Wealth Management
The nature of being a financial advisor has shifted significantly over the past decade. It’s gone from being centered around selecting investments and managing portfolios to financial planning and client service. Model portfolios have been ascending along with this evolution and are forecast to exceed $1 trillion in assets over the next decade.
According to surveys, clients invested in model portfolios are more likely to have higher levels of trust with their financial advisors and believe that volatility is an opportunity to grow assets. Additionally, they are more likely to be interested in other services offered by an advisor. They can also help in terms of aligning the interests of advisors, the firm, and clients. They also free up time and energy for advisors to spend on factors that ultimately drive success for advisors, like client service and prospecting.
Another benefit is that model portfolios provide an extra layer of due diligence, with 77% of advisors saying that they help with managing risk. In essence, it gives clients access to a higher quality of investment management and a more comprehensive relationship with an advisor.
Models also mean that advisors’ services become more scalable, enabling growth and expansion. In recent years, models have expanded to include offerings from third parties and a wider array strategies, which means there are possibilities for endless customization to fit clients’ unique needs and goals.
Finsum: Model portfolios bring the promise of a win-win for clients and advisors. Clients invested in model portfolios report higher levels of confidence with their advisor and don’t fear volatility. For advisors, they offer the ability to decrease time spent on investment management and focus more on client service and prospecting.
Goldman Sachs has raised $21 billion for private credit investments, its largest fund yet in this asset class.
Fresh capital, borrowed funds, co-investments, and SMAs are all a part of the how the firm has secured its newest private lending channel. This initiative is crucial for Goldman to demonstrate its ability to attract substantial external funds, focusing on steady fees instead of occasional large revenues.
High-net-worth individuals and institutional investors alike are increasing their allocations to alternatives, viewing private credit as a valuable investment. With plans to double its private credit assets to $300 billion in five years, Goldman is leveraging its extensive experience while other banks form partnerships to enter this market.
Finsum: Alternatives are a good way to hedge against the mainstream macro volatility problems looming on traditional portfolios
Summer tends to be slower on Broadway, even more so this year with some theaters being renovated and a lighter schedule for Shakespeare in the Park. However, there are some intriguing new shows that will be opening this summer.
The most highly anticipated is “Oh, Mary!” which is scheduled to open in late June at the Lyceum Theater. The play stars Cole Escola as an ahistorical, comedic Mary Todd Lincoln, who is resentful of her husband for thwarting her stage ambitions even during the Civil War. Conrad Ricamora plays Abe Lincoln. The play was highly lauded during its opening run for its humor and uniqueness. Now, it’s moving into a bigger theater with a larger production budget.
Maggie Siff of Billions and Sons of Anarchy stars in “Breaking the Story,” which is set to open on the Second Stage on June 4. Siff stars as a former war correspondent who is struggling to make the transition back to civilian life. During its preview run, the play received acclaim for its acting performances and its portrayal of internal conflict.
On a lighter note, Cats is returning to Broadway, albeit with a twist. “Cats: The Jellicle Ball” will open at the Perelman Theater on June 13 and is brought by directors Zhailon Levingston and Bill Rauch. The musical is set within the world of New York ballroom dancing and features club music and runway choreography. It will be interesting to see if this can recapture the magic of the original or come off as a tired sequel.
Finsum: This year’s summer season is especially slow on Broadway. However, there are a couple of interesting shows opening in the coming months, including “Oh! Mary” and “Breaking the Story”.
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Traditionally reserved for the wealthy, direct indexing has become more widely accessible thanks to technological advancements. This investment strategy involves owning the individual stocks in an index such as the S&P 500, which allows investors to sell off underperforming stocks to generate tax losses—a technique known as tax-loss harvesting.
According to Frec, a direct-indexing startup, a simulated S&P 500-based portfolio could boost after-tax annual returns by more than 2% over a decade, compared to an ETF, assuming a tax rate of 42.3% and excluding advisory fees.
Firms like Charles Schwab, Vanguard, and Fidelity now offer direct-indexing services with various account minimums and fee structures, lowering the entry barrier for average investors. With the market for direct indexing expected to reach $825 billion in assets by 2026, this approach is set to become increasingly popular among a broader range of investors.
Finsum: Computing power has drastically driven down the costs of Direct Indexing allowing more investors to gain its tax alpha.
As one of the leading asset managers, BlackRock, shook the market his week when, through regulatory filings, it disclosed that its income funds are invested in its own Bitcoin ETFs. The two important funds were the Strategic Income Opportunities Fund (BSIIX) and Strategic Global Bond Fund (MAWIX), which acquired $3.56 million and $485,000 worth of iShares Bitcoin Trust (IBIT) respectively.
These investments are a minor part of the $37.4 billion and $776.4 million portfolios of BSIIX and MAWIX, respectively. As of May 24, the iShares Bitcoin Trust held about $19.61 billion in Bitcoin, which trails the Grayscale Bitcoin Trust (GBTC).
Globally, spot Bitcoin ETFs hold over 1 million Bitcoin, valued at more than $68 billion, which is nearly 5.10% of Bitcoin's circulating supply of over 19.7 million BTC. Since their launch in January, over 600 investment firms, including major institutions like Morgan Stanley, JPMorgan, and Wells Fargo, have invested in spot Bitcoin ETFs, with Millennium Management being the largest accumulator at $1.9 billion.
Finsum: While this fund cannibalism isn’t new, it’s definitely something to be aware of when looking at income funds.
Research shows that the average advisor spends about 11 hours per week on administrative duties. Ideally, this time could be better spent on activities that are more directly connected to the firm’s success. AI can offer some relief in terms of reducing time spent on repetitive tasks. It can also help generate better outcomes by increasing efficiency, analysis capabilities, and decision-making.
Among the many use cases, scheduling and transcription are two that can be immediately applied. For scheduling, apps like Trevor or Clockwise can organize tasks, create to-do lists and daily plans, sync calendars across apps, and maximize time for deep work and productivity. These apps also become more effective over time as they adapt, learn patterns, and can help prioritize tasks.
Another powerful use for AI is transcription. Apps like OtterAI record, transcribe, and summarize meetings and can be integrated with Zoom, Microsoft Teams, or Google Meet. Future versions of these apps could analyze communications with clients or prospects to understand their emotions and provide more personalized service and communications.
While AI can make advisors more effective, it’s necessary to understand the limitations, especially given the nature of financial services and the importance of safeguarding client information.
Finsum: Advisors spend 11 hours per week on administrative tasks. AI apps can offer relief, especially in terms of scheduling, transcription, and organization.