FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Wealthy Americans Are Spending More This Holiday Season Than Before 2008 (Financial Advisor Magazine)
Americans are planning on spending more on gifts, travel, and entertainment this year. On average, they’re planning on spending $US10,525, according to a BMO Private Bank study.
And 43% of respondents stated that they are planning on selling more than they did before 2008.
Respondents said that they would be spending at least $US100 per person.
Additionally, some wealthy Americans are going to be increasing their holiday donations this season: 28% plan on donating more, 66% plan on staying the same, and only 6% are planning to donate less. On average, Americans with a net worth of $US1 million or more will be donating over $US3,600.
Merrill Lynch Is Cutting Compensation On Small Accounts So That Advisers Drop Them (The Wall Street Journal)
Merrill Lynch keeps trying to push its advisers to drop smaller accounts, or those with $US100,000 to $US250,000 in assets. In its latest move, Merrill Lynch will be cutting compensation on these smaller accounts, reports Michael Wursthorn.
“We’re really encouraging [advisers] because of a lack of capacity in their book,” John Hogarty, chief operating officer of global wealth and investment management at BAML, told the WSJ. “They have a tendency to spend time with their more meaningful clients and the clients below $US250,000 aren’t getting the right level of service according to their needs.”
Passive Is Going Strong Into 2015 (Morningstar)
“It’s been the year of passive US equity,” says Tim Strauts. “Just over the last 12 months, there has been $US156 billion that has gone into passive US equity funds. But $US91 billion has left active US equity funds. So, a good portion of the money is just moving from one side to the other — selling their active US equity and buying the passive.”
Even in international space, where active managers are traditionally seen as more likely to outperform, is starting to see a drift toward passive. “Last month, the flows were very strongly toward passive — $US12.5 billion to passive international and only a $US100 million inflow into active international,” added Strauts.
There Could Be Some Obstacles, But 2015 Is Looking Really Good (Charles Schwab)
“At this point, we have little reason to doubt these [positive] trends will continue into 2015, supported by improving US economic growth,” write Liz Ann Sonders, Brad Sorensen, and Jeffrey Kleintop.
Traditionally, stocks tend to do well in the third year of a presidential term — now that midterms are out of the way. Additionally, the drop in oil prices is expected to cause a net positive effect on the US economy.
However, there are still some risks: Other economies are diverging from the US, there’s ongoing geopolitical unrest, and there is increased volatility.
SEC Chairwoman Is Going To Get Way More Tough On Mutual Funds (Think Advisor)
SEC Chairwoman Mary Jo White announced that the SEC will be getting tougher on the asset management in general, and mutual funds in particular, reports Emily Zulz.
“The financial crisis only underscored the importance of the careful management of risk by funds and their advisors, including portfolio composition and operational risks in particular,” White said at The New York Times DealBook Opportunities for Tomorrow Conference.
“A broader set of proactive initiatives is require to help ensure that our regulatory program is fully addressing the increasingly complex portfolio composition and operations of today’s asset management industry,” she added.
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