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Are Advisor Compensation Models About to Shift? (Financial-Planning)
It’s all about relationships. According to PriceWaterhouse Coopers’ 2013 wealth management survey, the traditional pay structure where a fee is tied to assets under management may shift to a more client-centric “reward and incentive structures” model.
“Historically the focus was on net new money but we’re seeing a shift to the client experience, the client’s goals and managing risk,” PwC’s Steven Crosby told Financial-Planning. He said firms are starting to judge wealth managers’ performance based on customer satisfaction.
Advisers Warn Against Bailing On China (Wall Street Journal)
As emerging markets continue to take a hit, advisers are warning that it’s probably too late for investors to ditch China-focused funds, the Journal reports. Many managers are staying the course in China because “much of the damage from this banking scare has already been priced into the market,” ValMark Advisers’ Tyler Denholm told the Journal. Selling now would lock in the losses on China, which, apart from the recent credit crunch, enjoys favourable long-term projections.
Investors More Sensitive About Adviser Fees (Wall Street Journal)
Investors are complaining more about “fees” as of late. “We haven’t seen this level of sensitivity about fee structures for advisers since the war against fund loads in the mid-1990s,” Scott West, head of consulting at Invesco Ltd. told the Journal. Invesco found that investors react twice as negatively toward the word “fees” as they did “commissions.” Costs” and “charges” also did not raise as much concern. “It just reminded us that conversations between advisors and their clients are as much about emotions as they are about laying out the facts,” West said.
‘Dumb Money’ 401(k)-Investing American Workers Have Been Thrashing Hedge Fund (The Reformed Broker)
It may sound counter-intuitive, but smart investing requires you to get excited about down-markets, Josh Brown writes. “The truth is, if your time horizon is long and you are saving a chunk of what you make each year, the very best thing you can do is ignore whether or not “the coast is clear” and simply continue to leg in to stocks.” And that’s why Average Joe investors have been beating market-watching hedge fund “geniuses.”
ANALYST: The Bond Crash Is Worse Than 1994 (Business Insider)
ISI’s Ed Hyman wrote to clients that the sell-off in the Treasury market is already worse than the 1994 episode. “Looking ahead in 1994, bond yields surged another +100 [basis points] in the next 3.5 months,” Hyman wrote. “Of course, the huge difference is that in 1994 fed funds were hiked +75bp during this period, and another +175bp by the end of the year.” But in contrast, Hyman writes, there is no chance of a fed funds hike today, and the Fed’s balance sheet will continue to increase even with tapering.
FINRA Bails On Plan To Supervise Reps’ Outside Businesses (Investment News)
The Financial Industry Regulatory Authority (FINRA) dropped a plan “requiring broker-dealers to supervise non-securities-related businesses.” The supervision idea was in an original filing, but last week the self-regulator said it had “decided that the best course is to eliminate the proposed supplementary material from the proposed rule.”
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