FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
A Whole Bunch Of Brokers Are Going To Switch Firms This Weekend (Wall St. Journal)
The Presidents Day weekend is a popular time for brokers to switch firms, and this year’s expected to be a doozy. More brokers that usual are likely to make the move now, since there’s a lot of speculation that regulators may make it mandatory for brokers to tell their clients about bonuses they receive when they switch firms.
Among the those making the move are a Morgan Stanley team who’re heading to Bank of America’s Merril Lynch, and a Merril Lynch team who are going independant, according to recruiters.
“Any three-day weekend is popular, particularly when the holiday itself is not religious,” recruiter Bill Willis of Willis Consulting told the WSJ, adding that the departing broker can work on contacting and transferring over his clients Friday afternoon, all weekend and Monday. With the extra day, the broker is likely able to call all of his accounts.
The Market Is Unprepared For When The Fed Tightens Policy (iShares Blog)
Once the Fed starts to tighten monetary policy, the Federal Funds Rate is going to start to rise, said CFA Matt Tucker in a blog post, and the question on investors’ minds is: How high will rates go and when?
Even though the Fed seems bullish on how much the U.S. economy will grow and estimates that this monetary tightening might begin in 2014, the market is not anticipating a strong reaction to Fed tightening. This could make the market vulnerable, said Tucker.
“If investors begin to think rates will rise faster than originally expected, they may begin selling bond holdings, including mutual funds and ETFs, driving rates higher and creating a self-fulfilling upward move in rates, at least temporarily. Ultimately though, rates should be held in check by the economic realities of modest growth,” said Tucker.
Affluent Investors Are Heading To Low-Tax Havens (Investment News)
Financial Advisors are reporting that many of their clients are considering pulling up roots and heading to lower-tax cities thanks to multiple higher federal taxes and rising levies in states like California and New Jersey.
In California, the tax rate on income exceeding $1 million jumped to 13.3 per cent, the highest of any state, from 10.3 per cent.
While it’s not a frenzy, top earners are making moves and being more proactive, Teresa Ridge, senior director of planning in California at Wells Fargo & Co.’s unit told Investment News.
Investors Are Pulling Billions Out Of U.S. Stocks (Business Insider)
In January a historic quantity of money flowed into equities. And while money continues to pour into ETFs and equity mutual funds, in investors are pulling billions out of U.S. stocks. Funds invested in U.S. stocks suffered $3.65 billion in outflows this week.
Citi analyst Markus Rosgen noted that “In the week ended 2/13/2013, inflows into equity funds slowed to $1.8 billion while bonds had an inflow of $2.6 billion, ending equities’ nine-week winning streak versus bonds. The major laggards in equity funds were US funds which recorded $3.7 billion of outflow.”
Photo: Lipper, Jefferies
The Financial Crisis Might Have Cost More Than $10 Trillion (AdvisorOne)According to a report released by the Government Accountability Office (GAO), the Financial Crisis could have cost, based on value of goods not produces, services not rendered, anywhere between a few trillion to more than $10 trillion.
Since the crisis began, federal, state and local governments have faced greater fiscal challenges “in part because of reduced tax revenues from lower economic activity and increased spending to mitigate the impact of the recession.”
The report also said that “quantifying” the Dodd-Frank Wall Street Reform and Consumer Protection Act’s benefits since being passed into law in 2010 is “difficult.”
While Dodd-Frank’s “reforms could enhance the stability of the U.S. financial system and provide other benefits, the extent to which such benefits materialise will depend on many factors whose effects are difficult to predict,” said the GAO in their report.