Outside voices and views for advisers

Mar 27, 2015, 2:39 PM EST

Answering the questions raised by the DOL's fiduciary proposal

By Dale Brown

Since President Obama's public statement of support for the Department of Labor's fiduciary rule, the proposal rightly has been drawing a tremendous amount of attention. Considering the profound impact this rule could have on Main Street clients – potentially pricing millions of small and midsize investors out of quality, affordable financial advice – our industry has every reason to watch the developments surrounding the DOL's proposal with acute interest.While the revised rule is under review by the Office of Management and Budget, much of the discussion on the DOL's effort has been of the “what if” variety: What if the rule has not changed substantially from the 2010 version? What if the DOL's proposal conflicts with existing regulations? Until the revised rule is released for public comment, there is simply no way to know how this proposal might impact our industry, or how the debate over its future might... Read full post

Mar 26, 2015, 12:08 PM EST

Top 10 adviser marketing myths

By Craig Faulkner and Stephen Boswell

As we work with financial advisers throughout the country, we encounter inconsistencies in their thinking about marketing. Since there are few definitive resources on the “right” way to market financial services, it's easy for myths to proliferate. To clear the air, here are the most common adviser marketing myths.1. SEO will get my phone ringing.Search engine optimization, or SEO, is ideal for a lot of industries, such as apparel companies, hotels and restaurants. The financial services industry is a different animal. Your clients aren't searching for the cheapest adviser, or an adviser running a special on services. About nine out of 10 clients are typically referrals, not random Internet visitors. When it comes to something as personal as one's finances, people want to work with someone they can trust. They are much more likely to trust an adviser a friend recommends than the adviser they found by a keyword search on... Read full post

Mar 24, 2015, 2:33 PM EST

One-and-done: Does the Fed follow college basketball?

By David F. Sand

The calendar says late March, which for many means all college basketball, all the time. Investors around the country welcome the chance to focus on March Madness and stop worrying about interest rates and the next move by the Federal Reserve. Maybe it's OK to watch endless hours of basketball as long as one also remembers the phenomenon known as “one-and-done.”For folks who are not basketball fans, or who live on Mars, one-and-done refers to the relatively recent rule that requires at least one year of college before a player can declare for the National Basketball Association draft and turn pro. Some schools, including No. 1 ranked Kentucky, have become known for showcasing absurdly talented freshmen and then saying good-bye as they turn pro. And then doing so again with a fresh crop the next year. And the year after.As for the Fed, it is implied in most analysts' views of interest rates for 2015 and beyond that a rate... Read full post

Mar 18, 2015, 7:00 AM EST

4 ways to strengthen relationships with affluent women investors

By Nancy Schulman

For the past five years, we’ve conducted our Rebuilding Investor Trust studies to find what’s important to affluent investors, from their financial lives to their relationships with their advisory firms and advisers.The fourth edition of the study opened our eyes to some surprising insights. One was that while more than two-thirds of investors have seen their portfolios go up, performance for younger and female investors has lagged.What does this mean for financial institutions and advisers? There are clear opportunities to strengthen and grow relationships with today’s female investors, and here are four ways to do so. 1. Recognize the role gender preference plays in the adviser-affluent female investor relationshipToday, women have a choice and often seek out a female physician. It is not about being a better doctor, but how gender can influence style. Women are often better listeners, more reassuring and use shared ... Read full post

Mar 17, 2015, 10:47 AM EST

Reading the confusing alphabet soup of exchange-traded fund trends

By Scott Kubie

Every year, investing in exchange-traded funds gets more confusing. Last year, 178 new ETFs launched (based on their inception date as determined by Morningstar Inc.) and while the ETF universe seems to perpetually expand, the result of pushing the envelope in product development isn't necessarily always positive. Investors should be aware of these trends, while understanding that new ETFs aren't like cars or phones — there is no reason to assume the new model is better. Instead, investors should be diligent about how they use new ETFs and, if necessary, work with an expert who can help determine what is substance over hype. To help investors navigate the increasingly complex world of ETFs, here are the most promising trends and launches in 2014. EXISTING STRATEGYSome firms are taking an existing strategy and launching an ETF with a very similar approach. Often supported by large financial planning groups, these firms create... Read full post

Mar 17, 2015, 8:48 AM EST

Harnessing the power of tax-exempt income via municipal bonds

By John Loffredo

As income tax rates have risen, so has the value of the tax exemption that accompanies municipal bonds. As a result, more investors are looking to take advantage. At the same time, the municipal bond landscape has changed significantly in the past several years, making the case for an active, research-driven approach to investing.After many years of unchanged tax rates, many U.S. taxpayers have felt the dramatic impact of higher taxes in the last two years. For earners in the top income bracket, the 2013 adjustment in federal tax raised the marginal rate to 39.6% from 35%. The Medicare surcharge (which doesn't apply to municipal bond investment income) added another 3.8%, for an overall total of 43.4%. Proportionally, that's an increase of almost 24% in marginal tax rates for high earners. Add to this state and city taxes, and some taxpayers are facing a marginal rate of more than 50 cents in the dollar. (More: For investors seeing... Read full post

Mar 17, 2015, 12:01 AM EST

The long/short case for investors

By Juliana Hadas and Andrea Pompili

The task of balancing equity risk with the goal of achieving meaningful returns is top-of-mind for many investors and advisers. Long/short equity strategies, which allow managers to assume both long and short positions and to vary their exposure to the equity market over market cycles, may fill this role. The introduction of liquid alternative funds allows investors access to long/short strategies in a mutual fund format. There are four key reasons to consider an allocation to long/short strategies:1. Unlock different sources of alpha2. Reduce equity beta risk3. Improve return/risk profile of an equity allocation 4. Access through “liquid alternative” funds that offer daily liquidity, lower fees and more transparency. (More: Reading between the lines of liquid alternatives fund expense ratios)UNLOCK DIFFERENT SOURCES OF ALPHAThe ability to engage in short-selling increases the opportunity to generate alpha from security... Read full post

Mar 16, 2015, 9:57 PM EST

The robo-fication of RIA deal making

By Kathleen Asack and Mary Ann Buchanan

The wealth management industry is awash in robo hype. The mainstream introduction of online, automated investment services, known as robo-advisers, has the financial advisory business riveted. Headlines, shop-talk and strategic planning sessions are dominated by the human-versus-technology debate for current and future clients.We may never anoint a clear winner. Think back to when the automated teller machine was introduced. Many of the common banking transactions performed by bank tellers were completely replaced by a computer. Despite that technological innovation, human bank tellers still exist today because the human element matters. Real professionals address dynamic, complex and emotional situations in a way that computers cannot – at least not yet.Robo-advisers fulfill a market need for an efficient, online, total investment experience, and at a competitive price. They have prompted many financial advisers to question, or... Read full post

Mar 16, 2015, 12:36 PM EST

Robo-adviser frenzy: Apocalypse or rerun?

By Roger Ochs

In the independent financial advice industry, as in many other sectors, the rise of new technologies often leads to fevered discussions that the “old models” of doing business are about to become obsolete. With the rapid proliferation of so-called robo-advisers, there has been no shortage of commentators suggesting that algorithm-driven, online applications are about to turn human advisory professionals into walking, talking 8-track tapes.From my perspective, this scenario is not entirely new. Tax advisers experienced similar anxiety during the early days of do-it-yourself tax preparation applications. With that experience for reference, the oncoming disruption from the rise of robo-advisers may turn out to be not nearly as widespread or pronounced as the doomsday predictions would suggest.(More: Robo rumpus gets vicious)The robo-adviser trend signals a significant development in the way financial advice is delivered and... Read full post

Mar 13, 2015, 7:10 AM EST

How firms document risk management and suitability practices needs to change

By Phillip Wilson

Having worked as an institutional financial adviser as well as a direct service provider for the past 50 years, I have seen our space adapt and grow in countless ways. As an industry, we have met new client demands, evolved along with technological advancements and adapted to an expanding array of financial products. That said, I think regulators' recent work to standardize our fiduciary code has been one of the most interesting developments to watch. With every new regulation passed, clarification provided and upcoming "sweep" warning issued, our industry is left to ask, how do we document our fiduciary duty? The heart of suitabilityThe SEC-approved Finra Rule 2111 requires a firm or associated person to “have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the ... Read full post

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