span immediate, deferred, fixed, fixed-indexed and variable types; each transfers a different risk at a different cost, and the commission structure is a disclosable conflict.

Organic growth rate, CAC and revenue per client

The core practice metrics. Organic growth counts net new client assets excluding market movement and acquisitions — the honest measure of whether a firm is winning business. Client acquisition cost is total marketing and business-development spend divided by new clients won; revenue per client, and per adviser, sets capacity and pricing.

Succession and continuity plan

Succession is the planned multi-year transfer of ownership and client relationships, internally to next-generation advisers or externally by sale. A continuity plan is the separate emergency arrangement covering sudden death or disability — a documented agreement many state regulators and the SEC expect to see, and a question prospects increasingly ask an older adviser directly.

Watch

A video primer on Financial Planners.

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