FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Two Things Investors Should Consider In A Two-Speed Economy (Advisor Perspectives)
“There’s a two-speed pattern to the U.S. economy, as manufacturing sector looks healthier but as job growth and consumption stay ‘muted,'” writes BlackRock’s Russ Koesterich in Advisor Perspectives. But he’s also seeing this pattern in many economies around the world. With that in mind Koesterich thinks investors should do two things.
1. Investors should consider being underweight Treasuries. “While I still believe that any rise in rates will be contained, there is a floor to how low yields are likely to go, thanks to continued strength in manufacturing and a Fed likely to start tapering early next year.” 2. Investors should also increase their “exposure to cyclical companies, which are supported by the rebound in manufacturing.”
Investors could see their income tax bills rise because of some new provisions under the American Taxpayer Relief Act (ATRA). To lower this, some advisors consider tax-loss selling, “or using realised losses on investments to offset taxable gains,” says but Sarah D. Hammer, senior investment analyst at Vanguard. But this strategy has its own risks.
A client might want to keep the same risk exposure in their portfolio which could make tax-loss selling hard. “You must be cognisant of the wash-sale rule, which prohibits claiming a taxable loss on a security if there is a purchase of a “substantially identical” security 30 days before or after the sale,” she writes.
“Another risk involved with the purchase of a new investment is that it resets the investment’s cost basis and holding period, which — depending on circumstances — could potentially result in a reduction or elimination of the benefit of tax-loss selling,” said Hammer.
Why One Advisor Rejects The 4% Rule (FA Mag)
There’s a rule of thumb that suggests retirees take 4% from their savings in their first year of retirement, and then increase that in coming years in keeping with the inflation rates. But independent financial advisor, Dan Moisand, says he rejects the 4% rule.
“Most of us know someone who has lived at least into his or her mid-90s, but few of us know people that age who spend what they spent when they were 65, adjusted for inflation. The 95-year-old who still plays golf or travels the world is a rare exception, not the norm. It is a simple fact of life that as we get older, we slow down. The elderly tend to spend their time doing things that cost less.”
Merrill Advisor With $US500 Million In Client Assets Joins UBS (The Wall Street Journal)
Scott Harries, a financial advisor who managed over $US500 million in client assets at Merrill Lynch, and his team, have joined UBS, according to Corrie Driebusch at The Wall Street Journal. The team has joined UBS’ office in Los Angeles.
There’s Increased Demand For 401(k) Advisors (Think Advisor)
There is a growing demand for skilled 401(k) advisors, Jania Stout, vice president of the Fiduciary Consulting Group at PSA Financial Services Inc, told Think Advisor. And this is a recent trend. “It is a big market. There is a huge shift going on. It used to be that brokers or advisors would have a couple of plans in their whole entire career. Now most of the plans are moving to 401(k) specialists,” she said.
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