What’s good for the goose is good for….financial advisors?

On one hand, they adroitly help clients navigate their future, but when it comes to their firms, well, they might not be quite so vigilant, according to smartasset.com.

Only 27% of financial advisors have a succession plan – or formal preparations to segue from the business -- at all, according to a 2018 report from the Financial Planning Association.

Consequently, it begs the question: with a gaggle of advisors closing in on hanging it up, what’s their legacy strategy?

Among key findings from financial advisors on SmartAsset’s platform:

The number of financial advisors with a succession plan has increased.

Most financial advisors without a succession plan intend on creating one at some point in the future

Financial advisor succession planning is not top-of-mind for most individuals.

Meantime, probably not surprisingly, women, it seems, are making a major mark in the financial terrain.

The essential role of women agents in furthering the cause of financial inclusion and fostering business growth for financial service providers was confirmed through a plethora of research studies done worldwide, according to findevgateway.org.

What’s more, female agents are the ones of choice among female customers, while agents serving more women customers derive more income and satisfaction on the job.

For Financial Planning, Tobias Salinger talks with Dominique Henderson, the founder of DJH Capital to share tips on growing a financial advisor brand. Henderson is a financial advisor, planner, coach, and content creator who just released an ebook on tactics to grow a financial advisor practice. 

His main advice centers around boosting leads, targeting a niche, and creating a long-term relationship. Henderson is a big believer in finding the ‘right room’ where you can be yourself. Here, your message and advise are more likely to resonate. 

Henderson also focuses on advisors who are in the early stages of their careers and shares advice on making the right connections, finding the best events to attend, and how a real practice works. Henderson sees an increase in the number of people who considering becoming financial advisors and planners. 

He believes that the initial difficulty of cold calling and taking meetings all days dissuade many from the career path. Therefore, Henderson wants to highlight alternative methods of getting started in the business. 

Rather than the focus on gathering assets, he believes that advisors should think about how thier advice and planning will help an individual and their families over the long-term in multiple facets of their life. 

Finsum: The financial advisor industry has too much of a focus on asset-gathering. Instead, there should be more focus on how the right advice can improve a client’s life trajectory

Direct indexing is gaining adherents at a rapid pace as it proliferates from solely high net worth investors to investors with much smaller sums and is now available through most wealth management platforms. Direct indexing allows investors to capture the benefits of index investing such as low costs and diversification but allows more personalization. Its most well known benefit is that it can help lower taxes due to its unique ability to harvest tax losses which can offset gains in other parts of the portfolio. 

Another is that it allows customization of indexes because many investors may want to reduce exposure to a certain stock or sector. This can be because they have substantial exposure to the stock or industry through their other holdings or because of personal preferences. 

The latter is a reflection of the rise of values-based investing which is increasingly popular among younger investors. This entails making investments that align with one’s own personal values. For instance, an investor may choose not to include fossil fuel companies in their index because of concerns around the environment. These holdings are then replaced with a different stocks that have similar factor scores. 

Prior to direct indexing, investors with strong values would be limited in terms of investment options. Now, they are able to essentially create their own fund that aligns with their values. 

Finsum: One of the major benefits of direct indexing is that investors can customize their holdings to align with their personal values. 

In an article for WealthProfessional, Noelle Boughton covers Caldwell SEcurities’ strategy to support older financial advisors in their succession planning. This is due to the aging nature of the workforce in addition to the firm’s desire to maximize retention during the transition process. Senior advisors work with junior advisors in handling clients and then slowly phase out of the business with fewer responsibilities every year.

While junior advisors are focused on growing their business and adding clients, senior advisors are thinking about their retirement and maximizing the value of their practice. Many shops will have advisors sell their business to a junior advisor and then quickly move on. 

Caldwell Securities sees an opportunity by having a more formal and longer transition period that caters to the needs and ambitions of both junior and senior advisors. It’s also a value add for clients as they initially work with both advisors before the junior advisor slowly takes the lead. 

Senior advisors can be satisfied that their clients will continue to be satisfied and that they are being handed to someone who is caring, capable, and competent. They can also continue to draw a paycheck in addition to selling their business while easing into retirement.  

Finsum: The financial advisor industry is aging with a big chunk expected to retire over the next decade. Here is how Caldwell Securities is handling this matter.

In an article for Vettafi, Ben Hernandez discusses why intermediate-term Treasuries could be the best option for fixed income investors given the current market environment. In recent months, long-term Treasuries have considerably weakened as it’s become increasingly clear that the Federal Reserve is not close to pivoting in terms of its rate policy.

This is primarily due to the economy continuing to avoid a recession, while data like the jobs market and consumer spending continue to indicate the economy is expanding. At the same time, the short-end offers generous yields but would underperform in the event that the Fed cuts rates. Another factor is that there is going to be high levels of Treasury supply hitting the market later this year as the government looks to fund its deficit.

Given that both ends of the curve have high levels of risk and uncertainty, investors should consider intermediate-term Treasuries to take advantage of elevated yields while reducing duration risk. 

Historically, these periods of ‘pause’ when the Fed is deliberating its next policy move tend to be volatile. This is even more the case this year given the runup in yields and uncertainty in political and macro arenas. 

Finsum: Intermediate-term Treasuries could be the best option for investors given the risks and uncertainty surrounding the short and long-end.