The number of new advisors is not keeping up with retirements and attrition. According to Cerulli, the number of new advisors only increased by 2,706 in the previous years. This is troubling given that the firm projects that nearly 110,000 advisors will be retiring over the next decade. 

This amounts to nearly 38% of all advisors and 41% of total assets. These numbers and trends highlight the need for the industry to do a better job of attracting and retaining fresh talent. The crux of the issue seems to not be recruitment but that there is a 72% rookie failure rate. Some recommendations are growing and nurturing a talent pipeline, better communication of the role and responsibilities of a financial advisor, and a more structured training program which entails ramping up responsibilities.

Ideally, newer advisors would start in roles focused on operations and improving the practice before shifting into a producer role. Cerulli recommends that seniors advisors’ team with new advisors and provide them with experience in engaging with clients and gathering assets before they transition to more independent roles. It notes that many advisors who build successful, long-term careers were the recipients of such mentorship and guidance at the start of their careers. 

Finsum: 2023 was another year of poor recruitment figures for the financial advisor’s industry. Here are some recommendations on improving the success rate of new advisors. 

Two ever-present risks for fixed income investors are credit risk and interest rate risk. Rising interest and default rates diminish the value of bonds and have to be considered especially with corporate bonds. 

However, some ETF issuers now offer corporate bond ETFs with less credit and interest rate risk such as the WisdomTree U.S. Short Term Corporate Bond Fund (SFIG). It currently offers a 4.76% yield and invests primarily in short-term, corporate debt with an effective duration of 2.47 years. It’s notable that SFIG can offer such generous yields despite investing in high-quality debt with over 44% of holdings rated AA or A. 

Another potential catalyst for SFIG is when the Fed cut rates later this year. Currently, there are trillions on the sidelines in money market funds and some of this would migrate to funds with higher yields like SFIG.

According to BNP Paribas, another reason to be bullish on investment-grade corporate bonds is due to lower issuance and structurally, higher inflows. It sees less of a case for capital appreciation given the flat yield curve and recent rally, but it believes that yields at these levels are sufficiently attractive.

Finsum: Corporate bond investors have to be mindful of credit and interest rate risk. Investors can mitigate these factors with an ETF that invests in high-quality, short-term corporate debt.

For investors with unhurried time horizons, patience holds untapped potential. Unburdened by short-term needs, they can explore long-term investments and cultivate portfolio diversification beyond conventional assets. Traditionally, accessing alternative strategies like private equity or direct ownership meant navigating high minimums and limited accessibility.

Enter interval funds, a unique bridge between open-ended and closed-end structures. Unlike exchange-traded closed-end funds, interval funds offer periodic redemption windows, providing measured liquidity while pursuing less-liquid assets. This opens doors to previously exclusive (and sometimes higher risk) strategies, such as real estate investments, infrastructure assets, and private credit.

By incorporating these diverse allocations, their advisors can enhance portfolio resilience and reduce correlation to traditional assets, bolstering overall risk management. Additionally, interval funds often carry lower minimums compared to direct alternatives, democratizing access for a broader investor base.

Naturally, interval funds come with unique considerations. Redemptions occur only during predefined windows, necessitating careful planning. Shares may trade above or below net asset value, impacting entry and exit points. Also, advisors and investors should carefully consider any fund’s management fee, complexity, and performance-tracking aspects during their vetting process.

Ultimately, interval funds offer a valuable tool for advisors to unlock diversification for clients with long-term investing horizons.

Finsum: Find out how financial advisors can take advantage of their clients’ longer time horizons by using interval funds to provide greater diversification. 

Expertly managing investments is crucial, but what truly sets exceptional financial advisors apart is fostering peace of mind. While algorithms excel at navigating markets, understanding the human dimension – your clients' hopes, fears, and aspirations – requires a different kind of expertise.

Peace of mind doesn't solely stem from stellar returns; it comes from knowing you have a confidante who understands your unique circumstances and offers sound, impartial advice.

How do you find the time to cultivate this connection when portfolio management is a full-time job? One option is to consider model portfolios: professionally managed options offering efficient diversification, transparency, and robust reporting. By outsourcing this task, you free up valuable time to focus on what truly matters – your clients.

Instead of being bogged down by portfolio construction, dedicate yourself to empathy, understanding, and building personalized solutions. Ask probing questions, acknowledge their emotions, and tailor your recommendations to their unique needs and values.

Remember, clients seek a partner who navigates the emotional terrain of financial planning with compassion, expert guidance, and a genuine interest in their well-being. By strategically prioritizing connection and leveraging technology, you can become an indispensable source of peace of mind, the most valuable asset any advisor can offer.

Finsum: Learn how model portfolios can enable advisors to reach the ultimate goal of helping their clients achieve peace of mind.

Traditional benchmarks like the S&P 500 might not be capturing the full picture when it comes to energy as an investment sector. A recent article pointed out that, while its representation in the S&P500 has shrunk from 15% in the 1970s to barely 4% today, energy's contribution to index earnings remains significant, estimated at 10%. This raises a crucial question for financial advisors: are passive index funds providing sufficient exposure to this dynamic and evolving sector?

While global energy needs are undoubtedly set to rise, the energy landscape has vastly transformed since the oil-centric days of the past. Today's opportunities extend beyond traditional producers, encompassing a diverse spectrum of service providers, storage solutions, refiners, and transportation players.

Furthermore, the energy mix itself is undergoing a paradigm shift. The integration of sustainable alternatives alongside established methods creates a landscape rife with investment potential.

For advisors seeking to capitalize on this opportunity, a deep understanding of available energy fund options is paramount. By moving beyond traditional benchmarks and embracing the sector's multifaceted nature, advisors can unlock a wider range of potential returns for their clients while navigating the exciting transformation of the energy world.

Finsum: Do passive indexes fully capture the investment opportunity today’s energy sector presents?