FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
More investors are turning to apps to help with wealth management (Financial Planning)
Research from Phoenix Marketing International shows more and more investors are shying away from traditional advisors in favour of wealth management apps. David M. Thompson, managing director of affluent practice at Phoenix, says, “We already see it from data we have on affluent millennials, they are strikingly different from parents on these lines.” Phoenix’s research shows almost 60% of millionaires surveyed under the age of 35 were comfortable using apps to manage their wealth. Interestingly, wealth management apps are gaining traction among older investors too with 36% of wealthy investors aged 45 to 54 turning to the new technology.
Advisors are shying away from Roth IRA conversions (Wall Street Journal)
More and more financial advisors are steering clear of Roth IRA conversions for wealthier clients in anticipation Washington will make changes to the retirement vehicle. Currently, there is no mandatory age at which withdrawals must begin, but the Obama administration is attempting to make withdrawals mandatory beginning at the age of 70 1/2, matching the Traditional IRA. The Wall Street Journal notes, “imposing required minimum distributions would undermine that major selling point for Roth IRAs, which wealthy investors also use in estate planning. In most cases, Roth IRAs allow wealthy individuals to give heirs an income-tax free inheritance, since heirs won’t need to pay income taxes when they withdraw funds from the inherited Roth.”
FoolProof gives financial literacy classes (Financial Advisor)
FoolProof is offering free financial literacy classes to students, teachers and financial advisors. “Most financial literacy classes teach the fundamentals but they do not teach students to question everything they are told,” says Will DeHoo, founder of the FoolProof Foundation. The classes will explore areas ranging from buying a new car to saving money to addressing student loans. Anyone interested can sign up at www.FoolProofme.com.
Stock price action influences investment decisions (Think Advisor)
Stefan Zeisberger, assistant professor in the College of Business at New York’s Stony Brook University and co-author of a behavioural finance study called “All’s Well that Ends Well? On the Importance of How Returns are Achieved,” says investors are happiest if the value of their investments fall first and then increases. He makes the comparison to being a fan of a sports teams that falls behind early, only to see your team rally late to tie the game. According to Think Advisor, the study looked at three types of moves in stock prices: “One in which the price path followed a monotonic, one-directional trend; another where the price first decreased but then recovered; and a third where the price went up first and then down.” In the end, all of the moves registered the same performance, but investors were happiest when the investment sold off first and recovered later.
Jeff Gundlach is the new bond king (Bloomberg)
Howard Marks says after a terrible first year as a money manager in which he lost 6.2%, Jeff Gundlach learned, “you don’t bet the ranch,” and that has “helped him go from a smart guy to an excellent manager.” Gundlach’s DoubleLine Total Return Bond Fund is marking its fifth anniversary, and has outperformed all of its peers since inception. While the Total Return Bond Fund only has $US45.6 billion in assets under management, interested investors are running out of time as the fund will close its doors to new investors well before its hits $US100 billion.
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