(New York)

Something very interesting is happening in recruiting. While advisor movement slowed down right at the beginning of the pandemic, it has bounced back strongly in the last couple month. The reason why is that advisors are finding it easier to explore opportunities with new firms while they are working from home. Any advisor recruiter will tell you that calling a wirehouse broker at their branch is an almost impossible task as the office itself works as a gatekeeper. Even if you can get the advisor on the phone, it is taboo for them to speak about moving firms while they are in the office. Thus, the ability to take zoom calls from their comfort of their kitchen has opened the door to more recruiting since advisors are free to explore firms in-depth and with total privacy. Further, the lack of a need for offices has made advisors wonder if they need the infrastructure (and lower payouts) that come with being at a wirehouse.

FINSUM: The landscape for recruiting has changed overnight. No conferences, but no office gatekeepers either! It seems a great time for advisors to consider a move, and firms would be smart to put effort into recruiting right now as this is truly an unprecedented opportunity.

(New York)

Cloud computing is a red hot area of tech. Amazon’s AWS division gets most of the attention, but the whole sector has grown greatly in total revenue over the last couple of years. Heavy growth is forecast to continue through the early 2020s, but there is an x-factor that may give a big boost to cloud stocks which the market is not pricing. That x-factor is the fact that work-from-home is sending the demand for cloud services much higher than baseline forecasts. With distributed workforces, the need for cloud-based computing is higher than if workers were in offices. For example, Audi’s cloud spend grew 12% in just a month between March and April.

FINSUM: So WFH is a great tailwind for cloud computing. The only challenge is that the costs for companies have been soaring so much that they are trying to renegotiate them back down. Overall, seems a big net positive.

(Washington)

Last week Democrats published a wide-ranging agenda for the potential Biden presidency. One section of it—which received much publicity in our niche wealth management world—was about the party’s intent to get rid of the SEC’s new Reg BI. However, another part of that plan was much less covered, but no less important: the party also wants to bring back a true fiduciary rule, potentially very similar to the failed DOL rule 1.0. Interestingly, Barbara Roper, head of investor protection at the Consumer Federation of America, says that the approach the Democrats would likely take is not to create an entirely new rule, but edit and “reign in” conflicts in the existing rule.

FINSUM: So this is quite unsurprising, but very important. What was interesting to us is Roper’s comment about the way Democrats would likely go about this. In our view, modifying an existing rule would be much faster than crafting a new one, which means a new version might come into force a whole lot faster than expected.

(New York)

There has been a lot of hype about cloud computing for the last few years. Growth in the sector has been massive, and Amazon Web Services (Amazon’s cloud business) has become a key indicator for investors. A new report out today shows why now might be a good time to invest more in the sector. The report shows that large enterprises are planning to increase their overall spending on cloud product, and by 2021, the cloud will account for 32% of overall tech budgets versus 30% today. More impressively, spending on the cloud by large enterprises is up 59% since 2018 to $74m annually.

FINSUM: A 2% shift in tech spend into the cloud alone is a good driver of business. It is probably a good medium to long-term bet to take a look at a handful of cloud stocks.  Check out at Global X's CLOU for a good cloud computing ETF.

(Seattle)

For the last week, Microsoft has been in a delicate dance to try to acquire the hugely popular social media app TikTok. President Trump has been adamant that it needs to be bought by US interests or he may ban the app. Last week, Microsoft said it was trying to acquire the company, but then swiftly abandoned the efforts because Trump said he would block the deal. Now, Microsoft says that Satya Nadella and Trump have spoken and gotten on the same page and that the deal is back on. Wedbush thinks the deal could be transformational for Microsoft as it would put them in direct competition with Facebook, Alphabet etc, and give them a huge social media prize while those competitors remain mired in major regulatory scrutiny.

FINSUM: TikTok already has 100 million users in the US. We think if this goes through it could end up being a major boost to Microsoft. Perhaps not unlike Facebook’s acquisition of Instagram.