Outside voices and views for advisers

Apr 22, 2014, 12:01 AM EST

The bond party is over

By J. Brent Burns and Stephen J. Huxley

The rise in interest rates since the historic low in 2012 has many bond fund investors running for cover, much to the consternation of Pacific Investment Management Co.'s chief executive Bill Gross. And if one looks at rates over the long term, run they should!No one can forecast where rates will go over the next few years but a cursory examination of the chart below suggests it is unlikely they will follow the pattern they have followed over the past 33 years, when they reached their peak in 1981. This chart provides a long-term perspective on 10-year Treasury yields back to 1800. The dramatic drop that is quite evident in the chart has made many bond fund managers rich and lulled many investors into thinking total returns on bonds are almost as good as equity returns.But the party is over.The most important take away from this chart is that bond yields are beginning to move back toward familiar territory. The next most important take ... Read full post

Apr 18, 2014, 1:29 PM EST

The three levels of community involvement and how they can pay off

By Scott T. Hanson

About two decades ago, my business partner and I were having a discussion about the growth of our company when the conversation drifted to the volunteer work we'd been doing. At some point, we both came to the realization that our involvement with nonprofits had actually added great value to our firm.Both of us had been volunteering since high school, so the light that went on above our heads that day was in no way cynical. My opinion is that the purity of an act need not be diminished simply because it benefits the principals in more than one way.(See also: How financial advisers should focus their core values)That being said, as part of an overall business and life plan, you need to partake in community involvement because it's quite literally the perfect avocation. It's great for the charity and the people it supports, it's good for the community at large, it's great for you personally, and through fundraising and recruitment,... Read full post

Apr 17, 2014, 3:42 PM EST

Stress and health: A case study for advisers

By Jack Singer

Robert Sapolsky, author of Why Zebras Don't Get Ulcers, puts the relationship between stress and health into clear perspective: “A critical shift in medicine has been the recognition that many of the damaging diseases of slow accumulation can be either caused by or made worse by stress.”A FINANCIAL ADVISER CASE STUDYSteven decided to take educational courses to prepare himself for a career in the financial advice business. He obtained the required licenses and was excited about the possibility of providing a wonderful life for his family. He soon became completely devoted to his advising career, to the detriment of his family, but it was hard to slow down with the money pouring in. By now, Steve had many stressors (common to the advice profession) pouring in on him. Steve:• was burning the candle at both ends;• got out of bed exhausted each morning, feeling like he was heading off to battle;• was reluctant... Read full post

Apr 16, 2014, 5:19 PM EST

Quantity does not equal quality: Expanding 'disclosure events' on BrokerCheck a bad idea

By S. Lawrence Polk

The Financial Industry Regulatory Authority Inc.'s Central Registration Depository makes publicly available brokers' “disclosure events” — including descriptions of most investment-related customer complaints — through its free, Web-based BrokerCheck service.The intention is admirable. By disseminating such information, BrokerCheck can provide useful information to the investing public. The problem, however, lies in what is considered a “disclosure event.”(More: Under Finra proposal, brokerages will be forced to conduct background checks on new brokers)Under the current version of Form U4, brokers and their firms are required to disclose any written customer complaint, no matter how frivolous, as long as it somehow relates to a sales practice issue, even if the broker is not named in the complaint. The broker that is the subject of the complaint has it reported on his or her CRD and can remove the... Read full post

Apr 16, 2014, 3:24 PM EST

Time to sell stocks?

By Paul Schatz

With major indexes down 4% to 8%, I am once again getting asked whether the bull market has ended and a multiyear decline is unfolding.I don't think so. The New York Stock Exchange's cumulative advance/decline line (a cumulative measure of net stocks advancing) recently scored an all-time high. When bull markets end, we typically see this indicator peak months, quarters or even years before the Dow Jones Industrial Average and the S&P 500. The same can be said of the high-yield bond sector, which also just struck all-time highs. Bear markets are usually associated with restrictive monetary conditions and excessive valuations. It's very hard to argue we are seeing those right now.This decline continues to look like a pullback, meaning less than 10% in the Dow and S&P 500. It will end when the weaker bulls give up hope and throw in the towel, something that has not happened yet, but may be close. Sometimes that takes a few weeks, other... Read full post

Apr 10, 2014, 3:32 PM EST

The power of purpose: Benefits of goals-based investing

By Daniel Crosby

Much of behavioral finance's departure from traditional financial models centers around the respective approaches' vision of what constitutes “rational” behavior. Traditional approaches take a simple, objective approach — rational behavior is all about optimizing returns. Through a behavioral lens, rationality takes on a more subjective lens and could be construed as making decisions consistent with personal financial goals. The behavioral approach is constructivist in that the client sets the parameters for rationality through the articulation of personal goals. But by drawing out the financial goals of their clients, advisers do more than simply highlight a finish line, they actually catalyze a positive behavioral chain reaction.READ MORE about how goals-based planning is taking flight Consider the followings ways in which having deeper conversations about client goals might make your job easier and improve your... Read full post

Apr 9, 2014, 5:56 PM EST

Coming soon (thanks to the SEC): More adviser review sites

By Michael Kitces

Last week, the SEC issued new guidance on social media and the Rule 206(4)-1 "Testimonials" rule. While the guidance did not provide much clarity on ongoing sticky issues such as whether LinkedIn "endorsements" constitute testimonials, it did provide important clarification to one key area: third-party adviser review sites. Specifically, the SEC affirmed that as long as the adviser has no ability to change or alter the public commentary and that all of it will appear (good reviews and bad), then advisers do not have to worry about whether clients posting reviews on such sites will trigger a violation of the testimonial rule. Simply put, as long as the review site and the reviews themselves are beyond the adviser's control, the adviser won't be held accountable for any positive reviews (i.e., testimonials) that appear; in fact, the SEC even declared that advisers could cite the average score of the reviews (e.g., "Joe Smith Advisory... Read full post

Apr 9, 2014, 12:40 PM EST

Three big trends top advisers need to focus on now

By Michael Nathanson and Adam Birenbaum

Forward-thinking independent advisory firms have no shortage of substantive industry trends on which to focus in 2014 — from increasing uncertainties in the regulatory environment to the unyielding pace of technological change to new outsourcing opportunities and even new cyber and competitive threats. For smart advisers, there's a veritable smorgasbord of challenges and opportunities awaiting them, seemingly custom designed either to keep them up at night or get them up in the morning, depending on their perspective.Emerging from this expanded list, however, are three specific trends that we see gaining the most traction and creating the greatest potential and impact in the near term: • Increased pressure for consolidation across the industry; • Significantly more competitive and complex personnel;• The continued evolution of “advisory practices” becoming true “advisory businesses”Let's... Read full post

Apr 8, 2014, 9:22 AM EST

Answering the questions high-frequency trading raises

By Brian Schreiner

There has been a media firestorm over high-frequency trading since Michael Lewis appeared on “60 Minutes” on March 30 to discuss his new book "Flash Boys". But HFT is nothing new. It has been around since at least 1999 when stock exchanges became fully electronic. HFT is a complex and nuanced issue, which requires more than a cursory overview to gain an informed opinion. HFT is a type of algorithmic trading executed by sophisticated programs run by high-powered computers. These systems automatically buy and sell securities on electronic exchanges where the orders are automatically filled. HFT is computers trading with computers — very quickly.High-frequency traders have discovered ways to measure (buy/sell) order flow and move faster than many other participants, allowing them to beat other traders to the punch and thus receive better prices for the securities they buy and sell. They aim to capture pennies or even... Read full post

Apr 4, 2014, 2:57 PM EST

Why compliance is the "Green Eggs and Ham" of financial services

By April Rudin

Compliance is not a word most people like. It conjures up images of endless boxes that must be checked, raps on the knuckles, stern-eyed regulators, red tape, pages and pages of documents in tiny, incomprehensible print. When it comes to compliance for social media in the wealth management business, it's certainly no different. In fact, there is perhaps no topic that generates more angst among wealth managers and their compliance departments. For a time, the angst was so great that some compliance officers simply opted to opt out: No use of social media, no problem. It was banned at many firms. But then social media got too big, and too important, to ignore. Cue general freakout.Here's the thing. There really is no need for a freakout. Last week, as I stood in a hotel lobby listening to yet another wealth management executive sweat over how to manage all this free-wheeling social-media stuff, Dr. Seuss popped into my head. Remember... Read full post

Earlier Posts »

  @IN Wire

Apr 24 01:08PM
Information of the macroeconomic kind driving investment strategy: http://t.co/k0L4jP9rpH
Apr 24 01:08PM
Women CFPs satisfied with careers but bias remains rampant: http://t.co/csf75wKnYu

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