Eq: Total Market
How often does opportunity knock? Well, financial advisors could be hand wringing if they allow a chance to further buck up their business with model portfolio strategies and step up the client experience slip through their fingers, according to etftrends.com.
Shucking aside, simply put, a model’s a framework for a financial advisor, explained Brad Shepard, head of Advisor Innovation, WisdomTree Asset Management, said in a webcast, How to Build a Better Business with Model Portfolios. It enables the advisor to structure asset allocation and fund selection in their practice on behalf of a client, the continued.
Leveraging model portfolios to outsource the management of portfolios can help abet a greater degree of a client centric model and enhance the competitiveness of a business model, noted investmentnews.com.
According to Investment News, four examples of outsourcing options upon which advisors are implement that can rachet up firm operations and, possibly, culminate in ideal results:
1.Virtual administration services
2. HR assistance
3. An outsourced CFO
Anyone see the copy desk? It appears the definition of the fiduciary might be in for a rewrite, according to winkintel.com.
At this point, the Department of Labor needs to rewrite its fiduciary definition to all but make all first time advice fiduciary is just about the lone thing still on the table, analysts concur.
In that event, the alternation would pull weight and basically revert the DOL back to its maiden 2016 fiduciary rule, said Brad Campbell, partner at Faegre Drinker law firm. As it stands, the DOL’s package known as the investment advice rule makes rollover advice fiduciary, the site continued.
Valuable investment advice consists of two primary elements. One evolves around a new prohibited transaction exemption. Here, advisors can provide conflicted advice for commissions. The other is a reinstatement of the 1975 “live part test” in order to ascertain that which constitutes advice on investments.
Campbell noted the initiative’s “likely to be a very substantial proposal that will harken back to legal fights of 2016, which the DOL ultimately lost,” according to fa-mag.com.
The DOL, he continued, “is taking the position that fiduciary starts with the initial or rollover conversation. That's a pretty aggressive reinterpretation of what they historically had said, which frankly was ... that most rollovers were not fiduciary,”.
Meantime, investors so far continue to quake over performance of fixed income assets.
The Fed’s expected to continue fueling interest rates not on through the second half of the year, but into next year as well, according to wellsfargo.com. Consequently, the degree of the yield curve inversion may top what had been the two cycles before.
Now, up to now for the year, a regular theme’s emerged: the trepidations among investors evolving around the performance of fixed income assets. Some of the top questions swirling in the noggins of fixed income investors that Wells identified:
- What is happening to bonds so far in 2022?
- Why continue to invest in bonds?
- Why is the Fed garnering so much attention this year?
- What should investors expect from the remaining three Fed meetings of this year?
- What does Fed quantitative tightening mean?
While some market activities are difficult project, one thing that can be pinpointed are long trends in fixed income investing, according to fi-desk.com. Why? Because we can see them and, among all fixed income managers, increasing rife with significance.
Six trends they’re picking up on in the industry include Direct Indexing or Custom Indexing; Increased use of home office model portfolios; tax-loss harvesting in SMAs; truly optimizing rather than sequentially allocating; insisting on system interoperability; aggregating various data sources; and a shift in the Build vs. Buy debate.
--And these developments should be embraced, according to the site. “We believe these six trends are changing fixed income portfolio management for the better.”
Stocks had one of their worst days in months as the market fell off 2% and sent volatility measures such as the VIX spiking. Wallstreet’s ‘fear gauge’ was up nearly 4% as a result. This all happens as the dollar is reaching very strong levels and almost parodies the euro. While that might be great for those on a summer vacation in the Mediterranean, it's bad news for investors, because it reflects a more fed tightening, rising treasury rates, and inflation. Investors are concerned about rising volatility once again after it felt like it was behind them. With healthy job numbers and inflation trying to turn a corner, things looked bright and the market felt it, but the reality of a one-off good inflation report is setting in.
Finsum: Advisors need strategies for resilience vs inflation and excess volatility because its persistence seems strong.
While model portfolios, of course, help pare down some of the labor inherent to the analysis of all investment positions, some advisors, nevertheless, outsource some – or all – of the investment management responsibilities by tapping third part model portfolios, according to flexshares.com.
Unlike funds, among other traditional investment vehicles, external solutions like third party portfolios provide financial advisors leeway over a gambit of aspects of managing a portfolio. They include underlying holdings, asset allocation, rebalancing frequency, and trading.
“Advisors are typically seeking a holistic, cost-efficient, outcome-oriented solution from a trusted brand. Our models seek to provide a robust framework to navigate global markets and offer a straightforward means to help advisors build scale, enhance client service and satisfy regulatory expectations,” according to Melinda Mecca, director of Investment Solutions, Northern Trust Asset Management.
Also referred to by some RIA in the industry as the separately managed account, they’re used by investment advisors for accounts with higher AUM or asset under management, according to synertree.io.
Now, trade and asset allocation decisions are beyond the wheelhouse of an RIA, but should have the chops to know the product without in extensive insight into each security within the model portfolio, the site continued.
The rumble for a trend called direct indexing seems to be accelerating, as a burgeoning number of investors are displaying a demand for specialized portfolios, according to markettradingessentials.com.
The upshot: eschewing ownership of a mutual or exchange traded fund, direct indexing’s flashing the wallet on stocks of an index, the site continued. The idea’s to hit to hit paydirt on, for example, tax efficiency, diversification or values-based investing.
“It says a lot that these large fund providers are leaning into direct indexing,” said Adam Grealish, head of investments at Altruist, an advisor platform with a direct indexing product.
So, in light of the ascension of direct indexing, investors might be asking, pre tell, how to build a portfolio in which this strategy’s incorporated, according to corporate.vanguard.com.
Well, presto, investors can cull ways to meet that goal through a framework available in Personalized indexing: A portfolio construction plan, a Vanguard research paper recently published.
“Our research represents a sensible starting point for potential direct indexing investors who want to include this strategy in their portfolios,” said Vanguard senior investment strategist Kevin Khang, Ph.D., one of the paper’s authors.