FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisers.
Pessimists Are Completely Wrong About The Low Oil Prices (Lord Abbett)
“A few months ago, when the rise of ISIS pushed up oil prices, articles abounded about the danger posed to the US and the global economy. Now that oil prices are failing, articles abound about the dangers to the economy of lower prices, sometimes by the same people. Can pessimism really have it both ways? The answer is ‘no,'” says Milton Ezrati.
In fact, the three main concerns that pessimists have are wrong, argues Ezrati. First, he suggests that the lower prices do not threaten the fracking revolution. Second, although the oversupply is suggesting that low prices will continue, these “straight supply-demand calculations” are “less secure” that many believe. And finally, as long as oil prices say low, consumers will benefit — which will in turn boost the economy.
Morgan Stanley Will Spend $US50 Million Reimbursing Clients Who Didn’t Receive Prospectuses (The Wall Street Journal)
Morgan Stanley has set aside $US50 million to “reimburse clients who didn’t receive prospectuses after they purchased securities, according to a Securities and Exchange Commission filing made on Tuesday,” reports Michael Wursthorn.
In late 2013, the firm noticed that some clients never got electronic prospectuses, and they have decided to reimburse them.
Originally, Morgan Stanley was planning on paying back $US20 million, but the firm saw “an increased level of rescission offer acceptances during October 2014” according to an SEC filing.
Not All Liquid Alternatives Are Created Equal (Investment News)
The biggest risk of investing in liquid alternatives is the extreme performance disparity, argues Jeff Benjamin, which was exhibited by Morgan Stanley and Goldman Sachs. The former bank’s fund performed significantly worse than the latter’s: Morgan Stanley’s was down 1%, while Goldman’s was up 7.2%.
“Most alternative strategies are designed around capturing alpha above a market benchmark at the individual manager level. That means performance dispersions can be dramatic between the best and worst alternative funds in a given category,” writes Benjamin.
Don’t Merge If You Like To Be In Control (Wealth Management)
Advisory firms are increasingly feeling the pressure to merge with another firm to grow their businesses. However, there are three reasons merging may not be the best decision for a small firm. First, if you have not found the right partner, don’t merge with just anyone.
Second, advisers who prefer to be in complete control of the firm should avoid merging. When you add more people into your practice, you have to give up control in exchange for resources and support. “It is the reason you are likely to meet many advisers with a small practice of their own who are much happier than the advisor with the largest practice in, say, the Chicago office of a national firm,” argues Philip Palaveev.
And finally, working for oneself allows for a better work-life balance. Having more employees adds pressure on advisers to “maintain a similar workload and contribution, as it’s difficult to be lifestyle oriented in an ambitious team of people,” writes Palaveev.
Focus Just Added A $US1.4 Billion RIA (Think Advisor)
Focus Financial Partners added a huge $US1.4 billion RIA, Strategic Wealth Partners. All together, Focus has added 23 new partners in 2014.
Focus sees “tremendous potential” with the Chicago-area Strategic Wealth Partners. They are hoping to establish a regional presence in the “highly fragmented nature of the Chicago RIA market,” according to Vamsi Yadlapati, a managing director at Focus.
Strategic Wealth Partners was founded in 2008 and has 14 staff members.
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