One of the best real-time measures of the population’s interest in a subject can be gleaned through Google search data. Since the start of the year, searches for the topic are up by 50% and continue to climb with rates. In fact, there is a 0.9 correlation between search volume and longer-term rates.

According to Standard Life, interest in the topic really accelerated once rates exceeded 4%. Currently, many annuities are offering returns in the 7% to 8% range which is leading to strong demand from retirees or those close to retirement who are looking for income. 

Recent months have seen rates continue inching higher, while inflation expectations have moderated. Higher real rates are also adding to the appeal of annuities given concerns about the economic outlook and costs.

Two more contributing factors behind annuity demand are pent-up demand and demographics. For more than a decade, rates were so low that annuities simply didn’t deliver sufficient returns for investors or retirees. Instead, monetary policy was designed to push them higher up the risk curve in order to generate yield. 

Demographics also can’t be ignored. Next year, 12,000 Americans will be reaching retirement age every day. And by 2031, 70 million Americans will be above retirement age. The population is even older in Europe and Japan and will likely be interested in boosting their income during retirement. 

Finsum: Google search data shows that interest in annuities has surged since the beginning of the year. It’s not a coincidence that this happened as long-term rates were breaking out to multi decade highs. 

In an article for AdvisorHub, Lisa Fu covers a recent research report from Cerulli Associates which shows that portfolios managed by CIOs outperform those managed by advisors over multiple time frames. Over the last 3 years, model portfolios earned a 1.8% annual return which beat the 1% return of advisor-managed portfolios. The outperformance was similar on longer timeframes as well. 

Further, the outperformance was even stronger during periods of market volatility. During negative quarters over the last decade, model portfolios outperform 60% of the time. Model portfolio performance was also more consistent while advisor-led portfolios have much wider dispersion in terms of results. 

Of course, this is an indication that most advisors are better off using model portfolios which frees up more time to focus on operating a business, prospecting for new clients, and investing in client services and relationships. 

Many older advisors are resistant to giving up these responsibilities given that it was an integral part of the job for so many years. Yet, firms are encouraging younger advisors to go with model portfolios due to better outcomes for clients’ portfolios and more time and energy for tasks and actions that are more correlated with success.

Finsum: A research report from Cerulli Associates shows that model portfolios perform better than advisor-managed portfolios.

Although the advisor recruiting frenzy is certainly slowing down, two trends clearly standout. One is that LPL Financial has been a big winner with its variety of models and offerings for incoming advisors. The second is that Merrill Lynch has been a big loser with several high-profile exits.

This continued this week with two teams leaving Merrill Lynch who collectively manage over $1 billion in assets. The Coutant Group which is led by Kevin and Keith Coutant announced that they are leaving for UBS. The five-person group manages $700 million in assets with lead advisors Keith and Kevein having spent 23 and 20 years at the company, respectively. At UBS, they will be joining Soundview Wealth Management and continue operating in Connecticut. 

So far in 2023, UBS has recruited away nearly $4 billion in client assets from Merrill Lynch. Reportedly, the bank has been offering generous packages to brokers including guaranteed back-end bonuses and deals that are in the 400% range. 

The other major exit from Merrill was John Foley who managed $340 million in assets and left for RBC. According to reports, the exits are motivated by competitors offering more generous compensation and providing more freedom in terms of product recommendations and client relationships.

Finsum: Merrill Lynch has seen a steady stream of exits from advisors and brokers with large books. The latest are more than $1 billion in assets leaving for UBS and RBC. 

‘Higher for longer’ is the main takeaway from the FOMC meeting after the committee decided to hold rates. Members also signaled that another rate hike is likely before year end. Overall, there was a hawkish tilt to Chair Powell’s press conference as 2024 odds saw consensus expectations decline from 3 to 4 rate cuts to 2 to 3 cuts. 

FOMC members’ dot plots also show expectations of less easing in 2024. In June, it saw 2024 ending with rates at 4.6%. This was upped to 5.1%. The Fed did acknowledge progress in terms of inflation’s trajectory. Powell remarked that “We’re fairly close, we think, to where we need to get.”  

Fixed income weakened after the FOMC with yields on longer-term Treasuries jumping to new highs. Yields on the 10-year reached 4.48% and have broken out above the spring highs. The increase in yields has had negative effects on equities, specifically the financial sector and small caps. However, yields on shorter-term Treasuries haven’t risen above spring highs.

It’s an indication that markets are not expecting terminal rates to move materially higher but it’s adjusting to a longer duration of high rates. For fixed income investors, it likely means that volatility will persist in the short-term. 

Finsum: Longer-term Treasury yields are breaking out to new highs following the FOMC meeting. Expectations of meaningful Fed rate cuts in 2024 are being tempered. 

With major technological disruption happening in every industry, it’s natural to consider how the financial advisor industry will change over the coming decades. After all, the industry is unrecognizable to how it was a few decades ago. Here are some of the trends that will shape how the industry evolves. 

People, especially the younger generation, are increasingly spending more time in the digital world including when it comes to managing their finances. Many in this cohort would rather communicate with their advisors over text, email, or video calls. 

Artificial intelligence (AI) presents a threat and opportunity to advisors. AI is being used to augment robo-advisors and give them more interactive capabilities and personalized advice. While this could lead to some market share gains, advisors can also utilize AI to augment their own businesses by improving back-end operations, automating low-level processes, reducing expenses, free up time for client services, and boosting marketing efforts.  

Another major opportunity is the massive aging of the population and retirement of the baby boomer population. As this generation passes, trillions in wealth will be passed down to Generation Z and Millennials. Successful advisors will be able to form trust and relationships with older clients and their children.

Finsum: The financial advisor industry is going to face major challenges and opportunities over the next couple of decades. Demographics and technology are two of the most impactful.

In the world of investing, market volatility is often viewed with trepidation. However, for the savvy investor, it can also represent a wealth of opportunities. Mutual fund YACKX, managed by a team of experts at Yacktman Asset Management, is one such opportunity that warrants consideration in times of market turbulence.

Active Management: YACKX stands out due to its active management strategy. In volatile markets, actively managed funds have the potential to adjust more swiftly to changing conditions compared to passive funds. The fund managers of YACKX can leverage their expertise to make informed decisions, potentially minimizing losses during downturns and maximizing gains during upswings.

Diversification: YACKX typically holds a diversified portfolio across various asset classes, such as stocks, bonds, and sometimes even alternative investments. This diversification can help spread risk and reduce the impact of market volatility on the fund's overall performance. When one asset class falters, another may rise, offering a degree of stability.

Long-Term Focus: While market volatility can be unsettling in the short term, YACKX often takes a long-term perspective. This approach is especially beneficial for investors looking to build wealth over time. Volatility in the short term can create opportunities to buy quality assets at lower prices, potentially yielding substantial gains in the future.

Risk Management: The experienced managers of YACKX are skilled at assessing and managing risk. During times of heightened market volatility, their ability to identify undervalued assets and mitigate risk can be a valuable asset to investors seeking stability and growth.

Historical Performance: Before investing, it's important to review a fund's historical performance. YACKX's past performance, especially during volatile market periods, can offer insights into how it has navigated turbulent times and whether it aligns with your investment goals.

However, it's crucial to note that while YACKX may have characteristics that make it appealing during market volatility, all investments come with risks. Investors should carefully assess their risk tolerance, financial goals, and the fund's prospectus before making any investment decisions. Consulting with a financial advisor can also provide valuable guidance tailored to your specific circumstances.

In conclusion, mutual fund YACKX has several attributes that make it an enticing investment option during periods of market volatility. Its active management, diversification, long-term focus, risk management, and historical performance make it a compelling choice for investors seeking stability and growth in uncertain times. Nonetheless, thorough research and a thoughtful assessment of your financial objectives are essential before including any investment in your portfolio.

Title: Seizing the Moment: Why Mutual Fund NUVBX Could Be a Winning Investment in a High-Interest-Rate Environment

In a financial landscape where interest rates are on the rise, investors are actively seeking opportunities that can potentially provide both stability and returns that outpace inflation. Mutual fund NUVBX, managed by a team of experts at XYZ Investments, emerges as a promising investment avenue to consider during this era of higher interest rates.

Income Generation: Mutual fund NUVBX is well-suited to thrive in a high-interest-rate environment. This is because it primarily consists of bonds and fixed-income securities. When interest rates rise, the yields on these fixed-income investments also increase, leading to higher income potential for investors. NUVBX's portfolio is strategically positioned to capitalize on these higher yields, making it a potentially attractive option for income-focused investors.

Risk Mitigation: While higher interest rates can bring opportunities, they can also introduce greater risk, especially to traditional bond investments. NUVBX's expert management team is well-versed in navigating these challenges. They can adjust the fund's holdings to mitigate risks associated with interest rate fluctuations, potentially shielding investors from some of the negative impacts that rising rates can have on bond prices.

Diversification: NUVBX typically maintains a diversified portfolio of bonds, which can further reduce risk. Diversification helps spread the potential impact of interest rate changes across various types of bonds, offering a more balanced risk-return profile.

Historical Performance: Before making any investment, it's crucial to assess a fund's historical performance, especially during previous periods of rising interest rates. This can provide valuable insights into how the fund has performed in similar market conditions and whether it aligns with your investment objectives.

Income Stability: For investors seeking stable and predictable income streams, NUVBX's focus on bonds and fixed-income securities can provide a degree of income stability, making it a suitable option for those who rely on their investments for regular income.

However, as with all investments, it's essential for investors to conduct their due diligence. Carefully review NUVBX's prospectus, assess your risk tolerance, and consider how the fund fits into your overall investment strategy. Consulting with a financial advisor can also provide personalized guidance based on your unique financial goals and circumstances.

In conclusion, mutual fund NUVBX offers several compelling reasons for consideration in a high-interest-rate environment. Its potential for income generation, risk mitigation, diversification, historical performance, and income stability can make it a valuable addition to an investor's portfolio during times of rising interest rates. Nonetheless, prudence and thoughtful decision-making are essential when making any investment choice.

Direct indexing is a new approach to investing which involves recreating an index within an investors’ portfolio which combines the benefits of passive investing in addition to tax loss harvesting capabilities with the potential for increased customization. For these reasons, it’s been growing in popularity especially as it’s become available to a wider swathe of investors.

However, according to a recent report from Hearts & Wallets, a wealth management research firm, most investors remain unfamiliar with the concept. In fact, there is considerable confusion about what it specifically means. Many weren’t able to specifically delineate between ETFs and direct indexing.

Another challenge is that many investors believed that direct indexing was closer in approximation to active investing rather than passive investing and that it would require some sophisticated management. For those who were interested in direct indexing, the potential tax savings were the biggest factor. 

One of the conclusions of the report was that the industry should consider renaming ‘direct indexing’ to something that was more definitive. Too many investors who would be good candidates for these products are dismissive due to an incorrect understanding of its function and benefits. 

Finsum: Direct indexing is growing in popularity. Yet, a recent report on the category revealed some issues that may impede its future growth. 

Financial advisors pour so much time and energy into building their businesses and cultivating high-quality relationships with clients. Yet, they often don’t put in a fraction of the thought when it comes to succession planning even though the implications are massive in terms of maximizing the firm’s value or ensuring that employees remain satisfied and business continues successfully operating. 

For ThinkAdvisor, Buckingham Strategic Wealth’s MIchael Kitces shares some advice on successful succession planning. He recommends starting with honest and frequent dialogue between owners and younger advisors who may have expectations about their role in the firm’s future. Older advisors can also choose to transition at their own pace and may give up certain responsibilities while continuing to do the parts of the job they enjoy. 

Part of this communication strategy is to be open about uncertainty rather than repeatedly changing plans which can lead to frustration. Another common mistake is to think about every decision as being binary rather than thinking about compromises between valid, competing interests. Finally, remember that succession planning is ultimately about maximizing the value of the firm in the present and setting it up for success in the future. 

Finsum: Succession planning is the final major decision that advisors will make in their careers. Here are some ways to maximize your chances of success. 

REITs have languished in 2023 despite a buoyant equity market due to concerns of cascading defaults in certain segments like commercial real estate (CRE), while high rates continue to pose a significant threat to the group. However, the group is beginning to look attractive from a valuation perspective while offering generous dividend income to holders as well.

From a contrarian perspective, there are some silver linings. For one, yields on long-term Treasuries are hitting levels at which they have found resistance before. The biggest, recent headwinds for REITs has been the increase in long-term rates. If this were to reverse, it would be a major catalyst for the group by lowering their financing costs and making their dividends more attractive. 

Additionally despite the challenging operating environment, financials continue to be sound, outside of CRE, and dividends continue to be hiked. According to research, REIT stock prices tend to follow their dividend streams over long periods of time. So far, there is no evidence that dividend payouts will be compromised which increases conviction in buying the dip.

To reduce risk, investors should focus on areas where rents continue to increase such as healthcare and industrials in contrast to areas where rents are slowing or stagnating such as multifamily real estate and office properties. 

Finsum: REITs have been one of the worst performers over the last 2 years. Here is a contrarian perspective on why the sector could outperform in 2024.

Exxon Mobil recently shared its long-term outlook on how it sees the global energy market evolving. Overall, it sees renewables taking a greater share but that more than half of the world’s energy needs will continue to be met by oil & gas.

It sees energy demand as being intrinsically tied with economic development. By 2050, more than 1.5 billion people will have entered the global middle class which comes with increased consumption of automobiles, air conditioners, refrigerators, etc. 

China’s per-capita energy consumption more than pentupled as the country experienced an economic boom. The company sees a similar possibility in Africa over the next couple of decades. In total, it sees global electricity consumption growing by 80% by 2050.

In order to facilitate this, it believes that all types of energy need to play a role including oil & gas. Despite the belief of many that EVs portend a peak in oil demand, ExxonMobil points out that even if every car sold in 2035 is an EV, global oil demand would only drop to 85 million barrels per day which is equivalent to 2010 levels.  

Finsum: ExxonMobil shared its outlook for the global energy market till 2050. Overall, the company believes that energy demand will continue rising and that oil & gas will remain integral for the global economy.