Outside voices and views for advisers

Aug 16, 2018, 1:34 PM EST

Are 401(k) adviser aggregators the new 'wirehouses' for elite retirement plan advisers?


By Fred Barstein

The death of traditional wirehouses that's predicted periodically by industry experts is greatly exaggerated. Wirehouse advisers — those housed in the wealth management divisions of Merrill Lynch, Morgan Stanley, UBS and Wells Fargo — stay because they get support and brand recognition that independent broker-dealers and registered investment advisers cannot offer.Retirement plan advisers are different. Most B-Ds and RIAs do not understand or cater to advisers who specialize in defined-contribution plans. The Department of Labor's conflict-of-interest rule highlighted the differences between wealth and retirement plan advisers, causing some firms to either beef up support or shore up protection.But the so-called 401(k) aggregators, which are growing faster than the market overall, are attractive to elite plan advisers for several reasons. Demand for service from plan sponsors is growing while fees are declining, putting a ... Read full post

Aug 13, 2018, 10:25 AM EST

Tax-credit investigation may trip up Wells Fargo


By Stephen Gandel

As much as Wells Fargo & Co. wants the public to believe it has put its troubled past behind it, yet another legal tangle shows it still doesn't have a handle on its own questionable behavior.In the latest turn of events, the Department of Justice has started an investigation into whether Wells Fargo colluded with developers to submit low-ball bids on tax credits that support low-income housing projects, according to people close to the matter who were not authorized to discuss it publicly. The probe started in Miami but has now been referred to the corruption unit of the Department of Justice, which is looking into deals involving Wells Fargo nationwide, one of these people said.The U.S. Attorney's office in Miami convened a grand jury recently to look into the accusations against Wells Fargo, according to one of the people close to the investigation. Subpoenas have been issued to Wells Fargo, these people said, as well as to other... Read full post

Aug 13, 2018, 3:26 PM EST

Active money management isn't going to disappear


By Barry Ritholtz

There's a line of argument in the financial press that suggests that active money management is dying, a victim of high fees and underperformance versus low-cost indexing that captures average market returns.News flash: This is anything but the case. Active investing still dominates asset management around the world, and less than "18% of the global stock market is owned by index-tracking investors," according to a 2017 BlackRock Inc. analysis. That is a modest share and a clear sign that active asset management still dominates the industry.Despite my being mostly in the low-cost, passive camp, I have not been convinced yet by one of my favorite researchers, Jim Bianco, that active asset management is "no longer a viable business model."Indeed, there are many niches where active managers can prosper.The history of investing is, by definition, the history of active management, for the simple reason that indexing didn't exist until... Read full post

Aug 13, 2018, 11:01 AM EST

Bigger isn't always better when it comes to alternative investments


By Clive Slovin

In recent years, retail alternative investment products, along with the companies that package them, have come under siege from regulators, investors, the press and even some advisers. None of this is a secret, and, quite frankly, some of the criticism has been well-deserved, as we've seen offerings that were poorly designed, not well-vetted or improperly managed — or, in some cases, a combination of all three. The entire alternative product universe has been tarred with an unreasonably broad brush as a result of the misdeeds of a few bad actors. But the hard reality is that a poor reputation is hard to shed, even when it's not entirely earned. That, in part, explains why some in the retail alternative space at first welcomed the arrival of larger product sponsors that typically target the institutional market, including pension funds, family offices and private equity firms. These more esteemed brand names, the thinking went,... Read full post

Aug 9, 2018, 12:42 PM EST

Networking plays a key role in helping women advisers advance


By Dale Brown

As our members know, the Financial Services Institute has been highly engaged for many years in the crucial mission of helping women begin and develop successful careers in the financial advice industry, both as advisers and home office executives. According to our ongoing dialog with members, it's clear that awareness of this critical challenge is growing, with more firms establishing mentoring networks and dedicated educational resources to help female professionals advance in their careers.What is also clear, however, is that much work remains to be done — especially as women come to make up a greater proportion of the American investor population.(For more of FSI's views on this subject in InvestmentNews, see​ Helping women get ahead in financial services.)As more organizations become engaged in addressing this issue, new insights are emerging about various elements of the problem, and about best practices that can ... Read full post

Aug 8, 2018, 5:07 PM EST

The rise of the female financial adviser


By Joni Youngwirth

Our industry has long lamented the small percentage of female advisers. Indeed, the data show that only around 17% of all advisers are women. But has the time (finally!) come for the rise of the female financial adviser?... Read full post

Aug 7, 2018, 5:11 PM EST

FAANGs are really solo acts, not a supergroup


By Nir Kaissar

It's time for FAANG stocks to break up, at least in investors' minds.Facebook, Apple, Amazon, Netflix and Google parent Alphabet can't get away from one another. Every time one grabs the spotlight — as Apple did last week when it became the first U.S. company with a $1 trillion market value — it brings along the other four.They're alternately hailed as the hot stocks, technology's brightest lights and indispensable growth companies, and jeered as a worrisome sign of a frothy and top-heavy market. But look closely and it's no longer clear why they should be lumped together at all.Let's start with the technology moniker. Amazon is a retailer and Netflix is an entertainment company, which is why, contrary to popular perception, the Global Industry Classification Standard, or GICS, tags them as consumer discretionary companies, not tech. And as of the next GICS reclassification in September, Facebook will move from the tech... Read full post

Aug 7, 2018, 4:52 PM EST

Michael Kitces on the fate of robos, Yelp help and recent fintech competitions, products


By Michael Kitces

Welcome to the August 2018 issue of the Latest News in Financial Advisor #FinTech — where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisers and wealth management!This month's edition kicks off with the big news that, after years of warning that robo-adviser growth rates were slowing and seeing many high-profile robo-advisers pivot to become B2B solutions for advisers, some of them are beginning to outright shut down, with early robo-adviser Hedgeable (founded in 2009) withdrawing its investment adviser registration to manage portfolios as its founders move on to new blockchain endeavors, and WorthFM permanently terminating, as its related DailyWorth media site is sold (without the WorthFM robo-adviser attached) to personal finance media personality Jean Chatzky.From there, the latest highlights also include a number of... Read full post

Aug 7, 2018, 2:30 PM EST

SIFMA: Regulation Best Interest raises bar on investor protection


By Kenneth E. Bentsen Jr.

The United States' extensive history of individual investing has resulted in more options, greater competition and lower costs compared to the rest of the world. Just as the mix of financial products has evolved, with great benefit to everyday investors, our regulatory framework also must evolve to ensure those investors are best protected. The Securities and Exchange Commission's proposed Regulation Best Interest (Reg BI) is an important step in that evolution, and one that clearly raises the bar on investor protection. For almost 10 years, the financial services industry has advocated for a heightened standard of conduct for broker-dealers when dealing with retail investors across all accounts. Following the financial crisis in 2008, our industry made clear that we firmly support consistent and high standards for interacting with individual clients, including putting the client's best interest first. Most recently, in 2017, we... Read full post

Aug 7, 2018, 12:28 PM EST

5 principles that set apart top-performing advisory firms


By Nick Georgis

Independent advisory firms represent $5 trillion in assets under management, and the independent model continues to win considerable market share. According to Schwab Advisor Services' 2018 RIA Benchmarking Study, for firms with over $250 million in assets, total assets under management (AUM) grew 16.2% at the median year over year, revenue growth increased from 3.6% in 2016 to 11.9% in 2017 and, for the first time, average assets per client crossed the $2 million mark. In addition, the median firm recorded a five-year AUM compound annual growth rate of 10.9% — an enviable growth rate for any business. As remarkable as that growth is, some firms are growing at an even greater rate — the top 20% of firms have a five-year AUM CAGR of 16%, meaning they have more than doubled in size in a five-year period. The outperformance of these firms is driven by their innovative mindset and ability to effectively prioritize their... Read full post

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