FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Former NFLer allegedly ran a Ponzi scheme (Business Insider)
Will Allen, a former defensive back for the Miami Dolphins, New York Giants, and New England Patriots was charged with fraud for allegedly operating a $US32 million Ponzi scheme. The Securities and Exchange Commission alleges Allen, and his co-defendant, Susan C. Daub, used their firm, Capital Financial Partners, to promise investors up to 18% interest on loans to professional athletes. According to the SEC, “The complaint alleges that from July 2012 through February 2015, the defendants paid approximately $US20 million to investors while receiving a little more than $US13 million in loan repayments from athletes. To fill the nearly $US7 million gap, Allen and Daub used money from some investors to pay other investors, the hallmark of a Ponzi scheme.” The duo then used the money for a personal shopping spree.
Advisor confidence is falling (Wealth Management)
Wealth Management reports the Advisor Confidence Index fell 4.6% in March to 114, its lowest level in over a year. The loss of confidence comes amid a less optimistic view on the stock market as near-term advisor optimism tumbled 7%. As for the economy, optimism for current conditions slid 3.5% while optimism for the next six months and 12 months fell 3.8% and 4%, respectively.
The changing dynamics of advisor compensation (Financial Planning)
Financial advisors are changing the way they charge their clients. A Financial Planning survey showed, “Nearly 59% of the independent financial advisors surveyed by Financial Planning charged on a percentage of AUM,” and that “roughly 20% of all independent firms (and about a quarter of fee-only advisory firms) said they had changed their fee structure in the past year.” Almost one-third of those surveyed said they were their fee structure to increase profitability.
An explanation of life settlements (Financial Advisor)
Financial Advisor notes a life settlement says “an existing life insurance policy can be sold to a third party for more than the cash surrender value but less than the death benefit.” Interestingly, a survey of 200 advisors showed 40% were completely unaware such a policy existed, or had heard of it but didn’t understand its use. On the other end of the spectrum, only 11% of those surveyed had advised a client on such a policy.
Blackrock is altering money funds to meet new regulations (Think Advisor)
BlackRock is changing its money-market mutual funds to meet new SEC regulations. Think Advisor notes, BlackRock will “offer funds that invest solely in government securities and others with floating net asset values that would invest in corporate debt,” and that it would offer funds that “limit holdings to securities with maturities of seven days or less.” Data provided by Crain’s shows BlackRock is the third largest US provider of money-market funds, with $US217.5 billion in assets.
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