Wealth Management
You don’t have to double check a wealth of sources like wikepedia to ferret outthe meaning of succession plaining; it’s simply the way you pinpoint and developing your organization’s possible leaders in the making as well as key employees, according to linkedin.com.
It abets your ability to make sure you maintain continuity, hang onto talent and get ready for changes that weren’t expected. That said, succession planning recruiting posed challenges and is susceptible to mistakes.
How can you go about circumventing pitfalls and biases in the process? These strategies can help:
Assess your current and future needs
Develop a talent pool and a succession plan
Use objective and consistent methods
Involve multiple stakeholders and perspectives
Monitor and evaluate your results
Broadly speaking, talent development’s on the ascension – and fast – with succession planning squarely in the middle, according to sigmaassessmentsystems.com.
For senior managers and leaders of organizations who need to keep current on industry trends to help their team with the most effective and relevant growth opportunities, succession planning struts important implications.
SIGMA gathered a report on the State of Succession Planning for the year. Four emerging trends:
--Recruiting and retention of staff are the focus of most organizations
--Keeping up with Industry innovation’s key for many organizations to recognize
--Stepping up customer experience is a commitment among many leaders
--The transformation of their brand and culture’s a goal of a significant number of organizations
Each month, more than four million workers walked away from their job, according a 2021 U.S. Bureau of Labor Statistics report.
Within asset management, active fixed income is in a growth boom based on a surge of inflows and new issuances to meet this demand. There are two secular components as ETFs continue to displace mutual funds as preferred vehicles for fixed income investing, and institutions and advisors become more aware and comfortable with the category.
And, a cyclical factor is the current market environment given the combination of attractive yields and uncertainty about the trajectory of monetary policy. These environments tend to favor active over passive strategies since active managers have more latitude in terms of credit quality and duration.
In recent months, we’ve seen a frenzy in terms of new issues with Vanguard and Blackrock introducing active ETFs that mirror their own active fixed income mutual funds. Now, Capital Group is joining the fray with the launches of the Capital Group Core Bond ETF (CGCB) and the Capital Group Short Duration Municipal Income ETF (CGSM). Asset managers are responding to demand for these products, or otherwise would lose market share to firms who provide ETF versions of popular mutual funds.
CGCB invests across the entire fixed income spectrum with a focus on capital preservation and generating income. CGSM invests in municipal debt that is exempt from federal taxes and typically short-duration.
Finsum: Capital Group is launching two new active fixed income ETFs which is a major trend in the asset management world.
Despite a down Q3, retail investors continue piling into fixed income ETFs, both long and short-duration. They don’t seem too fazed by the recent hawkishness from the Fed or recent calls for continued strength in yields.
Last week, inflows into the most popular Treasury ETF - the iShares 20+ Year Treasury Bond ETF (TLT) reached its highest levels since March 2020. In Q3, TLT was down 13%. This turned a small yearly gain into a more than 10% decline. Despite this performance, TLT has had $4 billion of inflows in Q3 and has seen short interest decline as well.
Clearly, retail investors have a contrarian bent as many strategists are calling for further weakness in bonds, and Fed fund futures markets increased their odds of further hikes while decreasing odds of cuts in 2024.
Some of the inflows into fixed income may be due to concerns about equities and economic growth given recent soft labor and consumption data over the last few weeks. THerefore, they may be looking to take advantage of the highest yields in decades and the potential for price appreciation in the event of a recession or further cooling of inflation.
Finsum: Fixed income ETFs are seeing continued inflows despite poor performance in Q3. Here are why retail investors may be buying the dip.
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Eric Henderson, the president of Nationwide Financial’s annuity division, recently shared some thoughts on annuities and how it can help reduce financial stress for retirees. Henderson has been with the company for nearly 40 years and been instrumental in helping Nationwide’s annuity business grow to over $100 billion in assets.
He believes that this is a great time for annuities given that short-term rates are above 5% in many instances. It’s been benefiting from volatility in fixed income and equities in addition to a cascade of uncertainties including inflation, monetary policy, recession risk, geopolitics, etc.
Annuities can help investors side-step these risks while also taking advantage of historically high rates. So far, fixed annuities have seen the biggest increase in sales, but there has been strength in other types of annuities as interest and awareness grows.
In terms of trends, Feldman sees more shorter-term, annuity products being introduced given the combination of uncertainty and increasing demand. Additionally, he sees the potential for ‘customized’ annuities that are created to fit an individual’s specific needs.
Overall, he believes that at some point investors evolve from a ‘wealth accumulation mindset’ to focusing more on maximizing income. He believes this is the best time in decades for investors to build healthy income streams, and it also provides needed diversification given a shaky economic outlook.
Finsum: Nationwide’s head of annuities, Eric Henderson, shared his thoughts on the category’s increase in popularity and some interesting trends.
Model portfolios have been growing at a consistent rate for decades due to increasing adoption by younger advisors and more awareness among investors. Now, they have reached a size at which they are starting to affect markets especially when dealing with more illiquid securities. Currently, they collectively manage $3 trillion in assets under management (AUM).
It’s natural to consider the risks and opportunities as these ripple effects will only grow with model portfolios forecast to exceed $10 trillion in AUM over the next decade. In fact, recent unusual flows into various ETFs are often due to changes in the holdings of model portfolios.
Most model portfolios are constructed with ETFs. They are managed by investment teams of asset managers and can enable advisors to spend less time on portfolio management or security selection and more time on building their business and managing client relations.
Since 2018, more than 400 model portfolio offerings have been launched. Most research shows that model portfolios tend to outperform advisor-managed portfolios. Ultimately, it’s an acknowledgement that beating the market is nearly impossible and that an advisors’ job is increasingly about financial planning rather than investing.
Finsum: Model portfolio AUM is already in excess of $3 trillion. Here’s why the category is forecast to exceed $10 trillion over the next decade.
Fixed income posted its worst quarterly performance in over a year as the market has been reducing odds of rate cuts, while increasing odds of additional hikes and extending its estimate of the duration of tight policy. This also led to the first quarterly decline in equities this year.
Yields on long-duration Treasuries are now at their highest level since 2007. Fed hawkishness is even neutering positive reactions to benign economic data as evidenced by the recent low PCE print. Fixed income was initially bid up, however this strength was sold into as most bonds finished the day unchanged. Some additional reasons may be the recent rise in oil which could handcuff the Fed from pivoting, huge supply of Treasuries hitting the market over the next couple of quarters, and uncertainty over the government shutdown.
In terms of fixed income performance, short-duration assets are outperforming, while long-duration assets are hitting new lows. Many strategists are now saying that yields will rise further with the 10Y going past 5%.
The contrarian case is that the Fed is close to the end of its tightening cycle and that the economy is finally starting to show signs of contraction. Thus, investors should buy on the dip to take advantage of these elevated yields.
Finsum: Fixed income and equities both performed poorly in Q3. For fixed income, here are some of the factors behind the weakness.