News Mentions & Press Releases
An overwhelming majority of advisers (97%) believe conventional and robo-advisers can co-exist, a study says, but a strong majority (78%) still see the new tech as threatening. —
“We did the study because we felt there was a lot of confusion out there about robo-advisers and the ability of our advisers to embrace that technology,” says Todd Clarke, chief executive of CLS Investments. “The study bore all that out. Advisers are confused; they do see it as a threat.”
CLS Investments, an asset manager that creates exchange-traded fund (ETF) strategies, conducted its survey to gauge the significance of the conflict that advisers seem to be experiencing in the face of a new technology.
But the technology is just one of many facets of the advisory business that is changing, Clarke believes. “Think about grocery shopping or buying shoes online,” he tells PLANADVISER. “Those have changed, and even hailing a cab has changed.”
Don’t point to China for bubble. How about the Philippines?
The Philippines stock market is now trading at 20 times forward earnings, 34.8% higher than the long-term average of 14.8 times, on the back of 11.9% earnings growth this year and another 13.2% next. By comparison, India, foreign investors darling, “only” trades at 17.9 times, on the back of 15.8% and 18.2% earnings growth this year and next.
There are signs that the Philippines bubble is starting to deflate, according to Credit Suissestrategist Sakthi Siva, who has been Underweight on the Philippines for a while.
Credit Suisse likes to use price-to-book versus return-on-equity to measure how expensive a market is. Back in January, the Philippines was trading at a 15-year record 55% premium over the rest of the Asia, “close to the premiums at which other bubbles—like India in 2007-08, China in 2007 and Indonesia in 2013.” This premium has come down to 46% since.
There is more room for a downhill stroll. Unlike China or India, the Philippines does not have much room to cut its cost of equity, so we do not even have a monetary stimulus theme to play. The country’s real short-term interest rate is only at 0.1%.
For advisors who require in-depth portfolio analytics, including various measurements of risk, Orion works with AdvisoryWorld, one of whose products is Batch Risk Assessment. This product automates the process of visualizing multiple risk factors across a financial service firm’s entire book of business. Both Riskalyze and AdvisoryWorld offer proposal tools that allow advisors to illustrate a client’s current portfolio risk and compare it with the risk inherent in a proposed portfolio constructed by the advisors.
Perhaps the single most talked about topic at T3 2015 was robo-advisors and what tools advisors need to compete against them (and there was no shortage of firms in attendance hoping to offer tools to help. The players included established firms such as Advicent eMoney and MoneyGuidePro, newer recognizable names such as Betterment Institutional, and lesser-known names such as Jemstep, Motif, NestEgg, Oranj, Trizic, WealthAccess, Wealthminder and Upside—the last one of which was recently purchased by Envestnet.)
Orion, in partnership with sister company CLS and with Riskalyze, had one of the more compelling new product launches: AutoPilot. This is essentially a turnkey robo-advisor platform that advisors can brand as their own and easily embed into their own sites. Online clients can then go through the Riskalyze process to establish their Risk Number and synchronize their assets through account aggregation. Software powered by CLS will then create an online proposal for the client. Once accepted, an Orion application powers the online account opening and allows the client to complete all paperwork digitally. Once the account has been established, CLS provides the ongoing trading monitoring and rebalancing of the account. Clients have access to their accounts 24/7 through Orion’s client portal technology.
Another episode, another incredible behind the scenes look at a succession plan in mid-execution. Any advisor looking to pass the day to day running of a business off to his or her family member or trusted partner would be remiss in not watching this show. The focus for this one is on the staff transition and their reactions to this significant change to the business. And those reactions are telling. They convey the emotional investment in the firm and its leadership and the personal nature of this type of change. The fact is, you cannot discount or diminish the importance of including the people that make the business run, in the process of executing a succession plan. Gabe seems to get that instinctively, and that is evident in what this episode brings across, which is that:
The biggest knocks against midcaps are their valuation ratios. Regardless of which approach to valuation is used, midcaps look expensive. Current valuations compared with peak valuations in the last 10 years are a challenge. Midcaps currently trade at 21 times trailing earnings, and have traded above 20 times earnings for the past eight months.
The only other time in the past 10 years that midcaps have had a P/E over 20 was during one month in 2007. The average valuation over the last 10 years also suggests overvaluation. The average price-to-earnings multiple (P/E) is 17, and the current P/E ratio is 22 percent above the average. Figure 1 shows the current and 10-year averages for three key metrics, including P/E ratio.
Northstar (Orion/CLS), eMoney, MoneyGuidePro, Advicent, RiXtrema and Riskalyze are among the firms with products and services aimed at helping advisors compete effectively against the B2C robo advisor platforms. Some of the newer names in this group are Jemstep, Oranj, Wealth Access and Upside.
The new AutoPilot from Riskalyze and Orion/CLS is a robo-type product that advisors can plug into their current website. Riskalyze technology handles the risk assessment, Orion technology powers client onboarding and servicing, and CLS handles the investment management, all for a cost of 25 basis points.
There are a few common threads here. All of these offer a superior end-user experience, and most incorporate account aggregation and integration with other applications as required. Finally, most offer a seamless, paperless client-onboarding experience.
With all the talk of potential interest-rate increases in the U.S., fixed-income exchange-traded funds are in vogue.
Through February, investors poured more than $20 billion into bond ETFs—67% of net flows to all exchange-traded products, according to research firm XTF Inc.—as they looked to sync their fixed-income exposure with a view on rates.
Jeffrey Gundlach is running a new total-bond ETF. PHOTO: BLOOMBERG NEWS
While flexibility is one of the great benefits of the over 250 fixed-income and bond ETFs—allowing investors to pinpoint portfolios for desired levels of credit and rate exposure—there are investors seeking
Wealth Access, a personal financial management platform, announced Tuesday its integration with MoneyGuidePro, a popular financial planning software.
The companies integrated the two programs to make it easier to manage client finances and create financial plans in a streamlined process.
“We have found that a lot of [advisers] were spending a lot of time gathering data to be able to have intelligent conversations with clients,” said David Benskin, chief executive and founder of Wealth Access. “A lot of our clients are more financial planning-oriented, so it was a really natural fit for us to integrate with MoneyGuidePro.”
CLS Investments, LLC (“CLS”), a third party money manager in the U.S., and a leading manager of Exchange Traded Funds (“ETFs”) within individual investor portfolios, has announced the launch of Individual Account Management (IAM) on the Flexible Advantage product through Nationwide’s Managed Account Services platform. IAM is a low-cost solution for investors who prefer a managed approach to retirement planning. The Managed Account Services money management platform allows CLS, in conjunction with Nationwide, to help increase participants’ retirement readiness and offers a customized asset allocation strategy specifically designed to help meet their future needs.
IAM is an active solution that provides investors with a tailored risk-managed portfolio specific to their investing objectives and time horizon. Investments on this platform are monitored daily and adjusted within the portfolio when warranted by market conditions. Behind the portfolio management is a team with more than 170 years of combined experience, providing consistent scrutiny and risk analysis of thousands of investment options and more than 100 asset class segments and strategies for potential inclusion within a portfolio.
“For many investors, their qualified retirement plan accounts are their largest asset,” said Todd Clarke, CEO, CLS. “The problem is, a lot of those same investors don’t have the knowledge or emotional discipline to actively manage it. The IAM option through Managed Account Services provides a level of service that’s usually only received by high net worth investors, and it allows Nationwide’s clients the confidence of knowing that there is a team of experts looking out for their investment portfolio. We are thrilled to be partnering with Nationwide to provide tailored retirement solutions to people who need it.”
Exchange traded funds help advisors and investors gain exposure to broad areas of the market or focused segments through an easy-to-use investment vehicle. However, people should understand how their ETFs are traded.
Specifically, ETFs trade in two distinct markets: the secondary markets that everyone typically monitors on a stock exchange and the primary market where specific authorized participants help create and redeem ETF shares, writes Grant Englebart, portfolio manager at CLS Investments, for InvestmentNews.
Everyone should be familiar with the secondary market as it refers to the on-screen, quotable market that we track through price changes on the stock exchange, similar to tracking a company’s stock.
However, ETFs are also traded on a primary market where APs and the ETF sponsor help create and redeem ETF shares for underlying securities or holdings, which occur at the net asset value of the ETF, through so-called in-kind transactions.
The creation and redemption process helps keep an ETF trading near its NAV and allows large traders to go in and out of what appears to be an ETF with low liquidity. For instance, if an advisor or investor is interested in taking large order on an ETF that only trades on a couple thousand shares per day, he or she would contact a broker or authorized participant. The AP would come back with a quote and the investor would pay the broker the necessary commission.