The financial services industry is at the brink of transformation with the introduction of generative AI, which could reshape how financial advice is provided. Traditionally, financial planning has relied on human advisors, but AI tools now offer the ability to handle tasks from retirement planning to portfolio management, learning from user data and economic trends. 

These AI systems can improve efficiency and communication between clients and advisors, but adopting them requires careful consideration of the costs and risks involved. Issues like AI "hallucinations," where the technology generates inaccurate advice, and bias in recommendations highlight the need for vigilance. 

Despite these challenges, the potential for AI to revolutionize financial services is immense, provided businesses implement strong governance, human oversight, and regulatory compliance. 

Finsum: By striking the right balance, AI can enhance the financial advisors practice while ensuring ethical and responsible use.

The U.S. is close to finalizing rules that will restrict certain American investments in China’s artificial intelligence sector, with a focus on national security. These regulations, currently under review by the Office of Management and Budget, are expected to be released soon and stem from an executive order issued by President Biden in August 2023. 

The new rules will require U.S. investors to notify the Treasury Department about AI-related investments and limit funding for technologies like semiconductors, quantum computing, and microelectronics that could benefit China's military. 

Some exceptions, such as investments in publicly traded securities and certain limited partnerships, have been proposed. Experts expect further clarification in the final rules, particularly regarding AI's scope and the conditions for limited partners. 

Finsum: There seems to be broader efforts to safeguard U.S. technological from China and this trend is worth monitoring. 

The three best business books of the last three years—Right Kind of Wrong by Amy Edmondson, Chip War by Chris Miller, and This Is How They Tell Me the World Ends by Nicole Perlroth—offer vital insights for navigating today's complex, tech-driven economy. 

Edmondson's work explores the value of intelligent risk-taking and learning from failure, a key principle for fostering innovation in business leadership. Miller's Chip War unveils the geopolitical and economic significance of semiconductors, illuminating the high-stakes competition that will shape the future of global technology. Perlroth's exposé on the cyberwarfare landscape underscores the growing importance of cybersecurity, warning businesses of the existential threats posed by digital vulnerabilities. 

Each book provides a different yet complementary lens on how technology, risk, and global power dynamics intersect in the modern economy. 

Finsum: These books equip business leaders with the foresight needed to thrive in an increasingly volatile world.

For years, alternative investments were mainly the domain of institutional investors, with private individuals largely excluded from opportunities like hedge funds and private equity. The rise of fintech has changed this, offering wider access through platforms that enable everyday investors to participate in alternative investments. 

These platforms utilize technologies like AI, blockchain, and crowdfunding to lower barriers and provide more transparent, secure options. This democratization allows regular investors to diversify portfolios and tap into high-potential markets, like venture capital or cryptocurrency. 

However, the illiquidity and volatility of many alternative assets still pose risks for inexperienced investors. As fintech continues to evolve, it will further shape the future of alternative investments, but due diligence remains essential for success.

Finsum: There have been monumental innovations in fintech in the last decade, but perhaps the strongest is in the alternative investment space. 

A variable annuity offers the potential for investment growth along with tax deferral, but at a higher cost compared to fixed annuities. With variable annuities, you can invest in subaccounts like mutual funds, and when ready, convert the balance into income payments. 

While the returns and income depend on investment performance, many insurers guarantee a minimum payout. However, these annuities often come with high fees and restrictions on early withdrawals. The best variable annuities have low fees, flexible withdrawal options, income guarantees, and are backed by financially strong companies. Here are three of the best options in the current market: 

• Lincoln Financials’ American Legacy Target Date Annuity, Annual Fee 0.10% to 0.90%
• Pacific Life’s Pacific Odyssey Variable Annuity, Annual Fee 0.30%
• RiverSource RAVA Vista Variable Annuity, Annual Fee 1.00%

Finsum: There is currently more value in annuities than there was a decade ago due to the risk levels compared to bond markets and the return profile. 

Private credit has shifted from corporate finance to consumer lending, with firms like Elliott, Carlyle, and Fortress purchasing billions in loans from FinTech’s. Companies like Klarna, SoFi, and Upstart, once dominant, have struggled with high costs and rising interest rates, prompting them to offload loans. 

By moving loans off their balance sheets, these FinTech’s hope to boost new lending, though the long-term financial impact is uncertain. Upstart, known for its AI-powered underwriting, faces substantial risks from loan defaults, leading to significant losses. 

Private investors, focused on high returns from loan interest, are seizing opportunities, as seen in deals that boosted stock values for Upstart and SoFi. Despite FinTech’s’ ambitions to disrupt traditional banking, private credit is now positioned to challenge their dominance.

Finsum: We’ll see if private credit can improve where fintech has not, but this could drastically change the industry. 

Holiday travel can bring excitement, but it often comes with a range of stressors due to the sheer volume of people traveling. 

1. Book Early and Use Price Alerts: To avoid the stress of skyrocketing fares, it’s crucial to book your holiday travel as early as possible. Setting up price alerts on websites like Skyscanner can help you track fluctuations and snag the best deal when the time is right. 

1. Consider Less-Crowded Destinations: For example, if you’re dreaming of sun and sand, opt for alternatives to crowded hotspots. Instead of Cabo, try Todos Santos for a more relaxed, affordable getaway with fewer tourists. 

1. Have a Backup Plan: Preparing a solid backup plan is key. Consider purchasing travel insurance to cover potential disruptions, and map out alternative routes to your destination in case your flight gets canceled. 

Millions are hitting the road, airports, and train stations, all with the same idea of seeing loved ones or taking a vacation at the same time.

Finsum: I love using flight monitoring services and historical averages to minimize my holiday flight costs. 

Innovator Capital Management has launched a new ETF targeting the Russell 2000, adding to its Managed Floor suite. This ETF offers small-cap exposure with a built-in downside cushion, limiting potential losses to around 10% over a rolling 12-month period. 

Unlike traditional defined outcome ETFs that lock in a fixed downside and upside cap, this fund employs a laddered options strategy for more flexibility and dynamic risk management. As volatility looms due to uncertainties around the election and interest rates, the fund aims to attract investors who are cautious about small-cap risks but still want exposure. 

This move capitalizes on increased investor interest in small-caps while addressing concerns about potential market downturns. Ultimately, Innovator's strategy is designed to provide both growth opportunities and a safeguard against significant losses.

Finsum: Small caps can outperform in a falling rate environment and this could be a great option for new buffer ETF investors. 

CAIS, a leading alternative investment platform for independent financial advisors, has launched CAIS Advisors, a registered investment advisor aimed at improving portfolio construction tools. Headed by Chief Investment Officer Neil Blundell, CAIS Advisors plans to offer advisory services and customizable alternative investment portfolios.

Blundell highlighted the challenges advisors face when integrating alternative investments into broader portfolios and emphasized how CAIS technology simplifies this process. The new division will also introduce multi-manager registered solutions, spanning private equity, real assets, and hedge funds.

 Additionally, CAIS will debut Compass, a tool designed to streamline portfolio construction using alternative investments. These launches were unveiled at the CAIS Alternative Investment Summit.

Finsum: Model portfolios and construction tools can greatly improve advisor effectiveness and efficiency. 

Derek Jeter considered the 2000 World Series, where the Yankees faced the Mets, his most stressful experience, feeling relief rather than joy after winning. He believed losing to the Mets would have forced him to leave Manhattan, reflecting the pressure of maintaining control over the city. 

As the Yankees prepare for the ALCS against the Guardians and the Mets face the Dodgers in the NLCS, there's a chance of another Subway Series. This would be the third time both New York teams made the LCS in the same year, with 2000 being the last occurrence. 

Mets manager Carlos Mendoza, formerly with the Yankees, and players from both teams are familiar faces, heightening anticipation. However, both teams remain focused on their current opponents, determined to advance.

Finsum: This could be an absolute electric sporting event in one of the most prominent sports cities in the U.S.