FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Ten Reasons Why You Should Stay Active In Stocks (The AllianceBernstein Blog)
On the AllianceBernstein Blog, Sharon Fay wrote about the importance of staying active in equities, rather than passive investing. "We understand the appeal of passive investing. It offers lower fees and simplicity. And many investors are skeptical about the ability of active managers to consistently beat a benchmark. Often, a passive portfolio can be a good complementary component to an active allocation, especially in large-cap developed markets," she said. "Yet there’s also a lot of evidence supporting the benefits of an active approach. Today, we see many risks that are hard to avoid by hugging a benchmark—and opportunities that simply cannot be captured by going passive."
The ten reasons for staying active in stocks are (verbatim):
1. To steer clear of expensive areas
2. To manage a rising rate environment
3. To navigate political risk
4. To deal with disintermediation
5. To avoid bubbles
6. To capture technological innovation
7. To adjust to economic recovery
8. To find higher revenue growth
9. To benefit beyond the benchmark
10. To exploit less intensively researched universes
The Time To Create A Succession Plan Might Be Earlier Than You Think (Wealth Management)
Older advisors aren't the only ones who need to create a succession plan. Instead of waiting until near retirement, Anita Venkiteswaran, vice president at Focus Financial Partners, has three suggestions to keep in mind when planning for your business' future.
1. "Right fit. The most critical aspect of external succession planning is finding the right firm match. The best match happens when two firms not only share similar values and principles, but also understand each other’s client niche, service model and investment philosophy. There is likely no identical firm to yours, but think through criteria that are important to you in a firm that would serve your clients in your absence. Make a list and prioritize them."
2. "Right time. Many people struggle with the question – 'When is the right time to start putting together a viable succession plan?' The answer is NOW. Whether you are a $500 million dollar firm or a $25 million dollar firm, whether you are 35 years old or 60 years old, your clients are important to you and you should be thinking about them and their future in your absence."
3. "Right value. ...Do not get hung up on the revenue multiples being thrown out in the industry. Instead think about how to build a business that can bring some value to the partner you identified. Only then can you ensure that your family gets some equity value out of the business that you have put your blood and sweat into building."
How To Become Your Clients' One Advisor For All Their Assets (Financial Planning)
Often clients will try to spread their assets among several advisors in order to lower their risk. However, that leaves the advisor with "a jumble of assets that don’t complement each other and lack diversification," writes Bruce Fraser in Financial Planning. To bring in all of a client's outside assets, advisors should take a systematic approach, sit down with their clients, and go over a financial plan and goals.
"Once advisors have mapped out a financial plan, as part of a quarterly meeting cycle or a comprehensive annual review, they can point out the benefits of consolidating assets under one advisor, and the difficulty to monitor a financial plan if the assets are spread in multiple directions," Fraser said. "Technology is also playing a bigger role. Some advisors are taking a holistic approach and using account aggregation tools."
Experienced Advisors Are Staying In Their Current Positions Because of Economic Improvement (InvestmentNews)
According to InvestmentNews' Advisers on the Move database, only 58 veteran advisor teams switched firms in the second quarter, down from 97 teams a year ago. This is also lower than the 101 teams that moved in Q1. Recruiters and executives have attributed this slowdown to market highs and a strong economy.
"There is an overall slowdown, not just for the quarter but if you look at the year in aggregate the pie of advisers changing firms has shrunk," Tash Elwyn, president of Raymond James & Associates, Inc, told InvestmentNews. "The market at new highs certainly can lead to higher satisfaction levels by clients, which then leads in turn to higher satisfaction levels by advisers."
How To Recognize And Stop Financial Abuse of Elderly Clients (Wall Street Journal)
Financial abuse is an important problem especially among the elderly, and advisors are in an advantageous position to recognize and stop the issue. In a WSJ column, Paul Hynes at HearthStone Private Wealth Management writes about tactics to spot financial abuse.
"Financial elder abuse encompasses anything from the unauthorized use of bank accounts to wire scams to deceiving or even coercing someone to change their power of attorney," he said. "Maybe the best way to prevent the financial abuse of an elderly client is simply to keep in touch with them and inquire about their lives. Checking in over the phone is helpful, but advisers should really make an effort to see clients face-to-face."
"Potential red flags include a change in living conditions, like the addition of a full-time caregiver, for example. In-home caregivers may have access to information about the elder person's assets and accounts, and may be in a position to exercise significant influence or control over the elderly person," Hynes said.
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