Advisor Profit Margins Rise
The median profit margins of investment advisors, both pre- and post-marketing costs, rose in 2011, according to a new report from Lipper, Investment Management Profitability Analysis for 2012.
The median pre-marketing margin for investment advisors rose to 43.85% in 2011 from 40.17% in 2010, Lipper found. The post-marketing margin rose to 34.44% in 2011 compared with a margin of 32.26% in 2010.
The median post-marketing profitability margin surpassed recent medians to reach the highest value in nine years.
LPL Uses Psychology in New Tech Tool for Marketing to Women
Women's financial lives do not always follow a chronological script - that's part of the reason LPL Financial rolled out a new marketing and practice management platform to give planners an edge in marketing financial advice to them.
The new online platform, WomenInvest, includes compliance-approved, customizable marketing materials for working with women investors. The independent broker-dealer is betting that grouping women by life events, not ages, is the better way to reach them. There are four life stages, according to LPL, that make the most sense for marketing services to women investors.
"In Relationships" enables advisors to effectively engage with both partners in a marriage or domestic union. "In Transition" focuses on providing support to women investors during a time of significant life change. "In Business" identifies strategies for advising professional women, including female business owners or those who have inherited significant assets; and "In Retirement" helps advisors work closely with women investors in developing financial strategies that support the goals of living longer and better.
IRA Investors Hungry for Alternative Investments, Survey Finds
Investors are interested in putting a portion of their IRAs toward alternative assets but lack the know-how to do so, according to a new study from Pensco, an independent custodian for direct alternative investments in retirement accounts.
The research found that 77% of American families with retirement accounts want to invest in alternative assets but many (44%) do not understand how to achieve that goal.
And advisors, for the most part, haven't been able to help. While eight in 10 say their clients have expressed interest in alternative assets, only 10% offer that capability, according to the findings.
CFP Board Changes Bankruptcy, Disciplinary Procedures
The CFP Board announced new changes to its rules and procedures in three areas, including the way it handles bankruptcies among certificants and applicants.
In the past three years, the CFP Board has seen reported bankruptcies among planners rise sharply, to 37 in the first quarter of this year from one in the same period of 2008, eight in 2009, 20 in 2010. (There were 49 in 2011.) The increase is due, in most cases, to the economic downturn, according to Michael Shaw, the board's managing director of professional standards and legal.
Going forward, the board will issue a news release four times a year, publicizing all bankruptcy-only cases and will no longer investigate bankruptcies when public filings about them are available. Bankruptcy-only cases involve planners not under investigation for other issues by the board. Currently, the board submits all advisor bankruptcies to a disciplinary panel, which can result in additional punitive actions.
Many Investors, Especially Younger Earners, Neglect Retirement Accounts
A majority of Americans are not aware of the money that could be coming their way if they made an annual contribution to an IRA, a recent survey by TIAA-CREF found.
Younger Americans were the least conscientious about IRAs and also the least aware of the potential benefits, according to the findings. Nearly three-fourths of survey respondents age 18 to 34 did not know the maximum contribution, while 61% of the adults surveyed were unaware of the limits. More important, 58% of young Americans did not know that growth in an IRA is tax-deferred.
Advisors Use More Variable Annuities
Planners have increased their recommendations of variable annuities since 2008, regardless of whether they were annuity supporters or skeptics, according to a joint survey by investment management firm AllianceBernstein and the Insured Retirement Institute.
Six in 10 financial advisors who sold more than 10 annuity contracts per year upped their recommendations, as did so-called dabblers, those who sold less than 10 contracts annually, the research found.
A majority of dabblers (73%) and sellers (79%) said they will continue to recommend variable annuities and agreed with the statement that "they never want to see any of their clients experience a year like 2008 ever again."
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