Here are a handful of tips and general trends for advisors to keep in mind this week.


"Although women make up one half of the U.S. population and almost two thirds of the work force, according to the U.S. Department of Labor, female financial advisors make up just shy of 31% of the total advisor population. Yet, women are taking leadership roles in managing their own or family finances and running some of the most recognizable companies in the world. In speaking with hundreds, if not thousands, of female financial advisors over the years, I hear a recurring theme: high achieving women like to work with other similarly situated women. Women who are in control of their finances are most comfortable looking to a successful female advisor who they think will relate to them and understand their particular investment needs and goals. Happily, we are starting to see more top male advisors recognize this trend and are looking to partner with female advisors to better appeal to this demographic. Top female advisors are smart, responsible and responsive, and most of all, extremely good at nurturing relationships. These women serve as a beacon for other women to enter and grow in the financial advisory profession."

Mindy Diamond, president and CEO of Diamond Consultants -- Chester, NJ 


"In a very complex world, it is important to have a checklist driven process. This is imperative for advisor and client confidence as well as for producing the desired client result. By having a process and following a checklist, an advisor can help ensure that nothing is slipping through the cracks and the client can know that the important things are being reviewed and handled. In addition, when an advisor is asked about her 'value proposition' she can describe her process succinctly and clearly. Another key is to review and revise the checklist as the complex financial world evolves to help ensure the proper things are being looked at."

William Keen, managing director of investments at the Keen Wealth Management Group of Wells Fargo Advisors -- Kansas City, Mo.


With the market going up, clients are naturally going to shift their focus from risk to 'getting back what they lost.' With marginal tax rates higher than they were in the recent past, tax advantaged investing is going to be a critical strategy to assist your client achieve that goal. Here are a few important things to remember:

  1. Do not pursue 'tax advantaged' investment strategies if they are costly. High management, trading, underwriting costs, along with higher sales commissions can wipe out any advantage you achieve by deferring taxes. 
  2. Your asset allocation should look at tax management like you look at the correlation between investments. You want to mix tax driven strategies with total return strategies to maximize your after-tax return, and therefore your wealth creation. 
  3. Tax losses have economic value. The value of a tax loss is determined by the type of gain you are offsetting. To the extent you can realize tax losses throughout the year, you save 20% if you offset a long-term gain, and 39% if you offset a short term gain.
  4. Mutual funds cannot distribute losses. They can only use losses to offset gains within the mutual fund. Further, at this point, most mutual fund have used up their losses from the 2008/2009 sell-off. They are likely to start to distribute gains going into the future.

David Schulz, president of Convergence Investment Partners -- Milwaukee, Wis. 


Here are six misunderstandings investors have about the current equity market and U.S. economy. Advisors should be aware of this to better advise their clients:

  1. Energy innovation. Hydraulic fracking in particular will drive growth in energy production and will be a key catalyst driving higher domestic GDP growth. 
  2. Manufacturing. Domestic manufacturing is undergoing a renewed level of growth driven primarily by lower cost of energy and stable labor and other costs.
  3. Housing recovery. Housing will continue to drive US economic expansion. Lack of housing inventory and low interest rates will drive housing starts toward the 1.5 million level. We expect this area will eventually create sizable new jobs.
  4. Corporate financial condition. Today U.S. corporations have 5.7% of assets in cash, in 1980 this was 3.0%. We expect this cash will be deployed in the next 2-4 months as confidence improves and executives feel more comfortable taking risks on new projects.
  5. Institutions (pension and endowments) are underinvested in equities. On average they now have allocated approximately 30% of their assets to equities. This is far less than the 2002 level of about 55-60%. From a contrary point of view this is quite bullish. The same is generally true of advisers and retail investors.
  6. Equity valuations today are much lower than last two times we traded at 1,550 level on S&P 500. In 2000 peak the S&P 500 traded at 1,550 a 25 P/E ratio, in 2008 we traded at 1,550 again this time an 18 P/E ratio, today again trade at 1,550 S&P 500 level, however this is only a 14 P/E ratio on current earnings and 12.8 times on next year earnings estimates. 

Rob Lutts, president and CIO of Cabot Money Management -- Salem, Mass.

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