If there is one industry has had its fair share of rules and regulations since the Great Recession and subsequent market debacle of 2008, it is the financial services industry. From bank stress tests to higher capital balances and tighter control on sales and trading, the industry is probably one of the most scrutinized, coming in right after nuclear power.
A new report from UBS handicaps the implication on yet another new set of rules.
The U.S. Department of Labor recently issued a proposal for a new fiduciary standard with respect to retirement accounts. The UBS team feels that, if enacted as stated, the change is critical for affected companies and, beyond changes to the macroeconomic environment, could be one of the most important drivers of some stocks’ near-term stock price performance.
UBS focused on three stocks to buy in advance of the proposal: Ameriprise Financial Inc. (NYSE: AMP), TD Ameritrade Holding Corp. (NYSE: AMTD) and Morgan Stanley (NYSE: MS).
This top financial services firm, formerly known as American Express Financial Advisors, was spun off from the credit card giant in 2005. The company provides a range of financial products and services in the United States and internationally.
The Advice & Wealth Management segment offers financial planning and advice, as well as brokerage services primarily to retail clients through its advisors. The Asset Management segment provides investment advice and investment products to retail, high net worth and institutional clients through unaffiliated third party financial institutions and an institutional sales force. In recent years Ameriprise has recruited heavily from the top Wall Street firms’ ranks.
The UBS team pointed out that, during the company’s earnings call, management highlighted the fact that the Ameriprise advisers already act as fiduciaries under current SEC guidelines for its advisory relationships. While they also indicated compliance-related costs could rise ahead due to the Labor Department proposal, they were well prepared for changes.
Ameriprise Financial investors are paid a 1.8% dividend. The UBS price target for the stock is $145. The Thomson/First Call consensus target is $141.80. The stock closed Tuesday at $137.53.