Displaying items by tag: wealth management

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Published in Wealth Management
Tuesday, 02 March 2021 16:02

How to Buy Annuities When Rates are Low

(New York)

While yields have been rising over the last few weeks, the reality is that they are still near historic lows, and far below the level most retirees need in order to earn decent income, especially given how risky bonds currently appear. So, in this very difficult environment annuities have emerged as a good option, but how to take best advantage of them when rates are so low? There are a few options, but the best one is “laddering”, or buying multiple annuities over time in order to not commit your entire pot of capital at a time when rates are so low. Additionally, some annuities offer dividend payments on top of regular payouts, which can provide extra income.


FINSUM: One of the big worries right now is putting a big pot of money into annuities, only to see rates and payouts rise in a couple years. Hence laddering is good strategy.

Published in Wealth Management
Thursday, 14 January 2021 13:31

How New Tech Can Help Wealth Management

(New York)

WealthManagement.com has run an interesting article about the role of technology in our industry. Authored by Adam Malamed, former COO of Ladenburg Thalmann, the piece discusses how technology should be employed in wealth management, and what has separated successful from unsuccessful technologies. Adam makes the point that while new technologies may be nice in themselves, they are useless unless they fulfil a real market need, which is why so many previously hyped technologies have gone bust (e.g. facial recognition tech for client pitches). Furthermore, the industry itself has been experiencing heavy margin compression, and therefore wealth tech companies need to find ways to simultaneously increase operating margins while also improving client experience. One great example the article makes is Docusign, which made document execution immensely simpler, while also reducing the costs of
processing paperwork. It is a win for clients and for firms.


FINSUM: We couldn’t agree more with this view. Change in our space is by its very nature evolutionary. Clients don’t want to take risks on new tech with capital that took them fifty years to earn, and therefore, many wealth management firms are reticent to adopt “disruptive” new technologies.

Published in Wealth Management

(New York)

A new survey by the Money Management Institute and AON has come up with some interesting findings as it relates to client satisfaction with their advisors. One of the most intriguing findings was that clients say they wished their advisors used more goals-based financial planning. Goals-based planning is the idea that you plan around clients’ individual life goals (e.g. saving enough money to pay for children’s college) and then continually report to clients how they are doing in those areas. Incorporating values into their financial planning is another area where clients say advisors could improve.


FINSUM: Many advisors already do this, but there is likely room for improvement, especially as it relates to reporting. Very few invest and save just for the sake of accumulation without a plan for their money, so reporting on the key areas they are making progress towards is a good step. There are even funds that specialize in helping aid goals-based investing.

Published in Wealth Management

(San Francisco)

The wealth management market is already in shock from Democrats’ tax proposal—think top tax rates of over 65% for high tax states. Remember that a large majority of states charge taxes on residents, including big ones like New York and California, where large numbers of America’s wealthy reside. Now, California, the largest and one of the most influential states in the union, has just put out a proposal for taxing wealth, not income. The plan comes from the state’s legislator. Here are the basics of the plan: “The state would apply a 0.4% rate to all net worth above $30 million for single or joint filers. The tax would apply on wealth above $15 million per spouse for married taxpayers who file separately. Net worth would include all assets and liabilities held globally by a taxpayer”, according to Barron’s.


FINSUM: Two eye-opening things here. Firstly, Democrats have a veto-proof supermajority in the state legislature, so passing this will be much easier than elsewhere. Secondly, how much will this influence other states? It was easy to see how left-leaning states influenced others as it regarded state-level fiduciary rules.

Published in Wealth Management
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