Financial advisors often promote their services by saying that they can help remove emotions from investing. In theory, advisors can use a variety of risk management tools, knowledge of capital markets, and long-term investing perspectives to help their clients avoid making costly knee jerk reactions.

Brexit is just one example, but it can be a powerful case study for advisors seeking to help clients understand why emotions should be curtailed by financial professionals who are armed with capital markets expertise.

In the months leading up to the Brexit referendum, markets climbed and declined in response to changing expectations for how the country’s citizens would vote. In the final days before the vote, investor sentiment strengthened as pundits increasingly said a vote in favor of the U.K. pulling out of the European Union was unlikely.

Many investors had previously feared that Brexit would hinder economic growth in Europe and create a challenging environment for U.S. companies and business in other countries that sell products in the continent.

Indeed, Brexit is likely to mean that U.K. will have to forge new trade agreements with individual members of the European Union and is likely to have to do the same with U.S. exporters.

When the Brexit referendum surprisingly determined that voters want to leave the U.K., panic ensured. On June 24, when the results were released, U.S. equities dropped approximately 3%. It was the worst single-day decline for the S&P 500 in nearly a year and wiped away the index’s gain for 2016, according CNBC.

By the end of June 27, the index had dropped 4.07%. The decline, however, was only temporary. Indeed, during the last three days of June, the S&P climbed 4.95% and, as of July 8, had generated a total return of 4.21% year-to-date.

Investors who panicked by selling in the days immediately after Brexit are likely to have sold during a dip, only to miss the strong returns when equities bounced back. With that in mind, advisors should explain to their clients that panic selling often results in selling low and then missing out on the strong returns that typically follow market dips.

They should explain, furthermore, that using portfolio diversification to cushion declines, maintaining a long-term perspective, and understanding the role of corporate fundamentals can go a long way in helping investors avoid panic selling.

Advisors should develop illustrations that show how having a mix of asset classes could have reduced the impact upon a portfolio of the post-Brexit market decline and that portfolio rebalancing may have resulted in buying equities during the market dip.

They should also show index performance numbers that illustrate how riding out historical market declines, including the correction associated with the Great Recession, would have allowed investors to recoup losses and then eventually achieve additional gains.

Finally, advisors should point out that corporate fundamentals don’t justify a major prolonged market correction. While overall corporate earnings in the U.S. have taken a hit due to cheap oil, many industries, such as Information Technology, are experiencing strong sales and improving profits.

Innovation, meanwhile, is allowing companies like Amazon.com and Netflix to rapidly grow their earnings by disrupting traditional business models with technology. At the same time, corporations are holding near record levels of cash, which is allowing them to buy back stock, launch dividends, and conduct mergers and acquisitions at near record levels.

All of those actions provide additional support to stock prices. The U.S. economy is also likely to support corporate fundamentals. While U.S. economic growth has been slow, many developments are encouraging, with the labor market strengthening, real estate values increasing, and consumers’ finances improving.

Collecting Social Security early can help retirees assess how much they can spend because the payments are consistent. So reports Wealth Management.

Also, proponents of waiting typically point to the 8% payment increase you get for delaying the payments. However, the nominal annualized reture when waiting a year is less than 8% and retirees will miss out on a full year of payments. 

Lastly, collecting Social Security may be more attractive than withdrawing money from an IRA when considering taxes.

Read the full article from Wealth Management.

The Securities and Exchange Commission recently awarded a whistleblower $3 million for information that helped the regulator crack a complex case of fraud. So reports ThinkAdvisor. The program was established more than three years ago and has paid out more than $50 million to whistleblowers.

Read the full article from Think Advisor.

Robert Renshaw has joined Edison, N.J.-based Fountainhead Capital Management as senior financial strategist. So reports TapintoEdison.

Fountainhead Managing Partner Marc Rock says Renshaw’s strength involves understanding each client’s unique circumstances and partnering with the appropriate team members to create customized strategies.

Read the full release from TapintoEdison.

Warren Buffett is defending the $25 billion in shares his firm bought back, according to a recent article from The Wall Street Journal.

Buffet said the large buyback was done to enhance the intrinsic value for shareholders while still leaving plenty of money to pounce on opportunities. Berkshire Hathaway has $138.3 billion in cash and short-term Treasury bonds available, as of the fourth quarter.

However, Buffett did take a shot at other CEOs buying back stock. “American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked,” he wrote.

Read the full article from The Wall Street Journal.

JPMorgan strategists are calling Bitcoin an “economic sideshow” while positing the true post-COVID-19 narrative is the “rise in digital finance.” So reports Seeking Alpha.

The analysists also argue that competition between fintechs and banks is going to pick up steam as Big Tech continues to play a role as a potent digital platform for customer data access. “The report points out that financial innovation is outpacing regulation, creating an uneven playing field, benefiting fintechs as it’s easier and cheaper for them to offer similar products and services,” according to the article.

Read the full article from Seeking Alpha.

2020 was a memorable year for many Bitcoin investors. However, Sean Williams of The Motley Fool, says these three “high-powered growth stocks” are poised to leave Bitcoin in the dust in 2021.

• Sea Limited (NYSE: SE): this Singapore-based company has seen its shares quintuple in the last year, but Williams say it is just getting started. Williams points to Shopee, Sea’s online shopping platform. He also noted Sea’s financial services sector.
• Jushi Holdings (OTC: JUSHF): this is marijuana stock has a strategy that allows it to build up its brand with minimal competition. Williams also points out that the Jushi execs have a lot of skin in the game.
• Fastly (NYSE: FSLY): this edge cloud services provider helps speed up and secure “the process by which content reaches end users.” Williams says that despite it being up 422% last year, as of publication of the article, it “looks to be in the very early stages of its growth.”

Learn more about these stocks and Williams’ thoughts by reading the full article from The Motley Fool. Williams has no position in any stocks or cryptocurrencies mention in this article. The Motley Fool, however, does own shares in all three stocks and recommends them. It does not own any cryptocurrencies mentioned.

E*TRADE Financial announced results from the most recent wave of StreetWise, its quarterly tracking study of experienced investors. In this study, respondents reflected on their 2020 investing decisions.

Highlights of the survey include:

• The vast majority are satisfied with their portfolio management. Interestingly, 71% of investors are satisfied with how they managed their investments this year.
• Most investors are steadfast in their long-term plan. In 2020, the top financial lesson investors learned was to stay the course (50%). This was distantly followed by focusing on strategic market moves (19%) and saving for an emergency fund (15%).
• Digital tools and human advice are not either/or. As the year comes to a close, the number one move self-directed investors plan to make is to use an online tool to review their portfolio (38%), followed by reaching out to an advisor (35%). Further, investors’ top financial resolution for 2021 is to use online tools to diversify their portfolio and help meet goals (33%), followed by seeking the help of an investment professional (30%).

“The year kicked off with a market shock that may define a generation in COVID-19, and as a nation we then experienced a social movement of monumental proportions in the fight for equality, only to cap the year with the most contentious election in modern history,” said Mike Loewengart, Managing Director of Investment Strategy at E*TRADE Financial. “And these next few months may continue to see pronounced volatility as markets balance winter virus woes with vaccine developments. In spite all of this, it’s encouraging to see investors tune out the noise and remain focused on long-term investment goals.”

Read the full press release from E*TRADE Financial.

As You Sow, a nonprofit group, released its study entitled '100 Most Overpaid CEOs,' and there are many familiar industry faces on it.

The group notes that although it finds “very weak links” between pay and company performance, firms still continue to say high CEO pay is a reward for performance. “If we grant the assumption that pay should be determined by performance and then use a basic statistical technique to map actual performance outcomes to predicted levels of pay relative to those outcomes, we can then see how much the CEO pay package exceeded such a prediction,” the study notes.

The group then compiled a list of the top 100 CEOs with the biggest “excess” pay, which is intended to show how much they’re overpaid.

Here are some of the top industry names on the list:

Company: Fiserv
Rank: 15
CEO: Jeffery W. Yabuki
Pay: $27,601,026
Excess: $13,842,124

Company: JPMorgan Chase & Co.
Rank: 35
CEO: James Dimon
Pay: $31,612,616
Excess: $18,424,207

Company: Goldman Sachs
Rank: 39
CEO: David M. Solomon
Pay: $24,657,737
Excess: $12,052,277

Company: Ameriprise Financial, Inc.
Rank: 49
CEO: James Cracchiolo
Pay: $24,516,930
Excess: $11,530,117

Company: Wells Fargo & Company
Rank: 55
CEO: Charles W. Scharf
Pay: $34,286,574
Excess: $22,449,470

Company: Citigroup Inc.
Rank: 76
CEO: Michael L. Corbat
Pay: $25,508,761
Excess: $12,917,382.00

Company: Lincoln National
Rank: 87
CEO: Dennis R. Glass
Pay: $15,412,217
Excess: $3,287,852

Company: Marsh & McLennan Companies, Inc.
Rank: 92
CEO: Daniel S. Glaser
Pay: $20,331,697
Excess: $6,752,197.00

Alphabet’s CEO Sundar Pichai topped the list, followed by David M. Zaslav of Discovery, Inc. and Larry J. Merlo of CVS Health Corporation.
See the full list here.
 

Northwestern Mutual FA Jacki Purcell says there are three things FAs love to hear and two things they hate. So reports Yahoo! Finance.

They like to hear:

1. “Roth, Bitcoin, Mutual Funds”—by being specific, Purcell says clients demonstrate they want to take an active role in planning for their financial future.
2. “My spouse and I would like to meet with you”—when clients mention their partner at the outset, that’s a very good thing as it helps unify couples.
3. “I’m nervous about [fill in the blank]”—this honesty about fears shows healthy communication.

Two things Purcell says FAs hate to hear:

1. “Let’s wait until X milestone to save”—good intentions aren’t enough. “Great financial planning requires implementation,” she says
2. I heard from my parents/grandparents/coworker that I should do X with my money”—every person’s financial plan should be unique to them.

Read the full article from Yahoo! Finance.

Melissa Weisz, an advisor with RegentAtlantic, is credited with helping prevent one of her clients from being scammed out of more than $40,000. So reports Wealth Management.

The recently divorced client was on the verge of sending $47,772 to a man she never met in person. The client, and the scammer, had met on a dating site and had already been communicating for several months when he asked for a loan to pay a customs fee so that he could reclaim some equipment.

The client and the scammer had talked at length about forming a life together. In fact, the scammer had already convinced the client to provide two smaller loans totaling about $8,000.

Weisz had become aware that something fishy was going on when her client asked for the large and very specific cash transfer from her managed account. She asked the client why she needed the money so quickly, an uncomfortable question. The client eventually confided in Weisz but made her promise not to tell anyone and demanded she transfer the money as requested.

The client thought “how dare she interfere in what might be my last chance at having fun and romance again?” Weisz asked if she could join the client at the bank before authorizing the transfer and the client agreed. The bank officer was also skeptical and, during the course of their business asked the scammer for identification, which he refused to provide. Finally, the client agreed to call the police, who looked into the scammer’s cover story and found he was not who he said.

Romance scams costs Americans more than $201 million in 2019, up 40% from the year prior. But, there are things FAs can do to help protect clients from such scams.

Advisors can be on the lookout for irregular cash transactions from clients. They can also ask why the money is needed so quickly, encourage the client to know the person they are sending money to face to face, not just their online profile. This can include video chats early on in the relationships or even in person.

They can also encourage clients to do a reverse image search for profile photos and discourage them from ever sending money to people they have only communicated with online. They can also question the client about any major life event that’s due to an online relationship.

Read the full article from Wealth Management.

Cetera Financial Group has agreed to buy Voya Financial’s retail brokerage unit. So reports AdvisorHub.

Voya’s broker unit has about 900 independent brokers, 385,000 customers and services about $40 billion in client assets.

The value of the deal was not disclosed, but Voya said it expects to get more than $300 million in ‘deployable proceeds’ when the deal closes, which should be the second or third quarter of the year.

Read the full article from AdvisorHub.

Canterbury Investment Management conducted a survey of financial professionals about the challenges they face heading into the year. Ninety-five advisors participated in the survey. So reports ETF Trends. 

Canterbury discussed one of the biggest challenges with Brent Slinkard: building a process for getting a steady stream of qualified prospects. Slinkard is a consultant to independent financial advisors. Slinkard says that everyone wants such a pipeline, but there is “no magic formula.”

“Generating quality leads requires a systematic process over time,” he says. “If you look through the optics of an investor, it is about communicating properly, informing, educating, and nurturing over time to a point where you can ultimately convert that prospect to a quality client… I assert that it is absolutely based on a systemic process that allows you to nurture leads over time and bring them in, in an intelligent way to your advisory.

Tom Hardin, Chief Investment Officer at Canterbury Investment Management, notes that when trying to retain and nurture clients “one of the biggest mistakes that advisors make is scheduling these quarterly or semi-annual meetings where they take this performance monitor, and they compare the performance of their portfolio to either an index or combination of benchmark indexes.”

He says that approach puts the client in the "left brain" where they begin to worry about the comparisons. They may even question the process if the performance lags an index in a quarter. Hardin says he focuses on the “right brain” and teaches concepts that reinforce the process.

“I want them to begin to connect me and my expertise to their dreams and their goals and make the connection that I can help them get there,” he says
Read the full conversation from ETF Trends.

David Solomon, the CEO of Goldman Sachs does not think working from home is here to stay. So reports CNBC.

Specifically, despite a number of Goldman’s employees working from home during the pandemic, Solomon said working from home is an “aberration” that “we’re going to correct as quickly as possible.” He made his comments while speaking at Credit Suisse’s annual financial services forum.

“I do think for a business like ours which is an innovative, collaborative apprenticeship culture, this is not ideal for us and it’s not a new normal,” Solomon said, according to CNBC.

Read the full article from CNBC.

This past year ushered in some changes that are likely to stick around. In fact, 60% of advisors say they plan to, or may consider, a permanent virtual/in-office hybrid arrangement for their teams, according to a new survey of 396 financial advisors by InCapital.

More than half (55%) felt their teams were, or might be, more productive working from home. They noted several key benefits of working from home:

• 65% of advisors said they had time to increase communications with clients
• 49% spent time improving how they serve clients
• 30% said they will be or are considering reducing the size of their office space
• 16% said they may eliminate office space altogether

Back to the Office

Just shy of half (42%) returned to their offices as of December 2020, while 34% expect to return in the first half of 2021. Meanwhile, 11% plan to return in the back half of the year and 13% do not expect to return at all this year.

Half of the advisors surveyed said they are waiting until the second half of 2021 or later to meet clients in person. Only 12% of advisors said they have in-person meetings with clients now, and 38% said they would in the first half of 2021.

Most (67%) said they are not concerned about how clients and prospects react to them working from home. In terms of prospecting, the vast majority (96%) said they were comfortable meeting with prospects virtually; and 67% said prospecting and selling could be done effectively via virtual meetings. In fact, 45% of advisors said they had six or more virtual prospecting meetings in 2020 with a success rate of 22%.

For more survey results, read the full press release.

There are three things financial advisors can do to outperform the competition. So reports Financial Advisor Magazine.

They include:

• Proper Pricing: Don’t offer discounts because proper pricing is the most critical tool you have. You need to be compensated properly for the value you provide. That’s why you need to have a pricing model that includes flat fees and other non-asset-based fees. This way you are protected in volatile markets.
• Focus on the Future: Have a plan to bring in new clients. This can include seminars, educational events and other events that showcase you as an industry leader.
• Building Your Team: “The RIAs that hire with high-performance individuals in mind and focus on members that can pull their own weight put themselves at an advantage,” according to the article. “It's essential to be selective when hiring for the sake of overhead and team performance.”

Read the full article from Financial Advisor Magazine.