FA Insights is a daily newsletter from Business Insider that provides the top news and commentary for financial advisors.
House passes plan aimed to help military members with their finances, stem suicides (Financial Planning)
The US House of Representatives has passed a proposal that would provide military members with financial education after a report from Financial Planning showed a link between their financial stress and suicide. If passed by the Senate, the would-be law would provide $400 million over 5 years to improve the financial education of members of the US military. According to Financial Planning, “Financial stress is a top precipitating factor to military suicide that’s been largely overlooked ever since the military suicide rate began to exceed comparable civilian rates more than a decade ago.”
The impact of Chicago’s downgrade to junk on the muni market (Charles Schwab)
On May 12, Moody’s downgraded Chicago’s general obligation debt rating to ‘junk’ due to its unfunded pension liabilities. Schwab notes the drop below investment grade could cause Chicago to “immediately face $2.2 billion in accelerated payments due to swaps, letters of credit, and other lines of credit tied to the city’s investment-grade rating.” Chicago’s liquidity would be greatly reduced if it were forced to make these payments immediately. How should investors play the muni market? Schwab says, “Diversify by issuer and state, consider munis less affected by pensions and Use professional managers.”
Solving transition risks (Allianz Global Investors)
Few investors are aware of transition risk, which Allianz says occurs when investors make the switch from accumulating assets to income during a time of market turbulence. So what can investors do to avoid this problem? Allianz suggests “setting up the portfolio in such a way that it keeps the expected future retirement-income stream as stable as possible, and reduces the exposure of retirement income to changes in the interest-rate environment.”
Dodd-Frank Rollback moves on (Think Advisor)
The Senate Banking Committee passed rollbacks to the Dodd-Frank Act in a 12-to-10 partisan vote. Think Advisor reports the rollbacks “seek changes in the process of designating banks as systemically important, increases “transparency” of the Federal Reserve Board, includes bipartisan measures for the Jumpstart Our Business Startups (JOBS) Act and calls for international discussions on capital standards for insurers.” The bill will now go before the entire Senate for a vote.
Savant Capital Management’s fast-paced expansion continues (Financial Advisor)
The Rockford, Illinois independent registered advisory firm continued its shopping spree, acquiring Orion Capital Management. The acquisition brings another $150 million in assets under management to Savant, upping its total to $4.5 billion. “Gone are the days when a retiring independent advisor struggled to find a suitor willing to care properly for their clients. Gone are the days when an advisor seeking organic growth but in need of a support system had to give up their freedom to pursue such growth. The choices are myriad,” noted Savant CEO Brent Brodeski.