Outside voices and views for advisers

Nov 24, 2015, 3:08 PM EST

Female breadwinners need advisers' help talking to their partners about money

By Kathleen Burns Kingsbury

A new study conducted by the Family Wealth Advisory Council found that more than 70% of female breadwinners want their advisers to help them communicate with their partners as part of their wealth management engagement. The reason is that being a woman and the main earner in the family can make life complicated. Simple financial matters, ranging from who picks up the check at dinner to whose career aspirations come first, are called into question. (More: Check out IN's inaugural Women to Watch list)Historically, couples would rely on gender roles to find answers, but modern couples make up the rules as they go along. Having a safe place to discuss these matters is attractive to these women who often don't know where to turn for help.As a female-friendly adviser, this is an important service to provide. It will differentiate you from the competition and solidify the relationship with both partners. To ensure success, consider these... Read full post

Nov 24, 2015, 9:29 AM EST

Alternative investments combined with fee-based services are changing the investing world

By Michael Spellacy

The growing popularity of alternative investments is having a profound impact on investment firms and the growing practice of fee-based advisory services. And it's not just alternative specialists who are affected, but the entire asset-management landscape, from traditional wirehouses to private banks and platform providers. Firms would be wise to embrace a fuller mix of services to satisfy today's investors and differentiate themselves from other asset-management firms.The growing interest in alternatives is characterized by the demand for a more flexible asset allocation, with funds apportioned among various instrument types based on an ever-changing investment environment. And why not? After all, investors increasingly desire diversification and investment options suitable to various long-term goals and risk tolerance.But the issue is not simply flexibility, it’s also performance. Yes, asset managers and their clients want to... Read full post

Nov 23, 2015, 4:54 PM EST

Four questions hybrid advisers should ask their asset management platform

By Michael C. Bryan

The turnkey asset management landscape continues to undergo seismic shifts following recent news that one of the industry's major players would exit the business. The move left other so-called TAMPs scrambling, eager to capitalize on this unforeseen opportunity to fill the vacuum left behind and increase their share of the market.The benefits of TAMPs for advisers, and the independent broker-dealers that make them available, include research, client proposals, account analytics, investment management options, operational conveniences, compliance tools and performance reporting. However, offering one, two or even multiple TAMP platforms isn't all broker-dealers should provide true independent, hybrid advisers.As the landscape changes, all independent advisers — especially hybrid advisers — should revisit what kind of asset management services they really need. Do they have partners who ensure maximum choice and flexibility... Read full post

Nov 23, 2015, 6:30 PM EST

How to encourage the rise of senior women in financial advice

By Hollie Fagan

For all the advances that women have made in financial services, a large gender gap persists at the top of most advisory firms — an unsettling trend in an industry dependent on the strength of its relationships with a diverse set of clients, an increasing number of whom are women. As InvestmentNews Research's advisory benchmarking data recently demonstrated, female advisers are still struggling to attain senior positions: Only 19% of those with partner-level positions or ownership titles are women.This gap in senior leadership represents a huge missed opportunity for female professionals and advisory firms alike. The advisory profession can be extremely well suited to women in finance who seek a stimulating relationship-based position. And advisory firms that want to compete in today's complex and variegated financial marketplace urgently need a talent pool that reflects the diversity of their clients — women especially.... Read full post

Nov 20, 2015, 10:19 PM EST

Advice for advisers: Always think about inflation

By Rusty Vanneman

Inflation — and how to outpace it — should always be a top concern for investors. Over the last several years though, it really hasn't. Inflation, as defined by the Consumer Price Index, has been falling for about four years and has now essentially flat-lined, with 0% year-over-year changes. Other inflation measures, such as the Producer Price Index and import prices, have recently had negative year-over-year changes, and the Personal Consumption Expenditures Price Index (PCE) has lagged Federal Reserve targets for more than three years. No wonder investors aren't all that worried. Nonetheless, advisers and investors should remain vigilant. Investing really isn't about beating benchmarks so much as meeting long-term objectives and liabilities. For long-term investing to be successful, long-term returns need to outpace inflation. For example, what good is getting a 4% return when inflation is 5% (which would be a -1% real... Read full post

Nov 19, 2015, 11:42 PM EST

How investors get yield wrong and how dangerous that can be

By Phill Rogerson

The way many retired investors think about the yield of their investment portfolios is complicated and puzzling. Too often, they blur the distinction between yield as an investment characteristic and yield as a source of income for retirement spending. My conversations with hundreds of financial advisers and end investors over the past few years have taught me that there is a peculiar psychology of yield. Unfortunately, this psychology can be dangerous when it overshadows sound investment thinking.What creates the psychology of yield?One cause of this curious perspective on yield is the old adage: “Never invade principal.” The natural fear of running out of money in old age demands a reliable solution. If you only spend the income from a portfolio, you'll leave your nest egg intact and never run out of money in old age, right?This may have been true in the good old days when investors stuck to CDs, conservative bonds or a... Read full post

Nov 18, 2015, 1:37 PM EST

How ETFs can help mitigate the impact of market bubbles

By James Norman

Financial markets suffer from irrationality. In the last 15 years, policy makers such as Alan Greenspan and Nobel Prize winners such as Robert Shiller and Paul Samuelson have noted “irrational exuberance” and “macro inefficiencies” as drivers of booms and busts. One need look no further than the recent Chinese equity market bubble for a reminder. All this stems from the simple fact that financial markets are the creation of – and subject to the behavior of – human beings. They reflect the full range of our dreams, aspirations, greed, biases and fears, many of which drive us as a whole to irrational behavior.This is not to say rational factors have no place. I am a senior investment professional at a quantitatively oriented investment shop, and I cannot imagine a world in which we cannot try to take advantage of market inefficiencies and also address their risks. History shows that irrational... Read full post

Nov 16, 2015, 6:53 AM EST

China equity exposure, already big in some funds, expected to increase in 2016

By Todd Rosenbluth

Shareholders of large emerging-markets exchange-traded funds and mutual funds already have significant exposure to China, but the weightings will likely rise in 2016.MSCI announced last week that it would include nearly two-dozen foreign listed securities to its global indexes. In particular, China's Alibaba Group (BABA) and Baidu (BIDU), which trade in the U.S. only as American depositary receipts and are among the largest companies in the world, would be added to the MSCI emerging markers indexes in two stages; the first round of investment will take place at the end of this month and the second stage would be in May 2016. Both iShares Core MSCI Emerging Markets (IEMG) and iShares MSCI Emerging Markets (EEM) would be directly affected, and we think a variety of active mutual funds that use an MSCI index as a benchmark would be indirectly affected. (More: Yellen, yuan and yields: Global economies are more closely linked than... Read full post

Nov 13, 2015, 4:08 PM EST

Planning for the millennial market disruption

By Michael Conway

If you somehow haven't heard, millennials (generally defined as those born from the 1980s to 2000s) have begun to dominate every part of American life, including our culture, our politics and our economy. This trend should soon accelerate, as millennials will represent the largest segment of the adult population in the U.S. by the end of the decade.While this dramatic shift in demographics will continue to disrupt industries, many financial advisers dismiss or disregard these coming risks. Compared with previous generations, millennials have vastly different views about money, social responsibility and what it means to be successful. Yet planning practices continue to reflect the ideologies, needs and preferences of an older generation. Smart advisers will seize the opportunity to cut ties with routine, cater to a new audience and build younger, more sustainable books of business.CULTURE OF CONTINUATIONFirms that most resist change... Read full post

Nov 12, 2015, 2:49 PM EST

Want high-yield exposure? Forget ETFs

By Gershon Distenfeld

If you have a short-term view on high yield, an exchange-traded fund might be right for you. But if you want long-term exposure, ETFs are a terrible choice.The numbers speak for themselves. Over the first nine months of the year, the two largest ETFs — HYG and JNK — have sharply underperformed the average active manager, not to mention their own benchmarks.ETFs' longer-term performance falls short too. In fact, not only have active managers outpaced ETFs over the long run, they've done it with lower volatility, as measured by risk-adjusted returns. The Sharpe ratio, which measures return per unit of risk, was 0.43 for JNK and 0.48 for HYG between 2008 and September of this year. For the top 20% of active high-yield managers, it was 0.69. From the perspectives of both absolute return and risk versus return, high-yield ETFs are a bad long-term investment.STILL USEFULDoes this mean ETFs serve no useful purpose? Of course not.... Read full post

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