Page 8 - Investment Advisor April/May 2022
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                                                     By Janet Levaux

                 Complex Times, Approaches

                        s we go to press, it’s day 20 of Russia’s invasion of   Wealthfront, says Welsh, has about $27 billion assets and
                        Ukraine. The sad situation is looking protracted, with   470,000 self-directed clients, and annual revenue of about $67
                 A several thousand soldiers and several hundred civil-  million. For UBS, the aim is to attract the robo-advisor’s “afflu-
                 ians killed so far. Also, concerns are mounting that higher oil   ent Gen Z and millennial” investors through Wealthfront’s
                 prices, sanctions and other factors could produce a recession   digital platform.
                 in the U.S. and elsewhere.                           Get  ready  for  “a  torrent”  of  regulatory  issues  this  year,
                   As they try to keep up with these rapidly changing develop-  Washington Bureau Chief  Melanie Waddell explains  in this
                 ments, financial advisors may want to reconsider their view   month’s The Playing Field column. As for FINRA, its priority
                 of life insurance. Rather than being                                    is on compliance with Regulation
                 only seen as a product just for spe-  “Being creative about fixed       Best Interest.
                 cific business or estate-planning   income investments is even            Jim Lundy, who works for the
                 goals, advisors should note that                                        law firm Faegre Drinker, says that
                 some  actuaries  today  are  compar-  more important in a low-          although Reg BI applies to bro-
                 ing the structure of life insurance                                     ker-dealers, the SEC “is continu-
                 to a “Super Roth” to help protect  interest-rate environment,”          ing to scrutinize” the investment
                 clients from tax increases, accord-  explains Michael Finke in          advisory industry. “We’re seeing
                 ing to Michael Finke, the author of                                     more and more examinations
                 this month’s cover story.        this month’s cover story.              with alleged violations of Section
                   “Being creative about fixed                                           206 — the statute that applies the
                 income investments is even more important in a low-interest-  fiduciary standard,” he adds.
                 rate environment, particularly when reaching for higher yields   In this month’s The Fast Track column, Angie Herbers —
                 by investing in longer-term bonds or taking greater credit   head of Herbers & Company — drills down into the need
                 risk — which is fraught with the potential for a loss if interest   for targeted development of staff. “An advisor might be
                 rates rise or the economy contracts,” explains Finke, the Frank   great at retirement planning but uncertain when it comes
                 M. Engle Chair of Economic Security at the American College   to advanced issues in estate planning or tax planning, for
                 of Financial Services and leader of the Wealth Management   example,” she explains.
                 Certified Professional designation program. He offers an in-  Herbers emphasizes that “creating a culture in which new
                 depth look at this strategy and how advisors can generate “tax   advisors can learn from one another is invaluable.” At a time
                 alpha”  by  allocating  fixed  income  and  other  tax-inefficient   when  “thousands  of  unhappy  young advisors  have left  their
                 investment strategies within a life insurance wrapper.   jobs, leadership style and firm values can be a big advantage in
                   In other areas of the business, Tim Welsh of Nexus Strategy   retaining your talent,” she points out.
                 looks at the “head-turning acquisition of the original robo-
                 advisor Wealthfront” by UBS in this month’s Industry Insights
                 column. He sees the $1.4 billion deal as one that Wealthfront
                 and its venture-capital backers “couldn’t resist.”
                                                                                             GROUP EDITOR-IN-CHIEF

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