FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Compliance officer receives $US1 million for whistleblowing (Think Advisor)
A whistleblower will receive between $US1.4 million and $US1.6 million for providing information that lead the Securities and Exchange Commission to enforcement action against their company. According to the SEC, the whistleblower “had a reasonable basis to believe that disclosure to the SEC was necessary to prevent imminent misconduct from causing substantial financial harm to the company or investors.” The SEC is not allowed to disclose the name of the whistleblower or provide any information that may reveal their identity.
The attitude of the American consumer has shifted (Charles Schwab)
Economists were expecting the drop in oil prices to provide a boost to consumer spending, but that hasn’t materialised. Retail sales finally saw an uptick of 0.5% in March, following three months of declines, but the savings rate was still at 5.8%, its highest since 2012. Schwab notes now is the time to be cautious on the consumer discretionary sector and that it’s “a bit late to be jumping on the train.”
What happens to clients when a team splits (Financial Planning)
While most advisory teams stick together, there is always the possibility that members choose to go their separate ways. What happens when someone leaves? Recruiter Howard Diamond says, “Firms sometimes do a little sweetener to keep the clients there,” including offering reduced fees. Ultimately, its up to the clients themselves. “Quite frankly, if you can’t bring over your clients within a month or two month period then you are not going to bring them over,” added Diamond.
Doug Ramsey, chief investment officer of Leuthold Group LLC, describes the stock market’s recovery from the financial crisis as “abysmal.” Bloomberg reports Ramsey believes, “The Standard & Poor’s 500 Index should be 32 per cent higher based on growth rates since the Great Depression.” He continued, “Margins are spectacular, but the actual nominal rate of per-share growth is not that impressive.” Not everyone agrees with Ramsey’s logic. Wharton School finance professor Jeremy Siegel says, “In March 2009, we were at the worst bear market in 75 years — you can’t say that because the market has gone up from that low, it’s necessarily overvalued.”
More independent broker-dealers are staying at their firms (Investment News)
Increased competition from fee-only custodians, a strong stock market and better constructed succession plans are keeping independent broker-dealers from changing firms. According to Investment News, “Independent broker-dealers recruited only $US426 million from three teams in the first quarter this year,” down from $US1.23 billion and five teams from the year prior. Jodie Papike, executive vice president at Cross-Search, adds, “That can change very quickly if there continues to be any kind of consolidation or changes taking place at the big firms.”
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