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C tant Contact
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 July
13, 2010 - Vol 4, Issue 28
Dear Reader,
There's good reason why Nouriel Roubini has been
dubbed Dr. Doom. After reading his book co-authored with
Stephen Mihm, Crisis
Economics, one might despair for our economic
system. Roubini makes the recent crisis seem inevitable,
hard to stop, and very hard to keep from happening again.
Many
advisors already adhere to strict standards of fiduciary duty.
But to formalize and make oversight of practice activities more
transparent and compliant, The Envestnet Advisor Suite is an integrated
set of solutions designed to empower advisors to act in the best
interest of their clients.We thank them for their sponsorship.
Bob Veres' view is that the SEC is adequately funded, but
perhaps is not ideally allocating the resources it already has. Fiduciary
standards and regulatory reform are only part of the solution to
protecting consumers from the predatory behavior of some financial
services professionals in our midst. The remainder of the
fix is potentially uncomplicated. See Bob's other
contribution below.
Dan Richards describes a recent research report which offered a retirement
readiness index. Attached to the report was a questionnaire
that advisors can walk clients through to benchmark where they
stand on each task and identify areas that need improvement.
Domestic equities are down roughly 14.5% from their April 23rd high. Many
advisors tout sophisticated (and very expensive) asset
diversification strategies, supposedly to protect their clients
against precisely these circumstances. So, with this recent
decline, Dave Loeper asks whether all of those supposed
diversifiers protected portfolios?
More articles below...
"The word 'deficit' has come to epitomize not only
our economic dilemmas but also our moral and intellectual
failures to address them in an era that should be boasting of new
breakthroughs in the social and physical sciences," writes Michael
Lewitt in the latest installment of his HCM Market Letter, Deficits
Monetary and Moral. "Instead, our ability to solve
complex problems is weighed down by flawed and corrupted government
processes and the lack of courage to forthrightly change them."
Bob Veres provides one of his Client Articles, which is a
service for advisors to send to their clients; it's a daily blog
about what it felt like to watch the market during the past fiscal
quarter. It communicates several points: perhaps most
importantly, that what seems clear in hindsight (the markets gave
back their first quarter gains) is not at all clear as it is
experienced.
Kristen Luke provides the next two installments of her series on low-budget
marketing for startup RIA firms. She discusses how to craft
your message and the steps to take to build your website.
In a letter to the editor, a reader questions Michael Nairne's
article last week, And the Winner Is..., and we provide Nairne's
response.
Lastly, we highlight submissions to Market Commentaries.
We welcome guest submissions from our readers. For more
information, here are our guidelines.
If you are experiencing problems opening or navigating through our
newsletters, we can send you a text-only version. Please send
an email to feedback@advisorperspectives.com requesting the
"text-only" version.
If you have received this newsletter in error, or you do not wish to
receive future newsletters, please reply to this
email with the word “unsubscribe” in the subject line.
Contact us about advertising
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Nouriel Roubini on Crisis
Economics
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"Something is wrong with this situation, but the
solution is not obvious," says Michael Edesess in his review of
Nouriel Roubini's latest book. "There's a lack of good
information in the hands of actual investors, and too much
misinformation. Some advisors act in the best interests of investors
and others don't, but the investors can't tell the difference."
Nouriel Roubini on Crisis Economics
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Action Speaks Louder than Words
- Or Regulation
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According to a
recent Envestnet study, investors are keenly interested in better
understanding the professional responsibilities and obligations of
financial advisors - and would look favorably on advisors who take
steps to communicate that responsibility, regardless of whether a
uniform professional standard is legislatively imposed. This
represents a watershed opportunity for financial advisors and the
industry alike to bolster investor confidence.
Learn more - Download the Fiduciary Opportunity Toolkit
at thefiduciaryopportunity.com
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How to Fix the SEC
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Take Bob Veres' recommendations for streamlining the
SEC, throw in a fiduciary standard for anyone who provides even a
scintilla of advice, and you have the makings of a real difference in
the safety and security of investors in all investment sectors, working
with all stripes of advisor. And it wouldn't cost the taxpayer
even one more dime than we're spending now.
How to Fix the SEC
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The Retirement Readiness
Checklist
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Fake Diversification Exposed:
Does Asset Allocation Work?
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With the recent market decline, did supposed
diversifiers, like foreign and emerging market stocks, real estate,
corporate and high-yield bonds (junk), foreign bonds,
inflation-protected bonds, commodities, etc., protect portfolios? Not
exactly, says Dave Loeper.
Fake Diversification Exposed: Does Asset Allocation
Work?
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Deficits Monetary and Moral
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"As the pending financial reform bill demonstrates,
the Obama administration has been unable or unwilling to foment genuine
regulatory change on Wall Street or meaningful economic reform or
recovery, particularly in the all-important housing market,"
writes Michael Lewitt. "In every case, it has favored the
interests of the rich and powerful over those of the disenfranchised..."
Deficits Monetary and Moral
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Chronicle of the Quarter
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"Anybody looking at the zig-zag course of the stock
market can see that the more closely you look, the more you miss what
is actually happening," writes Bob Veres. "Daily price
movements jump around in what appears to be a totally random pattern; up
one day, down the next - and it's only when you step back and look at
the year or multiple years can you see whether actual money is being
made or lost."
Chronicle of the Quarter
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Parts 2 and 3 of A Marketing
Guide for RIAs
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Letter to the Editor
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Highlights from Market
Commentaries
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Evensky & Katz president Harold Evensky doesn't know about you, but
he's getting tired of living in interesting times. Unfortunately the
market gods don't much care for his opinion. So, given the reality that
the markets have been a tad exciting lately, in addition to his regular
meandering tidbits, he's included a number of items that he thought might
provide a little perspective on the ranting of the financial talking
heads.
July 2010 Newsletter by Harold Evensky of Evensky
& Katz
Want to be invited to 'A' list parties? Want people to think you are
smart? Then don't smile and don't say anything positive - especially
about the economy. Pessimism has become so pervasive that people will
believe just about anything, as long as it is negative. The truth is that
the U.S. is creating jobs, even if the rate of growth is slower than in
previous recoveries. Profits are still rising. In fact, analysts are
still raising earnings estimates. The market has so much negativity
priced in that it is cheap on just about any basis.
Get Real - This is Not 1932 by Brian S. Wesbury and
Robert Stein of First Trust Advisors
Instead of directing savings toward investments in real, productive
assets that we would observe as physical output, fixed capital, and
equipment (and claims on those assets in the form of corporate stocks and
bonds), our economy has been forced to choke down a massive issuance of
government liabilities in order to bail out bad debt. For every dollar of
debt that should have defaulted, we now have two dollars of debt
outstanding: the original debt, and a newly issued government security.
What appears to be 'sideline cash' is simply the evidence of past
spending.
Implications of a Likely Economic Downturn by John
Hussman of Hussman Funds
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