Outside voices and views for advisers

Sep 4, 2015, 1:16 PM EST

Hire a PR firm or be a do-it-yourselfer? Questions advisers should ask

By Chris Sullivan

The financial media is becoming ever more fragmented, with new platforms and titles offering opportunities for advisers to have their voices heard. Inevitably, public relations and media outreach come up as firms craft their marketing plans, leading to the question: “Do I need a PR firm?”The answer is a resounding “maybe.” Here are questions you need to answer that will help you figure out whether the services of a PR firm are a good investment for you or whether a DIY approach might help you achieve your goals. Who am I trying to reach?Once you've determined your key audience(s), building a focused PR plan becomes much simpler. Today's fragmented media may offer more total opportunity but it also comes with a dramatically amplified noise factor. Know “who” you want to reach and it becomes easier to figure out “how.” What am I trying to accomplish?The end goal of any PR campaign is... Read full post

Sep 4, 2015, 12:17 PM EST

Put your bond manager to the liquidity test

By Douglas J. Peebles and Ashish Shah

Bond market liquidity is drying up — something every investor and financial adviser should take seriously. But liquidity risk can also provide an additional source of returns. The trick is knowing how to manage it.This is why picking the right manager is critical. Before entrusting money to anyone, investors or their advisers should make sure prospective managers understand why liquidity is evaporating and have an investment process that can effectively manage this growing risk. In our view, settling for anything less will make it harder to protect your portfolio from the damage less liquid markets can cause — and to seize the opportunities they offer.Here are some questions advisers should ask:1) To what do you attribute the decline in liquidity? For most people, an asset is liquid if it can be bought or sold quickly without significantly affecting its price — something that's become more difficult lately. Many... Read full post

Sep 3, 2015, 6:50 AM EST

Post-crash behavior will lead to Dow 20,000

By Paul Schatz

The day before Flash Crash II last week, I opined that the bottoming process could begin as early as last week. From my seat, it did. One week removed from the mini-crash or crashette and stocks took it hard on the chin again. China was blamed, but that's only a cover story and coincidence. However, unlike Aug. 24, we did not see another Flash Crash. There was no panic. Selling was fairly orderly, which can be viewed as a good thing and a not so good thing. Volume was on the light side. Market internals were abhorrent.In short, stocks are shaking out from mini-crash-type action according to history. Of all the declines since the bull market launched in 2009, including the 20% one in 2011, the current correction gives the bears the most ammunition to claim that a new bear market has started. But before you jump to conclusions, read on.BULL NOT DEADI remain steadfast that while the bull market is old, wrinkly and not exactly the pillar... Read full post

Sep 2, 2015, 11:59 AM EST

Global inflation could derail Fed's plan to bring rates back to normal

By Ion Dan

When the Cold War ended, the U.S. economy, along with those of many other countries, became more open. The share of exports and imports in the gross domestic product — a proxy for economic openness — indicated an acceleration in openness in the early 2000s. Around the same time, inflation rates around the world converged. ENTER CHINA China's economic evolution in recent decades is relevant both to increasing globalization and its impact on inflation around the world. The divergence in Chinese inflation from that of the rest of the world in the mid-1990s reflected the Chinese economy's opening up after the Cold War, as well as the local imbalance between pent-up demand and available goods, especially food items. During the 1997 Asian crisis, the shock to aggregate demand dropped inflation to the other extreme. Since the crisis, however, China has seen explosive economic growth driven by exports and infrastructure investments.... Read full post

Sep 1, 2015, 2:56 PM EST

Investors thinking about retirement should understand BDCs

By Michael Kelly

With 77 million baby boomers now in or preparing for retirement, many Americans' investment portfolios are undergoing a significant shift. In the face of longer life expectancies, they are seeking to increase investment income and protect their nest eggs in the years to come — no small feat, given what the market has to offer.Today, traditional fixed-income holdings, such as bond funds, may not provide enough meaningful income on their own. Historically low interest rates have limited the yields available to investors. The imminent rise in short-term rates repeatedly signaled by the Federal Reserve may help. However, rate increases may diminish the value of fixed-rate holdings in the near term. Additionally, persistent market volatility has resulted in significant swings in the performance of fixed-income assets in portfolios.These forces have led investors to seek out more stable, noncorrelated investment strategies that can... Read full post

Aug 31, 2015, 6:53 AM EST

Dynasty trust planning: a tax-efficient way to manage wealthy families' assets

By Michelle Canerday and Robert Gerber

Wealthy families have been taking advantage of an extremely beneficial estate-planning tool that advisers should be aware of. It allows individuals to pass millions — and in some cases billions — of dollars to children, grandchildren and future generations without ever having to pay estate, gift or generation-skipping transfer taxes on such assets, so long as they remain in the dynasty trust. This strategy is often referred to dynasty trust planning.DYNASTY TRUST PLANNING IN A NUTSHELLDynasty trust planning is an extremely powerful estate-planning tool whereby a parent or grandparent establishes a trust for the benefit of his or her children and grandchildren, then transfers assets to it, where they can continue to grow indefinitely for future generations without being subject to gift, estate or GST taxes. Dynasty trust planning not only provides significant tax benefits, but it also shields the assets from creditors and... Read full post

Aug 31, 2015, 6:49 AM EST

The makeup of independent advisory firms has fundamentally changed

By Philip Palaveev and Brandon Odell

The following is an excerpt from the Executive Summary of the 2015 InvestmentNews Compensation & Staffing Study, which will publish next Monday.Growth has changed the nature of the independent advisory firm. Adviser ownership used to define independence; however, today there are more employee advisers in independent firms than owner-advisers. This change amplifies the importance of career tracks and growing talent. It also poses difficult questions to the culture of the firm and its competitive positioning. With the influx of employee advisers, what does “independent” mean?And as much as growth has created opportunity and brought a wave of hires, it does not seem to have affected compensation for most positions in the last two years. Salaries for employee advisers and other key positions remain virtually unchanged.Employee Advisers Outnumber OwnersThe dramatic increase seen over the past five years in owner income can be... Read full post

Aug 28, 2015, 4:03 PM EST

Predicting how robo-advisers will evolve based on the history of TAMPs

By Gary Manguso

There's no question robo-advisers are trending. The big guns are in, and a new entrant seems to launch monthly. The question for advisers to ask is, what does the future hold for robos? Having worked for 20 years in the TAMP industry, I see similarities between our experience with turnkey asset management platforms and the current robo evolution. Twenty years ago, I joined forces with a group of financial professionals, and we began helping advisers help clients. We focused on what we believed to be the most critical part of portfolio construction — asset allocation. Pivoting off the Brinson study, we began to link the independent adviser with investment committees from top-tier firms. Sound familiar? It should, because robo offerings like Betterment and Charles Schwab & Co.'s Schwab Intelligent Portfolios share the same emphasis on modeling and academic prowess. In fact, Schwab bases their asset allocation theory around the... Read full post

Aug 28, 2015, 2:57 PM EST

Michael Kitces' weekend reading for financial advisers

By Michael Kitces

This week's edition kicks off with the big news that the world's largest asset manager, BlackRock, decided to buy the #3 robo-adviser FutureAdvisor for $150M, with plans to pivot the company from its current direct-to-consumer focus to instead become a robo-adviser-for-advisers solution for BlackRock's institutional partners (i.e., banks, broker-dealers, insurance companies, and perhaps RIAs).From there, we have a few articles on this week's market turmoil, including a discussion of the unusual market volatility in ETFs that occurred on Monday morning (when many ETFs traded at materially different prices than their intrinsic NAV), a second article from ETF.com looking at the details of how an "ETF flash crash" occurs (important to understand if market volatility picks up again soon!), and a separate article discussing the unrelated but also problematic technology outage this week at BNY Mellon that left hundreds of mutual funds and... Read full post

Aug 28, 2015, 2:17 PM EST

Hurricane Katrina: 7 lessons advisers can learn from the Coast Guard's response

By Steve Branham

As an investment adviser, what lessons can you possibly learn from the U.S. Coast Guard's response to Hurricane Katrina? Saturday marks the tenth anniversary of Hurricane Katrina, which slammed into New Orleans on Aug. 29, 2005. The Coast Guard rescued 24,500 people during the first nine days of the crisis, and was one of the few government agencies to put up a coordinated, aggressive and successful response. Following the crisis, Congress held hearings to determine why the Coast Guard got it right, and why most other first responders failed.Here are 7 lessons advisers can learn from the Coast Guard's response to Katrina:1. Simple is preferable to complex when dealing in a dynamic, ever-changing environment. Most clients prefer simple answers and solutions. Their confidence in you will be directly correlated to your ability to provide simple, intuitive solutions and suggestions. 2. Under duress, you will fall to the level to which you ... Read full post

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