Expanding tax-efficient investing options, firms are now utilizing direct indexing technology to make separately managed accounts (SMAs) more advantageous for tax management. Unlike funds, SMAs allow for individualized tax strategies because the investor owns the underlying assets directly, an option now expanding with high demand. 

Direct indexing remains the most common approach for tax-efficient SMAs, enabling tailored tax-loss harvesting by strategically selling select stocks. Some firms are also adapting this approach to actively managed equities, though balancing loss harvesting with stock selection can be complex. 

Tax management in fixed-income portfolios, though more limited, still offers advantages, especially during interest rate hikes. 

Finsum: Model portfolios are gaining traction, for similar tax efficiency reasons.

Recent movements in some of the most sensitive global assets suggest that the Federal Reserve’s decision to lower interest rates may have come too soon or might not be sustainable. Since the Fed’s rate cut in mid-September, emerging-market assets have acted as if borrowing costs will stay elevated, leaving them vulnerable. 

New risks, including rising U.S. Treasury yields and a stronger dollar, have overshadowed any benefits from the rate cut, with concerns over China’s lackluster stimulus and the potential return of Donald Trump to the presidency adding to market uncertainty. 

Investors in emerging markets are now positioning themselves defensively in the face of a stronger U.S. economy and a weakening Chinese one. While there was initial optimism, strong U.S. data and political tensions have reignited fears of persistent inflation. 

Finsum: This could have traders reassessing their strategies, unsure of how much more support they can expect from central banks.

The financial services industry is at the brink of transformation with the introduction of generative AI, which could reshape how financial advice is provided. Traditionally, financial planning has relied on human advisors, but AI tools now offer the ability to handle tasks from retirement planning to portfolio management, learning from user data and economic trends. 

These AI systems can improve efficiency and communication between clients and advisors, but adopting them requires careful consideration of the costs and risks involved. Issues like AI "hallucinations," where the technology generates inaccurate advice, and bias in recommendations highlight the need for vigilance. 

Despite these challenges, the potential for AI to revolutionize financial services is immense, provided businesses implement strong governance, human oversight, and regulatory compliance. 

Finsum: By striking the right balance, AI can enhance the financial advisors practice while ensuring ethical and responsible use.