(New York)

The life of an advisor at a wirehouse is certainly changing. In the new broker-protocol-collapsed world, things have become different. At UBS, the changes are very clear—advisors are being paid more, but it is harder to leave. The average broker for UBS earned about $471,000 in 2017 (skewed by big earners), up 13% over 2016. However, at the same time, the firm dropped out of the broker protocol, making it harder for advisors to breakaway. UBS spent 7% less on new broker recruiting last year.

FINSUM: A 13% pay bump is a pretty strong number, but it could likely be much higher if one were to go out on their own.

(New York)

Advisors look out. The big bang moment in wealth management might be about to happen. That moment might be when Amazon launches its own robo advisor, taking the concept to the masses in a way that has not been done before. Amazon is already getting involved in finance with its pursuit of checking accounts and ecommerce retailer Overstock.com is launching its own robo. One wealth management commentator put it this way, saying “Advisers have their head in the sand; they are in denial … Many think this won’t affect them or their clients … There were probably a large number of buggy manufacturers that were saying the same thing in 1910”. Amazon has a mountain of using data on people’s spending habits, which could give them a leg up.

FINSUM: It seems like only a matter of time before Amazon moves in this direction. There is still good margin to be had in this space, which makes it ripe for Amazon.

(New York)

There are currently a lot of catalysts for small caps. The idea of favoring the segment started around the time of Trump’s election, when import tariffs seemed likely. Trump’s America first stance was also generally seen as favorable to small caps, which tend to have a high proportion of domestic sales compared to their larger cap peers. Now, with Trump set to implement metal tariffs and the threat of a trade war looking like a reality, small caps may once again shine, as they would be shielded from most of the international trade fallout. Furthermore, small caps will benefit the most from the new tax cut package.

FINSUM: There are a lot of catalysts that will help small caps. It seems like a great time to buy.

(New York)

While some see the housing market as being in the middle of a long push upward, some see a lot of risks on the horizon as rates rise. In particular, mortgage rates look set to move strongly higher as the Fed keeps hiking rates. 30-year mortgage rates just hit a four-year high and are already hurting refinancings. Not only will the rates hurt new buyers, but they also keep people from moving, which could create bottlenecks in the system. The rise in rates is also challenging because home prices have risen sharply.

FINSUM: So the big point which counteracts all this negativity is that Millennials are entering their home-buying years, so there is a large pool of demand to support prices. The higher end of the market may be where things are weakest.

(New York)

One of the biggest surprises in the rise of ETFs has been the dominance of stocks over bonds. Bonds have always had some liquidity challenges for individual investors, so at the outset one would have expected bond ETFs to do well since they greatly enhanced accessibility to the asset class. However, while stock ETFs have exploded, bond ETFs have been more of a steady progression, but things are heating up. Bonds represent 15% of the total ETF market, but are growing quickly, with the market size doubling to $1.5 tn by 2022.

FINSUM: We think bond ETF demand will rise in line with rates. Once people start seeing 5% yields plus on solid bonds with short durations we think there will be more and more buying.