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FINANCIAL ADVISOR INSIGHTS: Advisors Are Profiling Clients Based On 'Financial Personalities'

Jan 29, 2013, 02:01 IST

FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.

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Shipping Titan Says The Only Debt To Worry About Is American Debt (Lori Ann LaRocco, CNBC)

Even though 95% of all world trade is done via sea, only a fraction of shipping companies are traded publicly. Dynasties Of The Sea, a new book by CNBC's Lori Ann LaRocco, profiled 21 of the biggest players of the notoriously secretive shipping industry and got their thoughts on the global economy and financial advisors.

Charles Fabrikant, Chairman of SEACOR Holdings is quoted saying: "The only sovereign debt that worries me is America’s. My biggest concern there is at some point our creditors will call to question on us. If they do, it will re-orient the cost of capital...I do worry that someday I’m going to wake up and see America not paying zero percent for borrowing, but 6, 7 or even 8%.... In the future, the U.S. may still be paying at zero or if I woke up in 2014 and Uncle Sam was paying 8% for treasury bills, it wouldn’t knock me over. In planning my business, I’ve got to be prepared for, in my view, both eventualities."

Those Calling For A 'Great Rotation' Don't Understand How Markets Work (John Hussman)

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Mutual Fund owner John Hussman, a noted bear, said that strategists and fund managers who believe that 2013 is the year of the 'Great Rotation,' or that money will flow out of bonds and into equities this year, just don't understand how the market works. The outstanding quantity of bonds and equities is always held by someone or the other at any given point of time, he said.

"The idea of a 'rotation' out of bonds and into stocks begs the question of who will buy the bonds and sell the stocks, as someone must be on the other side of that trade. Similarly, to 'move cash into the market' requires a seller of stock who becomes the new holder of said cash."

There Are Several Indicators That The Global Economy Is Exiting Crisis Mode (Mark Dow)

Traders are shifting away from what are traditionally considered safe bets, according to trader Mark Dow. US Treasury yields are on their way up, which is associated with positive growth and risk taking, and the Euro is falling with respect to the Swiss Franc and the Australian dollar. While the latter is also in part due to weakness in the Eurozone, there's a more exotic version of the EURCHF and EURAUD exchange rate spreads that tells a similar story—the Turkish Lira and South African Rand exchange rate. The Rand is strengthening with respect to the Lira, which indicates global normalization from crisis mode. This change in attitude towards risk could also mean that commodities are unlikely to bounce back as forcefully as they have in the recent past, according to Dow.

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There Will Be More Bears In The Bond Market (Nomura)

Primary dealers, foreign central banks, domestic and foreign commercial banks are turning bearish on US Treasury bonds, according to Nomura's George Goncalves.

"Current market positioning for bonds has turned to an overall bearish bias as four out of the six key investor types we track had bearish flows in their latest updates," said Goncalves, in a note released this morning. "Net, selling pressures have turned decided negative for USTs."

Financial Advisors Are Profiling Their Clients Based On Their "Financial Personalities" (The Wall St. Journal)

Veteran Wealth Advisor Tamara Surratt changes how she communicates with her clients based on their financial personalities, she told the Wall St. Journal. Some advisors segment their clients by asset class, advisors like Surratt and those who work at Canada-based Danielson Group, an Assante Wealth Management team, find it more effective to differentiate clients based on how they make financial decisions.

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M&A Volume Fell In 2012, But Value Of AUM Climbed 34% (Financial Advisor)

The total value of assets under management from mergers and acquisitions deals done last year rose 34 percent versus the prior year, to $58.8 billion, according to data released today by Schwab Advisor Services. But the volume of transactions completed dropped to 45 last year, compared to 57 in 2011, and 70 in 2010. The biggest driver in last year's M&A activity were a category referred to as the national acquiring firms.

"We see the national acquiring firms providing a good overall alternative in the industry’s growth because it gives financial advisors a choice regarding succession and they’re a growth catalyst because they’re grabbing advisors who are going independent," Jon Beatty, senior vice president of sales and relationship management at Schwab Advisor Services. "That means we’re adding new advisors to the marketplace."

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