Wealth Management
Scott Bessent, President-elect Donald Trump’s nominee for Treasury Secretary, emphasized the critical importance of maintaining the U.S. dollar as the world’s reserve currency during his testimony to the Senate Finance Committee.
He advocated for prioritizing productive investments over wasteful spending to stimulate economic growth while addressing vulnerabilities in supply chains and strategically using sanctions for national security. Bessent reiterated support for making Trump’s 2017 tax cuts permanent, warning of a historic $4 trillion tax hike if Congress fails to act.
He also outlined plans for pro-growth policies, including reducing the corporate tax rate to 15% for U.S.-based manufacturers and exempting tips and Social Security income from taxation. Bessent underscored Trump's aggressive tariff plans to counter perceived unfair trade practices and strengthen domestic industries.
Finsum: This administration could usher in a transformative era but we’ll see how tariffs and tax cuts off set for economic Growth.
Public pension funds, including CalSTRS and LACERA, are enlisting consultants and specialists to navigate the intricate structures used by private equity firms to extend the lifespan of investments. LACERA, managing $82 billion as of November, has allocated resources for a new role focused on operational due diligence within its private markets portfolio.
With private equity increasingly relying on financial engineering, experts stress the need for limited partners to stay informed to adapt to these complex arrangements. Examples of strained assets rolled into continuation vehicles, like Upstream and United Site Services, highlight the challenges of managing leveraged investments in a high-interest-rate environment.
Despite these pressures, some private equity firms, such as Audax, maintain optimism about long-term recovery through operational improvements and strategic adjustments.
Finsum: Although pockets of distress exist, we remain confident in the resilience of private markets and their ability to weather economic headwinds.
The private credit market faces significant risks due to relaxed lending standards and the influx of capital, warns Nick Moakes of the Wellcome Trust. He anticipates substantial losses for investors if the U.S. economy enters a recession.
While private credit is less systemically risky than traditional banking, diminished checks on borrowing have raised concerns. Rating agency KBRA projects defaults in the sector to rise to 3% by 2025, driven by higher interest rates and vulnerable business models.
Moakes also criticized large alternative asset managers, noting their focus on asset growth may not align with investor interests. Despite the risks, the Wellcome Trust avoids direct private credit investments but monitors the market through its private equity allocations.
Finsum: With rates moves slowing down we think private credit could have an advantage over traditional fixed income products.
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Despite the ongoing challenges in the residential REIT sector, some companies are well-positioned to benefit from strong demand and strategic advantages. Equity LifeStyle Properties, for example, focuses on manufactured home communities and RV resorts in high-demand locations, benefiting from favorable demographics and constrained supply.
Veris Residential, with a modern Class A portfolio and a tech-driven approach, is poised to capitalize on scalable growth in the Northeast market. UMH Properties, which operates manufactured home communities across several states, is likely to see continued demand, particularly due to high mortgage rates that make renting a more viable option for many.
These REITs are leveraging technology to enhance operations and optimize revenue, allowing them to adapt to evolving market dynamics.
Finsum: Including an influx of new rental units and increased concessions, these companies offer strong prospects for future growth.
Last year may have felt like an uphill battle, but with the right strategies, 2025 could be transformative. The key difference between where you are now and the best version of yourself lies in the connections you make and the knowledge you gain. Start building relationships and immerse yourself in powerful ideas by reading books that challenge your perspective.
Five standout business books to inspire your growth this year include Simon Squibb’s "What’s Your Dream?", which offers a roadmap for turning aspirations into reality, and Rob Dix’s "Seven Myths About Money," which debunks outdated financial advice. For a holistic approach, Sahil Bloom’s "The 5 Types of Wealth" teaches how to balance time, health, relationships, and finances.
Mel Robbins’ "The Let Them Theory" helps you focus on your goals while letting go of distractions, and Reid Hoffman and Greg Beato’s "Superagency" explores the transformative potential of AI in shaping a better future. With these books in hand, 2025 can be your breakthrough year.
Finsum: These books offer a well rounded approach that could spark both ideas and conversational topics with clients.
The wealth management industry is at a critical juncture, as the retirement of over 109,000 financial advisors in the next decade coincides with the Great Wealth Transfer, presenting a unique opportunity for firms to secure trillions in assets.
High-net-worth clients, a key growth segment, are raising the bar with their expectations for personalized, holistic financial solutions that address complex needs like estate planning, tax optimization, and ESG-aligned investments. To stand out, advisors must deepen client relationships, focusing on understanding values, family dynamics, and long-term goals to foster trust and loyalty.
Expanding service offerings such as direct indexing, alternative investments, and foreign currency management allows advisors to cater to sophisticated client demands while optimizing for customization and after-tax returns.
Finsum: By aligning advanced solutions with client preferences, advisors can not only retain existing clients but also attract new ones, solidifying their competitive edge.