News
As the financial performance of financial institutions has declined in recent years, so has the total compensation of their CEOs-to the tune of a 4.2% drop in the past year, according to Crowe Horwath LLP's 2010 Comprehensive Financial Institution Compensation Survey, released September 28. The survey conducted by the large Oak Brook, Ill.-based public accounting and consulting firm showed that some salaries actually rose. While heads of personal investment sales experienced the largest decrease in median base salary at 10.7%, this position saw a gain of 16.4% in total compensation. And residential loan officers were blessed with a 17% hike. In response to new federal regulations, only 17.3% of the financial institutions surveyed made changes to their compensation practices, while another 41% conducted internal reviews but saw no need for change.
If you live in Pennsylvania and go to see the movie "Wall Street: Money Never Sleeps," you may be surprised to receive with your ticket stub some timely literature about stock fraud. A lot has happened since the original 1987 film "Wall Street"-the market has plummeted and Congress has passed major financial reforms. As part of today's enhanced watchdog effort, the Pennsylvania Securities Commission has created the informational pamphlets for moviegoers in an effort to heighten investment fraud and scam awareness. And with good reason: One out of every five citizens over the age of 65 has been victimized by a financial swindle, according to an Investor Protection Trust survey. PSC staffers will be on hand during the film's run at select theaters to answer questions as well. For information go to www.psc.state.pa.us, or call 1-800-600-0007.Cardinal Point Wealth Management LLC and Cardinal Point Wealth Management Inc.-San Jose, Calif., and Toronto, respectively-on September 20 announced the formation of an independent, integrated cross-border wealth management firm to handle the financial and investment planning issues of U.S. and Canadian citizens with assets in both countries or those transitioning wealth between the two countries. According to Cardinal, Canada's recent economic growth and strength are attracting many U.S.-based companies and investors to pursue opportunities in Canada, creating complex cross-border financial and investment planning issues as U.S. citizens are relocating to work in Canada. Due to the strength of the Canadian dollar, many Canadians are investing in U.S. real estate-Canadians were the top foreign purchasers of property in the U.S. in 2009-for vacation properties, second homes and retirement residences. Visit www.cardinalpointwealth.com.
According to USA TODAY, Fidelity, Vanguard, Putnam, Charles Schwab and others are busy Tweeting in the name of customer service and corporate marketing. Pimco, the bond company in San Diego, has about 5,000 followers on Twitter, and Fidelity has some 3,000. Not all have jumped on the Tweet-wagon, such as T.Rowe Price and Capital Management and Research, which manages the American funds. One reason: Due to compliance regulations, fund companies must be very careful what they Tweet.
Fidelity announced on September 23 that it will "merge away" two small Advisor funds, in a reorganization of Fidelity Advisor Fifty and Fidelity Advisor New Insights. The upshot? Fidelity Advisor Fifty Fund would be reorganized on a tax-free basis with and into Fidelity Advisor New Insights Fund. While both funds measure themselves against the S&P 500 Index, notes Fund Times, Advisor Fifty's $49.2 million in assets "is a tiny drop in Advisor New Insights' $12.3 billion bucket"-not to mention that Advisor Fifty also owns 50 stocks compared to New Insights' 400-plus. Will Danoff, Morningstar's 2007 Domestic-Equity Fund Manager of the Year, will continue to run the fund. Since Danoff took over in August 2003, the fund's 9.2% annualized gain has more than doubled the category's and index's returns, Fund Times reports.
Centerbridge Capital Partners LP, with about $12 billion in capital under management, announced on September 23 the acquisition of the resort finance business of GMAC Commercial Finance LLC, a subsidiary of Ally Financial Inc., primarily consisting of a $1 billion portfolio of loans related to timeshare resorts throughout North America. In connection with the acquisition, Centerbridge formed Lantern Asset Management, LLC, to manage the resort finance business. Lantern's senior management team is expected to include certain GMAC employees, as well as William T. Phillips, formerly executive VP and COO of Marriott Vacation Club International. Centerbridge will hold its resort finance business in a new entity called Resort Finance America LLC, of which Lantern is also a subsidiary.
Jeffrey Nichols, a precious-metals economist for over 25 years and senior economic advisor to Rosland Capital, a precious-metal asset firm based in Santa Monica, Calif., wrote last week that he believed gold could reach $1,500 per ounce by the end of the year or, failing that, during the early months of 2011. "There are more bulls than bears ... more buyers than sellers!" he explained. "It's that simple." The U.S. gold futures market, judging from recent Commodity Futures Trading Commission data, does not look excessive and, thus, vulnerable to the sort of selling that often triggers an end to major advances in the metals price, he said, adding that economic growth throughout Greater China and India will support continued rising demand for gold jewelry-a culturally preferred repository for long-term saving.
J.P. Morgan Asset Management, New York, in late September celebrated the three-year anniversary of its Research 130/30 strategy. Since its inception in July of 2007, this bottom-up, fundamental strategy, managed by Terance Chen in JPMAM's Core Equity Team, has achieved an annualized excess return of 3.25% (net of fees) above the Russell 1000 benchmark, delivering out-performance despite significant periods of market volatility, says the company. The strategy, with $105 million in assets under management and which invests in a diversified portfolio of U.S. large cap equities with a target average exposure of 130% long and 30% short, also ranks in the 12th percentile in the eVestment U.S. Extended universe, since inception (and as of June 30, based on absolute returns). Research 130/30 is expected to be one of JPMAM's key equity extension strategies.
The Certified Financial Planner Board of Standards on September 27 announced that it had taken public disciplinary actions against the following individuals' right to use the CFP certification marks, effective immediately. Disciplinary actions, in order of increasing severity, notes the board, include letters of admonition, suspensions, and permanent revocations. Letter of Admonition: John P. Stelman, Lake Orien, Mich. Suspended: David Larkin George, Carlsbad, Calif.; Melissa Pearce, Laguana Nuguel, Calif.; Max J. Safdie, Mill Valley, Calif.; Mario J. Ferrari, Boca Raton, Fla.; Jeffrey L. Elverman, Genoa City, Wis. Revocation: Jeffrey A. Forrest, San Luis Obispo, Calif.; Raoul G. Sevelius, Chico, Calif.; Marcus R. Michles, Winter Park, Fla.; Cynthia A. Murphy, Montclair, N.J.; Julie M. Jarvis, Upper Arlington, Ohio; Oren E. Sullivan, Rock Hill, S.C.; David Disraeli, Cedar Park, Texas. Information on any planner's disciplinary history and certification status with CFP Board can be found at www.CFP.net/search.
Events
NICSA's East Coast Regional Meeting is scheduled for October 6, at The Seaport Hotel, Boston. Among the presenters will be András Teleki, attorney and noted speaker on regulatory issues, who will discuss recent regulatory developments such as OFAC, AML rules and what they mean for the investment management community. NICSA is a nonprofit trade association serving the operations sector of the investment management industry. The group hosts dozens of Webinars and live meetings each year, and provides to its members educational and networking opportunities. For membership and event information go to www.nicsa.org or call 508-485-1500.
The Financial Planning Association's annual conference will be held October 9 - 12 in Denver, Colo.. FPA Denver 2010 features numerous sessions in nine specialized educational tracks; approval pending (at press time) for up to 21 hours of continuing education credits. Keynote speakers include Dan Ariely, Ian Bremme and David Wessel. Presenting sponsors are Ameriprise Financial, Charles Schwab Advisor Services and TD Ameritrade Institutional. Visit www.FPAAnnualConference.org.
TheMutualFundWire.com and FUSE Research Network will host, as part of the Thought Leadership Series, Influencers' Summit 2010: Redistributing Resources, on October 25 and 26 in Boston at the Ritz Carlton, Boston Common. On hand will be senior executives from more than 40 fund firms, including Goldman Sachs, Invesco, John Hancock Funds, Nuveen Investments, and Prudential Investments. For event and sponsorship information, go to mfwire.com/thoughtleaders or contact Erin Kello at 212-331-8999 x 104.
Uncertainty regarding financial regulatory reform, particularly the SEC's definition of "family office" under a provision of the Hedge Fund Transparency Act, has prompted many wealthy individuals and family office executives to re-evaluate their current office structure. With this in mind, Family Office Exchange (FOX), Chicago, will hold a workshop designed for wealthy individuals and executives of single-family offices wishing to consider better options. "Is Regulation in Your Future? Structural Options for Private Wealth Management" is scheduled for November 10 and 11 at The Peninsula Chicago. For registration information, go to www.foxexchange.com/ptc or e-mail [email protected].
On the Move
GAMCO Investors Inc., based in Rye, N.Y., which manages over $26 billion in assets and is comprised of private advisory accounts, mutual funds and closed-end funds (Gabelli Funds LLC), and other entities, on September 16 named Agnes Mullady as president and COO of the Open-End Fund division of Gabelli Funds. Mullady will also serve as chief executive of the broker-dealer currently in formation to distribute the company's open-end funds. In May 2009, Mullady was promoted to senior VP of GAMCO Investors Inc., having initially joined GAMCO in 2005. Prior to this she served a senior VP at U.S. Trust Company.
David Dreman is stepping down as the chairman and CIO of Dreman Value Management LLC, which he founded in Jersey City, N.J., in 1977 (as Dreman Value, Inc.). As Bloomberg put it, Dreman, 74, is "the fund manager best known for against-the-grain bets on stocks he deems cheap." Dreman, also an author of investment books, will be replaced by E. Clifton Hoover, who joined the firm in 2006 as co-chief investment officer, co-director of research and managing director, effective October 31. Hoover previously worked at NFJ Investment Group LP in Dallas and will serve as Dreman's sole investment chief, with responsibility for $5 billion in assets.
Boulder, Colo.-based Baird, an employee-owned wealth management, capital markets, private equity, and asset management firm, on September 21 added six people, including four financial advisors, to its Boulder office. The new advisors, known as The Boulder Group, collectively oversee nearly $450 million in client assets. The advisors, previously at other Wall Street firms, are John C. Frisbie, John Bickel, Lee Carlin, and Roger Cracraft. Also joining the office are Nancy K. Crume, client relations, and Juli Loch, administrative office manager. Baird has added more than 100 financial advisors to its Private Wealth Management group in 2009, and 53 advisors and branch managers since the beginning of 2010.