Wealth Management
Since May, President Biden has been pushing a social spending bill that would significantly increase the US’ social safety net and do so by raising taxes on the wealthy. The two primary tax changes Biden is planning for individuals focus on inheritance taxes and capital gains taxes. These plans have spooked US advisors and their clients because collectively they could create some very significant increases in taxation. However, Biden’s plans for the whole bill seem to have taken a major hit in the last few days, as the very hot inflation reading on the economy has many politicians considering whether a huge spending bill would only worsen the issue.
FINSUM: We have been following this saga very closely and we believe the inflation numbers are the death knell for this bill. Biden was already facing major opposition on spending and taxes in their own right, and now some of the benefit of the economic firepower is being called into question.
Annuities have been on a hot streak as of late and that continues into the 2021. Data collected from a combination of Morningstar and Beacon Annuity Solutions shows that sales for all annuities are up 17.3% through the first half of 2021 dwarfing previous years growth. And over the previous year up a staggering 27.9%. But the makeup tells the interesting story, total fixed annuities were up 12.1% while fixed annuities were almost level with 0.2% growth. And within variable annuities it was registered index linked annuities that dominated the sector with 11.2% growth and up 107.8% over the previous year’s same period. The book value of fixed annuities grew from 32% from Q1 to Q2 in 2021 totaling $12.7 billion.
FINSUM: This is a huge growth in annuities, and it probably stems from the inflation risk in the bond market, annuities are just the safer alternative for an income stream vs yield-less bonds.
MetaCap has acquired a MCAP technology company in an equity exclusive transaction. MCAP is a fintech software development company that hosts a suite of software and e-market making services that offer liquidity solutions to institutional investors. Metacap sees the acquisition as part of their growth in client facing businesses and sector expansion. They can leverage the new acquisition by expanding what they can offer customers and grow their clientele. Revenue and EBITA growth has been a key point of success for MTEC and that as a one two punch they can be even stronger with the merger moving forward.
FINSUM: This is yet another dip into digital portfolio construction via buyout or merger, and a sign of how quickly fintech is moving the frontier in the financial industry.
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The Trump administration put rules in place which forbid employers from considering social or environmental impact when it came to fund selection from enrolling in retirement plans. However, the Biden admin is turning a new leaf on this front as they have proposed a rule which will ease the decision-making process for employers if they want to add ESG funds to their employees’ retirement plans. This is yet another proposal from the Biden admin that favors renewables and green corporations in the country's transition to net zero emissions. Part of the response is a boost in demand as investors have overwhelming interest in ESG in their portfolios. It isn’t a no brainer that ESG should be a part of a retirement portfolio, as it does prepare for downside risk, but it may not outperform.
FINSUM: The U.S. 401(k) savings machine is a huge pool of investment, and institutional savings could be a major boost to ESG demand.
The COVID-19 crisis has kept our industry on its toes, pushing firms and clients to find new ways to communicate and collaborate in spite of new difficulties. If anything, it has underscored how important it is to use technology to your benefit.
This case study covers how advisors like Mike McCann have used technology to automate routine tasks, stay connected with clients and colleagues, and ensure they provide responsive service for every client. His firm, Perspective Financial Services, has used technology to power growth in the face of these challenges – growth for both their clients and their firm.
In reading Mike’s story and his advice, you too can learn to apply these technology tools to your own practice and be better prepared to take on the unexpected.
We’ll cover powerful and practical tech insights and guidance, including:
• Ways technology can help you anticipate client needs and deepen relationships
• How technology can make firms more agile and secure
• Advice based on real-world success
Disclosures:
Schwab Advisor Services™ serves independent investment advisors and includes the custody, trading, and support services of Charles Schwab & Co., Inc. (Schwab), member SIPC. Independent investment advisors are not owned by, affiliated with, or supervised by Schwab.
This is a sponsored feature developed by Schwab and supported by FINSUM.
FINSUM is not affiliated with The Charles Schwab Corporation. Any mention of third-party firms or individuals is not and should not be construed as a recommendation, endorsement, or sponsorship by Schwab.
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TRG 1220-03BE (12/20)
Moody’s Analytics launched a new platform called PortfolioStudio which is a cloud-based portfolio management tool with risk analysis built in. Moody’s staff say the tool will improve efficiently and allow managers to assess risks in their investments. PortfolioStudio will be a part of the Moody’s ‘ecosystem’ meaning it will share data, models, and assumptions across their applications, and will provide insights to their clients. They view their risk expertise as a natural fit for portfolio management and that the technology will benefit their clients.
FINSUM: Integrating credit and ratings features is a boost that Moody’s can add for their clients and gives them an edge over similar portfolio management platforms.