There is a new digital custodian in the industry who is promising 90% cost savings to RIAs on their technology and custodial costs. That new company is called Altruist, and is a commission-free custody service that intends to compete with the big players in the space at their own game. “Our goal is for everyone to really pay almost nothing”, says founder Jason Wenk, continuing “How much has really changed over the last 10 years? The change is way overdue. It’s not like this is some epiphany for us”. The new Altruist platform will launch in October and be very easy to integrate with the existing platforms from major competitors.
FINSUM: Technology costs are eating up a huge chunk of revenue across the industry, so anyone that can lower them and still provide stellar service will have a competitive edge.
For the last half decade or so, financial advisors across the industry have been on an endless search for the next frontier of advice that will insulate their business from cheap, digital competitors. This has led to a wide array of new services, but one that is increasingly pervasive is college counseling. Many advisors are now taking a much more active role in college planning for the children of clients. This includes everything from figuring out how to shelter certain assets from financial aid forms (e.g. insurance products) to actually proofreading applications and helping children choose majors and study abroad programs. Demand for the service has been rising since the cost of tuition has exploded, meaning it represents a much larger financial burden than ever before.
FINSUM: Some of this seems to make a lot of sense (e.g. making financial plans to pay for college and help with financial aid forms), but having financial advisors help kids choose majors seems a little odd. That said, this seems like a good growth area for the business.
The headline looks a little bearish, granted, but it honestly may be true. The stars seem to be aligning for some big price losses in Apple’ stock. The company is set to unveil the iPhone 11 today, and it is hard to remember a time when there has been less excitement. For many reasons, including this being Apple’s last 4G phone, this model year looks to be a dud, and customer demand for it looks commensurately weak. Accordingly, the replacement cycle is likely to be poor. However, market expectations don’t seem to reflect all this, which means the stock is set up for big disappointment. Even Wall Street equity research divisions are now significantly lowering price targets for the stock.
FINSUM: The smartphone market is growing increasingly commoditized and dull and it is affecting Apple too. The company has done an admirable job diversifying, but 2020 is looking bleak for Apple.
One of the biggest banks on Wall Street has just made a bold call on gold. Citi says that the precious metal is likely to shoot to $2,000 or more within the next 24 months. The bank argues that a dovish cutting cycle by the Fed will be a catalyst for price gains, which will be supported by a weakening economy and worries over the trade war. According to Citi, “We expect spot gold prices to trade stronger for longer . . . posting new cyclical highs at some point in the next year or two”. Standard Chartered, another big bank, also made the interesting comment that “It does seem that gold’s status within the portfolio has been reignited”.
FINSUM: The most interesting comment here is about gold’s role in a portfolio. For many years it seemed that investors had forgotten about gold’s role in diversification, but it finally seems to have made a comeback.
Vanguard is a pretty tough firm to beat in the mutual fund space. Their sterling reputation is hard to top, and no one seems to outdo them in the asset class. However, there may be a viable competitor: boutique manager Dodge & Cox. In fact, the fund manager just got ranked first out of 150 mutual fund companies by Morningstar. The rankings are based “on a variety of factors, including analyst fund ratings, expense ratios, and corporate stewardship”. Perhaps most importantly for investors, almost all Dodge & Cox mutual funds beat their category averages over the last decade.
FINSUM: Dodge & Cox has outperformed Vanguard in many ways, though obviously Vanguard can offer lower costs than anyone else. In many cases, though, performance has been good enough to more than account for the difference in fees.