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Understanding Family Dynamics Could Give Advisors An Edge (Investment News)
Ellen Eichelbaum, a gerontology consultant, told Investment News that advisors that take the time to understand family dynamics will likely come away winners. She says advisors should watch for favoritism, or an adult child that feels like he/she bears most of the burden of care and address such issues before they explode. “You would be the best financial adviser in the world if you ask the right questions,” Eichelbaum told Investment News. “You would get the client, as well as their children after they see that you’ve taken good care of their mother.”
Jennifer S. Bridwell and Sabrina C. Callin at PIMCO think investors should consider alternative investment strategies. This is an environment in which returns from more traditional asset classes are expected to be lower and more volatile. In a Q&A published on PIMCO’s website both explain how investors can implement these strategies in their portfolios.
Bridwell: Hedge funds and other alternative strategies can be employed to help investors limit risk or volatility and preserve returns in their portfolios, while private equity strategies can offer a significant opportunistic liquidity premium. As we have said, though, strategy and manager due diligence is very important and has been ramped up significantly by clients globally, much to the benefit of investors, we would argue.
Callin: Alternative strategies are quite heterogeneous. There are a wide variety of approaches, risk exposures and target returns and risk. The key to realising the important diversification benefit that alternatives offer is understanding the risk exposures, both systematic and variable, and how they will likely correlate to the dominant risk exposures in one’s existing portfolio, especially during periods of stress.
Bank Of America’s Plan To Raise Merrill Fees Has Upset Its Advisors (The Wall Street Journal)
Bank of America plants to raise its fees for customers with managed accounts at Merrill Lynch’s brokerage unit, according to the WSJ. These clients could end up paying 50% more a year and advisors are worried that this may cause clients to jump ship. “The increases come amid a $100 million platform overhaul at Merrill that is designed to make it easier for advisers to manage their clients’ accounts and build portfolios, according to the firm,” reports Corrie Driebusch at the Wall Street Journal.
“As part of that change, which brought together five separate platforms, Merrill also unified its fee structure, setting minimum fees based on the amount of money a customer has invested with the firm.” Advisors have to change their fees by the end of 2015.
The FBI has charged Brian R. Callahan and Adam J. Manson in a 24-count indictment each with conspiracy to commit securities and wire fraud, according to Newsday. The two are accused of running a $100 million Ponzi scheme and using the funds to buy the Panoramic View Hotel & Residence in Montauk, other homes and luxury automobiles. Some of the money was also reportedly used to pay back some investors.
“The defendants used one of Long Island’s landmarks, the Panoramic View Resort, to perpetuate a wide-ranging fraud,” Eastern District U.S. Attorney Loretta Lynch said in a statement cited by Newsday. “Callahan gave his word that he would invest his clients’ funds safely and responsibly in established vehicles. Instead, he simply stole the funds to prop up his partner’s failing investment.”
The SEC has adopted stricter broker-dealer custody rules. This is intended to “substantially increase protections” for investors who have invested with broker-dealers that are registered with the SEC.
“These rules will provide important additional safeguards for customer assets held by broker-dealers,” said Mary Jo White, Chair of the SEC in a press release. “These rules will strengthen the audit requirements for broker-dealers and enhance our oversight of the way they maintain custody of their customers’ assets.” Broker-dealers are expected to start filing new quarterly reports with the SEC and annual reports with Securities Investor Protection Corporation (SIPC) by the end of the year.
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