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.

The world’s wealth total has shrunk on a year-over-year basis for the first time since the 2008 financial crisis, according to an annual report by UBS. So reports Fortune.

According to UBS, wealth worldwide fell 2.4% in 2022 to $11.3 trillion. The country losing the most wealth was the United States, with a $5.9 trillion decline—also its biggest drop since 2008.

“Stock market losses in 2022 often reversed—at least in part—the gains made a year earlier,” the UBS report states.

Read the full article from Fortune. 

Advisors are moving away from mutual funds and toward lower-cost or more personalized products, according to a new report by financial industry data provider Cerulli Associates. So reports Financial Advisor.

Exchange-traded funds are catching up on mutual funds and their revenue sharing payments, according to Cerulli, although mutual funds are still advisors’ most broadly utilized product.

Separately managed accounts should also gain in popularity as advisors target high-net-worth clients, according to Cerulli.

Read the full article from Financial Advisor. 

Morgan Stanley strategists have warned that stocks are poised to retreat, writing, “Price is about as disconnected from reality as it’s been during this bear market.” So reports Bloomberg.

A team led by the bearish Michael Wilson said that the Federal Reserve will likely raise interest rates longer than is currently priced in by the market.

The Morgan Stanley strategists also projected an earnings recession.

Read the full article from Bloomberg.

Goldman Sachs economists have concluded that labor-market robustness and signs of growing business confidence have reduced the chances that the U.S. economy will go into a recession in the next year. So reports Business Insider.

In a recent research note, a strategist team led by Jan Hatzius cut its odds of a recession in the next 12 months to 25%, down from 35%.

The economists added, “Progress on price inflation has been particularly rapid in recent months.”

Read the full article from Business Insider.

Private equity group Reverence Capital Partners is courting suitors for a minority stake in wealth management firm network Osaic, previously known as Advisor Group, according to sources with knowledge of the situation. So reports Bloomberg.

The people said that Reverence was looking to sell up to 20% of Osaic in a deal that could be valued at up to $2.5 billion.

Osaic said in June it was rebranding under the new name as it brought together eight wealth management businesses into a single organization.

Read the full article from Bloomberg.

The NFL Players Association has approved UBS to work with current and former players through the union’s registered financial advisor program. So reports InvestmentNews.

In recent years, the NFLPA previously approved Goldman Sachs, Bessemer Trust, Morgan Stanley and Bernstein Private Wealth for the program.

The program was long restricted to individual financial advisors rather than firms and still maintains a roster of more than 117 individual advisors.

Read the full article from InvestmentNews.

Former Wells Fargo CEO Tim Sloan has sued the bank, claiming it withheld more than $34 million in compensation following his 2019 retirement. So reports the Charlotte Observer.

Sloan’s retirement from the bank followed a scandal over employees creating fake customer accounts to hit sales targets.

In the complaint, Sloan claims Wells Fargo illegally canceled an equity grant it owed him in order to use him as a “scapegoat.”

Read the full article from Charlotte Observer.

Jason Eaton, who prosecutors accuse of shooting three students of Palestinian descent in Burlington, Vermont, has worked as a financial advisor. So reports USA Today.

CUSO Financial Services, Eaton’s most recent employer, confirmed to the newspaper that the broker-dealer fired him on November 8 after less than a year on the job.

Eaton was also formerly a broker for TD Ameritrade, Edward Jones, Cadaret Grant & Co. and Equity Services.

Read the full article from USA Today.

LPL Financial has opened its Liquidity & Succession program to external advisors. So reports Think Advisor.

“Advisors who are nearing retirement are paired with other, philosophically aligned, independent advisors to help provide clients with a similar experience and seamless transition," Jared Fingeret, senior vice president of Liquidity & Succession, Strategic Programs at LPL, said in a statement.

Rolled out internally as a test last year, the program will probably help draw more advisors to LPL, a spokesperson told Think Advisor.

Read the full article from Think Advisor.

Truly committing to diversity, equity and inclusion (DEI) can be powerful for a business, according to Charles Schwab Advisor Services’ Leslie Tabor. She is the director of business consulting services and education at the firm. So reports Think Advisor.

Tabor says firms should think of DEI as a business competency that supports its growth. “Future clients are going to be more diverse,” she tells the publication. “The following generation will identify with one or more diverse races or ethnicities. Diversity is just good for business.”

Tabor says that last year Schwab launched “a multi-year DEI roadmap and a 12-month action plan” as part of a program for clients. The effort led to 94 advisors embarking on a “five-month learning journey” toward building a more inclusive DEI culture.

Read the full article from Think Advisor.

Merrill Lynch added 93 “experienced advisors” in the second quarter, triple the number it added in the first quarter, according to its president Andy Sieg, the president of Merrill Lynch Wealth Management. So reports Advisor Hub.

The quarter’s tally marks the largest addition of experienced financial advisors since 2010. Sieg expects the hiring momentum to continue, or accelerate, throughout the year.

Read the full article from Advisor Hub.

Last year Edward Jones launched a pilot program to allow brokers to share office space. Now, the company has indicated allowing brokers to team up is coming, breaking with its longstanding solo practitioner model. So reports Advisor Hub.

By the end of 2023, each of the firm’s 19,000 advisors will be able to team up with another advisor to share a branch office. The firm is also testing allowing veteran brokers to add a junior partner.

A company executive overseeing branch development said that teaming “enables our branch teams to stay competitive and deliver on the complex needs of our clients and investors more effectively.”

Read the full article from Advisor Hub.