(Washington)

The House Financial Services Committee sent a very strong message to president-elect Joe Biden this week: dissolve Reg BI. Chaired by Maxine Waters, the committee said that the Trump administration had "taken several actions that have eroded shareholder rights, established regulatory barriers to shareholder engagement, increased issuer involvement in the proxy voting advice process and stripped away fundamental investor protections, including safeguards around private markets, where investors have few protections”, and that Biden should take care of the issue by getting rid of Reg BI, and separately, CRS altogether.

FINSUM: Industry experts seem to agree that the Biden Administration is unlikely to completely unwind Reg BI, if only because getting a new rule through would require Congressional approval. While that could still happen depending on how the Georgia runoffs go, it seems more likely the new SEC team would just employ very strict enforcement of Reg BI.

(New York)

Goals-based investing and planning is a well-known, but not greatly understood topic within asset and wealth management. The idea of goals-based investing is to make the goals for investment clear so as to match them to life needs and keep motivation high for clients. However, many advisors do this incorrectly and resultingly think it is ineffective. The main problem is always that advisors don’t take enough time to truly understand their clients’ goals. Many clients, when posed question about goals, will give half-hearted answers that they think they should say (e.g. a comfortable retirement). It is on advisors to dig deeper and truly understand what they want. For example, a client who is fully engaged might say they want to buy a retirement home on the coast when they are 65 and afford to give their daughter a six-figure wedding.

FINSUM: If the goal that you are trying to align investment to isn’t completely genuine for the client, then it doesn’t truly serve as motivation. That said, true insight into what a client wants can deliver enormous value.

(New York)

Goldman Sachs went on the record with a bold call last week. They told investors that despite all the fears in the market, a big correction WAS NOT coming. Alessio Rizzi and his team at Goldman say that many indicators are showing a bullish outlook, and that big losses don’t seem likely. According to Rizzi, “more moderate risky asset returns are likely from here, rather than an imminent risk of a sizable correction”. One indicator Goldman cited as very bullish was the ratio between puts and calls. Right now the market is deeply favoring calls, with the ratio nearing the limits of its normal distribution.

FINSUM: So bulls look at this and say “aha, I’m right, the market will rise”; and bears say “exactly as expected, this is a contrarian indicator”! In our opinion, on the whole, there is plenty to be optimistic about.

(New York)

Tech shares have been doing very well recently. This has given rise to renewed fears of overvaluation and a market correction. In the ten days leading up to December 8th,the Nasdaq 100 jumped 5.3%. While this makes some nervous after a year of huge gains for tech, history tells us this likely means more gains are coming. There have only been 10 times ion history when the Nasdaq 100 went on a ten-day winning streak, and the average gain in the year following was 19%.

FINSUM: The point here is that even if value stocks do well—which they have been as the economic outlook has brightened—tech stocks don’t look bearish by any means.

Did you know that most advisors spend 5.5 hours per week handling investment management related tasks like searching for funds? That stat comes from Kitces.com and does a good job highlighting what has become an increasingly difficult problem for advisors: how to find the right funds when there is an ever-increasing ocean of options, including many that look very similar. Between screeners with limited criteria (I want “value ESG”, not just “value”) and the pain of cross-asset class searches, finding funds has increasingly become a real quagmire for time and effort. Imagine if you could have three extra hours per week to focus on new client acquisition instead of cycling through drop-down menus trying to find funds? Well, a company called Magnifi has a great new tool to help you do just that. For example, international stocks are getting some attention from Wall Street analysts right now because of their favorable valuations versus US stocks. However, finding the right international funds is even harder than doing so for domestic stocks. For example, you might want to find the best ETFs focused on Asia. Because of the antiquated architecture of existing fund screeners, it would take hours of work to pin down funds in the right fee range and with the right composition. Instead, Magnifi uses natural language search to immediately display and compare all the relevant funds for your query. For example, here are the results for searching “China Value Funds”.

Another great thing about Magnifi is that they incorporate FI360’s fiduciary risk score for every fund, allowing you to incorporate that element for clients and rest easy with concern to regulations.

FINSUM: In our view, Magnifi is the best way to search and filter investments, period. Once you try it out you will quickly move on from the many ETF “screeners” available.