When selecting the best wineries to visit, the environment can play as crucial of a role as the wine itself. With over 400 wineries in Napa and Sonoma counties, up from just 25 in Napa during the 1970s, the region has seen a surge in tourism driven by Michelin-starred restaurants, luxurious accommodations, and unique wine experiences.

This intense competition has forced Napa Valley wineries to boost their offerings beyond standard tastings with luxurious experiences like sensory garden tours and private dining with Michelin-starred chefs. 

1. Stags' Leap Winery, the Napa landmark that was established in 1883, helped create the iconic AVA. The 240-acre estate offers extensive tours and features an Apothecary and Sensory Garden along with a Kitchen Garden, providing a rich historical experience.

1. Beaulieu Vineyard, renowned for its Georges de Latour Private Reserve Cabernet Sauvignon, offers experiences celebrating its nearly 120-year history, including the Cabernet Collector tasting and the Georges de Latour Legacy Experience, all set against stunning valley views.

1. Cakebread Cellars, family-owned since the 1970s, is a premier destination for both wine and culinary enthusiasts. Visitors can enjoy farm-to-table cuisine, cooking classes, and strolls through the estate’s culinary garden, with various seated tastings and tours to choose from.

Finsum: The serene views at these Wineries provided a much-needed respite for RIAs looking for a chance to decompress.

According to panelists at the SALT conference, private credit will continue to experience strong growth over the next few years. Additionally, they believe that reports of banks stepping in to more aggressively compete with private credit lenders are overblown. Instead, there’s more likely to be partnerships between private credit investors and banks in terms of originating deals and arranging terms.

Michael Arougheti, the co-founder and CEO of Ares Management, sees private credit compounding at an annual rate of 15% for the next decade. He sees growth driven by cyclical and secular factors such as companies staying private for longer, the current high-rate environment, and many ‘good’ borrowers with weak balance sheets. Another factor is the billions being raised for private credit funds across Wall Street. 

Panelists also agreed that there are many selective opportunities in fixed income and credit at the moment. And more opportunities should emerge over the next year, especially with rates staying higher for longer. Arougheti believes that there will be more opportunities created by the lack of liquidity. This underscores another difference between the current environment and past cycles for distressed debt - weakness is not sector-specific, rather, it’s more rate-induced. 

Finsum: At the SALT conference, panelists agreed that despite headlines, private credit markets will see strong growth over the next few years. They also see more attractive opportunities emerging given high rates and limited liquidity. 

Entering 2024, the consensus was that the Federal Reserve would be cutting rates in the back half of the year in response to falling inflation and a slowing economy. This has major implications for private real estate, given that trillions of dollars in loans are maturing over the next couple of years. 

Yet, economic data and inflation have been more resilient than expected. Now, rate cut odds have narrowed, while there is some chatter that the Fed may have to tighten further. Currently, the Fed continues to signal that its next move is to cut rates, albeit later and to a lesser extent than previously thought. 

Still, this is likely to be uncomfortable for many borrowers, as many are holding onto properties based on the belief that rates will be lower, leading to more favorable selling or refinancing conditions. This is especially the case for those exposed to floating-rate debt. 

According to Richard Mack, the CEO and co-founder of Mack Real Estate Group, “People are paying to hold assets, but unless rents rise quickly, eventually asset prices will have to adjust to rates instead of hoping and anticipating rate decreases. In essence, you have to pay to wait and see what kind of recovery transpires, which is different from past cycles where interim cash flow paid you to wait for appreciation.” 

Finsum: Many were confident that conditions for real estate would improve as the Fed eased policy in the second half of the year. Now, many borrowers are likely to face increased stress as rate-cut expectations have been scaled back.

According to a white paper by SEI and FP Transitions, nearly 99% of independent financial services and advisory practices fail after the founder retires, so succession planning is not just survival but an opportunity for growth.

The paper found that although 32% of advisors claim to have a succession plan, only 17% have a binding agreement, highlighting the need for more actionable planning. But this plan helps gain new clients and encourage growth because many firms don’t have a strategy in place and can’t draw in new talent. 

Succession planning should focus on building a sustainable business that aligns with long-term goals, whether through acquisition or extending ownership. The white paper also notes that while 45% of advisors have a continuity plan, many intend to implement one soon, reflecting an increasing awareness of its importance.

Finsum: The current benefits of succession planning are growing and could improve practice performance today.

A recent deep dive by Cerulli Associates explored how defined contribution (DC) managed account users and non-users perceive the value of DC managed account programs.

Managed account users appreciate the time, energy, and stress saved by delegating 401(k) and retirement planning to professionals. They also value the human advice component and the employer’s vetting of the solution.

Many non-users were shown to be swayed by the human advice component of managed accounts and affected the fee structure they were willing to accept. Adding to this a meager 16% of non-advice users feel very confident in their investment strategy, while nearly all DC managed account users express strong confidence.

As the retirement industry shifts away from defined benefit systems, individual plan participants must educate themselves and implement effective retirement investment strategies. 

Finsum: Retirement accounts seem ready-made for managed accounts and clients seem to desire them based on this research. 

In 2023, the housing market reached unprecedented heights, with median home prices soaring to an all-time high of $389,800.

While mortgage rates reached 40-year highs there was still robust demand as the microeconomics of the market continued to put upward pressure on prices. Experts predict that this trend will continue into 2024, as mortgage rates are expected to decline due to the Federal Reserve’s plan to lower benchmark interest rates.

REITs, traded on stock exchanges, allow investors to gain exposure to real estate without direct property ownership. They distribute at least 90% of taxable income to shareholders through dividends. 

While real estate investment trusts (REITs) are popular for diversifying portfolios and generating passive income, the private real estate market also offers rewarding opportunities. They can have higher IRR with more active positions but carry increased liquidity risk. 

Finsum: Investors should be extra cautious of liquidity risk in high interest rates, but the returns could certainly be worth it. 

According to Cerulli, wealth management firms vying for high-net-worth clients should increase their focus on personalization and private markets. With traditional wealth management, it’s increasingly challenging for advisors to differentiate their services. Additionally, it doesn’t fully meet the needs of clients, especially given unprecedented amounts of uncertainty in terms of the economy, monetary policy, and geopolitics.

A consequence of this uncertainty is unpredictability in terms of return and risk in terms of major asset classes, highlighting the need for effective asset allocation. The report also showed that direct indexing is utilized by 55% of advisors who are looking to provide active management and customization to clients. 

The firm also projects growth for separately managed accounts given high net worth investors’ growing demand for customization and private market investments. As a result, these trends underscore the need for effective account aggregation and performance reporting. 

This enables the alignment of solutions across different areas such as financial planning, investing strategy, banking, estate planning, etc. Equally important, this type of comprehensive reporting and consolidation eases the transition to having higher allocations to alternative investments. 

Finsum: Cerulli conducted a survey of advisors and high-net-worth clients. The findings highlight the importance of providing access to private markets and personalized services.

Herbers & Co. conducted a survey of investors with more than $250,000 in assets and advisors to identify whether advisors’ offerings are effectively meeting clients’ needs. Among the findings, the biggest takeaway is that there is some misalignment between advisors and clients in certain areas. 

One change from the survey, compared to previous years, is that 90% of clients said effective tax planning is their highest priority. Previously, clients cited retirement, investment management, and cash flow as top concerns. Currently, only 73% of wealth management firms offer tax planning services. For advisors, it’s an opportunity to offer more comprehensive planning solutions that encompass cash flow, education, estate planning, investments, retirement planning, and tax management. 

Many wealth management firms self-identify as offering comprehensive planning, yet only 31% actually do so. This means planning for a client’s specific needs, such as business planning for business owners. 

The survey also revealed that a portion of clients are interested in alternative investments, including cryptocurrencies. The challenge for advisors is that most firms currently don’t offer advice in these areas. However, they are likely to get questions from clients, especially with the introduction of crypto ETFs backed by asset managers like Blackrock and Fidelity. Advisors should proactively prepare for these conversations. 

Finsum: A survey of clients and wealth management firms found that there are some areas in which advisors can do a better job of understanding and meeting client needs.

A portfolio’s outcome is driven by a variety of factors on factors like commissions, time horizon, and asset classes, with strategy being a key determinant shaped by each manager’s risk tolerance. While a more risk averse 60/40 strategy, allocating 60% to equities and 40% to fixed income, balances growth and stability, there are other ways to achieve those outcomes in a simplified manor. 

Structured notes, which combine various asset classes into one security, offer a way to achieve this allocation without multiple subscriptions, all while potentially reducing fees. But additionally structured notes offer flexibility, and actively managed notes can adjust based on market conditions, providing regular NAV updates. 

However, structured notes carry risks such as limited liquidity, market risk, and default risk, which can impact their performance and investor returns. Mitigating these risks can provide a competitive advantage in the market.

Finsum: The world of structured notes is vast, but they do offer the ability to simplify portions of an investment strategy and manage moving parts easier. 

Unified managed accounts (UMAs) are professionally managed accounts that allow for the use of multiple investment strategies. This makes it a more comprehensive approach than a separately managed account (SMA) which is typically used for a single, targeted strategy. 

As of the end of last year, UMAs accounted for 26% of assets in managed accounts. Growth in UMAs is due to multiple factors; however, two recent factors are improved pricing and an increase in the number of investment options. 

With UMAs, different strategies can be used to construct a customized client portfolio that leverages the best strategies across different asset classes and investment managers. This allows advisors to optimize portfolios by blending various strategies and selecting managers with the proper expertise. 

This means that an advisor could use different managers for different asset classes, such as domestic equities, foreign stocks, and fixed income. UMAs can also allow for more granularity, such as having one manager for a core equity position and another for dividend stocks. 

UMAs also provide a comprehensive view of a client's finances, which means that rebalancing strategies are more effective, and there is more potential for personalization. This includes the ability to add custom models to a portfolio along with third-party ones. 

Finsum: Unified managed accounts are experiencing rapid growth and provide advisors with a more holistic and comprehensive view of a client's finances.