Concerns over the banking sector are currently making things rough in the $8 trillion agency mortgage bond market. Agency mortgage bonds are widely held by banks, bond funds, and insurers as they are backed by mortgage loans from government-controlled lenders Fannie Mae and Freddie Mac. They are far less likely to default than most debt. They are also easy to buy and sell quickly, which is why they were Silicon Valley Bank’s biggest investment before its troubles. However, agency mortgage bonds are vulnerable to rising interest rates like all long-term bonds. This pushed their prices down last year and also saddled banks such as Silicon Valley Bank. In fact, the risk premium on a widely followed Bloomberg index of agency MBS hit its highest level since October last week, as climbing interest rates led to volatile global markets. According to bond fund managers, this certainly reflected fears that other regional banks might have to sell their holdings. When benchmark interest rates rise, bonds that were sold at times of lower rates lose value. For instance, prices of low-coupon agency mortgage bonds started dropping about a year ago, when the Fed raised interest rates to tame inflation and also indicated that it might start selling the mortgage bonds that it owned.

Finsum:With faltering banks such as Silicon Valley Bank holding large amounts of agency mortgage bonds, the turmoil in the banking industry is roiling the $8 trillion agency mortgage bond market.

There are numerous ways for an advisor to expand his or her client list, but approaching people you know might be one of the lowest-hanging fruit. However, approaching them in the wrong way will only end up in rejection. Bryce Sanders, President of Perceptive Business Solutions Inc. recently wrote an article for ThinkAdvisor on how best to approach people you know for business. According to Sanders, the first step is to identify their need and research the issue. For instance, if you’re talking with someone, listen carefully when they speak. You may realize they have a problem on their mind. The next step is to discuss the issue and demonstrate an understanding of it. You know there is something on their mind and as a friend, you are concerned. Try to “tactfully” draw it out. Next, assess their level of comfort or unease. They might be thrilled you spoke up or ask you to back off. The fourth step is to view the situation as a third party. Make a list of all the potential solutions or approaches to their issue. Then offer to do something for free. You could say it’s not the first time you heard about the problem and then connect your friend with a specialist at your firm. After you meet with the specialist, present your friend with a turnkey solution. If they say no, gently follow up.

Finsum:Bryce Sanders, President of Perceptive Business Solutions Inc. recently wrote an article for ThinkAdvisor on the best steps for approaching your friends for business, including identifying their needs, demonstrating an understanding, offering them free advice, and gently following up.

A financial advisor succession plan? It’s a component, of course, of a strategy to pass the baton of a practice to another advisor. Long and short term planning’s typically is part of the plan, according to assetmark.com.

It could be that one component of the plan is the outright sale – internally or externally -- of the business. Or you might add a junior advisor as your successor down the road or pass it to a family member.

Face it: a retirement plan’s a big time consideration for independent financial professionals and, often, comes down to them establishing a succession plan for their business. 

A trio of benefits stemming from proactive succession planning include: 

Peace of Mind

A succession plan to add to the value of your business and enhance its marketability and:

Provide you an opportunity to prepare next generation advisors

Organizations; yes, they get it. Succession planning’s nothing to poo poo at. That said, when it comes to pulling it off well, it’s a different story, according to delotitte.com.

It takes having the right leaders doing the right jobs at, you’ve got it, the right time, as most organizations recognized years ago. Even so, not many of those very companies have managed to be  proactive, not to mention, disciplined, about carrying out succession planning processes that strike gold, the site continued.

By the end of the year, a goal of the Financial Industry Regulatory Authority is to examine 1,000 broker-dealers for Reg bi compliance, according to Bill St. Louis, head of Finra’s National Cause and Financial Crimes Detection Program, reported advisorhub.com.

That’s no small potatoes, considering that the total would account for about a third of the organization’s approximately 3,000 member firms. Compliance flaws in half of its exams were linked to the rule, which is more than two years old, last year.

An update of an annuity sales standard was adopted by Georgia, Illinois and Tennessee, according to thinkadvisor.com. It was developed by the National Association of Insurance Commissioners.

The update was designed by the NAIC to abet the U.S. Securities and Exchange Commission’s Regulation Best Interest sales standard. Its been adopted by a minimum of 33 states.

Failure by enough states to uniformly adopt the update might mean that the SEC could lasso the ability to oversee some aspects – at the minimum -- of sales and fixed annuities, some regulators think.

Jonathan Foster, president, and CEO of Angeles Wealth Management, recently penned an article on MarketWatch where he listed the benefits of direct indexing for retail investors. Foster noted that while direct indexing is primarily used by high-net-worth investors that are seeking to optimize their after-tax returns, the widespread elimination of brokerage trading fees and the growing availability of fractional share trading have led to greater adoption of direct indexing. According to Foster, the advantages that direct indexing can bring to a portfolio include ‘dirty money,’ outmoded mutual funds, and personalization. Foster says that ‘dirty money’ refers to investors expressing concern about how the companies they invest in make money. For instance, direct indexing offers advisors the ability to craft portfolios that exclude what their clients believe to be “dirty money.” Foster uses tobacco as an example. In this instance, direct indexing can help an investor craft a tobacco-free portfolio. Outmoded mutual funds refer to investors using mutual funds in taxable accounts and not having the benefit of starting with their own individualized cost basis, which can lead to distributable annual taxable gains. With direct indexing, investors can take advantage of tax-loss harvesting. Direct indexing can also offer investors an opportunity to customize portfolios with strategies such as ESG.

Finsum:A wealth management executive recently wrote an article on MarketWatch advocating for direct indexing due to benefits such as excluding certain securities, employing tax-loss harvesting, and customizing a portfolio for certain strategies.