Wealth Management
Separately managed accounts (SMAs) are gaining traction among investors, offering personalized portfolios with features like tax optimization and tailored investment preferences. Once reserved for the wealthy, advancements in technology have made SMAs more accessible, with minimum investments as low as $5,000 through platforms like Fidelity.
While SMAs allow for benefits such as tax-loss harvesting and charitable stock donations, they often come with higher fees compared to ETFs, which can make them less cost-effective for many retail investors.
Critics argue that customization can lead to active management pitfalls, with most SMAs historically underperforming benchmarks after accounting for fees.
Finsum: Innovations in AI and portfolio management tools are enabling financial advisors to efficiently manage larger numbers of accounts with greater precision.
As competition intensifies in wealth management, independent firms are leveraging bold strategies like generous payouts, cutting-edge tools, and strategic guidance to attract top advisors. For advisors considering a change, it’s vital to look beyond incentives and seek a firm that prioritizes trust, accountability, and open communication.
A commitment to radical transparency—a philosophy emphasizing full disclosure and honest dialogue—can set a firm apart in a crowded market. This approach fosters deeper trust by encouraging clear communication, owning missteps, and making decision-making processes visible to all stakeholders.
Advisors who embrace transparency in their client relationships can build stronger partnerships, ensuring alignment of goals and expectations. Firms that champion these values by prioritizing advisor feedback and meaningful investments in their growth will cultivate long-term success for both their teams and their clients.
Finsum: There seems to be a clear leveling up in terms of what firms are offering clients, but don’t sell short the benefits of technology and efficiency when serving advisors.
The latest T. Rowe Price study reveals a notable shift in how employers and advisors approach retirement income within workplace plans. More plan sponsors now hold defined views on retirement income compared to previous years, reflecting increased engagement on the topic.
Managed accounts with income planning features and target-date investments offering managed payouts or embedded annuities are gaining interest as viable solutions. Collective investment trusts (CITs) have also surpassed mutual funds as preferred target-date vehicles due to their cost-effectiveness and flexibility.
Additionally, the study highlights growing employer interest in financial wellness programs, including emergency savings accounts, as tools to enhance employee satisfaction and retention. While ESG integration garners moderate support, the study identifies regulatory and implementation challenges as barriers to broader adoption.
Finsum: Research shows how important advisors are to clients in setting up DC strategies, and they can leverage their influence to shift perspectives.
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Municipal bonds have been essential to funding U.S. infrastructure projects, benefiting public facilities like hospitals, schools, and transportation systems through their tax-exempt status since 1913.
With the upcoming expiration of the Tax Cuts and Jobs Act in 2025, the future of this tax exemption faces uncertainty as policymakers explore ways to manage budget deficits. Removing the exemption could significantly raise borrowing costs, hinder infrastructure investments, and place added financial strain on taxpayers.
While alternatives like public-private partnerships and Build America Bonds exist, they present notable complexities and drawbacks. The preservation of tax exemptions for municipal bonds is critical to fostering local autonomy, stimulating economic growth, and maintaining cost-effective infrastructure funding.
Finsum: Removing this protecting this framework could reduce sustainable development and support for communities across the nation.
Over the past five years, inflation in the U.S. has reached its highest levels in decades, peaking at 9.1% in mid-2022 before cooling to around 2.7% as of late 2024. While inflationary periods are inevitable, investors can take strategic steps to protect their wealth.
Warren Buffett, with a net worth exceeding $142 billion, advocates two timeless approaches to counter inflation’s effects. First, investing in yourself—enhancing your skills and abilities—ensures enduring value, unaffected by economic fluctuations.
Second, Buffett highlights real estate’s intrinsic worth, noting its stability and potential for appreciation even during inflationary spikes. Real estates inherently built into the CPI making up 40% providing a strong safeguard against inflation.
Finsum: By focusing on assets with lasting value, investors can safeguard their financial health in uncertain times.
Bitcoin is forecasted to experience significant price growth in 2025, driven by favorable regulatory changes and increasing institutional adoption. Analysts predict potential price peaks ranging from $150,000 to $250,000, with Trump's pro-crypto policies and support for a bitcoin reserve bolstering optimism.
The approval of bitcoin ETFs and the halving event in 2024 set the stage for mainstream acceptance and reduced supply, enhancing price stability. Institutional inflows, including allocations from retirement funds and sovereign wealth reserves, are expected to mitigate past cycles' extreme volatility.
However, experts caution against potential market corrections due to global economic disruptions or policy delays. Overall, bitcoin’s expanding role as a reserve asset and its growing integration into traditional finance solidify its bullish outlook.
Finsum: While these targets seem high its important to note that almost all experts are expecting volatility beyond typical asset classes, so these forecasts carry more risk than usual.