Wealth Management

(New York)

While the idea is more important for retail investors, we thought Bloomberg’s article today warning about buying ETFs might also be relevant for advisors. Bloomberg argues that the name “ETF” has become so vague as to be almost meaningless, and that investors need to be very disciplined in understanding the fund before buying it. The catch-all term “ETF” now encompasses everything from ultra-low cost index tracking funds to hugely leveraged volatility funds, all traded under often simple names and tickers.

FINSUM: The name of the game here is to read the fund prospectus and deeply understand the product being bought. But advisors already know that!


The SEC says that a lack of fee disclosures related to conflicts of interest may be rife across the wealth management industry. Now the SEC is giving a free pass to those that have failed to disclose. So long as investors come clean and give money back to investors, they won’t be punished. The biggest abuses seem to be in the lack of disclosure of mutual fund fees, which goes against the rules laid out in the Investment Advisers Act of 1940. Those who come forward will not face civil monetary penalties, but that special treatment will only be for those who come forward voluntarily.

FINSUM: Hard to say how big of a problem this is. But it does sound like this might be a good way to clean up the issue quickly.

(New York)

The president of Wells Fargo Advisors, David Kowach, shared his views on the industry yesterday. He says that advisors must embrace technology, bridge the generation gap, and become more professional in order to thrive. While some see technologies, like robo advisors or artificial intelligence, as a threat, Kowach says these may “displace lower-value activities, but not meaningful, deep client relationships and caring”. He says it is hard to disrupt advisors who really deeply understand their clients.

FINSUM: Pretty vague and bland platitudes about wealth management, but we thought some of our readers might like to hear them. We do agree that there is a human element to the client-advisor relationship which will be hard to disrupt.

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