<p><div class="image-container float_right" style="width:400px"><div class="image"><img src="http://static5.businessinsider.com/image/50242b26ecad04bb7e00000d-415-311/ham-2.jpg?maxX=400&amp;maxY=300" border="0" alt="hammock, relaxing, reading " width="400" height="300" /></div><p class="source"><a href="http://www.flickr.com/photos/andrewmalone/5162647077/in/photostream/">Flickr / andrewmalone</a></p></div>One of the most common pitfalls of everyday <keyword id="6359051" type="COMPANY" weightage="60" keywordseo="investors">investors</keyword> is slipping into a "set it and forget it" mentality. </p>
<p class="p1">You might sit down with your broker or financial advisor or review your employer-provided 401(k) once a year, but for for the most part, you put your faith in someone else's hands. </p>
<p class="p1">That's when seemingly harmless fees are free to fester.</p>
<p class="p1"><span style="font-size: 15px; line-height: 1.5em;">"It's not like you can try calling (brokerage firms) and ask them what they charge. They don't publish a fee schedule," Mike Sha, CEO of portfolio tracking site </span><a href="http://www.sigfig.com" target="_blank">SigFig</a><span style="font-size: 15px; line-height: 1.5em;"> told us</span><span style="font-size: 15px; line-height: 1.5em;">. "We've talked to people who work with <keyword id="45476" type="PERSON" weightage="60" keywordseo="Brokers">brokers</keyword> or advisors and they have no idea what the fee structure is in other firms."</span></p>
<p class="p1">With no other fees to compare your own to, you could wind up paying for far more than you should – especially if your broker's working on commission. </p>
<p class="p1">Among SigFig's users, more than 60 percent of investors working with <a href="http://blog.sigfig.com/taxes-and-fees/top-10-worst-brokerage-fees-2011/" target="_blank">high-fee brokerage firms</a> are paying a staggering $25 per trade – with some as high as <em>$400 per trade</em>.</p>
<p class="p1">In fact, a new study by Woodbine Associate estimates broker fees could be sucking as much a $5 billion from <keyword id="6357979" type="ORGANIZATION" weightage="60" keywordseo="mutual-funds">mutual funds</keyword>, pension funds and regular investors each year, <a href="http://www.nytimes.com/2012/05/07/business/rebates-to-brokers-are-seen-as-a-conflict-of-interest.html?pagewanted=all" target="_blank">according to the NYT</a>. </p>
<p class="p1">Front load or back load fees,<span> for example, are like cutting a check to your broker for 5 percent for simply selling you a certain fund (front load). Or, imagine cutting them a</span><em> </em><span>check if you decide to exit a fund later (back load). These commission-based fees are the reason the broker model is so loathed by consumer advocates and ex-Wall Streeters.</span></p>
<p class="p1">But we're not just talking about commission fees charged by brokers. Everyday workers stowing funds in a 401(k) or IRA could lose up to $150,000 in fees over their lifetime.</p>
<p class="p1">The hard part is figuring out which funds are working more in your broker's favor than yours.</p>
<p class="p1">You could take the indirect approach and do a little homework, which is easier than ever thanks to a crop of new tools online. <a href="https://www.sigfig.com/" target="_blank">SigFig</a>, <a href="http://www.jemstep.com" target="_blank">Jemstep</a>, and <a href="http://www.futureadvisor.com" target="_blank">FutureAdvisor</a> can each show you exactly how your funds are performing and lay out how much you're paying in fees. </p>
<p class="p1"><span style="font-size: 15px; line-height: 1.5em;">"There's no reason you shouldn't as an investor sit down with your broker and say, 'I want to talk about the services I'm getting from brokerage firm X and you," Roy says. "Tell them, 'Before you invest in a fund on my behalf, please contact me to explain why that fund is so superior that I should pay for the privilege of giving you my money." </span></p>
<p class="p1">If you put the onus back on them, chances are they won't put up a fight and risk losing a client. </p>
<p class="p1"><span style="font-size: 15px; line-height: 1.5em;">Opting for a fee-based advisor could be your best bet, as don't work on commission. </span><span style="font-size: 15px; line-height: 1.5em;">Find one with the </span><a href="http://www.napfa.org/index.asp" target="_blank" title="Opens in new window: http://www.napfa.org/index.asp" class="external">National Association of Personal Financial Advisors</a><span style="font-size: 15px; line-height: 1.5em;">, which has a great </span><a href="http://findanadvisor.napfa.org/Home.aspx" target="_blank" title="Opens in new window: http://findanadvisor.napfa.org/Home.aspx" class="external">search tool</a><span style="font-size: 15px; line-height: 1.5em;"> to track advisors in your area. All of their advisors are under fiduciary duty to work in your best interest.</span></p>

SMART INVESTOR: Here's The Most Common Pit Fall Of Casual Investors

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/5565a9b5eab8ea207ae30456-3110-2332/rand-paul-118.jpg" alt="rand paul" data-mce-source="Reuters" data-mce-caption="Republican presidential candidate U.S. Senator Rand Paul (R-KY) speaks at the First in the Nation Republican Leadership Conference in Nashua, New Hampshire April 18, 2015. " /><p class="source"><span>Reuters</span></p><p class="caption">Republican presidential candidate U.S. Senator Rand Paul (R-KY)</p></div><p></p></div></div><em><strong>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.</strong></em></p><p><strong><a href="http://www.businessinsider.com/senate-rejects-rand-pauls-audit-the-fed-legislation-2016-1">Rand Paul's "Audit the Fed" was blocked</a> (AP)</strong></p><p>Republican presidential candidate Sen. Rand Paul's (R-Kentucky) "Audit the Fed" bill was blocked on the Senate floor. The bill received 53 Yes votes and 44 No votes with 3 abstaining. Presidential candidates Paul, Sen. Marco Rubio (R-Florida) and Sen. Bernie Sanders (I-Vermont) all voted Yes. Sen. Ted Cruz (R-Texas) was absent. The bill needed 60 Yes votes to pass, and wasn't expected to do so.</p><p><strong><a href="http://blog.cinchfinancial.com/2016/01/12/the-best-option-for-paying-off-post-holiday-credit-card-debt/?utm_source=Blog&amp;utm_medium=CCconsolidation&amp;utm_campaign=Pitch">The best way to pay off credit card debt from the holidays</a> (Cinch Financial)</strong></p><p>Now that the holidays are over, it's time to pay the bills. According to Cinch Financial, the average consumer spends $805 on the holidays, and most of that is charged to a credit card. Cinch says when looking to consolidate debt its best to go to a local federal credit union as opposed to a big brand bank, because they allow you to minimize interest and fees. Avoid selecting a new card based on rewards since someone looking to pay down debt shouldn't be making purchases, Cinch says.</p><p><strong><a href="http://www.bloomberg.com/news/articles/2016-01-12/junk-bonds-signal-44-chance-of-recession-in-2016-fridson-says">Junk bonds say there's a 44% chance of a recession in 2016</a> (Bloomberg)</strong></p><p>Martin Fridson, a money manager at Lehmann, Livian, Fridson Advisors LLC, told Bloomberg, junk bonds are pricing in a 44% chance of a US recession this year. Fridson arrives at this probability by looking at monthly junk bond spreads of Bank of America Merrill Lynch index data and observing a spread of 7.39%, which is a little less than halfway between the <span>5.2% average for expansionary months and 10.19% average for recessionary months. </span>"<span>You could say that if you take out energy, the rest of the market is not indicating a particularly high recession risk, and that's also a valid comment," Fridson told Bloomberg.</span></p><p><strong><a href="http://www.businessinsider.com/hillary-clinton-fair-share-surcharge-tax-2016-1?r=UK&amp;IR=T">Hillary Clinton wants to raise taxes on the wealthy</a> (Business Insider) </strong><span>US Democratic presidential candidate Hillary Clinton is calling for a 4% "surcharge" on anyone making an annual income of $5 million or more. Reuters reports the Clinton campaign says the tax hike on America's highest earners would bring in an additional $150 billion over 10 years.</span></p><p><strong><a href="http://wealthmanagement.com/technology/fund-manager-invesco-acquires-robo-advisor-jemstep">Invesco is buying robo-advisor</a> (Wealth Management)</strong></p><p>Wealth Management reports, Invesco has purchased robo-advisor Jemstep with the hopes of providing its advisors with <span>better digital technology for interfacing with clients. According to <span>Martin L. Flanagan, CEO and president of </span><span data-scayt-lang="en_US" data-scayt-word="Invesco">Invesco, "<span>Jemstep's proven platform enhances our ability to help advisors grow their business and by seeking to deliver superior client experiences in a rapidly evolving market environment." Terms of the deal were not disclosed.</span></span></span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/dont-buy-powerball-ticket-2016-1">The next Powerball will have the biggest jackpot ever - but you shouldn't buy a ticket</a></h3>        <div>            <div>    <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script>    <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="xsOXcyMDE6XBXPBBNlSedH6d_fvwloUw" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>    <script>    if (typeof RunFunctions === 'undefined') { var RunFunctions = []; }     RunFunctions.push(function()    {         var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'xsOXcyMDE6XBXPBBNlSedH6d_fvwloUw',{ autoplay: 'false' });     });    </script>    <noscript><div>Please enable Javascript to watch this video</div></noscript></div>        </div>        <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script>    </div>

'Audit the Fed' was blocked in the Senate

<p><span><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/4e14b21a49e2ae1466100000-871/robots-thumbnail2.jpg" alt="robots, thumbnail" data-mce-source="AP" /><p class="source"><span>AP</span></p></div><p></p></div></div>Legg Mason has joined the club. </span></p><p><span>The fund manager announced on Thursday, July 7, that</span> that it will be acquiring an 82% majority stake in robo advisor Financial Guard. </p><p><span>In doing so, it has become the</span><span> latest in a long line of Wall Street firms acquiring or building up innovative robo capabilities. </span></p><p>Financial Guard is an online wealth management platform that offers clients customized investment advice that pulls from both passive and active strategies. <span>The robo advisor will operate as part of Legg Mason's alternative distribution strategies business and will open up<span> another avenue of distribution for the firm's affiliates.</span></span></p><p>The deal is part of Legg Mason's long term strategy to package more products and provide more holistic solutions for customers, according to Barclays analysts, who said firms were responding to a "robo-up or get left behind" environment. </p><p>With UBS wealth management's partnership with SigFig, Blackrock's acquisition of FutureAdvisor, and Invesco's acquisition of Jemstep, Legg Mason is following suit and getting ready for the future. </p><p>"<span>While the motivations are different and the way they are being utilized varies across our coverage, we believe it ultimately boils down to companies seeing this technology as part of the future and making investments now so that they don't get left behind," the Barclays analysts said. </span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/goldman-sachs-flags-emails-with-these-phrases-2016-6">These are the phrases that will get your email flagged at Goldman Sachs</a></h3>        <div>            <div>    <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script>    <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="JmMWw3NDE67SsX7jdg192zCLe6Blqs_t" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>    <script>    if (typeof RunFunctions === 'undefined') { var RunFunctions = []; }     RunFunctions.push(function()    {         var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'JmMWw3NDE67SsX7jdg192zCLe6Blqs_t',{ autoplay: 'false' });     });    </script>    <noscript><div>Please enable Javascript to watch this video</div></noscript></div>        </div>        <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script>    </div>

Wall Street is in a 'robo-up or get left behind' world

<img src="https://static-ssl.businessinsider.com/image/591f232c34911b075c8b48d3-505/screen shot 2017-05-19 at 125340 pm.png" alt="Screen Shot 2017 05 19 at 12.53.40 PM" /><p class="source"><span>Morgan Stanley</span></p><p>A lot of robo-advice startups could be heading for trouble.</p><p><span>Robo-advisers provide financial advice or portfolio management online or via a smartphone application. Rather than using human managers to build portfolios, they use algorithms to determine where to invest. </span></p><p>Global assets managed by robos could reach $13 trillion by 2025 in a best case scenario, according to a group of equity analysts at Morgan Stanley. That's up from $100 billion as of December 2016. </p><p>But while robo pioneers Betterment, Wealthfront and Nutmeg have been growing at a fast clip, it's actually the legacy firms <span>such as Vanguard and Charles Schwab that will drive growth in the robo-advice space moving forward, according to Morgan Stanley. Schwab already has close to $50 billion in robo assets, up from $4.2 billion in 2014. </span></p><p>"[W]e think the incumbents are best positioned to win market share, and we see the fact that ~70% of the companies we interviewed either just launched or are about to launch such offering as a step in such direction," the bank said. </p><p>That's because legacy firms have their brand names to back them up. A lot of investors, especially high-net-worth investors, are more comfortable giving their money to a well-established Wall Street firm than to a young startup from the Valley. </p><p>"The case of Vanguard and Schwab has showed that network and brand are key to lower cost of acquisition, and allow for faster expansion," the bank said. </p><p>But this doesn't mean the bank thinks the end is nigh for all robo-advice fintech firms. They believe a "handful" will survive, but most will have to partner up with other startups or get bought out by incumbent firms. </p><p>This consolidation is already underway. TIAA, a New York-based financial services firm, <a href="http://www.investmentnews.com/article/20160630/FREE/160639998/tiaa-acquires-business-to-business-robo-adviser-myvest">bought the business-to-business robo-adviser MyVest</a> in 2016. In the same year, Invesco, a legacy investment management firm, <a href="http://www.ft.com/cms/s/0/f57828e0-bd48-11e5-846f-79b0e3d20eaf.html?ft_site=falcon&amp;desktop=true#axzz4hY3sssWD">bought Atlanta-based robo-adviser Jemstep</a>.</p><p>Robo-advice startups, you've been warned. </p><h3>More from Frank Chaparro:</h3><ul><li><a href="http://www.businessinsider.com/morgan-stanley-on-roboadvisers-and-fintech-2017-5" rel="nofollow">MORGAN STANLEY: Only a 'handful' of robo-advice startups will survive</a></li><li><a href="http://www.businessinsider.com/free-masters-program-in-financial-engineering-2017-5" rel="nofollow">A hedge fund manager is supporting a free master's program in financial engineering</a></li><li><a href="http://www.businessinsider.com/lloyd-blankfein-shares-2-bits-of-advice-2017-5" rel="nofollow">Lloyd Blankfein was given 2 bits of advice when he became a partner at Goldman Sachs, and they sum up the company culture (GS)</a></li><li><a href="http://www.businessinsider.com/goldman-sachs-ceo-lloyd-blankfein-on-who-he-wants-to-hire-2017-5" rel="nofollow">Goldman Sachs CEO Lloyd Blankfein describes the kind of people he wants to hire (GS)</a></li><li><a href="http://markets.businessinsider.com/news/stocks/tjx-stock-price-morgan-stanley-positive-note-2017-5-1002022723" rel="nofollow">MORGAN STANLEY: There's one 'high quality' retail stock ready to pop 15%</a></li></ul>            <h3>NOW WATCH: <a href="http://www.businessinsider.com/look-inside-donald-trump-28-million-dollar-caribbean-estate-st-martin-sale-2017-5">Trump is reportedly selling his Caribbean estate for $28 million - take a look inside</a></h3>                                    Please enable Javascript to watch this video                    

MORGAN STANLEY: Only a 'handful' of robo-advice startups will survive

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/4cc86ce6ccd1d5d619090000-590/robo-signer-1.jpg" alt="robo signer" /></div></div></div>The rise of financial technology is threatening Wall Street, right?</p><p>The common narrative when it comes to <span>fintech</span> is that it poses an existential threat to established players. </p><p>Startups are picking up customers at an incredible rate. According to a new report out by UBS Evidence Lab, the use of financial services from non-bank providers is set to surge by as much 150% over the next 12 months. </p><p><span>While it's obvious that fintech presents a risk to banks, it also presents a huge opportunity both in terms of the potential for collaboration and the resulting increase in bank revenue. </span></p><div title="Page 9"><p><span><span>According to the UBS bank management survey of 61 big banks, 38% of respondent banks already have a fintech partnership, a level that looks likely to rise to 51% over the next year. Emerging markets in particular have the potential to form partnerships and digitize traditional services. </span></span></p><p><span><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><img style="display: block; margin-left: auto; margin-right: auto;" src="https://static-ssl.businessinsider.com/image/57aa3ed4db5ce925008b5aa5-647/screen shot 2016-08-09 at 4.35.50 pm.png" alt="UBS Fintech report" data-mce-source="UBS Evidence Lab" /><p class="source"><span>UBS Evidence Lab</span></p></div><p></p></div></div></span></span></p><p><span><span>Both groups can leverage from each other's strengths and make up for each other's shortfalls.  Banks have large and loyal customer bases, large distribution networks and the capital to fund new projects. Startups on the other hand, are innovative and nimble</span><span> with deep technical expertise and can offer a better customer experience at lower operating costs. </span></span></p><p><span><span>These startups provide services to customers in a way that is often faster, easier and cheaper than traditional banks, and partnerships allow the banks to offer their own customers these services without incurring the cost. </span></span></p><p>The benefits of collaboration can be seen in revenues, and the report predicts that a <span>3.8% bank revenue uplift will arise from the impact of fintech over the next three years. </span></p></div><p>This collaboration is already happening, with large incumbent banks partnering or acquiring startups and building up their own innovation capabilities. JPMorgan teamed up with OnDeck Capital, <span>UBS's own wealth management arm with SigFig, Blackrock acquired FutureAdvisor, Invesco acquired Jemstep, and last month <a href="http://www.businessinsider.com/legg-mason-acquires-majority-stake-in-financial-guard-2016-7">Legg Mason acquired Financial Guard</a>, among others. </span></p><p>Other banks like Wells Fargo, Citi, Deutsche Bank, BBVA and UBS have all established in-house fintech labs and innovation centers and have conducted their own surveys to analyze trends in the space and learn how they can get ahead. </p><p class="tagline"><div id="categorypromo"><p><script src="//load.sumome.com/" data-sumo-site-id="ad2d02bb34b81e60382fbf1fd2c2e4d9230918d0b8ccae68c9d7bac17d286fa5" async="async"></script></p></div></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/malcolm-gladwell-revisionist-history-donate-princeton-vassar-bowdoin-tipping-point-outliers-blink-2016-7">MALCOLM GLADWELL: 'Anyone who gives a single dollar to Princeton has completely lost their mind' </a></h3>        <div>            <div>    <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script>    <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="tlNzV5NDE68LblejgkI-6sByYCuoiDZ7" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>    <script>    if (typeof RunFunctions === 'undefined') { var RunFunctions = []; }     RunFunctions.push(function()    {         var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'tlNzV5NDE68LblejgkI-6sByYCuoiDZ7',{ autoplay: 'false' });     });    </script>    <noscript><div>Please enable Javascript to watch this video</div></noscript></div>        </div>        <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script>    </div>

There's a big misunderstanding about technology's impact on Wall Street

<p><span class="KonaFilter image-container float_right"><span data-post-image="" class="image on-image"><img src="https://static-ssl.businessinsider.com/image/5493570c69bedd38698b4567-909-681/robot-hugs-costume-1.jpg?maxX=600" border="0" alt="robot hugs costume" width="600"><span class="source"><span><a href="https://www.flickr.com/photos/benhusmann/5126030385/in/photolist-8NYffe-eEuk9H-4GLf8H-eeaNLg-CBNN3-7ef4Vt-4tjEND-7B1Kkj-dcBE4C-8H2ihf-tyKQ-7Nojam-AAKAq-7t5BDs-6pBD5-73u2YE-eYwfFt-5poWK-kQNFcj-8NYNaD-hkiNZa-4zntt1-5HgYqB-EHvwx-cYVw2W-8KjdRJ-DtYeV-MxAfD-9gv3KS-7XwYnu-7Lnf4x-8he8WU-7Nojcs-buePP-vJDpB-bbwkYD-bT9fYz-2ptG3z-dScuSm-5guCHM-E5Sfh-awg1ZR-vju5M-fX8sgY-6b9yA1-azrfv7-5Btnka-dhPcaH-dWTnJy-8X33JT">Flickr / Ben Husmann</a></span></span></img></span><p></p></span>In July, research and consulting firm Corporate Insight presented an impressive number: <a href="http://www.businessinsider.com/robo-advisors-grow-quickly-2014-7">$15.7 billion</a>.</p>
<p>That was the amount of money managed by the online investment platforms known as <a href="http://www.businessinsider.com/where-robo-advisor-started-2014-9">robo-advisers</a>.</p>
<p>By once again analyzing 11 leaders in the field this December, Corporate Insight has determined that since its last analysis, these robo-advisers have taken more than another $3 billion under management for a total of nearly $19 billion.</p>
<p>This number represents a 21% increase since&#xa0;July, and a 65% increase since the first time the data was collected in April.</p>
<p>"The continued growth of the newcomers and the recent actions of the major players prove that online advice is not a fleeting fad," Corporate Insight analyst Grant Easterbrook wrote in an email to Business Insider. "Human advisers must realize that the disruptive powers of the web and automation are here to stay."</p>
<p>Corporate Insight looked at the influence of online platforms <a href="http://www.businessinsider.com/san-francisco-49ers-wealthfront-2014-8">Wealthfront</a>,&#xa0;<a href="http://www.businessinsider.com/why-i-use-a-robo-advisor-2014-8">Betterment</a>, Assetbuilder, Covester, Financial Guard,&#xa0;<a href="http://www.businessinsider.com/i-tried-online-investing-site-futureadvisor-2014-11">FutureAdvisor</a>, Jemstep, MarketRiders, Personal Capital, RebalanceIRA, and SigFig.</p>
<p>Easterbrook&#xa0;says the innovative new partnerships and products announced by <a href="http://www.businessinsider.com/betterment-announces-partnership-with-fidelity-2014-10">Fidelity</a>, TD Ameritrade, TradeKing, and <a href="http://www.businessinsider.com/charles-schwab-launches-robo-adviser-2014-10">Charles Schwab</a>, as well as the $161 million raised in funding rounds by four of these 11 robo-advisers this year, is clear&#xa0;evidence that robo-advice is being welcomed into the mainstream.</p>
<p>The growth, segmented into "discretionary control" (money that's directly managed) and "paid investment advice," is shown in the chart below:</p>
<p><span class="KonaFilter image-container display-table"><span><span data-post-image="" class="image"><img src="https://static-ssl.businessinsider.com/image/54942c7969beddd411e024d5-689-517/chart-corporate-insight-robo-advisers-dec.jpg" border="0" alt="chart corporate insight robo advisers dec"><span class="source"><span>Grant Easterbrook / Corporate Insight</span></span></img></span><p></p></span></span></p>

Robo-Advisers Now Manage 21% More Money Than They Did 5 Months Ago

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/56e69134dd08957d0b8b46e3-667-500/109aqj.jpg" alt="ROBOTS" data-mce-source="Jim Edwards / Business Insider / The Simpsons" /><p class="source"><span>Jim Edwards / Business Insider / The Simpsons</span></p><p class="caption">Automated financial advisors are coming.</p></div><p></p></div></div>Far too many people aren't getting the advice they need before purchasing financial products and may be taken advantage of, according to the Financial Conduct Authority (FCA).</p><p>In its Financial Advice Market Review (FAMR), <a href="https://www.fca.org.uk/your-fca/documents/financial-advice-market-review-final-report">published on Monday</a>, the FCA says that up to 16 million people could be trapped in a "financial advice gap" - they need advice but can't afford it.</p><p>The report notes that two-thirds of retail investment products in the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> are bought without professional advice, which is up a third from 2007.</p><p>The problem may stem from a ban in 2013 which stopped financial advisors from offering free advice to customers and being paid by commissions from the product providers.</p><p>The FCA solution is for more "streamlined" and "informal" advice, and that could take the form of so-called "robo-advice" - computer-generated recommendations based on online financial questionnaires. Here's the report:</p><p style="padding-left: 30px;">The FAMR believes that creating an environment that supports firms in delivering 'streamlined advice' within the MiFID regime will have a positive effect on the market. This is particularly the case for online automated advice models that have the ability to deliver advice in a more cost efficient way.</p><p>Robo-advice is already a reality. Platforms like Wealthfront and Betterment in the US have proved hugely popular in the US and in the UK, the likes of insurer LV= have launched their own robo-advisor offerings.</p><p>BlackRock, one of the world's largest fund managers, <a href="https://next.ft.com/content/aa146994-4b61-11e5-b558-8a9722977189">last year also acquired online-only FutureAdvisor</a> and <a href="http://www.investmentnews.com/article/20160112/FREE/160119985/invesco-acquires-robo-adviser-jemstep">in January asset manager Invesco bought automated investment manager Jemstep.</a></p><p>The Royal Bank of Scotland (RBS) is poised to cut 550 jobs from their investment and protection divisions, <a href="https://next.ft.com/content/10df9f22-e90f-11e5-bb79-2303682345c8">according to the Financial Times</a>, with plans to utilise "robo-advisors" in their place to save money. The automated systems would offer customers advice based on a series of questions and responses.</p><p>The FAMR report also said people should be able to be able to access their pension pots to pay for financial advice, which would be offset by the gains in purchasing worthwhile products:</p><p style="padding-left: 30px;">This will ensure that consumers can access financial advice at a key milestone in their lives and feel confident in making financial decisions as they approach retirement," the report said. This would give "millions" of people better access to affordable financial advice "that meets their needs at every stage of their lives.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/2-in-1-shampoo-conditioner-combination-science-2016-3">Why 2-in-1 shampoo and conditioner products don't work </a></h3>        <div>            <div>    <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script>    <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="91YjV0MTE6Q-UUNd4hePsmmU5pUlzcwC" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>    <script>    if (typeof RunFunctions === 'undefined') { var RunFunctions = []; }     RunFunctions.push(function()    {         var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', '91YjV0MTE6Q-UUNd4hePsmmU5pUlzcwC',{ autoplay: 'false' });     });    </script>    <noscript><div>Please enable Javascript to watch this video</div></noscript></div>        </div>        <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script>    </div>

16 million people are trapped in a 'financial advice gap' - robo-advisors could be the answer

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/572cd6c352bcd028008c1548-911-683/retirement grandfather.jpg" alt="retirement grandfather grandchild" data-mce-source="Mike Baird/Flickr" data-link="http://www.flickr.com/photos/mikebaird/5998907313/in/photostream/" /><p class="source"><span><a href="http://www.flickr.com/photos/mikebaird/5998907313/in/photostream/">Mike Baird/Flickr</a></span></p></div><p></p></div></div><em><strong>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.</strong></em></p><p><strong><a href="http://www.bloomberg.com/news/articles/2016-05-06/the-rich-have-you-beat-in-retirement-too">The lowest-paid American workers aren't as well set up for retirement as their better-paid counterparts</a> (Bloomberg)</strong></p><p><span>"<span>The US retirement landscape is starting to look like a Charles Dickens novel</span></span><span>," writes Bloomberg's Ben Steverman. </span></p><p><span>Steverman cites a new report from the Government Accountability Office, which found that about 60% of all US households have no savings in an IRA or 401(k)-style account. Moreover, the highest-paid US workers are set to end up with retirement savings incomes over 11 times larger than those of their lowest-paid counterparts.</span></p><p><span><span>"<span>Since voluntary savings plans led by 401(k)s have largely replaced traditional pensions, it's probably no surprise that this is the best of times for many highly paid worker</span>s," writes Steverman. "<span>Equally unsurprising is that this is the worst of times for almost everyone else, especially the </span>42%<span> of workers who don't have access to a work-sponsored plan</span></span><span>."</span></span></p><p><strong><a href="http://www.advisorperspectives.com/commentaries/20160506-lpl-financial-consumer-check-in">Oil's surge isn't going to hit consumers ... yet</a> (Advisor Perspectives)</strong></p><p>Oil prices have bounced back a bit this year. Since their February lows, both WTI and Brent crude are up about 60%, trading around $44 per barrel. As such, some folks have started to get nervous about what this could mean for consumers' wallets.</p><p>"E<span>xamining consumer spending activity in the past 18-24 months does not suggest an impending dramatic change, however, barring a return to oil prices of $100 per barrel,</span>" argues J<span>ohn Canally of LPL Financial.</span></p><p><strong><a href="http://www.fa-mag.com/news/murray-says-advisors-will-become-therapists-for-the-aging-26737.html?section=43">Advisors may need to start taking on the role of a family therapist</a> (FA Magazine)</strong></p><p>As more Americans live longer, advisers may have to start taking on the role of a family therapist, reports Dan Jamieson.</p><p><span>"The financial aspects, as critically important as they are, become almost footnotes" to the other physical, mental, and emotional issues in retirement for both clients and their parents, s<span>aid author and speaker Nick Murray Thursday at Financial Advisor magazine's seventh annual Inside Retirement conference in Dallas.</span></span></p><p><strong><a href="http://www.schwab.com/public/schwab/nn/articles/The-ECB-s-Latest-Plan-What-Does-It-Mean-for-U-S-Corporate-Bonds">Here's what the ECB's new plan means for US corporate bonds</a> (Charles Schwab)</strong></p><p>The ECB will begin buying European investment-grade corporate bonds in June as part of its economic stimulus program.</p><p>"<span>Because bond yields move inversely to bond prices, the ECB's buying may lead to lower European corporate bond yields</span><span>," notes Collin Martin. "<span>We think this may indirectly support the U.S. investment-grade corporate bond market, as international investors may be pushed to seek out higher-yielding alternatives</span><span>."</span></span></p><p><strong><a href="http://www.investmentnews.com/article/20160504/FREE/160509965/pershing-adds-three-new-robo-advisers-in-latest-push-into-digital">Pershing just scooped up 3 robo partners</a> (InvestmentNews)</strong></p><p>Pershing added three new robo-adviser partners: Jemstep, SigFig, and Vanare. This is part of the firm's big push to offer more digital options to its advisers, reports Alessandra Malito.</p>      <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/absolutely-everyone-needs-prenup-marriage-divorce-lisa-zeiderman-2015-12">Why absolutely everyone needs a prenup</a></h3>        <div>            <div>    <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script>    <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="ttOGgweTp_ufF78dSmKnr_4eyRvQo7ih" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>    <script>    if (typeof RunFunctions === 'undefined') { var RunFunctions = []; }     RunFunctions.push(function()    {         var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'ttOGgweTp_ufF78dSmKnr_4eyRvQo7ih',{ autoplay: 'false' });     });    </script>    <noscript><div>Please enable Javascript to watch this video</div></noscript></div>        </div>        <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script>    </div>

The lowest-paid American workers aren't as well set up for retirement as their better-paid counterparts

<p><em><strong><div class="KonaFilter image-container display-table float_right"><div><div class="image"><img src="https://static-ssl.businessinsider.com/image/56cdf7c12e5265b9008b95d1-934-700/slack-imgs.com.jpeg" alt="fortune teller" data-mce-source="Billie Grace Ward, via Flickr" data-link="https://www.flickr.com/photos/wwward0/16091645165/in/photolist-82sBz7-qvXTu2-qYb8wg-6Z14Cm-4x5C1b-93vN68-4G3Xjt-6R8RM1-4G3XjH-zZY8XB-qCJsdA-4G3XjB-4G3XjK-b168QB-569yzm-dAWBiP-8XeaF-C4efa-C4JZQ-7NspBY-7jLQiF-43cXJL-r2grR-fL144f-bnyK58-FSvKd-6YW3wF-6YW3B2-6D4Kkt-quBTV-fQQmts-6zJVJi-6YZTX1-6Z14FY-4hLNGT-8yaPnF-6YW8tp-6i9a9M-6YW8J2-6fvPBP-agm33t-6i9apz-8HGkbi-bYB8Uh-6YZVzq-6idiKG-7B2hxE-fQQnnj-7L3FyQ-dyx2xi" /><p class="source"><span><a href="https://www.flickr.com/photos/wwward0/16091645165/in/photolist-82sBz7-qvXTu2-qYb8wg-6Z14Cm-4x5C1b-93vN68-4G3Xjt-6R8RM1-4G3XjH-zZY8XB-qCJsdA-4G3XjB-4G3XjK-b168QB-569yzm-dAWBiP-8XeaF-C4efa-C4JZQ-7NspBY-7jLQiF-43cXJL-r2grR-fL144f-bnyK58-FSvKd-6YW3wF-6YW3B2-6D4Kkt-quBTV-fQQmts-6zJVJi-6YZTX1-6Z14FY-4hLNGT-8yaPnF-6YW8tp-6i9a9M-6YW8J2-6fvPBP-agm33t-6i9apz-8HGkbi-bYB8Uh-6YZVzq-6idiKG-7B2hxE-fQQnnj-7L3FyQ-dyx2xi">Billie Grace Ward, via Flickr</a></span></p></div><p></p></div></div>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.</strong></em></p><p><strong><a href="http://www.investmentnews.com/gallery/20160223/FREE/223009999/PH">7 behaviors that might predict a person's future wealth</a> (InvestmentNews)</strong></p><p>People who are good at generating and saving wealth exhibit certain characteristics, writes Liz Skinner. Recognizing these attributes could give advisors a better sense of their prospective clients.</p><p>There are seven behaviors in particular that suggest people may have high net worth potential: recognizing they have what it takes to build wealth; being satisfied with their likely future financial situation; meticulously planning their financial future; recognizing buying opportunities; believing that it's "very easy" to walk away from non-excellent professional service; being satisfied with the way their household manages finances; and living within their means.</p><p><strong><a href="http://mergermarketgroup.com/wp-content/uploads/2016/02/DW-North-American-Distressed-Debt-2016_Final_LR.pdf">The financial industry might not lean as Republican as everyone thinks</a> (Debtwire)</strong></p><p>In its annual North American Distressed Debt Market Outlook report, Debtwire noted that 46% of investors surveyed in December 2015 (including hedge fund managers, desk-side traders, asset managers) said they planned to vote for Democrat in the 2016 vote. By comparison, only 27% said they would vote for the Republican.</p><p>67% of respondents believe the economy to have better prospects with a Democrat.</p><p><strong><a href="http://www.advisorperspectives.com/commentaries/20160224-lpl-financial-from-headwind-to-tailwind">If the dollar stabilizes, that headwind could disappear by the end of 2016</a> (Advisor Perspectives)</strong></p><p>The stronger dollar has been a major headwind for US exports, commodity prices, and corporate revenue and earnings. But in the first two months of 2016, that headwind has "subsided substantially," writes LPL Financial's John Canally.</p><p>"If the dollar stabilizes at current levels - which is consistent with our view - by the end of 2016, the dollar headwind would disappear altogether, and could turn into a small tailwind for U.S. exports, commodity prices, and corporate revenue and earnings. In the longer term, however, we continue to believe the dollar will slowly depreciate over time-continuing the trend that has been in place since the early 1970s, but at a pace that will not undermine the nation's health or its role as a global economic power," Canally argues.</p><p><strong><a href="http://wealthmanagement.com/technology/nextcapital-partners-pershing-move-beyond-401ks">NextCapital has partnered with Pershing to expand beyond 401(k)s </a>(Wealth Management)</strong></p><p>NextCapital, the Chicago-based company, announced that it will partner with Pershing Advisor Solutions as its custodian and will integrate into the NetX360, reports Ryan W. Neal.</p><p>"<span>The move beyond the 401(k) seems to place NextCapital into more direct competition with companies with other white-label digital advice providers like Jemstep, Vanare, FutureAdvisor and Marstone, which partnered with Pershing in June to launch a robo provider for Pershing advisors," writes Neal.</span></p><p><strong><a href="http://www.financial-planning.com/news/industry/finra-bars-three-planners-for-stealing-one-from-housekeepers-2695811-1.html">3 advisers were separately barred from the industry after stealing money</a> (Financial Planning)</strong></p><p>FINRA permanently barred three former advisors from the industry. One stop from clients who cleaned homes for a living; the second embezzled money from a nonprofit; and the third siphoned money out of client accounts through ATM transactions, reports Ann Marsh.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/cam-newton-carolina-panthers-press-conference-nfl-denver-broncos-super-bowl-2016-2"> Here's the question that prompted Cam Newton to storm out of his postgame press conference</a></h3>        <div>            <div>    <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script>    <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="VoZG5yMDE6VHP_GWa6so3qlVcSAMa9_y" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>    <script>    if (typeof RunFunctions === 'undefined') { var RunFunctions = []; }     RunFunctions.push(function()    {         var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'VoZG5yMDE6VHP_GWa6so3qlVcSAMa9_y',{ autoplay: 'false' });     });    </script>    <noscript><div>Please enable Javascript to watch this video</div></noscript></div>        </div>        <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script>    </div>

These 7 behaviors might predict someone's future wealth

<p><strong><strong><strong><strong><strong><strong><strong><em><strong>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.</strong></em></strong></strong></strong></strong></strong></strong></strong></p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;"><strong><a href="http://www.bmocm.com/">The Value Trade Is Working</a> (BMO Capital Markets)</strong></p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">In a new report Brian Belski writes that value strategies outperform when the economy is improving, the market is up, and earnings are growing like right now. </p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">"According to our analysis, during periods of double-digit S&amp;P 500 earnings growth, value outperforms growth by roughly 2.1%. In addition, in years where earnings growth rates increase from the prior year and the S&amp;P 500 delivers single-digit gains, value outperforms growth by an average of 8%. In terms of economic growth, when GDP improves from the prior year, value outperforms growth by an average of 3.5%. When all three of these conditions are met – which is how we expect 2013 to unfold – value outperforms growth by nearly 10%.</p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">"From our perspective, investors should not solely focus on stocks with battered prices when searching for value opportunities. Rather, the focus should be on areas within the market with attractive valuations and a solid fundamental backdrop in the form of consistent earnings growth and business operating performance."</p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;"><strong><a href="http://www.advisorone.com/2013/03/21/hey-mut-fund-providers-gen-y-cant-hear-you">Mutual Funds Are Ignoring A Large Investor Pool</a> (Advisor One)</strong></p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">Mutual funds are ignoring a large and growing investor pool – Gen Y, which accounts for 10 percent of investors. A recent study by Cogent Research showed that most young investors don't have enough of an understanding about how mutual funds work or the companies themselves. Mutual funds need to reach out and have more of a presence on social media.<strong> <br /></strong></p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;"><strong><a href="http://www.businessinsider.com/sec-sues-belesis-fopr-alleged-fraud-2013-3">SEC Charges Wall Street 2 Actor Thomas Belesis With Fraud</a> (Business Insider)</strong></p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">The SEC has charged CEO of brokerage firm John Thomas Financial and Wall Street 2 actor, Thomas Belesis, with fraud. Hedge fund manager George Jaresky has also been charged.</p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">"An investigation by the SEC’s Enforcement Division found that George R. Jarkesy Jr., worked closely with Thomas Belesis to launch two hedge funds that raised $30 million from investors. Jarkesy and his firm John Thomas Capital Management (since renamed Patriot28 LLC) inflated valuations of the funds’ assets, causing the value of investors’ shares to be overstated and his management and incentive fees to be increased. </p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">"Jarkesy, a frequent media commentator and radio talk show host, also lied to investors about the identity of the funds’ auditor and prime broker. Meanwhile, although they shared the same “John Thomas” brand name, Jarkesy’s firm and Belesis’ firm John Thomas Financial were portrayed as wholly independent."<strong> </strong></p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;"><strong><a href="http://www.mebanefaber.com/2013/03/21/you-are-not-a-good-investor/">Proof That You're A Bad Investor</a> (BlackRock)</strong></p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">A study by Blackrock via Mebane Faber shows that investors underperform both the stock market and inflation.</p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">"Amidst difficult financial times, emotional instincts often drive investors to take actions that make no rational sense but make perfect emotional sense," wrote BlackRock. "Psychological factors such as fear often translate into poor timing of buys and sells."</p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;"><div class="image-container" style="width:580px"><div class="image"><img src="http://static2.businessinsider.com/image/514c48bd6bb3f7ef3d000009-1591-725/screen shot 2013-03-22 at 8.03.50 am.png?maxX=580&amp;maxY=264" border="0" alt="average investor returns" width="580" height="264" /></div><p class="source">BlackRock</p></div><br /><br /></p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;"><a href="http://go.bloomberg.com/tech-deals/2013-03-19-why-you-should-consider-taking-financial-advice-from-a-computer/"><strong>A Startup That Tries To Remove Bias From The Financial Services Industry (Bloomberg)</strong></a></p>
<p style="overflow: hidden; color: #000000; background-color: #ffffff; text-align: left; text-decoration: none;">Jemstep is an online investment advisor that tries to remove the bias in the financial services industry. President Simon Roy told Bloomberg, "The incentive structure under which brokers operate is designed to serve the interests of institutions, not the interest of investors. ...Our advice is objective and untainted by any third-party influence." Jemstep allows investors to get "automated advice" based on their retirement-account data.</p>

5 Smart Insights For Financial Advisors

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/53d68875ecad04803093ea6c-622-466/charles-barkley-tnt-inside-the-nba.png" alt="charles barkley tnt inside the nba" border="0"><p class="source"><span><a href="http://www.youtube.com/watch?v=bU_0FmXEBnY">TNT</a></span></p></img></div><p></p></div></div><em><strong>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors. </strong></em></p><p><strong><a href="http://www.financial-planning.com/news/independent_bds/charles-barkley-plug-a-slam-dunk-for-raymond-james-advisor-2691946-1.html">Charles Barkley gives a shout out to his financial advisor</a> (Financial Planning)</strong><em><strong> </strong></em></p><p>When former NBA all-star Charles Barkley was on the floor of the New York Stock Exchange CNBC anchor Bob Pisani asked him who handled his investments.</p><p>Barkley's response, "Raymond James. I'm [at] Raymond James. Birmingham, Ala. My guy's name is Glenn Guthrie. I've been with him for 27 years and I trust him with my life." <strong><br /></strong></p><p><strong><a href="http://www.investmentnews.com/article/20150217/BLOG12/150219946/longer-life-expectancies-are-killing-pension-funds">People are living longer and its crushing pension funds</a> (John Mauldin)</strong></p><p>John Mauldin writes, "It is a fairly well-defined trend. The actuarial accountants whose responsibility it is to track these things updated the life expectancy tables for a 65-year-old male, who can now expect to live an additional 21.6 years, two years longer than in the old table." By his count pensions may be underfunded by as much as $4.1 trillion because fund managers assume unrealistic earnings of 7.5-8.0%.<strong><span><br /></span></strong></p><p><strong><a href="http://wealthmanagement.com/careers/when-you-move-clients-move-too">Things to consider when contemplating a move to a new firm</a> (Wealth Management)</strong></p><p>Changing firms brings about the opportunity for better pay. However, a move can be costly if the advisor doesn't consider the interests of his/her clients. Mindy Diamond of Wealth Management six things an advisor must take into account before making the big move. </p><p><strong><a href="http://www.financial-planning.com/gallery/fp/10-robo-advisor-moves-to-watch-2691950-1.html">The rise of the 'robo advisor'</a> (Financial Planning)</strong></p><p>The 'robo advisor' has begun to take market share from the traditional financial advisor. Financial Planning outlines the advantages and disadvantages of 10 names in the space. Names highlighted include: Schwab, Vanguard, Wealthfront, Betterment, Motif, Jemstep, SigFig, Aspiration Fund Advisor, Robinhood and Guardvest. </p><p><strong><a href="http://www.investmentnews.com/article/20150217/TECH/150219943/3-must-dos-from-the-t3-conference">3 takeaways from the T3 Conference</a> (Investment News)</strong></p><p>The rise of the 'robo advisor' allows firms to manage thousands of clients, far more than the traditional advisor. Advisors should not fight the trend and should instead embrace change. Steve Sanduski of Investment News says these are three 'must dos' from the T3 Conference: "Implement a robo-adviser strategy, offer a "consumer grade" client interface, and educate your clients."</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/iphone-headphones-tricks-2015-2">14 things you didn't know your iPhone headphones could do</a></h3>        <div>            <div>    <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script>    <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="o2OGM3czpWcydnvhjbkDBd6feXPuExiD" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>    <script>    if (typeof RunFunctions === 'undefined') { var RunFunctions = []; }     RunFunctions.push(function()    {         var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'o2OGM3czpWcydnvhjbkDBd6feXPuExiD',{ autoplay: 'false' });     });    </script>    <noscript><div>Please enable Javascript to watch this video</div></noscript></div>        </div>        <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script>    </div>

Charles Barkley trusts his financial advisor with his life

<p><div class="KonaFilter image-container float_right"><div class="image"><img src="https://static-ssl.businessinsider.com/image/53d667a1eab8ea613666954e-1065-799/robot-soccer-1.jpg?maxX=480" border="0" alt="robot soccer" width="480" /><p class="source"><span>Joe Raedle / Getty Images</span></p></div><p></p></div>Robo-advisors keep making h<span style="background-color: #ffffff;">eadlines, but how much money do they actually manage?</span></p>
<p><span style="background-color: #ffffff;">Research and consulting firm Corporate Insight has found that as of July, the 11 leading startups in the robo-advice space currently manage $15.7 billion in client assets.</span></p>
<p>Back in April, that number was $11.5 billion - a 36.5% growth rate in about three months.</p>
<p>While the term "robo-advisor" is most often used for companies that rely completely on algorithms to manage funds, this analysis broadens the definition to include online investment management companies that are automated to varying extents.</p>
<p>Specifically, it profiles the activities of usual players <a href="http://www.businessinsider.com/robo-advisors-vs-financial-advisors-2014-7" target="_blank">Wealthfront and Betterment</a>, along with Assetbuilder, Covester, Financial Guard, FutureAdvisor, Jemstep, MarketRiders, Personal Capital, RebalanceIRA, and SigFig.</p>
<p>Grant Easterbrook, an analyst at Corporate Insight, explains that the growth "represents continued consumer interest in lower-cost, lower-minimum investment advice solutions."</p>
<p>The growth, segmented into "discretionary control" (money that's directly managed), and "paid investment advice" (self-explanatory), is shown in the chart below:</p>
<p><div class="KonaFilter image-container display-table"><div><div class="image"><img src="https://static-ssl.businessinsider.com/image/53d66648ecad04522b93ea67-632-504/corporate-insight-robo-advisors.jpg" border="0" alt="corporate insight robo advisors" /><p class="source"><span><a href="http://www.corporateinsight.com/">Grant Easterbrook / Corporate Insight</a></span></p></div><p></p></div></div></p>
<p>Easterbrook highlights <span style="background-color: #ffffff;">the fact that some of the firms are now shifting from a free service meant to attract customers into a paid service, and many of the companies have gathered the initial clients needed to provide potential investors with more impressive numbers. "Invest</span>ors look to assets-under-management numbers as a sign of legitimacy (especially for startups), but firms have to find initial clients to get to that point!" he said in an email.</p>
<p>Easterbrook predicts that robo-advisors will only gain more influence as companies like Tradeking and Scottrade launch their own versions, and companies like Vanguard consider solutions like lowering the minimum investment required for clients to work with their advisors.</p>
<p>"The interest from some of the major players is a sign of the business case for trying to serve less affluent investors with an online solution that is more scalable than a traditional in-person financial advisor relationship," Easterbrook says. "The cost of adding and serving each additional customer is lower."</p>

Robo-Advisors Now Manage Over 36% More Money Than They Did 3 Months Ago



	
		
			<img alt="robot" data-mce-source="Oli Scarff/Getty" src="https://static-ssl.businessinsider.com/image/560ec4319dd7cc1e008bee3a-3111-2333/134260579-4.jpg" />
			<p class="source">
				Oli Scarff/Getty</p>
		
		
	

America's deep-rooted wealth management sector has been feeling an uneasy rumbling underfoot of late.

<p>
	The threat: a group of tech-savvy underdogs aiming squarely at millennials.</p>
<p>
	Robo-advisers such as Betterment, FutureAdvisor and Wealthfront have been attracting attention and assets, <a href="https://www.cbinsights.com/blog/fin-tech-startups-millennials/">pitching themselves as low-cost and convenient alternative</a> to brokerages.</p>
<p>
	Some have said their assets under management could grow <a href="http://www.businessinsider.com/financial-advisor-insights-june-19-2015-2015-6">68% annually, reaching $2.2 trillion by 2020</a>.</p>
<p>
	But according to a new report, these firms might not be as much of a threat to goliaths such as UBS and Morgan Stanley as has been suggested.</p>
<p>
	In fact, it is the fintech startups that are in most danger.</p>
<p>
	According to a report by New York-based financial advisory firm, TABB Group, traditional wealth management giants are recognizing the potential threat these startups pose, and are responding by making their own, cheaper versions of the technology.</p>
<p>
	Charles Schwab launched Schwab Intelligent Portfolios in March, and it raised more than $3 billion assets under management by July. BlackRock bought FutureAdvisors in late August. TD Ameritrade has partnered up with FinTech Jemstep.</p>
<p>
	One wealth manager, comparing robo-advisors to Amazon's affect on retail, told Tabb: "The difference was when Amazon started, Walmart, didn't say 'I'm going to jump into this,' the way that Vanguard and Schwab and Merrill have already jumped into the robo space... traditional advisors (are) beginning to offer technology enhanced advisory services at virtually the same pricing, robo-advisors have little room to exercise upward pricing power."</p>


	
		
			<img alt="TABB robo" data-mce-source="TABB" src="https://static-ssl.businessinsider.com/image/560eda059dd7cc1d008bef8d-619-343/screen shot 2015-10-02 at 3.16.33 pm.png" />
			<p class="source">
				TABB</p>
		
		
	

To be sure, fintech startups enjoyed a first mover advantage.<strong> </strong>

<p>
	They have targeted digital-native millenials, or so-called Henrys- "high earning, not rich yet" - that<a href="Finance companies specializing in robo-advising"> have been largely passed over by traditional wealth managers</a>.</p>
<p>
	That has helped these funds amass about $22 billion under management, according to TABB.</p>
<p>
	The problem is: with the small assets millennials hold, it's "hardly profitable" for these fintech companies.</p>


	
		
			<a class="zoomin" href="https://static-ssl.businessinsider.com/image/560d900fbd86ef14008be8ed-960/screen shot 2015-10-01 at 3.17.29 pm.png" title_caption="" title_source="TABB Group LLC"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"><img alt="Millenials" data-mce-source="TABB Group LLC" src="https://static-ssl.businessinsider.com/image/560d900fbd86ef14008be8ed-605-453/screen shot 2015-10-01 at 3.17.29 pm.png" /></span></a>
			<p class="source">
				TABB Group LLC</p>
		
		
	

"You can attract all the 20-something-year-olds you want, but the truth is they don't have the money. They don't have the assets that the older generation does," one fintech firm told TABB.

<p>
	The question is: can they keep millennials as customers long enough that their assets grow and they become profitable clients.</p>
<p>
	TABB thinks not.</p>
<p>
	Robo-advisors don't have the capacity to deal with more complex financial problems that will come as the millenial generation grows older. Traditional wealth management groups can offer options that the start ups cannot, such as estate planning and a broader range of investment options.</p>
<p>
	"The robo-advisers work for middle class, or young people, who don't have much and just need to avoid fees," one Wall Street pro told <a href="Which means robo-advice services will have to increase fees to offer a hybrid options, a mix of human and robot advice.">Business Insider</a> in March. "They can't replace full-service advisers."</p>
<p>
	Add that to the fact that the traditional full service advisers are catching up in terms of their own tech-savvy offerings, and the fintech startups look set to get squeezed.</p>
<p>
	To compete independently with traditional wealth management groups, TABB suggests fintechs will eventually have to start hybridizing their technology - or adding human advisors to accounts.</p>
<p>
	Rather than becoming antagonists to the wealth management sector, fintech startups are a much-needed wake up call for the industry, according to the report.</p>
<p>
	"Ironically, the increasing preassure to generate profits may ultimately relegate robo-advisors to providing support to the very model that they set out to disrupt," the note stated.</p>
<p>
	"In the end, the robo-advisor story is not one of upstarts disrupting financial services, but instead a tale of innovators delivering change, only to find that they themselves must assimilate."</p>

	<h3>
		NOW WATCH: <a href="http://www.businessinsider.com/subways-jared-fogle-allegedly-sent-lewd-texts-2015-8">More trouble for Subway's Jared Fogle...</a></h3>
	
		
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<br />


A group of much-hyped finance startups made a big bet on millennials - but it won't work

<p><strong><em><strong><div class="image-container float_right" style="width:478px"><div class="image"><img src="http://static3.businessinsider.com/image/52320d0469bedda41b966714-744-558/counting-money-3.jpg?maxX=478&amp;maxY=358" border="0" alt="counting money" width="478" height="358" /><p class="source on-image"><a href="http://commons.wikimedia.org/wiki/File:De_geldwisselaar_en_zijn_vrouw.jpg">Wikimedia Commons</a></p></div></div>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.</strong></em></strong></p>
<p><a href="http://online.wsj.com/article/SB10001424127887324576304579071050519636012.html?mod=WSJ_WealthAdviser_WhatsNews_3_3_RightBottom"><strong>Why It's Important For Advisors To Know About The Relatives Of Clients</strong></a><strong> (The Wall Street Journal)</strong><a href="http://online.wsj.com/article/SB10001424127887324576304579071050519636012.html?mod=WSJ_WealthAdviser_WhatsNews_3_3_RightBottom"> </a></p>
<p>It's becoming increasingly important for advisors to consider the relatives of their high-net-worth clients during the financial planning process, writes Jean-Luc Bourdon California-based BrightPath Wealth Planning in a new WSJ column. This is because these clients often want to help struggling family members. </p>
<p>"Many clients assume that their relatives aren't relevant to the conversations they have with their advisers, but I tell all of my clients that it's critical I know about their extended families. We can have the most secure financial plan for a client, but if they have close relatives in precarious financial situations, it can weaken their own financial outlook."</p>
<p><strong><a href="http://advisorperspectives.com/commentaries/tocqueville_091213.php">The Most Compelling Argument To Own Cash</a> (Advisor Perspectives) </strong></p>
<p>"The best time for an investor to own cash is when it pays next to nothing. ," writes Francois Sicart of Tocqueville Asset Management. "This may sound counterintuitive, and it is the opposite of what most investors do when cash pays nothing: They scramble to find better-paying alternatives, even if it means taking on more risk. But the contrarian aspect of this rule has always appealed to me, and my own experience has generally vindicated it."</p>
<p>"Personal biases aside, the most compelling argument to owning cash when interest rates are close to zero is simply that, from that point, they basically have nowhere to go but up. And when they do, sometimes with a lag but sooner or later, lower prices for stocks and bonds will result."</p>
<p><a href="http://www.businessinsider.com/bond-to-stock-swing-2013-9"><strong>This May Be The Beginning Of A Big Swing From Bonds To Stocks</strong></a><strong> (Dr. Ed's Blog)</strong><a href="http://www.businessinsider.com/bond-to-stock-swing-2013-9"><strong></strong> </a></p>
<p>Retail investors could be flooding out of bonds and into stocks. In fact, over the past 13 weeks bond funds have witnessed cash outflows of $438 billion at an annual rate, while equity funds have seen inflows of $92 billion at an annual rate, according to the Investment Company Institute. "I wouldn't describe that as a 'Great Rotation' just yet, but it could be the start of a big swing by retail investors into equities," writes Dr. Ed Yardeni.</p>
<p><a href="http://www.finra.org/Industry/Regulation/Guidance/CommunicationstoFirms/P340609"><strong>FINRA To Consider Revised Broker Compensation Rules</strong></a><strong> (FINRA)</strong><a href="http://www.finra.org/Industry/Regulation/Guidance/CommunicationstoFirms/P340609"><strong></strong> </a></p>
<p>During its September 19 meeting, the Financial Industry Regulatory Authority (FINRA) will consider a revised proposal that would require brokers to disclose their compensation when they switch firms. The proposal was initially slated to be considered in a July meeting, but was postponed. At the time, <a href="http://www.businessinsider.com/simon-roy-finra-broker-bonus-disclosure-2013-7">Simon Roy, president of Jemstep told Business Insider</a> that this had wirehouse support because "the proposed legislation is expected to reduce poaching of productive brokers from their ranks which could reduce broker compensation costs and increase firm profitability."</p>
<p><a href="http://www.businessinsider.com/gold-is-getting-slammed-2013-9"><strong>The Gold Bounce Is Over (Societe Generale)</strong> </a></p>
<p>Gold prices are falling again and Societe Generale's analysts who have been bearish on gold have said the "gold bounce is over." They make a few bearish arguments. 1. A military strike on Syria looks a lot less likely. And gold prices have peaked early during Middle East crises. 2. The weakness in the rupee and other such "Forex rate trends have turned bearish for gold price." 3. The physical demand for gold in Asia is weakening while supply from ETF selling is making its way to Asia. 4. Selling of gold ETFs will probably pick up as "Syria is no longer a bullish factor and US Fed tapering is likely to start at the September meeting."</p>

Financial Advisors Need To Ask Their High-Net-Worth Clients About Their Deadbeat Relatives

<p><div class="image-container float_right" style="width:480px"><div class="image"><img src="http://static1.businessinsider.com/image/51db3fa7ecad04134600003f-590-443/poaching.jpg?maxX=480&amp;maxY=360" border="0" alt="poaching" width="480" height="360" /><p class="source"><a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult_VPage&amp;VBID=2C0BXZ68DDEE9&amp;SMLS=1&amp;RW=1491&amp;RH=828">REUTERS/Rick Wilking</a></p></div></div>The Financial Industry Regulatory Authority (FINRA) was expected to consider a rule that would require <a href="http://www.finra.org/Industry/Regulation/Guidance/CommunicationstoFirms/P292644">brokers to disclose their bonuses</a> to clients, at its July 11 meeting.</p>
<p>This has however been <a href="http://www.investmentnews.com/article/20130708/FREE/130709950">postponed</a>, according to Investment News.</p>
<p>Under this rule, <keyword id="45476" type="PERSON" weightage="60" keywordseo="Brokers">brokers</keyword> would be required to disclose details on compensation of $50,000 or more, including signing bonuses, back-end bonuses etc. And the rule would need SEC approval. </p>
<p>In an email interview, <a href="https://www.jemstep.com/">Simon Roy, president of Jemstep, an online investment advisor,</a> told Business Insider that wirehouse support for the rule has more to do with preventing poaching and less to do with transparency. For there to be true transparency, clients need to should have access to more transparent accounting.</p>
<p><strong>Business Insider: Many wirehouses like Morgan Stanley are welcoming FINRA's broker compensation disclosure rule on the grounds that it brings more transparency. Do you agree?</strong></p>
<p><strong>Simon Roy:</strong> Anything that increases fee and compensation transparency on behalf of clients is of value. However, to say that the wirehouses support this proposed legislation on the grounds that it brings more transparency is a stretch. The proposed legislation is expected to reduce poaching of productive brokers from their ranks which could reduce broker compensation costs and increase firm profitability. Wirehouses are like owners of baseball teams looking to reduce the share of revenue paid to high value players. Anything that inhibits large payouts to players benefits the teams who invest in large farm system, i.e., the large wirehouses. Presenting their rationale for supporting this legislation as transparency appears to be a somewhat convenient patina.  The real reason is an effort to improve firm economics. </p>
<p>It is worth noting that FINRA is an industry self-governance body and wirehouses have seats on the board. </p>
<p><strong>BI: What in your mind are the benefits to clients? What are the potential conflicts of interest that could arise? </strong></p>
<p><strong>SR:</strong> I believe the benefits of this proposed legislation for the client are indirect and not easily quantifiable. Ironically brokers who leave firms are paid a bonus on the previous years’ production so informing clients when they leave does not necessarily reduce the incentive boost production in the prior year. </p>
<p>While I support more transparency for clients, broker bonuses are not the logical starting point. It would be more valuable and actionable for investors to have a transparent accounting of all fees paid on their portfolios held at brokerage firms and the other sources of income earned by brokerages from their portfolios.  Clients could use this information to evaluate the services they receive from brokerage firms and be in a position to make changes if needed.</p>
<p><strong>BI: Is there an argument to be made against such a rule?</strong></p>
<p><strong>SR:</strong> I do not think there is a really good argument to be made against such legislation but it certainly can be improved to make it more meaningful to investors. I would challenge to wirehouses to propose expanding the legislation in support of transparency to make all brokerage fees and earning off their client’s portfolios openly available to clients. <br /><br /><strong>BI: Is there anything else you think our readers should know?</strong></p>
<p><strong>SR:</strong> The reason brokers are paid up to 180% bonuses for moving firms is because they can generate significant revenue for brokerage firms from their client base. The issue for clients is not the level of bonuses brokers are paid to move or to stay, but rather the inability to determine the full cost of doing business with a particular brokerage firm. Clients should know what they are paying and what they are gaining from such fees.  The alternative for many dissatisfied with this lack of transparency is to move to Registered Investment Advisors (RIAs) who have a fiduciary responsibility to only take compensation directly from clients and be fully transparent with such fees.</p>

Wirehouses Are Pushing For A Regulation That Would Prevent Poaching 

<p><div class="image-container float_right"><div class="image"><img src="http://static3.businessinsider.com/image/523b78c469bedd5514647572-1200-924/ben-bernanke-tighten-2.jpg?maxX=480&amp;maxY=360" border="0" alt="ben bernanke tighten" width="480" height="360" /><p class="source on-image">REUTERS/Jason Reed </p><p class="caption">U.S. Federal Reserve Chairman Ben Bernanke prepares to testify at a Joint Economic Committee hearing on the economic outlook, on Capitol Hill in Washington, October 4, 2011.</p></div></div><em><strong>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.</strong></em></p>
<p><strong><a href="https://advisors.vanguard.com/VGApp/iip/site/advisor/researchcommentary/article/IWE_InvComFedTapering">What Advisors Should Take Away From The Fed's Decision</a> (Vanguard) </strong></p>
<p>With the Fed' exit strategy still unclear it has hard for advisors to know what to tell their clients. In this situation, Andrew Patterson at Vanguard recommends diversification to "offset large swings in equity returns." "The "cushion" they provide may not be as thick as it has been in the past, but bonds do still provide protection in your clients' portfolios," he says.  The main takeaway for advisors then is that "tapering alone does not signal an increase in interest rates." </p>
<p>"Markets and economic conditions work to determine interest rates across the yield curve while monetary policy reacts to economic conditions. While interest rates will likely increase, we do not know with certainty when or at what speed. The Fed's exit strategy won't just zoom ahead once it's been placed in drive. Instead, the Fed will be constantly analyzing economic conditions and adjusting policy accordingly."</p>
<p><a href="http://www.businessinsider.com/tom-lee-fed-decision-bullish-for-stocks-2013-9"><strong>TOM LEE: The Fed Decision Revealed Traders' Hands, And Now I See Four Supports To The Stock Market</strong></a><strong> (JP Morgan)</strong></p>
<p>On Wednesday the Federal Reserve said it would maintain its monthly $85 billion asset purchase program. JP Morgan analyst Tom Lee has been bullish on stocks for some time and said that yesterday's decision showed that many traders continue to be underweight on stocks. Lee identifies four reasons the Fed's decision will support the stock market into the end of the year. </p>
<p>1. "Interest rate expectations have been lowered, providing some support to housing, interest rate sensitives (even autos), lowering corporate bond yields and even the dollar weakened (supporting exporters)." 2. "Fed has provided some insurance against risk into year-end. An additional positive for equities is that the Fed is providing support for markets into a somewhat riskier period given the upcoming debt ceiling/budget debate and the pending nomination of a new Fed Chairman." 3. "The right groups rallied today, with builders, Cyclicals leading and not solely "bond proxies." 4. "The rally showed investors are [underweight] risk, including equities."</p>
<p><a href="http://online.wsj.com/article/SB10001424127887323308504579085384212233564.html?mod=WSJ_WealthAdviser_WhatsNews_3_3_RightTop"><strong>Advisors Need To Discuss A Budget With Their Clients</strong></a><strong> (The Wall Street Journal)</strong><a href="http://online.wsj.com/article/SB10001424127887323308504579085384212233564.html?mod=WSJ_WealthAdviser_WhatsNews_3_3_RightTop"> </a></p>
<p>In today's uncertain job market, it's possible that some might not be able to delay retirement and meet any shortfalls. That's why it is important for advisors to talk to their clients about having a budget to limit their expenses, writes Kevin M Reardon, president of Wisconsin-based Shakespeare Wealth Management in a new WSJ column. </p>
<p>Advisors can do this by explaining that the nature of expenses has changed in the last 25 years. They should also points out that wages haven't grown much in the past ten years and it was easier to save before. "One of the saving tools I like to suggest is to go back to the age-old envelope system. Take out actual cash and put it in various envelopes labeled for different purposes for the month: gas, groceries, entertainment. Once the money is gone, then you're done spending until the next month," Reardon writes. </p>
<p><a href="http://www.finra.org/Newsroom/NewsReleases/2013/P347341"><strong>FINRA Approves Proposal Requiring Brokers To Disclose Compensation</strong></a><strong> (FINRA/Business Insider)</strong><a href="http://www.finra.org/Newsroom/NewsReleases/2013/P347341"><strong></strong> </a></p>
<p>The Financial Industry Regulatory Authority (FINRA) has approved a proposal requiring brokers to disclose their compensation when they switch firms. "This proposal is about making sure the customer can make a fully informed decision to follow a broker to a new firm and understand the costs associated with transferring his or her account," said FINRA chairman Richard Ketchum in a press release. "This proposal reflects our commitment to transparency and investor protection." </p>
<p><a href="http://www.businessinsider.com/simon-roy-finra-broker-bonus-disclosure-2013-7">Simon Roy, president of Jemstep</a> previously told Business Insider that the legislation is more self serving since FINRA is an industry self-governance body and wirehouses have seats on the board. "The proposed legislation is expected to reduce poaching of productive brokers from their ranks which could reduce broker compensation costs and increase firm profitability," he said. The proposal will now be submitted to the SEC for review and approval.</p>
<p><a href="http://www.businessinsider.com/fleckenstein-all-hell-is-going-to-break-loose-2013-9"><strong>FLECKENSTEIN: 'All Hell Is Going To Break Loose'</strong></a><strong> (King World News)</strong><a href="http://www.businessinsider.com/fleckenstein-all-hell-is-going-to-break-loose-2013-9"><strong></strong> </a></p>
<p>After the Fed's decision to delay a taper of it's asset purchase program, Bill Fleckenstein, President of Fleckenstein Capital, told King World News that the Fed is trapped. "Since April, the 10-Year has gone from about 1.6%, to as high as 3% recently.  Now we have to see when this rally in bonds stops.  The bond market will then roll over and then the Fed won't have the tapering as an excuse.  It means the bond market has ceased to price in the scenario that the Fed wants, and the bond market is not responding to the Fed's moves in the short-run.  In the old days we would call that 'losing control of the bond market.'  And if that starts to happen, all hell is going to break loose."</p>

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