Biden recently made his pick for a critical new position at the DOL: head of the Employee Benefits Security Administration. Lisa Gomez has been nominated and is likely to get bipartisan confirmation. Gomez is seen as critical to the redrafting of the fiduciary rule that is taking place at the DOL. Most industry insiders expect the new version of the fiduciary rule to be much tougher, more akin to the original Obama era rule than the currently in-effect Trump version.

FINSUM: The reality is that if a critical new person is being brought on board to lead the effort, it is likely to push back the timeline, or so says Brad Campbell, leading regulatory lawyer at Faegre Drinker, a leading law firm in our space.

Direct and Custom Indexing is swallowing up the financial world interests like ETFs have over the last 20 years, but this new trend isn’t without its drawbacks, specifically for retirees. Most investors will utilize direct indexing to weed out stocks they don’t want or minimize their tax burden, Lawrence Tint formerly of BGI voiced some critiques of custom indexing. Tint believes the tax advantage over traditional indexing is minimal because of the turnover in the funds. Additionally direct indexing will have higher fees and even if brokers don’t charge for fees investors will incur the bid-ask spread costs. Finally, direct indexing will make it very hard for income investors to reinvest dividends in a way to mirror the existing or custom index, and the more custom the index the more likely the traditional problems of stock pickers will riddle the custom portfolio.

FINSUM: These drawbacks to direct indexing provide a more complete view of the pros and cons to the financial trend, but it still has a leg up in tax loss harvesting over traditional ETFs.

Model portfolios allow the feel of tailored experience with the ability to hit wider audiences by addressing the specific risks, features or scenarios investors are concerned about. WisdomTree has been a leader in model portfolio development by providing options across diverse assets such as equity, fixed-income, strategic multi-asset, growth oriented, and dividend options. On top of this they build out scenario focused funds.Their fixed income funds are focusing on shorter duration quality bonds while dipping into alternative credit. They have also developed a variety of international funds that focus on developing countries in order to meet the needs of investors worried the U.S. equity market is too overvalued.

FINSUM: Model portfolios are giving advisors a strong option for targeted concerns that face their clients like volatility and inflation.

The roaring post comeback of equities post pandemic has been wonderful but investors have few places to turn to mitigate their tax bill, except for the bond market. All major categories in the S&P 500 were up this year, and enjoying the broader rally. Bonds have suffered and so have many bond ETFs however, the glimmer of hope is how they can contribute to help offset tax loss. Bond ETF holders will already be in a better position just given their construction and exposure to taxes, and investors are also jumping between fixed income ETFs to manage fees as some ETF managers are cutting in order to synchronize for the tax loss harvesters. However, the 2-3% fall off in bond ETFs won’t be enough to entirely offset the equities rally this year.

FINSUM: This is the perfect time to capture low fees in bond ETFs because they are mainly a tax vehicle at this moment and return is secondary.

Bonds and equities are more correlated than ever and on top of that there isn’t any yield in the bond market these days due to the trillions in QE. Investors are now searching for an uncorrelated hedge to what looks like a looming equity bubble, and private credit markets are giving investors an alternative. High fees, opaque transactions, illiquid markets, and locked up finances are downsizing private credit but more companies are searching for financing partnerships in private markets. Middleman companies like Blackstone and Carlyle Tactical Private Credit can match companies in transactions that wouldn’t be possible in public markets and generate yield that wouldn’t normally be possible. In order to meet the rising demand private creditors are pitching to larger companies that could have access to the public bond market and giving persuasive pitches.

FINSUM: Private credit is the most enticing alternative to the volatile bond market.