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Financial advisors constantly strive to find the perfect balance between serving their existing clients and attracting new ones. Often, they view their core value proposition as managing customized portfolios tailored to each client's unique needs. From this perspective, they believe spending less time constructing bespoke portfolios could negatively impact client relationships. However, a counterintuitive approach suggests the opposite: using model portfolios can create more time for genuinely serving clients.


While it may seem a paradox, spending less time on portfolio construction and more time listening to clients can significantly improve service. Building trust and understanding client needs requires dedicated time for genuine conversations and insightful questions. By freeing time from portfolio management, advisors can focus on building deeper relationships with their clients, focusing on what truly matters most to them.


Moreover, using model portfolios doesn't mean sacrificing portfolio quality. These portfolios are typically managed by professionals with access to a larger team of experts and a more comprehensive range of investment options than most advisors have access to.


Embracing model portfolios as a time-saving tool allows advisors to shift their focus from portfolio construction to client service. This seemingly counterintuitive approach often leads to higher client satisfaction and increased referrals, leading to a more successful practice.

Finsum: Consider how model portfolios can enhance client service for advisors by saving time on portfolio construction and focusing on client relationships.


The cryptocurrency industry stands on the precipice of a potentially pivotal moment, with several applications for crypto-based ETFs awaiting approval by the US Securities and Exchange Commission (SEC). Recent activities suggest the SEC is actively preparing to issue its decisions, potentially within the next few months.


The world's largest asset manager, including BlackRock, has expressed increasing confidence in the SEC's approval of their spot Bitcoin ETF applications, possibly as early as January 2024. While the outcome remains uncertain, the SEC's recent engagements with applicants and its compressed 21-day public comment window indicate a focused and potentially accelerated decision-making process.


These developments have fueled speculation in the market, with some attributing the recent rise in Bitcoin prices to the anticipated SEC decision. Others cite the upcoming Bitcoin halving event in 2024 as a contributing factor.


Regardless of the specific drivers, the next few months will likely greatly impact the cryptocurrency landscape. The SEC's decisions on these ETF applications could have significant implications for investor access, market liquidity, and the overall development of the crypto asset class.

Finsum: Anticipation for SEC's decision on crypto ETFs grows, hinting at major shifts in market access to crypto-based investment vehicles.


Wednesday, 06 December 2023 02:34

What are investors looking for in an annuity?

Based on the most recent annuity sales data, it's a good bet they are seeking a combination of growth and protection. According to LIMRA, the financial services research and education organization, sales of registered indexed-linked annuities (RILAs) set a record in the third quarter of 2023 at $12.6 billion, up 19% year-over-year.

In a recent posting on the organization's website, Todd Giesing, assistant vice president LIMRA Annuity Research, stated that "Investors still seem focused on the value of protection and growth potential that RILAs offer."

And while RILA sales set a record, the overall annuity market is also having a good year. In the news release for their most recent U.S. Individual Annuity Sales Survey, LIMRA reported that "With economic conditions continuing to be favorable for annuities, total sales increased 11% year-over-year to $89.4 billion in the third quarter of 2023."

One additional highlight from the survey is worth noting. Fixed indexed annuity (FIA) sales were $23.3 billion in the third quarter, up 9% from the prior year's results.

Finsum: LIMRA reports registered indexed-linked annuities sales, reflecting a strong investor preference for investment growth and protection.


Saturday, 02 December 2023 10:39

REITs Could Rally in 2024 if Fed Cuts Rates

REIT stocks have endured a brutal two year period primarily due to the headwind of rising rates. Now, there is some optimism that the Fed could be done hiking and its next major move will be to cut rates in 2024 as inflation declines to its desired level. Yet, the sector does face some real challenges in the coming year especially in areas with weaker fundamentals.


At the Nareit REITworld 2023 annual conference, investors and Wall Street analysts shared their perspective on the sector. Steve Sakwa, the senior managing director and senior equity research analyst at Evercore ISI noted some weakness in apartments and self-storage while noting strength in senior housing, industrials, and healthcare. 


A catalyst for the data center space could be companies spending on artificial intelligence (AI) with this positive catalyst lasting for 3 to 5 years. He expects 3 to 4 rate cuts in 2024, which he believes will push REIT stocks 15 to 20% higher. 


Jeff Horowitz, the global head of real estate, gaming, and lodging at BofA Securities struck an optimistic tone. He sees public companies being in a good place with an average maturity of five-years at below 4% and could see a wave of REIT IPOs in 2024 as well.

Finsum: REIT stocks have underperformed for 2 years. Now, there are some reasons for optimism with many expecting the Fed to cut rates in 2024 and opportunities in some parts of the real estate market.


Every industry changes and evolves with time. The financial advice industry is no different as advisors increasingly move towards focusing more on financial planning and serving clients with less emphasis on making investment decisions.


This is now being increasingly handled by asset managers and third parties. Currently, about 10% of advisors use home office model portfolios with minimal modifications. 36% of RIAs and independent broker-dealers are building their own allocations from scratch. Most advisors are taking a blended approach by using these models as a starting point and then offering some customization to suit a clients’ specific needs. 

For advisors, the shift makes sense especially as most clients seem to value planning more than performance. Further, it frees up time and energy that can be spent on client service and growing the business. According to Cerulli, advisors who build their own portfolios, spend about 30% of their time on the task. 


Another benefit for advisors is that it makes the business more scalable. For advisors who spend considerable time on portfolio management, there is more of a constraint to how many clients can be added. An interesting finding is that firms with large amounts of assets under management are more likely to use model portfolios. 

Finsum: Model portfolios are becoming increasingly popular, although most are currently using a blended approach. Here are some of the major benefits to advisors. 


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