FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Just under 60% of victims of fraud felt too much shame to actually report the crime to authorities, according to a survey by the American Institute of Certified Public Accountants, writes Ted Knutson at Financial Advisor Magazine.
“Nearly 40 per cent of victims said they didn’t report thefts because they blamed themselves, while 18 per cent said they were too embarrassed to contact the police and others about the crimes,” Knutson reports.
The survey also found that around a quarter of respondents who reported being defrauded personally knew the perpetrator of the crime.
Tom Lee of Fundstrat noted that since 2007, American households have sold off a huge amount of their equity investments, reports Business Insider’s Bob Bryan.
Households have sold about $2 trillion of stocks, an 18.6% decline in their holdings, Lee observed. “This is the largest liquidation in history and surpasses the 10% liquidation during the decade from 1979 to 1989 — that was the precedent decade before the massive inflows into equities in the 1990s,” said Lee.
Harvard finance professor Carmen Reinhart analysed IMF projections of GDP growth in the US and several European countries to determine the depth of post-crisis economic damage and the amount of time needed to recover to pre-crisis income levels. Reinhart found that while the US and Germany recovered relatively quickly, countries like Italy and Greece might not return to pre-crisis output levels until well into the next decade.
Reinhart observed that this could reflect differences in the debt crises that led to recessions in those countries: “The anemic recovery in many advanced economies (even when compared to other severe crises) owes much to the prevailing ‘extend and pretend’ approach to debt. European banks since the crisis have largely been kept busy buying government debt and evergreening (in Ponzi-scheme fashion) private pre-crisis loans. As difficult as the foreclosure episode was in the US, it enabled borrowers and banks to adapt to the collapse of the housing bubble and to move on.”
Michael S. Fischer reports that a recent survey of big institutional investment companies by information technology firm Backstop Solutions Group shows that while 77% of respondents considered cybersecurity an important priority, less than a fifth “said they had complete confidence in their firm’s plan to recover from a cyberattack.”
The survey also showed that 43% of respondents “said their firm had increased its budget for cybersecurity in the last year, including outlays for prevention,” wrote Fischer.
FINRA: Robo-advisors can’t be fiduciaries (Financial Planning)
A white paper by former Federal Reserve senior counsel Melanie L. Fein argues that a recent FINRA report suggests that robo-advisors are unable to act as fiduciaries, reports Andrew Shilling for Financial Planning.
Shilling quotes Fein’s paper, arguing “the best interest of the client requires the advisor to conduct some degree of portfolio analysis when providing investment recommendations. Without portfolio analysis, the advisor cannot be confident that the investment advice is appropriate for an individual client.”