Wealth Management
LPL Financial recently announced that Financial House has joined its broker-dealer, RIA, and custodial platforms. LPL was able to lure Financial House from Lincoln Financial, where the team managed around $650 million in advisory, brokerage, and retirement assets. The Financial House team, which was based in Centreville, Delaware, includes partner advisors Joseph Biloon, Robert Griesemer, and Emily Woodson as well as advisors Joseph Blair, Leo Strine, and Gary Ulrich. According to Griesemer, the team left Lincoln because its business had model changed. He said the following in a statement, “Financial House was founded primarily as an insurance and planning firm, but that’s changed over the years. We now offer more comprehensive, complex investment strategies and planning, so working with an insurance-based partner no longer suited our business model.” He added, “At the end of the day, we recognized LPL would provide us with more independence and flexibility to grow our practice as we see fit.” According to Biloon, “Financial House expects LPL to provide it with opportunities to add advisors and potentially acquire other practices because of LPL’s access to retiring advisors who want to sell part or all of their business.”
Finsum:A $650 million team left Lincoln Financial for LPL due to its changing business model that no longer fit with Lincoln’s insurance-based model.
Taking, um, stock, of your portfolio holdings?
Hold on with both paws: with investors updating their economic outcome probabilities, volatility’s the byword for next year in the S&P 500, UBS Global Wealth Management recently said, according to markets.businessinsider.com.
"[Expect] more volatility and large market swings exacerbated by positioning as investors update their economic outcome probabilities in reaction to each new data point and Fed utterance," Jason Draho, head of Asset Allocation Americas at UBS Global Wealth Management, said in a note.
He noted that the S&P’s been marked this year by a "pendulum-like return pattern.” He added “large month-to-month swings could continue well into next year before the economy's eventual destination becomes clear."
And if you thought the oil market’s were beyond the sticky fingers of volatility: ha!
As in think again.
After heading north on the tailwinds of a post lockdown spark in demand, crude climbed to an almost unprecedented high in the aftermath of the Ukraine invasion, according to currenciesdirect.com. Then, in light of the tumultuous global economy, drooped.
According to a new report by Edelman Financial Engines, inflation, recessionary fears, and geopolitical uncertainty are undermining financial confidence. The report found that just 23% of more than 2,000 adults that were polled earlier this fall felt “very comfortable” about their finances and only 12% consider themselves wealthy. Even high-net-worth investors are concerned about their finances. Only 44% of millionaires feel “very comfortable” about their finances, with only 29% feeling wealthy. Jason Van de Loo, head of wealth planning and marketing at Edelman Financial Engines, had this to say about the results, “Becoming a millionaire was always the pinnacle of financial success. But at a time when inflation and stress levels are up, and markets and portfolios are down, very few Americans actually feel wealthy.” Edelman Financial Engines also found that most adults feel less financially secure than they would have hoped at this stage in their life. The results match similar responses from other surveys. A separate report by Bank of America found that 71% of workers feel their pay isn’t keeping up with the rising cost of living which brings the number of people who feel financially secure to a five-year low.
Finsum:A poll conducted by Edelman Financial Engines revealed that Americans are less confident about their finances due to inflation and recessionary concerns.
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Registered index-linked annuities (RILA) are currently the fastest-growing variable annuity in the industry due to their downside limits and upside crediting formula. Now that the Senate unanimously passed legislation to make it easier for the industry to register new products, RILAs should see even more growth. The legislation directs the SEC to issue a new form that replaces the IPO paperwork annuity issuers are currently required to use for RILAs. With the passage of the Senate bill, insurers filing for RILAs would be able to forgo the requirement that they disclose financial information using generally accepted accounting principles (GAAP). This will make it easier for insurers since GAAP is something they typically don’t use. Sales of RILAs for the first half of the year came in at $20.4 billion, a 6% jump from 2021. According to the insurance industry trade group Limra, the product now makes up 40% of overall variable annuity sales. Inflation and market volatility have made the RILA product attractive to investors due to its loss protection features and potential for upside growth.
Finsum: Registered index-linked annuities, which are already the fastest-growing variable annuity, should see even more growth as the Senate passed legislation that makes it easier to register them.
Direct Indexing is expected to grow faster than ETFs, mutual funds, and separate accounts over the next five years and is poised to reach more than $800 billion in assets by 2026. This is according to The Case for Direct Indexing: Differentiation in a Competitive Marketplace, Cerulli Associates’ second annual report on direct indexing. The report, which was sponsored by Parametric Portfolio Associates, provides the first comprehensive analysis of how advisory firms are using direct indexing to address client needs. It revealed that assets in direct index products reached $462 billion in the first quarter of this year, growing at a 15% rate from the second quarter of last year. However, a recent Cerulli survey showed that only 14% of financial advisors are aware of and recommend direct indexing solutions to their clients. Cerulli expects that number to increase, resulting in direct indexing assets growing at an annualized rate of 12.3% as it becomes more mainstream. The report was designed to help advisors identify situations where direct indexing can help their clients. It examined seven real-world use cases by advisors, which included Tax-Loss Harvesting, Trimming Highly Appreciated Stock Positions, Planned Charitable Giving, and ESG Investing.
Finsum:According to a new report from Cerulli Associates, direct indexing is expected to grow 12.3% annually and reach $800 billion in assets by 2026.
Andrew Hartnett, president of the North American Securities Administrators Association, recently said in an interview that a massive, multi-state sweep of broker-dealers will be completed sometime early next year to gauge the effectiveness of their Reg BI implementation. This should give state regulators “what they hope” will be a clear snapshot of whether firms are putting investors' interests first or not. Last November, similar multi-state exams of 443 firms found pervasive retail advice and sales violations. This was in spite of the fact that Regulation Best Interest had already been in place for more than 15 months at that time. The 2021 sweep found a majority of broker-dealers and reps still putting their interests above their retail clients. The sweep also found that 65% of brokerage firms also failed to discuss lower-cost or lower-risk products with their clients, even when they offered such products. Hartnett stated, “Now we’re out there doing exams again to see where the industry is now, what’s changed and how well firms are implementing the requirements to look at reasonably available alternatives.” NASAA is also ramping up its focus on fees on the registered investment advisor side and expects to release that guidance next year.
Finsum:The time for leniency is over for broker-dealers as the NASAA is planning a multi-state sweep to gauge the effectiveness of their Reg BI enforcement.