Calif. closes 529 plan as more advisers go direct


By Jessica ToonkelOct 18 (Reuters) - The California State Treasurer’s decision last week to shut down its adviser-sold 529 plan is the latest evidence that the once popular option is losing ground, experts say.For starters, these plans are already losing market share to their direct-sold counterparts — giving up 9 percent market share in the past five years. And experts predict that this trend will pick up pace as regulation of the brokerage industry expands.On Oct. 12, the ScholarShares Investment Board, which runs California’s 529 plan, announced it had decided to drop the plan because it was not able to find a manager that “could deliver a competitive plan for our account holders,” according to a statement by Joe DeAnda, a spokesman for California’s treasurer office.The change came as California switched providers from Fidelity Investments to TIAA-CREF. TIAA-CREF did not bid to run the plan.”We bid on the direct plan because that is where we feel we have the most expertise,” said Doug Chittenden, senior vice president of institutional product management at TIAA-CREF. California’s direct 529 plan has $3.9 billion in assets, compared to the adviser-sold plan, which has $283 million.Currently, 30 states have both an adviser-sold and direct option, according to FRC. When 529 plans came to the forefront in 1997, adviser-sold plans — which are sometimes available nationwide and are sold by brokers who receive a commission — largely drove the growth of the market.But that has changed. While adviser-sold plans accounted for 60 percent of 529 savings plan industry assets in 2006, they accounted for only 51 percent of assets as of the end of 2010, according to Financial Research Corporation.VICTIM OF SUCCESSTo some extent, adviser-sold 529 plans are a victim of their own success, industry officials said. As the industry has raised awareness about how these programs work, more investors feel comfortable investing in them directly.States also spend more of their marketing dollars promoting direct-sold plans, which may be another reason that market is growing, said Laura Lutton, a Morningstar Inc. analyst.What’s more, a growing number of advisers are telling clients to invest in their in-state direct-sold plans, forgoing any commission or fee.Twenty-three percent of advisers recently surveyed by Financial Research Corp said they always recommend their in-state direct 529 plans for clients, while 49 percent said they sometimes do.Direct-sold plans are less expensive than adviser-sold plans, said Paul Curley, a 529 analyst at FRC. The average fee for an adviser-sold plan is 1.14 percent. Direct plans, average 0.58 percent, according to FRC.Robert Oliver, an Ann Arbor, Michigan-based fee-only adviser, always directs his clients to the in-state plan, which costs 0.35 percent and offers a tax break to residents. But he still meets prospective clients who have been sold out-of-state plans by other brokers, he said.”A lot of clients are being sold plans because the adviser gets a commission off of them,” Oliver said.REGULATORY CHANGESGiven the regulatory landscape, that is likely to change, Hurley said.The securities industry expects the SEC to soon propose rules that would harmonize legal standards of care between brokers and registered investment advisers. That would mean that brokers could be required to act as fiduciaries, acting in the best interest of a client, a standard that RIAs already follow.One change that would bring: Advisers selling out-of-state plans, when their clients can get a tax deduction for the in-state option, would have to provide even more disclosures about why they are choosing an out-of-state plan for the client, Hurley said.But advisers won’t be shut out entirely, experts say.”When we talk to account holders, the top three ways that investors learn about 529 plans is word of mouth, advisers and the Internet,” said Joan Marshall, chair of the College Savings Plan Network and executive director of Maryland’s college savings plan. “A lot of people really want the assistance of advisers when making these decisions.”

Well, time to slap the old vodka bottle!


Blog Guy, I know you’re an expert on other cultures, and I have a question. I just heard an Eastern European expression, “slapping the old vodka bottle.” Jeez, I’m really hoping that’s not a euphemism for… No, it’s not. Relax. In some countries, they open a bottle of vodka by slapping the bottom until the cork comes out. The cork? But these days, vodka bottles have screw-tops! Well, then I guess they could be at it for quite some time. That’s why they normally bring along a plate of sausages, to keep their energy level up. So slapping the bottom of a bottle is a totally pointless tradition in the 21st century? It accomplishes absolutely nothing? I wouldn’t say that. If you need to get the last bit of ketchup out of a bottle for your burger, this is the guy to ask… Join the Oddly Enough blog network Follow this blog on Twitter at rbasler Tomasz Bodzicz of Poland opens a bottle of vodka in a traditional style as he sits in the back of a truck in front of Poland’s embassy, during a protest in Bucharest, Romania, October 9, 2011. More stuff from Oddly Enough ??

UPDATE 2-Austerity pressure weighs on Irish government


* PM insists there is no division in government* C.bank warns banks on raising mortgage rates* Credit Unions have provisions shortfall of around 300 mln eurosBy Conor Humphries and Carmel CrimminsDUBLIN, Oct 14 (Reuters) - A fresh call for Ireland to ramp up its austerity drive heaped pressure on Prime Minister Enda Kenny’s coalition government on Friday as he brokered negotiations for his administration’s first budget under an EU-IMF bailout.Fissures have emerged in Kenny’s cabinet over whether Dublin needs to make adjustments above 3.6 billion euros ($4.9 billion) next year to get the deficit, currently the worst in the industrialised world, down to 8.6 percent of Gross Domestic Product (GDP) from an estimated 10 percent this year.Adding to the strain, the Paris-based Organisation for Economic Cooperation and Development (OECD) said Dublin should go beyond the 8.6 percent goal to help regain the credibility of investors spooked by a deepening euro zone debt crisis.”I don’t want us to go beyond the 3.6 billion cut we have committed to,” Energy Minister Pat Rabbitte told state broadcaster RTE before the OECD report was published.”It’s very easy to rhyme off figures and say we will go for more than planned,” said Rabbitte, a senior member of junior coalition partner, the Labour Party.”You sit around a table with figures in front of you in social welfare, in health, in education, in justice and see how difficult it is.”Unlike Athens, Dublin has won international praise for meeting its bailout goals and Kenny, who led his centre-right Fine Gael party to a historic victory in March, is determined to position Ireland as the first country to emerge from the currency bloc’s debt crisis.But a weakening growth outlook for next year means Ireland will likely have to beyond 3.6 billion euros in spending cuts and tax increases just to meet its existing target.The worsening crisis in Greece, meanwhile, is putting pressure on Dublin to do more to further distinguish itself from Athens in the minds of investors.”In terms of your international credibility it’s always better to overperform,” Bob Ford, a senior OECD official said at a news conference in Dublin.”But if growth gets weak, it may be difficult to perform, so to overperform might be too much to ask.”Kenny, who has been widely praised for his smooth working relationship with his more left-wing Labour colleagues, told state broadcaster RTE on Friday: “There isn’t any division or any split.”BREATHING DOWN THE BANKS’ NECKSUnlike fellow bailout candidates, Greece and Portugal, whose economic problems are rooted in structurally weak economies, Ireland’s financial crisis was triggered by reckless lending by its banks.A devastating property crash and subsequent recession has sent mortgage arrears soaring and the country’s central bank on Friday warned lenders they needed to tackle the problem of unsustainable debts quickly and fairly.The central bank’s deputy governor Matthew Elderfield summoned the heads of Bank of Ireland , Allied Irish Banks , permanent tsb and the EBS Building Society to a meeting this week to tell them he would be “breathing down their necks” over the arrears problem.Banks risk enforcement action if they are not dealing with arrears fairly, he said.”There is a core group where the financial circumstances are so dire they are going to lose ownership of their home and it is unfair to postpone dealing with that group because in some cases you are saddling them with more debt for the future,” Elderfield told state broadcaster RTE.He also said the central bank may acquire the power to cap mortgage rates if banks didn’t stop hiking variable mortgage rates, some of which are as high as six percent compared to an European Central Bank base rate of 1.5 percent.”It seems in many cases the banks are using variable rate increases as a way to compensate for a lack of profitability on their tracker books and that doesn’t make sense to me in terms of fairness, but also from a practical matter that it is making the arrears problem worse,” Elderfield said.”I am saying to the banks that they are courting a policy response to cap their rates if they persist in doing this.”After recapitalising its banks, Ireland’s government has said it will also recapitalise the credit union sector, community-based savings and lending clubs, by up to 1 billion euros.A government-commissioned report on Friday showed that the country’s 409 credit unions had a provisions shortfall of around 300 million euros after arrears nearly doubled in the space of two years.Professor Donal McKillop, who wrote the report, said the credit unions may need less than 1 billion euros in extra capital unless conditions worsened.

Wind, solar farm finance at record in Q3-report


* Wind, solar more cost-competitive with fossil fuelsLONDON, Oct 13 (Reuters) - Wind farm and solar park financing surged to a record $41.8 billion in the third quarter, even though clean energy share prices and the European economy slumped, a report by research firm Bloomberg New Energy Finance said on Thursday.Asset financing of utility-scale renewable energy projects was 27 percent lower in the third quarter last year at $33 billion.The increase in financing was mainly driven by offshore wind investment. Three large offshore wind farms in the North Sea totalled more than 1 gigawatt in capacity and $6.3 billion in investment.There were also large financings for photovoltaic (PV), solar thermal and biofuel projects in the United States, a geothermal plant in Indonesia and onshore wind projects in Brazil and China, the report said.”Over the past three years we have seen extraordinary falls in the prices of clean energy equipment — wind turbines and solar photovoltaic panels. As these figures show, this has driven up installation rates and asset investment levels,” Michael Liebreich, chief executive of Bloomberg New Energy Finance, said in a statement.”However, there is still not enough demand to soak up significant over-supply, so prices and margins have remained under pressure and manufacturers’ share prices are being crushed,” he added.The average price of PV modules has fallen by a third since autumn 2010 and by 70 percent since mid-2008, while wind turbine prices have fallen by 20 percent since 2009, the report showed.This has made renewable energy technologies more cost-competitive with fossil fuel power sources but have been painful for supply chains.However, renewable energy stocks have lagged fossil fuel energy and wider global stocks over the past few months and the year to date, underperforming as world shares slid on concerns about slow global economic growth.Wind power shares have fallen sharply as the risk of further fiscal tightening weighed on a sector which depends on government support.Overall new investment in clean energy — including asset finance, equity raisings on public markets and venture capital and private equity — was $45.5 billion in the third quarter, up 16 percent on Q3 2010, the report said.In the third quarter, merger and acquisition activity in the clean energy sector rose 59 percent to $25.9 billion from Q3 2010.Large acquisition deals in the past three months included EDF’s purchase of 50 percent of its renewable energy arm EDF Energies Nouvelles for $7.9 billion and Toshiba’s takeover of Swiss electronic metering firm Landis+Gyr for $2.3 billion.

ADR REPORT-Euro fund hopes, weak dollar lift foreign shares


An index of American depositary receipts of Latin American companies jumped 2.6 percent, with Brazil’s Vale up 2.6 percent at $25.22, and Petrobras also up 2.6 percent at $24.50.Mexico’s America Movil gained 2.7 percent to $23.43.European ADRs rallied in sync with the FTSEurofirst-300 index closing at a nine-week high, lifted by stronger euro-zone economic data and news that Slovakia struck a deal to sign off on a plan to expand the region’s sovereign bailout fund.Slovakia is the last country in the 17-member currency zone left to approve the revamped fund.The BNY Mellon index of European ADRs advanced 1.91 percent.The euro rallied to almost a one-month high against the U.S. dollar on hopes that approval of the expansion of the euro zone’s rescue fund would help contain the region’s debt crisis.A weaker U.S. dollar makes greenback-denominated assets, like ADRs, cheaper for foreign investors.Barclays jumped 7 percent to $11.72 in New York, while HSBC gained 2.9 percent to $41.61.Commodity-related ADRs also jumped, including global miner BHP Billiton , up 2.9 percent at $76.19. Italian energy company Eni SpA rose 2.6 percent to $41.50.The BNY Mellon index of leading ADRs gained 1.94 percent, while the U.S. benchmark S&P 500 index rose 1 percent.

Bank Austria sees limited read-across from Erste-CFO


“This is something we continue to evaluate. For the rest (of countries in the region) I think this should be a specific topic for them,” he said when asked about potential parallels to Erste’s big writedowns.”The Hungarian situation which was the other big topic is something that we already disclosed quite recently what our exposure is, which — by luck rather than anything else — is a bit more moderate than others so we expect the impact to be visible but very much under control,” he said.”In Romania our presence is smaller and is very old…I think in Romania in particular we have much less of a heavy (presence).”

UPDATE 1-Wall St firms went bearish…just before stocks rebound


* Biggest shift for Morgan Stanley Smith Barney since 2009By Jessica ToonkelOct 11 (Reuters) - Clients of some big Wall Street firms have probably missed out on a sharp recovery in stocks over the past few days.The firms, who were cautiously optimistic or bullish through the summer selloff, have turned bearish just as the market seems to be clawing back.Between Sept. 18 and Oct. 6, several Wall Street houses who mostly stood pat through months of market volatility and heavy declines finally decided enough is enough.Morgan Stanley Smith Barney, Wells Fargo Advisors and UBS have scaled back their portfolios’ exposure to equities in the past three-and-a-half weeks, shifting away from stocks and into fixed income and cash.Meanwhile, the S&P 500 Index had its biggest rally in nearly six weeks on Monday and has gained 8.8 percent in the past six trading days.Despite that, investment officers at the firms say they don’t don’t believe governments in Europe and the U.S. are doing enough to address the crushing debt undermining their financial systems.Investment managers said they believe the ongoing uncertainty and wild market swings are here to stay. What’s more, the volatility suggests to some investment strategists that another recession is increasingly likely.European leaders have been meeting for months to address the debt crisis plaguing the continent. What little progress there has been is not happening fast enough, said Jeff Applegate, chief investment officer at Morgan Stanley Smith Barney, the brokerage arm of Morgan Stanley .European Central Bank President Jean-Claude Trichet warned on Tuesday that the crisis had “reached a systemic dimension.”At the same time, in the U.S. the government has been unable to get much accomplished, Applegate said. For example, President Obama’s jobs-creation package was defeated in the U.S. Senate on Tuesday.”You have seen a lot of change since August,” Applegate said. “And the policy responses have not been been swift enough or large enough.”On Oct. 6, Morgan Stanley Smith Barney shifted the allocation of its portfolios from overweight on global equities, commodities and real estate investment trusts to underweight, while going overweight from underweight on cash and global bonds.BIG SHIFT”This is a big shift for us, the biggest we have made since April 2009,” Applegate said. At that time the firm shifted to overweight equities as the markets rebounded after the financial crisis.One major factor in Morgan Stanley Smith barney’s decision to cut back on risk was a Sept. 21 report by the Economic Cycle Research Institute predicting a recession. ECRI has successfully predicted the past four U.S. recessions.On Oct. 1, Wells Fargo Advisors, the brokerage arm of Wells Fargo & Co. went from neutral to underweight on its equity exposure in its cyclical asset allocation portfolios.Wells, which reevaluates its portfolios on a quarterly basis, first reduced its equity exposure slightly in April, but cut exposure even further this month due to fears about the European debt crisis, said Stuart Freeman, chief equity strategist at Wells Fargo Advisors.The firm in April shifted its moderate growth & income portfolio to 58 percent in equities from 63 percent. This month, the fund decreased its share of equities again, to 45 percent.Wells Fargo Advisors now predicts a 35 percent chance for a U.S. recession, up from a 20 percent chance four months ago, Freeman said. The chances of a recession in Europe, according to the firm: 40 percent, up from 25 percent a few months ago.Similarly, UBS shifted its portfolios from neutral to underweight equities on Sept. 18.”We felt that the fundamental issues affecting the markets had not been resolved,” said Mike Ryan, head of research for wealth management at UBS. Ryan doesn’t think the United States is necessarily headed for a recession.”We think you will see choppy, sluggish growth,” he said.Of course, not every firm is scaling back on equities. Equity strategists at Bank of America Merrill Lynch - whose logo is a bull — are maintaining their overweight position on equities, albeit a “moderate” overweight position, said Kate Moore, global equity strategist at Bank of America Merrill Lynch.She said that too many investors have held too small a position in equities since the market crash of 2008 and missed the rally. Furthermore, she said she believes Europe is closer to coming up with a solution for its problems.”We are seeing a willingness of policy makers in Europe to put things together,” she said.Bank of America Merrill Lynch’s economists forecast U.S. GDP growth of 2.5 percent for the third quarter, she said.”That’s a far cry from the two quarters of negative GDP growth that define a recession,” Moore said.

UPDATE 1-Wall St firms went bearish…just before stocks rebound


* Biggest shift for Morgan Stanley Smith Barney since 2009By Jessica ToonkelOct 11 (Reuters) - Clients of some big Wall Street firms have probably missed out on a sharp recovery in stocks over the past few days.The firms, who were cautiously optimistic or bullish through the summer selloff, have turned bearish just as the market seems to be clawing back.Between Sept. 18 and Oct. 6, several Wall Street houses who mostly stood pat through months of market volatility and heavy declines finally decided enough is enough.Morgan Stanley Smith Barney, Wells Fargo Advisors and UBS have scaled back their portfolios’ exposure to equities in the past three-and-a-half weeks, shifting away from stocks and into fixed income and cash.Meanwhile, the S&P 500 Index had its biggest rally in nearly six weeks on Monday and has gained 8.8 percent in the past six trading days.Despite that, investment officers at the firms say they don’t don’t believe governments in Europe and the U.S. are doing enough to address the crushing debt undermining their financial systems.Investment managers said they believe the ongoing uncertainty and wild market swings are here to stay. What’s more, the volatility suggests to some investment strategists that another recession is increasingly likely.European leaders have been meeting for months to address the debt crisis plaguing the continent. What little progress there has been is not happening fast enough, said Jeff Applegate, chief investment officer at Morgan Stanley Smith Barney, the brokerage arm of Morgan Stanley .European Central Bank President Jean-Claude Trichet warned on Tuesday that the crisis had “reached a systemic dimension.”At the same time, in the U.S. the government has been unable to get much accomplished, Applegate said. For example, President Obama’s jobs-creation package was defeated in the U.S. Senate on Tuesday.”You have seen a lot of change since August,” Applegate said. “And the policy responses have not been been swift enough or large enough.”On Oct. 6, Morgan Stanley Smith Barney shifted the allocation of its portfolios from overweight on global equities, commodities and real estate investment trusts to underweight, while going overweight from underweight on cash and global bonds.BIG SHIFT”This is a big shift for us, the biggest we have made since April 2009,” Applegate said. At that time the firm shifted to overweight equities as the markets rebounded after the financial crisis.One major factor in Morgan Stanley Smith barney’s decision to cut back on risk was a Sept. 21 report by the Economic Cycle Research Institute predicting a recession. ECRI has successfully predicted the past four U.S. recessions.On Oct. 1, Wells Fargo Advisors, the brokerage arm of Wells Fargo & Co. went from neutral to underweight on its equity exposure in its cyclical asset allocation portfolios.Wells, which reevaluates its portfolios on a quarterly basis, first reduced its equity exposure slightly in April, but cut exposure even further this month due to fears about the European debt crisis, said Stuart Freeman, chief equity strategist at Wells Fargo Advisors.The firm in April shifted its moderate growth & income portfolio to 58 percent in equities from 63 percent. This month, the fund decreased its share of equities again, to 45 percent.Wells Fargo Advisors now predicts a 35 percent chance for a U.S. recession, up from a 20 percent chance four months ago, Freeman said. The chances of a recession in Europe, according to the firm: 40 percent, up from 25 percent a few months ago.Similarly, UBS shifted its portfolios from neutral to underweight equities on Sept. 18.”We felt that the fundamental issues affecting the markets had not been resolved,” said Mike Ryan, head of research for wealth management at UBS. Ryan doesn’t think the United States is necessarily headed for a recession.”We think you will see choppy, sluggish growth,” he said.Of course, not every firm is scaling back on equities. Equity strategists at Bank of America Merrill Lynch - whose logo is a bull — are maintaining their overweight position on equities, albeit a “moderate” overweight position, said Kate Moore, global equity strategist at Bank of America Merrill Lynch.She said that too many investors have held too small a position in equities since the market crash of 2008 and missed the rally. Furthermore, she said she believes Europe is closer to coming up with a solution for its problems.”We are seeing a willingness of policy makers in Europe to put things together,” she said.Bank of America Merrill Lynch’s economists forecast U.S. GDP growth of 2.5 percent for the third quarter, she said.”That’s a far cry from the two quarters of negative GDP growth that define a recession,” Moore said.

Oman plans two power sector IPOs in 2012-13


Last year, OPWP awarded Phoenix Power Co a 25-year agreement to build-own-operate the 2000-megawatts Sur power company, which will cost $1.5 billion when the plant is commissioned in 2014.Phoenix Power is made up of a consortium of Marubeni Corporation, Chubu Electric Power Co Inc, Qatar Electricity and Water Company and a local group Bahwan Engineering Group.The second IPO in April 2013 is being planned by Batinah Power Company, but the government has yet to sign an agreement with the developers.Last month, SMN Power Company offered 35 percent of its share capital in an IPO that closed on Monday.Four power companies already trade on the Omani bourseThe central bank governor on Monday said that Nizwa and Al Izz International banks will each float 40 percent of their share capital in public offerings early next year, bringing the total planned IPO issues in 2012 to three.