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What The DOMA Ruling Means For Financial Advisors (Wall Street Journal)
Financial advisors are wondering what the Supreme Court’s historic decision overturning the defence of Marriage Act will do to business. For some firms that offered niche estate planning for same-sex couples, the decision — which effectively extends to gay couples the same federal tax breaks that heterosexual couples enjoy — might actually harm short-term business. Still, plenty of firms could get new clients now that federal marriage rules will encompass more Americans.
Advisors could also benefit from some of ambiguity surrounding the ruling, since it still isn’t clear if same-sex partners will be recognised by states that don’t acknowledge gay marriage, if the couple married in another state that does recognise it.
Now Might Be A Good Time To Buy Junk Bonds (BlackRock)
With interest rates surging and bonds undergoing a massive sell-off in recent weeks, now might be just the right time to get in on junk bonds once again. “High yield has been a popular trade for several years given the economic recovery and low default rate,” write the analysts at BlackRock. “With the recent shift in interest rates and the economy still growing, the sector is attractive. Can investors continue to reap returns? We believe so.”
Keep holding onto Treasuries, says Vanguard’s Joe Davis. Here’s why:
1.It has taken time for interest rates to rise. So just because they are low it doesn’t mean that they will jump over the next two days. 2. “Secondly is that with low interest rates, that did imply muted return for bond portfolios over the next several years, and that there was more risk of a one-year or one-month loss going forward than there had been over the past 30 or 40 years just because the low-income cushions in those portfolios, and that has played out at least in the past day or two.” 3. “Bonds are just inherently, as a broad asset class, less volatile than equities, and that played out yesterday.”
FINRA Increased Enforcement in 2012 (Financial Planning)
2012 was a banner year for FINRA, which brought a grand total of 1,541 disciplinary actions. The self-regulator took home almost $70 million in fines, and ordered $34 million in restitution to investors. According to its annual report, the regulator expelled 30 firms, 294 individuals, and suspended another 549.
Financial advisors should be well versed on Medicare and related insurance plans — such as Medicare Advantage — before advising clients, according to Brian Hanby who heads a Utah-based insurance agency. “A lot of people do not realise how much health care can cost even with Medicare. It can be a nightmare if you have serious health problems,” Hanby told FA Mag.
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