Eq: Financials (114)
The retiring type?
Yeah, well, not if you’re the retiree who created the Retiree Portfolio Model – an Excel spreadsheet that can be downloaded -- for retirees, according to bobleheads.org.
Seems as if Forum member BigFoot48, who developed the model, was onto something.
Homing in on a retiree and the lives of their spouse’s, it models their most common financial aspects. That includes pensions, Social Security benefits and living expenses. With that data, a model of their accounts over a period of one to 40 years is used.
With a feature of this model, the user can compare their normal portfolio results with that one includes alternative choices, like performing Roth IRA conversions and selecting alternative Social Security starting ages and benefits, not to mention buying a Single Premium Immediate Annuity.
And talk about visibility. Formulas and results – and that means all of them – can be viewed completely – not to mention the fact that they can be unprotected; paving the way to user customization.
Meantime, monitor the markets, you say?
Um, among a good chunk of advisors, apparently not.
According to capitalgroup.com, in the U.S., some of the highest growth advisors are 40% more likely to leverage model portfolios in their practice. And that’s at the cost of monitoring the markets, into which they’re sinking less time.
The old balancing act. You know; the one where retirees seek a balance between gaining a foothold on sufficient income and hanging on to wealth.
Oh yeah. That one. Look out below, because it can be precarious, according to thestreet.com.
Well, consider this tactic: an allocation to cash like, short direction, high quality bond ETFs, supplanting part of the usual aggregate bond fund allocation.
In light of a jump in interest rates, the inclination is for a sag in bond prices, putting a dent in the value of bond funds. That’s when short duration, high quality bond ETFs can provide a buffer.
On the other hand, investors, regardless of age and stages of life, are right for ETFs – and especially so for retirees on the precipice of retirement, according to moneysense.ca.
Within the financial cycle, The Money Sense ETF list is right for all ages and stages, retirees can safely contemplate a solid subset of picks. A panel of seven ETF experts selects the list. The panel didn’t per se formally designate any of its picks as “retirement friendly,”
More and more, in recent years, especially, model portfolios are finding their mojo, according to wealthsolutionsreport.com.
Within the financial advice industry, they’re hitting traction and, for wealth managers, have evolved as a solution – and a compelling one, at that.
In 2020, the estimated value of assets under management in model portfolios hit $3 trillion. The catalyst? To a degree, exchange traded funds don’t take as big a hit out of the wallet. Not only that, the fact the trend toward comprehensive financial planning strategies is ongoing.
Meantime, a little time travel, anyone?
In the next five years, the model portfolio realm of money management is expected to balloon to a business of $10 trillion, BlackRock Inc, expects, according to advisorhub.com.
“It’s going to be massive,” said Salim Ramji, global head of iShares and index investments at the asset manager, on Bloomberg Television’s ETF IQ. “It’s the way in which more and more fiduciary advisers are doing business, and, as a result, that’s the way in which we’re doing business with them.”
What’s good for the goose is good for….financial advisors?
On one hand, they adroitly help clients navigate their future, but when it comes to their firms, well, they might not be quite so vigilant, according to smartasset.com.
Only 27% of financial advisors have a succession plan – or formal preparations to segue from the business -- at all, according to a 2018 report from the Financial Planning Association.
Consequently, it begs the question: with a gaggle of advisors closing in on hanging it up, what’s their legacy strategy?
Among key findings from financial advisors on SmartAsset’s platform:
The number of financial advisors with a succession plan has increased.
Most financial advisors without a succession plan intend on creating one at some point in the future
Financial advisor succession planning is not top-of-mind for most individuals.
Meantime, probably not surprisingly, women, it seems, are making a major mark in the financial terrain.
The essential role of women agents in furthering the cause of financial inclusion and fostering business growth for financial service providers was confirmed through a plethora of research studies done worldwide, according to findevgateway.org.
What’s more, female agents are the ones of choice among female customers, while agents serving more women customers derive more income and satisfaction on the job.
A gaggle of financial advisors will assign clients to a pre built mode portfolio, according to smartasset.com.
Why, pre tell? Well, given that pinpointing which investments will abet your ability to hit your financial goals isn’t exactly a walk in, say, Central Park, instead of building a portfolio of investments from ground zero, they’ll opt instead for a model portfolio, already built.
Why invest in a model portfolio:
Diversification
Research and Professional Analysis
Rebalancing
Affordability
Don’t want to tackle a do it yourself approach to investing? Model portfolios can be your ticket. But prior to sinking your bread into it, it’s incumbent upon you to not only grasp how it works, but to compare fees.
And a reminder: if you’ve been putting dollars in ready made curated portfolios, it’s a good idea to check the type of registration offered by the managers the curated portfolios have with market regulator Sebi, according to livemint.com.
Registered as a research analyst? Well, that means that offering model portfolios is off the boards, based on observations of Sebi’s settlement, which was order dated in May,
Ultimately, all the curated portfolios offered by research analysts in the market’s likely to be impacted.
No bi week for Reg Bi, no siree.
Bill St. Louis, executive vice president and head of the National Cause and Financial Crimes Detection Program at FINRA, recently announced the intention of the organization to hold Reg Bi compliance exams of 1000 broker-dealers, according to natlawreview.com. They’ll take place by year’s end.
While on the books for nearly three years, enforcement actions under the rules has generated little action from FINRA.
Christopher Kelly, FINRA’s acting head of enforcement, said there will be no new standard applied in the enforcement actions.
“Both Reg BI for broker-dealers and the IA fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interests,” the SEC states in a staff bulletin released in late April, reported investmentnews.com.
From the staff’s perspective: “although the specific application of Reg BI and the IA fiduciary standard may differ in some respects and be triggered at different times, they generally yield substantially similar results in terms of the ultimate responsibilities owed to retail investors.”
Remember when LeBron James declared his intentions to take his talents to South Beach?
Well, that emphasis on talent is no less significant in the financial services industry, emerging as a primary observation of Q1 of the year, according to kaizenrecruitment.com.au.
“It was interesting to note that salaries had noticeably stabilized, and an increasing number of clients are now striving to compete on culture and values as well as through enhancing their broader Employee Value Proposition offering,” the site stated.
Meantime, with the significance of the talent set omnipresent, the more things change….the more financial firms have to adjust their game plan in order to, well, remain competitive in the game, according to empaxis.com.
The impetus behind it all? You might lay it on the usual suspects, including these days following COVID and a terrain seemingly technology centric.
Now, when it comes to recruitment, several obstacles must be overcome in financial services. For one, the numbers tell a story. Staffing’s a concern for four out of five financial institutions, Then there’s age; the average financial advisor’s 55; while one fifth are longer in the tooth at over 65.
Get in line?
By adding direct indexing capabilities to its arsenal, LPL Financial Holdings recently joined the crowd of wealth management firms to take the plunge, according to zacks.com.
Direct indexing, of course, is a strategy that enhances tax efficiency and tailors outcomes for clients. It’s a formidable one two combo given its high degree of promise for advisors and investors.
"Financial advisors are always looking to help improve client outcomes and deliver personalized investment solutions," said Rob Pettman, the executive vice president of Wealth Management Solutions at LPL Financial. Investors today seek strategies that enable customization, helping them achieve diverse goals such as tax reduction and sector-specific preferences, he continued.
Mention direct indexing to advisors and, well, a few ears might perk up given the interest its stimulated among them, according to thoughtfulfinance.com.
Direct indexing, of course, is hardly a one trick pony. The ability to simultaneously address multiple ESG area, not to mention flexibility and a choice on shareholder voting just begin to describe the benefits offered to investors by direct indexing.
What firm doesn’t need a pick me up; you know, from time to time? Well, you might want to try on a model portfolio for size, according to investmentnews.com.
Addressing part and parcel of the financial picture of a client’s key to helping advisors erect a business.
Streamlining the management of the portfolio process – yet not to the detriment of client trust or the performance of a portfolio is an approach. One way to make it click is through the use of a model portfolio.
A few ways to go about it:
MODEL PORTFOLIOS FOSTER MORE EFFICIENT RELATIONSHIPS
MODEL PORTFOLIOS OFFER CONSISTENT ANALYTICS
MODEL PORTFOLIOS IMPROVE RELIABILITY
MODEL PORTFOLIOS PROVIDE BLENDED STRATEGIES TO IMPROVE CUSTOMIZATION
Consequently, probably not surprisingly, increasingly, model portfolios are finding their mojo, gaining greater popularity, according to smartasset.com.
The proof’s in the bottom line. According to Morningstar, as of March of last year, assets following model portfolios swelled to $349 billion. Between June 30 of 2021 and March 31 of last year, that’s a hopscotch of an estimated 22%.
Okay, now, stop drooling. Say what?
This: over the next five years, the model portfolio realm of money management’s expected to swell to a $10 trillion business by Blackrock Inc, according to finance.yahoo.com.
You say coaches are masters at plotting strategy? Well, in this care, the strategy, where asset managers and investment platforms gather packages that are ready made and sold to financial advisers, current is on course to expand from approximately $4.2 trillion according to Salim Ramji, global head of iShares and index investments at the asset manager.
“It’s going to be massive,” he said on Bloomberg Television’s ETF IQ. “It’s the way in which more and more fiduciary advisers are doing business, and, as a result, that’s the way in which we’re doing business with them.”
Also significant, when it comes to money management, plucking money into the model portfolio commands a special corner, according to advisorhub.com.
Blackrock, a plethora of competitors like Vanguard and Charles Schwab are reaping the benefits stemming from the popularity of bundling funds into ready made strategies.
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Talk about that feeling of being left out. You know; as in hit the road, Jack.
With direct indexing, investors can include – or turn their backs on -- specific stocks from an index, according to etftrends.com. Not only that, entire sectors can be similarly left out. Yep, not exactly star treatment.
What’s more, leveraging guidance from an advisor, investors can do a gaggle of things; let’s say, for example, align their portfolios with their values and sustainability objectives.
Sure, it dispenses tax loss harvesting opportunities. But there’s more. With direct indexing services like Vanguard Personalized Indexing, advisors can build customized portfolios. That accommodates their client’s individual investment goals.
While, in recent years, one of the ready for prime time features, direct indexing not only boasts positives, but downsides as well, according to comparebrokers.co.
In the financial industry it’s tabbed as the foreseeable future, optimal for investors who are big believers in customizing the portfolio. For those who’ve retired, it’s the rage.
A tricky path when it comes to attracting – and hanging onto talent – in the financial sector?
Oh, sure, if you insist.
In the aftermath of surveying 531 talent acquisition leaders across sectors in the name of its 2023 Hiring Report, goodtime.io recently released the report’s financial services edition, shining the spotlight on how they’re performing those initiatives despite the challenges.
A few need to know takeaways within the prism of this year’s obstacles in financial services hiring:
- Hiring Goal Attainment Fell Short
- Top Previous Change: Recruitment Team Turnover
- Layoffs Hit Financial Services
- Top Expected Challenge: Limiting Hiring Technology
- Competitive or Uncompetitive Landscape? You Decide
Oh, and here’s an idea: with an eye on top producers, make a deal they can scarcely refuse, according to linkedin.com.
Ah huh; now you’re listening. With both ears.With younger advisors turning up the heat on their demands, the importance of an up to date technology stack in order to lure potential talent is hardly lost on firms.
“Good technology is a game changer and committing to the tech of the future will be very attractive to those being recruited,” said Jim Frawley, CEO and founder of Bellwether.
Follow the leader?
Thing is, whether due to, for example, the pending retirement of its founder and current CEO or spurred by growth targets that have fallen short, your investment advisory firm needs fresh executive leadership, according to selectadvisorinstitute.com.
One of a number of questions you should ask yourself: should the new leader currently be a member of your firm or not?
Prior to arriving at a decision, bear in mind:
Three reasons to hire from the outside:
- Internal employees may lack the leadership ability
- It’s time for a shakeup
- Removing top talent from the competition
Three reasons to promote from within
- Save time, not to mention, money
- Your firm’s already on the right track
- Retention and morale
The need for new talent in commodity management’s made all the more important to move off the back burner considering financial advisors managing assets valued at trillions of dollars are preparing to head into retirement, according to financial-planning.com.
Yet, it’s not an easy road for those breaking into the industry, reported Cerulli Associates. In 2022, more than 72% of early career "rookie" advisors didn’t break through and left the profession in the rearview mirror.
Talk about the quintessential utility player.
What can model portfolios do? The wind up and the pitch: by leveraging research, market insights and a deep well of experience, these offerings, crafted for clients by asset managers salted away time for advisors, allowing them steer the focus onto clients, according to etfdb.com.
That said, the questions hanging in the stratosphere, according to WisdomTree Investments research, is the way in which advisors, on behalf of clients, enter the terrain of model portfolios. Not only that, which clients will most enthusiastically embrace working with an advisor all in on the models.
“Smaller accounts” might be the way some advisors kick things off – or they might do so with tax exempt accounts.
Meantime, scoop de jour: investing’s a tough enough nut to crack. Meaning you need every advantage you can leverage.
For example, socking money into a model portfolio means you’ll be packing the insights of indust4ry experts who not only know their stuff – but, heck, in all likelihood, they designed them, according to smartasset.com.
After all, prior to tabbing the assets for each portfolio, financial advisors and investment managers, for the most part, tap their analysis as professionals and deep will of research to generate investment strategies that show that detail’s king.