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It’s pretty rare that clients sue their financial advisors. “About 95% of financial advisors don’t even have any customer complaints against them,” writes Tom Ajamie, a plaintiff lawyer who represents clients who have sued wealth management firms.
But it does happen.
As a result, financial advisors should take several steps to ensure that they set up they are best protected against particularly litigious clients.
“Set up your business so you follow procedures that make it not only possible to say you are doing the right thing, but also to show that you did the right thing,” advised Don Littlefield, a lawyer who defends financial advisors.
In other words, advisors should keep meticulous paperwork, document all conversations, and “be willing to share the bad news” not just the good news.
Asian Equities Are Ready For A Comeback (AllianceBernstein)
While developed-market equities have been soaring, Asian stocks have been pretty quiet over the past few years. However, AllianceBernstein’s Stuart Rae and Rajeev Eyunni argue that now might be time to look at Asian equities because they are primed for a comeback.
“…things may be falling into place. Indeed, many Asian markets have made a solid recovery in recent months. But they aren’t in full swing yet. Parts of the market are still lagging — unduly, in our view — and those may offer the most attractive investment opportunities as the recovery gains traction. In other words, cheap Asian ex Japan stocks — i.e., those whose earnings power remains underappreciated — may be due for a rebound,” Rae and Eyunni write.
Specifically, they believe that there is value in individual Asian companies and industries. Additionally, they argue that there is “exceptional opportunity” in Chinese and Taiwanese markets, based on valuation spreads.
A Merrill Lynch Brokerage Team Was Ordered To Return $US6.6 Million In Signing Bonuses (Financial Advisor Magazine)
Two brokers at a Beverly Hills Merrill Lynch office must return over $US6.6 million in signing bonuses to Barclays Capital, because they left Barclays after less than four months on the job.
Finra ordered Matthew Celenza to pay $US5.1 million “representing principal on a note he signed when joining Barclays in March 2012” and approximately $US140,000 in interest. His partner, Lawrence DiGioia, was ordered to pay $US1.51 million and around $US40,000 in interest.
“Big brokerage firms in the United States typically offer signing bonuses to top brokers in the form of loans that are forgiven over a period of time that typically runs about eight years. Barclays cited unjust enrichment, breach of contract, and performance, among other causes, in its claim,” according to the report.
Favour Longer-Dated Treasury Bonds After The September Jobs Report (BlackRock Blog)
Following the strong September jobs report, investors might be wondering what to do with their bond portfolios.
“Favour longer-dated Treasures over those with two- to five-year durations. Looking forward, US interest rates should drift back (at BlackRock, our year-end target for 10-Year Treasury is around 3%), and I continue to be convinced that rates are likely to be led by the front-end of the curve. Of course, the various headline-grabbing geopolitical risks that have come up in recent months may delay this process, but the eventual trajectory of rates is higher,” writes BlackRock’s Rick Rieder.
As the yield curve flattens further, “the extent of any rate rise should remain modest at the long-tend,” writes Rieder. “Therefore, I continue to view longer-dated Treasuries as a potential opportunity, particularly if their yields rise over the coming weeks.”
The only downside of longer-dated treasury bonds is that they have the potential to exhibit the most volatility and are also the most vulnerable to rising rates.
Investors Should Look At Solution Based Funds (Morningstar)
Investors should look at solution-based funds, argues Christine Benz, because they “address investor’s real needs.” One kind of solution fund that she believes investors should consider are small and mid-cap funds, especially the “vehicle type”, because it “gives the investor fewer moving parts to deal with.”
Additionally, these small and mid-cap funds give active managers more flexibility, argues Benz. Funds that are small-cap oriented give managers “latitude to own mid-cap stocks. And it can also reduce tax and transaction costs incurred by that portfolio if the manager isn’t having to periodically sell securities because they have outgrown his or her market-cap parameters,” she writes.
Another type of solution based funds that investors should look at are “inflation fights.” These inflation fighting instruments include “Treasury Inflation-Protected Securities (TIPS) in the mix”, commodities, and maybe real estate investment trusts (REITs).
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