FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
The Biggest Concern Of The Wealthiest Americans (Vanguard)
A new report from Spectrem Group and Vanguard finds that the health of the spouse is the top concern of millionaires and ultra high net worth (UHNW individuals — those with $5 million to $25 million in net worth. Meanwhile, the mass affluent, those with $100,000 to $1 million in net worth, say that maintaining their current financial position is their top concern. The report suggest that advisors ask their clients about their health care concerns and help them with their "'what if?' scenarios."
4 Reasons Capital Spending Could Pick Up Soon (iShares Blog)
Stock market bulls cite increasing capital expenditures as one of the reasons they think stocks will rise. But capital spending by companies rich with cash have been restrained because of concerns about consumer spending and policy uncertainty. BlackRock's Russ Koesterich however argues that there are four reasons capital spending could "marginally improve this year."
1. "Improving consumer confidence" - The Conference Board's measure of consumer expectations averaged 78 in the second half of last year, "a material improvement from the previous four years when this measure of consumer sentiment averaged below 60," writes Koesterich.
2. "Better economic growth"– The U.S. economy should expand 2.5% this year, compared to 2% in 2013.
3. "Normalization in real interest rates"– "To the extent the macro environment continues to improve and the Federal Reserve (Fed) exits its quantitative easing (QE) program by year’s end, I would expect real long-term yields to continue to normalize, a development that in the past has been associated with higher levels of capital spending."
4. "Companies have little choice"– The capital stock is "rapidly aging" and this will likely force more capital spending in many industries.
SIFMA And Chamber Of Commerce Oppose FINRA's Data Collection Plan (Investment News)
The Securities Industry and Financial Markets Association (SIFMA) and the U.S. Chamber of Commerce have come out in opposition of FINRA's data collection proposal, reports Mark Schoeff Jr. at Investment News. The proposal called Comprehensive Automated Risk Data System (CARDS) would collect customer trade data to better detect fraudulent practices. Those opposed to CARDS have raised concerns about the financial privacy of customers.
"CARDS would require firms to develop new systems and/or dramatically modify existing systems to collect data elements that they do not have currently, create storage capacity to store vast amounts of new data, develop methods to standardize data format … and save the data for an unspecified period of time,” Ira Hammerman, SIFMA vice president wrote. "The information that will be requested through CARDS is a road map to an individual's financial life and virtually all investors' information will be housed in one place."
Sometimes, The Stock Market And The 'Fear Index' Will Surge Together For Years (Charles Schwab)
The VIX, a gauge of volatility, also known as the fear gauge doesn't always move in the opposite direction of the market, as seen during the financial crisis. In the 1990s the two climbed together. Charles Schwab's Liz Ann Sonders thinks we could see that happen again in coming years. "Stress in [the emerging markets] has been a contributing factor behind the recent uptick in volatility, but I believe we may be entering a period similar to the mid-to-late 1990s, when the stock market and volatility both rose for an extended period (the only time in history). As most know (and you can partly see in the chart below), the two generally move inversely," she wrote in her recent commentary."
Advisors Need To Better Guide Their Clients As The Fed Tapers (The Wall Street Journal)
The Fed's tapering of its monthly asset purchase program "will contribute to GDP and corporate earnings growth over the next six months," writes Kevin Clewley of KD Clewley Capital Management in a new WSJ column. While many are worried about a correction and want to hold cash Clewley thinks advisors need to explain the impact of quantitative easing and guide their clients better.
"As the Fed continues to taper and stops artificially lowering long-term interest rates via QE, the spread between long-term and short-term rates should continue to widen, making lending more profitable to banks, expanding the availability of credit, and boosting growth. In December, when the Fed decided to taper the purchase of government bonds by $10 million a month, stocks prices rose on the news, which could mean that investors are becoming less concerned that the eventual end of QE will hurt the economy."