FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Important differences between government and private student loans (Think Advisor)
The student debt load in America is now north of $US1.2 trillion. The good news for borrowers is that interest rates are down versus last year. According to Think Advisor, “Among government loans, subsidized and unsubsidized loans for undergraduates are 4.29%, down from 4.66% last year, and for graduate students they’re 5.84%, down from 6.21%. PLUS loans for parents and graduate students, which, unlike other government loans don’t have loan limits beyond the cost of education minus financial aid, are 6.84%, down from 7.21%.” Borrowers who use private loans are also seeing a drop in borrowing costs, and some have even fallen below the rate offered on government loans. The key differences between the two are government loans begin to accrue interest after graduation, whereas private loans begin accruing interest immediately. Also, government loans are more lenient when it comes to the inability to pay.
A big win for a hedge fund’s retirement plan (Bloomberg)
Renaissance Technologies ended its employee 401(k) plan, and has replaced it with a a tax-advantaged, fee-free opportunity to invest in Medallion, a fund that has averaged a 71.8% return over the past 20 years. The fund won approval after four years of battling the government. Bloomberg reports, “The loser will be the U.S. Treasury, which stands to miss out on many millions of tax dollars.”
Advisors can help clients with charitable donations (Financial Advisor)
The 2015 Fidelity Charitable Giving Report found only 30% of Fidelity Charitable clients have discussed charitable donations with their advisors. Chris Carnal, head of fundraising for Fidelity Charitable, suggests, “There is an opportunity for advisors to more deeply engage with their clients by expanding their conversations to include clients’ motivations for giving, their long-term giving goals, and how they would like to involve family in their philanthropy.” Advisors should discuss charitable donations with their clients as they are a way to lower taxable income.
Communication is key (AllianceBernstein)
Generating income in today’s low-interest-rate world is difficult, and the lack of communication between advisors and their clients is part of the problem. According to AllianceBernstein, “Sixty-nine per cent of the advisors we surveyed said they were confident they could generate income for their clients. But fewer than half of investors and home-office gatekeepers — financial professionals at large brokerage firms who help evaluate and select asset managers — felt the same way.” AllianceBernstein believes communication and confidence go hand in hand.
Met Life is fighting back against its ‘SIFI’ designation (Fox Business)
Met Life continues to push back against its designation as a systemically important financial institution. The insurer filed a lawsuit against the Financial Stability Oversight Council (FSOC), arguing it was unable to obtain a fair hearing on the issue. According to Fox Business’ Maria Bartiromo, “The filing comes on the heels of a federal judge’s ruling that the government went beyond its authority in demanding an equity stake while bailing out Maurice “Hank” Greenberg’s American International Group.”
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