Best of the Week: How to Manage High Mortgage Rates


With interest rates for a 30-year fixed mortgage more than doubling from a year ago and the Federal Reserve signaling that more rate hikes are coming, it seems safe to say that the he era of low mortgage rates is over for the foreseeable future. So how are advisors reacting? We posed this question to several senior advisors, who cautioned against trying to time the real estate market, suggested that jumbo loans might offer better value than conforming loans, and recommended making a larger down payment, if possible.

Dodge a tax bullet. When the Secure Act became law at the end of 2019, one of the key changes it made was the elimination of the so-called “Expandable IRA”. Going forward, many beneficiaries of inherited IRAs are expected to withdraw them in 10 years instead of throughout their lifetime. But the IRS did not come up with related regulations on required minimum distributions until earlier this year. When this was the case, it caused confusion as to whether beneficiaries who had not taken RMDs from inherited IRAs in 2021 and 2022 would take a big tax hit. Well, those beneficiaries can breathe a sigh of relief now that the IRS has said the new rules won’t apply until 2023.

The Breakaway Merrill team in custody with Goldman. A Merrill Lynch team managing $1 billion in Beverly Hills, Calif., has teamed up with Goldman Sachs Advisor Solutions, the bank’s custodial unit, spun off from Goldman’s September 2020 acquisition of Folio Financial. Founders of the newly formed registered investment adviser, Beverly Hills Private Wealth, touted the decision to become independent as a way to provide fiduciary-level advice while limiting conflicts of interest.

Edward Jones waives the banking plan. Edward Jones has dropped plans to start a bank that would provide non-brokerage services to customers, saying he was unlikely to get the required approval from the Federal Deposit Insurance Corp. for the project. Edward Jones announced his banking plan two years ago, touting the potential to offer customers “one centralized source for saving, spending, and borrowing,” but cited “recent conversations” with the FDIC as one. contributing factor in its decision to abandon the plan.

SEC crackdown on upcoming advisor communications. Investment advisers should brace for an in-depth review from the Securities and Exchange Commission over electronic communications, our columnist writes, citing the recent announcement of $1.8 billion in fines against 16 firms as a sign that the regulators have their antennas in place. With the SEC’s chief enforcement officer officially advocating for tougher penalties for misconduct, companies should use this time to review how they’ve updated their policies and procedures on books and records to accommodate their increasingly digital communications with their customers.

How to approach estate planning. Estate planning is a crucial part of any comprehensive financial plan, but clients are often reluctant to engage in the process and often put it off. A new survey quantifies the challenge, noting that while Americans who work with an advisor are more likely to have an estate plan, advisors need to work harder to develop and update those plans with their clients.

Nearly 20% of the US population identifies as Hispanic or Latino, but there is a shortage of counselors from this demographic. This week, Barron’s advisor spoke with Kenneth Correa, the son of Colombian parents who leads advisor recruitment as well as national sales at Merrill Lynch Wealth Management. Correa explains how Merrill plans to grow Hispanic/Latino advisors from 9% to 20% of the thunderous herd. And he describes how far the industry has come in the quarter century he’s been a part of it.

Have a good week-end.


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