Money-market fund returns and other cash equivalents haven’t looked this attractive since before the global financial crisis.
That has some investors rediscovering the once popular destination for parking money during times of uncertainty, especially now with equities flirting with record highs and the Federal Reserve committed to raising short-term interest rates even more. No greater authority than BlackRock Inc.’s Larry Fink pointed out during a Bloomberg Television interview that cash equivalents are an attractive place to camp out.
Whether that proves enough of an impetus remains to be seen, according to Peter Crane, who has been following the sector for decades and serves as president of Westborough, Massachusetts-based Crane Data LLC.
from FA News https://www.fa-mag.com/news/-old-guys-in-florida–likely-to-ponder-if-cash-is-still-trash-39853.html
The number of broker-dealers is decreasing as cost pressures continue to mount, according to Cerulli Associates, which released new data on Monday.
At the end of 2016, there were 1,070 broker-dealers with retail-focused advisors, 438 fewer than in 2006, a decline of 29 percent, the research organization said.
The 2008 financial crisis triggered numerous mergers and acquisitions and broker-dealers and broker-dealers have faced a decline in their return on assets, dropping from 87 basis points to 75 basis points over the five-year period ending in 2016, Cerulli said.
“While several factors caused return on assets to decline, the adoption of fee-based advice likely has had the largest impact,” the report in the latest Cerulli Edge said.
Advisors have decreased the amount of assets they assign to brokerage accounts to 31 percent of their business, and they plan to reduce that even further to 21 percent in the next two years.
The fact that markets have done well has countered some of that downward pressure. From 2011 to 2016, overall revenue for broker-dealers grew at a 4 percent annual rate.
Another factor impacting independent broker-dealers in particular is the introduction of hybrid RIA platforms by advisory firms, Cerulli says.
from FA News https://www.fa-mag.com/news/pressure-increases-on-bds-39847.html
In the high-stakes drama of soured loans and failed investment banking ambitions that is European finance, Sergio Ermotti has a problem others would love to have: His UBS Group AG is starting to look a little dull.
Seven years after a sweeping revamp of the bank, whose tilt toward wealth management became a blueprint for rivals, the chief executive officer is overseeing one of the most stable lenders in Europe. The stock is trading at a premium to peers, clients are adding assets and the bank reports predictable profits.
But as turnaround plans at peers such as Credit Suisse Group AG gather speed, some investors are asking whether UBS is doing enough to sustain its lead.
“People I speak to are just concerned the story has got a bit boring, a bit stale,” said Amit Goel, a bank analyst at Barclays Plc.
from FA News https://www.fa-mag.com/news/ubs-investors-demand-sense-of-urgency-with-rivals-closing-in-39852.html
U.S. corporate lenders are giving up safeguards that protect them from short-term interest rates falling close to zero, a step that could haunt them when the economy sours.
Almost 70 percent of loans to junk-rated companies made in the second quarter were missing a key protection known as a Libor floor, according to data compiled by Bloomberg.
from FA News https://www.fa-mag.com/news/as-fed-tightens–investors-give-up-crisis-era-rate-protection-39849.html
Another week, and another consultancy firm is warning that the asset management industry faces a crisis in the coming years. I’m starting to wonder whether the apocalyptic warnings about the future of money managers underestimate the plasticity of the world of investment.
The global fund management industry enjoyed record net inflows last year, with total assets increasing by 12 percent to more than $79 trillion, according to a report released this week by the Boston Consulting Group.
from FA News https://www.fa-mag.com/news/maybe-the-future-of-fund-management-isn-t-so-bleak–mark-gilbert-39842.html
“It’s no secret that the City by the Bay is one of the most expensive places to live in America,” said Kimberly Foss, founder and president of Empyrion Wealth Management in Roseville, Calif.
Whether it’s because of its natural beauty or its proximity to the high-tech billionaires of Silicon Valley, the median home there goes for more than $1.3 million, as measured by the real estate website Zillow. That’s an increase of 10.7 percent over the past year, and it’s expected to rise another 7.4 percent in the year ahead.
from FA News https://www.fa-mag.com/news/retire-in-san-francisco–here-s-the-minimum-portfolio-a-client-would-need-39835.html