Displaying items by tag: advisors

According to research from WisdomTree Investments and shared in an article by Nick Peters-Golden on VettaFi’s Modern Alpha Channel, the volatile markets and uncertainty about the economy in 2020 yielded some insights and lessons that can be applied today.

2020 was particularly challenging for advisors given the outbreak of the coronavirus and aggressive policies to deal with it, including massive amounts of fiscal and monetary stimulus. There were other practical challenges, such as maintaining communication with clients virtually. 

The research results in some surprising takeaways. For one, investors didn’t seem more panicked despite the steep drop in stock prices amid the initial lockdowns. Additionally, surveys showed that investors were satisfied with their advisors’ performance over this period. 

WisdomTree attributes this satisfaction due to constant communication with clients and reassurance about their long-term plans. Most advisors increased communication with clients and were able to increase confidence by using model portfolios. 

As a result, the number of investors who said advisors using third-party model portfolios was ‘absolutely acceptable’ rose to 86% from 90%. Additionally, advisors got high marks from clients about their accessibility and responsiveness than prior to the crisis. 

Finsum: Research from WisdomTree Investments shows that clients were satisfied with advisors’ performance in 2020 despite a challenging environment.

Vestmark just unveiled its direct indexing offering which is part of its personalized unified managed account that will give its clients more bespoke services like tax optimization and portfolio management according to reporting by Diana Britton for WealthManagement.com.

Initially, the company launched six index-based SMA strategies in January. Now, it’s adding to this with its direct investment platform, enabling direct indexing for customers. This is just one part of its comprehensive, outsourced portfolio management service - VAST. 

VAST includes direct indexing, separately managed accounts, mutual funds, ETFs, and individual securities. It’s already available on the Manager Marketplace which counts 200 managers and 1,000 strategies. Additional offerings include daily optimization to maximize tax loss harvesting.

Another feature is values-based investing which allows clients and advisors to screen out investments based on certain criteria. The current minimum for VAST is $250,000. While Vestmark’s offerings are similar to other institutions, the primary differentiator is the daily tax loss harvesting as other companies tend to harvest tax losses on a monthly or quarterly basis. 

In an article for SmartAsset, Rebecca Lake, CEPF, discussed some networking strategies that advisors should implement to grow their business. First, networking will ensure that advisors have a pipeline of future opportunities. 

Networking is also effective to help you establish a reputation in your community and can help you connect with people who could be potential clients. It’s especially important as word of mouth remains the primary way that people choose their advisors. 

The simplest step is to join a professional association that is national or locally based. These will regularly put you in face-to-face contact with people in your industry and potential clients in an informal, relaxed setting. Local organizations will also give you the opportunity to participate in community events which can provide organic opportunities to form relationships with people in your community.  

Another important piece for advisors is to grow a presence on social media. It can help display your personality and thinking on a deeper level, and it can help you find potential clients within your niche. And, you can also use social media to try to understand whether or not these prospective clients are a good fit for your practice based on their digital footprint.

Finsum: Networking is an integral part of success for any financial advisor as it will ensure that you have a pipeline of potential clients.

Model portfolios continue to be a major beneficiary of current volatility and uncertainty as evidenced by Charles Schwab seeing $4.6 billion in inflows to its bond ETF according to an article by Bloomberg’s Carly Wanna.

These inflows are being attributed to adjustments made by a model portfolio and are offered by many large asset managers. Currently, there is no firm estimate on the size of the model portfolio industry, but manu speculate that trillions are managed through them. And, they are offered by the largest asset managers including Vanguard and Blackrock. 

But, the best indication of their size and influence is the massive inflows and outflows from ETFs which tends to happen at the beginning or end of quarters. Additionally, it’s easy to match the inflows and outflows from various ETFs. In this case, the model portfolio seems to be reaching for increased yield as it moves out of Treasuries and into lower-rated corporate debt. 

Overall, model portfolios are booming due to the strategy providing the benefits of active management with lower costs and increased transparency.

Finsum: Model portfolios are having an impact on Wall Street as evidenced by the huge inflows into Schwab’s bond ETF.

In an article for John Hancock Investment Management, Steve Deroin, the Head of Asset Allocation Models and ETF Strategy, discusses why he believes active fixed income will see a strong decade of growth as it’s uniquely positioned for the current market environment. 

Active ETFs are a small share of the total market, but they are rapidly growing. It provides the benefits of the ETF structure, while being more responsive to a volatile market environment. Currently, active ETFs have 5.3% market share but received 14.4% of net inflows in 2022. Additionally, they accounted for 63% of all new ETFs in 2022 which is the 3rd straight year that active offerings outpaced passive ones. 

In the fixed-income market, active ETFs offer exposure to bonds with more liquidity, transparency, and lower costs. Many passive fixed income ETFs don’t offer exposure to higher-yielding instruments and are instead concentrated in Treasuries and mortgage-backed securities. 

Thus, given these trends and a much more volatile market environment, the active fixed income ETF segment will continue to rapidly grow. 

Finsum: Active fixed-income ETFs are growing faster than passive fixed-income and active equity ETFs. Expect this trend to continue over the next decade.