FA insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Money managers say US stocks are overvalued (Investment News)
A recent Bank of America Merrill Lynch money manager survey shows 23% of respondents believe US stocks are overvalued, the most since the height of the dotcom bubble in the spring of 2000. A whopping 35% of respondents are looking to reduce their holdings of US stocks to underweight. So what are they buying? The two most popular responses were stocks in Europe and Japan, which were overweight by 60% and 40% of money managers, respectively.
The US Dollar Index has rallied 25% since July, and has been a tremendous boon for the 615,000, or so, Americans who have chosen to retire abroad. According to Bloomberg, the Vanguard Retirement Nest Egg Calculator says, “Retirees who tap 10 per cent less of their portfolio each year can stretch money for five additional years with the same level of risk.” So who is seeing the biggest benefit from the strong dollar? American retirees in Europe have seen the greenback surge by 24% over the past year while those in Canada and Japan have both witnessed gains of 15%. However, not every retiree abroad is benefiting from the dollar’s strength. US citizens in Panama use the dollar while those in Costa Rica have seen the buck depreciate 6.4% versus the colon since the start of 2014.
How to build a long-term care plan without insurance (Financial Planning)
Long-term care is attracting more interest as health care costs and life expectancies rise and more and more baby boomers reach their golden years. How can advisors help their clients meet their long-term needs? The National Institute on Ageing notes one of the most important assets for elderly Americans’ is the equity in their homes. Clients should consider selling their homes and “renting in an area where there is good elder support, moving to a continuing care community or exploring the potential of living with family members.” Advisors should make sure their clients have caretaker agreements in place long before they are needed, and should make sure all valuables are protected. Finally, Financial Planning suggests advisors help “clients become empowered patients by documenting acceptable quality of life measures, and sharing those decisions with medical providers and everyone else who has input on their care.”
SEC Chair Mary Jo White said, “That’s what I think is the right thing to do,” when supporting the idea of standardising investment advice rules for brokers and advisers. White failed to go into specifics as to what the rules might encompass, but also suggested a more stringent exam for advisers was needed. Wealth Management states, “The SEC is only in the early stages,” and that the process is complex.
Registered Investment Advisors have the chance to take nearly 30% of the market share, compared to their 20% in in 2013. Independent Financial Partners has brought on dozens of ex-wirehouse reps over the past 15 years and “now includes over 500 independent reps and has some $US30 billion in assets under advisement.” IFP CEO William Hunt says, “The first step is to create a story that sells itself, and we think we have.” Timothy Kneed, an advisor for IFAM Capital, a partner of Focus Financial Partners, attributes notes, “We have great people around us. That’s the reason for our success,”
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