Wealth Management
Vanguard, managing over $9 trillion in assets, favors high-rated corporate debt over riskier high-yield bonds to guard against potential economic downturns caused by high borrowing costs.
Despite expectations of the Federal Reserve cutting rates by September due to cooling inflation and labor market weakness, Vanguard predicts rates will hold steady this year.
High demand for investment-grade bonds has compressed credit spreads, but Vanguard's defensive strategy, along with its active fixed income management, is poised to perform well if the economy weakens, allowing for credit additions at more attractive prices.
Finsum: Active managers will be eyeing fall fed decisions closely as they have a huge impact on bonds.
In 2023, registered investment advisors (RIAs) experienced a notable rebound, with assets under management rising nearly 18% to a median of $542 million, according to Schwab’s RIA Benchmarking Study.
The median organic growth rate hit 5%, excluding market performance. RIA revenue increased by 6.3%, and the number of clients grew by 4.3%. Top-performing firms saw even higher growth rates of 12%.
Key strategies for success included having a documented client persona, a solid value proposition, and a structured marketing plan. Client retention has remained steady at 97% over the past decade. Additionally, growing firms are focusing on talent acquisition and developing staff skills to drive future growth.
Finsum: Firms will simultaneously be doubling down efforts on retention and recruiting in 2024.
State Street Global Advisors (SSGA) is introducing a new 'high growth' option within its Risk-Based ETF Model Portfolios, aiming to attract younger investors. The portfolio allocates 89% to growth assets and 11% to defensive assets.
Kathleen Gallagher, SSGA managing director, highlights this move as a response to adviser demand for cost-effective portfolios catering to clients in their accumulation phase. The high growth model will be available on Praemium, Hub24, and Netwealth platforms.
This complements SSGA’s existing moderate, balanced, and growth portfolios, focusing on strategic asset allocation and risk management.
Finsum: This option could be a great opportunity to get model adoption among younger clientele
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The rapid growth of private credit lending beyond its traditional markets highlights concerns about its opaque nature and potential risks to the U.S. economy, according to Moody's. Non-bank private credit lenders are increasingly competing with traditional banks by offering non-publicly traded debt to mid-sized corporate borrowers.
This trend has expanded into alternative lending opportunities such as asset-based financing. Despite banks refinancing significant debt and providing leveraged loans for M&A deals, private credit lenders are finding new opportunities.
Regulators and the IMF have expressed concerns about the potential risks and lack of transparency in this growing market. Four major alternative asset managers have significantly increased their credit assets under management, further highlighting the sector's rapid expansion.
Finsum: We probably aren’t close to a regulation overhaul with private credit but transparency is worth considering.
In 2023, smaller watches were popular, and this trend is expected to continue in 2024. Instead of making predictions, how about what's currently happening and what we might see throughout the year.
Interest in steel watches remains strong despite the focus on smaller, dressier models. Brands are expanding their offerings beyond just sizes, catering to diverse collector interests.
Special watches continue to fetch high prices at auctions, while more common models struggle. Lastly, there's hope for more transparency from dealers and auction houses in the watch market, as the market starts to swing towards buyers.
Finsum: Rolex’s acquisition of Bucherer was a huge signal for change in the watch market at the end of 2024 and it is starting to be present.
Independent financial advisors see business growth as their top challenge for 2024, but according to a survey by Interactive Brokers, robust technology and multiple custodial relationships will drive this growth. The survey revealed that 79% of advisors believe automation can free up time for client relationships, while 60% think it helps new team members get up to speed faster.
Additionally, 58% said automation reduces overhead costs. Advisors are increasingly seeking more automation in client account management and onboarding processes. The multi-custodial model is gaining traction, with 64% of advisors using at least two custodians.
The survey also noted a growing focus on high-interest rate accounts for cash balances. To spur firm growth, advisors are prioritizing marketing, client referrals, and industry networking, with some planning to recruit and train young talent as part of their long-term succession strategies.
Finsum: We see advisors leaning on this combination of technology and personal relationships benefiting the most.