Monthly Archives: November 2013

Analyzing my portfolio with T-Advisor

T-Advisor suite for wealth management is a resource for investors to obtain the best information from their positions. The different tools offer the real situation of the investments and several data to analyse them and take decisions.

T-Advisor has the tool “My Portfolios” to join different shares taking into account personal criteria, as geographical area or economic sector, for instance. Once the portfolio is organized, the investor obtains the main data, as valuation, the year-to-date performance and the year performance and the volatility.

My portfolio - T-Advisor

If we select a portfolio, T-Advisor shows a complete report about it. Charts and graphs will report about diversification and performance. We also obtain information about the best shares of our portfolio and a summing up of the changes in our investments.

General data portfolio T-Advisor

Investor will see a report about specific data from their positions, to value keeping or changing to increase or reduce them. “Trade list” section collects all transactions that the investor carries out to follow the portfolio changes.

Information is the best tool to take investment decisions. T-Advisor was thought for that. That is why the “Diagnosis” section shows the whole portfolio details about valuation, asset allocation, risk and the contribution of the different shares to the performance of the portfolio.

T-Advisor Diagnosis section

Finally, the “Follow Up” section offers several suggestions to improve the portfolio performance.

T-Advisor Follow-up section

T-Advisor offers the best information for investors to take the best decisions. A selection of relevant information, as T-Advisor does, gives the ability to manage portfolios and obtain the best results.

Financial planning: any new trend in sight?

Financial planning: Two hands squeeze a dollar. by T-Advisor

The immediate answer to the question at the top is clear: of course, a wide range of changes are taking places and creating next trends in the advisors industry. Beyond the crisis and the economic transformation that we all are living on, financial planning is moving through a wave of social and technological changes, apart from the effects on the current advisors’ tasks. We would like to underline the main ones:

  • The generation gap in the financial planning behaviour. People focus this behaviour linked not only with personal experiences, but mainly with social ones, conditioned by the economic and political environment (think about social security, health insurance or retirement). Older generations tend more to save money and healthy organize their accounts. Younger ones do not plan, design a budget or think so much about their future finances. Also, young people have less financial literacy and less knowledge about investment and financial products.
  • The influence of technology to plan our investments. Interactive experience, so experts, is going to be a very important trend in the next years. Tablets, mobile phones and apps are creating a self-sufficient little investor, who takes care for his money by himself from his device. Advisers will no longer control the planning experience and this trend will deeply change the industry. Moreover, sector companies will have to develop flexible tools for all devices and all kinds of browsers or operative systems, if they want to have a chance in the billion-app-world. By the way, they also will have to look heavily to the cloud.
  • The advisory industry will be conditioned by new ingredients. Technology will reduce costs to advisers, but also will pressure their customer fees. With the availability of new tools, private investors will access to markets at a very low price. But advisers should take the trend as a chance, because more people connected and interested in investments will be target for them if they are well-positioned. How? Taking into account social shifts in demography and longevity, which will create new priorities in investments. Apart of that, advisors will have to evolve into an all-in-one provider: tech tools, legal planning, career planning or even coaching.

To sum up, the advisory industry is facing a deep change in a changing world. Possibly, next three years are going to be critical and we are surely going to be witness of this transformation. Technology, effects of the social shifts linked to the end of the crisis and new players and models in financial planning are the main cards in this game.

ETF flows follow the US hesitations

ETF flows: World map with asset share in areas

ETF industry changes the strength of their inflows following US hesitations and sighs. The QE tapering or not, the debt ceiling, the continuous uncertainty in the American economic policy conditioned last six months for ETF investors.

The effects are clear, because as our chart shows, 70% of assets market share are on Americans hands. BlackRock report on flows last October reveals that the industry counted $24.3 bn since October, 17th, because traders were waiting for a solution in Washington between Rep’s and Dem’s.

Between January and October and compared with the same period of 2012, ETF flows on equities increased in all world areas but emerging markets, where the trend is beginning to change. After a strong start in 2013, there was a shift in the line, stronger in summer. Investors are now attracted by low valuations.

US equity ETF focused on large-cap and mid-cap, with an important contribution of technology and consumer non-cyclicals. Moreover, assets are near $1 trillion, helped by double digits growths and the current records in the S&P500.

In Europe, equity products pushed up after the stagnation in the first half of the year. Flows on Europe reached $7.9 bn in October, a new record after four consecutive months with increases. The better economic outlook and the attractive valuations moved the investors to the Old Continent, rounding 30% in assets growth. In October, this figure surpassed $400 bn. A figure to take into account: Germany accounted almost $3 bn outflows.

Fixed income and money markets have been performing the worst results, with heavy outflows. Also gold summed a hard outflow in October, more than $2 bn.

In any case, US still drive the ETF markets. Not only because 70% assets are in this country, but because current risks, as a not clear Fed monetary policy (with several contradictory statements of its members) or the next debt ceiling negotiations till January, are on the view of ETF managers to decide where to put their money to obtain higher yields.

European banks: new landscape after the crisis

European banks: Image of the euro symbol in front of the seal of the ECB

European banking sector changed deeply in the last years as a result of the long crisis since 2007. The branch experienced a lot of different events, such direct recapitalizations and nationalisations. Nobody could have bet for it before 2007, but the banking landscape in Europe is quite different.

ECB figures show this dramatic change. From 2008 to 2012, almost 600 banking institutions disappeared and assets dropped 12%. The peak of the restructuration process took place in 2009. Mergers and resolutions finished, for instance, the savings’ bank sector, which had 50% of the market in Spain.

It seems that it happened long time before, but we should not forget the nationalisations of ING in Holland or Hypo Real Estate in Germany happened three or four years ago, just to point two cases in which countries were not intervened by the troika. In the bail-out side, Spain needed €40 bn to recapitalized four banks, amongst them Bankia. Now, Spain and Ireland seem to be at the end of the bailout programme.

European banks have to deal now with new regulations. Not only Basel III capital requirements will influence in the balances and future bank investments, but also the next European single supervisor. ECB is going to repeat the stress tests for the banking sector and, although there is more confidence than before, some investors still have some doubts about the capital strength of the branch.

One of the most important trends in the European banking sector is the concentration. Following the ECB, big banks have a bigger market share, amongst them in Germany, Italy and Spain. European bank ranking by assets shows that UK, Germany and France are at the top.

The question now is the real strength of European banks. Are they a good business in the stock markets? As the European Banking Authority stated, there is still uncertainty about the quality of banks’ assets and valuation, because of the loans lent to companies and building sector. It is just a question of time to discover the real truth for investors.

ETF, an easy way to perform in the market

Exchange Traded Funds, broadly known by its initials ETF, are a kind of security available in Stock Exchange. As they are listed in the markets, they work as stocks, although they have some features from mutual funds.

As a stock, prices move continuously and are always updated, against mutual funds, whose prices are updated when markets are closed. So, investors have permanent information about the value of their positions and can react to change the strategy. As a stock, also, investors can buy on margin, short sell o hold for the long term.

But there are more advantages to be considered. ETFs track indexes, sectors or a basket of securities (for instance, different shares, commodities, bonds), that means, they are linked in their performance with the yields obtained from these investments. Investments are diversified with no effort looking for new securities and trading non-stop. In the finance jargon, this is known as passive management.

Traditional mutual funds develop an active management to outperform the markets. In other words, to get more yield than the indexes or sectors. ETFs just follow the trend of the market and their managers only make some little adjustments to keep the line. This kind of management has an immediate positive aftermath: costs are quite less for the investor. Fees and administrative costs are lower, as they need fewer resources to get results.

So, price transparency, diversification, fewer costs and flexibility are the main advantages. ETFs market has widely developed in the last years. Global flows reached $32.9 bn only in October, but from January the flows come to $194.2 bn, so a recent BlackRock report. Bloomberg ranks the biggest ETF in the US by investment sectors and Morningstar ranks also ETF by performance. Some funds beat 100% yearly return.

T-Advisor, aware of the good performance and advantages of ETF, recommends these products in the investment planning tool.

ECB rate cut: possible impact and effects

Mario Draghi and ECB Board decision of an interest rate cut last week surprised investors and markets. Traditionally, the European monetary policy institution rejected sudden rate cuts, but last inflation figures (from +1,1% in September to +0,7% in October for Eurozone) jointly with a strong appreciation of the Euro against Dollar (till its 2013 maximum in 1,38 $) were determined.

The immediate impact in the finance markets was positive: indexes rose as expected when such decisions are taken, but investors’ eyes are divided looking also the development of the other side of the Atlantic. Third quarter US GDP soared more than expected and increased the worries about a next tapering of the QE3 (that means, that the Federal Reserve could begin to shorten the current US debt buys to expand credit for a sooner reversal of the economic crisis). Markets changed the sentiment downwards.

The current situation of the monetary policy in the main world central banks is relaxing to push up the weak economies. Bank of Japan keeps the rate in 0%, the Fed near 0% and now ECB joins to the group not very far (0.25%). Analysts and experts have different points of view about the next consequences.

USB head for foreign exchange strategy, quoted by Reuters, sustained that ECB could have decided better the use of other instruments, as a negative deposit rate for banks, more long term cheap loans or even a quantitative easing, as in the US. These measures would have taken a bigger effect to push the credit flow, so USB expert, the main current worry for the monetary system. In the same way, a strategist of the private bank Berenberg, quoted by Spiegel, sustained that the cut “won’t hurt anything, but it also won’t do much either”.

The Economist also recalls that Mr. Draghi pointed “other artillery” if the rate cut weren’t enough. Japanese deflation and stagnation ghosts floated in Frankfurt last week. In any case, ECB moved perhaps because, as economist Paul Krugman says, the institution isn’t so sure that “Europe has turned the corner” of the crisis. However, it should be remembered that ECB mandate refers just to inflation control, not economic or employment improvement, as the Fed.

Online platforms, a growing threat to traditional advisers

We would like to share this article that analyzes two latest reports about the growing popularity of web-based personal finance startups and discount brokerage platforms in wake of 2008 crisis.

We hope you find it interesting!

Online personal finance startups and discount trading platforms are not just for the do-it-yourself crowd anymore — and that poses a threat to traditional financial advisers, new reports from Corporate Insight and Cerulli Associates Inc. platforms by T-Advisor

The last Corporate Insight study, takes note of more than 100 investing and personal finance startups with great appeal for younger investors. Nearly twice as many U.S. retail investors are using direct-to-investor platforms offered by discount brokerages such as The Charles Schwab Corp., Fidelity Investments and E-Trade than in 2008, when the financial crisis hit, according to the Cerulli report.

“As a member of Gen X/Y, I find obfuscated fees, wrap programs and commissions are a huge turnoff,” Bill Winterberg, a certified financial planner and publisher of the website, wrote in an e-mail. “The direct providers largely operate in this clear and simple pricing realm, so they’re poised to win more and more business.”

While discount brokerages have long appealed to do-it-yourself investors, their improved tech platforms and financial planning services now also appeal to mass-affluent investors who lost trust in big banks during the market meltdown. Add to that the growing popularity of online startups, and it’s clear that traditional financial advisers must now work harder to capture investors’ assets.

Corporate Insight’s report, “Next-Generation Investing: Online Startups and the Future of Financial Advice,” examined more than 100 investing and personal finance startups and found that they are redefining how investors get financial advice with scalable, low-cost solutions.

Among these startups are Jemstep, which offers automated “buy” and “sell” recommendations for client portfolios; Covestor, which allows investors to mimic the trades of professional investment managers; and LearnVest, which offers online-only personal financial adviser relationships without any face-to-face interaction.

To be sure, not all of these startups will succeed.

“The reality is that I looked at 130-odd startups and some of them will fail,” said Grant Easterbrook, a Corporate Insight analyst and the report’s author. “There is an attrition rate, especially as they are tied to the market. If the market tanks due to the euro or the Middle East or quantitative easing, customers will flee to the sidelines.”

Mr. Easterbrook added, however, that the proliferation of startups highlights the longer-term trend of baby boomers being replaced by Generation X and Generation Y investors.

“When you look at those Gen X and Y investors, they’re not as interested in face-to-face meetings, and they have a lot of negative perceptions about the major financial institutions,” he said. “These people don’t trust the big wirehouses.”

According to the Cerulli report, “U.S. Retail Investor Product Use 2013,” of the roughly $27 trillion in retail investor assets, $4.3 trillion now is on discount brokerage platforms — twice as much as in 2008. The advisory channels account for $15.4 trillion of that total, while channels such as non-adviser-sold retirement plans account for $4.5 trillion.

At $5.2 trillion in assets, wirehouses still control the largest slice of the advisory segment, but their influence is slipping. “The four firms that comprise the channel have lost overall market share in the last several years, but remain the most concentrated asset bases in the retail investing world,” Cerulli reported.

As online tools become more popular, however, assets will move away from wirehouses toward independent advisory channels, as well as direct distribution platforms, especially for mass-affluent investors with assets in the $500,000 to $2 million range, the Cerulli report predicted. Among the channels, registered investment advisers have seen “the most appealing growth” in the past four years, the report noted.

“The results, to me, signal the ongoing trend that began nearly 15 years ago — the ongoing rise of discount brokerage platforms [as they] continue to commoditize the core elements of creating and implementing portfolios,” Michael Kitces, partner and director of research at the Pinnacle Advisory Group and publisher of The Kitces Report and Nerd’s Eye View, wrote in an e-mail. “Advisers who are relying on generating commissions or fees from simply implementing basic passive, strategic portfolios, and regularly monitoring them, will be under increasing price pressure and competition. For most of them, the way out is to provide a deeper level of customized advice.”

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