FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Kids gaining control of assets are a threat to advisors (Investment News)
According to Investment News, $US30 trillion worth of assets will be transferred from Gen Xers to millennials through inheritance over the next 30 years. The transfer of wealth will be a nightmare for advisors who are unprepared. Many simply don’t know how to connect to the younger generation. A recent survey by Investment News found “66% of children fire their parents’ advisor after they inherit their parents’ wealth.” Aside from a lack of relationship with their clients children, advisors must also worry about children spending the assets too quickly and the assets being divided up between too many parties.
Excess returns are accompanied by excess risk (Richard Bernstein Advisors)
Investors remain wary of credit-related asset classes. Richard Bernstein points to MLPs, REITs, emerging market debt and other areas where investors are ignoring risks. While these assets outperformed leading up to the financial crisis, they have lagged notably as the credit bubble has deflated. Bernstein says, “Investors seem to have been lulled into a false sense of security by higher yields and/or promises of capital appreciation from distressed prices.”
Rapper 50 Cent filed for bankruptcy (WSJ, Business Insider)
Curtis Jackson, better known as rapper 50 Cent, has filed for Chapter 11 bankruptcy protection. The filing by Jackson comes he was ordered to pay $US5 million to settle a lawsuit, in addition to a $US17.2 million judgement that went against him. The Wall Street Journal says, “In court papers filed in the US Bankruptcy Court in Hartford, Conn., Mr. Jackson reported assets and debts each in the range of $US10 million to $US50 million.”
Mariner Wealth is expanding (Financial Advisor)
Mariner Wealth is opening offices in four new cities. The firm has announced plans to expand its reach to Oklahoma City, San Francisco, Scottsdale and St. Louis. “I would love to kind of fill out the country,” says Mariner chief Marty Bicknell. “That is our strategy and that would be a great outcome. However, it doesn’t quite work that way. Chicago, for example, I’d love to be in Chicago, but we’ve had no luck finding the right individuals there.”
The alt investment tax loophole is closing (Think Advisor)
The IRS and Treasury are working to close a loophole that high-net-worth individuals are using when they invest in alternatives. According to a joint guidance filed by the two, investors are using ‘basket options’ to “inappropriately defer income recognition and convert ordinary income and short-term capital gain into long-term capital gain.” Think Advisor reports, the Treasury and IRS are now calling these ‘listed transactions’ forcing them to be declared on tax returns. Those who fail to do so would be subject to a fine.
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