FA insights is a daily newsletter from Business Insider that the top news and commentary for financial advisors.
A lesson learned from Bernie Madoff (Investment Perspectives)
Advisors have been learning from Bernie Madoff’s Ponzi scheme since it collapsed in December 2008. One of the key lessons has been to avoid the herd mentality, and to not do something just because everyone else is. However, this is easier said than done. A study by noted Arizona State behavioural researcher Robert Cialdini showed people are greatly influenced by their peers. So how can you reduce your risk? Dan Richards suggests using peer influence to show perspective clients you already work with people like them. Also, make sure you have a narrow focus.
How to benefit from bond market volatility (Investment News)
Recent volatility in the high yield market has led to many nervous moments for investors in the space. However, high yield bonds that have experienced a steep drop in prices without a decline in credit quality are “good money.” Investors who do their homework correctly will be rewarded. David Sherman, a principal at Cohanzick Management, recommends investors look for short-term bonds to “minimize the mark-to-market risk of the portfolio.”
Concerns are growing over the safety of filing taxes online (Financial Planning)
Americans are voicing a growing amount of concern when it comes to the safety of their personal and financial data when filing taxes online. A recently released report by Taxsoftware.com showed 70% of respondents worried about the safety of their information when using a desktop computer and that users of tablet devices or mobile phones also expressed similar concerns. “The rise in concern by taxpayers is to be expected, given the recent headlines about computer hacking and data theft,” said Taxsoftware.com spokesperson Mickey Macedo.
Raymond James poaches talent from Morgan Stanley (Think Advisor)
Raymond James has added a Washington DC-based team with $US150 million of assets into the fold. The team of Douglas Richards and Sheldon Ray Jr. leaves Morgan Stanley, its home for the past eight years, after generating nearly $US2 million in yearly fees and commissions. In a statement, Douglas Richards noted: “We find it so refreshing to experience a culture so contrary to that of Wall Street.”
Young clients offer growth for advisors (Financial Advisor)
New data out suggests financial advisors should target younger clients. A report released by PriceMetrix showed advisors with a younger book of business see growth nearly double that of those with older clients. PriceMetrix President and CEO Doug Trott noted: “There are good reasons to avoid clients with less than $US250,000 in assets.” He continued: “but adding age to the mix can change an advisor’s thinking. He or she could justifiably decide to take on the 40-year-old with fewer assets because that client will grow so much faster.”
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