In an article for SmartAsset, Rebecca Lake CEPF discussed the importance of a workable retirement plan for financial advisors. Many advisors spend their careers helping their clients achieve their financial goals, so they can retire in peace. Yet, they don’t apply the same diligence to succession planning for their own practices.

Instead, advisors should think about the ultimate outcome they want for their business and then work backward to create a plan to achieve that goal. Of course, the plan needs to have some flexibility built in as circumstances can change. But, an end goal is essential to ensure that all of your efforts translate into ultimate success. 

The next step is to have a rough estimate of the net worth of your business. This will help you understand how much your practice would generate in the event of  sale. In tandem with this, advisors should also ensure that their personal financial planning is on track in terms of retirement planning, disability insurance, life insurance, budgeting, etc.

Following this, you should be transparent about your succession planning with clients and employees or anyone else who could be potentially impacted. Employees want to have some sort of clarity about their careers and potential roles, while clients want to be reassured that they will be in good hands with a new management team. 

Finsum: Succession planning is an essential step for financial advisors especially as these decisions will have a major impact on clients and employees.

In an article for USNews, Tony Dong covered how fixed income funds can help investors reduce volatility in their portfolios while producing a steady income. These funds offer the benefits of bond ownership without the costs and complexity. And, it’s especially the case for fixed income classes where markets are less liquid, opaque, and hard to access such as municipal debt and corporate bonds.

These funds also offer benefits in terms of diversification that simply are not possible to replicate for non-institutional investors. The iShares Core US Aggregate Bond ETF is one of his picks as a top bond fund as it is extremely liquid and has very low costs at 0.03%. The fund holds over 10,000 government and high-quality corporate debt, while it pays a yield of 4.2%. 

Another option is the Nuveen Floating Rate Income Fund which is an actively managed bond fund. This fund offers higher returns as it tends to invest in shorter-term and lower-quality debt. It also has higher costs with an 0.71% annual expense ratio. 

However, active management does offer some benefits especially given recent volatility around rates given increasing levels of financial stress and expectations of a change in Fed policy. 

Finsum: Fixed income funds can help investors reduce volatility in their portfolios while generating a steady income.

In an article for MarketWatch, Mike Murphy covered a recent report that state and federal regulators are examining unusual trading patterns behind the recent volatility in bank stocks. Notably, the entire banking sector and specifically regional banks, have been subject to heightened volatility and heavy short-selling in recent months following the failures of banks like Signature Bank, First Republic, and Silicon Valley Bank.

In recent weeks, there have been big declines and large amounts of put buying in the stocks of regional banks like PacWest, Western Alliance, and Zions. The core challenge for these banks is that they made long-term loans at much lower rates, yet they have to increase short-term deposit rates or risk depositors leaving for higher rates elsewhere. And the risk of this deposit flight increases if concerns about a bank’s financial health increases.

Both the White House and the SEC noted the short-selling pressure on banks possibly contributing to the volatility. In a statement, SEC Chair Gary Gensler said, “In times of increased volatility and uncertainty, the SEC is particularly focused on identifying and prosecuting any form of misconduct that might threaten investors, capital formation or the markets more broadly.”

Finsum: With increasing volatility in the banking sector, regulators and public officials are examining short-selling and put buying as factors that may be adding to volatility.

In an article for LPL Financial, the firm discussed some methods for how financial advisors can build a pipeline of potential clients to ensure the growth and longevity of their practice. 

The first step is to identify your prospecting strategy. This entails identifying key goals and metrics for each step of the client journey to ensure that consistent effort and focus is being applied at all stages. There should also be some sort of system to monitor outreach to prospects, quickly follow up, assess whether the prospect is a good fit, and conversion into clients.

The next step is to identify your key values and differentiators. Then, share this with your target audience. This step is critical in helping prospects understand why you chose the profession, and what you stand for. 

An important element of this step is to figure out your ideal client and then focus your outreach efforts on this niche. Then, you can brainstorm ways to connect with that target audience whether it's through advocacy groups, social media, community events, etc.

Finally, you should ask for referrals from existing clients as they are likely to have the best understanding of who among their friends and colleagues would be receptive to learning about your approach to helping them reach their financial goals. 

Finsum: Financial advisors need to build and nurture their pipeline of prospects to ensure that their practice continues to grow and has longevity. 

In an article for the Financial Times, Derek Brower discussed recent weakness in energy stocks due to increasing worries of a recession despite a recent string of strong earnings reports. This follows a two year rally which was fueled by production cuts in 2020, a better than expected economy, and the war in Ukraine. 

Last year, the energy sector was up more than 50%, while the S&P 500 finished down double-digits. This year in contrast, the S&P 500 has an 8% gain, while the energy sector is down 5%.

According to Wall Street analysts, investors are looking past companies’ strong results due to expectations that recent trouble in the banking sector will translate into reduced economic activity and demand for crude oil. 

Another indication is that dividend yields in energy stocks are nearly double those found in financial stocks and quadruple those of tech stocks. Inflation is proving to be a significant headwind as production costs have increased, eroding margins with lower oil prices. Another is that productivity in the Permian Basin has declined by 30% over the last 2 years, another reason that margin contraction is likely.

Finsum: Following major outperformance in 2022, energy stocks have underperformed so far this year due to increasing recession fears.