Investment News articles from May 2009

Investment News archives from May 2009

OppenheimerFunds faces heat from 529 plans; Steep losses in the firm's bond fund lead to unprecedented lawsuit.
May 4, 2009... Byline: Charles Paikert OppenheimerFunds Inc.'s hot streak in the Section 529 college savings plan business is coming to an end. The fallout from the implosion of OppenheimerFunds' Core Bond Fund, which lost 36% of its value last year,...

Keeping it all in the family can be tricky business; Ensuring that the personal relationship stays intact is key, financial advisers say.
May 4, 2009... Byline: Bruce Kelly Running a successful family financial advisory business is much tougher than the smiling portraits posted on many firm's websites would lead a client or prospect to believe. Although thousands of registered...

Planning groups look to cut health insurance deals; FPA and NAPFA seek to save money for members on a variety of policies.
May 4, 2009... Byline: Lisa Shidler The two largest organizations of financial planners are looking at ways to give members discounts on several kinds of insurance. The Denver-based Financial Planning Association is talking to carriers about...

Revisiting greed.
May 4, 2009... Byline: Jamie Burns After taking a beating in the past year, greed is making a comeback at least on the big screen. Actor Michael Douglas and director Oliver Stone are coming together again for a sequel to the 1987 film, "Wall...

At the Bell.
May 4, 2009... Invesco PowerShares to shutter 19 ETFs Invesco PowerShares Capital Management LLC of Wheaton, Ill., said Friday that it plans to close 19, or 14%, of its exchange traded funds. The PowerShares product line included 135 ETFs with assets...

Advisers are cautious on two real estate IPOs; The offerings may be too complicated for investors, they say.
May 4, 2009... Byline: David Hoffman Financial advisers are leery of an initial public offering of two new exchange traded trusts which give retail investors easy access to residential real estate that ends tomorrow. The MacroShares Major Metro...

Rich investors' fear of risk poses a challenge to advisers; Millionaire investment trends lean to cash, fixed-income, surveys show.
May 4, 2009... Byline: Charles Paikert As a result of shifting views of high-net-worth and ultrahigh-net-worth investors, financial advisers will have to re-evaluate business practices, including fees, portfolios and investment policies, according to...

Obama's first 100 days in office earn advisers' thumbs down; Just 36% say he's doing a good job as president.
May 4, 2009... Byline: Sue Asci President Obama reached his much-ballyhooed 100-day milestone last week, but most financial advisers were in no mood to celebrate. An exclusive InvestmentNews online survey conducted last week found that a hefty 63.9%...

Wall Street's world turned upside down; Financial firms scramble to find their path in a fear-driven investing environment.
May 4, 2009... Byline: Jeff Benjamin The day of reckoning has come for the financial services industry. The industry "has a lot to answer for,'' said John Bogle, founder of The Vanguard Group Inc. in Malvern, Pa. "This industry creates products that...

Agents oppose government-sponsored health care; Association of Health Insurance Advisors worries it would lead to nationalized system.
May 4, 2009... Byline: Sara Hansard As Congress starts to take up health care reform, a group representing health insurance agents is voicing its dissent over President Obama's call for universal health insurance. Specifically, the Association of...

Mutual fund company stocks lead market rally; But sudden price run-up should be approached cautiously.
May 4, 2009... Byline: Jeff Benjamin These are difficult times for the mutual fund industry, which makes consideration of publicly traded fund companies as investments particularly nerve-racking. The stock market's rally since the March 9 low has...

Tax system is too taxing.
May 4, 2009... Byline: Jamie Burns Four in five Americans say that the federal tax system needs to be completely overhauled, according to a recent survey. The 2009 Survey of U.S. Attitudes on Taxes, Government Spending and Wealth Distribution,...

Upcoming events.(Calendar)
May 4, 2009... May 6 Webcast series: Are you an emotionally intelligent adviser? Do you know how to manage the often irrational expectations of affluent clients? Can you manage your own emotions? Take a free EQ assessment and then find out what the...

PEOPLE.
May 4, 2009... Davidson Cos. of Great Falls, Mont., has hired Tim Austin, 47, as senior vice president and chief operations officer. He is responsible for continuing to develop the firm's operations and information technology areas, which together employ...

FRED JOSEPH; The president of the NASAA defends his group's turf in Washington.
May 4, 2009... Byline: Sara Hansard More than ever, state securities regulators face the threat of a diminished role in overseeing the financial services industry. As Congress weighs the idea of creating a new systemic-risk regulator that would be...

ROUND-TABLE PANELISTS.(Discussion)
May 4, 2009... Curtis Jensen, co-chief investment officer and portfolio manager, Third Avenue Management LLC of New York Robert Bruno, president of First Eagle Funds Distributors of New York Roger Vincent, independent chairman of the board, ING...

Hennessee pushes for changes in the regulation of hedge funds; Firm wants third parties with street smarts to perform audits.
May 4, 2009... Byline: Bruce Kelly A day before he and his hedge-fund consulting firm were stung by the Securities and Exchange Commission with $815,000 in fines and penalties, a major figure in the hedge fund world started his own effort to change hedge...

Schwab executive says rivals will follow its lead on alternatives; He urges advisers to "interrogate' Fidelity, TD, Pershing.
May 4, 2009... Byline: Jed Horowitz The head of sales at The Charles Schwab Corp.'s adviser services unit expects its competitors to adopt the same restrictions it is putting on the custody of alternative assets, and urged clients to "interrogate'' the...

Activity of investment advice needs regulation.
May 4, 2009... As Congress prepares to tighten financial regulation to correct weaknesses revealed by the mortgage collapse, the debate over who should regulate those who give investment advice, including financial planners,has entered a new phase. In...

Fidelity officials share business concerns with RIA, broker clients; Firm to limit some alternative securities; discusses revisions in referral program.
May 4, 2009... Byline: Jed Horowitz Leaders of Fidelity Investments' adviser and broker-dealer clearing businesses pointed fingers at themselves and at clients last week for retreating from customer contact during the most chaotic periods of their...

Dykstra down on strikes.
May 4, 2009... Byline: Bruce Kelly Former New York Met and Philadelphia Phillies fan favorite Lenny Dykstra has failed to pay back money he borrowed from his brokerage firm, and his recent loss of a securities arbitration claim over the matter is one in...

Radical retirement initiative from Brookings in the works; Guaranteed-income products should be part of 401(k) plans, experts say.
May 4, 2009... Byline: Mark Bruno Some top retirement gurus are in the process of developing proposals that could make annuity products a crucial part of millions of Americans' retirement plans. This movement, which is being led by retirement experts...

Upstart HighTower snags $10B broker; Richard Saperstein defects from JPMorgan; brings $35M to $40M in revenue with him.
May 4, 2009... Byline: Bruce Kelly Former Wall Street chieftains Philip Purcell and David Pottruck's plan to snatch superstar brokers for a start-up advisory firm and independent broker-dealer is making significant strides as a top broker is preparing to...

MUTUAL FUND INDUSTRY BRACES FOR SHIFT IN SALES CHANNELS; Transformation may blur distinction between load, no-load funds.(Company overview)
May 4, 2009... Byline: David Hoffman Mutual fund groups must adjust to a new, potentially expensive distribution landscape, according to members of a round-table panel of fund executives, financial advisers and industry experts. With profits being...

Swine flu crisis creates market winners and losers; Some travel stocks get battered, while pharmaceutical stocks rise.
May 4, 2009... Byline: David Hoffman The swine flu epidemic has hurt certain segments of the market, such as travel stocks, while others, such as shares of pharmaceutical companies, may get a short-term lift, according to observers. As the flu moved...

Mutually owned insurers escape rating woes of public counterparts; But similar holdings produce comparable investment results.
May 4, 2009... Byline: Darla Mercado Mutual insurers look poised to pounce on their publicly held peers' market share, but industry observers warn that these carriers face the same problems as their stock company brethren. "For the publicly traded...

Cost of planning course cut as a result of downturn.
May 11, 2009... Byline: Lisa Shidler In an effort to encourage people to continue to take its courses amid the economic downturn, the College for Financial Planning has cut the cost of one of its most popular courses by more than half. The online...

Downturn sparks interest in charitable-lead trusts; Wealth transfer and gift device is suited to a low-interest-rate environment.
May 11, 2009... Byline: Lisa Shidler Today's scant interest yields and sharply lower equity values are making a little-used estate planning vehicle more attractive to high-net-worth clients. The tool, a charitable-lead trust, is an arrangement by...

BOND PORTFOLIOS THAT PLAYED IT SAFE FARED BEST; Long-duration and government offerings took six of the top 10 spots.
May 11, 2009... Byline: Timothy Inklebarger Safety reigns supreme this year, with managers of long-duration and government bond strategies taking six of the top 10 spots in Morningstar Inc.'s database of separate accounts and collective investment trusts...

NON-TRADITIONAL STRATEGIES DOMINATE IN EQUITY FUNDS; Rally boosts first-quarter returns, but 12-month performance is disappointing.
May 11, 2009... Byline: Rob Kozlowski Equity managers overall got a boost at the end of the first quarter, thanks to the March rally, but the firms at the top of the performance charts for the 12-month period ended March 31 were those that followed...

Upcoming Events.(Calendar)
May 11, 2009... May 19 Adviser-to-adviser webcast: Surviving an SEC audit after Madoff Leading advisers and a former senior SEC enforcement chief discuss how to prepare for and handle an SEC audit in light of the Madoff scandal. Key topics covered...

Advisers not stressed by bank test results; Most feel the industry is in better shape than Federal Reserve's findings indicate.
May 11, 2009... Byline: Sue Asci and Evan Cooper The results of the Federal Reserve's examination of the nation's 19 largest banks don't adequately characterize the state of the financial industry, according to 75% of financial advisers responding to a...

Lights! Scammer! Action!
May 11, 2009... Byline: Darla Mercado Disgraced financier and jailbird Bernard L. Madoff is about to get the big-screen treatment. The scam artist will be the subject of a film, "Madoff: Made Off with America,'' a project that has been in the works...

Breeding confusion.
May 11, 2009... Byline: Sue Asci Most corporate financial officers think that financial reports are too confusing for the average investor, but in-depth disclosure about a firm's strategies and opportunities would be helpful, a new survey found. The...

Putnam chief Reynolds leads effort to fix DC plans; Wants to "fill holes' in retirement savings system.
May 11, 2009... Byline: Mark Bruno Financial services industry executives are expected to flex their muscles and make some radical changes to the nation's retirement system over the next several months an effort that could significantly increase the...

ETF giant iShares is going after 401(k) market; Providers try to wrest a piece of the action from mutual funds.
May 11, 2009... Byline: David Hoffman Led by the iShares exchange traded fund group, exchange traded funds are poised to break the stranglehold that mutual funds have on 401(k) retirement plans. The San Francisco-based unit of Barclays Global...

Employees don't understand target funds, survey shows; Lack of knowledge among participants could spell trouble for plan executives.
May 11, 2009... Byline: Timothy Inklebarger Employees don't understand target date funds, and that could spell trouble for employers. Less than 6% of employees surveyed by Chicago-based Envestnet Asset Management Inc. and Evanston, Ill.-based...

Obama was wrong to demonize Chrysler's debt holders.
May 11, 2009... President Obama was off-base to castigate the Chrysler secured debt holders who held out against the proposed deal to rescue Chrysler LLC. The holdouts, which included New York-based OppenheimerFunds and Perella Weinberg Partners, and...

This adviser really connects with his clients.
May 11, 2009... Byline: Jim Pavia I would trust Richard Salmen with my hard-earned money. And the fact that he is the president of the Financial Planning Association did not influence me in that statement. I met Mr. Salmen for the first time last week...

Account openings from RIAs surge at custodians; But Fidelity, Pershing say it is too early to pop the champagne.
May 11, 2009... Byline: Jed Horowitz Account openings at Fidelity Investments from registered investment advisers and their clients jumped 30% in the first quarter. "We had a nice run,'' said Michael Durbin, president of the Boston-based fund giant's...

Feds want to get hands on life settlements, some say; SEC signals plans on uniform solutions for disclosures, licensing.
May 11, 2009... Byline: Darla Mercado As states propose and pass rules for oversight of life settlement transactions, industry participants wonder just how far the Securities and Exchange Commission will reach into the market to provide uniform guidance...

Neuberger Berman targets brokers, advisers; Firm plans to extend institutional products to retail market.
May 11, 2009... Byline: Mark Bruno Executives of Neuberger Berman Group LLC, now running the $155 billion money manager as an independent firm, plan to share some of their institutional-only investment strategies with investment advisers and individuals...

A new front emerges in active-versus-passive war; FundQuest finds that comparing the difference in investing styles requires deeper investigation.
May 11, 2009... Byline: Jeff Benjamin The debate over the virtues of active versus passive portfolio management probably will live forever. Much of the debate boils down to ingrained theories related to the impact of fees on performance and the...

Staring into recovery.
May 11, 2009... Byline: Evan Cooper When the economy emerges from the current financial crisis, it will be changed in 10 significant ways, according to Diane Swonk, chief economist of Chicago-based Mesirow Financial Inc. In her May newsletter, Ms....

Schapiro pledges to boost enforcement; SEC chief calls for "council of regulators' to oversee financial services industry.
May 11, 2009... Byline: Sara Hansard Securities and Exchange Commission Chairman Mary Schapiro's pledge Friday to revamp the regulator's enforcement efforts was cheered by some officials in the mutual fund industry. "The SEC is acting aggressively to...

At the Bell.
May 11, 2009... Frank: Regulatory bill will be law by yearend President Obama will likely sign comprehensive financial services regulatory reform legislation into law by yearend, House Financial Services Committee Chairman Barney Frank, D.-Mass., predicted...

Small family foundations grapple with losses, costs; Many are rethinking their future and may shut down, study finds.
May 11, 2009... Byline: Lisa Shidler Declining endowment values are leading many small family foundations to question their future. About 12% of foundations, in fact, intended to spend down their endowments and cease operations, according to a study...

IMCA's wealth adviser program taps demand for advanced skills; Group's increasingly popular designation helps retain high-net-worth clients, say advisers.
May 11, 2009... Byline: Charles Paikert The recession may have taken a toll on wealth, but wealth management is alive and well. In March, the number of designees in the Investment Management Consultants Association's chartered private wealth adviser...

SEC weighs changes to audit rule post-Madoff; Commission set to issue proposal affecting firms that self-custody.
May 11, 2009... Byline: Sara Hansard The Securities and Exchange Commission will issue a rule proposal as early as this week that would lead to surprise audits of investment advisory firms that held custody of their clients' assets. Indeed, the SEC...

Advisers eye move to multifamily offices; Becoming a partner is brass ring, observers say.
May 11, 2009... Byline: Charles Paikert Making a move to a multifamily office is piquing the interest of financial advisers with high-net-worth clients. "We're seeing lots of interest in MFOs, and I think you'll see more as the market improves and...

NFS to seek outsourcing work from self-clearing brokers; Profitability will depend on attracting volume, observers say.
May 11, 2009... Byline: Jed Horowitz With its traditional client base of small broker-dealers shrinking, Fidelity Investments' National Financial Services LLC unit plans to step up its trade processing, record keeping, software management and other...

RBC Wealth Management capitalizes on crisis; In the past five months, it has attracted 215 wirehouse reps.
May 11, 2009... Byline: Mark Bruno Unlike most bank executives, John Taft director of Royal Bank of Canada's U.S. wealth management business can make a compelling case for the economic crisis being good for business. RBC Wealth Management of...

Endowment investing model, in crisis, faces keen scrutiny; Observers question using the approach for individual investors.
May 11, 2009... Byline: Dan Jamieson Some industry observers are questioning whether an endowment model of investing as popularized by the Yale University endowment fund should be used for individual investors. The endowment model adds...

People.
May 11, 2009... Deloitte Financial Advisory Services LLP of New York has hired Don Barbo, 44, as a director in Dallas. Previously, he served as the director of health care valuations services for Hill Schwartz Spilker Keller LLC, a valuation and...

Mutual fund sales, advice tilt toward fee-based model; Wrap programs, sales through RIAs show growth.
May 11, 2009... Byline: David Hoffman Sales of mutual funds through brokers and financial advisers continued to shift toward fee-based compensation last year, while the trend toward fee-for-advice distribution accelerated, according to a study released...

A season of caution for VA providers; Insurers make changes to hedge risk in products.
May 11, 2009... Byline: Darla Mercado Insurers are rolling out adjustments to their variable annuity products this time with an air of caution. On May 1, the date that heralds a slew of final VA filings, carriers were as busy as they were last...

HighTower has lured advisers for months; Recruits join from firms that were decimated by the financial crisis, such as Lehman, Merrill.
May 18, 2009... Byline: Bruce Kelly In the months before it landed one of the biggest advisers on Wall Street, HighTower Securities LLC was already successfully recruiting other breakaway brokers. This month, the independent broker-dealer and its...

Earning an F in thrift.
May 18, 2009... Byline: Sue Asci Although the majority of consumers who participated in the National Financial Literacy Survey gave themselves good grades for their knowledge of personal finance, many admitted that they aren't saving money for the future....

DEVELOPING SKILLS TO WORK WITH CLIENTS MORE EFFECTIVELY; Learning how to handle stress, show empathy, feel optimistic enhances business relationships.
May 18, 2009... The following edited transcript is from "Are You an Emotionally Intelligent Adviser?'' an InvestmentNews webcast held May 6. Deputy editor Evan Cooper and reporter Lisa Shidler were the moderators. InvestmentNews: What is driving the new...

Schwab edges Fidelity in "breakaway-broker' race; 1Q figures show firms neck and neck on team, asset recruiting.
May 18, 2009... Byline: Jed Horowitz The Charles Schwab Corp. edged out Fidelity Investments during the first quarter in the battle to service the small but growing number of stockbrokers who are leaving their Series 7 licenses behind to become...

Lawsuits against Fisher Investments may lead to other adviser litigation; Meanwhile, firm's founder says cases "will run into a concrete wall'.
May 18, 2009... Byline: Bruce Kelly If legal action against Fisher Investments is any indication, financial advisers increasingly will face lawsuits and arbitration claims from clients who are angry about investment losses. This month, two sets of...

Downturn alters behavior and attitudes of advisers; Their faith in the stock market and themselves is shaken, survey shows.
May 18, 2009... Byline: Jeff Benjamin Guiding investors through the financial crisis has taken a toll on financial advisers, leading some to question their abilities, rethink their investment strategies and even take up yoga. An InvestmentNews survey...

Advisers enter blogosphere to lure prospects; Personal websites are also seen as a way to market a practice and communicate with clients.
May 18, 2009... Byline: Davis D. Janowski They account for only a minuscule fraction of the world's estimated 100 million bloggers, but financial advisers who maintain their own commentary-oriented websites are finding that blogging can pay. Blogs...

Assessing adviser stress.
May 18, 2009... To gauge their stress levels, more than 580 advisers answered the following questions, all of which began: "In the past month, how often have you...'' * Been upset because of something that happened unexpectedly? * Felt that you were...

Agent fingerprinting seen as gap in state insurance regulation; NAIC supports uniformity and wants access to FBI database.
May 18, 2009... Byline: Darla Mercado The lack of a uniform fingerprinting requirement for insurance agents and brokers may serve as new ammunition in the battle over federal regulation of the insurance industry. A recent report, "Insurance...

Online test reveals high stress among advisers; Don't blame yourself for market downturn, experts counsel.
May 18, 2009... Byline: Lisa Shidler Arlene Moore has coped with the market's ups and downs more than 20 years as an adviser, but the most recent downturn has been different. She became so upset that she gave up her morning exercise routine in favor...

Finra walks fiduciary/suitability tightrope; Ketchum sees virtue in both standards, but can the two coexist?
May 18, 2009... Byline: Sara Hansard Finra chief Richard Ketchum's call for a fiduciary standard for all advisers, even as he indicated that he would not want to significantly alter suitability rules for broker-dealers, highlights the difficulties...

Inside the panic at Reserve Management; E-mail trail shows world crashing down on money market pioneer Bent and his son.
May 18, 2009... Byline: Aaron Elstein and Megan Johnston The evening of Sept. 15 was the worst of Bruce Bent II's career. Panicked investors, who woke up that Monday morning to news of New York-based Lehman Brothers Holdings Corp.'s filing for...

Upcoming Events.(Calendar)
May 18, 2009... May 19 Adviser-to-adviser webcast: Surviving an SEC audit after Madoff Leading advisers and a former SEC enforcement chief discuss how to prepare for and handle an SEC audit in light of the Madoff scandal. Key topics covered during the...

People.
May 18, 2009... Chase Investment Counsel Corp. of Charlottesville, Va., has promoted David B. Scott, 54, to president, replacing firm founder Derwood S. Chase Jr., 77. Mr. Scott, formerly a senior vice president, will continue in his role as chief...

Schwab aims to grab index fund assets from competitors; Fee cuts on equity funds follow similar move by Fidelity in 2004.
May 18, 2009... Byline: David Hoffman Having slashed its equity index fund fees, Charles Schwab Investment Management Inc. is hoping to undercut its rivals in an attempt to take away index fund assets. It is the same strategy that Fidelity Investments...

Saving for college is still a priority, survey shows; Concerns over costs haven't discouraged parents.
May 18, 2009... Byline: Charles Paikert Worries about saving for college haven't stopped parents from continuing to set money aside for higher-education costs. Six in 10 parents surveyed said that they strongly believed that if tuition costs kept...

Bank customers urged to come clean on offshore accounts; IRS crackdown with tough penalties is no joke; those who come forward may avoid prosecution.
May 18, 2009... Byline: Charles Paikert Wealthy Americans who have offshore bank accounts may be sweating more than usual this summer. If they haven't done so already, offshore account holders have until Sept. 23 to take advantage of the Internal...

BAD TIMES COULD BE BOON FOR PORTFOLIO STRATEGIES; A shift away from products toward a broader investment process is occurring.
May 18, 2009... Byline: Jeff Benjamin The global economic crisis could turn out to be a blessing in disguise for the ever-expanding managed-accounts industry. The industry suffered right along with the rest of the world during the past year, but it is...

OppenheimerFunds struggles to regain trust of financial advisers; Some say the rebuilding process, as Janus discovered, could take years.
May 18, 2009... Byline: David Hoffman With the battered performance of its bond funds creating a financial nightmare for investors, OppenheimerFunds Inc. is fighting to rebuild its image and win back the confidence of financial advisers a job that will...

Let's rebuild retirement's three legs.
May 18, 2009... For decades, the U.S. retirement system was described as a three-legged stool. One leg was the Social Security system, the second was the employer-sponsored retirement plan, and the third was personal savings. Unfortunately, all three legs...

Wirehouses warm to fiduciary reps in effort to win 401(k) business; Movement indicates a willingness to compete in the small-company-retirement-plan market.
May 18, 2009... Byline: Mark Bruno As competition intensifies to capture the 401(k) and other retirement plan business of small and midsize companies, wirehouses increasingly are allowing representatives who specialize in the niche to act as fiduciaries....

At the Bell.
May 18, 2009... Ameriprise declines to accept TARP money Ameriprise Financial Inc. on Friday stepped back from receiving TARP money, less than 24 hours after the Department of the Treasury cleared it to participate in the program. The...

Finra pushes for public majority in arbitrations; Proposal would affect any broker-firm dispute, except discrimination.
May 18, 2009... Byline: Dan Jamieson In another sign that industry-affiliated arbitrators may be on their way out, the Financial Industry Regulatory Authority Inc. wants to stop using industry panelists in most cases involving a registered representative...

Retirement group to propose changes to 401(k) disclosure bill; Spark Institute wants fewer fee details on investor statements.
May 18, 2009... Byline: Sara Hansard An industry association that represents the interests of retirement plan service providers this week will suggest modifications to proposed legislation that would require the industry to break out 401(k) fees on...

Stocks win over shoes.
May 18, 2009... Byline: Lisa Shidler Investors are eating out and buying clothing less often, but they are more open to buying financial and technology stocks, according to a new study. The study, from Jersey City, N.J.-based TD Ameritrade...

MassMutual weighs future in VA marketplace; Firm has pulled back on variable annuities in recent months.
May 18, 2009... Byline: Darla Mercado Following the departure of a major annuities expert and the elimination of some variable annuity riders, Massachusetts Mutual Life Insurance Co. is mulling the future of its role in the VA marketplace. "The...

Cramer's "harmless'.
May 18, 2009... Byline: Darla Mercado There may be method to Jim Cramer's madness, according to a research paper. A study by Paul J. Bolster and Emery A. Trahan, professors of finance at the Northeastern University College of Business Administration...

Webcast panelists.(Discussion)
May 18, 2009... Doug Lennick Principal Lennick Aberman Group Minneapolis Shani Robins, Ph.D. Founder The Wisdom Therapy Institute Palo Alto, Calif. George Walper President Spectrem Group, Chicago