We are nearing the end of one of the most aggressive periods of monetary tightening in history. Since March 2022, the Federal Reserve has hiked 11 times, sending the benchmark rate above 5%. At the latest FOMC meeting, Chair Powell left room open for more hikes if necessary, but the overall message was that inflation was moving closer to desired levels, while the economy remained resilient. 

Most market participants are now focused on the Fed pivoting and cutting rates sometime in 2024. Therefore, it wouldn’t be prudent to hold off on investing in an annuity or other sort of fixed interest investments in the hopes of securing higher rates. In fact, we are starting to see cuts on some annuities for the first time in years, following the recent decline in longer-term yields

For most of the year, ‘higher for longer’ has been the prevailing narrative. Yet, there are many indications that we are in the final innings of the hiking cycle such as a cooling labor market and moderation in inflation. Additionally, public comments from Fed officials have indicated the need to cut rates if inflation does moderate to keep real rates from climbing even further. 

Currently, annuities are at their highest payout rates in decades. Given the likelihood that we are in the midst of a Fed pivot, prospective buyers of annuities should take advantage of these attractive rates before they start to drop. 

Finsum: Fixed annuities are quite attractive given the current level of rates. Yet, there are some signs that interest rates are going to turn lower which means that this is an opportune time to invest in an annuity.  

Success for a financial advisor is dependent on attracting and retaining clients. The key is to create an incredible client service model to deliver an experience for clients that surpasses their expectations. 

The client service model is your holistic plan for how you will engage with clients. It starts with the onboarding process and has to make clients feel comfortable and trust in your expertise. At all steps, advisors should constantly deliver value while fostering engagement. The latter is key to retention and can also lead to referrals down the line. 

The first step is to imagine the experience through your clients’ perspective. For this, you must specify your target market and define the ideal client. Think carefully about your clients’ pain points, and what would prevent them from working with you. 

Next, you need to consider the client journey. As they move through different stages of their life, their needs and goals will evolve. This will shape the advice and services you offer. Some common steps are onboarding, initial planning, regular reviews, and a consistent communication strategy. 

Finally, it’s important to remain consistent in all your appearances and interactions with clients. Ultimately, the purpose of a client service model is to ensure the delivery of a meaningful experience to clients at all steps and through all channels.

Finsum: Building an effective client service model is an invaluable asset when it comes to attracting and retaining clients. Here’s some tips on getting started.

Financial advisors and investors seem to be speaking different languages when it comes to annuities. A recent survey paints a curious picture: while only 19% of financial professionals perceive client interest in guaranteed lifetime income products, nearly half of the surveyed investors nearing or in retirement express the same desire. This disconnect presents an opportunity for advisors to revisit the conversation and unlock significant value for their clients.

For investors approaching their golden years, the fear of market volatility and portfolio depletion is real. They seek peace of mind, knowing a portion of their income is secure, regardless of economic turbulence. Despite their complexities, annuities offer this very protection, guaranteeing regular payouts throughout retirement.

The conversation around annuities requires reframing. It's not about sacrificing growth for a fixed income stream, but about building a holistic retirement plan that balances potential future returns with guaranteed income that alleviates anxiety and fosters financial security. Advisors who bridge this gap and proactively discuss lifetime income options with their clients stand to forge deeper trust and build stronger, more enduring relationships.

Finsum: Financial professionals may underestimate their client’s interest in guaranteed lifetime income options.

Passive ETFs have lower expense ratios because they don't require a team of portfolio managers to constantly analyze and adjust the mix of underlying investments. Over time, this lower cost can add a meaningful amount to the value of an investor's holdings.

While advisors and investors appreciate lower expense ratios, ETF's benefits extend beyond a simple fee advantage. A closer look reveals another hidden strength: real-time trading.

Unlike traditional mutual funds, which price investments only at day's end, ETFs operate like stocks, providing continuous price transparency and allowing for immediate execution. Gone are the days of uncertainty surrounding redemption values; with ETFs, you see the precise price you'll pay and receive, empowering informed decisions throughout the trading day.

Yet another impactful advantage lies in their liquidity. Popular ETFs often boast trading volumes exceeding even blue-chip stocks. This translates to tight bid-ask spreads, minimizing the price difference between buying and selling, and enabling efficient trade execution.

The combination of low-cost, real-time pricing, and ample liquidity make ETFs powerful tools for financial advisors seeking precision and flexibility within their client's portfolios.

Finsum: Low cost is not the only reason financial advisors should consider ETFs in their client’s portfolios. Consider these other advantages as well.

Technology's allure is undeniable for financial advisors weighing a move to a new broker-dealer. Sleek interfaces, integrated apps, and workflow-reducing features promise efficiency and a world-class client experience. But while ease-of-use and functionality deserve scrutiny, a truly informed decision involves understanding the security, legal, and compliance capabilities of the prospective firm's tech.

Ask how client data is secured. What are the client-facing system's encryption standards, two-factor authentication, and access controls? Understand how the platform complies with industry regulations and data privacy laws. And most importantly, what happens if the lights go out? Does a comprehensive disaster recovery plan ensure business continuity and safeguard client assets even during outages or cyberattacks?

These may seem like technical minutiae, but your clients trust you've vetted these issues thoroughly when they follow you to your new professional home. Prioritizing security and compliance in your tech evaluation isn't just about ticking boxes; it's about safeguarding your practice's foundation and fostering the trust your clients deserve.

Finsum: Cybersecurity, compliance, and data privacy are key factors to consider when evaluating a potential broker-dealer’s technology.