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The Number Of American Investors Who Want Financial Advice Is Growing (WealthManagement.com)
The number of American investors who are looking for financial advice increased from 24% in 2013 to 35% in 2014, according to the third annual Advice Matters survey.
However, even though the number is rising, the majority of Americans are still not interested in any advice at all.
“Those who aren’t interested in advice may not know what it includes or how valuable it can be,” Eric Jones, senior managing director of advisory solutions at TIAA-CREF told Wealth Management’s Megan Leonhardt.
The major issue for most people with financial advisors is trust. Some 65% of those polled stated that “it’s difficult to know which sources of advice can be trusted”, which is a 16% increase from the 2013 survey. The second most common issue is cost. 44% of respondents believe that “good financial advice will cost more than they can afford.”
Why We Shouldn’t Worry About A Global Economic Slowdown (Blackrock Blog)
There are some signs out there that suggest global growth is slowing. But BlackRock thinks we shouldn’t get too worried. First of all, the majority of global manufacturing surveys suggest that global growth is stable, and there are even indications that it might be growing. The global purchasing managers index (PMI) has remained around 52.5 for the majority of the year, and the services component has “improved recently.”
Secondly, credit spread “remains tight” at the moment. Widening credit spreads are associated with “deteriorating” conditions, and are associated with slower growth. On the flip side, “tight” spread has typically been associated with faster growth.
And finally, industrial metals prices remain “steady.” Blackrock’s Russ Koesterich writes that, “while gold prices have been selling off, prices of industrial metals have been more stable. This is relevant for global growth. Given industrial commodities’ sensitivity to economic activity, increases in their prices tend to have a positive correlation with global growth. Using the Journal of Commerce Index of Industrial Metals as a proxy, industrial metal prices have been holding their own. The index is up around 8% from the spring lows and 7% year over year. On this metric, there is little evidence of a global slowdown.”
Merrill Edge Is Looking To Double Its Advisor Number Over The Next Two Years (Financial Advisor)
Bank of America Merrill Lynch’s dual “online/in-person service for mass-market clients, Merrill Edge, is planning to double its number of financial advisors by the end of 2016,” Aron Levin, the head of Preferred Banking and Merrill Edge Investing, told Ted Knutson.
Right now there are 1,500 Merrill Edge advisors in Bank of America’s retail branch network. This move would increase that number 3,000 — meaning that 60% of Bank of America’s branches would now have a Merrill Edge advisor.
This doubling comes with two goals: first of all, it will provide face-to-face financial support to more clients. And secondly, this will expose clients to BAML and U.S. Trust services “as they attain more assets and their personal wealth grows.”
Merrill Edge was started in 2010, and aims to work with clients who have $US50,000 to $US250,000 in investible assets.
Say Hello To The $US1 Billion Super Ensemble Advisory Firms (Investment News)
The advisor firm landscape is quickly changing. “Rapid growth has created a new type of advisory firm — a large, sophisticated, aggressive, multioffice enterprise with a clear strategy for even more growth”, according to InvestmentNews Financial Research. Namely, the new “Super Ensemble” advisory firm.
Only four years ago, a “Super Ensemble” a firm was considered to be “Super Ensemble” if it had at least $US1 billion in AUM. Nowadays they need to have at least $US10 billion. On average, these firms rake in an annual revenue of $US17 million,.
On top of that, they’re “rapidly growing”, seeing 18.6% growth. They’re closely followed by “Enterprise Ensemble” firms (those between $US5-10 million), which saw 17.5% growth. Even though smaller Enterprise firms and solo firms see the slowest average growth rate, it does not mean that they are unsuccessful.
Even though many investors like the concept of indexing, others think that it’s getting too big. Vanguard’s Chris Philips writes that “there’s always going to be questions out there whenever you see popularity of anything rising,” and cites Apple, Microsoft, and Exxon as examples. He adds that people regard indexing in a similar fashion, and are asking: “is there a tipping point for indexing, and should we be concerned by that?”
Another problem with indexing is that it leads to market inefficiencies. Philips stated that as indexing becomes more popular, “it will lead investors to have portfolios that are more inefficiently managed. And the thinking behind that is that index fund, ETFs, they generally are priced at the day’s close. So they are building up their portfolios. And if a majority of monies are actually passively managed, then the price-discovery process of active managers is marginalized. If that takes place, then, the theory goes, you could actually end up with more inefficiencies in the marketplace, more arbitrage opportunities, poorly priced equities or fixed income investments.”
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