Displaying items by tag: advisors

In an article for the FinancialTimes, Moira O’Neill discusses the pros and cons of buying an annuity today. Annuities are increasingly on investors and advisors’ minds because many are now offering yields that are equivalent to long-term returns achieved by equities. Further, inflation is trending lower, while many believe that current elevated rates will prove to be transitory.

From a less quantitative perspective, annuities also offer peace of mind given that there is no variability in terms of returns regardless of what happens with the economy or inflation or monetary policy. This can be appreciated more in the current environment given the rising risk of a recession. 

Given that most annuities operate in perpetuity, a big factor in whether buying an annuity makes sense depends on an investors’ lifespan. The longer they live, the better an annuity will perform. And, this would certainly be the case if we go back to a low interest rate world which prevailed for much of the past 2 decades. 

For investors and advisors who believe that inflation is here to stay, buying an annuity doesn’t make sense. Instead, they should find better opportunities in other asset classes which tend to outperform in an inflationary environment. 

Finsum: Annuities are seeing major demand due to high interest rates, falling inflation, and increasing concerns that a recession is looming.

Many advisors have embraced model portfolios as it frees them from a portion of their portfolio management responsibilities. Instead, they are able to focus more time and energy on areas like client relationships, prospecting, and planning which are shown to be more important to building a successful practice, client retention, and helping clients reach their goals.

However as covered by Jeff Benjamin for InvestmentNews, some advisors are rejecting this approach. Instead, they believe that they can add value to their clients by remaining involved in portfolio management. Many of these advisors apply their expertise when it comes to selecting individual stocks for their clients’ portfolios. 

For instance, Ryan Johnson of Buckingham Advisors will manage the large-cap equity portion of clients’ portfolios, but when it comes to small-caps, international, or fixed income he relies on mutual funds and ETFs.  

Many of these advisors cite reasons such as tax management, higher concentration, and greater client involvement in their portfolios. That being said, these advisors acknowledge that it’s more work and comes with greater risk. Yet, they are willing to accept the tradeoff. 

Finsum: Model portfolios are taking a greater share of the industry as it frees advisors up from portfolio management responsibilities. Yet, some are not so eager to embrace the trend. 

For WealthProfessional, Leo Almazora discusses best practices when it comes to succession planning. For one, advisors need to delineate between working in the business and on the business. Many are so wrapped up in helping their clients plan for the future and reach their financial goals that they don’t apply similar principles to the futures of their practice.

However, it’s increasingly accepted that succession planning is an integral part of serving your clients especially if you plan to retire before your clients. Therefore, advisors need to secure a worthy successor for their clients and it’s ‘the last best thing an advisor can do for their clients’.

According to Almazora, advisors should start planning for succession about 5 years before their retirement date. Although there are multiple ways to structure a takeover, some sort of soft transition is ideal, where the new advisor and old advisor both work together for a couple of years to ease the transition. These types of transitions typically result in less client attrition and more client satisfaction. 

In terms of finding the right successor, some considerations are shared values in terms of planning and investing and a similar temperament when it comes to clients. Another important factor is that the successor should be able to identify with the niche that is an advisor’s specialty. 

Finsum: Over the next decade, there is going to be a wave of retirement of financial advisors. WIth this in mind, advisors need to get serious about succession planning.

In an article for SmartAsset, Rebecca Lake CEPF discusses some time management tips for financial advisors. This is especially relevant for advisors in the early stages of their careers as they often have multiple roles such as prospecting for clients, servicing existing clients, portfolio management, operations, marketing, etc. 

Many advisors end up overwhelmed and working inefficiently. Ironically, advisors need to audit their time and efforts to ensure that their daily routine is consistent with their long-term goals which is a similar process with onboarding new clients. 

The first step is to start creating a structure and routine to your day especially in regards to the most important tasks that drive success. Often, advisors can end up in a reactive mode throughout their day which leaves them tired at the end of the day but still unproductive in terms of achieving longer-term goals. 

Another step is to identify tasks that are time-consuming but not productive and find ways to outsource or delegate these. If this is not possible, then you can put some time limit on these tasks. 

Overall, these steps can help advisors be more productive and also have a healthier work-life relationship while ensuring that progress is being made towards longer-term goals. 

Finsum: A big challenge for advisors is time management. This is even more the case for new advisors who have to build their business while they learn the business.

In an article for AdvisorHub, Karmen Alexander discussed the first 100 days of the new presidents of Merril Lynch, Eric Schimpf and Lindsay Hans. The duo have been hitting the road and personally meeting with the company’s roster of advisors, associates, executives, and investment professionals across major markets. 

They are also betting on a new growth strategy which dovetails with its parent company, Bank of America. Essentially, it comes down to discovering new talent and then investing in their training. And, it’s a major shift from its previous aggressive recruiting of brokers and advisors. 

Currently, it’s targeting about 200 new advisor recruits every quarter. In part, this is a response to the current attrition rate of 4% annually due to a combination of recruitment by competitors, exits from the industry, and retirements. The new trainees will also help to offload work and responsibilities from existing teams so that they can focus more on growing their business and serving clients. 

Merril is also offering incentives for advisors to pursue new clients. So far, it’s working as it saw a more than 100% increase in the number of new client relationships in the first-half of the year and a 150% increase in the number of net new households added. 

Finsum: Merril Lynch has two new presidents leading it. In their first 100 days, the duo have unveiled their new growth strategy for advisors and clients.