(Washington)

Biden has officially made his new SEC pick—Gary Gensler. And while the nomination has not gotten much press, what comes next may. Many fiduciary advocates and those on the left are making a big push for a change to Reg BI, and not just in terms of its actual content, but the name itself. “New suitability standard” is a name that has been floated for example. One industry lawyer, Brian Hamburger, put it this way, “Brokers, as they are registered as brokers, are representative of products; they derive their powers by way of a selling agreement between product manufacturers or investment products; and the dealer component, where they have an obligation to distribute that as appropriate to customers … That is a far cry from having to act in a client’s best interest”.

FINSUM: Most readers here are probably thinking “who cares what it is called”, but that is not the root of the matter. Rather, the name may be a symbolic first step of a major overhaul and the creation of a true fiduciary standard by the SEC.

(New York)

If there is a product that looks like it has a great ten-year horizon ahead of it, it might just be annuities. Just like eSports and electric vehicles seem to have a great demographic trend behind them, annuities will ride a wave of retirees into great success. However, that is not the only tailwind. The other is ultra-low interest rates, which have completely upended the role of bonds in a portfolio. They yield very little and have a great deal of risk. Understanding that, annuities have a very interesting role to play, as between the three major types: fixed, variable, and fixed index, they offer a range of options that can help replace bonds. Fixed annuities offer set guaranteed income, variable give banded income but offer some upside, and fixed index work as a hybrid between the two.

FINSUM: Annuities have gotten a bad reputation over the years because of some high fees and bad actors, but product suites have gotten better. They can really round out a client’s need for low volatility income.

(New York)

Imagine you are an advisor at a big brand name broker-dealer or wirehouse. As much as you might gripe about your ever-changing compensation plan or the structures the firm puts in place, one thing you really like is that the logo on your business helps you win clients. Naturally then, losing that logo is a big challenge, both in terms of marketing, but also in terms you one’s own psychology. Therefore, when going independent it is critical to consider the marketing support you may receive. Many RIAs have next to none, or at least not much more than off-the-shelf options. However, some RIAs differentiate themselves through branding and marketing, such as leading investment concepts or customized marketing that empowers each advisor.

FINSUM: This might sound silly, but when considering whether to join an RIA google their name and check the Google News tab. Find key terms on their site (e.g. do they have any trademarked words?) and do the same. The firm’s marketing prowess will quickly become clear.

(New York)

ESG has been getting more and more mainstream, and yesterday it likely took the final hurdle to major acceptance. A top asset manager with almost $1 tn in AUM announced that from here forward, all its new funds would be ESG. The manager is DWS group, which is majority owned by Deutsche Bank. According to DWS, “Sustainability is more than a corporate topic, it’s a society topic and an industry topic”. The move follows UBS’ recommendation last year that investors choose sustainable investing over traditional investing. However, according to some US financial advisors, these kind of moves will come slowly in the US. “There is too much assets tied up in old money and not enough advisor support,” says Jeff Glitterman of Glitterman Wealth Management.

FINSUM: We have to agree with Glitterman here. While BlackRock has certainly been a leader in the US, there is a reason a lot of these big announcements have been coming from European firms.

(New York)

Despite all fears, markets had a fairly strong year in 2020. Why? See the full story on our partner Magnifi’s site.