(New York)

Okay, so there is a lot to be gloomy about with the stock market right now. Stocks had a terrible run last week and are off to a poor start today. However, looking in the longer-term, there is some heartening news. That news is that despite some forecasters saying the demographic backdrop for stocks looks weak as Baby Boomers begin to withdraw money as they retire, all that slack, and perhaps more will be taken up by the Millennial generation, which is the largest in the US.

FINSUM: Here is an additional argument we found interesting—that compared to market history, stock returns for the period from 2000 to 2016 were very weak on a relative basis. Coupled with the demographics, it makes one think there may some long-term potential left for this market.

(New York)

For years the big fear across the wealth management industry was that robo advisors would steal clients for human advisors and eventually leave the latter jobless. However, several years of evidence shows that is not actually what is happening. First of all, it is not Millennials which are the biggest consumers of robo services, rather it is baby boomers. For instance, Vanguard reports that 85% of those enrolled in its robo are over the age of 50. Even at Merrill’s Edge platform, the percentage is 45%. Additionally, the ~$200 bn that has been brought under management by robos does not seem to have migrated out of human-advised accounts, but rather is new money coming into the industry, representing pure growth.

FINSUM: While the threat of robos has been lessening over the last couple of years, this is downright positive news. Rather than eating away at human advisors, robos seem likely to actually bring more capital to the table.

(Los Angeles)

A term which is anathema to the ears of real estate developers and landlords is once again rearing its head—rent controls. A push for localized and state rent controls is mounting across the country and the battleground appears to be in California, which is set to vote on a number of such measures. Mid-sized and large cities have been seeing double digit percentage annual rent increases for years, which has led to an incredible pushback from tenants. A number of ballot measures would give local governments across the country significant power to control rents.

FINSUM: It has been a long time since these policies were last in force in a major way, and the collective memories of their downside seems to have been forgotten. All that said, this push is a reaction to the huge investment in housing that private equity firms made following the Crisis. Since then they have raised rents aggressively, which has led to this inevitable grass roots push.

(San Francisco)

There has been hype for several years about the chances for the growing tech industry to absorb and dominate some of the domain of the finance sector. Examples already abound, such as tech companies taking market share in currency transfers or in every day payments. Amazon is providing payment services and financing to merchants, for example. Now big banks are fighting back, pushing regulators to subject tech companies to the same rules and scrutiny to which they are forced. They argue that not doing so will hinder transparency and threaten the global financial system.

FINSUM: This just seems like another of the many areas where a regulatory push is mounting against tech.

(Washington)
Advisors need to be aware and involved, say some of the top names in the industry, because the fiduciary rule is headed in directions that nobody wanted. While the DOL rule was far from perfect, what is in the works is worse—a patchwork of dozens of individual state rules set to fragment the US wealth management market. The SEC is working on a harmonized rule, but according to the CEO of Cetera, “If you are not actively engaged in that discussion with the regulators, then you are not fulfilling your obligations to this profession. You should be getting everyone you know, every advisor you know, to be a good citizen”.

FINSUM: We don’t now how much any individual advisor can do to affect the outcome of the fiduciary rule saga, but suffice it to say that things are quite dicey right now and every little bit helps.