Wealth Management

If advisors are looking to build out their practice, they should look no further than Millennials and Generation Z. That is according to Fidelity, which believes younger investors represent substantial, long-term wealth potential. According to a recent report from Fidelity Institutional, population and wealth are significantly shifting to the younger generations, who now collectively represent 47% of the U.S. population. These findings came from the Fidelity Investments 2022 Investor Insights Study, which included 2,490 investors who were 21 and older and had household investable assets of $50,000 or more. Fidelity also offered recommendations on how to approach younger investors. For instance, advisors should create an ideal profile of the young clients they would like to work with. They should also engage with the children of their current clients as a way to retain assets when wealth is transferred. Financial advisors can differentiate themselves by becoming a coach and elevating the client experience with frequent check-ins and establishing and monitoring financial routines. In terms of gathering clients, Fidelity recommends that advisors refine their social media strategy to capture their attention, while also telling younger prospects what they do for the community and the causes that they care about.

Finsum:According to a recent study by Fidelity, advisors should consider reaching out to Millennials and Generation Z as they offer substantial long-term wealth potential.

JPMorgan Asset Management recently announced that it plans to convert four of its mutual funds into ETFs, pending fund board approval. This includes three municipal mutual funds. The firm plans to switch all share classes of the Limited Duration Bond, High Yield Municipal, Sustainable Municipal Income, and Equity Focus fund. If approved at a meeting scheduled for February, the funds will be converted to actively managed transparent ETFs in July. The JPMorgan Limited Duration Bond fund invests mainly in mortgage-backed or mortgage-related securities that it believes will perform well over market cycles. The JPMorgan High Yield Municipal fund is designed to deliver a high level of current income exempt from federal income taxes. The JPMorgan Sustainable Municipal Income fund is designed to deliver current income exempt from federal income taxes by investing in municipal bonds with the use of proceeds that provide positive social or environmental benefits. According to the firm's announcement, the new ETFs will mainly have the same investment strategies as the mutual funds. JPMorgan was one of the first companies to convert active mutual funds into ETFs with the Inflation Managed Bond ETF conversion taking place in April.

Finsum:JPMorgan announced that it plans to convert three active municipal bond funds into actively managed transparent ETFs in July.

The SEC brought its first enforcement action this year for alleged violations of Reg BI, which requires that broker-dealers act in the best interest of their clients. The action came almost two years after Reg BI took effect. There are signs that there will be more Reg BI enforcement this year as the agency has issued subpoenas to dozens of broker-dealers. Toby Galloway, chair of the securities litigation and enforcement practice at Winstead PC stated, “They’ve got this rule that hasn’t been enforced a whole lot just yet. But they’re going to use it.” Reg BI isn’t the only enforcement action expected to take place this year. Communication technology and other issues are expected to see new enforcement actions in 2023. For example, several big banks were fined close to $2 billion in September for failing to monitor employees’ communications on messaging apps such as WhatsApp. Bloomberg News reported that the SEC’s probe into communication is expanding to other industry players such as asset managers. In addition, the agency is working to finalize new climate disclosure requirements for companies, while also looking for ways to bring litigation related to ESG issues under existing regulations.


Finsum:The SEC is expected to litigate more violations of Reg BI, communication technology, and ESG-related issues this year.

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