Wealth Management
If a new bill in the Senate gets passed at some point, ESG investing in retirement plans may become a thing of the past. On July 26th, Senator Mike Braun of Indiana introduced The Maximize Americans’ Retirement Security Act (S. 4613), legislation that would clarify that the fiduciary duty of plan administrators is to select and maintain investments based solely on “pecuniary” financial factors. Based on the legislation, pecuniary factors are defined as any factors that a fiduciary prudently determines are expected to have a material effect on the risk or return of an investment. The bill, which was co-sponsored by seven other GOP senators, would curb the Department of Labor’s efforts to make it easier for plan fiduciaries to consider ESG factors when selecting plan investments. ESG investing has become a hot political topic as of late, and its recent underperformance during the bear market has only further added to the scrutiny.
Finsum: With ESG becoming a hot political issue, GOP Senators introduced a bill that would curb the DOL’s efforts to make it easier for plan fiduciaries to consider ESG factors in plan investments.
Potomac Fund Management’s model portfolios are reaching a larger audience as its strategies are now available on the FMAX and Amplify platforms. FMAX stands for Fidelity’s Managed Account Xchange, which is an investment platform that connects advisors to portfolio construction solutions. Amplify is another wealth management platform that provides advisors with portfolio and client solutions. This follows a recent announcement by the company that its strategies had launched on the Orion Portfolio Solutions platform. The demand for strategy diversification has skyrocketed as advisors deal with the current bear market. The downturn has led advisors to embrace multiple strategies to build and preserve wealth for their clients. Potomac’s strategies are designed to “win by losing less” which may help financial advisors build portfolios to help protect against market risk. The company’s suite of model portfolios allows advisors to match the right strategy to each investor’s needs.
Finsum: Potomac Fund Management’s model portfolios, which help advisors diversify against market risk, are now available on more platforms.
Vanguard is expanding their model portfolio selection for their ‘LifeStrategy’ brand on two fronts an MPS Classic and MPS Global. The MPS will have a total of five model portfolios which will be based in index funds giving a variety of risk preference choices to investors. The least risky models have a 20% equity exposure while escalating all the way to 100%. The MPS will definitely favor UK investments in both bonds and equities, but the global funds will be strictly a market cap weight. Vanguard is hoping the development of more model portfolios will deepen their relationship with financial advisors, by giving them better options to suit their end clients needs.
More...
The SEC is planning to beef up its Reg BI enforcement for the rest of the year. The SEC put out a recent bulletin focused on Reg BI compliance and the role that brokers and advisors play in the process. The tone was about how brokers and advisors need to take more responsibility into their own hands regarding compliance. Additionally, more focus and guidance on rollover recommendations is in the pipe, said the SEC. More bulletins on the topic are expected soon.
FINSUM: Rollovers are obviously a major topic for advisors, so this will be closely watched and scrutinized by the wealth management community.
JPMorgan is one of the few bulls it seems on Wall Street as Kolanovic says markets are just pricing in too much risk, but three stocks could be in the best position to rally. ACV Auctions is first which is a wholesale auto dealer. The revenues and the price are just a mismatch accordinding to JPMorgan. Boot Barn Holding is next with a rise in consumer spending as well as resilient profits are moving the EBITA nail for BOOT. Finally, there is Springworks Therapeutics which is a clinical research company for rare diseases. They have two prime candidates in different stages which could mean big things for their future moving forward.
Finsum: If the Fed steers its way around a recession then markets have definitely overreacted to tightening and equities could have a high upside.
President Biden’s 2023 federal budget levy’s a new ultra-wealthy tax that would apply 20% total income tax on those with a net worth of more than $100 million. Notably in the deal, it opens the window to tax unrealized capital gains or any asset growth. The bill is expected to meet a brick wall in congress however as even moderate Dems will have a difficult time supporting it. Biden’s selling point is the expected $360 billion in payments toward the deficit in the next decade. However, the senate proposed a very similar bill last year that was shut down by congress.
Finsum: Taxing unrealized gains is a slippery slope, and hopefully would never trickle down to different wealth classes.