InvestmentNews INsider

The INsiderblog

InvestmentNews reporters offer their take on intriguing or controversial articles from around the web.

Oct 15, 2018

What Elon Musk can teach advisers about social media

By Ryan W. Neal

Social media is hard, and success requires patience, dedication and a lot of work. There's no definite "right way" to use Facebook, Twitter, LinkedIn or any other platform. There's no handbook for advisers on how to attract a million followers on Twitter like Josh Brown, or grow a blog to the prominence of Michael Kitces' Nerd's Eye View. But there sure is a way to do it wrong, as Tesla CEO Elon Musk recently found out. After Mr. Musk tweeted in August that he had secured funding to take his electric car company private, Tesla's stock price soared. But the Securities and Exchange Commission filed suit Sept. 27, arguing that Mr. Musk's tweet was misleading.Mr. Musk eventually agreed to pay a $20 million fine, step down as Tesla's chairman (and not run for re-election for three years) and have future tweets about the company approved by lawyers. That didn't stop him from getting in an insult, calling the regulator the Shortseller... Read full post

Oct 10, 2018

When investment performance is too good to be true

By Jeff Benjamin

While past investment performance should never be interpreted as an indicator of future returns, a rare snafu involving the Great-West Multi-Sector Bond Fund (MXUGX) shows that sometimes past investment performance isn't even an indicator of past returns.Last week, when InvestmentNews sent out a data request to Morningstar for a list of the top-performing bond funds during the three months that ended Sept. 30, the $675 million Great-West fund topped the list with a stunning 7.1% return. The next best performer on the list was the $43 million Western Asset Emerging Markets Debt Fund (LMWDX), which posted a 4.3% gain during the third quarter.Getting to above 7% for a bond fund over that period would have required allocations deep into the junk bond jungle, entailing the kind of risk rarely seen or expected in a multisector bond fund. For perspective, consider that Morningstar's multisector bond fund category gained about 20 basis points... Read full post

Oct 5, 2018

Outdated tech could be the industry's greatest vulnerability — and greatest defense

By Ryan W. Neal

Decades-old computer systems are at the heart of most of the world's financial institutions, and those antiques could be the industry's greatest vulnerability to technology companies that are looking to move into the market. Though they could also be the industry's greatest defense. Fintech is making everything from investing to splitting a bar tab easier and more convenient. Today few banks can match the user experience of sending money on PayPal, just as few advisory firms can match the ease of setting up and funding a new brokerage account the way robo-advisers do. Even when they try, such as Merrill Lynch did by adding Zelle to its mobile app to make it easier for clients to move money, the financial institutions have to integrate the new technology onto their legacy systems. And these systems can only go so far. More than a third of financial institutions said legacy platforms are their biggest obstacle to improving data and... Read full post

Oct 3, 2018

Divide between former robo-rivals widens

By Ryan W. Neal

In a pair of blog posts this week, Betterment and Wealthfront showed how far the former fierce rivals have diverged in recent years. On Tuesday, Betterment founder and CEO Jon Stein stated the case for traditional advisers adopting automated investment management technology, such as Betterment for Advisors. A day later, Wealthfront co-founders Andy Rachleff and Dan Carroll reiterated their belief that a purely digital service is the way forward to help the next generation save and invest. It wasn't long ago the two digital startups were going head-to-head for millennial assets, thumbing their noses at the industry without any competition from the traditional financial advice providers. Today, just about every large financial institution has a digital advice product; either going directly to consumers or as back-office technology for independent advisers. These firms — the two largest startups — aren't threatened, but they ... Read full post

Sep 26, 2018

Why in the world isn't the 401(k) industry entirely digital?

By Ryan W. Neal

As a byproduct of InvestmentNews' recent acquisition, I just hit a major life milestone. I experienced my first 401(k) account rollover, and oh boy, was it eye-opening. As a technology reporter, I'm much more familiar with fintech companies and firms pushing the digital envelope than I am with the status quo — or worse. Without naming any names, the entire process is shockingly analog and requires much labor on behalf of individual plan participants. You're telling me that in order to move my money from an old 401(k) plan into a brand new one, I have to request a physical check by mail from one provider, receive it in the mail, print out a form, fill it out, then mail that form with the check to the new provider? With, like, stamps and envelopes? It may be that I'm too busy ruining beloved American institutions and having brunch, but why would anyone want to take the time to print, sign and mail something in the modern age of... Read full post

Sep 20, 2018

Square eyes the digital investing space

By Ryan W. Neal

Count Square, the fintech company launched by Twitter CEO Jack Dorsey, among the technology startups looking to expand into the digital investing and advice markets. Speaking at Recode's Code Commerce conference, Square chief financial officer Sarah Friar said the company is actively exploring what to do with the roughly $209 million it holds on behalf of customers using its Cash mobile payments app. "And we're starting to think about, are there other things we could do for our customers there? Maybe help them with their savings," Ms. Friar said. Lots of ideas are on the table, including savings and investments."We actually already allow people to purchase bitcoin, for example, which we think of as allowing them access to an asset," she said. While buying cryptocurrency is "jumping three steps ahead" of what most people would do first with extra cash in an account, Ms. Friar hinted that other types of accounts could be forthcoming.... Read full post

Sep 18, 2018

EF Hutton banks on cryptocurrency to fuel latest revival

By Ryan W. Neal

Editor's note: This blog has been updated to include comments from EF Hutton CEO Chris Daniels, who could not be reached prior to its original publication."When EF Hutton talks, people listen ... and make coin." That is the catch phrase EF Hutton is using in its latest attempt at a comeback, this time as a fintech company trading in everyone's favorite buzzword — cryptocurrency. The company using the 114-year-old brokerage's name plans to launch MeggaCoin on Oct. 1 in an effort to raise a reported $60 million for its parent company, HUTN Inc. MegaCoin users will pay a one-time $5 fee to set up an EF Hutton account, then will receive MeggaCoins for the time they spend using a variety of MeggaLife social media apps. If users bank 20 million coins, they can redeem them for cash held by MeggaTrust, "an independent trust that is overseen by independent third-party trustees," according to a press release. The funds in MeggaTrust... Read full post

Sep 11, 2018

5 questions about 'Impact'

By Matt Ackermann

• What inspired the creation of the documentary?The idea for this project first sprouted after I watched “Revenge of the Electric Car.” I was particularly struck by Elon Musk's storyline and how he risked everything he owned to follow his passion. The film impacted me so deeply – more than any book, movie or speech had ever done. The storytelling format of a documentary is such a powerful medium. It can connect you emotionally to people and ideas in a way that no other format can. That's why I wanted to fund “Impact.” I realized that a documentary would be the ideal tool for raising awareness about impact investing and for inspiring others to use their businesses and investments to make the world a better place. • What is the premise of the documentary?“Impact” was created to elevate the role of entrepreneurism in achieving the United Nations' Sustainable Development Goals (SDGs)... Read full post

Sep 11, 2018

Behind the scenes: “Impact” cost me 15 pounds but the payoff has been priceless

By Matt Ackermann

It is 3:14 in the morning. With my wife's robe as a pillow, I am curled up in a ball on my bathroom floor, in absolute physical agony, and I couldn't be happier.Maybe I should rewind.You see, about 18 months ago, I was sitting in a meeting with a potential new partner and began mindlessly daydreaming when a booming voice asked an open-ended question that jolted me into a new reality.“What about you? What would you do if you could do anything you wanted,” asked Vanderbilt's Steve Distante.I answered immediately, “I'd make a documentary.”Steve laughed because, without knowing, I had just stumbled into one of his passions. I had also stumbled into the executive producer of our new video project, Impact.“What do you think about impact investing,” he asked.I had no idea that with two simple questions, the direction of my life was about to change forever and send me on an exciting new journey.This journey... Read full post

Sep 6, 2018

Trump administration hypocrisy on retirement security

By Greg Iacurci

Is President Donald J. Trump a hypocrite when it comes to retirement security? His actions certainly suggest so.On Aug. 31, Mr. Trump signed an executive order meant to strengthen retirement security by expanding access to workplace retirement savings plans for American workers. Specifically, relaxing rules around multiple employer plans would "make it easier for businesses to offer retirement plans." This announcement was celebrated with great fanfare from the retirement industry and members of Congress. However, Mr. Trump took measures last year that seemingly flew in the face of the so-called retirement security he is now promoting. Primarily, the president signed a resolution killing a rule around state auto-IRA programs; he signed a similar resolution on city auto-IRA programs earlier in 2017. His administration also dissolved the Treasury Department's myRA program. These initiatives, started during the administration of Barack H. ... Read full post

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