FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisers.
Near Retirees Regret Investing Too Conservatively (Financial Advisor Magazine)
Many near retirees ages 55 to 64 who have an employer-sponsored retirement plan regret being conservative investors, according to a TIAA-CREF’s Ready to Retire survey.
Sixty-eight per cent believe that they are unprepared for the future, and 52% wish they had started saving sooner, while 47% wish that they saved more of their paycheck.
“This research reinforces that preparing for retirement shouldn’t become a sprint to the finish, but rather a long-distance pursuit that requires careful planning throughout an adult’s life,” according to Teresa Hassara at TIAA-CREF.
“I think if you go back to ’08, which is what everyone’s touchstone is on this, both active and passive equity funds get crushed. It’s not that active did much worse than passive, but I think there are good funds in both camps. I think you want to be careful either way; you want to get a low-cost fund,” said Russ Kinnel.
“I think you want to find a good, well-run, low-cost fund and, to me, active versus passive is not the most important part of that equation,” said Kinnel.
There is one small historical trend in active versus passive performance, however. Actively managed funds have tended to outperform passive ones in small caps and certain foreign markets. “But I think it’s not nearly as dramatic in one direction or the other as people suspect,” added Kinnel.
Wells Fargo Will Pay Ex-Advisers $US7.4 Million (The Wall Street Journal)
Two former Wells Fargo financial advisers sued the firm claiming they did not receive their bonuses because they moved to rival brokerages. Wells Fargo has agreed to pay $US7.4 billion to settle the lawsuit.
Wells Fargo argued that the “advisers received promissory notes and other signing bonuses from their new employers ‘to compensate them for the forfeiture.’ Thus, the advisers ‘either suffered no damages’ or ‘their damages were mitigated,'” according to Matthias Rieker.
George Soros Invests $US500 Million With Bill Gross (Business Insider)
A private investment vehicle managed by Soros Fund Management, Quantum Partners, will invest $US500 million in an account that will be managed by Bill Gross, according to an announcement on Janus’ website.
“The account will be managed in a strategy similar to the Unconstrained Fund, which is what Bill Gross manages at Janus, but will not be a part of that fund,” reports Myles Udland.
Bill Gross joined Janus in late September after leaving PIMCO. When Gross joined Janus, the Unconstrained Fund had just $US13 million in AUM, but as of October 31, the fund had $US442 million in assets under management.
Investors Should Consider Consumer Discretionary Stocks Because Gas Prices Are So Low (Advisor Perspectives)
Investors are underestimating the future economic growth and earnings growth in consumer discretionary stocks, argues William Smead. The housing depression “prevented the economic recovery from blossoming” over the last few years, but now the lower gasoline processes will pump up the consumer discretionary sector.
“We believe that consumer spending is on the cusp of a decade long expansion which has positive implications for stock pickers. As a group, US households are saving 5.6% of their gross income each month, sporting the lowest household debt service ratio of the last 35 years,” and have the “most favourable” demographics since 1980, argues Smead.
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