Wealth Management

(New York)

For the last half decade or so, financial advisors across the industry have been on an endless search for the next frontier of advice that will insulate their business from cheap, digital competitors. This has led to a wide array of new services, but one that is increasingly pervasive is college counseling. Many advisors are now taking a much more active role in college planning for the children of clients. This includes everything from figuring out how to shelter certain assets from financial aid forms (e.g. insurance products) to actually proofreading applications and helping children choose majors and study abroad programs. Demand for the service has been rising since the cost of tuition has exploded, meaning it represents a much larger financial burden than ever before.

FINSUM: Some of this seems to make a lot of sense (e.g. making financial plans to pay for college and help with financial aid forms), but having financial advisors help kids choose majors seems a little odd. That said, this seems like a good growth area for the business.

(New York)

Vanguard is a pretty tough firm to beat in the mutual fund space. Their sterling reputation is hard to top, and no one seems to outdo them in the asset class. However, there may be a viable competitor: boutique manager Dodge & Cox. In fact, the fund manager just got ranked first out of 150 mutual fund companies by Morningstar. The rankings are based “on a variety of factors, including analyst fund ratings, expense ratios, and corporate stewardship”. Perhaps most importantly for investors, almost all Dodge & Cox mutual funds beat their category averages over the last decade.

FINSUM: Dodge & Cox has outperformed Vanguard in many ways, though obviously Vanguard can offer lower costs than anyone else. In many cases, though, performance has been good enough to more than account for the difference in fees.


Anyone who has been following the DOL/SEC-fiduciary rule/best interest saga is probably sick of the word “harmonization”. The term is a catch-all for the idea that the two agencies will synchronize their rule-making so there won’t be any grey area or uncertainty for advisors. We doubt that will happen (or even can, given the law of unintended consequences). Yet, a top industry law firm has just weighed on the specific points where harmonization may happen. The first big area to consider is rollovers, as both agencies have in the past claimed it as their own territory. That will likely be an area where harmonization is necessary because of previous guidance issued by both. Electronic disclosures will be another priority area. Additionally, the rules governing defined benefit versus defined contribution plans will also need to be harmonized.

FINSUM: We are slightly doubtful their will be some great harmonization between the DOL and the SEC. So, expect some uncertainty, grey areas, and more business for lawyers.

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