Displaying items by tag: advisors

Following a couple of quiet months in terms of financial advisor recruiting, there’s been another surge in activity in terms of M&A for RIAs as covered by Ali Hibbs for WealthManagement. It’s not a coincidence that this renewal in appetites is happening along with a resurgence in ‘animal spirits’ due to strong stock market gains and constructive developments on the economic and inflation front.

Commensurately, Cetera Holdings which is the parent company of Cetera Financial Group, acquired The Retirement Planning Group (TRPG). TRPG is a firm with 14 advisors and 40 employees with headquarters in Kansas City and offices in St. Louis and Denver. It marks the first pure RIA acquisition by Cetera, but it wasn’t exactly surprising given the recent arrival of former Fidelity senior executive Mike Durbin as CEO. As of the end of Q1, Cetera had $330 billion in assets under administration and $116 billion in assets under management. 

According to Durbin, the deal is accretive for Cetera and ‘represents our commitment to constantly identify and deliver multiple options that give advisors a depth of choice and flexibility to affiliate their business with Cetera.’ Earlier this year, Cetera made minority investments in Prosperity Advisors and NetVEST Financial. It also acquired the retail wealth business of Securian Financial Group. 

Finsum: M&A activity is picking up once again in the RIA space after a couple of months of less activity. The most high-profile is Cetera’s acquisition of The Retirement Planning Group.

In an article for Citywire, David Stevenson discusses whether active fixed income or equity ETFs will displace mutual funds. Already, passive equity funds have replaced mutual funds as the preferred vehicle for investors and institutions given lower costs, more transparency, and better returns over long time periods. 

On the fixed income side, it’s a bit more challenging given that active funds have a track record of outperforming passive funds. In large part, this is because active funds have more latitude in terms of duration and credit quality that are not available to passive funds. 

However, Stevenson is skeptical that active ETFs will be able to completely replace mutual funds. He sees many active ETFs as being mutual funds in an ‘ETF package’ with a slightly lower fee. He is also skeptical that active fixed income will continue to outperform over the long-term. 

As evidence, he cites the lack of inflows into active ETFs despite a spate of launches over the past year. So far, active funds only account for 5.8% of assets under management, while passive makes up the rest. Of this, active fixed income ETFs have seen 9% of total bond flows, totaling only $8.5 billion, while passive fixed fixed income ETFs have seen $75 billion of inflows. 

Finsum: Active fixed income funds have performed well YTD but still are not seeing significant inflows despite a number of new issues in the past year. 

In an article for ETFTrends’ Direct Indexing Channel, James Comtois discusses how direct indexing essentially means that advisors and investors become portfolio managers, since they own the stocks directly and can customize their holdings based on their goals, preferences, and individual circumstances.

Contrast this to passive ETFs which continue to be the dominant investment vehicle for investors and advisors in which stocks are indirectly owned with no possibility of customization. Some drawbacks to indirect ownership are no shareholder rights in terms of voting on Board members or other issues. Additionally, there is no possibility of harvesting tax losses during periods of volatility to offset capital gains in other holdings. 

Many younger investors are passionate about their investments reflecting their values. This is simply not possible through passive ETFs. For instance an investor may not want to own companies in the defense industry, direct indexing allows them to exclude these companies and replace them with stocks that have similar factor scores to ensure integrity with the underlying index.

Given these benefits, it’s understandable why the category has seen major growth in the last couple of years. And, this growth will continue especially as direct indexing is no longer only available to high net worth investors. It’s increasingly being offered to those with smaller sums to invest through firms like Vanguard and Schwab. 

Finsum: Direct indexing is rapidly growing due to the benefits it offers investors which include increased customization and tax loss harvesting. 

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. 

Client turnover and attrition is a reality for every financial advisor. In order to combat this entropy, advisors need to have a marketing plan, generate leads, and build a pipeline of prospects. For many advisors, this is something they don’t enjoy as they get into the business because they enjoy analyzing investments and servicing clients. 

However, this type of discipline is necessary to ensure that your firm keeps growing. In an article for Nasdaq.com, Luke Acree, the President and founder of ReminderMedia, discusses some ways that financial advisors can generate leads which is the first step in growing a practice. 

The simplest step is to ensure that you are providing proper and full attention to existing clients. A good idea before embarking on a growth plan is to ensure that your current clients are satisfied. This also increases the chances of getting a referral which tend to be the highest-quality leads. 

Building on online presence is a strategy that will pay off in the long-term. In the short-term, there is little return for your efforts, but it’s increasingly how younger generations will find you and make decisions. Ensure that your profiles are professional while displaying your personality and unique offering. 

Finsum: High-quality leads are integral for any financial advisor practice to grow. Here are some suggestions on how advisors can ensure a steady stream of leads to help build their pipeline of prospects.