Wealth Management Media Scan: What Consumer Financial Publications Wrote about This Week

By Raab, Marian | American Banker, May 27, 2008 | Go to article overview

Wealth Management Media Scan: What Consumer Financial Publications Wrote about This Week


Raab, Marian, American Banker


Finding, Keeping

Qualified wealth managers are in increasingly short supply for individual and institutional investors, wealth-bulletin.com reported.

Only a quarter of executives surveyed by SEI Investments Co. said they expected to be able to hire enough quality wealth managers in the next three years.

SEI, an investment management company in Oaks, Pa., conducted the survey last year and released its report last week.

Its aim was to find out what most influences a wealth management firms attracting and retaining high-performing relationship managers. SEI concluded that the two most important factors when it came to retaining top talent were culture/workplace environment and brand/reputation.

Compensation was next, followed by wealth management infrastructure and strategic business direction, wealth-bulletin.com said.

Investment management companies should take a hard look at their infrastructure to see if it can support an advice-based business rather than a product based one, the report said.

Attracting and retaining wealth managers who can deliver on the promise of an advice-driven model is critical to banks success, said David Campbell, a senior vice president in SEIs private banking solutions unit.

Most wealth management executives, he said, understand this and are looking at new methods to grow and keep their talent base.

According to the report, the average firm with 100 wealth managers will need to hire an additional 150 over the next five years to sustain even a 15% growth rate, the report said.

Escaping Auctions

A few slivers of hope have emerged for individual and institutional investors who have been stuck in auction-rate securities the last four months, according to BusinessWeek.

Analysts, it said, estimate individual investors hold more than half the market.

Theoretically, investors should be able to sell auction-rate securities every seven, 28, or 35 days.

Since February, however, when rates started to decline, few buyers have shown up at most auctions.

About half of auctions for municipal securities are failing, and virtually all auctions are failing for securities backed by student loans or issued by closed-end funds, BusinessWeek said.

Some issuers have started buying back all or part of the securities, which were frequently sold as a higher-yielding alternative to money market funds and certificates of deposit, the magazine reported.

A small secondary market has opened for trading, which offers another escape hatch for investors willing and able to take a loss of principal to access their money. In addition, some brokerage firms are now allowing customers to borrow against their frozen auction rates at relatively favorable terms, BusinessWeek said.

Brokers are not helping customers out of the goodness of their hearts.

The Securities and Exchange Commission, state securities regulators, and attorneys general in 10 states have begun investigating the $330 billion market, the story noted.

New charges of unfair practices, inadequate disclosure, and securities law violations are turning up; many small investors say they are not getting a fair share when issuers refinance a portion of their auction-rate securities.

Heres the Call

Theres been a lot of interest lately in callable certificates of deposit.

These products can pay one-half to 1 percentage point more than conventional CDs, The Wall Street Journals Green Thumb column reported.

Callable CDs can deliver a stronger performance because with interest rates so low, savers are becoming pressed to find decent returns.

But the Journal said buyers of callable CDs run the risk that the issuing bank will yank the CD from them if rates decline.

That doesnt stop brokers, who sell most of the callable CDs, from pushing them, the column said. …

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