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The INsiderblog

InvestmentNews reporters offer their take on intriguing or controversial articles from around the web.

Jun 5, 2018

Women to Watch: Help us find the next generation of female leaders

By Suzanne Siracuse

What a year for women's empowerment!Over the last nine months, obstacles that women face personally and professionally have been making front-page headlines and sparking powerful movements such as #Metoo and Time's Up. These efforts are bringing much-needed attention to these critical issues.Sadly, these are not new issues, and they are not limited to Hollywood and celebrities. These issues have been prevalent in the financial services industry, as well. But the positive news out of it all is that more firms are understanding certain behaviors and policies cannot and will not be tolerated. And change is on the horizon. By bringing attention to important issues and topics, we all have the ability to change the way women are treated and valued now and in the future. So how does InvestmentNews' Women to Watch initiative fit into all this?InvestmentNews is proud to have launched our Women to Watch initiative in 2015 with the mission of... Read full post

Jun 1, 2018

Hedge fund scam artist targets the middle class

By Bruce Kelly

Investment scams that hit working people or the middle class typically are pretty prosaic. They include church scams, such as a pastor cloaking his phony investment pitch in holy talk, or what are known as affinity frauds, in which the person committing the fraud belongs to and identifies with the same ethnic or religious group he preys upon. Regular people with small amounts of money are simply not of interest to a criminal with a sophisticated sounding investment pitch who's looking to make a big score. Con artists who target the wealthy or upper middle class — think of Bernie Madoff — often talk about sophisticated investment strategies, rather than Jesus, to con their victims. The more complex the strategy, the more impressed the rich mark. Mr. Madoff played this game brilliantly, claiming he bought blue chip stocks and took options contracts on them, using something known as a "split-strike" strategy to earn his... Read full post

May 21, 2018

Envestnet Yodlee raises the bar with AI-powered apps

By Ryan W. Neal

Any doubts as to who is leading the way on adviser technology should be put to rest after last week's Envestnet Advisor Summit. In addition to announcing updates to Tamarac and a plan to launch an annuities marketplace, Envestnet gave a first look at the new artificial intelligence tools it's building with Yodlee's data and technology.They are miles ahead of anything else on the market. (More: Envestnet is the industry's 800-pound tech gorilla)Envestnet Yodlee Chief Executive Anil Arora demonstrated three applications during his keynote. The first, Envision IQ, plugs into a firm's data and provides an easy-to-use interface to which advisers can pose any questions they may have about their business or their clients. Using either a desktop or mobile device, advisers can key in queries like "Who are my top clients?" or "What are my new money flows?" or "Did any clients add cash last week?" and receive an answer within seconds. If advisers ... Read full post

Apr 27, 2018

Wells Fargo wouldn't be the first to push proprietary products on 401(k) plan participants

By Greg Iacurci

The disclosure of an alleged Labor Department investigation of Wells Fargo sales practices — including those in its retirement-plan services division — is sure to raise a few eyebrows, but should this sort of thing really be a revelation to anyone in the 401(k) industry?The Wall Street Journal reported Thursday that the Department of Labor is looking into, among other things, "whether Wells Fargo's retirement-plan services unit pressed account holders to buy in-house funds, generating more revenue to the bank." The article suggests the DOL is investigating potential violations of the Employee Retirement Income Security Act of 1974, which prohibits fiduciaries from self-dealing. Regardless of what Wells Fargo may or may not have done, let's not fool ourselves. Pushing proprietary products — both in 401(k) plans and to participants rolling over 401(k) money into an individual retirement account — is something... Read full post

Sep 11, 2017

DOL fiduciary rule has enforcement gaps — and they could widen

By Greg Iacurci

The Department of Labor's fiduciary rule, as it's currently written, has some enforcement gaps. And they could widen, especially for annuity products, depending on how the Trump administration's review of the rule shakes out. The primary enforcement mechanism of the Obama-era regulation, which raises investment advice standards in retirement accounts, is a "best-interest contract" between an investor and financial institution such as a broker-dealer. Beginning in January, firms that wish to use certain compensation arrangements, like commissions, must enter into a contract with an IRA investor affirming the broker's fiduciary relationship to the investor and that the investor is receiving advice that's in his/her best interest. The investor, in turn, will have a way to bring suit against the institution for breach of contract.But, what if there's no contract? As it turns out, nothing would really change for IRA investors seeking to... Read full post

Jun 21, 2017

Finra engages in rulemaking by enforcement: financial industry groups

By Mark Schoeff Jr.

Financial industry trade associations criticized Finra for using enforcement to establish regulatory standards for brokers rather than the formal rulemaking process, in letters to the broker-dealer regulator as part of its self-examination process.The Financial Services Institute, which represents independent brokers and financial advisers, said that as the Financial Industry Regulatory Authority Inc. has increased its fine level, FSI members are wondering about the broker-dealer self-regulator's motivation. "Recent developments in fines have lead [sic] members to believe that enforcement has moved away from investor protection and is now actively creating standards and rules outside the rulemaking process," David Bellaire, FSI executive vice president and general counsel, wrote in a June 19 comment letter. "Furthermore, some FSI members report that they feel the threat of large fines is being used to force them to sign [settlements].... Read full post

May 10, 2017

What's really behind the opposition to state auto-IRAs?

By Greg Iacurci

State auto-IRA programs were dealt a blow last week, when the Senate voted to overturn an Obama-era rule that promoted creation of these retirement plans. President Donald J. Trump is now poised to sign away the Labor Department rule. Observers expect this will chill progress among some of the states considering an auto-IRA program.Proponents of the rule and state-level action to build these automatic-enrollment, payroll-deduction retirement programs point to one overarching fact: Roughly a third of Americans don't have access to a workplace retirement plan, a proportion that has remained stagnant for years. They argue that in the absence of a better idea, why shouldn't states be encouraged to promote more retirement savings? To be fair to detractors: Yes, these plans have their flaws. As Aron Szapiro, director of policy research at Morningstar Inc. pointed out to me, these auto-IRA programs may further fragment retirement savings,... Read full post

Apr 27, 2017

Think you're an expert on market sentiment? So does everyone else

By John Waggoner

As the stock market soars to new highs, you'll probably have clients point to clues that mean the stock market is seriously overvalued: aged relatives investing in Tesla, for example, or billionaires moving to Thailand. Rather than throwing a pie in your client's face, you should probably explain that anecdotal stock market indicators are, at best, a highly suspect methodology for investing. Sure, a dozen people used anecdotal indicators to dodge the technology meltdown of 2000, but at least six of them were liars and the other half were lucky. And, while there's something to be said for measuring sentiment, it's an imperfect art — and, for the long-term investor, one that should probably be ignored. (More: Active fund managers underperform once again)Sentiment indicators are contrary indicators; that is, they attempt to show when stock fever has reached an unsustainable high. The most famous sentiment indicators are anecdotal,... Read full post

Apr 3, 2017

How to spot fake answers from Social Security Administration reps

By Mary Beth Franklin

We've all grown a bit weary over politically charged arguments about what constitutes real versus fake news. Based on my overflowing email box, I sense a similar frustration from financial advisers and their clients about how to interpret answers from Social Security Administration representatives that seem to contradict current law."I have had several married clients go to and then leave Social Security Administration offices where representatives consistently tell them 'No, you can't do that' or 'Sorry, the rules have changed' and the like when we know those answers are sometimes just wrong," said Stephen Harnden, a financial planner at Harnden MacLean Wealth Advisors in Peoria, Ariz."Nearly every SSA representative I have spoken with has been friendly, courteous and in a mode of trying to help" Mr. Harden explained in an email. "However, it is very frustrating and time consuming to try to help our clients fight their way through... Read full post

Mar 16, 2017

Confidence: How you can give it to young financial advisers and watch them run with it

By Christina Nelson

Our fourth annual 40 Under 40 project is under way, and we need your help to uncover top young talent in financial advice. InvestmentNews' goal each year is to find the stories that inspire the industry and illuminate its clearest path to future success, which depends on knowing who our next generation of leaders will be and what ideas are emerging from them. In the first three years of this project we garnered well over 3,000 nominations. Great job, readers! Grasping what the future of our profession can be depends in large part on you telling us who amazes you on a daily basis. The editorial team vets these suggestions based on a candidate's accomplishments at such a young age, contribution to the industry, leadership at a firm and in the profession, and promise for continued success. Help us find these enterprising personalities.What's in it for you?Readers have told us time and again that learning about the 40 winners each year has ... Read full post

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