A morning briefing on coverage of special interest to wealth managers, financial planners and other advisers. Please send tips and comments to email@example.com or firstname.lastname@example.org.
By Kevin Noblet
Bitcoin may be out on the fringes of global financial activity right now, and there’s no real place for it in client portfolios–at least if an adviser wants to stay on the right side of compliance. “That said, I would be watching bitcoin like a hawk,” says Norb Vonnegut on Wealth Adviser at WSJ.com. In the future, exchange-traded funds that track the now-volatile bitcoin market could be a good investment, he contends. And its usefulness for free and quick money transfers could potentially “change the service end of wealth management.”
MANAGING THE MONEY:
Mutual-fund fee wars to rage on. The days when investors would pay a high fee for a star manager without questioning that expense are long gone, says Morningstar’s John Rekenthaler. Writing on the research company’s website, he observes how Vanguard has blitzed the exchange-traded fund marketplace just as it previously blitzed the mutual-fund market, and the only viable response from competitors has been to follow Vanguard’s example and cut fees.
Little things matter in a divorce. How detailed does the division of assets get in a divorce? Among the calculations are “the value of a client’s frequent-flier miles or corporate perks,” Financial Planning says. These are “likely to be lost to one spouse when divorced. A fair split will find a way to compensate for that loss.” Advisers who specialize in this area note the importance of being thorough. “You get one bite at the apple,” says one, Lili Vasileff in Greenwich, Conn. “You had better get it right.”
Look for a niche inside a niche. When advisers decide to specialize, they often don’t go far enough. “Think beyond the idea of a `target market.’ Get laser specific,” recommends Ray Sclafani of Clientwise. “Locate a niche within that target market, and then within that niche look for an ideal client profile,” he writes on Wealth Adviser at WSJ.com. One example he gives: an adviser who works specifically with spouses who lost their partners to brain cancer.
A fee structure based on total wealth. More investment advisers should charge their fees based on total wealth under advisement rather than just on assets under management, says Thomas Nally, president of TD Ameritrade Institutional. Advisers could then charge a lower basis-point number, like that charged by “some of these robo-advisers, but provide much more services,” he told InvestmentNews. He suggested fixed assets like a home or business could be included in that wealth, for services such as tax and estate strategies.
New BrokerCheck-link plan criticized. In response to industry complaints, the Financial Industry Regulatory Authority revised its proposal to make advisers put links to BrokerCheck on their websites. Now at least one industry group is unhappy with the new plan, InvestmentNews reports. “Firms will incur significant costs and operational burdens,” says the Financial Services Institute, which represents independent brokers.
Is Wells Fargo trying to do too much? With a host of wealth-management operations, Wells Fargo “is attempting to be all things to all people,” says AdvisorHUB’s Andrew Parish. Writing on WealthManagement.com, he notes its ownership of a full-service brokerage, an independent broker network and a bank-based brokerage. “Wells Fargo has a well-deserved reputation as a national bank with a sterling brand name,” Mr. Parish says. “Why all the fuss with multiple platforms that seem to contradict one another?”
ALSO OF ADVISER INTEREST:
Wheel of Fortune turns for an adviser. It took two auditions for Florida-based adviser Ted Hoornstra to make it onto television’s “Wheel of Fortune” game show. But he made just $1,000 on his investment in time, winning the first toss-up puzzle, solving the Madonna song “Papa Don’t Preach,” reports the Tampa Bay Business Journal. He was shut out after that and finished in third place.