Archive for September, 2015

Volatility: An equal opportunity offender

They may have money to lose, but, like any other investor, they hate to lose it.

High-net-worth individuals (HNIs), who continue to have a high degree of exposure to the equity market, are feeling the pinch from the current bout of global market volatility, with both direct equity holdings and indirect holdings through hedge funds, taking a beating.

According to the 2015 edition of the ‘World Wealth Report’ from Capgemini and RBC Wealth Management, equities remained the dominant investment for HNIs, with 27% of their wealth invested in stocks. In the Asia-Pacific region, the wealthy increased their equity allocations to 22.8% from 21.7% the previous year.

While allocations to different markets and individual securities will determine the actual performance of any portfolio, broader equity market indicators have not been encouraging. The MSCI World Index has fallen nearly 5% year-to-date. Individual indices like India’s SP BSE Sensex have fallen more, with the index down about 7% since the start of the year.

Those who chose to invest through hedge funds—the so-called smart money—have done only marginally better. According to Hedge Fund Research, a firm that tracks the global hedge fund industry, a composite index of global hedge funds was down nearly 2% in August and is flat year-to-date. Emerging market-focused hedge funds, however, have fared much worse, falling 4.5% in August and 9.2% of the past three months, said an 11 September report from Hedge Fund Research.

What could possibly make things a little worse for HNIs is the fact that many of them tend to invest on credit. According to the Capgemini-RBC Wealth report quoted above, 18% of all HNI assets are financed through credit. And 40% of credit taken is being used for investments, showed the report. This essentially means that when the market turns, not only do HNIs take a hit on their investments, they also need to worry about repaying the capital they may have borrowed for these investments. Not surprisingly, the younger HNIs are more likely to fund investments through credit, making them more exposed to the double whammy of a fall in the value of credit-funded investments.

So, how do wealthy individuals react when the market turns jittery? Do they take it in their stride or get shaky like the average retail investor? Those in the private banking industry say that the reaction from HNIs is not very different from retail investors, although it differs based on the sources of wealth. HNIs with inherited wealth tend to follow a more structured approach to investment and often invest through professional setups like family offices. Such HNI investors exhibit greater staying power. Entrepreneurs and wealthy professionals feel the pinch more. Entrepreneurs are more reactive to volatility, particularly if they foresee the need to liquidate their investments for their own businesses.

A more common consequence of volatility is the reluctance to commit fresh capital until a clearer picture emerges on the medium- to long-term outlook for the asset class. This played out in recent weeks when HNIs pulled away from the primary markets after a bout of extreme volatility in the secondary market. A number of initial public offerings (IPOs) that came to the market after mid-August saw limited subscriptions with the HNI portion of the issues remaining under-subscribed. Some HNIs invest large chunks of money in IPOs with the intention to exit after capturing the initial gains seen on listing. However, with the equity market turning volatile, the potential for such gains was limited and hence, the HNIs stayed away.

In the longer term, though, HNIs in India are slowly changing their investment style and moving towards a more structured way of deploying their surplus funds. The growing segment of alternative investment funds (AIFs) is an example of this.

AIFs, divided into three different categories, include hedge funds, private equity funds and real estate funds. Most such funds are tapping into HNI wealth to get subscriptions to their planned funds. According to a 22 August Press Trust of India report, 158 entities have been allowed to set up AIFs in the past three years by the capital market regulator. In the April-June quarter, AIFs made an investment of over Rs.9,094 crore compared to Rs.7,357 crore in the preceding three months. The growth in this segment is reflective of the desire of HNIs to invest professionally through well-managed and professional entities. Investing through such funds also allow HNIs to cash in on emerging themes in the economy such as the rise in e-commerce.

Furthermore, the concept of family offices is picking up. While such offices, specialised in managing resources of wealthy families, were limited to the ultra HNI segment in the past, they are becoming more common, say bankers. With professionals coming in to manage this wealth, deployment of money will also move towards formalized channels.

Ira Dugal is assistant managing editor, Mint.


Sunday, September 27th, 2015 EN No Comments

RBC Capital Receives $79.78 Consensus Target Price from Brokerages (NYSE:RY)

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Shares of RBC Capital (NYSE:RY) have received an average recommendation of “Hold” from the thirteen ratings firms that are currently covering the firm, AnalystRatings.NET reports. Three investment analysts have rated the stock with a sell recommendation, five have assigned a hold recommendation and four have given a buy recommendation to the company. The average 1-year target price among analysts that have covered the stock in the last year is $79.78.

RBC Capital (NYSE:RY) traded up 0.78% during mid-day trading on Tuesday, reaching $54.02. 1,661,656 shares of the company traded hands. The company’s 50 day moving average price is $55.63 and its 200 day moving average price is $60.72. The firm has a market capitalization of $77.94 billion and a P/E ratio of 10.99. RBC Capital has a 12-month low of $51.27 and a 12-month high of $74.09.

RBC Capital (NYSE:RY) last issued its quarterly earnings data on Wednesday, August 26th. The company reported $1.25 earnings per share (EPS) for the quarter, missing the Thomson Reuters’ consensus estimate of $1.29 by $0.04. During the same period last year, the firm earned $1.62 earnings per share. Equities research analysts predict that RBC Capital will post $6.64 EPS for the current year.

Several analysts have recently issued reports on RY shares. BMO Capital Markets restated a “market perform” rating and set a $90.00 price target (up previously from $89.00) on shares of RBC Capital in a report on Monday, June 1st. Keefe, Bruyette Woods reaffirmed an “underperform” rating and issued a $76.00 price objective on shares of RBC Capital in a research report on Wednesday, June 3rd. National Bank Financial dropped their price target on RBC Capital from $83.00 to $80.00 and set a “sector perform” rating on the stock in a research report on Tuesday, August 4th. CIBC restated a “sector outperform” rating and set a $87.00 price objective (up from $86.00) on shares of RBC Capital in a research note on Monday, June 1st. Finally, Zacks cut RBC Capital from a “hold” rating to a “sell” rating in a research note on Friday, August 21st.

Royal Bank of Canada is a banking company. It functions over 16 million private, business and corporate customers across a diversified mixture of businesses in 40 countries. The Company’s five business segments comprise Personal Commercial Banking, Wealth Management, Insurance, Investor Treasury Services and Capital Markets. The Company’s Personal Commercial Banking consists of personal and business banking operations, auto financing and retail investment businesses. Wealth Management consists of Canadian Wealth Management, United States and International Wealth Management and Global Asset Management. Insurance consists of its insurance operations in Canada and internationally and operates under two business lines: Canadian Insurance and International Insurance. Investor Treasury Services section offers global custody, fund and pension management. Capital Markets consists of a big part of its own global wholesale banking businesses.

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Sunday, September 27th, 2015 EN No Comments

Check Out the Investors You Haven’t Considered Yet

When Morten Middelfart went searching for seed investors for Social Quant, his Twitter analytics company in Tampa, Fla., his banker suggested pitching Atlantic Merchant Capital Advisors, a local family office. One informal meeting with the private investment firm, which manages the wealth of individuals and their families, was all it took to land Middelfart’s venture a high-figure investment early this year, along with ongoing advice, customer introductions and part-time office space.

Such experiences are rare, but they do happen, and more family wealth-management groups are betting on private equity deals. There are some drawbacks: Family offices can take longer to seal the deal than traditional angels and VCs, and they generally have a lower tolerance for startup failures, warns David McCombie III, CEO of McCombie Group, a Miami-based private investment firm that has invested about $10 million in half a dozen startups in the past three years. But, he adds, many enjoy advising and supporting founders beyond simply writing a check. Plus, they have buckets of cash. 

So how do you go about finding a family investment office to back your business? Not all family offices are so named, making them tough to pinpoint via web or LinkedIn search. Some don’t even have a website. To broaden your search, McCombie recommends creating a wish list of wealthy people you’d love as backers and using LinkedIn to identify mutual contacts to introduce you. 

Networking offline is equally important. “Get out into the community first. Get to know everybody,” says Mike Kawula, who joined Social Quant as CEO in April. He credits that tactic with securing Social Quant’s funding. It’s best to let the investment community know who you are and what your company does before you go actively trolling for funding. 

Once you’ve got some leads on family offices, call to ask whether they invest in early-stage companies, what startups their current portfolio includes and what industries interest them. “The reality is, if you had a list of 100 family offices and personal contacts at each of them, only five or so would be legitimately interested in directly investing,” McCombie says. 

Diego Villarreal, who raised $60,000 in seed capital from a family office for his nightlife app Banter, warns that chasing after cold leads is a waste of time. “People say fundraising is a full-time job. But if you only go for the hot leads that might actually convert into investments, it’s not,” he says.

Cut to the chase by emailing an abbreviated version of your pitch deck to hot leads. It should be designed to grab their attention. “Three to four slides is plenty,” says Jeremy Office, principal of Maclendon Wealth Management, a multifamily wealth-management practice in Delray Beach, Fla., that caters to entrepreneurs. “The idea is to avoid overwhelming them and instead intrigue them enough so they want a follow-up meeting.” 

If you get the meeting, let investors know you’re attracted to their experience or interest in your industry, McCombie advises. “Emphasize that you’re not just looking at them as another rich person, but you came to them specifically because you think they can add some value.” 

In other words, show respect for the fact that these families constantly get tapped for capital, and they’ll be more likely to welcome you into theirs.


Saturday, September 26th, 2015 EN No Comments

Grizzly, but bearable: Amid the market’s swings, wealth managers say there are …

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Saturday, September 26th, 2015 EN No Comments

Insider Buying: Royal Bank of Canada Director Acquires 1000 Shares of Stock (RY)

Royal Bank of Canada (TSE:RY) Director David Francis Denison bought 1,000 shares of the business’s stock in a transaction that occurred on Friday, September 25th. The stock was purchased at an average cost of C$72.10 per share, for a total transaction of C$72,100.00.

The firm also recently disclosed a quarterly dividend, which will be paid on Tuesday, November 24th. Stockholders of record on Monday, October 26th will be given a $0.79 dividend. This represents a $3.16 annualized dividend and a dividend yield of 4.39%.

Shares of Royal Bank of Canada (TSE:RY) opened at 71.91 on Friday. The company has a 50-day moving average of $73.40 and a 200-day moving average of $76.82. Royal Bank of Canada has a 12 month low of $68.05 and a 12 month high of $83.87. The stock has a market capitalization of $103.75 billion and a PE ratio of 10.96.

RY has been the topic of a number of research reports. Scotiabank decreased their target price on shares of Royal Bank of Canada from C$84.00 to C$82.00 in a research note on Thursday, August 20th. Bank of America cut their price target on shares of Royal Bank of Canada from C$77.00 to C$72.00 and set a “buy” rating for the company in a report on Thursday, August 27th. CIBC dropped their target price on shares of Royal Bank of Canada from C$84.00 to C$83.00 in a report on Tuesday, September 1st. Canaccord Genuity dropped their price target on shares of Royal Bank of Canada from C$76.00 to C$75.00 and set a “hold” rating for the company in a research note on Thursday, August 27th. Finally, National Bank Financial decreased their price objective on shares of Royal Bank of Canada from C$80.00 to C$76.00 and set a “sector perform” rating for the company in a research report on Thursday, August 27th. Two research analysts have rated the stock with a sell rating, four have issued a hold rating and five have issued a buy rating to the company’s stock. Royal Bank of Canada currently has a consensus rating of “Hold” and an average target price of C$80.42.

Royal Bank of Canada is a banking company. It serves over 16 million personal, business and corporate clients across a diversified mix of businesses in 40 countries. The Company’s five business segments include Personal Commercial Banking, Wealth Management, Insurance, Investor Treasury Services and Capital Markets. The Company’s Personal Commercial Banking consists of personal and business banking operations, auto financing and retail investment businesses. Wealth Management consists of Canadian Wealth Management, United States and International Wealth Management and Global Asset Management. Insurance consists of its insurance operations in Canada and globally and operates under two business lines: Canadian Insurance and International Insurance. Investor Treasury Services segment offers global custody, fund and pension administration. Capital Markets consists of a majority of its global wholesale banking businesses.


Saturday, September 26th, 2015 EN No Comments

Which Accounts to Tap First?

When you withdraw money from your investment accounts, the big question is: in what order?  From taxable accounts first?  Tax-deferred?  The answer makes a difference.

When you leave the workforce and rely on your savings for income, you are liberated from many daily tasks.  The 8 a.m. meetings, unfinished projects, and strings of emails all disappear.  Yet, you are left with one major responsibility: paying yourself.

The road to becoming your own HR department – the transition from living on a paycheck to living off your portfolio – requires a major attitude adjustment.  You’ve built your nest egg over a successful career and now your portfolio needs to support you.

Here are some strategies to consider when the time comes to crack it open.

The plan behind retirement savings is simple: you are trying to grow your nest egg as large as possible.  Success is measured by the size of your portfolio at retirement and much less so on how you achieve that growth.  When the time comes to start withdrawing funds, it’s a different story.  Success is measured by your overall happiness, standard of living, and trust that your money is not in danger of running out.

First, know that all those tenets of savings you relied on when growing your portfolio, work against you in retirement.  Dollar cost averaging and compound interest both work in reverse.

Dollar cost averaging – investing a fixed amount at a specified interval, like the first of every month, can help during volatile markets because it lets you buy more when markets are down.  However, when regularly withdrawing funds, temporary dips in the market can do damage because you must sell more shares to provide an equal amount of cash.

With compound interest friend to all investors, you know that early investing provides a larger base to grow and steady investing magnifies returns.  But in reverse, early withdrawal – i.e., a large lump sum taken from the retirement portfolio early on will diminish the positive influence of compounding on remaining assets.

Knowing these retirement challenges lie ahead, the next step is to set up a withdrawal plan.  A great first step is to create a cash bucket of safe, liquid investments that can support near-term expenses.  If you know what your next six months of expenses are, it will make it much easier to tolerate volatility and stick to your long-term plan.

Next, create a plan outlining which investment account to tap first.  Should you draw from your taxable accounts at the onset or dip into your individual retirement accounts?  A basic goal of tax planning is to put off paying taxes as long as possible.  Tax deferred retirement accounts allow you to declare income later in life; if you also have a lower income in retirement, taxed paid may be considerably lower.

Yet there are several scenarios when drawing from your IRAs first might make sense:

Are your IRAs very large, potentially causing your distributions to bump you into a higher tax bracket?  If this is the case, it might make sense to begin spending from your IRAs before you reach age 70½, the time in which you are required to begin taking distributions.  Remember that your required minimum distribution (RMD) is considered taxable income.

If your IRA had grown to $2 million by 70½, your first distribution would be approximately $73,000, potentially bumping you into a higher bracket and forcing you to pay more to the government.  Had you been spending down the IRA during the first years of retirement, your RMD (and subsequent tax payments) would be less.

Investments also matter when deciding how to fund your retirement.  If you have stock with large gains, you may want to hold off selling for as long as possible.  If these securities become part of your estate, your heirs receive a step-up in basis at inheritance, meaning they pay no capital gains tax on the appreciation earned over your lifetime, only on the appreciation since they inherited it.

Last, save your Roth for, well … last.  The strategy for reducing IRA values (and RMDs) doesn’t apply to Roths as they have no distribution requirement.  With a Roth IRA, you invest money that had already been taxed – the opposite from a conventional IRA, where the money gets taxed upon withdrawal.  Since you won’t have to pay tax on your Roth money, keep it growing tax free, perhaps even into the next generations.

Follow AdviceIQ on Twitter at @adviceiq.

Sean Condon, CFP, is a wealth advisor and financial planner with Windgate Wealth Management in Chicago. Take our brief quiz to find out how much portfolio risk is right for you.

Sean provides financial guidance to people who are building a career and concerned about accumulating wealth for their future. His firm also works with those at or near retirement and in need a strategy for managing the transition from living on a paycheck to living off their portfolio. Additional insights on financial planning and investing can be found on the Reflections blog, here.

If you would like to know more about Sean or have questions about becoming a client of Windgate Wealth Management, send an email to or call 844-377-4963.

Perritt Capital Management Inc. is the registered investment advisor for Windgate Wealth Management accounts. Perritt Capital Management Inc. is not responsible for any linked website’s content.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.





Friday, September 25th, 2015 EN No Comments

Wealth Management Remains Work in Progress at Virginia Bank

Cardinal Financial made a big push into wealth management a decade ago. Today, it remains an inconsistent business, though management is optimistic about the future.


Friday, September 25th, 2015 EN No Comments

eMoney Advisor Receives Award for Innovation

 (“eMoney”), a leading provider of advanced wealth planning
solutions for financial advisors, was named winner at the 2015
Industry Awards
, earning the top spot in the Technology Innovation
category for its emX wealth-planning platform. The firm was recognized
at the awards ceremony on Thursday, September 24 at the Mandarin
Oriental in New York, NY.

Launched in December 2014, emX
is a completely reengineered version of eMoney’s technology

solution, developed to transform an advisor’s ability to deliver
expertise and grow their business. Featuring an intuitive interface,
resources to improve collaboration, and options to build a fully
integrated technology platform through emX Select, emX delivers an
unparalleled interactive wealth-management experience for both advisors
and their clients.

“There have been a lot of exciting developments at eMoney this year,”
said Michael Kroener, Regional Sales Manager at eMoney; Kroener accepted
the award on the company’s behalf. “And through them all, we’ve
maintained a commitment to innovation and a focus on meeting the needs
of our advisors. That’s why we developed emX in the first place—because
we believe in the value of the financial advisor.”

According to, their Industry Awards program was
developed to recognize the companies and organizations that support
financial advisor success. Nominated alongside Advent Software for Black
Diamond I X; Betterment Institutional for BI Platform; CLS for Video
Statements; Jemstep for Jemstep Advisor Pro; Laserfiche for Laserfiche
Connector; and Vestorly for Vestorly Platform; the nod to eMoney for
innovation is a testament to the firm’s unrelenting quest to set the
standard for how a technology platform should support advisors and the
clients they serve.

“Advisors who combine their expertise with leading technology will
provide the best experience for their clients and be the most
successful,” Kroener continued. “That belief is at the center of
everything we do, and is what motivates us to push for greater
innovation every day.”

“This is eMoney’s inflection point,” said Michael Durbin, eMoney’s
interim CEO and president of Fidelity Wealth Technologies. Durbin
assumed leadership earlier this month. “We knew this team had created
something really impressive for their clients with emX and believe that
empowering them to continue to perform will yield the best results. And
right now, I have the best seat in the house to watch that happen.”

For more information on eMoney Advisor and emX, visit and
the eMoney
, or connect on Facebook,Twitter and LinkedIn.

About eMoney Advisor, LLC

eMoney Advisor, LLC (“eMoney”), based in Conshohocken, Pennsylvania, is
the only wealth-planning system for financial advisors that offers
superior transparency, accessibility, security, and organization for
everything that affects their clients’ financial lives. A technology
envisioned and created by advisors for advisors, eMoney’s award-winning
software and resources are tailored to transform the advisor’s ability
to implement comprehensive financial plans and prepare their clients for
a secure financial future. For more information, please visit:


Friday, September 25th, 2015 EN No Comments

Changing scene: Morgan Stanley adds wealth expert – Glens Falls Post

GLENS FALLS | Elise Shartsis, a family wealth director, senior investment management consultant and financial adviser with the Morgan Stanley Wealth Management office in Greenwich, Connecticut for 26 years, has joined Morgan Stanley’s Glens Falls office.

Shartsis advises and manages money for high net worth families and corporations. She was named a top wealth manager in Westchester and Connecticut by Five Star Management in 2013, 2014 and 2015. She co-presents a course on Insider Trading to attorneys and executives, which has been accredited by the NYS CLE Board.

Shartsis lives in Warren County with her husband, Jay Shartsis. She is active in domestic and international charities and was appointed by the Westchester District Attorney to a special task force on animal cruelty prevention in that county. She is doing research for a book about successful women in business.


Thursday, September 24th, 2015 EN No Comments

LPL-Affiliated RIA Merges With Bank-Focused Wealth Group

IFP advisors can now tap into a direct pipeline of potential clients.IFP advisors can now “tap into a direct pipeline of potential clients.”

Independent Financial Partners, an RIA that is affiliated with LPL Financial’s (LPLA) hybrid platform, says it has merged with Private Wealth Alliance.

Tampa-based IFP serves more than 500 advisors and has about $6 billion in assets under management, while Private Wealth Alliance includes about 40 investment professionals with $500 million in assets; it has advisors in community and regional banks and credit unions, and these financial institutions have between $200 million and $21 billion in assets. 

“The advisors of Private Wealth Alliance now have access to a multitude of resources from IFP, including direct access to seasoned advisors in wealth management and insurance, to further expand their client offerings,” said Dan Overbey, managing director of IFP Institutional Services and Private Wealth Alliance, in a statement.

With the deal, IFP advisors can now access Private Wealth Alliance’s bank relationships, meaning they can “tap into a direct pipeline of potential clients – the banks’ customers,” the groups say in a press release.

“As we look to grow IFP Institutional Services, we will look to build relationships with additional banks throughout the country,” said William Hamm, CEO of Independent Financial Partners, in the release. “This initiative is part of our multi-silo strategy to build up our presence in institutional services, as well as retirement plans, insurance and wealth management. The banking channel is an important leg on the IFP stool.”

Other LPL Developments

This news comes amid a bumpy week for LPL Financial.

LPL Financial agreed Tuesday to pay a total of $3.2 million to settle penalties regarding its sale of nontraded real estate investment trusts and leveraged ETFs.

Under a settlement reached with the North American Securities Administrators Association’s Non-Traded REIT Task Force, the San-Diego based LPL will pay civil penalties of $1.425 million to be distributed among 48 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands for its failure to implement an adequate sytem to supervise the sale of nontraded REITs, as well as its failure to enforce its written procedures regarding the sale of the illiquid trusts.

In a joint settlement reached the same day with the Massachusetts Attorney General and the Delaware Attorney General, LPL’s Boston arm agreed to pay $1.8 million for placing approximately 200 Massachusetts clients into “risky” leveraged ETFs.

LPL reached a separate settlement with Massachusetts securities regulators in 2013 regarding its sales of nontraded REITs and faces a separate action by New Hampshire securities regulators. New Hampshire regulators want LPL to pay $3.6 million in fines and restitution for alleged unsuitable sales of nontraded REITs.

LPL said in a statement that while the indie BD continues “to be engaged — like most others in our industry — with our regulators on various matters, including as noted by NASAA …, the NASAA agreement represents resolution of the last of the most significant historical regulatory matters that we have been working through.”


Thursday, September 24th, 2015 EN No Comments