Displaying items by tag: merrill lynch
Bank of America just put out a big warning that advisors need to pay attention to. The bank is warning that earnings growth could get “vaporized” across a couple of sectors. The reason why is tax hikes. BofA's Savita Subramanian posits that in a scenario where taxes rise to 25% next year (from 21% this year), 5% would be wiped off earnings growth, a huge margin in a year that is already set up to see some cooling after the red hot earnings growth of 2021.
FINSUM: Investors don’t seem to be adequately accounting for this risk. Despite the fact that Biden’s proposals will likely get watered down, there appears a high likelihood that taxes will rise next year.
Morningstar has added a lot of coverage to their model portfolio universe this year. Earlier in 2021 they expanded their coverage of ratings to 1500 model portfolios, an increase of 50%. Of all those funds reported on, only two of them took home their coveted gold rating: the Vanguard CORE series and the BlackRock Target Allocation ETF. Vanguard was noted as having highly diversified index funds and rarely making portfolio changes. Other funds that got acclaim, such as their silver rating, include American Funds Growth & Income and the American Funds Tax Aware Growth & Income series.
FINSUM: The world of model portfolios has grown nearly as dizzying as that of ETFs so these Morningstar guides are a big help.
Usually big Wall Street banks are pretty moderate in their outlooks, and they are mostly bullish in general. Well, Bank of America Merrill Lynch didn’t hold back this week when they said the S&P 500 was at risk of a 16.5% tumble in the near term. The bank said that it expects the S&P 500 to fall 20 to 30 bp for every basis point increase in the ten-year Treasury. The bank thinks yields will rise 55 bp by the end the year, implying an up to 16.5% tumble in stocks. The bank says valuations are overstretched by almost every metric.
FINSUM: The bank did point out three sectors it felt were safer, which are energy, communications services, and health care.
Congratulations are in order for Merrill Lynch. In what is mundane—but big—news, the firm has just introduced a paperless onboarding solution for clients. Barron’s describes it this way: “fully digitizes the procedure, allowing clients to approve new account openings through digital attestation on a computer, tablet, or cellphone. What once took a week or more can now be done in a day … That may not be its standout feature, though. COBE allows client associates to simultaneously enter information and process multiple new clients in the same household—for multiple accounts … During an online demonstration, Merrill executives showed a fictitious example of a client associate entering information for a couple who wants to open a joint brokerage account, two IRAs, a joint bank checking account, and a custodial account for their niece. Once an associate has entered as much information as he has from an earlier client conversation, he can invite the new clients to collaborate virtually on the rest. They can view the same screen and make changes to it simultaneously. During the process, the associate can click a button to perform a real-time identity check on the client to satisfy know-your-customer requirements, without asking the client to upload documents.”.
FINSUM: This sounds like the holy grail of onboarding tools. Merrill should package this up and sell it as a service to others in the industry!
Merrill Lynch is giving its herd of advisors a break on their incentive compensation. Brokers at Merrill have a piece of incentive compensation which gives them a bonus if at least 30% of clients use three specific services. But instead of making the cut off for meeting those quotas July of this year, they have extended it to January 2021, giving brokers an extra 6 months to meet those goals. Merrill Lynch says that the change will allow advisors to focus on best serving clients in this volatile period.
FINSUM: Even with the six-month extension, given the market volatility, it will likely be difficult to cross-sell clients into new products.