Fiduciary Magazine

Archive for May, 2011

Kristina Fausti of Fiduciary360 makes an argument that providing suitable advice is a part of being a fiduciary but providing suitable advice does not make you a fiduciary. Earlier this year, the Securities and Exchange Commission approved FINRA’s Suitability Rule, or Rule 2111.  The rule requires that a member or an associated person make recommendations that are appropriate for their clients based on obtained information which includes risk tolerance and liquidity needs.  The rule goes into effect on July 9, 2012.

American Public Media’s Marketplace reported that state and local pensions will be earning returns of 4 or 5 percent as opposed to forecasted returns of 8 percent.  However, Dean Baker the co-director of the Center for Economic and Policy Research believes that the forecasted returns of 8 percent are accurate “given the mix of assets held by these funds, current stock market valuations, and projected economic growth”.  With states such as California looking to cut back on pension contributions to narrow their deficits requiring employees to contribute more funds than previously required and the possibility of lower than expected returns, fund managers need to protect assets to ensure pension payments in the long-term.

According to a recent study by Dow Jones, affluent investors (U.S. investors who are at least 25 years old with a minimum of $500,000 of assets to invest) prefer to use self-directed investment strategies through online and discount brokerages rather than full-service firms.  A majority of affluent investors are satisfied with their current advisor or wealth manager but are lacking advice on topics such as tax strategies, estate planning, and emerging markets.  Financial advisors need to be knowledgeable in these areas to provide value-added services to their clients and lure them back from their online counterparts.

Apparently, it should. Ron Lieber of the NY Times makes a case for including index funds in the investment choices provided by a 401(k) plan.

What are your thoughts?

In an article that ran at On Wall St., SEC Chairman Mary Shapiro said that the SEC would take a hard look at the fees as well as a potential 25 bps cap, but it will have to wait until the completion of Frank-Dodd…if that ever happens.