Succession planning is increasingly important with the heightened pace of M&A activity and the ‘greying’ of the industry. It can ensure the smooth transfer of clients, assets, and responsibilities when an advisor retires. 

The process entails identifying who is best qualified to be your successor, ensuring clients concerns are addressed, and regulations are followed. The goal is to ensure that the business continues operating without interruption while preserving the value of the practice.

In terms of identifying potential successors, it’s important to determine whether there is the right alignment with the firm’s values, vision, and approach towards clients in addition to the proper experience, knowledge, and skills. They must also possess some leadership ability as they will have to make important decisions and lead the firm. Finally, these attributes can be developed through mentoring and guidance. 

Another element is maximizing client satisfaction and retention through the process. This can be done by introducing the new advisor to clients well in advance and working in tandem for some period before fully shifting responsibilities. It’s also important to stay in regular communication with all stakeholders during the process including clients, employees, and other partners. 

Finsum: Succession planning is increasingly important due to the ‘greying’ of the industry and increase in M&A activity. Here are some important considerations.

The breakout in long-term yields has resulted in bonds turning negative on the year. Bonds could rally if the Fed does cut rates next year as anticipated by the market, but the rally would most likely be contained in the short-duration securities according to Blackrock’s Jeffrey Rosenberg. This would be a change from the long end as typically the best place to hedge against equities.

Rosenberg believes that the combination of higher Treasury supply and quantitative tightening will lead to upward pressure on long-term rates. The yield curve has become historically inverted which means that bonds would rally the hardest at the short end in the event of a rate cut. However, many passive benchmarks are overweight toward intermediate and long-term durations.

It’s also clear that there is a different relationship between stocks and bonds in a high rate, high inflation world. This has meant that fixed income is less effective as a source of diversification. However, this is most true with long-duration bonds. Short-duration bonds continue to work to diversify against equities especially as the Fed is likely to remain vigilant against longer-term inflation expectations rising even if it shifts on policy. 

Finsum: Blackrock’s Jeffrey Rosenberg details his outlook for active fixed income. He favors short-duration bonds given elevated volatility and the inverted yield curve. 

The era of employee-funded retirement began decades ago with the rise of 401(k) plans. Ever since, employers and service providers have been looking for ways to increase participant savings rates within these plans. Research conducted by Empower sheds light on a key to making this happen.

The study found that "engaged 401(k) plan participants are saving at significantly higher rates than that of unengaged participants, demonstrating that getting people involved in their retirement planning is a key component of driving better outcomes."

One way to engage participants is to provide them with access to in-person advice. Yet, not all plan advisors are equipped to deliver advice to all the participants within the plans they advise. Here's where fiduciary support from the plan's recordkeeper can be invaluable.

While partnering with recordkeepers capable of participant-level advice, plan advisors can selectively choose which participants for whom they are best suited to provide advice. The recordkeeper's advice program is an ideal solution for the remaining participants – usually those with smaller account balances or less complex questions.

Fiduciary services such as participant advice are integral to engaging participants, boosting savings rates, and helping them invest wisely. By partnering with the right recordkeepers, plan advisors can enhance the quality and efficiency of these services, benefiting all involved parties.

Finsum: An Empower study shows that engaged 401(k) plan participants save at a higher rate than unengaged participants underscoring the importance of finding ways to get involved in their retirement planning.

Inflows into fixed income ETFs have continued despite major losses in bonds over the last couple of months. Further, there is no clear indication when the tide will turn given expectations of high supply in the coming months and ambiguity about the economy, inflation, and Fed. 

The most liquid and popular bond ETF, the iShares 20+ Treasury ETF (TLT) has had $17.9 billion inflows so far this year. Assets under management have swelled to $41 billion as well. The biggest driver of flows is due to institutions, pension funds, and family offices that have a mandate regarding fixed income exposure.

Another factor driving demand is that yields are at their highest level in 16 years due to the Fed’s rate hikes. A longer-term trend that supports fixed income flows is that many investors and wealth managers are increasingly favoring ETFs over mutual funds due to lower costs and better liquidity. 

ETFs could also be better suited for volatile environments given that they can be used to harvest tax losses. Additionally intraday liquidity means that exposures can be shifted more easily to achieve precise targeting. 

Finsum: Fixed income ETFs continue to experience healthy flows despite significant volatility.

For AdvisorHub, Holt Hackney interviewed Kimberly R. Nelson, an advisor at Coastal Bridge Advisors, on the factors behind her success, and what makes her practice unique. Nelson was ranked #5 on AdvisorHub’s Top 100 RIAs to Watch List and credits her success to using empathy to understand the emotions that are driving the behaviors and actions of her clients. 

Nelson is an empath which means she can intuitively empathize with her wealthy clients. Despite having wealth, her clients still face the same challenges as others along with additional complications. 

Empathy helps her connect with her clients and provides support and resources when it’s needed most. She’s also pioneered serving female clients after divorce who may find themselves with a windfall but no professional network to help them manage this money. 

In terms of her investing philosophy, she believes that quality assets will provide value to a portfolio and outperform in the long-term. She believes that her job is to ‘shepherd’ her clients through periods of volatility and recommends diversified asset allocation and a well-constructed financial plan that reflect the needs and concerns of the clients. 

Finsum: Kimberly R. Nelson is an empath, and she attributes this to her success as a financial advisor.