Two Financial Advisors Explain Why Their Business Doubled After They Left Merrill Lynch


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How One Advisor Team Abandoned Merrill Lynch For HighTower And Saw It’s Business Double (

After 20 years at Merrill Lynch, Paul Pagnato and David Karp jumped to HighTower Advisors. Since then the Pagnato-Karp Group, as the team is known, has grown from $1 billion in assets and 11 people, to $2 billion in assets and 17 people, reports This, they said, is because of their fee-based compensation model. “Now that they know we don’t have a product to sell or an offering, they know that we’re fiduciaries, the floodgates just opened up,” Pagnato told 

Switching to HighTower also gave them more flexibility than they had at Merrill allowing them to make TV appearances allowing them to establish the brand. They also have more options in terms of the investment products they use.

Advisors Need To Factor In A Few Different Metrics To Benchmark Properly (The Wall Street Journal)

Jonathan Citrin founder of Michigan based CitrinGroup writes that it is important for advisors to benchmark properly so they can better gauge their performance. 

“One thing that advisers struggle with is whether to benchmark–including fees–because they can change the appearance of performance. My advice is to report performances to clients without the noise caused by fees, to show whether the net increase is desirable. However, when you’re looking at performance internally, examine your performance including fees, in addition to net performance, to analyse their effect.”

To benchmark properly he says advisors should factor in rate of return and measurement of risk. “Blending benchmarks” is also important because portfolios consist of stocks and bonds. And since advisors are operating in an increasingly globalized world, he also recommends using a global market cap benchmark.

Advisors Should Stop Taking Performance At Face Value And Check For These Metrics (FA Mag)

Advisors shouldn’t take the performance of an asset at face value writes Jason Brady, a portfolio manager at Thornburg Investment Management in a new FA Mag column. Instead, he recommends that we factor in “the complexity of taxes on investment income.” He also points out that “the take home value of dividends is higher than that of ordinary income in the form of bond yield.”

He also argues that the type of asset and the length of the holding period should be factored into performance. “Some other key metrics that advisors should look out for when judging the tax efficiency of a particular portfolio are turnover, volatility, and embedded capital gains or losses.”

Our Big Institutional Clients Have Capitulated And Are Diving Into Stocks (Bank of America)

In recent weeks Bank of America Merrill Lynch’s retail clients have loaded up on stocks while institutional investors have shed them. “After near-record net sales by institutional clients in mid July, and following five weeks of outflows, institutions became net buyers of US stocks this past week,” writes BAML’s Savita Subramanian. 

“Flows at extremes can signal a shift in trends, as late last year we saw capitulation by private clients which preceded two months of net buying in by this group. And outflows by institutional clients [year-to-date] are now approaching full-year 2008 and 2010 levels, after which they were net buyers in 2009 and 2011.”

BAML client flows

FBI Agents Arrest Tech Analyst Sandeep Aggarwal For Leaking Non-Public Info To A Former SAC Portfolio Manager (Business Insider)

Sell side analyst Sandeep Aggarwal was arrested yesterday in San Jose, California on insider trading charges. Aggarwal is charged with one count of conspiracy to commit securities fraud, and one count of conspiracy to commit wire fraud. Aggarwal worked at Collins Stewart at the time that he is reported to have tipped off SAC portfolio manager Richard Lee to a potential deal between Microsoft and Yahoo.

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