FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Investors shouldn’t overlook currency risk when investing in global bonds (Charles Schwab)
The strength of the US dollar has added another dimension to the global bond rout, currency risk. The Barclays U.S. Aggregate Bond Index is down 0.3% so far in 2015 while the Barclays Emerging Market Local Currency Government Bond Index is lower by 3.4%. Investors need to be aware of an even stronger dollar if the Fed goes along with hiking rates, as majority of market participants believe will happen in the second half of 2015. Schwab favours, “remaining underweight non-USD denominated bonds and hedging the currency exposure of bonds in your portfolio.”
5 ways to measure how loyal your clients are (Financial Planning)
According to Financial Planning, advisors should ask themselves these five questions when trying to determine client loyalty. 1) How long have you been working together? 2) What percentage of a clients assets do you manage? 3) Does the client follow your advice? 4) Does the client give you possible leads? 5) Have you met the clients family?
Marijuana prices are crashing in Colorado (Bloomberg)
Bloomberg reports, global brokerage company Convergex has discovered recreational marijuana prices have fallen sharply in Colorado. An eighth of an ounce of marijuana now costs $US30-$US45, down from $US50-$US70 last year. The drop in prices is also reflected in the price of an ounce, which is down to $US250-$US300 from $US300-$US400. According to Convergex’s report, marijuana sales are up 98% year-over-year in April.
The Financial Industry Regulatory Authority has fined Morgan Stanley $US650,000 and Scottrade $US300,000 for failing to detect fraudulent wire transfers. According to Think Advisor, three Morgan Stanley registered reps moved $US494,400 to their personal accounts from client accounts. As for Scottrade, the firm “failed to obtain any customer confirmations for third-party wire transfers of less than $US200,000, and failed to ensure that the appropriate personnel obtained confirmations for third-party wire transfers of between $US200,000 and $US500,000.” Neither firm admitted or denied wrong doing.
How advisors can avoid fraud (Financial Advisor)
Todd Cipperman, founding principal of Cipperman Compliance Services, suggests advisors do a background search on a fund’s compliance officer before investing money. “Sometimes there is too much focus on performance and not enough on the operational aspects of the fund or manager. Advisors understand they can take market risk, but they do not want to take firm risk. You do not want to risk a firm collapsing,” Cipperman said. He also believes it is important for advisors to check the historical performance of the investments in order to return if high returns are justified. Never think a fund is safe just because other firms invest in it.
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