Displaying items by tag: advisors

(New York)

Advisors (or advisers) look out, your titles are poised to be taken away by the SEC. While much of the focus on the new SEC best interest rule has understandably been centered around its pseudo-fiduciary components, there is actually a major fight brewing over the SEC’s new rules which restrict the use of certain titles. In particular, it wants to bar brokers from using the word “advisor” and potentially “financial planner” as well. The idea is to only associate the word “advisor” with a fiduciary to make it clearer to consumers. Industry interest groups are already railing against the proposal.

FINSUM: We find this a complicated issue. We understand the fiduciary motivation here, but advisors have been using that title for a long time and, for better or worse, are known that way by the public. Further, a fee structure does not, in our view, change whether someone is an advisor (in the general sense of the word).

(Washington)

Advisors all over the country are wondering about a simple question—why the SEC did not use the word “fiduciary” in its new best interest rule. The answer to the question had remained obscure until this week, when SEC chairman Clayton answered it at a conference following a question by FINRA CEO Robert Cook. Clayton said that the new rule is “definitely a fiduciary principle, just like the fiduciary duty in the investment advisor space is a fiduciary principle”, but continuing that calling standards for both brokers and advisors “fiduciary” and “then defining them would not make it clear that the relationship models were different”.

FINSUM: So basically the SEC avoided using the word so as not to muddle the difference between the relationships of brokers to clients vis-a-vis advisors to clients.

(New York)

One of the main mistakes that retirees make is that they underestimate the amount of money they will need for spending in retirement. Accordingly, one of the main jobs of financial advisors is to adjust their thinking on this and make sure that does not happen. Here are some of the reasons people underestimate what they will need. They discount the likelihood of needing to help family members who might get into a precarious financial situation, or even paying for things like weddings. Retirees also forget to budget for one-time big ticket items, even though they are mostly predictable, such as a new car or a new roof. People also underestimate how much more they spend on entertainment, as they will have a great deal more time. Healthcare is also chronically underestimated.

FINSUM: While advisors deal with this frequently, it is never a bad idea to revisit the key “problem” areas.

(New York)

No, the headline above is not a joke, though it may look like one to some. While it is easy to joke about people leaving millions to their dogs, the reality is that setting aside a portion of inheritance to take care of a pet is increasingly common, and advisors need to be aware. 44% of pet owners have some financial plan in their will for the care of pets, with the structure usually being that money would go to a designated caregiver. One advisor in Boca Raton who handles pet planning says “If you care about them and you want to make sure they’re taken care of, you have to have a contingency plan for them or else they end up at the Humane Society”.

FINSUM: 44% is a huge number, but it does make a lot of sense. Pets are valued family members and it seems irresponsible to many to leave them without care.

(New York)

Goldman Sachs has been working hard to build up its advisor business. While the firm already has very strong revenue per advisor, it is trying to build up its advisor base and boost its securities lending business. However, it has a problem—many of it advisors are jumping ship. Goldman used to be a place where advisors stuck around for years, but in the last 12 months no less than five big, high quality teams have left the firm. Two have gone to other wirehouses, three became independent. Those in the industry say more are likely to leave.

FINSUM: It looks like Goldman is experiencing the same issues as everyone else.