FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisers.
The Midterm Election Results Probably Won’t Affect Government Consumption (JP Morgan Asset Management)
The upcoming midterm elections have, unsurprisingly, raised concerns over the Congress’ budget priorities.
However, it’s important to note that government consumption “is one of the least variable components of the GDP,” according to JP Morgan. “Year to year, the government spends a consistent amount; while this consistency is largely due to defence spending, public works projects also help keep spending steady.”
As a result, JP Morgan analysts believe that major change in government consumption is “unlikely,” regardless of which party takes control of Congress following elections.
Here Are The 3 Biggest Myths About Retirement-Income Strategies (Charles Schwab)
There are three major myths about retirement-income strategies. First, many investors believe that yield is the most important factor in portfolio building. But this strategy is can cost you the benefits of diversification and capital appreciation, writes Rob Williams.
Second, investors believe bonds are inherently better than bond funds. “Depending on your portfolio size and preferences, bond funds can fill most of the needs often served by individual bonds. If you don’t have the interest, time or resources to build a diversified portfolio, a collection of bond funds can do the job as well,” writes Williams.
And finally, investors believe that annuities are “bad” and expensive. However, some annuities provide insurance against several risks while other investments can’t.
Young Advisers Will Learn Only By Doing (Financial Planning)
Experience is the greatest teacher, and senior advisers should encourage their new hires to be extremely hands-on, as opposed to watching from the sidelines, to learn the ropes.
There are several ways to get young advisers involved. First, senior advisers should have them write meeting summaries and correspondences with clients. Next, they should set target milestones for handling specific scenarios. And finally, senior members should give presentation feedback, so that younger hires know where to fix mistakes.
Resist The Urge To Lecture Clients (Advisor Perspectives)
Connecting with clients emotionally is the most important aspect of the adviser-client relationship, writes Dan Solin. And there are two important ways to do this during meetings: no lecturing and no taking notes.
Lecturing inhibits emotional connection because oftentimes a client’s concerns differ from what advisers believe is important. As a result, clients may feel rejected. Instead, advisers should find out personal information about the clients, and answer their questions first.
Additionally, advisers should avoid taking notes during client meetings — especially during the first meeting. If you’re looking down at a piece of paper, you’re going to have a hard time making an emotional connection with your prospective client. And besides, no one makes serious financial decisions during a discovery meeting.
Muni Investors Should Remain At The Longer End Of The Curve (BlackRock Blog)
Municipal bonds are typically a buy-and-hold option for most investors. As a result, it’s important to look at the long-term trend in interest rates — not just the next few months.
The Fed generally uses inflation and employment to gauge the interest-rate policy. If these two movements “remain muted,” then central bankers should not be too aggressive in the rate movements in the future.
“For muni investors, that means the longer end of the curves should remain the place to be for incremental yield pick-up for the foreseeable future. Although longer maturities have gotten expensive recently … they should continue to represent long-term value for traditional muni bond investors,” writes Peter Hayes.
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