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Assessing the Risk of a Greek Default

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Assessing the Risk of a Greek Default

Assessing the Risk of a Greek Default

On Friday, April 24th, the finance ministers of Europe will again meet to discuss the fate of Greece’s bailout program. Although no definitive course of action is expected to come out of this meeting, it is yet another chance to assess the potential consequences if indeed the Greek government defaults on its loans.

Greek debt currently sits at 175% of GDP, and there has been a recent flight from Greek bonds. Short-term (3 year) bond yields are at nearly 29%, and standard 10-year bond yields are over 12.5%. Bond analysts are giving Greece a 90% of defaulting on its debt over the next five years, which is up from just 67% on March 1st.

See our Chart of the Week to see how things look for Greece’s debt, and who is on the hook if there is a default.

What happens if Greece defaults? Many expect that it would lead to an exit from the monetary union and that the country would have to return to their previous currency, the drachma.

In such a case, there would be substantial chaos as other European countries own €52.9B of bilateral debt, the European Financial Stability Fund (EFSF) is owed €141.8B in emergency loans, the ECB holds €27B of tradeable bonds, and €67.5B of bonds are held by private investors. It is likely a banking crisis would result, as the web of debt unravels between banks and countries throughout the globe.

Even if Greece doesn’t exit the Eurozone, it will be between a rock and a hard place. With an anti-austerity government in place, the inability to print its own currency, and skyrocketing yields on bonds and confidence, it will be difficult to find a way forward.

For a good overview of how this all started, don’t forget to view this video on the Eurozone Debt Crisis visualized.

Original graphic from: Gainesville Coins

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Investor Education

The Top 5 Reasons Clients Fire a Financial Advisor

Firing an advisor is often driven by more than cost and performance factors. Here are the top reasons clients ‘break up’ with their advisors.

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The following content is sponsored by Morningstar
This circle graphic shows the top reasons for firing a financial advisor.

The Top 5 Reasons Clients Fire a Financial Advisor

What drives investors to fire a financial advisor?

From saving for a down payment to planning for retirement, clients turn to advisors to guide them through life’s complex financial decisions. However, many of the key reasons for firing a financial advisor stem from emotional factors, and go beyond purely financial motivations.

We partnered with Morningstar to show the top reasons clients fire an advisor to provide insight on what’s driving investor behavior.

What Drives Firing Decisions?

Here are the top reasons clients terminated their advisor, based on a survey of 184 respondents:

Reason for Firing% of Respondents
Citing This Reason
Type of Motivation
Quality of financial advice
and services
32%Emotion-based reason
Quality of relationship21%Emotion-based reason
Cost of services17%Financial-based reason
Return performance11%Financial-based reason
Comfort handling financial
issues on their own
10%Emotion-based reason

Numbers may not total 100 due to rounding. Respondents could select more than one answer.

While firing an advisor is rare, many of the primary drivers behind firing decisions are also emotionally driven.

Often, advisors were fired due to the quality of the relationship. In many cases, this was due to an advisor not dedicating enough time to fully grasp their personal financial goals. Additionally, wealthier, and more financially literate clients are more likely to fire their advisors—highlighting the importance of understanding the client. 

Key Takeaways

Given these driving factors, here are five ways that advisors can build a lasting relationship through recognizing their clients’ emotional needs:

  • Understand your clients’ deeper goals
  • Reach out proactively
  • Act as a financial coach
  • Keep clients updated
  • Conduct goal-setting exercises on a regular basis

By communicating their value and setting expectations early, advisors can help prevent setbacks in their practice by adeptly recognizing the emotional motivators of their clients.

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Curious about what drives investors to hire a financial advisor? Discover the top 5 reasons here.

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