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2011 Advisor Hall of Fame; Experts Assess 2012: December Research—Slideshow

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The December issue of Research magazine showcases the 2011 Advisor Hall of Fame. Now in its 21st year, this eagerly awaited annual feature is a benchmark of excellence in the industry.

Winners, selected by a distinguished panel of judges, have demonstrated superior service to clients and the broader community. Inductee Denise Fries of Securities America, for instance, spends her Tuesdays and Thursdays helping out local charities. “The best helping hand you can find is at the end of your own wrist,” she says.

Another highlight of the December issue: the Research Roundtable looks ahead to 2012. This expert panel convenes annually to assess how market developments will play out in the year ahead. This year’s panelists give a wide range of views. Kenneth Fisher of Fisher Investments anticipates “a bull market with gusto,” for instance, while Jeffrey Gundlach of DoubleLine Capital likens today’s market to standing with one foot on a pier and the other on a drifting boat–“so you’re probably going to end up in the water.”

Click through the following slides to preview the December issue of Research.

2011 Advisor Hall of Fame

Getting into Research magazine’s Hall of Fame is difficult by design. It requires passing a set of rigorous screens and impressing a distinguished panel of judges. Candidates must have at least 15 years in the industry, acquired substantial assets under management and earned recognition from their peers and communities for excellent customer service and furthering valuable causes.

Contributing Editor Ellen Uzelac profiles this year’s inductees: Theresa E. Chacopulos of Wells Fargo; Denise Fries of Securities America; Gregory W. Kasten of Unified Trust Co.; Gerard Klingman of Raymond James Financial Services; and Sheryl Stephens of Raymond James.

Customer service? Chacopulos helps clients with everything from negotiating car purchases to, in one case, finding a rehab clinic. Serving the broader community? Fries has devoted herself to causes ranging from Habitat for Humanity to campaigning for gluten-free cereals.

The five inductees have diverse styles and backgrounds. Kasten was an anesthesiologist who was spurred into the financial arena by his dissatisfaction with the retirement products he was offered as a client.

Stephens began as a secretary to an eminent financial advisor, John Winton, an experience that put her on the path to running the firm after his death. “He was a true mentor,” Stephens says of Winton.

Research Roundtable

Forecasting how 2012 will unfold in the markets is the agenda of an expert panel assembled by Research magazine and interviewed by Contributing Editor Jane Wollman Rusoff. This year’s Roundtable features John Buckingham of Al Frank Asset management, Kenneth L. Fisher of Fisher Investments, Jeffrey Gundlach of DoubleLine Capital and Robert Rodriguez of First Pacific Advisors.

Fisher finds cause for optimism in the political season. “Election years are almost never negative for the stock market, and this one should be particularly good,” he remarks. “Normally, when we initially elect a Republican, the market is gangbusters. When we re-elect a Democrat, it’s pretty darn good. And next year we’ll do one or the other.”

Gundlach takes a more somber view, seeing a precarious economy and a stock market potentially weighed down by political factors.

Rodriguez thinks corporate earnings forecasts have been too optimistic anyway, with many companies already having done much to push margins.

Disclosure Upheaval

Louis S. Harvey, head of the Dalbar market research firm, sketches out a new landscape of disclosure requirements for 401(k)s and other retirement plans. Regulations issued by the IRS and the Labor Department require greater openness about fees and multiple communications with large numbers of clients.

Industry reactions to the new rules have varied widely, Harvey notes, with some firms embracing the requirements while others seek ways to minimize their impact. Harvey warns against “denial” and “deception” as perilous responses to the changed environment.

On the contrary, he asserts, the rules form an opportunity for firms to gain client trust and market share. Advisors who familiarize themselves with the rules can increase the trust and appreciation with which they are regarded by clients, and provide fee disclosure as an enhancement of existing service.

“New regulations and the threat of penalties give aggressive competitors the opportunity to win business from incumbents who are lax regarding the new regulations,” writes Harvey.

A Rational Look at a Much Maligned Product

In the Annuity Analytics column, Bob Seawright takes up a defense of fixed index annuities, a type of product that has received a heavy dose of criticism. Money magazine, for instance, referred to FIAs as a “safety trap” and alleged they have “pervasive problems.” Forbes has called FIA sales “a protection racket,” aimed at selling a “lousy investment.”

A study published in The Journal of Financial Planning, Seawright notes, is the first to attempt a real-world analysis of FIA returns, rather than one based on hypothetical scenarios. The results suggest that the products have considerable merit, when viewed in context, and that the complaints about them are considerably overblown.

“Fixed income annuities are designed to provide principal protection with annual returns roughly 1-2 percent better than traditional fixed annuities,” writes Seawright. “Based upon those standards, FIAs appear to have succeeded.”

Dividend Trouble

Global Economy columnist Alexei Bayer contends that recent big dividend payouts do not constitute good news for future stock prices. Rather, the dividends reflect decisions by corporate managers to avoid hiring and investing in the current troubled economic environment.

“Share prices may be supported by higher dividends for a while,” writes Bayer, “but if higher dividends do not reflect a plausible steady increase in future profitability, their effect will be only temporary.”

Complicating matters further, the traditional distinction between “mature” industries that provide high dividends, and riskier entrepreneurial sectors that do not, has blurred, Bayer observes. For instance, automotive parts supplier Johnson Controls, which has paid a regular dividend for over a century, is now enmeshed in competition with a variety of green-tech start-ups.

Meanwhile, U.S. government bond yields have declined, despite the federal government’s growing debt burden. Bayer assesses: “The gap between low bond yields and higher stock dividends can only mean one thing: that investors have no expectations of an economic recovery that would reduce the safe-haven premium of U.S. Treasuries or raise the specter of higher inflation.”

Prospecting Strategy

Why are wirehouses losing market share? The answer is that independents and registered investment advisors, as a general rule, have taken a more aggressive and thorough approach to prospecting new business, according to Sales Seminar columnist Bill Good.

Indeed, notes Good, wirehouses tend to have minimum account requirements that hinder the search for new business. “Advisors cannot take ‘starter accounts,’ and smaller accounts are sent to the hated call centers in New Jersey,” he writes.

Contemplating the strain wirehouse advisors are now under, Good offers a strategic approach to prospecting. One element of this strategy: having a person on the team whose primary responsibility is new business development. “Get that team member,” he advises. “Or if you are under 40, become that team member.”

Another tip: maintain a prospects file with rigid quality control, one that gets cleaned up frequently. The key to a person staying in the file, Good asserts: “You have to want to do business with them.”

What’s Your Name?

Closing Bell columnist Bill Miller looks at the vexed question of what to name your business. Employing his crack research technique, the whimsical columnist tosses back cocktails with some people who work in marketing departments at broker-dealers.

Helpfully, he points out that it’s best not to include your last name if that happens to be Ahmadinejad, Madoff or Lucifer, to name a few. He also suggests avoiding any indication that you are an architect or physician if you are not an architect or physician.

Another tip: “Leave your childhood fantasies out of it. Just because you always wanted to be a cowboy, isn’t a good enough reason to call your company Rodeo Clown Financial.”

View the complete table of contents for the December issue of Research.


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