Wealth Management
Merrill Lynch scooped up a four-person Citi Private Bank team that manages $1 billion in client assets. The team, which is based in Connecticut and New York is led by Frank A. Falco, who will be based out of Merrill’s Great Neck office on Long Island. The rest of the team includes Kevin C. Condon, John R. Huber, and Alexandra Maksimow, who will be based out of its Stamford, Connecticut office. Members of the team joined Merrill Lynch on a staggered schedule over the past couple of months after serving out their garden leave terms. Falco spent 22 of his 25 years in the industry with Citi. He started his career at Gaines, Berland Inc. in 1997. Condon had been with Citi for the previous seven years and started his career in 1992 as a portfolio manager with U.S. Trust. Huber had been with Citi since 2007 and started in the business at Prime Capital Services in 2005. Maksimow began her Citi career in 2012 as a credit analyst in the commercial bank before switching to the private bank in 2016. The move is noteworthy since the team is coming from the private banking channel and not the wealth management channel. However, Merrill has occasionally pulled in other salaried private bankers in recent years despite its freeze on veteran broker recruiting since 2017.
Finsum:Merrill Lynch nabbed a $1 billion team from Citi Private Bank despite its freeze on veteran broker recruiting.
Based on the results of a recent survey by Broadridge, advisors are still not embracing direct indexing. The survey data showed that just 12% of advisors are “very familiar” with direct indexing. In fact, fewer than one-third even consider themselves “somewhat familiar” with direct indexing, while 40% say they are aware of the technology, and 15% have never heard of it. Ram Ramaswamy, Head of Custom Direct Indexing at Neuberger Berman, told Ignites that he has encountered resistance from advisors to any new investment option. “The first thing we hear from a lot of advisors is that they are comfortable using the ETF and mutual fund model,” said Ramaswamy. In addition to resistance to new investment options, data gathering could be another impediment. Cindy Galiano, Head of Product, Investment Management at Morningstar Wealth, told Financial Advisor IQ, “Implementing direct indexing successfully requires a lot more than a Bloomberg terminal and a list of client holdings. An enormous amount of data is needed that ranges from benchmarks and prices to sophisticated risk models and portfolio optimization tools.”
Finsum:Due todata gathering and resistance to new investment options, advisors are still not embracing direct indexing.
Category: Wealth Management
Keywords: advisors, direct indexing, tax efficiency, ESG
A form reviewer at the Securities and Exchange Commission recently said he wants to make sure life insurers give investors a clear picture of how their registered index-linked annuity (RILA) contracts work. RILAs are annuity contracts that can expose the holder to the risk of investment-related loss of principal, but that tie crediting rates at least partly to the performance of investment indexes, rather than to the performance of funds that resemble mutual funds. At the Life Insurance Products Conference, held recently in Washington, D.C., Michael Kosoff, an attorney on the staff of the SEC’s Division of Investment Management, stated that he wants one strategy to be available throughout the life of the contract. He also wants to require issuers to disclose maximum losses. Essentially, the SEC wants life insurance company clients to say which crediting strategy the clients' guarantee will be available for the life of a RILA contract. A crediting strategy includes a reference to a particular index such as the S&P 500. Kosoff’s concern is that many issuers have a provision stating, “After the first year, we can terminate any and all options currently available. So, in essence, after year one, investors have no idea what they’re getting.”
Finsum:Due toconcerns over changing crediting changes in registered index-linked annuities, an SEC form reviewer stated that he wants one strategy to be available throughout the life of the contract.
More...
According to a Bloomberg News survey of terminal and Bloomberg.com readers, sixty-five percent of the respondents expect ESG funds to trail the broader market in 2023. Out of the 691 survey respondents, 264 expect ESG funds to “slightly underperform,” while 184 are predicting they’ll “significantly underperform.” Of those 691 respondents, 235 identified themselves as being directly involved in ESG investing, and of this group, a little more than half said they expect the funds to “slightly” or “significantly” underperform. Fionna Ross of Edinburgh-based fund manager Abrdn Plc told Bloomberg, “Given the challenges of 2022, there will be some recovery next year, but it will remain mixed” because of inflation and other overhanging economic hurdles." While data shows that the average equity fund adhering to ESG factors lost slightly less money this year than products that track traditional broader market indexes such as the S&P 500, ESG funds have outperformed over a longer period. According to researchers at Morningstar, about 56% of U.S. sustainable funds beat rival category groups in the three-year period that ended on Sept. 30th.
Finsum:Based on the results of a recent Bloomberg survey, 65% of respondents believe that ESG funds will underperform the broader market in 2023.
Altruist recently announced that it is adding unified managed accounts to its portfolio management capabilities. Altruist is a fintech company that offers a next-generation custodial solution built for independent financial advisors and their clients that combines software to manage a portfolio with and a powerful brokerage platform to invest. The new UMA capabilities will allow advisors to now mix and match models to create core-satellite or best-of-breed portfolios. The new feature will allow advisors to access third-party investment models from top asset managers through the firm’s Model Marketplace to create individual portfolios that meet clients’ investing goals. Advisors will also be able to include their own custom models as building blocks for client portfolios. The company launched its Model Marketplace in February 2021 featuring its own investment models, the Simplicity Series, as well as models from Vanguard and Dimensional Fund Advisors. Models from BlackRock, Redwood Investment Management, and State Street Global Advisors were added later on.
Finsum:Fintech firm Altruist announced the addition of UMAs to its model marketplace to allow advisors to mix and match models to create portfolios.
Skience, a leading financial services solution and consulting provider, recently announced an integration with CapitalROCK’s RightBRIDGE Best Interest Validation System. Skience offers consulting services and an award-winning platform that provides wealth management firms and RIAs with an efficient way to unify their technology. CapitalROCK, the makers of RightBRIDGE, provides financial services firms with a powerful and configurable rules engine to determine and document the best interest status of proposed rollovers, account types, and products. RightBRIDGE uses a scoring engine and ReasonText™ that explains why a recommendation fits a client’s needs and the licensing firm’s best interest requirements. By adding this integration, Skience will be able to provide advisors with an easy way to integrate Regulation Best Interest into their workflow process with a click of a button. The data can be used to update Skience records and be leveraged by Skience’s suitability checks as Skience’s client and household data will be prefilled into RightBRIDGE. The announcement comes as Robert Cook, FINRA Chief recently noted that more Reg BI-related enforcement cases are in the pipeline.
Finsum:Financial services platform Skience announced that it will be integrating with CapitalROCK’s RightBRIDGE solution that helps advisors meet Reg BI standards.