FINANCIAL ADVISOR INSIGHTS: The Biggest Problem Clients Face When Evaluating A Fund Advertisement
 FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors. For more visit Business Insider's new Wealth Advisor vertical. The Biggest Problem Clients Face When Evaluating A Fund (Pragmatic Capitalism) Over the last 30 years the wealth management industry has created a bunch of fund styles that are essentially quite like index funds. And one of the biggest problems investors face when deciding whether or not to own a fund, is benchmarking, writes Cullen Roche. "The benchmarking issue is the one that always comes up as being the most problematic when trying to justify whether a client should own a fund. The fund is either benchmarked incorrectly or it doesn’t perform well relative to a highly correlated index. To me, that’s the biggest problem when evaluating a fund. "Not only should we be ensuring that we’re benchmarking the funds properly (because the fund rating companies don’t always do it properly), but we should be ensuring that the funds we’re picking are actually a good value relative to the benchmark. That requires some risk adjusted return calculations and some modestly sophisticated understanding. But it’s no excuse for lazily looking at past performance, fees or other problem areas. The devil is in the detail in most funds. And sadly, when we look close, most of them are worse than their star rating states…." Why There Can't Be A Yelp For Advisors (Investment News/Nerd's Eye View) Evolution Finance has launched WalletHub as a personal finance social network where investors can review financial companies and products. It also has a section for financial advisors allowing investors to rate and review them. But Michael Kitces at Nerd's Eye View doesn't think there is much of a market for what is essentially a Yelp for financial advisors. This is in part because "“review” sites of all types rely on a relatively smaller percentage of actual customers/users to leave reviews… Even if we generously assume that 1% to 2% of clients will leave a review and that the advisor has a “big” client base of 150, that means most advisors will never have more than 1-3 client reviews, which isn’t enough review quantity to be credible." The Benefits Of Delaying Social Security Benefits (The Wall Street Journal) Jane Ross of Philadelphia-based RTD Financial Advisors thinks advisors should teach clients the importance of waiting before taking Social Security benefits. In a new WSJ column, she writes, "Many clients don't even know that they have options. They hear "full retirement age," and decide that's the time to start taking their benefits. But if clients hold off, they receive a guaranteed additional 8% increase each year up to age 70. That's the best annuity and the best interest rate around. Currently, the average Social Security benefit is $1,250 a month, which amounts to only $15,000 a year. The amount remains low because so many seniors elect to start receiving benefits early. "However, the difference, if you wait, can be astounding. I have one client who was able to wait until she was 70 before drawing on her Social Security benefits. She rarely earned the maximum Social Security credits during her working career, but she receives more than $34,000 a year." Here's What Happened Before The Stock Market Crashed In 1987 (Morgan Stanley) Many are warning that the stock market has got too expensive and that we should expect a major correction if not a crash. "The equity rally that began in 2009 has pushed valuations higher, but has received little support from earnings," writes Morgan Stanley's Hans Redeker in a new note to clients. "Indeed, since June 2012 the equity market rally was entirely driven by valuation and not earnings." "While there have been cases when better economic conditions pushed up earnings, providing equity market support, there have also been occasions when valuation driven equity market rallies translated into weakness, as witnessed in October 1987," adds Redeker. "The equity market rally which began in 1986 and peaked in the summer of 1987 falls into this category, as can be seen in Exhibit 6." 
Bank Of America Prepares To Dissolve Merrill Lynch Unit (Bloomberg) Bank of America is dissolving its Merrill Lynch unit but plans to keep the Merrill Lynch brand for its retail brokerage, Bloomberg reported. Bank of America will take over Merrill Lynch's debt. Jerry Dubrowski, a Bank of America spokesman told Bloomberg that this would have "no impact" on how clients are served, or on the Merrill Lynch brand. | 
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