InvestmentNews INsider

The INsiderblog

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

Dec 3, 2014

Don't ignore estate planning for millennial clients

By Darla Mercado

The cobbler's children go unshod, and the estate planning reporter has no estate plan.Though estate planning has been a fun part of my coverage at InvestmentNews for about a year, I've always envisioned it as an esoteric practice for moneyed, older clients with lots of extended family. Take entrepreneur Dan Ashbach, who needed an estate plan to protect his $10,000 a month digital business. And don't forget the celebrities who've made their own estate planning errors, potentially saddling loved ones with multimillion dollar tax bills. As surprising as it seems, I — and undoubtedly, many of your young professional clients — have no estate plan whatsoever. The truth didn't hit me until after attending a seminar on Tuesday night with my accountant and an attorney he's brought in for a team approach to planning.It's never too early to begin sketching out the basic estate plan for your millennial financial planning clients.... Read full post

Nov 21, 2014

Accounting fiasco highlights tangled web behind Nicholas Schorsch's empire

By Bruce Kelly

In the wake of accounting problems at American Realty Capital Properties Inc., the rest of Nicholas Schorsch's empire has drawn scrutiny for its complexity. And calling the Schorsch empire complex is putting it mildly. It includes dozens of nontraded real estate investment trusts and other illiquid alternative investment funds such as business development companies. Mr. Schorsch also controls traded REITs, mutual funds, broker-dealers and a giant real estate sponsor, American Realty Capital, which is the bedrock for his vast domain. Mr. Schorsch is chairman of American Realty Capital Properties Inc., or ARCP, which last month revealed a $23 million accounting error over the first six months of the year that was intentionally not corrected. Simply put, ARCP's admission to the accounting mistake has rocked Mr. Schorsch's world. Major broker dealers have temporarily halted sales of nontraded REITs he controls under the ARC or Cole brands. ... Read full post

Nov 7, 2014

Rival Fidelity shows up uninvited at Schwab Impact

By Mason Braswell

As a record turnout of investment advisers gathered for Charles Schwab & Co.'s annual Impact conference in Denver, Colo., an uninvited guest lurked outside the gates. Refusing to let Schwab hoard all the attention of the nearly 3,600 advisers, industry executives, consultants and other attendees, Fidelity Institutional Wealth Services, the RIA custody unit of Fidelity Investments, bombarded attendees with its own marketing assault. Giant ads for Fidelity, which competes with Schwab for client assets, and its new book, “Be Greater: Why Being Good Enough Is No Longer an Option,” were posted over a parking garage directly opposite the main entrance of the convention center. Fidelity also placed ads on local buses. The rival custodian also promoted its own tweet that appeared at the top of the feed whenever attendees searched for the #SchwabIMPACT hashtag. “What are you doing to build a great business?” the ad... Read full post

Sep 26, 2014

What is a bond really worth?

By Bruce Kelly

The age old question of what a bond is really worth was raised again this week when it was reported that the Securities and Exchange Commission is asking serious questions about how the world's largest bond shop, Pimco, valued some securities in its Total Return Bond ETF. Some markets for bonds can be notoriously opaque and illiquid, leaving advisers and investors with plenty of questions about the true value for a bond. And any news regarding Pimco and its eccentric, superstar co-founder — and now former fund manager — Bill Gross, will grab the investment advice industry's attention. The investment advice industry should expect regulators to continue their scrutiny of bond values, noted one industry executive. “Transparency in bond pricing is very much on the front burner for the SEC,” said Alexandra Lebenthal, president and chief executive of Lebenthal Holdings. “Bear in mind that there are tens of... Read full post

Sep 12, 2014

Nontraded REIT guidelines too late for some clients

By Bruce Kelly

State securities regulators are making noise about implementing changes to policies that would limit how much a client's net worth could be invested in nontraded real estate investment trusts.As my colleague Mark Schoeff Jr. recently reported, the North American Securities Administrators Association Inc. has been circulating to industry regulators and representatives a list of 33 proposed changes to its REIT policy, with the intent to better protect investors. One of the recommendations on the list focuses on how much of a client's net worth can be allocated to nontraded REITs. And it's no wonder. Such REITs are in regulators' sights because of questions about their fees, transparency and performance during the credit crisis. Some registered reps who sold illiquid REITs before the real estate collapse of 2007 and 2008 have vowed never again to touch the product. Some of the most notable REITs of that era saw dividends slashed and... Read full post

Aug 8, 2014

Why more graduates aren't sitting for the CFP mark

By Liz Skinner

The CFP Board of Standards Inc. is digging around to try and figure out why many financial planning program graduates don't go on to attain the certified financial planner mark. Early results are telling.A recent study showed that 69%, or 351 out of 506 graduates, had not taken the two-day comprehensive exam in the five years since they had completed their bachelor's or master's degree in financial planning. Hoping to enhance the pathway to the designation it grants, the CFP Board over the past two months had researchers sit down with graduates of five different financial planning programs and ask them what they've been up to since graduating up to six years ago.Of the 16 graduates interviewed, six had secured the mark, three had passed the exam but were still working on completing the two to three years of work experience needed before the board awards the certification, four planned to take the exam in the future and three said they... Read full post

Jul 23, 2014

Survey results draw a picture of tech-savvy advisers

By Joyce Hanson

There's a dog-eared copy of last year's copy of InvestmentNews' “most popular tech products” survey sitting on my desk, and it's finally time to retire it. The 2014 Technology Usage and Satisfaction Survey is in — all shiny and new and full of useful information. It publishes Monday, but I can give you a sneak peek.In taking a closer look at the rich data that respondents submitted, I came away with a picture of a typical tech-savvy adopter/buyer/user in the adviser space. That adviser is more likely to be an independent registered investment adviser than a registered rep at a broker-dealer. Assets under management range from $10 million to $99.9 million. The primary custodian is most likely to be Schwab Advisor Services or Pershing Advisor Solutions, and the top products used are Redtail Technologies Inc.'s customer relationship management platform, MoneyGuidePro's financial-planning system and Albridge Wealth... Read full post

Jul 16, 2014

Liquidity events heating up REIT market this summer

By Bruce Kelly

Liquidity events of nontraded real estate investment trusts are heating up during the dog days of summer. This month already has seen one liquidity event — meaning a merger or a listing on an exchange; while a significant nontraded health care REIT is reportedly in talks to be acquired.July has also witnessed the announcement of an acquisition of a traded REIT that was composed of former nontraded REITs and a spinoff of a nontraded REIT asset manager from its traded REIT parent. The flurry in activity comes after the first half of the year saw only two liquidity events: the listings in April of the $2 billion American Realty Capital Healthcare Trust Inc. on Nasdaq and the $1.9 billion American Realty Capital New York Recovery REIT Inc., which changed its name to New York REIT Inc., on the New York Stock Exchange.In June, a giant health care REIT, Ventas Inc., said it agreed to acquire the ARC Healthcare Trust for $2.6 billion in... Read full post

Jul 3, 2014

Even decades of legal protection don't create diversity

By Liz Skinner

Fifty years after the Civil Rights Act mandated equality under the law, the ethnic diversity of the nation's financial advisory business pales in comparison to the demographics of the population. About 64% of Americans are white, according to the 2010 Census; about 92% of advisers are white, according to the Securities Industry and Financial Markets Association. Some might argue that the population of wealth managers is white because that's where the wealth resides. But even on that measure, the proportion of minority advisers lags wealth demographics. Non-white Americans hold 12% of the wealth in this country, according to a Demos analysis of Federal Reserve data. Only 8% of advisers are ethnic minorities — and in most firms it's likely less.Few of the major financial firms break down their adviser populations by ethnicity. One that has been more visible is Edward Jones, and it estimates that it has about 6% minority advisers... Read full post

Jun 27, 2014

Brokers unable to escape their past

By Mason Braswell

As Finra looks to boost awareness of its database of brokers' records, more advisers may find themselves revisiting some of their lives' more dubious moments. In addition to a broker's employment history and any customer complaints, the Financial Industry Regulatory Authority Inc.'s database is full of youthful indiscretions from the classic fraternity prank gone awry to shoplifting and drag racing. Even though they may not be investment-related, they must still be disclosed.While those indiscretions may go under the radar now, several Finra efforts, including a proposal to require brokers to include a link to the database on all online marketing materials and social media, may bring some skeletons out of the closet. There's the case of the broker who stole a cheeseburger to get into his fraternity, another who got on a train without paying and several who wound up in handcuffs trying to impress their girlfriends. (Here are 12... Read full post

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