Outside voices and views for advisers

Apr 19, 2015, 12:01 AM EST

Real liquidity: Why investors care about water

By Julie Fox Gorte

One of the great teaching tools in undergraduate economics is the Diamond-Water Paradox, which challenges us to think through why water, a necessity of life, is almost free, while diamonds, which pretty much everyone can live without, are expensive. The deus ex machina here is scarcity: Diamonds are scarce, and water isn't. Rewind the tape: it wasn't.That's changing, and fast.Most people understand that it takes water to make food. Morgan Stanley recently analyzed water risks in food production and came to the sobering conclusion that at least one-third of global production of three major food commodities — wheat, corn and soybeans — occurs in areas where water scarcity is high or extremely high. If drought affects enough of the range, food prices could suffer, along with the fortunes of agriculture companies. For instance, both ADM and Bunge suffered from lethargic earnings during the Midwest's drought in 2012. Today's... Read full post

Apr 17, 2015, 3:10 PM EST

Help clients create contingency plans in case of divorce

By Frank Jaffe

They were considered the perfect match — both professionally and personally. Over the years, the couple built a successful kosher bakery. In recent years, two of their children started working at the company with the intention of taking it over once their parents retired. What no one anticipated was that the couple, after 30 years of marriage and nearly as many years co-owning the bakery, would decide to divorce.Now what? When my clients dropped this bombshell on me recently, not only was I personally taken by surprise, but my financial planning skills were put to the test. I advise clients to put together a business contingency plan for death and disability, but now a new set of variables was thrown into the mix. Going forward, would the ex-husband and wife be able to work together and draw salaries from the business? Starting a new business or career in late middle age would not be easy, especially without the support of a... Read full post

Apr 17, 2015, 3:09 PM EST

Increase your conference attendee ROI with one incredibly simple trick

By Brad Johnson

If you're a successful financial adviser, odds are good you go to your share of industry conferences each year. You go because you know that at every conference, you're going to get great ideas to grow and improve your business. But the truth is, if you are like most conference attendees, many of those game-changing ideas never get put into action.Here's an approach that helps you cut through the clutter of pages of notes to make sure the most important ideas get implemented every time.It goes something like this: You attend a conference and scribble down dozens of great ideas in your notebook. When you return home, you're excited and eager to start putting these new ideas to work. You wake up the next morning, drive down to your office, and settle in for a productive day.• Except you've got client phone calls to return, emails to answer.• A transfer got messed up while you were gone and now you've got to fix it.• Your... Read full post

Apr 16, 2015, 5:30 PM EST

The (currency) war is on

By Brian Andrew

One of the highlights in the first half of 2015 will involve currency valuations across global markets and how the developed economies' efforts to control the value of their currency affect markets.The U.S. dollar is known as the world's safe-haven currency. Whenever a crisis hits an emerging market, governments and citizens alike turn to the dollar as a safe store of value. We know that in many markets, the underground economy trades in dollars regardless of whatever local currency the aboveground economy runs on. This safe-haven status is achieved not only because the United States has one of the largest economies but because, despite its expansion and contractions, the U.S. economy is relatively stable. Our trade rules are well-established. In many countries, the currency value is “pegged” to the value of the dollar.(More: The surging dollar could crush unhedged global mutual funds)Remember that the value of a country's... Read full post

Apr 15, 2015, 10:29 AM EST

Rethinking how you build clients' equity portfolios

By Archan Basu and Dirk Hofschire

Advisers have traditionally relied on size and style to build domestic equity portfolios, but it's becoming increasingly difficult to justify this approach. In fact, the widespread adoption of the size and style approach may be a key factor to why parts of the stock market have failed to perform as expected. When a large majority of investors adopt the same approach, they quickly erase the opportunity that existed to begin with. To build a better equity portfolio, it pays to think cyclically, and to revisit sector investing.To explain why, go back to the basics: stocks follow earnings over the long term. More specifically, even though stock markets can be volatile and even decline in response to political, regulatory or economic developments, both earnings and stock prices have trended upward in a secular fashion. (More: Being a stock contrarian paid off in the first quarter)While there may be a long-term upward trend, each sector has... Read full post

Apr 15, 2015, 4:00 PM EST

How to build better relationships with custodians, B-Ds and tech vendors

By Greg Friedman

Any adviser will tell you that client relationships are at the heart of our industry. We spend the bulk of our time and energy staying in touch with clients and fostering a healthy dialogue so we can help manage their evolving financial needs. However, one of the relationships we often overlook in this business is the one our own firms have with vendors and custodians. In the same way we know what our clients expect from us, do our partners know what we expect from them? One of the initiatives Private Ocean has undertaken recently is to build better relationships with our custodial partners, broker-dealers, and technology vendors. Our goal is to keep the communication lines open and have a channel to give feedback on tools, features and other benefits that could positively impact not only the firm but our clients. What advisers don't realize is that these firms want you to be satisfied and appreciate your input. Here are just two steps ... Read full post

Apr 15, 2015, 3:17 PM EST

Tony Robbins' 4 pieces of advice for financial advisers

By Steve Sanduski

Shortly into my one-hour podcast conversation with Tony Robbins last week it was clear: this man is connected!Mr. Robbins mentioned he spoke to Ray Dalio, head of the world's largest hedge fund, just hours before my conversation. A few days earlier, he interviewed John Paulson, the hedgie best known for making $4 billion in one year by shorting subprime debt, and then topping it with a $5 billion score three years later.Former Federal Reserve chairman Alan Greenspan was also on Mr. Robbins' schedule recently, as they had a private meeting and discussed, among other things, the scary state of the world today. (Related read: Tony Robbins wants to be the new voice for independent advisers)A master questioner, Mr. Robbins asked Mr. Greenspan, “If you were head of the Fed today, what would you do?” Mr. Greenspan responded, “I would resign.”Who knew Mr. Greenspan had a sense of humor?Head to HeadWhile some advisers... Read full post

Apr 15, 2015, 3:03 PM EST

DOL fiduciary rule fails by only focusing on fees and expenses

By Don Trone

About 10 years ago, one of the law firms involved with some of the first class-action lawsuits against 401(k) plan sponsors and service providers met with me to see if I would consider serving as an expert witness. I asked the legal team, why are you only focusing on fees and expenses? One of the attorneys responded: Because it is the easiest fiduciary breach to argue in front of a jury. I declined to serve as a witness.I think the Department of Labor and the Obama administration's economic advisers have taken a similar approach. Reduce the fiduciary debate to a single sound bite that will have the most emotional impact on people: “The DOL is here to save you from bad advisers taking money out of your retirement savings.”If that is the DOL's strategy, then shame on them. Fiduciary responsibility is not just about fees and expenses. In fact, when you consider a procedurally prudent investment process, the management of fees... Read full post

Apr 14, 2015, 3:42 PM EST

Should you go it alone or join a corporate RIA?

By Jeffrey Rosenthal

Within the hybrid adviser space, much of the discussion in recent years has been centered on the importance of independent broker-dealers, or IBDs, remaining business model agnostic. Some hybrid advisers – financial advisers who provide both fee- and commission-based services – see the benefits of having their own independent registered investment adviser firm while doing their commission-based business through a strategic broker-dealer relationship. Other hybrid advisers choose to do business as an investment advisory representative, or IAR under their broker-dealer's corporate RIA.Whatever the case, IBDs must remain committed to supporting the business model that is unique to the adviser, since ultimately, the adviser knows what works optimally for his business and the clients they serve. Something that often gets overlooked in this discussion, however, is how the business model can impact the adviser's succession... Read full post

Apr 14, 2015, 3:39 PM EST

Steps to maximize the power of Twitter for your advice firm

By Kristin Andree

With a large majority of advisers active on LinkedIn, it's no wonder that platform has become, quite possibly, the best prospecting tool around. Yet with more firms loosening the reins and allowing their advisers to become more active on Twitter, and with the large amount of registered investment advisers already active on the platform, it's time to look at how you can best leverage Twitter in your marketing and prospecting efforts. Here are steps to take to get started:Choose the right Twitter handle. It is important when setting up your Twitter account that you choose the right handle. Using your name or company name is typically the best route, as is evidenced by the majority of advisers on Brightscope's list of the “Top 100 Most Social Financial Advisors.” However, some advisers opt to choose a handle that is a bit more catchy or memorable (such as Josh Brown's @ReformedBroker).Once you select your Twitter handle, be... Read full post

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