Archive - June 2014

1
Is it Wrong to be Bearish?
2
Time to Give Annuities a Second Look?
3
Roth 401(k) In-Plan Conversions
4
FINRA Supports Regulation to Quell Competition
5
Study on Investment Advisers and Broker-Dealers

Is it Wrong to be Bearish?

 

My bearishness about stocks is merely is in context of saying let’s not get over excited about the recovery and overvalue it and let’s follow Shiller PE10 and Tobin’s Q and thus accept that stocks are overpriced, so until the price comes down one must be bearish. I believe that diversification between risk assets is of minimal use especially when most needed in crashes. During crashes correlations rise until risk-on assets become highly correlated. I am not bearish in terms of thinking there will be a recession or the world will run out of oil or hyperinflation or true …

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Time to Give Annuities a Second Look?

Two Giraffes

Financial Planning Magazine published a piece by Andrew Welsch of “SourceMedia” entitled “Time to Give Annuities a Second Look?“.

The “article” consisted of an interview with Moshe Milevsky, a “well-known professor of finance at York University in Toronto” in which he argues that advisors should consider adding annuities to their clients’ portfolios.

You should understand, annuities are a big business. Most of the financial services world lives off of commissions, and annuities pay good commissions.

Fee-only financial advisors, on the other hand, don’t like annuities, and for good reasons.

There is great incentive for the annuity sales …

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Roth 401(k) In-Plan Conversions

As of the beginning of 2013, a new provision became available for participants in 401(k), 403(b) and 457 deferred compensation retirement plans: the Roth 401(k) In-Plan Conversion.  This provision allows current employees participating in one of these Qualified Retirement Plans to convert funds from the traditional 401(k) (or other) account into the Designated Roth Account (DRAC) that is part of the plan.

This is new and different because previously the only way to convert funds from the 401(k) plan to a Roth-like account was to have left employment by the …

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FINRA Supports Regulation to Quell Competition

Wolves in Sheep's Clothing

The financial services world is split between investment advisers and broker-dealers.

Investment advisers are legally required to act as fiduciaries. They must subordinate their interests to those of their clients. Should a conflict of interest arise, they must either eliminate it completely or fully disclose it to their clients.

Broker-dealers, in contrast, are regulated by a loosely defined “suitability standard.” They are agents of a brokerage firm first and obligated to act primarily for its benefit. Massive legal disclosures handle their many conflicts of interest.

Process governs the broker-dealer. A signed disclosure is sufficient to meet regulation.

The investment adviser …

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Study on Investment Advisers and Broker-Dealers

Wolf

In “FINRA Supports Regulation to Quell Competition” we wrote:

While only 5% of the firms registered with the SEC as investment advisors are also registered as broker-dealers, FINRA firms employ 88% of the investment adviser representatives.

This comes from the January 2011 “Study on Investment Advisers and Broker-Dealers” As Required by Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act done by the Staff of the U.S. Securities and Exchange Commission. Here are some portions of that report:

Broker-dealers and investment advisers are regulated extensively, but the regulatory regimes differ, and broker-dealers and

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