FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors. For more visit Business Insider’s new Wealth Advisor vertical.
Why I Won’t Stop Talking About Passive Investing Despite Josh Brown’s Protests (Bason Asset Management)
This past weekend, Josh Brown argued that passive investors have made insulting comments about those that have a different opinion. James Osborne of Bason Asset Management argues that while Brown thinks passive investors should quiet down he refuses to.
While Osborne agrees with Brown’s point about the need for active trading, he argues, “We still have thousands of actively managed mutual funds running a few trillion dollars, we have hedge funds and private equity firms and we have neighbourhood brokers who think they can also be stock pickers. And you know what? We never will have a shortage. No one can reasonably expect that everyone, or even a majority of investors will be passively invested, for one simple reason that I’ll borrow from Josh: We’re Human. We love to speculate, we love to look for a fight and take a risk. But most of all, we’re greedy.
“…But for those investors who want to understand the data, who would prefer not to be led on and/or lied to about the next market-crushing mutual fund manager, who want to take the best route possible for them to reach their financial goals, I’ll keep talking about passive strategies.”
What Advisors Should Do If Female Clients Are In Abusive Relationships (The Wall Street Journal)
Lisa R. Hatcher of Virginia-based Hatcher Byles Financial Planning says she has often come across women escaping abusive relationships in her practice. The abuse can take be physical, verbal, emotional or financial form. In a new WSJ piece, Hatcher writes that there are a few things an advisor can do if they sense such abuse.
“First advisers should normalize the expectation that each spouse should have equal control over the finances. They should project the assumption that this is what married couples do: they should have joint accounts but they should also have individual accounts so that they both can build a good credit history.” Hatcher also thinks advisors should “cultivate relationships with married clients both as a couple and individually.”
Hedge Funds Plowed Aggressively Into Gold Last Week (BofA Merrill Lynch)
Following the slump in gold prices this year hedge funds began to trimming their positions to the lowest level in 2005 in recent weeks. But last week they flooded back into gold.
“Large speculators increased gold longs by ~74% to $US6.6bn from $US3.8bn notional,” write BofA Merrill Lynch analysts MacNeil Curry, Jue Xiong, and Stephen Suttmeier in a note. “Positioning bounced back from the lowest levels since 2005 but remains in the contrarian buy zone. Despite the recent pullback from 1347, evidence says stay bullish for 1407, potentially 1450 before renewed basing.”
Despite it’s long-stated policy against selling proprietary products, Edward Jones launching just that in the form of affiliated mutual funds that will be used in its new RIA platform, Edward Jones Advisory Solutions, reports Investment News. The argument is that in not having proprietary products is in the best interest of clients.
“What they’re doing is looking to build out a product line with a more predictable revenue stream and more control over the client relationship,” Geoffrey Bobroff, a mutual fund industry consultant told Investment News. And some warn that that Jones is acting against its own beliefs and investors need to watch and see if this trend continues.
Why Asking For Referrals At Client Meetings Are Often Ineffective (Advisor Perspectives)
Often advisors are expected to ask clients for referrals after meetings even if they have been underperforming their benchmarks. One such advisor wrote to Beverly Flaxington a practice management consultant. Flaxington writes that this is why the strategy of asking for referrals at clients meetings doesn’t work.
“Client referrals should be treated like any other business strategy. You need to have a process and ongoing commitment to gaining referrals that isn’t tied to market movements. You can’t just ask at the end of a meeting and expect that will suffice,” she writes in Advisor Perspectives.
“If you have been “selling” on performance, you want to look at this too. You won’t always be ahead of your benchmark and you don’t want to set expectations that all times are good times! Be sure your value-add and the offering you are giving clients is expanded far beyond just performance.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.