Month: December 2021

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Finance-technology firm bringing 400 jobs, $15M investment to Wilmington | The Latest from WDEL News

Finance-technology firm bringing 400 jobs, M investment to Wilmington | The Latest from WDEL News

A transformative technology company combining the financial and technology sectors–or, FinTech–is coming to Wilmington and promising to bring with it almost 400 jobs.

Investor Cash Management (ICM) will invest $15.37 million into their new Wilmington-based headquarters after receiving $4.25 million in taxpayer-funded considerations through the Delaware Strategic Fund, though ICM’s expansion plans include providing 395 jobs over the next three years–13 times the size of its current 30-persons staff, officials said.

“We’re just grateful and humbled to be here. After an extensive search–our roots are in Chicago. Chicago is a good home to us–we looked at Florida, we looked at Texas, we looked at Connecticut. But we have no doubt whatsoever, intending no disrespect to others, that this is the right place for us,” said ICM founder and CEO Fred Phillips. 

The company, which just got its start in 2018, debuted during an unveiling of their plans at at press conference at 1201 North Market Street on December 14, 2021. Phillips described the company as transforming funds into both “fully liquid and fully invested” assets. He touted it is the youngest tech company to have ever received investment from Visa. 

In a press release from the state, officials described the company as a “platform as a service (PaaS) provider in the fintech space, ICM uses an application programming interface–or API-driven technology–to link cash management accounts directly to specified investments, transforming investment products such as mutual funds, exchange traded funds and/or shares into digital transaction currencies. The technology combines banking, investing and payments to drive client acquisition and increase assets.”

Mayor Mike Purzycki said he was happy to have the company finding its home here in the city. 

“I think it’s the jobs. It’s the addition to our city economically, but it’s also symbolic of the city’s appeal to people who could have gone anywhere in the entire country and they came here to Wilmington,” said Purzycki on Tuesday. “We think that’s pretty empowering. It makes you feel really confident that what you’re doing is the right thing.”

The move just makes sense, said Gov. John Carney, who believed it’s Wilmington’s pool of talent with seemingly endless depth. He said ICMs arrival is just the latest in a long list of companies that recognize the people that make the First State attractive. 

“We need to change and compete every day. And one of the areas where we believe we have great strength, and where we can be competitive, is in the financial services sector,” Carney said. “We have a great talent base here in Delaware, created initially by some of the larger banks and financial services institutions. We have a great tech sector…So that merger of those two into a FinTech sector has been really an important opportunity for us.”

As an additional bonus, the firm will be partnering with Delaware State University, which offers financial management tools, products, and services to its students, faculty, staff, and alumni, with the school’s stated goal being increasing financial literacy particularly for unbanked or underbanked minorities. 

“What we want to do, and what indeed we’ve done–among our partners are Delaware State [and university President] Tony Allen, who has just been wonderfully supportive–is to look at how it is that we can go ahead and solve the most fundamental of economic problem,” Phillips said. “Which is, ‘What is it that we should do with our money?'”

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Neogen to acquire 3M’s food safety business | 2021-12-14

Neogen to acquire 3M’s food safety business | 2021-12-14

LANSING, MICH. — Neogen Corp. is acquiring 3M’s food safety business. The acquisition will be in the form of a Reverse Morris Trust where 3M’s food safety business will be spun-off to 3M shareholders and then merged with a subsidiary of Neogen.

At the completion of the transaction, Neogen will issue shares to 3M shareholders such that 3M shareholders will receive approximately 50.1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of the combined company and existing Neogen shareholders will continue to own approximately 49.9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of the combined company. In connection with the transaction, 3M also will receive consideration valued at approximately $1 billion, subject to closing and other adjustments.

The transaction values 3M’s food safety business at approximately $5.3 billion. Once completed, the combined business is expected to have a value of $9.3 billion based on Neogen’s closing share price as of Dec. 13.

“This combination will enhance Neogen’s position in this new era of food security, equipping us with an expanded product line that enables us to capitalize on our growing footprint, reaching more customers, more often, while continuing our track record of strong and consistent growth,” said John Adent, Neogen’s president and chief executive officer. “The heightened global focus on food security, sustainability and supply chain solutions around the world presents exciting opportunities for Neogen to be positioned as an innovative leader at the forefront of the growth and digitization of the industry.”

Specifically, Neogen said the merger will expand its capabilities in indicator testing and pathogen detection. It also will expand Neogen’s opportunities beyond the US and Europe and give the company greater capabilities to lead the digitization of the food security industry.

Mr. Adent and the company’s existing management team will lead the combined company. The size of Neogen’s board of directors will be increased by two independent board members appointed by 3M at the closing.

“By combining our food safety business with Neogen, we will create an organization well positioned to capture long-term profitable growth,” said Mike Roman, CEO of 3M. “This transaction further evolves our strategy, focuses our health care business and benefits our stakeholders, as we actively manage our portfolio to drive growth and deliver shareholder value.”

The transaction is expected to close by the end of the third quarter of 2022.

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Stock market news live updates: Tech stocks lead indexes higher following Fed decision: S&P 500 gains 1.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

Stock market news live updates: Tech stocks lead indexes higher following Fed decision: S&P 500 gains 1.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

Stocks ended sharply higher Wednesday afternoon as investors mulled the Federal Reserve’s final monetary policy decision of 2021, which came against a backdrop of persistent inflationary pressures. 

The S&P 500 and Dow turned positive after spending much of the trading day earlier in the red. The Nasdaq outperformed to add more than 2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. Bond yields rose, and the benchmark 10-year Treasury yield added more than 3 basis points to rise rise above 1.47{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} immediately following the Fed’s 2 p.m. monetary policy decision.

All eyes on Wednesday were on the Federal Reserve’s monetary policy statement. In this, the Fed announced it was speeding the withdrawal of its crisis-era stimulus programs. The Fed ramped up the rate of tapering of its asset purchasing program to $30 billion per month. 

Previously, the Fed’s asset purchasing program took place at a rate of $120 billion per month in combined Treasuries and agency mortgage-backed securities from the start of the pandemic through November. Last month, the Fed began dialing back these purchases by $15 billion, and announced another $15 billion reduction for December.

The Federal Reserve’s updated Summary of Economic Projections, or so-called “dot plot,” also showed the likelihood of several interest rate hikes next year. The updated projections showed the median member of the Federal Open Market Committee expected three rate hikes in 2022, followed by as many as four hikes in 2023 and as many as two in 2024. This charted out a quicker cadence of rate hikes than projected in the Fed’s September dot plot. 

The firming economic recovery and soaring inflation has given the central bank room for a more hawkish tilt to policy. Last week’s Consumer Price Index showed the fastest surge in U.S. consumer prices since 1982 on a year-over-year basis in November. And on Tuesday, the U.S. Producer Price Index jumped by the most on record at a 9.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} year-over-year increase for last month. 

The Federal Reserve’s latest statement suggested officials were taking note of the rising prices.

“Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation,” according to the statement.

A number of strategists noted the trading activity in recent sessions and weeks reflected the market already pricing in a more hawkish Fed. Software and other growth names were some of the biggest laggards in the major indexes during Tuesday’s session, and the Nasdaq dropped more than 1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} during the trading day.

“When you have an anticipation of higher interest rates, growth stocks or long-duration growth stocks certainly get hit the hardest,” Art Hogan, national chief market strategist, told Yahoo Finance Live on Tuesday. “When you do that net present value calculation with a higher interest rate, that implied multiple or ascribed multiple to growth names comes in. So a lot of that’s been priced in. When you think about some of those real growth-y names and momentum names and risk assets, they’ve seen a lot of carnage.”

“What the market is trying to tell us here is that when you set your asset allocation plan for next year, you want to have a barbell approach with growth on one side — you want to have those growth names that are actually valued at a multiple to earnings, not a multiple to revenues or a multiple to cash flows or a multiple to sales,” he added. “We anticipate 2022 is going to be very much like 2021, where you really want to have a balance between growth and value.”

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4:03 p.m. ET: Tech stocks lead indexes higher following Fed decision: S&P 500 gains 1.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, Dow adds 383 points, or 1.1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

Here were the main moves in markets as of 4:03 p.m. ET:

  • S&P 500 (^GSPC): +75.77 (+1.64{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,709.86

  • Dow (^DJI): +383.38 (+1.08{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,927.56

  • Nasdaq (^IXIC): +327.94 (+2.15{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,565.58

  • Crude (CL=F): +$0.86 (+1.22{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $71.59 a barrel

  • Gold (GC=F): +$7.10 (+0.40{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,779.40 per ounce

  • 10-year Treasury (^TNX): +2.5 bps to yield 1.4630{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

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2:13 p.m. ET: Stocks trade higher as investors consider Fed decision 

Here’s a snapshot of how markets were trading Wednesday afternoon following the Federal Reserve’s latest monetary policy statement and projection materials. 

  • S&P 500 (^GSPC): +21.61 (+0.47{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,655.70

  • Dow (^DJI): +142.76 (+0.4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,686.94

  • Nasdaq (^IXIC): +58.47 (+0.38{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,295.27

  • Crude (CL=F): -$0.25 (-0.35{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $70.48 a barrel

  • Gold (GC=F): -$10.00 (-0.56{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,762.30 per ounce

  • 10-year Treasury (^TNX): +2.3 bps to yield 1.462{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

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11:51 a.m. ET: Pfizer shares set record high as company awaits COVID-19 pill authorization 

Shares of Pfizer (PFE) jumped to a fresh record intraday high on Wednesday amid optimism over the company’s COVID-19 pill, called Paxlovid. President Joe Biden said Tuesday that the White House had ordered enough of the antiviral pills to treat 10 million Americans, and that he was “encouraged by the promising data” that the drug-maker released on the pill. Pfizer’s data showed earlier this week that the drug decreased the risk of hospitalization or death by 89{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for high-risk adults. 

Pfizer’s stock was up more than 3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to trade above $57 per share Wednesday afternoon, and paced toward a fifth straight day of gains. The stock has risen 56{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for the year-to-date. 

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11:10 a.m. ET: Amazon Web Services sees connectivity issues, impacting Twitch, other platforms

Amazon’s web hosting platform Amazon Web Services (AWS) experienced connectivity issues Wednesday morning, triggering outages at platforms from Zoom Video Communications to Amazon-owned Twitch and other online services. 

As of 10:42 a.m. ET, more than 20,000 outages were reported on DownDetector. Amazon Web Services said on its status page Wednesday that it was still investigating connection issues in Northern California and Oregon as of late morning Eastern Time. 

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9:30 a.m. ET: Stocks open flat 

Here’s where markets were trading as of 9:30 a.m. ET: 

  • S&P 500 (^GSPC): +4.04 (+0.09{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,638.13

  • Dow (^DJI): +1.87 (+0.01{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,546.05

  • Nasdaq (^IXIC): -5.75 (-0.04{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,919.00

  • Crude (CL=F): -$0.54 (-0.76{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $70.19 a barrel

  • Gold (GC=F): -$1.60 (-0.09{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,770.70 per ounce

  • 10-year Treasury (^TNX): +3.8 bps to yield 1.467{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

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8:30 a.m. ET: Retail sales rose 0.3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in November, missing estimates

U.S. retail sales rose at a slower-than-expected rate in November after a jump in October, as electronics and department store retailers’ sales especially dropped during the month. 

Retail sales were up 0.3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in November compared to October, the Commerce Department said on Wednesday. This came in below the 0.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} monthly increase consensus economists were expecting, according to Bloomberg-compiled data. In October, retail sales rose 1.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, which was upwardly revised from the 1.7{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} increase previously expected. 

By category, department stores saw one of the biggest sales drops during the month with a decline of 5.4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. General merchandise store sales more broadly declined 1.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. Electronics and appliance store sales fell by 4.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, and health and personal care store sales were down 0.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. 

“I see this more as a sign that Americans started their holiday shopping early, as opposed to bad news for retailers,” Ted Rossman, senior industry analyst at CreditCards.com, wrote in an email Wednesday morning. He noted that on a year-over-year basis, retail sales were still up 18.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. 

“That year-over-year comparison is more significant, and it illustrates robust expansion,” he added. 

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7:26 a.m. ET Wednesday: Stock futures drift

Here’s where markets were trading ahead of the opening bell on Wednesday: 

  • S&P 500 futures (ES=F): +0.25 points (+0.01{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,637.25

  • Dow futures (YM=F): +12 points (+0.03{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,564.00

  • Nasdaq futures (NQ=F): -11.5 points (-0.07{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,913.25

  • Crude (CL=F): -$0.87 (-1.23{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $69.86 a barrel

  • Gold (GC=F): -$2.00 (-0.11{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,770.30 per ounce

  • 10-year Treasury (^TNX): +0.9 bps to yield 1.448{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

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6:24 p.m. ET Tuesday: Stock futures edge up ahead of Fed decision

Here were the main moves in markets as the overnight session kicked off on Tuesday: 

  • S&P 500 futures (ES=F): +2.25 points (+0.05{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,639.25

  • Dow futures (YM=F): +25 points (+0.07{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,577.00

  • Nasdaq futures (NQ=F): +12.25 points (+0.08{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,937.00

NEW YORK, NEW YORK - DECEMBER 13: Traders work on the floor of the New York Stock Exchange (NYSE) on December 13, 2021 in New York City. As investors are still concerned about rising prices due to inflation, the Dow Jones Industrial Average dropped 175 points in Monday morning trading. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – DECEMBER 13: Traders work on the floor of the New York Stock Exchange (NYSE) on December 13, 2021 in New York City. As investors are still concerned about rising prices due to inflation, the Dow Jones Industrial Average dropped 175 points in Monday morning trading. (Photo by Spencer Platt/Getty Images)

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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Fee-Only Financial Advisors: What to Know

Fee-Only Financial Advisors: What to Know
  • Fee-only advisors give financial planning advice to individuals and couples for a set fee based on the services they provide you.
  • Fee-only advisors do not receive commissions from the sales of products.
  • Fee-only and fee-based advisors have several differences to consider when deciding which type of advisor to work with.
  • Read more stories from Personal Finance Insider.

Seeking a professional to help you manage your money is a great step to achieving your financial goals. But not all financial advisors are the same; some may offer varying services — and more importantly, they may have different fee structures.

A fee-only financial advisor will be one you’ll come across during your search. Here’s what to know. 

What is a fee-only financial advisor?

A fee-only financial advisor is an advisor that’s paid on a set rate based on the services they provide a client, rather than being paid based on commission. These types of advisors act as a


fiduciary

, meaning that they’re required to make recommendations that are in a client’s best interest. While that seems like common sense, a lot of other advisors only act on a suitability basis, meaning that they only have to provide recommendations that are suitable for a client’s situation. 

Fee-only advisors provide the following services: 

  • Listening to and giving advice on a client’s financial situation
  • Implementing the client’s plan
  • Managing the client’s assets on an ongoing basis

What’s the difference between fee-only and fee-based? 

There are a few differences between fee-only advisors and fee-based advisors. Fee-only advisors do not receive any product sale commissions, such as those through the sale of life or disability insurance, mutual funds, or annuities. They charge clients a fee for their expertise and advice, and the opportunity to work together. 

Fee-only advisors can be paid in a number of ways including:

  • An hourly rate: Advisors are paid per hour for service provided. 
  • A retainer fee: Clients pay an ongoing fee to continue the advisor-client relationship. 
  • A percentage of assets under management (AUM): Advisors take a certain percentage, such as 1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, of all assets a client has under their management. 
  • A flat fee: Some advisors choose to charge a flat fee, typically paid monthly, semi-annually, or annually. 

Fee-based advisors can be paid in a number of ways including:

  • Commission-based model: Fee-based advisors can receive a fee from the sale of insurance and investment products. 
  • A combination of a commission and fee model: Fee-based advisors can receive a fee from the sale of products as well as a fee to give the client advice. 
  • Through a percentage based on assets under management (AUM): Like fee-only advisors, fee-based advisors can also charge a fee based on the amount of assets they manage for a client. 
  • Through an hourly or retainer model: Like fee-only advisors, fee-based advisors can also charge an hourly or ongoing fee for their advice. 

There are oftentimes downfalls of working with fee-based advisors, mostly because they can still make commission off of product sales. “One [drawback] of working with a fee-based advisor is that there exists an inherent conflict of interest,” says Scott Turner, CFP and fee-only advisor at Rockstar Financial Planning. “You can’t tell if they are offering the best products, or they are only limited to selling their own proprietary/limited products offered by the company they work for or represent.” 

Pros and cons of fee-only financial advisors 

There are several pros and cons to fee-only financial advisors:

Pros of fee-only:

  • Fewer conflicts of interest: Because fee-only advisors don’t accept payments on the sale of investment or insurance products they are able to make recommendations without the lure of receiving payment for such recommendations.
  • Follow a fiduciary standard: Because there are fewer conflicts of interest, fee-only advisors make recommendations that are in the best interest of the client, holding them to a fiduciary standard. 
  • Client knows fees ahead of time: Fee-only advisors discuss how they are paid with their clients ahead of time, either by an hourly rate, ongoing fee, flat fee or percentage of assets under management.

Cons of fee-only:

  • More expensive to work with: For those who need basic saving or budgeting advice, or want to purchase an investment or insurance product and don’t mind paying fees, then it may be less expensive to work with a different type of advisor. 
  • Will need to find products elsewhere: “Fee-only advisors don’t typically sell insurance, so they refer clients to a third-party insurance broker or salesperson. A fee-based advisor can often sell insurance directly to clients (although it might not be the best policy for the client),” states Matthew Jenkins, CFP and president of Noble Hill Planning, a fee-only financial planning firm. 

The financial takeaway

Working with a fee-only financial advisor can be a great way for clients to get fiduciary financial advice that’s in their best interest. However, not all clients will be able to afford the fee to work with an advisor or can justify the fee they may charge to manage the client’s assets. While working with a fee-based advisor is also an option, potential clients need to understand the fees they charge and how they get paid in order to determine if it will be a good fit. 

“Working with a fee-only advisor minimizes conflicts of interest, but just because someone is a fee-only advisor does not inherently mean they have the particular expertise you are looking for,” says Brandon Renfro, CFP and owner of Belonging Wealth Management. “You still need to vett a fee-only advisor to make sure they have the appropriate education and training to help you.”

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The finance jobs that pay $300k in your 30s, $400k in your 40s

The finance jobs that pay 0k in your 30s, 0k in your 40s

How soon do you start earning ‘good money’ in finance jobs? When does your pay peak, and when should you probably think about moving on, or suffer a precipitous pay fall? The new eFinancialCareers salary and bonus survey suggests the answer to each question is, “Sooner than you think.”

Over 4,500 people globally responded to our salary and bonus survey earlier this year, and many were high earners relative to almost any other industry. As the chart below shows, most finance careers bring high levels of total compensation (salary plus bonus) at a young age. Compensation typically rises dramatically until your mid-40s. And then it usually falls back – although there are exceptions. 

Our survey data suggests most finance jobs will pay you over $200k by the time you’re 26. Private equity is the curious exception here, possibly because a high proportion of PE pay comes in the form of carried interest which is only provided to more senior (and therefore older staff).

On average, our survey results suggest that if you work on the sell-side (in an investment bank) you will earn over $300k by the time you’re 30, although the highest pay is reserved for people who work in front office roles like M&A and sales and trading. 

The bad news is that pay in many roles peaks in your 40s and then falls dramatically. Depending upon where you work, it’s then all downhill from there.

The biggest drop-off is in the investment banking division, where pay goes from a peak of $496k aged 36-40 to $200k aged 51-55. In private equity, some over 56 year-olds appear to be earning a pittance compared to their younger counterparts.

There will always be high performers that skew the figures. In hedge funds, a few high earners in their late 50s drive the average up – and reflect the fact that in an industry where performance is everything, age can be immaterial. 

The best place to work if you’re in finance beyond your 40s looks like the sales and trading divisions of investment banks. Even though pay here peaks in your early 40s, the drop-off is far less significant than in other areas. – If you survive that long on the trading floor, you can still expect to be earning over $500k in your 50s, while the average 50 year-old in the investment banking division is earning half as much.

 

Photo by Matthew LeJune on Unsplash

Download our full salary and bonus survey here. 

Have a confidential story, tip, or comment you’d like to share? Contact: sbutcher@efinancialcareers.com in the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)

Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)

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Inflation puts pressure on insurers, policyholders

Inflation puts pressure on insurers, policyholders

The 6.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} annual increase in the consumer price index reported last week provided more evidence of higher inflationary trends in the United States, but economists and insurance industry executives say the higher prices may be only a short- or medium-term issue for the sector.

The COVID-19 pandemic is the main driver of price hikes, and supply and demand imbalances should normalize over the next two or so years, they say.

The spike in inflation, however, has rippled through the insurance industry from higher construction and auto fleet costs to valuation reviews that are surprising some. The uncertainty caused by the uneven emergence of businesses from the pandemic has made coping with the changes more difficult, and the emergence of the omicron coronavirus variant could complicate recovery efforts further.

After several months of above-average increases, inflation may be beginning to moderate. While the annual rate of inflation is at its highest in decades, the U.S. Bureau of Labor Statistics reported Friday that the consumer price index increased 0.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in November, on a seasonally adjusted basis, after rising 0.9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in October.

Economists say the global disruption tied to the pandemic has been the root cause of the current economic inflation and uncertainty. 

“There’s no question without the pandemic we wouldn’t have had this inflation,” said Robert Hartwig, clinical associate professor and director, Risk and Uncertainty Management Center, at the University of South Carolina’s Darla Moore School of Business, adding that “economists are the least surprised group” that inflation is occurring.

He added, however, that many of the factors that drove the consumer price index so high in October are already receding, with energy prices and futures lower and supply chain disruptions easing.

“This is a pandemic story,” said Thomas Holzheu, Armonk, New York-based chief economist Americas for Swiss Re Ltd. What started as a health crisis, with lockdowns and social distancing, turned into an unprecedented labor market crisis and ultimately into a global economic crisis, he said.

Supply chain disruptions that followed extreme swings in demand and changing preferences related to working from home have helped create mismatches in supply and demand, including housing changes as people relocated, driving homebuilding costs higher. “All of this comes from COVID,” Mr. Holzheu said.

Both economists noted that the most recent data and statistics are subject to a “base effect” because some economic indicators and metrics were depressed last year due to the effects of the COVID-19-related economic slowdown.

Michel Leonard, vice president, senior economist and data scientist, and head of the economics and analytics department in New York for the Insurance Information Institute, said that this period of inflation is supply driven and not demand driven.

“Significant economic, pandemic and geopolitical threats to recovery remain,” Mr. Leonard said in his presentation at the Joint Industry Forum in New York earlier this month. The emergence of the omicron variant is already leading to new restrictions and introducing added uncertainty to the budding recovery.

Although the reopening of economies is inconsistent and there are still mismatches between supply and demand, these are expected to “work themselves out but it’s taking a little longer than expected and will definitely stretch into 2022,” Mr. Holzheu said.

“As manufacturing ramps up and supply chain issues ease, that should alleviate over time, but there’s still a shortage that needs to be caught up,” said Karen Collins, an assistant vice president in Sacramento, California, for the American Property Casualty Insurance Association.

Materials needed for construction and repair on property insurance lines started to become “constrained” toward the end of 2020 and commercial auto was hit by supply chain disruption, extending repair times and becoming subject to labor shortages and further inflation, Ms. Collins said. Replacement costs for large fleets are also increasing due to supply and labor shortages in new vehicle production and extended repair times, she said.

Inflation is hitting the insurance industry hard in some coverage areas, said Marcus Winter, president and CEO of Munich Re U.S.

“The inflation for insurers right now is much higher than the average CPI inflation … particularly by the combination of increased costs for labor and material. Lumber costs have reduced a bit since their peak earlier this year but are still almost 40{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} higher than in 2019, and other construction materials such as steel, concrete and gypsum” are also showing above-average increases in price, he said.

One tool for combatting the rising costs is risk mitigation and control, Ms. Collins said.

Given the uptick in prices and fluctuations in rebuilding and replacement costs, policyholders must be increasingly confident and up to date with data concerning insured values, said Tim Ramsayer, valuation practice leader for Marsh Advisory, a division of Marsh LLC, in New York.

Mr. Ramsayer said policyholders can undertake valuation studies on their schedule of assets to ensure that data is accurate and reflects inflation, fluctuations in pricing and added uncertainty of emerging from the pandemic.

“There are some clients going through this exercise right now and being very surprised by the increase in values,” Mr. Ramsayer said.

Insurers also are reviewing the insured values of properties they cover, Munich Re’s Mr. Winter said.

“Insurance companies have seen the impact of inflation in their portfolios already at the end of 2020 and the beginning of 2021 and have already reacted to the current and future expected inflationary environment by adjusting insured property values and insured limits to maintain proper insurance to value,” he said.