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A report from PricewaterhouseCoopers showed that 34% of wealth managers think there will be significant consolidation ahead. In an interview with Barron’s, PWC’s Steven Crosby said that this was because of the constantly changing regulatory environment. What’s more, Crosby says wealth managers have a harder time holding on to wealthy clients, as they have to adapt to changing regulations even as there are more demands made of them.
But in a piece titled ‘The Wealth Management Whine’, Barron’s’ Robert Milburn wasn’t buying. “Let’s be honest. It’s typical of Wall Street to blame regulators for problems of their own doing.” To the argument that being a wealth manager is harder now than ever before he writes “Perhaps so, but our conversations with clients over the years suggests that a lot of the industry’s current hardships were directly brought on by the wealth managers themselves. It’s simple really – treat clients like chattel, and they will eventually trample you on their way out the door.”
The #1 Thing Worrying Hedge Fund Managers Right Now (Bank of America)
“China is the biggest area of concern for investors,” says BAML Chief Investment Strategist Michael Hartnett. “[The] number of investors expecting stronger China growth collapsed to a net -65%, a massive reversal from 67% in December 2012.” A Chinese hard landing and commodity collapse are now the biggest tail risks to investor portfolios.
The Benefits Of An ‘Enhanced’ Open Architecture Approach To Wealth Management (The Wall Street Journal)
In the Wealth Advisory world, firms continue to argue over the benefits of active and passive investment. Michael Nathanson, CEO of Boston-based The Colony Group talks about the virtues of the ‘enhanced’ open architecture approach his firm uses in The Wall Street Journal. This approach allows them to use both active and passive strategies, and allows clients to customise their portfolios.
“The key to this approach is that it allows us to offer clients greater customisation in their portfolios. We’re able to bring the benefits of proprietary strategies to clients, which puts the clients in a direct relationship with the managers.
“For example, if a client doesn’t want to own Exxon, a company included in many mutual funds, having proprietary portfolios can give advisers the flexibility to conform to a client’s desires.”
Dividend paying stocks have always outperformed non-divided paying stocks when the Fed has driven rates higher, according to BlackRock.
“Dividend paying stocks in the S&P 500 returned 2.2% annualized during such times of tightening (increasing rates), while non-dividend stocks in the S&P gained 1.8%, according to Ned Davis Research. On the other end of the spectrum, during periods of easing (declining rates) by the Federal Reserve, dividend payers gained 10.2% annualized and non-dividend payers lost 1.3%. During times of neutral Fed policy is when dividend payers have performed best, returning 12.3% versus 6.2% for non-dividend stocks. There is no guarantee that stocks will continue to pay dividends.
“The bottom line is that despite the prevailing uncertainty and volatility in financial markets, investors still need growth in their portfolios. In the new world of investing, high-quality companies that pay and grow their dividends can be wise choices.”
Here’s What It Looks Like When The Bond Market Goes Into A Coma (Societe Generale)
The surge in bond yields in May and June prompted trading volume in the Treasury market to hit all-time highs. The surge in bond yields in May and June prompted trading volume in the Treasury market to hit all-time highs. Much of the “activity and liquidity have dropped sharply,” after the bond sell-off eased a few weeks ago, according to Societe Generale’s Sebastien Galy. “My readership dropped by a third, which is pretty much the loss of volume on the UST market according to my rates colleague.”
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