(Washington)

Sneaking in right after Christmas and just before a change of administration, the SEC has announced an important rule change that affects all advisors. In particular, the SEC has updated a rule that has not been touched in decades and was increasingly out of touch with reality. The change has to do with marketing communications, particularly those through internet channels. According to Barron’s, “The new regulation also allows financial advisors to use testimonials, endorsements, and third-party ratings to woo potential clients, as long as they meet certain conditions”. SEC chief Jay Clayton commented that “The marketing rule reflects important updates to the traditional advertising and solicitation regimes, which have not been amended for decades, despite our evolving financial markets and technology. This comprehensive framework for regulating advisers’ marketing communications recognizes the increasing use of electronic media and mobile communications and will serve to improve the quality of information available to investors”.

FINSUM: Advisors have had to tread very lightly in digital communications/advertising for years because of a high degree of uncertainty about what was permissible. This goes a long way towards making that very clear.

(New York)

The new year brings many opportunities for advisors. One which is not utilized enough is the implementation of goals-based investing. The new year naturally brings a focus on goals, resolutions, and planning, making it the perfect time to get clients to commit to defining their goals and how their portfolios can get them there. Goals-based investing has been known to help get clients to really commit to their investments and stay in the market for the long haul.

FINSUM: This approach can get help clients get more bought into their own planning and strategies and help give meaning to why they are saving/sacrificing/investing. Just make sure the goals they give are genuine, as many clients will not put enough thought into describing these. There are also a number of funds that directly cater to a goals-based approach.

(New York)

2020 was a very unique year for recruiting. In particular, despite the obvious market and economic turmoil, it was a year in which almost all aspects of going independent got more favorable. Not only did working from home making recruiting conversations with new firms easier, but working from home itself made going independent seem less daunting. Further, firms’ appetite to offer great packages to recruit has grown considerably since this time last year, so it is certainly an advisors’ market when it comes to moving.

FINSUM: One other point to mention here is that clients themselves have also gotten more comfortable with their advisors being independent. The lack of office visits and growth of Zoom communication has limited the need for the big well-known logo in the office lobby when clients arrive. Independents seem likely to gain more market share.

(New York)

The annual next-year forecast cycle for Wall Street’s investment banks is in and some of the findings are interesting. As usual, banks are fairly bullish. However, that was certainly not automatic this year given the huge tumult in markets in 2020. One particular forecast stood out—Goldman Sachs. The bank’s research team, led by David Kostin, has its official 2021 S&P 500 price target as 4,200, or just about 14% ahead of today. Interestingly, the bank also thinks gold is going to rise strongly, from the mid 1,800s today to 2,300. According to Kostin, “On absolute metrics like price/earnings...the market is very expensive relative to its history, in the 90th percentile or greater … But relative to interest rates, the stock market is somewhat attractively valued. Those are two different stories—absolute valuation versus relative valuation”.

FINSUM: As tough as it is to swallow on a historical basis, we think the interest-rates measured basis for current valuations makes a great deal of sense.

(New York)

Many wealth management firms find themselves challenged by female clients. The industry has long been dominated by male advisors, and many firms have been slow to adapt to the needs of female clients. The increasing asset controlled by women has created more urgency to rectify this issue, and one approach that might aid in understanding how to better serve women is goals-based investing. According to one firm that has been very successful with female clients, “Women have to understand why they are doing stuff”. According to studies, meeting financial goals is more important to women than to men, and women tend to put more thought and work into defining the goals for their finances. Thus, making sure to deeply understand goals and explaining how certain investing/wealth management approaches will meet them is integral in making women feel comfortable.

FINSUM: Goals-based investing has many utilities in wealth management, and this one applies to a critical industry issue.