March 1, 2011 - Vol 5 Issue 9
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Understanding Variable Annuities with GMWBs
By Robert Huebscher
It's very tempting: a variable annuity with minimum lifetime payout that can increase - but never decrease - based on market performance. That temptation comes in the form of an increasingly popular variable annuity rider known as a guaranteed minimum withdrawal benefit. We explain the flaws in a widely publicized study by Morningstar/Ibbotson, and provide our own analysis of the product. We also provide Morningstar’s/Ibbotson’s rebuttal to our analysis.
Income Solutions for the "New Normal"
Sponsored Content by the American Century Investments Team
The "new normal" environment of subdued economic growth and low interest rates contains weighty implications for investment returns and retirement planning. Accordingly, income strategies will likely play an increasingly important role in your clients' portfolios.
Eight Key Lessons from an Oscar Winner
By Paul Rutherford
Like lost car keys, learning turns up in the most unexpected places. Sunday's Oscars were swept by The King's Speech - a movie which provides some powerful lessons for financial advisors.
Attract More HNW Clients by Adhering to the Fiduciary Standard
Sponsored Content by ByAllAccounts
Adopting the fiduciary standard as a way of doing business reinforces your role as a trusted advisor and sets you apart from the competition. It also enables you to move your business to the next level - from an "asset manager" providing advice on a portion of your client's assets to a "wealth manager" where you can develop a broader and deeper relationship and attract more HNW clients. Check out this whitepaper to get all the details.
Subsuming the Efficient Market Hypothesis
By Keith Goddard, CFA
A recent article highlighted important gaps in the efficient markets model (EMH) that limit its practical applications. It encouraged a search for a new theory of markets that builds upon EMH by rendering it as a special case within a broader, more general theory. Mordecai Kurz' Rational Belief Equilibrium is such a theory.
Women's Views of Wealth and the Planning Process
By Kristan Wojnar and Chuck Meek
Women don't think like men, especially when it comes to money. As women control a growing share of wealth in the years ahead, advisors will need a new paradigm in their practice, one that reflects an emphasis on values over goals.
Spring Cleaning for Your Website
By Kristen Luke
Despite the time, thought and energy you spend building your web site, it's too easy to forget about it and neglect it. It is time for a spring cleaning. Here are seven tips to spruce things up.
Simon Johnson on the Unconscionable Risks We Face
By Dan Richards
Simon Johnson is a professor of economics at MIT and was the chief economist for the International Monetary Fund. In this interview, he explains why the underlying factors which led to the financial crisis remain unresolved. We provide both a transcript and a video.
Highlights from Market Commentaries
Below are the three most widely read commentaries during the last week:
The Global Economic Impact of this Weekend's Developments
In the short run, regional developments will be stagflationary for the global economy. In the next few days, markets will react to the changed outlook for the region and the global economy. Over time, market apprehension is likely to give way as the impact of greater long-term stability in a key part of the world is felt.
The Global Economic Impact of this Weekend's Developments by Mohamed A. El-Erian of PIMCO
What Really Drives the Market
Well, we used to say there were four key drivers: 1. Fundamentals; 2. Fund flows; 3. Technicals; 4. Valuation; Then we introduced another one last week: 5. The Fed's balance sheet; Now that is not going to be included in any of the Graham & Dodd textbooks, that is for sure. But since Dr. Bernanke embarked on his non-traditional monetary maneuvers two years ago, there has been an 86% correlation between the S&P 500 and the movement in the Fed's balance sheet. And now there is a sixth: 6. Corporate earnings surprises Yes, this works with a 90% historical accuracy rate.
What Really Drives the Market by David Rosenberg of Gluskin Sheff
Fiscal Contraction is Coming ... This is a Key Theme
Well, if you haven't yet heard, major budgetary restraint is coming our way in the second half of the year, and so we would recommend that you enjoy whatever fiscal and monetary juice there is left in the blender. There isn't much that is for sure. The weekend newspapers were filled with reports of how the conservative wing of the Republican party have banded together to ensure that spending cuts will be in the offing. The state and local governments are already putting their restraint into gear.
Fiscal Contraction is Coming ... This is a Key Theme by David Rosenberg of Gluskin Sheff