Insurable Interest Canadian Insurance Blog

The war for market share among advisor custodians is one of the hottest conflicts in wealth management today, with trillions of dollars at stake for all parties involved — the custodians, the advisors who rely on them to safeguard client assets, and their collective clients. But at a recent industry event, several of the biggest names in RIA custody came together to highlight the biggest issues to watch. Leaders from custody giants Charles Schwab, Fidelity and Pershing, as well as relative newcomers Goldman Sachs and Altruist, appeared on stage at the National Association of Personal Financial Advisors, or NAPFA, Large Firm Forum, which took place last week near Phoenix. “Their growth and our growth are tied together, and it felt in listening that we really are partners, despite our different set of needs,” advisor Cheryl Holland said of the custodians in an interview after the panel discussion.  Cheryl Holland (right), a CFP and founder of Abacus Planning Group, moderated the panel. Speakers included Brad Losson (left), managing director at Charles Schwab; Richard Lofgren, managing director at Goldman Sachs; Jason Wenk, founder and CEO of Altruist; Angie Popek, SVP and regional managing director at Fidelity; and Ben Harrison, managing director at BNY Mellon |Pershing....

The company reported a $1.3 billion loss for the quarter on $3.3 billion in revenue, compared with a $168 million net loss on $4.1 billion in revenue for the fourth quarter of 2022. Adjusted pre-tax operating income, which excludes the effects of changes in the estimated value of derivatives, investments and benefits promises, increased to $661 million, from $610 million. Variable annuity premiums and deposits fell to $350 million, from $652 million. Group retirement: Hogan noted that about $42 billion of the $122 billion of assets at the Corebridge group retirement business are at the “out-of-plan” business. Many plan members end up buying fixed annuities and indexed annuities outside their employers’ retirement plans. Elias Habayeb, the Corebridge chief financial officer, said the plans are naturally seeing asset outflows as older workers retire. Those plan participants tend to have higher guaranteed minimum interest rates, Habayeb said. At the group retirement plans, “our net inflows are dominated by our younger-age cohorts, with lower guaranteed minimum interest rates,” he said. Corebridge CEO Kevin Hogan. Credit: Corebridge

Global Atlantic, a subsidiary of KKR, has assumed responsibility for the investment risk related to the LTCI block and passed the LTCI claim risk on to another insurer through a “retrocession” arrangement, or a reinsurance arrangement for a reinsurance arrangement. Global Atlantic has not identified the retrocession provider. For the direct writer of a product, having access to reinsurance is like having access to a safety net. The LTCI component of the Global Atlantic-Manulife reinsurance deal might make some insurers more comfortable with the idea of selling LTCI policies. The U.S. LTCI market boomed in the 1990s. The market began to freeze over in the early 2000s, after new state LTCI rate stability rules took effect and the issuers discovered that they had based prices on overly optimistic assumptions. The John Hancock Building in Boston. Credit: John Hancock

LPL Financial is facing a fine from the Securities and Exchange Commission of up to $50 million over its lack of compliance with records preservation rules tied to off-channel communications like text messages, according to the firm’s annual report. The fine is for “business-related electronic communications stored on personal devices or messaging platforms that we have not approved,” LPL’s annual report states. The firm added that it had ”not yet reached a settlement in principle with the SEC, and any settlement agreement remains subject to negotiation of the civil monetary penalty and definitive documentation.” Under the SEC’s proposed resolution, LPL says it would pay up to $50 million as a civil monetary penalty. News of this penalty was first reported by InvestmentNews on Friday. The firm recorded a $40 million expense in 2023 to “reflect the amount of the penalty that is not covered by our captive insurance subsidiary,” its annual report stated. On Feb. 9, the SEC charged five broker-dealers, seven dually registered broker-dealers and investment advisors, and four affiliated investment advisors for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications, including WhatsApp messages and texts.