Category Archives: Best Stocks

Dan Seiverts Tips for Wealth Management Firms Looking to Sell

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Wealth managers interested in selling their firms should not believe the hype about a strong seller’s market, says Dan Seivert, CEO of Echelon Partners, a leading investment banking firm for the industry.

“Everyone thinks it’s a sellers’ market now. If that were true valuations would be really high, but they’re moderate,” said Seivert, who spoke at this week’s Investment Advisor Forum sponsored by the Investments and Wealth Institute in New York City.

“There’s a dearth of attractive buyers but a lot of sellers,” said Seivert, adding that deal terms favor buyers.

Still, the number of deals in 2017 involving firms with more than $100 million in AUM surged to 154 in 2017,  capping a 16% compound annual growth rate since 2009.

(Related: RIA M&As on a 5-Year Growth Tear: Echelon Report )

Increased availability of financing has been a big driver of deal activity. In addition, sellers have more access to assistance in deal making and to sales to other wealth management firms, and they have more knowledge about dealmaking, according to Seivert.

Another 

For those firms interested in selling, Seivert stressed that “growth is the single most important variable in valuing a well management firm. Growth signals quality, validates a business model, affords financing, allows for both internal succession and sales to external buyers,” said Seivert.

(Related: Echelon Rolls Out RIA Valuation Business)

He recommends that potential sellers know how fast or slow they’re growing in order to assess their valuation, set a strategy for growth and check if their firm is taking an aggressive enough approach to pursuing growth opportunities.

Since 2010, revenues of wealth management firms have grown at a compounded annual rate of 15%, with rates ranging from a low of 8% in 2015 to a high of 24% in 2011, according to Seivert. (The 2017 growth rate was 20%.) Their assets have been rising while their numbers have been declining. 

(Related: Tibergien on M&A: Who Will Be the Last Firm Standing?)

Scale is another important consideration for sellers. Seivert divides the wealth management universe into three scale models: small businesses with more than $1 billion in assets; boutiques with $200 million to $1 billion AUM and practices with less than $200 million in assets. “The valuation paradigm is different for each firm.”

Buyers are most attracted to firms with meeting these key thresholds: $1 billion AUM, $10 million in revenues and $3 million in profits, according to Seivert. Few firms currently for sale meet those criteria, according to Echelon Partners. Just 3% have $1 billion in AUM and none have $10 million in revenues. Moreover, three-quarters of wealth managers for sale have less than $200 million in assets and less than $1 million in revenues.

In 2017, RIAs accounted for 39% of buyers of wealth managers, and strategic buyers or consolidators had a 42% market share. Bankers, once the largest buyers of wealth managers, now account for just 7% of purchasers (“other” accounted for the remaining 12%).

Looking ahead, Seivert said wealth management firms should expect a decline in valuations of as much as 35% after the bull market, about to enter its tenth year in March, ends. It could then take six to seven years for valuations to recover.

 

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Even rising short-term bond yields wont kill the stock markets momentum

Are you spooked by the two-year Treasury yield rising above the S&P 500s dividend yield? You shouldnt be.

To be sure, many analysts disagree. They have been circulating a version of the chart below, pointing out that the summer of 2008 was the last time the two-year yield was higher than the markets dividend yield. We all know what happened soon thereafter.

As you can also see from the chart, the two-year yield was continuously above the markets dividend yield for the three decades prior to 2008. The S&P 500
SPX, +0.06%
on balance did just fine over those decades, of course, including turning in one of the strongest bull markets in U.S. history.

So the next time someone tries to scare you by pointing out that the two-year yield has eclipsed the markets dividend yield, ask them to explain the markets strength over those three decades prior to 2008.

The data below show the S&P 500s dividend-adjusted 12-month return depending on the differential between the two-year yield and the stock markets dividend yield.

When S&P 500s average dividend-adjusted return over subsequent 12-months
The S&P 500s dividend yield was more than 5 percentage points higher than the two-year yield 13.1%
The dividend yield was higher than the two-year yield, but by less than 5 percentage points 11.0%
The two-year yield was higher than the dividend yield 10.2%

None of these differences is significant at the 95% confidence level that statisticians often use to determine that a pattern is genuine.

You should also be aware that there are theoretical objections to making simple comparisons between the two-year yield, currently at 2.08%, and the S&P 500 dividend yield, currently at 1.82%. In many ways its an apples-to-oranges comparison: The markets dividend yield is a function of both the stock markets overall level (a higher market results in a lower yield) and investors confidence in companies maintaining their dividends. The myriad factors impacting those considerations are far different than what is the proper risk-free rate of return. So its not at all clear what the markets are telling us when the two different yields converge or diverge.

None of this discussion means that there arent plenty of other things to worry about. But my contrarian instincts get triggered when I read analyses that have superficial plausibility but are in fact nothing more than sloppy thinking.

For more information, including descriptions of the Hulbert Sentiment Indices, go to The Hulbert Financial Digest or email mark@hulbertratings.com.

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5 Reasons Youre Not Reaching Your Financial Goals

Despite the fact that the stock market has been booming, so many people are not meeting their financial goals. Some wonder if theyll ever be able to retire.

Well, I want this year to be the year in which you actually reaching your financial goals.

Im a trader. Usually, when traders are not meeting or reaching their financial goals there are some simple and easy to explain reasons why. That fact may be hard to swallow, but its the truth. I have a reputation for giving it straight

So, let me detail five common reasons why traders arent realizing their full financial potential, and offers tips for how to reverse this negative trend.

Reason #1

You dont have goals. What are your goals?

If this question is being met with crickets chirping in the silence, thats a problem. Chances are, your lack of goals is playing a big part in why your financial dreams arent coming true.

To be able to attain your financial goals (and any goals, really), you first need to have goals. So what are your goals?

This should be unique to you, and not based on things you think you should want.

Maybe you want to earn enough money so that you can buy a condo in Manhattan. Or perhaps its not a single tangible thing, but you have a goal to increase your income by 20% per year.

Quite honestly, it doesnt matter what your goals are. Whats important is that you have goals that are meaningful to you, and which you have thought out carefully.

By having firmly defined goals, you have something specific on which to measure your progress, and specific things to work toward. Having specific goals in mind also allows you to create manageable milestones to work toward them.

Reason #2

You lack targeted training. You can have the most specific goals in the world, and the most magnificent plan for how to attain them.

But it wont happen if you dont have the skills necessary to succeed. This is true in any type of business, but its particularly important if youve chosen trading as your profession and how to go about reaching your financial goals.

Ive created an e-letter specifically designed to help my readers do that (go here now to learn how you can sign up). Its designed to give my readers the precise skills they need to get ahead and make money by trading penny stocks.

A basic education on how stocks work simply isnt enough: you need to be specifically trained in what it is that you need to know to make money.

Reason #3

Youre not working hard enough. Becoming a millionaire requires a lot of hard work.

But something that many traders overlook is that making $500,000, or even $200 for that matter, requires hard work too.

And when you work hard, you must be working hard on the right strategy. In a nutshell, you need to work hard all the time as a trader, whether youre trading with a small account or moving hundreds of thousands in a single traderesearch and preparation ahead of time matters most of all!

Its important to set up good work habits and to be diligent early on. If youre new to trading, now is the time to develop good habits, so that you can learn the ropes and experience growing pains when the stakes arent as high.

As you begin to make more money, youll be happy that you took your work seriously earlier, because you will have ingrained good habits and will understand what works and what doesnt in your trading.

As you begin to earn more, this solid foundation will help you work smarter and make more money later on. By learning how to work hard now, youll reap many benefits later.

Reason #4

You dont have proper guidance. Having a mentor is lame because you can just do it all yourself, right?

Absolutely wrong.

Why would you set yourself up for potential calamity and failure when a mentor can save you from experiencing both?

A mentor is worth his or her weight in gold. Its literally like having someone who has a big key that can unlock many of the mysteries of your unfolding career.

A mentor has been where you are, and probably made plenty of mistakes and bad decisions. By following their advice and consulting with them frequently, you can avoid many mistakes and bad decisions that could lose you a ton of money.

Listen, youre probably still going to make mistakes and lose money at points, so why not avoid as many of the pitfalls as you possibly can?

A mentor can help you do this.

Reason #5

Youre not adjusting your goals appropriately. Its important to have clarity on reaching your financial goals. But dont allow them to be so set in stone that you have no flexibility.

Being too rigid with your goals can actually keep you from attaining financial success and as a trader you must ALWAYS be adapting to new hot sectors, new hot stocks, new patterns and being aggressive or conservative in various market environments.

Listen, I am a big believer in dreaming big and setting huge financial or personal goals to work toward. However, you also need to be realistic on a certain level.

For instance, say your goal is to buy a hotel resort in South Beach. Thats a great goal, but it may take quite a long time to reach it.

Therefore, its important to set many more manageable goals along the way. Otherwise, your goal can seem very far away, and this can be discouraging.

Having mini-goals in between here and there allows you to focus on smaller milestones while remaining committed to your goals.

Thats how I attained bigger goals like these:

Sykes Car

Believe it or not, you can actually set your goals too low, too. Think of it this way

Say you have $10,000 in credit card debt and your goal is to pay it off. When you start to make money trading, you can pay this off pretty rapidly. But then, without a new goal, you can lose momentum.

Its important to re-adjust your goals to suit your career. If youre meeting them too quickly, aim higher! Dont hold yourself back by not dreaming big enough.

Having a clean path to reaching your financial goals is a vital part of finding success in business, whether you are trading penny stocks, operate a retail store, or run a food truck.

The tips in this post are meant to help keep you committed to your goals and gain financial success.

Im hosting an event next Wednesday, Jan. 24, to show you how too can learn how to gain financial success by trading penny stocks. If youre ready to take control of your financial future, join me. If not, I dont have time for excuses.

Regards,

Tim Sykes
for The Daily Reckoning

Wells Fargo, Ending Appeal, Settles Whistleblowers Retaliation Case

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Wells Fargo & Co. has reached a settlement with a former branch manager who claimed she was fired for blowing the whistle on employees who had been opening accounts without permission, the sales-pressure conduct at issue in a scandal that erupted in 2016.

The settlement, finalized on Jan. 12, brought an end to Wells Fargo’s appeal of a U.S. Department of Labor order compelling the bank to reinstate the fired branch manager, Claudia Ponce de Leon, and pay her $577,500 in back wages, damages and legal fees. That decision came almost a year after Wells Fargo reached a $185 million settlement with federal regulators and the Los Angeles City Attorney’s Office resolving allegations over the widespread misconduct at the bank.

An in-house judge at the Labor Department has ordered Wells Fargo and Ponce de Leon to submit a copy of the settlement agreement by Feb. 9. Ponce de Leon’s lawyer, Yosef Peretz, declined to comment, citing a confidentiality agreement. “All I can [say] at this point is the parties have decided to resolve the dispute,” Peretz said Friday.

A Wells Fargo spokeswoman said in a statement: “The matter has been resolved by mutual agreement of the parties.” An outside lawyer for Wells Fargo at Gibson, Dunn & Crutcher, Karl Nelson, did not immediately respond to requests for comment Friday. Nelson is a labor and employment partner in the firm’s Dallas office.

Wells Fargo has fought Ponce de Leon’s claims for years. In July, the Labor Department ordered the bank to reinstate Ponce de Leon and pay back wages. Wells Fargo promptly appealed the  decision last year to an administrative law judge.

In a prepared statement in December, the bank, responding to an inquiry from The National Law Journal, said Ponce de Leon was fired “because other team members repeatedly raised concerns about how she was treating them.” Wells Fargo said labor regulators did not interview several witnesses who could have attested to the conduct cited by the bank.

“We owe it to the team members who raised those concerns to allow for a full hearing so that their side of the story regarding Ms. Ponce de Leon’s conduct can be heard before any final determination is made on reinstating a manager who failed to comply with our vision and values,” Wells Fargo said. “At the end of a full and fair process, whichever way it comes out, we will comply with the outcome.”

Wells Fargo had contested Ponce de Leon’s retaliation claim since 2012, when it turned to Seyfarth Shaw partner Eric Steinert. Steinert, in communications with the Occupational Safety and Health Administration, said Wells Fargo gave Ponce de Leon repeated opportunities to address concerns about her conduct.

Peretz, in an interview last year, said Wells Fargo followed a familiar tack fighting Ponce de Leon’s claims.

“That’s the way big corporations fend off claims—arguing that she was a bad employee, in essence. The problem is, she has a very good track record,” Peretz said in the interview. “It’s a classic story of someone who’s trying to do the right thing and the system goes against her.”

The Ponce de Leon matter may be behind the bank. But Wells Fargo has a wider whistleblower problem on its hands. In a regulatory filing last year, Wells Fargo said it is facing “multiple single plaintiff Sarbanes-Oxley Act complaints and state law whistleblower actions filed with the Department of Labor or in various state courts alleging adverse employment actions for raising sales practice misconduct issues.”

Originally published on National Law Journal. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

The fallout from the fake-accounts scandal continues to spread.

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Signatures are a cornerstone in the client lifecycle and transaction process for advisors. Learn how you can accelerate client decisions, reduce operating costs and provide…

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A comprehensive handbook for attracting clients through digital marketing.

Join this webcast to see how Trisha Qualy, Director of Wealth Management at AdvisorNet Financial, took client assets from $100 million to $1.3 billion in…

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Join this conversation as a panel of experts provides tips and best practices to optimize your tech resources for business growth.

Moscow bans ‘The Death of Stalin’ for ‘humiliating’ Russians

It’s no laughing matter for Russian officials.

The Russian government has banned comedy film “The Death of Stalin” and withdrawn its distribution certificate.

The decision follows a public screening of the film Monday in front of senior Russian officials including filmmakers, politicians and representatives of the Russian Military Historical Society, the Ministry of Culture said in a statement.

A group of cultural figures, as well as politicians, had written to the culture minister urging him to ban the film because of its “extremist” content.

“We believe that the film contains information that can be regarded as extremist, aimed at humiliating the dignity of the Russian (Soviet) people, propagating inferiority of a person on the basis of his social and national identity,” they said in the letter, according to the ministry.

“This film is also a libel on the history of our country, an evil and absolutely inappropriate so-called comedy that demonizes the memory about our citizens who defeated fascism,” they added.

The film is a political satire written and directed by Armando Iannucci. It follows the final days of former Soviet Union leader Joseph Stalin and the power struggle that followed his death.

This is not the first time a film in Russia has stirred controversy.

In 2015, Moscow banned a Hollywood thriller, “Child 44,” after complaining that the movie made the country look like Mordor, the evil realm in the “Lord of the Rings” series.

The ministry of culture said at the time that the film was “historically inaccurate.”