Wealth Management
In the shifting world of financial advice, the imminent retirement of over a third of advisors within the next decade poses a significant challenge. This shift is driven by the aging demographic of current advisors, with nearly 60% of RIA assets managed by those aged 55 and older.
To navigate this transition successfully, firms need to focus on recruitment, targeting younger demographics, and modernizing engagement models to mitigate the impact of a declining advisor pool. Succession planning is vital for retiring advisors to secure their financial future, boost their firm's appeal, and mentor the next generation. Clear guidance and succession planning is key to attracting new talent.
Recruiting and retaining young advisors is essential, as they bring fresh perspectives and technological savvy, crucial for engaging younger investor demographics like Millennials and Gen Z. These new advisors can also help bridge the gap between clients and existing advisors as their values can be more aligned.
Finsum: It’s time to start thinking about recruiting and transitioning or succession planning as an opportunity to expand business in addition to providing a pathway to the future.
A survey of 631 financial advisors conducted by RIA Channel and FTSE Russell reveals that 79% of financial advisors do not currently use or offer direct indexing, although nearly half plan to begin adoption within the next five years.
The survey shows that direct indexing’s growth remains in its infancy despite more awareness among advisors and clients. It also shows that many advisors are unfamiliar with direct indexing and unprepared for the shift in wealth management towards more personalized offerings.
Among the respondents who offer direct indexing, 64% cited ‘tax loss harvesting’, 56% noted ‘tax efficient transitions’, and 40% acknowledged 'reducing concentration risk’ as major benefits of the strategy. Notably, 34% of advisors don’t feel confident talking to clients about direct indexing, despite offering the service.
In fact, the survey shows that 28% of advisors “don’t understand the benefits over other investment options,” while 27% believe the same goals can be reached with a portfolio of ETFs, and 20% see it as equivalent to separately managed accounts.
In terms of obstacles, 34% said there was a ‘lack of client demand’, and 29% noted a lack of ‘understanding and knowledge of direct indexing’. Other factors cited were an absence of ‘organizational focus’ and ‘cost’.
Clearly, more needs to be done to educate advisors about the opportunity embedded in direct indexing to provide a personalized experience and help clients optimize their tax situations.
Finsum: Direct indexing is becoming increasingly ubiquitous; however, there is still a big gap when it comes to education. Here are some insights from a recent survey on what is preventing some advisors from adopting the strategy.
In the shifting world of financial advice, the imminent retirement of over a third of advisors within the next decade poses a significant challenge. This shift is driven by the aging demographic of current advisors, with nearly 60% of RIA assets managed by those aged 55 and older.
To navigate this transition successfully, firms need to focus on recruitment, targeting younger demographics, and modernizing engagement models to mitigate the impact of a declining advisor pool. Succession planning is vital for retiring advisors to secure their financial future, boost their firm's appeal, and mentor the next generation. Clear guidance and succession planning is key to attracting new talent.
Recruiting and retaining young advisors is essential, as they bring fresh perspectives and technological savvy, crucial for engaging younger investor demographics like Millennials and Gen Z. These new advisors can also help bridge the gap between clients and existing advisors as their values can be more aligned.
Finsum: Its time to start thinking about recruiting and transitioning or succession planning as an opportunity to expand business in addition to providing a pathway to the future.
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The nature of being a financial advisor has shifted significantly over the past decade. It’s gone from being centered around selecting investments and managing portfolios to financial planning and client service. Model portfolios have been ascending along with this evolution and are forecast to exceed $1 trillion in assets over the next decade.
According to surveys, clients invested in model portfolios are more likely to have higher levels of trust with their financial advisors and believe that volatility is an opportunity to grow assets. Additionally, they are more likely to be interested in other services offered by an advisor. They can also help in terms of aligning the interests of advisors, the firm, and clients. They also free up time and energy for advisors to spend on factors that ultimately drive success for advisors, like client service and prospecting.
Another benefit is that model portfolios provide an extra layer of due diligence, with 77% of advisors saying that they help with managing risk. In essence, it gives clients access to a higher quality of investment management and a more comprehensive relationship with an advisor.
Models also mean that advisors’ services become more scalable, enabling growth and expansion. In recent years, models have expanded to include offerings from third parties and a wider array strategies, which means there are possibilities for endless customization to fit clients’ unique needs and goals.
Finsum: Model portfolios bring the promise of a win-win for clients and advisors. Clients invested in model portfolios report higher levels of confidence with their advisor and don’t fear volatility. For advisors, they offer the ability to decrease time spent on investment management and focus more on client service and prospecting.
Goldman Sachs has raised $21 billion for private credit investments, its largest fund yet in this asset class.
Fresh capital, borrowed funds, co-investments, and SMAs are all a part of the how the firm has secured its newest private lending channel. This initiative is crucial for Goldman to demonstrate its ability to attract substantial external funds, focusing on steady fees instead of occasional large revenues.
High-net-worth individuals and institutional investors alike are increasing their allocations to alternatives, viewing private credit as a valuable investment. With plans to double its private credit assets to $300 billion in five years, Goldman is leveraging its extensive experience while other banks form partnerships to enter this market.
Finsum: Alternatives are a good way to hedge against the mainstream macro volatility problems looming on traditional portfolios
Summer tends to be slower on Broadway, even more so this year with some theaters being renovated and a lighter schedule for Shakespeare in the Park. However, there are some intriguing new shows that will be opening this summer.
The most highly anticipated is “Oh, Mary!” which is scheduled to open in late June at the Lyceum Theater. The play stars Cole Escola as an ahistorical, comedic Mary Todd Lincoln, who is resentful of her husband for thwarting her stage ambitions even during the Civil War. Conrad Ricamora plays Abe Lincoln. The play was highly lauded during its opening run for its humor and uniqueness. Now, it’s moving into a bigger theater with a larger production budget.
Maggie Siff of Billions and Sons of Anarchy stars in “Breaking the Story,” which is set to open on the Second Stage on June 4. Siff stars as a former war correspondent who is struggling to make the transition back to civilian life. During its preview run, the play received acclaim for its acting performances and its portrayal of internal conflict.
On a lighter note, Cats is returning to Broadway, albeit with a twist. “Cats: The Jellicle Ball” will open at the Perelman Theater on June 13 and is brought by directors Zhailon Levingston and Bill Rauch. The musical is set within the world of New York ballroom dancing and features club music and runway choreography. It will be interesting to see if this can recapture the magic of the original or come off as a tired sequel.
Finsum: This year’s summer season is especially slow on Broadway. However, there are a couple of interesting shows opening in the coming months, including “Oh! Mary” and “Breaking the Story”.