FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Rogoff argues against secular stagnation (Think Advisor)
In 2009, Harvard economist Kenneth Rogoff teamed up with Carmen Reinhart to write the "This Time is Different,” arguing the US economy was looking at an era of secular stagnation. Fast forward to present day, Rogoff has changed his tune, suggesting we are experiencing a “garden variety post-WWII financial crisis” instead of as Think Advisor puts it, "the dawn of a new era of gloom." At a speech in front of the IMF, Rogoff noted, "The recovery took the form of the very slow U-shaped recovery predicted by scholars who had studied past financial crises and debt supercycles.” So where does the economy go from here? Think Advisor says, "Rogoff confidently predicts that the economy will again rise, leverage will again increase, financial innovation will break through onerous regulation, rates will again rise and the up and down cycles of economic history will resume their natural course."
Ways advisers have changed fees (Financial Planning)
According to Financial Planning, "About a quarter of fee-only advisory firms we surveyed in February said they had changed their fee structure in the past year (as did 20% of all independent firms), and another 13% said they were likely or somewhat likely to alter their fees this year." So how are fee structures changing? One approach has been to increase fees on clients who have smaller accounts. Another approach has been to switch from charging a commission on each transaction to a fee-based service. Click the link above to learn about other ways advisors have changed their fee structures.
Advisers say State Street doesn't provide enough support (Reuters)
State Street is falling out of favor with financial advisers. Reuters reports several advisers believe the company "does less than its competitors in giving them the data, investment tools, and ideas" and that "they need to improve their wealth management practices." This news is especially troubling to the company as it is struggling to win over investors with its ETF products, which are the lifeline of its business. The company recently fell to number three in the space with $458 billion in assets, trailing BlackRock's iShares ($1.1 trillion) and Vanguard ($478 billion).
JP Morgan tells advisors to look overseas (Financial Advisor)
JP Morgan Funds Chief Global Strategist David Kelly believes the US economy is headed for a slowdown, and that advisors should begin looking overseas for opportunity. Kelly's thesis is based on his belief the combination of the large number of retiring baby boomers and high rate of felony convictions for American men (12.5%) will create a shortage of skilled workers. Financial Advisor notes Kelly believes, "growth would be helped if the federal government loosened immigration restrictions, which would bring in more workers."
A look at housing (Charles Schwab)
Recent strength in the housing market has been a bright spot for the otherwise so-so US economy. April's Housing Market Index reading ticked up to 56 (52 previous), and remains near its best levels since before the financial crisis. The strength has been confirmed by the Fed's Beige Book, which stated, "Residential real estate activity was steady to improving across most Districts, although there was some slowing in housing starts due to abnormal seasonal patterns owing to the harsh weather," as well as the jump in mortgage applications and surge in household formations. While things are looking up, housing data has not all been good as starts and permits have seen an ugly couple of months. According to Schwab's Liz Ann Sonders, "Leading indicators for housing point to the possibility that year-over-year growth could move into double-digit territory by the fourth quarter of this year; but we should probably temper those expectations given the reluctance to borrow, still-high home prices, and the possibility of higher mortgage rates."
