One thing about the wealth management landscape that has never made much sense is how JP Morgan is not early as big a player as one might expect given the overall strength of its brand. Morgan Stanley and Merrill Lynch hog all the AUM and attention, with JP Morgan and Goldman Sachs mostly on the outside looking in. Well, that may be about to change, as JP Morgan is now planning some big changes to its wealth management business. According to the WSJ “The bank is creating a unit that will combine its U.S. wealth-management operations for affluent clients and the Chase branch network’s financial-advisory business”.
FINSUM: This sounds like a plan to go after mass market wealth management like Morgan Stanley or the Thundering Herd. Could be a big play.
Investors should take a look at big banks. Executives at top financial companies are excited about potential Q4 performance. Earnings estimates are moving higher based on more bullish guidance. Last year’s fourth quarter saw a dismal performance from big banks, so that sets up a very favorable comparison to this year. Morgan Stanley’s earnings may be up 41% according to analysts surveyed by Bloomberg.
FINSUM: It will probably be well-telegraphed, but big bank stocks still seem like they might see movement higher now and a pop on earnings releases.
Gold had a great first nine months of the year, rising 25%. Since September though, it has been quite bad, falling 7% versus an S&P 500 gain of 10%. So where is it headed? Godman Sachs says the metal still has a strong case. The bank’s research team says “gold’s strategic case is still strong … We expect ‘Fear’-driven investment demand for gold to be supported by late cycle concerns, political uncertainty and high [developing market] household savings”. Even if the Fed increases rates, GS thinks gold will be solid because rates still remain so low, which is a positive for the zero-yielding metal.
FINSUM: If you think the risk-on rally will continue, then stay away. However, if you think the market is going to be flat in 2020 because of political and economic uncertainty, then gold is at a decent buying point right now.
Despite all the worries that plagued the market this year, things have actually been very strong. Exceedingly so. But don’t expect that any longer, says Blackrock. The world’s largest asset manager expects returns in 2020 to come way down. The firm says that the big changes in monetary policy this year outweighed the geopolitical issues and caused huge returns, which won’t happen next year. Blackrock thinks returns in the mid single digits in 2020 seem realistic.
FINSUM: This is sort of a middle of the road call in terms of forecasted numbers, but we like the summary of what happened this year and how next year’s performance is not likely to be duplicated.
Expectations of higher compensation and more “freedom” usually top the list of articles that discuss why advisors are breaking away from large brokers. However, there is more to it than that. An interesting piece in Financial Planning tells the story of a team breaking away from Merrill Lynch. In reality it is not just comp that is an issue, and it s rarely the sole reason for breaking away. Often times it has to do with institutional limitations, like corporate bureaucracy, a bad branch manager, or small clients getting funneled to call centers. Other times it is because advisors are offering tons of service, like tax planning, cash flow management, loan refinancing etc that they just don’t get paid for.
FINSUM: This is a good piece that goes deeper than usual in exploring the real reasons advisors leave and whether doing so is a good idea.