(New York)

Some of the biggest names on Wall Street have been calling for a correction recently. Morgan Stanley is chief among them. The bank’s chief equity strategist, Mike Wilson, says he thinks there will be a 10% correction in the near term. According to Wilson—who predicted the last two market sell-offs—we are in a mid-cycle transition phase of a market cycle, which is an environment where equities getting very choppy.

FINSUM: This makes a lot of sense, but feels a little too bearish for us. If earnings can hold up, and inflation continues to moderate, we don’t think a full correction will occur. Flat and/or choppy, fair, but not a full 10% fall from here.

(New York)

Environmental, social, and governance investing is reaching a new market just about every month these days, but ESG blew past a huge one this week. Socially conscious investing capped a quarter of all new debt sales. Between corporations and countries, the ESG movement pushed out $391 billion in new debt this year. Companies like Enel SpA are leading the way in Italy, being pushed by the strong arm of European governments. The goal is to have Europe be a leader in climate change. However, investors are paying a premium to get ahold of the bonds. What many are calling ‘grenium’ is the excess being commanded by these socially conscious investments as practically everyone in the bond market is tracking ESG ratings.

FINSUM: Europe is a leader in the ESG movement, but its bond market might be a bit saturated. Look to the American or even emerging markets to get a piece of socially conscious bond investing.

Between fee compression and clients migrating to do-it-yourself platforms like Robinhood, advisors have experienced real fee compression. One potentially high-income / low-effort business line to offset these losses and keep your advisory business growing is referring clients interested in selling their life insurance policies.

A life settlement is a legal sale of an existing life insurance policy (typically of someone 70 or older) for more than its cash surrender value but less than its net death benefit to a third-party investor. The investor assumes the financial responsibility for ongoing premiums and receives the death benefit when the insured dies. The primary reason the policy owner sells is that they can no longer afford the ongoing premiums, they no longer need or want the policy, or they need money for expenses. Investors like the asset class because of the attractive returns and because the asset is uncorrelated with the market.

Due to large investment firms entering the asset class with billion-dollar funds, investor demand for life settlement policies significantly exceeds supply. As a result, for advisors interested in referring prospective life settlement cases, this can be a compelling revenue source. Agile Insurance Solutions (www.agileinsurance.net), via its AgileDIRECT program, offers the most attractive compensation, paying well above the industry average. Fees can be as high as 30% of the purchase price. This means the advisor can make a fee of over $100,000 for referring a single case – if it is purchased for $350,000. Moreover, the income your client makes from selling the policy should add to the client’s assets under management. To help your client and you, Agile offers transparency on its pricing so the advisor and client can understand the pricing logic. By being able to extend an offer within as little as 24 hours, advisors and clients save time and money, as compared to a long-drawn-out process.

The is a significant change from industry norms, where advisors got paid only a modest fee – if anything at all for referring policies, and the life settlement intermediaries captured all the fees. By going direct to Agile, Agile can pay the advisor a significant referral fee instead of paying intermediaries. Finally, extending an offer with 24 hours saves the client significant time and money.

For more information on AgileDIRECT, please visit their website (www.agileinsurance.net) or contact them directly at This email address is being protected from spambots. You need JavaScript enabled to view it..

(New York)

Bank of America put out a stern warning this week. A team of Bank of America equity strategists led by Ohsung Kwon says that the current market looks eerily like the one in the fourth quarter of 2018, when stocks fell 20%. The market is experiencing some concerns on near-term earnings as companies cut back forecasts. According to Kwon, “The nearest memory of early cycle companies' impact on the market is almost exactly three years ago when companies warned about tariffs and slowing macro conditions during 3Q18 earnings … Those warnings and a hawkish Fed resulted in a 20% decline in the S&P 500”.

FINSUM: 2018 came within a hair of a full bear market. That feels too bearish given the overall trajectory of growth. If Congress doesn’t get the debt ceiling raised, though, all bets are off.

(New York)

Firstly, some good news for advisors, Morningstar has announced it is doubling its analyst coverage of models next year from a current 250. Within that coverage, advisors can also find the top 15 models according to Morningstar. Here are those ranked 15-11. Number 15: T. Rowe Price Active, number 14: Dimensional Tax-Sensitive, number 13: Dimensional Core Wealth, number 12: Fidelity Target Allocation Index-Focused, number 11: BlackRock Target Allocation Tax-Aware ETF.

FINSUM: A nice diverse group of models with a lot of different focus areas. Great start for further research.