Investment bankers have had a good run–but growth will get tougher amid higher interest rates and a regulatory crackdown on some mergers, writes Liz Hoffman.
Investment banking refers to three businesses linked by their proximity to corporate boardrooms: advice about mergers and other restructurings, as well as underwriting of stock and debt securities. Assignments in one area often spur activity in others, as companies borrow for takeovers or repurchase stock to pacify an activist investor. Revenue gains going forward are likely to hinge more on intensified competition for clients and deals, rather than the pie growing for everyone.
Below, some of the best analysis and insight from WSJ writers and columnists, and occasionally beyond, on investing, the wealth-management business and more.
NEW RULES COMING
Regulators are set to propose stricter rules this week aimed at preventing biased advice from skewing recommendations that stockbrokers provide to their clients, writes Dave Michaels.
The proposal from the Securities and Exchange Commission could eventually replace the Labor Department’s “fiduciary rule,” a regulation that required brokers handling retirement accounts to always put their clients’ interest ahead of their own financial gain. A federal appeals court invalidated Labor’s measure in March, ruling the government overreached its authority to regulate products such as individual retirement accounts. The government could appeal the decision.
The SEC’s plan would impose a new duty on brokers who advise retail customers on investments. The regulator hasn’t disclosed yet what that will involve—whether brokers will just have to disclose all conflicts of interest or whether they will effectively be forbidden from recommending certain investments that pay them more but aren’t better for their clients.
The SEC’s proposal will include a new disclosure intended to shine more light on whether a financial adviser is just a salesman or has a duty of loyalty to a client. The written disclosure would clarify the differences between brokers and investment advisers, who have a duty of loyalty to customers. It also could require brokers to explain how conflicts of interest, such as sales commissions, can affect a broker’s recommendations.
The Securities Industry and Financial Markets Association announced new recommendations last week focused on data protection, writes Maria Armental on Dow Jones Newswires.
“Collectively, our industry has a huge responsibility to protect clients,” John Maurello, managing director of Sifma’s private client group, said during opening remarks at the trade group’s Private Client Conference, being held at the Ritz-Carlton Golf Resort in Naples, Fla.
Sifma represents securities firms, banks and asset-management companies.
The new initiative sets four principles–access, security and responsibility, transparency and permissions and scope of access and use–regarding data aggregation. The group said customers should receive a “clear and conspicuous” explanation of how third parties will access and use financial account data and receive assurances that people accessing data will keep it safe and secure.
Tesla, Uber Deaths Raise Questions About the Perils of Partly Autonomous Driving: Humans were behind the wheel in the fatal crashes, raising questions of complacency.
How Department Stores’ Past Could Save Their Future: Once home to enticing diversions like fashion shows and roaming flamingos, they’re struggling to regain their place as relevant (and profitable) social spaces. History might offer a guide.
PLANNING & INVESTING
Why Women Should Keep Working After Their Husbands Retire: Study says U.S. women have more to gain from continuing to work and boosting future Social Security benefits.
BUSINESS & PRACTICE
Bet Against Volatility? You Lost. Bet On It? You Lost Too!: Crisis hedge funds’ lackluster performance showcases the limits of protection against volatility.
TRAVEL & LIFESTYLE
Brussels’ Hip Ixelles District Lures Affluent New Admirers: Prices rise in the city’s Ixelles district, which has drawn French ex-pats attracted to lower taxes and a higher quality of life.
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