FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisers.
The End Of QE Suggests That The First Rate Hike Is Close (Charles Schwab)
The Fed officially ended quantitative easing on Wednesday. The committee maintained the near-zero target rate, and once again used the “considerable time” language. However, they also added that the rate hike will now be data-dependent.
The end of QE means that there is “one less thing in the way” of the first rate hike, according to Collin Martin.
“With the Fed using more qualitative guidance, we think it will be important to pay attention to each release of the economic projections to get an idea of when the Fed might start hiking rates and how high they may got. We still think a hike sometime in 2015 is most likely,” he writes.
Older Investors Have A Lot To Learn From Millennials (BlackRock Blog)
Millennials were in high school and college as they watched their parents struggle with the financial crisis. As a result, “they perceive pensions as a quaint anachronism” and they “don’t believe in the retirement fairy,” writes Heather Pelant.
Additionally, they have developed extremely good saving habits that the baby-boomer generation did not. First of all, they dedicate nearly half of their incomes to saving and investing — on average 22% goes to savings and 18% goes to investing.
Millennials are more interested in investing in the stock market (and have more faith in it, too) than Baby Boomers. In fact, 56% of millennials regularly monitor their investments, and spend approximately 7 hours per months “reviewing the numbers.”
Strike Gold With Gold-Mining Stocks (Morningstar)
The “pickings have been slim” for “bargain-hunting investors,” but now’s a good time to check gold-mining stocks, according to Christine Benz.
Historically, those who have invested in gold-mining stocks have done poorly because it’s an extremely volatile group that requires perfect timing. However, Benz argues that investors who are willing to “look beyond the ugly near-term numbers are apt to find” gold stocks attractive.
One good reason to invest in gold is that precious metals add diversification benefit to portfolios. Additionally, Morningstar analysts believe that most gold-mining stocks are currently undervalued, and that investors stand to benefit from that in the future.
UBS Wants Its Advisers To Serve Only Super-Wealthy Clients (The Wall Street Journal)
UBS wants its US-based financial advisers to only serve clients with over $US1 million, and to more the clients with smaller accounts to the call center — UBS Wealth Advice Center, according to Corrie Driebusch. And this isn’t uncommon: Many US brokerage firms are now pushing advisers to focus on wealthier clients.
UBS appears to be following in Bank of America’s footsteps. Now, Merrill Lynch isn’t paying advisers who are working with accounts of less than $US250,000. Instead, those smaller accounts are being moved to its online and telephone-based advice service, Merrill Edge.
Since 2011, Merrill Edge has grown to $US109 billion. By comparison, the UBS Wealth Advice Center was created in 2013, and so far manages only $US8.6 billion. And it looks like they are aiming to grow their call center to something similar to Merrill Edge.
Spouses Should Share Long-Term Care Coverage (Financial Planning)
Long-term care coverage is expensive. But there’s good news: If both spouses are planning on getting coverage, then “a share policy might offer more coverage for less money by letting clients pool their benefits,” according to Financial Planning.
For spousal sharing, if a client buys a five-year policy, then the couple has 10 years of coverage between them. That means that if one spouse uses two years, then the second can use the other eight.
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