Week’s Best: Dementia and Family Finances
When a family member experiences cognitive decline, financial advisors can be an important source of support and guidance. We asked a handful of advisors about the steps they recommend families take after a dementia diagnosis. They told us about the importance of educating the person who will take over the finances and discussing legal documents such as advance directives and powers of attorney. Another recommendation: Make sure the caregiver has sources of personal support.
Among other most-read wealth management articles this week:
Sweep-rate woes. Key companies in the wealth management industry face potential fallout as legal and regulatory pressure builds for them to raise the yields they pay on uninvested client cash held in sweep accounts. A William Blair analyst issued a report looking at how much it may hurt the earnings of companies including
Charles Schwab
and LPL Financial to raise sweep rates to 2.5% now. He estimates they could see earnings per share decline by about 20%. And Moody’s warned in a new report that the creditworthiness of some firms could suffer. Private-equity-backed firms such as Kestra Holdings, Aretec (which owns Cetera), and Osaic are at particular risk from negative impacts, Moody’s says.
Growing pains for wealth managers. From talent shortages to integrating AI, industry insiders see challenges ahead as the wealth management industry grows. From an estimated $27 trillion in 2018, the industry’s assets are estimated at $64 trillion today and are projected to hit $87 trillion in 2028. One executive told us that firms need to focus on developing professionals who are skilled at providing advice, not just selling financial products. “People who want to work in the advice industry are very different from the folks who want to do sales,” he said.
Reg BI risk alert. More than four years after Regulation Best Interest took effect, regulators say brokerage firms’ compliance efforts are still falling short. In a recent risk alert, the Securities and Exchange Commission pointed to areas where some firms need to step up. One is making sure they have specific policies and procedures in place to adhere to the rule. Another is providing guidance to front-line advisors on how to evaluate a variety of investment options to make sure a recommendation is in a client’s best interest.
Calming election worries. With the presidential election less than three months away, some investors are suffering from agita as they ponder how the outcome could affect the economy—and their investment portfolios. In a column this week, Barron’s Hall of Fame advisor Spuds Powell detailed how he assuages clients’ jitters about the contest between Donald Trump and Kamala Harris. Among the takeaways: Candidates’ rhetoric about specific industries may not translate into the sort of performance that one might expect.
Joe Duran’s new deal. Rise Growth Partners, launched by industry veteran Joe Duran to help accelerate wealth management practices’ growth, made its first investment. It took a minority stake in Bleakley Financial Group, an LPL Financial affiliate based in Fairfield, N.J. with almost $10 billion in assets. Andy Schwartz, a principal at Bleakley, said his team is looking to Rise both as a financier and a business-development partner. Earlier this year, Rise announced it had secured $250 million in funding from the private-equity shop Charlesbank Capital Partners.
Write to Amey Stone at [email protected]
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