Volatility is pervading markets and many advisors may have new clients or millennial investors who haven’t experienced this volatility before. A study from McKinsey showed that trust with an advisor is highly correlated with the amount of communication with advisors. Outsourcing financial news, posts, and blogs are a way to not burn clients out. Also, you can give different avenues to communication such as emails as well as social media. Themes can also help concentrate your message and lead to better takeaways. Managing expectations in uncertainty and making sure your clients feel their goals are being addressed are crucial.

Finsum: A little communication goes a long way and investors need to understand how their portfolio is adapting and performing in high volatility. 

Some advisors think of model portfolios as a tool for advisors that is rigid: a pre-selected allocation not to be tampered with. However, the model portfolio’s true advantage is that it brings an element of customization. This varies based on how an advisor implements the options, but overall because investors own the underlying asset, unlike a mutual fund they can add/drop for customization. This gives investors an edge for tax loss harvesting or tweaking to add a growth stock for example. To add to that models are relatively fee efficient particularly when it comes to their mutual fund counterparts while bringing most of the same options.

Finsum: A model portfolio can also be selected for its inherent traits as well and provide advisors with more flexibility than they are perceived to have.

Direct Indexing is being touted as the best way to generate tax alpha in a portfolio but is it all that it's cracked up to be? Experts say it has limits and diminishing marginal returns over time because as stocks are dropped, replacements with a lower cost basis will be more expensive to unload later on. Moreover one of the less talked about aspects is that as opportunities narrow as stock is unloaded there is less upside to growth opportunities as the portfolio is smaller. Investors should look to capitalize on direct indexing as they offload specific accounts for inheritance and retirement which is a relatively more minor portion of the portfolio.

Finsum: There may be a shift from custom indexing as a primary ESG focus if it fails to deliver tax alpha and is better suited to dropping greenwashers.

Emerging market debt could be in trouble according to JPMorgan. With a seemingly never-ending Russia-Ukraine crisis as well as rising borrowing costs low grade emerging market debt could be in trouble. A note said that almost half of the sample of the 52 countries are carrying high repayment risk. Generally speaking, spillover risk is high if Russia defaults and Ukraine has to res-structure. All of this is compounded by rising yields which makes repayment even more difficult.

Finsum: For those looking for solutions to rising volatility be careful chasing emerging market debt as a response.

Volatility is pervading markets and many advisors may have new clients or millennial investors who haven’t experienced this volatility before. A study from McKinsey showed that trust with an advisor is highly correlated with the amount of communication with advisors. Outsourcing financial news, posts, and blogs are a way to not burn clients out. Also, you can give different avenues to communication such as emails as well as social media. Themes can also help concentrate your message and lead to better takeaways. Managing expectations in uncertainty and making sure your clients feel their goals are being addressed are crucial.

Finsum: A little communication goes a long way and investors need to understand how their portfolio is adapting and performing in high volatility.