(Washington)

The lone wolf financial advisor is steadily becoming a rarity in the wealth management industry (Edward Jones advisors aside!). For instance, 77% of Merrill Lynch advisors now report that they work in teams, up from 48% in 2013. Whether you work solo or in a team, one thing many might not know is that FA teams tend to grow their AUM and client base much faster than solo advisors. The advantage seems to be derived from two key aspects. The first is that a team has a wider variety of skill sets to help deliver comprehensive services to clients. The other is that having a team in place makes clients worry less about the impact of losing a single advisor via illness, death, or leaving the firm.

FINSUM: The team approach seems to be working across the industry, with clients liking the change. That said, forming teams comes with its own set of significant risks and considerations.

(Washington)

The reality of the political environment in the US is making one thing very clear: it is a tentative time to buy or own healthcare stocks. While healthcare companies are currently performing well, the market is growing increasingly bearish about them, and with good reason. Democratic candidates have proposed an array of new national healthcare plans that all have degrees of disruption, some of them massive, to the status quo. That means the healthcare industry is facing a problem that is very hard to control and could cause extensive changes to their current operating paradigm.

FINSUM: Unless healthcare gets so beat up that it is worth taking a risk on the stocks just as a bet that the Democrats don’t win the election, it seems like there is asymmetric risk reward in the sector right now.

(Washington)

Senator Elizabeth Warren, who is running for the Democratic presidential bid, has just put forward a brazen new policy. She is calling for a large scale program to forgive student debt for millions of Americans. She wants to offer a $50,000 forgiveness program to those with incomes under $100,000. She plans to finance the overall program, which also includes making future tuition free, through a tax on the ultra wealthy. Her plan has faced some internal party criticism, because many times those with the highest debt are also those that went to elite colleges and tend to be at the higher echelons of the earnings spectrum.

FINSUM: While this is a LONG way from happening, it is worth thinking through, especially as other candidates are likely to adopt some form of it. In our view, the biggest beneficiary of this policy would be real estate, as it would enable a whole generation of Millennials and Gen Zers to buy homes because they would suddenly be unsaddled by student debt.

(Detroit)

The car industry has a big problem on its hands, and it is not something that can necessarily be solved with new technologies or better mpg. The problem is not even that that young people don’t want to buy new cars, it is that they don’t want cars at all. In fact, they don’t even care to have driver’s licenses. In 1983, half of all 16-year olds had licenses. In 2017, it was down to a quarter. Gen Z, those born after 1997, aren’t ageing into licenses and ownership either, as the rates of those who have licenses by 24 is falling. 16-year olds reportedly don’t care about the freedom of getting their own car anymore, as they have Uber and Lyft and increasingly just move from urban area to urban area as they age, where car ownership isn’t as ideal.

FINSUM: Not wanting your own car at 16 sounds almost unfathomable to older generations (including us), but it is a reality that is emerging.

(Washington)

The anti-fiduciary rule crusaders have been more successful than anyone could have imagined. Back in 2017, the slew of industry groups fighting the DOL’s rule looked woefully outgunned. But in time, they completely succeeded. They are coming off another fresh victory as well—in Maryland—but the next battle looks to be even bigger. That battle will be in New Jersey, a state that seems to have taken the stage as a leader in the state-level fiduciary rule push growing across the US. Unlike Maryland, New Jersey is committed to a rule, which makes this fight more substantial. The new rule in NJ also has the support of some advisors there, giving the proposal more traction.

FINSUM: In our view, it will likely be harder to stop the spread of these state level fiduciary rules than it was at the national level, if only because it is harder to concentrate opposing resources across the whole US. Also, if a state truly has conviction about the rule, it seems more likely to come to fruition.