Wealth Management
Large financial firms have dedicated research teams that construct portfolios. Individuals or even sub-teams dedicate to different factors, and smaller firms previously had a hard time competing. However, technology is shifting the balance, as tools like machine learning and artificial intelligence can augment current labor to boost productivity. These measures can enhance productivity without increasing one of the largest input costs in finance: labor. Magnifi’s powerful artificial intelligence can amp up your research department by providing detailed analytics, and powerful search features that navigate thousands of portfolio opportunities without the large teams. Technology is leveling the playing field and giving small firms the edge in labor output.
(Washington)
Congressional Democrats are pushing for more ways to increase taxes on wealthy Americans, and their newest mechanism is closing a loophole on Roth IRA contributions. Currently, people making in excess of $400,000 can convert pre-tax retirement saving accounts into a Roth IRA. Technically, individuals can’t contribute to their Roth if their income exceeded $140,000, but the ‘backdoor’ loophole allowed you to convert the pre-tax contributions into a Roth IRA. Additionally, House Democrats are trying to end the ‘mega backdoor’ Roth’s which were saving up to $38,500 for wealthy individuals. The Democratic proposal also is requiring minimum reporting for certain balances and further Roth restrictions. These are significant changes to the potential tax code for the wealthiest, and if implemented these provisions would all come into effect Dec. 31, 2021.
FINSUM: Democrats are also considering automatic enrollment in Roth retirement vehicles in order to boost retirement savings on the lower-income spectrum. These are some of the largest changes to the tax code in recent years, all in an attempt to boost the tax base and pay for a $3.5 spending bill.
Artificial Intelligence is being adopted across the financial industry. In a recent poll by the World Economic Forum, executives at 151 leading financial institutions were asked questions about the prospects of AI in their business. 77% expect AI to be a critical part of their business in the next two years and 64% expect to be mass adopters. Magnifi can bring this cutting-edge technology to your financial institution. Adopters of Magnifi’s products will utilize machine learning techniques that can optimize portfolios for their clients across risk, return, themes, fees, and other factors. AI’s wide adoption is being utilized to lower high labor costs, or even better, to augment current labor for more productivity. Finally, Magnifi delivers all of this with a simple set of tools that are easy for advisors to interact with to deliver their clients the best product possible.
More...
Artificial Intelligence is one of the fastest-growing segments of technology, and while most people think of AI as a computer listening to their conversations to send them advertisements it’s growing just as rapidly in the world of finance. In 2019, AI and machine learning was a $6.67 billion dollar segment of the financial world according to a study by Mordor Intelligence. That number is expected to more than triple by 2025 as the projection is $22.6 billion. Additionally, Business Insider pins the savings to financial institutions and banks by AI at $447 billion in the next two years. Magnifi can bring these powerful tools to your advising team to put research insights, analytics, and custom solutions for your clients at your fingertips. Magnifi uses natural language intelligence that can filter thousands of investment opportunities to provide the best opportunities to your clients, and these features are as simple to use as a Google search.
(Washington)
Rollovers are about to see a huge change. Advisors have largely been sleeping on the effects of the new fiduciary rule, largely because the current one was drafted under Trump and is thus milder. However, what many don’t realize is that come December, rollovers are going to be a lot more complicated. According to Fred Reish, leading industry attorney, the new rule “has turned the rollover world on its head”. Speaking further and addressing compliance, he added “A whole series of steps have to be taken to adjust to this standard”.
FINSUM: Okay so here is the reality. Full implementation begins in December, but the DOL may grant a last-minute stay because it is working on a full new fiduciary rule draft (Biden’s version). In either event, the new rule will certainly not be lighter than this version.
(New York)
Model portfolios are seeing great inflows recently, but their popularity has created its own problems. The biggest of those problems—a dizzying proliferation of funds. Today we are going to make an off-the-cuff recommendation. How about a one-stop, no fee “model portfolio” for retirement. The model portfolio? Buy these four ETFs: the Vanguard Total Stock Market ETF (VTI), the Vanguard Total International Stock ETF (VXUS), the iShares Core Total USD Bond Market ETF (IUSB), and the Schwab US REIT ETF (SCHH).
FINSUM: This is in jest of course, but this is a dead simple and well-conceived set of ETFs for retirement.