Just as Vanguard disrupted the mutual fund industry by forcing competitors to lower their costs, robo advisors will change the financial advice industry, writes Morningstar’s John Rekenthaler. The one percent fee structure of financial advisors is already being challenged, and they will have to provide more value as portfolio management becomes commoditized. Smaller, generic portfolios won’t need a financial advisor, he argues. “Those who possess more financial assets than human capital, and who seek professional help (DIYers being another breed altogether), will likely use traditional advisors,” Rekenthaler says. “Nevertheless, the parallel is sufficiently strong that I feel confident in predicting that robo advisors have only just begun. They will not conquer all, but they will expand greatly over the next couple of decades.”
College students are long on Facebook and Amazon while short on Snapchat, according to Investopedia’s Market Madness Investing challenge. Using the website’s stock simulator, students used $50,000 worth of virtual cash to build a mock portfolio with real cash on the line for the top three performances. Despite Snapchat’s popularity among college users, it was the third most shorted stock. Investopedia CEO David Siegel noted how the students used a variety of complex investing strategies, including options trades. Humza W. of Wayne State University took home the $10,000 top prize after he “swing shorted microcap equities that had massive short-term price and volume spikes but no real change in the long-term fundamentals of the company.” The majority of Humza’s earnings came from buying put options on Lululemon Athletica just before earnings.
Long Island, N.Y.-based The Choice Group Wealth Management has joined LPL Financial's broker/dealer and hybrid registered investment advisor platforms, the company announced. Based in Melville, N.Y., The Choice Group specializes in serving clients nearing or in retirement with a focus on financial planning — including retirement planning, cash flow analysis and estate planning services. The firm's four advisors — Ira Katz, Daniel McNicholas, John Scala and Bryce Wilinski — have about $420 million in assets under management. “An impetus for our move was the impending Department of Labor changes," Katz said. "We wanted to be proactive and align with a platform that we felt gave us access to more products and greater flexibility so we can act as a fiduciary and serve our clients’ best interests. LPL was the right partner because we have been able to evolve our offering while continuing to operate as a boutique wealth management firm.”