Tag Archive for: COVID

COVID Mandates Infuriate Advisors; Big Banks Aren’t Actually ‘Following The Science’

COVID-19 quickly became a politically charged topic as it found its way into every corner of our lives. We aren’t here to talk politics, but rather the realities faced by advisors and unnecessary mandates being enforced at their places of employment.

At different firms across Wall Street, there are varying degrees of mandates and penalties for advisors that have chosen not to get the proverbial ‘jab’ for whatever reason. On top of those arbitrary rules, you also have firms forcing advisors to spend certain amounts of time in the office, no matter if it is meaningful to their business and growth.

A quick list of what advisors are dealing with in regards to COVID-19:1. If you are unvaccinated you could be fired. (**since been backed off of)
2. If you are unvaccinated you are disallowed to meet in person with clients.
3. If you are vaccinated, you have to be in the office a minimum of three days per week.
4. Vaccination status may indirectly affect bonuses and promotions.

Each of the above responses to COVID-19 is dramatic overreaches that don’t match even the latest (flawed) CDC guidelines.I think that one could make the case that these guidelines are coming from bank legal departments rather than directly connected to any sort of science. And, as per usual, the mandates are putting undue burdens on advisors unnecessarily.

We continue to hear significantly grumbling from advisors with respect to not just a new normal here – but rather banks and brokerages taking advantage of a crisis to control advisors. Given that the very nature of being a financial advisor is largely entrepreneurial, the likes of J.P. Morgan and Merrill Lynch (Bank of America) should back off.

JPM: No Vax? You’re fired.

Jamie Dimon, the CEO of JPMorgan Chase, has been a strong supporter of in-person work during the COVID-19 pandemic. Dimon flat out said, “he would fire New York-based employees who haven’t been vaccinated.”Those words come after Citigroup, the fourth-largest bank in the U.S., took a very hard line on vaccines.  There are strict rules about vaccinations at the bank, and if people don’t get vaccinated could lose their jobs. Employees who have religious beliefs or medical conditions that qualify them will not have to pay.JPM has taken this even a step further. A recent memo was issued letting advisors know that if they “are not fully vaccinated or has chosen not to declare their status is not permitted to travel for the firm for any business reason.”

Wave goodbye to client meetings.

Advisors across the country have taken this to heart. How is it a firm can dictate you are required to come back into the office, but if you decline to show your proof of vaccination, the firm bars you from seeing your clients? We don’t get it. They’re saying it’s OK to put you in a closed, indoor room with your co-workers but not at all with your clients, where you have the option to set a meeting up in an outdoor setting. The firm’s decree is putting limits on how you conduct your business, to limit how you interact with your clients. And if you do see your clients, we all know that just gives the firm reason for termination.

This is a great way to create a wedge between FAs and their clients. Oh, wait, it has! $2M J.P. Morgan Advisor Heads to WF and Yet Another to RayJay.

As COVID Cases Surge, so Does Investor Interest in Biotechnology

While local administrations return to the drawing board to reform their timelines, financial professionals stay the course in eyeing biotechnology as the emblematic ‘hand’ that will control the speed in which the valve is opened or closed. In this TrackStar Insights edition of Advisors in Focus, we’ll reveal what fund sectors and stocks are being researched in concert with the rapid directional changes in state governance.

Below are the five most-researched ETF categories by financial advisors this week (source: TrackStarIQ):

  • Materials
  • Technology
  • Health & Biotech
  • Oil & Gas
  • Financials

The Health and Biotech sector saw a 22.5% lift in advisor engagement from the previous week, as vaccine and drug trial news continues to move markets.

Investors persist in trying to size up the future biotech winners and losers in today’s ever-changing landscape. Taking a deeper dive, the ten stocks that led advisor interest this week within the sector are:

  • Inovio Pharmaceuticals (INO)
  • Kitov Pharma (KTOV)
  • Sorrento Therapeutics (SRNE)
  • Vaxart (VXRT)
  • Novavax (NVAX)
  • Moderna (MRNA)
  • VBI Vaccines (VBIV)
  • iBio (IBIO)
  • Novan (NOVN)
  • Trevena (TRVN)

Individual biotech stocks are known for their volatile nature because share prices rise or fall in reaction to the latest headlines about drug trials or FDA approvals. History has shown that biotech ETFs are also capable of substantial percentage moves in short time frames as well.

Let’s consider two with stellar three-month rallies: one passively managed, and the other actively managed.

SPDR S&P 500 Biotech Fund (XBI)

SPDR S&P 500 Biotech Fund (XBI) is a passive biotech ETF that tracks the S&P Biotechnology Select Industry Index, which consists of 136 stocks currently within the biotechnology segment of the S&P U.S. total market composite index. This ETF was the most researched biotech fund this month based on TrackStarIQ data.

The ETF has $5.2 billion in assets, and shareholders are likely satisfied with recent performance: XBI is up 17.7% YTD and 44.5% in the past three months.

Fast Facts:

Fund assets: $5.2 billion
Number of holdings: 136
YTD Return: 17.7%
Three-month: 44.5%
Top five holdings and portfolio weighting:

  • NVAX – 2.2%
  • NVTA – 2%
  • INO – 1.95%
  • OPK – 1.5%
  • ARWR – 1.4%

Novavax accounts for the largest percentage within the SPDR S&P Biotech Fund and the ticker also ranks in the TrackStarIQ sector’s top ten stocks researched by advisors, along with Inovio.

ARK Genomic Revolution ETF (ARKG)

ARK Genomic Revolution Fund (ARKG) is an actively managed ETF that invests in healthcare, technology, basic materials, or any company that falls within the fund’s investment theme of genomics innovation. While not as well known as XBI, TrackStarIQ rankings suggest that the fund is seeing increased interest by the financial advisor community lately.

In addition, ARKG shares have substantially outperformed passively managed biotech ETFs: surging 55.6% year-to-date and 67% over the past three months.

Fast Facts:

Fund Assets: $1.3 billion
No. of holdings: 38
YTD Return: 55.6%
Three-month: 66.7%
Top five holdings and portfolio weighting:

  • CRSP – 9.4%
  • ILMN – 8.6%
  • NVTA – 8%
  • ARCT – 7%
  • NTLA – 4.2%

The fourth-largest holding in the ARK Genomic Revolution Fund—Arcturus Therapeutics (ARCT)—has rallied 360% in 2020, and the substantial gains in that stock help to explain why the actively managed ETF has easily outperformed passively managed biotech ETFs.

We will continue to monitor activity in this sector as more COVID impact unfolds.


During COVID-19 Chaos Big Teams Accelerate Moves To New Firms; Want To Know Why?

If it seems like larger and more frequent recruiting headlines to keep hitting the tape, you are viewing the wealth management landscape correctly. Each and every week hundreds of millions, if not billions, in client assets are filling out asset transfer paperwork on Saturday and Sunday across the country. And there is no slow down in sight.

The wirehouses continue to be hit hardest as advisors are either opting for perceived greener pastures at a rival firm or setting up their own shop as masters of their inside an RIA aggregator of note. The mass exodus remains real and ongoinG, no matter what firm brass at places like UBS and BofA/Merrill Lynch would have you believe.

But we are more interested in why these moves are occurring now…and accelerating in the midst of COVID-19 and historic market volatility. We think the following four dynamics are fueling the recruiting market and have tipped the scales in the question.

  1. Practice valuations and client balances (AUM) are at historic highs.The thought process here is that with client balances at or near all-time highs, annual production levels are bloated in ways the industry has never seen before. T12 numbers and their multipliers are extremely ripe and perfectly situated to capitalize on the next dynamic in this list. Advisors would be well advised to take advantage of the gift that the markets have given them.
  2. Recruiting deals are at all-time highs and almost artificially outsized for big teams.The competition for teams of scale is as fierce as it has ever been, and deals reflect that competition. At both Wells Fargo and First Republic, when including deferred compensation balances and choosing to retire at those firms, the numbers can surpass 500%. Yes, you read that right. Deals are more apt to retreat from these levels than to press much higher – another reason why big teams are hitting the bid.
  3. Expired Deals.Every advisor and team that mattered during the financial crisis has had the deals they signed back in 2010 (either to stay at their firm or in a move to a new firm) expire. Everyone is a free agent and evaluating the best way to play out the rest of their career – both philosophically and by way of monetizing their book. Besides the two firms that exited protocol in UBS and Morgan Stanley, most advisors are completely legally detached from their current firm.
  4. The COVID-19 effect is real and a significant advantage for transitioning to a new firm.At the outset of the pandemic most thought that the chaos and market turbulence would stifle recruiting movement. Just the opposite has been true. Clients that have stayed home from work are more available to discuss moves and sign transition paperwork virtually; while advisors deal with fewer colleagues attempting to keep their clients at the firm they are leaving. In terms of the drama of the first weeks of a transition, COVID-19 has become an easy off-ramp for exiting advisors.

Doing a serious evaluation of the tent that you find yourself under as an advisor is an absolute must right now. With so many deals stretching beyond 300% and production and asset levels at historic highs, big teams will continue to leave. Considering the factors above and the cover for a transition, you should be doing your own evaluation right now.