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January 10, 2013

Advocating Direct Investments through Education

Top Stories

Financial advisers turn bullish on investing in real estate
Investing in commercial real estate turned out to be a profitable move in 2012, and financial advisers see promising opportunities in 2013 as the broad economy continues to recover. American Realty Capital Properties and Cole Real Estate Investments have enjoyed recent successes in the nontraded REIT space by focusing on triple-net-lease REITs. Other promising areas for investment include multifamily, local shopping centers with grocery store anchors and REITs that invest in mortgages, advisers say. InvestmentNews (free registration) (1/6)

Policy Update

Obama reportedly will nominate Lew as Treasury Secretary
President Barack Obama will choose close adviser and longtime Washington figure Jack Lew, currently the White House chief-of-staff, to be the next Treasury Secretary, replacing the departing Timothy Geithner, sources said. The selection suggests that at the beginning of Obama's second term, his administration will focus on anticipated disputes with Republican lawmakers over finances. Lew has been a central figure in negotiating budget deals in Washington since the 1980s. The Washington Post (1/10), The New York Times (tiered subscription model) (1/9), Reuters (1/9), The Economist (free content)/Free exchange blog (1/10)

FINRA will focus on high-speed trading and complex products
Richard Ketchum, head of the Financial Industry Regulatory Authority, says the agency will increase scrutiny of high-speed trading, complex products, leveraged loans, collateralized loan obligations and conflicts of interest among brokers when they pitch their investments over rivals' products. FINRA filed more than 1,500 enforcement actions against brokers and financial firms last year -- a record -- and imposed more than $100 million in penalties. The New York Times (tiered subscription model)/DealBook blog (1/8), The Wall Street Journal (1/8)

Advisers breathe easier as estate-tax exemption is solidified
Financial advisers and clients can take time planning gifts to family and charitable causes after Congress made a $5.12 million estate-tax exemption permanent. The "fiscal cliff" compromise essentially preserved favorable treatment for estate and gift tax that has been in effect the past two years. InvestmentNews (free registration) (1/6)

FINRA solicits comments on its bonus-disclosure proposal
The Financial Industry Regulatory Authority has started seeking comments about its proposal that would require brokers to disclose their signing bonuses when they move from one company to another. Richard Ketchum, chairman and CEO of FINRA, would like to see the measure in place by summer. Some in the industry are opposed to the plan. Reuters (1/8), The Wall Street Journal (1/8)

SEC adds political-disclosure measure to its agenda
The Securities and Exchange Commission says it hasn't yet determined whether to propose a rule requiring firms to disclose their political activities, but proponents of such a rule say they're increasingly confident the SEC will issue a recommendation. The rule was recently put on an April timeline, a move that observers say would be strange if the SEC were not planning to press ahead with a proposal. Bloomberg (1/7)

Industry News

Direct-lending funds spark investors' interest
Investors scouting for more yield are starting to take interest in direct-lending funds. The funds make loans to medium-sized companies, and many have seen returns ranging from 10% to 14% in recent years. Potential downsides include high fees and lack of liquidity. The Wall Street Journal (1/4)

REITs had banner year because of low prices, short supply
Investors' demand for higher yields, low property prices and tight supplies combined to make real estate investment trusts the strongest asset class in 2012. Stephen Blank, a senior resident fellow with the Urban Land Institute, said real estate also has been proven to be valuable in diversifying investor portfolios. AdvisorOne (1/6)

Income Planning

Report: Sales of income annuities reached record high in Q3
Income annuities saw record-high sales of about $2.4 billion in the third quarter, an increase of 3.8% over the previous quarter and 6.7% from the third quarter of 2011, according to Beacon Research and Morningstar. Sales of indexed annuities remained relatively steady for the third quarter, while variable-annuity sales fell 4.9% from the previous quarter and 7.2% year-over-year, data show. Net third-quarter sales of variable annuities, however, were up 44.3% from the second quarter, and net assets of the products reached a record $1.62 trillion in the third quarter. Employee Benefit News (1/8)

Business Best Practices

Additional steps an adviser must take to secure client information
Client information and client asset integrity have become topics in regulatory exams, writes Tom Giachetti, chair of the Securities Practice Group at Stark & Stark. Exam questions are presenting scenarios in which an adviser shares offices with unrelated individuals or entities, and situations in which vendors may have access to client information. Confidentiality agreements are key in these circumstances, Giachetti writes, including with outside parties such as landlords. AdvisorOne (1/1)

Financial advisers need to delegate to make better use of their time
Most financial advisers who own their businesses would be more productive if they delegated some of their tasks to others. The best use of a financial adviser's day is generally agreed to be face-to-face time with clients. A study by Rough Notes found that small-business owners spend 52% of their time on back-office tasks and only 7% working directly with clients. Financial Advisor (1/2013)

SmartQuote

A blunder at the right moment is better than cleverness at the wrong time."

--Carolyn Wells,
American author and poet

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