FINRA guidance better explains suitability rules | Fiduciary-definition proposal is coming soon, Borzi says | Adviser reform might be delayed by House and Senate changes
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December 13, 2012
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Newer nontraded REITs are more investor friendly, experts say
Opportunities in newly offered nontraded real estate investment trusts might be a bright spot for investors because newer products are more investor friendly, says David Steinwedell, managing partner of Blue Vault Partners. Double-digit returns and an improving economy are fueling interest in REITs that invest in commercial property, Morningstar analyst Philip Martin says. Financial Advisor online (12/6)
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Policy Update
FINRA guidance better explains suitability rules
The Financial Industry Regulatory Authority has issued guidance to give financial advisers a clearer and more specific explanation of suitability rules. Violation of suitability rules has been the most common basis for FINRA enforcement action against advisers this year. Financial Planning (12/2012), The Wall Street Journal (tiered subscription model) (12/11)
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Fiduciary-definition proposal is coming soon, Borzi says
The Labor Department will rekindle an effort to redefine "fiduciary" under the Employee Retirement Income Security Act sometime in the next few months, Assistant Labor Secretary Phyllis Borzi says. The proposal will take account of industry feedback and will address concerns about the previous iteration, she says. "The reproposal will be better, clearer, more targeted and more reasonably balanced," Borzi said. AdvisorOne (12/7)
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Adviser reform might be delayed by House and Senate changes
Action on far-reaching reform that could change the way financial advisers do business likely will be delayed by changes in leadership on two key congressional committees. The House Financial Services Committee and the Senate Banking, Housing and Urban Affairs Committee will have new chairmen when Congress returns to Washington in 2013. Reuters (12/7)
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Industry News
Multifamily fundamentals still strong, but worries persist
Rising apartment rents are driving multifamily development in such cites as Houston, Denver, Oakland, Seattle, Miami and Charlotte, N.C. There are fears of overbuilding; however it is also recognized that there is new demand for multifamily living from younger adults. The New York Times (tiered subscription model) (12/6)
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How baby boomer retirements change the economy
Baby boomers' retirements are reshaping the U.S. economy, and policy changes must adapt to that reality, write Kenneth Baer and Jeffrey Liebman, both former Office of Management and Budget executives. Spending on Medicaid, Medicare and Social Security, for example, is growing in large part because boomers are retiring. In addition, the dynamics of the labor market are different now that boomers are exiting. The New York Times (tiered subscription model) (12/6)
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Income Planning
Alternatives play growing role in investors' portfolios
Alternatives can add yield to a portfolio, but these assets also come with risk. Still, many advisers think these investments are worthwhile. More than 75% of institutional investors see alternative investments as essential to diversification, according to studies, with 72% believing that the typical mix of 60% stocks and 40% bonds is no longer an efficient way to achieve returns. Myths about alternative investments include the idea that a 60-40 stock-bond portfolio has low volatility, one expert says. In addition, the term "uncorrelated" can be misleading. AdvisorOne (12/7), Financial Advisor online (12/6)
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Business Best Practices
Report: Advisers face high cost by failing to engage via technology
Financial advisers could be losing millions of dollars' worth of business by failing to embrace videoconferencing, social networking and other high-tech modes of customer engagement, according to Cisco's Internet Business Solutions Group. "[F]or a firm with $200 billion in assets under management and approximately $1.8 billion in revenue, the overall opportunity could be as much as [an estimated] $341 million," according to the study's authors. U.S. News & World Report (12/11)
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IPA Member Information
SmartQuote
No problem can withstand the assault of sustained thinking."
-- Voltaire,
French writer, historian and philosopher
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About IPA
The Investment Program Association (IPA) was formed in 1985 to provide effective national leadership for the direct investment industry. The IPA supports individual investor access to a variety of asset classes not correlated to the traded markets and historically available only to institutional investors. These investments include public non-listed REITs (NLREITs) and Business Development Companies (BDCs), Energy and Equipment Leasing Programs, and private equity offerings. For the last 28 years, the IPA has successfully championed the growth of such products, which have increased in popularity with financial professionals and investors alike. Direct investments are held in the accounts of more than 2 million individual investors, and the IPA's member companies operate or have properties in all 50 states. The mission of the IPA is advocating direct investments through education. Access the wealth of IPA educational materials here, or visit the IPA online for more information about becoming a member.
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