Financial advisors often promote their services by saying that they can help remove emotions from investing. In theory, advisors can use a variety of risk management tools, knowledge of capital markets, and long-term investing perspectives to help their clients avoid making costly knee jerk reactions.

Brexit is just one example, but it can be a powerful case study for advisors seeking to help clients understand why emotions should be curtailed by financial professionals who are armed with capital markets expertise.

In the months leading up to the Brexit referendum, markets climbed and declined in response to changing expectations for how the country’s citizens would vote. In the final days before the vote, investor sentiment strengthened as pundits increasingly said a vote in favor of the U.K. pulling out of the European Union was unlikely.

Many investors had previously feared that Brexit would hinder economic growth in Europe and create a challenging environment for U.S. companies and business in other countries that sell products in the continent.

Indeed, Brexit is likely to mean that U.K. will have to forge new trade agreements with individual members of the European Union and is likely to have to do the same with U.S. exporters.

When the Brexit referendum surprisingly determined that voters want to leave the U.K., panic ensured. On June 24, when the results were released, U.S. equities dropped approximately 3%. It was the worst single-day decline for the S&P 500 in nearly a year and wiped away the index’s gain for 2016, according CNBC.

By the end of June 27, the index had dropped 4.07%. The decline, however, was only temporary. Indeed, during the last three days of June, the S&P climbed 4.95% and, as of July 8, had generated a total return of 4.21% year-to-date.

Investors who panicked by selling in the days immediately after Brexit are likely to have sold during a dip, only to miss the strong returns when equities bounced back. With that in mind, advisors should explain to their clients that panic selling often results in selling low and then missing out on the strong returns that typically follow market dips.

They should explain, furthermore, that using portfolio diversification to cushion declines, maintaining a long-term perspective, and understanding the role of corporate fundamentals can go a long way in helping investors avoid panic selling.

Advisors should develop illustrations that show how having a mix of asset classes could have reduced the impact upon a portfolio of the post-Brexit market decline and that portfolio rebalancing may have resulted in buying equities during the market dip.

They should also show index performance numbers that illustrate how riding out historical market declines, including the correction associated with the Great Recession, would have allowed investors to recoup losses and then eventually achieve additional gains.

Finally, advisors should point out that corporate fundamentals don’t justify a major prolonged market correction. While overall corporate earnings in the U.S. have taken a hit due to cheap oil, many industries, such as Information Technology, are experiencing strong sales and improving profits.

Innovation, meanwhile, is allowing companies like Amazon.com and Netflix to rapidly grow their earnings by disrupting traditional business models with technology. At the same time, corporations are holding near record levels of cash, which is allowing them to buy back stock, launch dividends, and conduct mergers and acquisitions at near record levels.

All of those actions provide additional support to stock prices. The U.S. economy is also likely to support corporate fundamentals. While U.S. economic growth has been slow, many developments are encouraging, with the labor market strengthening, real estate values increasing, and consumers’ finances improving.

Collecting Social Security early can help retirees assess how much they can spend because the payments are consistent. So reports Wealth Management.

Also, proponents of waiting typically point to the 8% payment increase you get for delaying the payments. However, the nominal annualized reture when waiting a year is less than 8% and retirees will miss out on a full year of payments. 

Lastly, collecting Social Security may be more attractive than withdrawing money from an IRA when considering taxes.

Read the full article from Wealth Management.

The Securities and Exchange Commission recently awarded a whistleblower $3 million for information that helped the regulator crack a complex case of fraud. So reports ThinkAdvisor. The program was established more than three years ago and has paid out more than $50 million to whistleblowers.

Read the full article from Think Advisor.

Robert Renshaw has joined Edison, N.J.-based Fountainhead Capital Management as senior financial strategist. So reports TapintoEdison.

Fountainhead Managing Partner Marc Rock says Renshaw’s strength involves understanding each client’s unique circumstances and partnering with the appropriate team members to create customized strategies.

Read the full release from TapintoEdison.

While the economy still has some significant hurdles to overcome, the Dow Jones Industrial Average broke past the 30,000 point mark recently. Mark Teed, an FA with Raymond James, says the market “continues to look promising” after positive COVID-19 vaccine news and the transition to the Joe Biden administration gets underway. So reports WWLP.

“With the election over, we now know what the next four years is going to look like,” Teed said, according to the article. “What it’s telling us is that next year is going to be really good. It’s starting to discount in every area, every single sector is going up.”

Teed is “optimistic” the Dow could got much higher heading into the new year.

Read the full article from WWLP.

Federal Reserve Vice Chairman Richard Clarida has forecast that the hit to the U.S. economy from the coronavirus pandemic could last for years. So reports The Hill.

In a speech, Clarida said U.S. gross domestic product probably won’t return to its 2019 high watermark for a year and the unemployment rate will not reach its pre-COVID-19 low even then.

Clarida added that more fiscal stimulus is likely necessary.

Read the full article from The Hill.

With last week’s turbulence, some market watchers are wondering when the next big pullback will happen… or if it has already begun. So reports CNN.

Some analysts are concerned about the VIX, which is usually muted when stocks are soaring, because it keeps rising. Some are calling this a red flag. Others are saying the status of the VIX is a “worrisome sign.”

Much of the market rally has baked in the emergence of an effective vaccine to fight against COVID-19. The unprecedented stimulus has also played an important role in the market’s movements this year.

Randy Frederick, Charles Schwab’s vice president of trading and derivatives, said worries about the VIX and stock market rise are a "little overblown," adding he sees it as more of a “caution flag than a panic button."

Frederick pointed to politics and the pandemic as potential reasons for investor uneasiness. Goldman Sachs recently notes that “VIX futures contracts around early November have spiked.”

Read the full article from CNN.

Some of the biggest financial firms are causing excess market volatility and leading to mispricing of company stock, according to a recent analysis. So reports The Financial Times. Those firms are BlackRock, Capital Group, Vanguard, Fidelity and State Street. 

Trading behavior of these firms and the concentration of ownership has led to this volatility. The top 10 biggest institutional investors own more than 25% of the U.S. stock market. 

This renews the question into whether these firms should classified as “systemically important financial institutions” alongside the big banks. That would involve increased regulatory scrutiny, increased costs and reduced profits. 

Read the full article from The Financial Times.

Investopedia asked several advisors what they’re thankful for in 2020. Here are highlights from three of the many responses.

• Mary Beth Storjohann, Founder, Workable Wealth is grateful for “a supportive team of colleagues, amazing clients, and the ability to continue to use creativity when it comes to inspiring people to make smarter choices with their money.”
• Dasarte Yarnway, Founder & Managing Director, Berknell Financial Group is grateful “to be a symbol of possibility for the many people across continents—regardless of race, region, or creed—that with faith, work, and discipline, you can design the life of your dreams.”
• Taylor Schulte, Founder & CEO of Define Financial, is “grateful for gaining confidence to get more personal and vulnerable with clients—something I've always struggled with.”

Read the full article from Investopedia.

Financial Advisor Keith Ashley is accused of killing his client, 62-year old Jim Seegan earlier this year to gain control of his finances while also scamming at least 8 other clients. So reports KSAT.

Police say Ashley staged the crime scene to make it appear Seegan had committed suicide. They accuse Ashley of placing a handgun in Seegan’s hand and leaving a typed note reading, in part, “my last friend Keith Ashley will help you,” next to the body. The note included Ashley’s phone number.

Ashley, who has been indicted and arrested on wire fraud charges, has been accused of bilking clients out of more than $1.9 million in a ponzi scheem.

Read the full article from KSAT. 

With news of Phillip A. Kenner, one of the worst advisors in 2015, being sentenced to 17 years in jail recently, ThinkAdvisor compiled a list of financial advisors that have scammed professional athletes.

1. Angel Pagan, ex-MLB outfielder for the Mets, Giants and Cubs: FINRA ordered Merrill Lynch to pay Pagan and his wife more than $2 million after investing in unsuitable investments.
2. Keyon Dooling, a former NBA player, who played for the Clippers, Heat, Magic, Nets, Bucks, Celtics and Grizzlies: Dooling was advised by Aaron Parthemer to invest in Global Village Concerns and Club Pay, both of which become worthless.
3. John St. Clair, a former NFL player who spent time with the Rams, Dolphins, Bears and Browns: St. Clair was also advised by Parthemer. FINRA ordered Morgan Stanley to pay Dooling and St. Clair $819,300.
4. Mark Sanchez, best known for his time as Quarterback of the NFL’s Jets: Sanchez fell victim to a scheme surrounding The Ticket Reserve. Advisor Ash Narayan, a board member of the company, stole $30 million from clients to invest it in the company. Sanchez also spent time for the Eagles, Cowboys, Redskins, Bears and Broncos.
5. Tim Duncan, NBA All-star for the Spurs: Charles A. Banks, Duncan’s financial advisor, was ordered to pay $7.5 million to Duncan for fraud and was sentenced to four years in jail.
6. Kevin Garnett, an NBA All-Star who played for the Timberwolves, Nets and Celtics: Garnett sued Welenken CPAs for $77 million, accusing them of working with Banks to commit fraud.
7. Dennis Rodman, an NBA All-Star who played for the Pistons, Bulls, Spurs, Lakers and Mavericks: Peggy Ann Fulford, who claimed to be a financial advisor, defrauded Rodman and others out of millions of dollars. She was sentenced to 120 months in prison.
8. Travis Best, an ex-NBA player, who spent time with the Pacers, Bulls, Heat, Mavericks and Nets: Best was also a victim of Fulford, who was ordered to pay $5.8 million in restitution.
9. Ricky Williams, a Heisman Trophy winner and running back for the NFL’s Saints, Dolphins and Ravens: Williams was also a victim of Fulford.
10. Lex Hilliard, a running back for the NFL’s Dolphins, Patriots, Jets and Vikings: Hilliard was also a victim of Fulford.
11. Michael Peca, an NHL player mostly known for his time with the Islanders and Sabres: Financial advisor Phillip Kenner, who was sentenced this month to 17 years in prison for swindling a bunch of players and others out of $30 million.
12. Bryan Berard, an NHL player who played defense for the Islanders, Maple Leafs, Rangers, Bruins, Blackhawks and Blue Jackets: Berard is another one of Kenner’s victims.
13. Darryl Sydor, an NHL defenseman for the Penguins, Kings, Stars, Blue Jackets, Lightning, and Blues: Sydor is yet another one of Kenner’s victims.
14. Bill Ranford, an NHL goalie with the Bruins, Oilers, Capitals, Red Wings, and Lightning: Kenner also ripped off Ranford.
15. Sergei Gonchar, an NHL defenseman with the Capitals, Bruins, Penguins, Senators and Stars: Gonchar was also ripped off by Kenner.   

Read the full article from Think Advisor.

Some advisors are turning to new fee models, such as hourly or annual rates, in order to reach a broader group of clients, such as those with lower assets. So reports CNBC. 

For example, Garrett Planning Network, which has 200+ advisors, offers an hourly rate where customers can get help with investments, budgeting, debt management, estate planning and more. The hourly rate is $215, but can be as low as $150 and as high as $500 or more depending on the services.

Others are embracing a subscription model, charging by the month or annually. For example, Meg Bartelt, a CFP and Flow Financial Planning, receives a median annual fee of $6,000 and her clients make an average of $140,000+. Annual fees allow clients to better manage cash flow and allows firms to reach clients that other advisors ignore.

Finally, some advisors, in an effort to make their services more affordable, offer group coaching and courses. While not as powerful as one-on-one counseling, it can be much less expensive for clients while allowing the advisor to still get paid well for their time.

Read the full article from CNBC.
 

Millennial investors and those from Gen Y are looking for financial advisors to broaden the scope of their conversations. Doing so can help deepen trust and increase satisfaction. So reports the National Association of Plan Advisors. 

The finding comes from a new report, entitled Future of Client-Advisor Relationships, from AIG Life & Retirement and the MIT AgeLab. The study is based on a survey of more than 2,000 people ages 30 and 75. 

https://www.lifeandretirement.aig.com/financial-professionals/mit-age-lab-study
In addition to traditional topics related to financial and retirement advice, investors are looking to engage advisors about their career, health, future care, housing, and identity protection.

Read the full article from the National Association of Plan Advisors.

The coronavirus has caused a lot of changes, including the way FAs communicate with clients. And, some of those changes may be permanent. So reports Think Advisor.

In fact 57% of investors noted in a recent poll that communications with their advisor has changed, and 62% say they would keep at least some of the new methods after the pandemic ends. Those new methods include phone calls, emails, video chats, text messages, social media, snail mail and even in-person.

Read the full article from Think Advisor.

Do you have more work than you can handle? Need to hire staff to help? U.S. News & World Report has some tips for you.

Meredith Moore, founder and CEO of Artisan Financial Strategies, said she realized she needed to hire a junior advisor who could work with clients who didn't fit her ideal profile. However, she needed an advisor that had an outlook that aligned with her own. 

Instead of simply placing a help wanted advertisement, she created a paid one-year intensive class focused on practice management. The class had strict rules on attendance and assignments. Candidates had to watch videos, listen to podcasts, and other work that required hours of study. 

Moore also didn’t require the candidate to bring over a big book of business. Instead, she split her cases with him. "There is a misconception that AUM means everything when considering hiring advisors, but actually there are other qualities that often outweigh the importance of AUM," says Ryan Shanks, co-founder and CEO of FA Match, according to the article. 

Shanks also said that hiring a newer advisor gives a firm the opportunity to better mold the individual when it comes to a firm’s culture and when dealing with clients. 

Stoy Hall, for his part, knew he needed to hire two junior advisors. Hall is the executive director and senior wealth advisor at Centric Wealth. He found one junio advisor while speaking on a college campus and the other via LinkedIn after a correspondence over a period of time.

He says that hiring can be difficult. “I learned that not everyone is fit for this industry,” he said, according to the article. “Some people need to experience the corporate side over the independent side." He also said that not everyone is cut out to be in an advisory role, but that doesn’t mean they might not be valuable to your firm. Therefore, advisors should consider what non-advisory roles someone may be able to fill if they seem like they can bring value to a firm.

Other places, like Wambolt & Associates Wealth Management Partners, operate an internship program with the goal of identifying college students close to graduation who may make good hires later on.

Read the full article from U.S. News & World Report. 

A survey of 300 U.S. financial professionals by Natixis Investment Managers found that many advisors feel they need to improve their client-relationship skills. So reports CNBC.

“It’s about being stronger at actively listening and understanding what clients are really saying,” said Dave Goodsell, executive director of Natixis’ Center for Investor Insight, according to the publication. “You’d think if you do that, you’ll have clients with you for a longer period of time.”

Advisors also have a number of views on what they need to do to improve client relationships. They include:

• Getting to know family members and heirs of clients (53%)
• Helping clients avoid making emotional decisions (46%)
• Providing advice beyond investments (41%)
• Managing expectations (37%)
• Client communications (28%)

Read the full article from CNBC.