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Long-term investing takes discipline and logic and in many ways involves investing like a Vulcan, writes Joe Davis chief economist at Vanguard. “Vulcans were devoted to discipline, too. Some of them chose to complete Kolinahr training, in which they demonstrated that they had purged themselves of emotions,” he writes. “Advisors are like Kolinahr masters. They set clients on the path to disciplined investing by asking the right questions to identify goals and then developing diversified, low-cost portfolios to achieve them. Then, during those inevitable market downturns, advisors help clients resist the panicky urge to sell.”
He points out that long-term investing requires the use of logic, another skill Vulcans have. “The logic of low costs is relentless. At its heart is the idea that you can’t control most of life or the markets, so you should control what you can. Costs are high on that list.” Davis also reminds us that Spock, the most famous Vulcan, was part human and worked well with the more reckless and human Jim Kirk. “Active funds also meet an emotional need, a human need, to hope,” he writes.
It’s A Stock-Pickers Market Now (The Wall Street Journal)
Last year, the market cycle was such that individual stocks tended to have returns that were similar to the given indexes. Macro strategies did well then, writes Paul J. Boyd of ClearPath Capital Partners in a WSJ column. As the economic cycle moves, Boyd argues that this is a good time to take a more active approach.
“Historically, in the cycle following a phase of high equity correlation, there tends to be a lot more disparity between returns–and that’s precisely what we’ve seen since the end of 2013,” he writes. “We’re halfway through a year that’s been marked by higher dispersion, where the performance between individual stock returns and the market itself is varied.”
…”Now that we’re almost through with two full quarters of 2014, the success of that active approach has become clear: Actively managed strategies are up an average of 2.5% over those tracking the moves of broad indexes.”
High Net Worth Individuals Increasingly Want A More Integrated And Digital Services From Wealth Managers (Capegemini/RBC Wealth Management)
Globally, 65.3% of high net worth individuals (HNWIs) said they would consider leaving their wealth management firm if they didn’t provide them with an integrated experience “meaning, for example, that they can initiate an action on one channel and finish it on another) with a consistent level of service throughout,” according to the 2014 World Wealth Report.
FINRA Employees Had Quite The Payday In 2013 (Investment News)
Financial Industry Regulatory Authority (FINRA) employees clearly did well for themselves last year. The average compensation and salary for FINRA employees in 2013 was $US197,000 ex certain costs, reports Bruce Kelly at Investment News. “That’s pretty sweet, particularly as it practically doubles the mean wage earned at all 167 occupation titles listed in the 2013 ‘Securities and Commodity Contracts Intermediation and Brokerage’ wage estimates tallied by the Bureau of Labour Statistics,” reports Kelly.
“The fact of the matter is that Finra must compete with the securities industry when attracting, and especially retaining, workers who have the necessary regulatory training, expertise and knowledge,” Finra spokeswoman Nancy Condon told Kelly in an email interview. “Our salaries must be competitive to keep the highly skilled individuals that Finra employs.”
5 Proactive Things Advisors Can Do To Maintain Client Loyalty (Advisor Perspectives)
Advisors need to give their clients pro-active advice if they want to see client loyalty writes Dan Richards in Advisor Perspectives. “The difficulty lies in how clients interpret ‘stay the course’ recommendations, especially in tough markets,” he writes. “All too often, they view advice to stand pat as the easy way out for their advisors, representing passivity and lack of effort on their part.”
He suggests that advisors do these five things:
1. Advisors should update clients on their portfolio holdings, otherwise clients might feel like they’re not doing much.
2. “Take advantage of opportunities to rebalance …Besides offering investment merits, rebalancing gives you another opportunity to approach clients with proactive recommendations.”
3. Working on tax efficiency in investing and on after-tax returns offers a good opportunity to get in touch with clients.
4. Clients often are worried about the poor performers in their portfolio. Advisors should explain their decision to hold or sell the asset.
5. Changing out holdings is another proactive way to approach a client. “Even though there may not be a big difference between the bond that’s matured and the new one you’re recommending, the fact that you’ve gone to the effort to research an alternative sends a positive message to clients.”
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