FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
One Criterion Trumps All Others When Advisors Pick Investments For Clients (Aberdeen Asset Management)
A survey of 200 registered investment advisors (RIAs) by Aberdeen Asset Management showed that 59% of RIAs think "clarity regarding the fund manager’s investment philosophy and strategy is the most important attribute considered when recommending a mutual fund to a client." Historical returns, fund rankings, fund manager tenure, and brand name were less important.
"Fund managers that can clearly and concisely articulate their investment philosophy and strategy are more likely to garner interest from advisors and attract assets," said Mickey Janvier, Head of Wealth Management, Americas, for Aberdeen Asset Management.
"While this seems simple in theory, many fund managers continue to undervalue the importance of clear and concise communication with advisors about how portfolios are invested. These managers will have a difficult time remaining relevant in an environment where transparency is king."
Advisors Need To Bring Their A Game To Protect Clients From Hedge Funds (The Wall Street Journal)
Now that the SEC has allowed hedge funds to advertise it is up to advisors to make sure their clients aren't don't become targets writes Jeffrey B. Clark, Jr of Texas-based Sendero Wealth Management. "It's a good rule of thumb that top performing hedge funds don't need to advertise, so it's likely that the more desperate funds will target investors most frequently." There are some protections of course but advisors need to communicate "what the return will be, what the fees will be, how liquid the investment may be, and why it may or may not make a good fit."
Stocks Look More Vulnerable Than Ever (TD Securities)
"Stocks look more vulnerable than ever," warns Eric Green of TD Securities. Stocks had a nice run up at the start of the year and then traded sideways between May and early September, and then picked up again.
"Part of this may be attributed to a ‘low for longer’ theme that has gained more traction relative to the lead up to the September meeting. Part of this may also be due to a tapering event that many may view as a vote of confidence in the recovery. Either way, however, equities look toppish at this point. As tapering expectations coalesce the bias is clearly lower, particularly in the US where cyclically adjusted PE ratios for non-financial corporates have run well ahead of their counterparts in the UK or Europe.
"A 5% to 10% correction in stock prices is now a reasonable expectation, but it is a correction that provides better entry points and is a correction that will prove short-lived as economic math in 2014 is tilted to 2.5%, or higher."
FINRA Board Considers Raising Arbitration Fees (Investment News)
The Financial Industry Regulatory Authority (FINRA) is considering raising fees associated with pursuing arbitration claims, reports Mark Schoeff Jr at Investment News. This is being considered in an effort to raise the pay for people on arbitration panels. The last time arbitration pay was changed was in 1999.
These 10 Themes Will Be The Big Market Stories Of 2014 (Richard Bernstein Advisors)
Richard Bernstein of Richard Bernstein Advisors is out with his list of investment themes that will be critical in 2014. Here they are 1. "The US stock market continues its bull run." 2. "Japan outperforms emerging markets – The currency wars begin." 3. "European small cap stocks lead global equity performance." 4. "High yield municipals lead the bond market." 5. "Gold falls below $1,000." 6. "The American Industrial Renaissance continues." 7. "The Fed stays on hold much longer than investors expect." 8. "Investors realize that the term “Liquid Alts” may be an oxymoron." 9. "The king has no clothes: high quality stocks underperform." 10. "We expect smaller banks to again outperform larger banks in 2014."