FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
After a rough time in 2013, municipal bonds saw a reversal in 2014. But how does one know if a muni bond makes sense for their diversified portfolio? Daniel Wallick, principal at Vanguard Investment Strategy Group, says first investors need to determine their risk tolerance. “Let’s just talk about the three big buckets. You can have treasuries, which are guaranteed by the U.S. government. You can have municipals, which are guaranteed by a state or local government,” he says. “Or you can have corporate bonds, which are guaranteed by some private company.”
“The risk level is the U.S. bonds are most secure. U.S. Treasuries are the most secure. Munis are next, and then corporates are there. So where are you in terms of that comfort level of how much risk you’re willing to take? It’s really the first question to ask.
“The second one is, what’s the yield on munis, what’s your tax rate, and how does that relate to the other options you have? Is it a valuable investment based on that?”
PIMCO’s flagship Total Return Fund saw its fourteenth month of net outflows, according to the latest data from Morningstar. The fund saw net outflows of $US4.5 billion bringing the cumulative total to $US64 billion. PIMCO has come under the scanner after the abrupt departure of Mohamed El-Erian earlier this year raised questions about PIMCO CEO Bill Gross’ management style.
How Wealth Managers Can Hold On To Clients With Multiple Advisors (The Wall Street Journal)
It common for investors to have multiple advisors when they are still growing their assets and to settle on one when it’s time to retire, writes Rob Kron, head of investment and retirement education for BlackRock’s U.S. Wealth Advisory Group, in a WSJ column. But to be the one that manages to retain a client, Kron writes that advisors need to start initiating the discussion early.
“Start with a qualitative line of questioning — asking the client about what they want to do in retirement and what resources they have available to make that happen,” he writes. “For clients with realistic expectations, those discussions are going to be about the ways you’ll help keep them on track to meet their goals. For clients whose expectations for their assets are greater than what those assets can realistically provide, it’s about showing how you can help them close that gap.”
Uncertainty about regulator requirements is the number one obstacle to advisors using social media, according to an InvestmentNews survey of 450 advisors. 55% of respondents said that was the biggest concern, and 55% also said there was firm mandated ban on at least one social media network. The survey also found that among those that do use social media 40% on use “canned content.”
JP Morgan Funds is out with its Q3 ‘Guide to the Markets.’ Every quarter, David Kelly and the J.P Morgan Funds market strategy team, highlight a chart of stock market inflection points — the two stock market pears and following crashes. The S&P 500 is now around 1,960 and is trading at 15.6 times forecasted earnings, following a 190% run up, compared to 15.2 times earnings in 2007 that followed on 101% run up ahead of the crash.
Business Insider Emails & Alerts
Site highlights each day to your inbox.