Wealth Management
A new insurance company plans on selling non-variable annuities directly to consumers. Former Global Bankers Insurance Group executives teamed up to start Pillar Life by forming Pillar Insurance LLC and using the entity to acquire Continental Life Insurance Company. Pillar Insurance renamed Continental Life to Pillar Life last year. The company plans on building a web-based self-service process by April 2023. The insurer has already posted guides to multi-year guaranteed annuity contracts and single-premium immediate annuities on its website. The Interstate Insurance Compact, which is an organization that helps states review product and rate filings, has approved Pillar Life forms for an SPIA contract and a single-premium deferred annuity contract. Pillar Life will also offer life insurance and supplemental health insurance products. For clients, this means they will have more ways to buy annuities on their own. For advisors, however, it will likely make it more difficult to go through the paperwork to find out what clients own.
Finsum:Pillar Life plans on offering non-variable annuities direct to consumers through a web-based self-service model.
Providers of ETFs that invest based on principles of environmental, social, and governance (ESG) are facing headwinds from multiple sides. First, they are about to be hit with a batch of new rules from the SEC. Secondly, they have been put directly in the middle of a political battle between those for ESG and those who think it is just woke capitalism. On the SEC front, the agency recently published the results of two consultations. The first was on proposals to change the so-called Names Rule. The SEC wants to strictly define how a fund’s constituent investments should be reflected in its name. The second was on proposals for requirements on ESG disclosures for investment advisers and investment companies. On the political front, Florida passed a resolution in August that bans its pension fund managers from considering ESG with regard to their investing strategies. During the same month, Texas criticized BlackRock and nine European financial groups for boycotting the fossil fuel industry.
Finsum:ESG ETF providers are facing criticism on both the regulatory and political fronts.
At the 2022 PLANADVISER National Conference, which was recently held in Scottsdale, Arizona, three staffers from the SEC provided an in-depth discussion on multiple topics, which included best practices that firms should consider putting in place to avoid any Reg BI issues. According to the SEC staffers, under Reg BI, when making a recommendation to a retail customer, a brokerage professional must act in the best interest of the retail customer at the time the recommendation is made, without placing their own financial or other interests ahead of the retail customer’s interests. Their recommendations included: avoiding compensation thresholds that disproportionately increase compensation through incremental increases in sales, minimizing compensation incentives for employees to favor one type of account over another, eliminating compensation incentives within comparable product lines, and implementing supervisory procedures to monitor recommendations.
Finsum:At a recent conference, three members of the SEC provided a list of recommendations for advisors to implement to avoid running afoul of Reg BI.
More...
While many market strategists have noted the recent failures of the 60/40 model portfolio, one investment manager still sees value in the portfolio model. Quilter Cheviot's investment manager David Henry told the Financial Times that there was still value in 60/40 portfolios despite rising inflation and geopolitical uncertainty. He commented, "But if we look at the historical numbers, maybe the grim reaper should hold onto his horses." Henry looked at quarterly returns for stocks and bonds since 1986 and found that there were nine quarters when the prices of both bonds and stocks fell in tandem and it has only happened once since 1986 in consecutive quarters, the first and second quarters of this year. He stated, "Breakdowns in diversification like we have seen this year, are rare. We then looked at 12-month forward returns for a 60/40 asset allocation following quarters where stocks and bonds fell together and returns were pretty healthy following those quarters.”
Finsum: An investment manager still believes in the 60/40 portfolio model as it is pretty rare for stocks and bonds to fall in tandem.
According to the findings of the Advisor Edition of State Street Global Advisors’ Inflation Impact Survey, the vast majority of investors who are currently working with a financial advisor, believe their advisors’ insight and guidance are valued more today during the current period of market volatility and rising inflation. The survey revealed that approximately three-quarters of investors have discussed inflation with their advisors and how inflation will impact their investment goals in both the short and long term. 90% say they value their financial advisors’ knowledge and guidance even more during uncertain times, and 86% believe their advisor has helped them remain confident during the current period of rising inflation and market volatility. The data follows the initial findings of State Street’s Global Advisors’ Inflation Impact Survey that showed inflation-induced stress and anxiety is influencing investor behavior with short-term budgeting and long-term financial goals.
Finsum:State Street’s Inflation Impact Survey revealed that investors are placing a higher value on their financial advisor’s guidance during times of heightened market volatility and inflation.
CAIS recently announced that Mariner Wealth Advisors selected the firm to provide a customized alternative investment platform solution for the firm’s rapidly growing network of advisors. CAIS is a leading alternative investment platform for independent financial advisors. It provides advisors with a broad selection of alternative investment strategies, including hedge funds, private equity, and more. Mariner Wealth Advisors is a privately held advisory firm with over $60 billion in assets under advisement. CAIS will offer Mariner’s advisors access to a broad menu of alternative investment funds and products, educational resources, end-to-end digitized transaction processing, and third-party reporting integrations. Mariner’s advisors will receive access to a curated menu of diversified alternative investment products across asset classes and qualification levels. CAIS will also assist in the launch of proprietary funds and multi-manager funds managed by Mariner Wealth Advisors and enable the firm to add its own sourced third-party funds to the platform for centralized monitoring, transacting, and reporting.
Finsum:Alternative investment platform CAIS was recently selected by Mariner Wealth Advisors to provide its advisors with a broad selection of alternative investment strategies.