Wealth Management
It’s not a coincidence that a regular reading habit is a common habit of the most successful business leaders. Books can provide objective information and practical insights that provide a fresh perspective and can lead to better decisions. Currently, there are plenty of intriguing titles, but one standout is How to Tell a Story by the Moth, Meg Bowles, and Catherine Burns. For advisors, effective storytelling can drive more powerful conversations and lead to better outcomes with clients, prospects, and employees.
The Moth is a regular gathering that features people from all walks of life who share personal stories. The book gathers key lessons on how speakers can captivate and move their audience through the use of personal stories.
Suggestions include not using any notes during the story, as this can dilute the connection between the speaker and the audience. The authors believe that stories should be memorized. Another recommendation is to explain the stakes to the audience so they understand the story’s importance and connect on an emotional level with the speaker.
In terms of specific tactics, the opening of the story needs to be memorable and capture the audience’s attention while also hinting at the larger purpose or theme. Similarly, they recommend spending time ensuring that the story has a simple and powerful ending rather than a meandering one.
The U.S. dollar's dominance as the global currency could face a challenge from China. In the first quarter of 2024, China sold a record $53.3 billion in U.S. Treasuries and agency bonds, indicating a push towards diversification.
Over the past 17 months, China's central bank has been significantly increasing its gold reserves, raising concerns about a shift away from reliance on the U.S. dollar. This move may be part of a strategy to protect against U.S. sanctions and reflect China’s broader economic ambitions.
Other countries, including India, Russia, and Turkey, are also reducing their U.S. asset holdings amid concerns over America’s debt and political stability. While the dollar's decline isn't immediate, investors should consider diversifying their assets to navigate potential changes in the global financial landscape.
Finsum: These sorts of shifts could have drastic impact on Treasury prices so investors should monitor international changes.
In the shifting world of financial advice, the imminent retirement of over a third of advisors within the next decade poses a significant challenge. This shift is driven by the aging demographic of current advisors, with nearly 60% of RIA assets managed by those aged 55 and older.
To navigate this transition successfully, firms need to focus on recruitment, targeting younger demographics, and modernizing engagement models to mitigate the impact of a declining advisor pool. Succession planning is vital for retiring advisors to secure their financial future, boost their firm's appeal, and mentor the next generation. Clear guidance and succession planning is key to attracting new talent.
Recruiting and retaining young advisors is essential, as they bring fresh perspectives and technological savvy, crucial for engaging younger investor demographics like Millennials and Gen Z. These new advisors can also help bridge the gap between clients and existing advisors as their values can be more aligned.
Finsum: It’s time to start thinking about recruiting and transitioning or succession planning as an opportunity to expand business in addition to providing a pathway to the future.
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A survey of 631 financial advisors conducted by RIA Channel and FTSE Russell reveals that 79% of financial advisors do not currently use or offer direct indexing, although nearly half plan to begin adoption within the next five years.
The survey shows that direct indexing’s growth remains in its infancy despite more awareness among advisors and clients. It also shows that many advisors are unfamiliar with direct indexing and unprepared for the shift in wealth management towards more personalized offerings.
Among the respondents who offer direct indexing, 64% cited ‘tax loss harvesting’, 56% noted ‘tax efficient transitions’, and 40% acknowledged 'reducing concentration risk’ as major benefits of the strategy. Notably, 34% of advisors don’t feel confident talking to clients about direct indexing, despite offering the service.
In fact, the survey shows that 28% of advisors “don’t understand the benefits over other investment options,” while 27% believe the same goals can be reached with a portfolio of ETFs, and 20% see it as equivalent to separately managed accounts.
In terms of obstacles, 34% said there was a ‘lack of client demand’, and 29% noted a lack of ‘understanding and knowledge of direct indexing’. Other factors cited were an absence of ‘organizational focus’ and ‘cost’.
Clearly, more needs to be done to educate advisors about the opportunity embedded in direct indexing to provide a personalized experience and help clients optimize their tax situations.
Finsum: Direct indexing is becoming increasingly ubiquitous; however, there is still a big gap when it comes to education. Here are some insights from a recent survey on what is preventing some advisors from adopting the strategy.
In the shifting world of financial advice, the imminent retirement of over a third of advisors within the next decade poses a significant challenge. This shift is driven by the aging demographic of current advisors, with nearly 60% of RIA assets managed by those aged 55 and older.
To navigate this transition successfully, firms need to focus on recruitment, targeting younger demographics, and modernizing engagement models to mitigate the impact of a declining advisor pool. Succession planning is vital for retiring advisors to secure their financial future, boost their firm's appeal, and mentor the next generation. Clear guidance and succession planning is key to attracting new talent.
Recruiting and retaining young advisors is essential, as they bring fresh perspectives and technological savvy, crucial for engaging younger investor demographics like Millennials and Gen Z. These new advisors can also help bridge the gap between clients and existing advisors as their values can be more aligned.
Finsum: Its time to start thinking about recruiting and transitioning or succession planning as an opportunity to expand business in addition to providing a pathway to the future.
The nature of being a financial advisor has shifted significantly over the past decade. It’s gone from being centered around selecting investments and managing portfolios to financial planning and client service. Model portfolios have been ascending along with this evolution and are forecast to exceed $1 trillion in assets over the next decade.
According to surveys, clients invested in model portfolios are more likely to have higher levels of trust with their financial advisors and believe that volatility is an opportunity to grow assets. Additionally, they are more likely to be interested in other services offered by an advisor. They can also help in terms of aligning the interests of advisors, the firm, and clients. They also free up time and energy for advisors to spend on factors that ultimately drive success for advisors, like client service and prospecting.
Another benefit is that model portfolios provide an extra layer of due diligence, with 77% of advisors saying that they help with managing risk. In essence, it gives clients access to a higher quality of investment management and a more comprehensive relationship with an advisor.
Models also mean that advisors’ services become more scalable, enabling growth and expansion. In recent years, models have expanded to include offerings from third parties and a wider array strategies, which means there are possibilities for endless customization to fit clients’ unique needs and goals.
Finsum: Model portfolios bring the promise of a win-win for clients and advisors. Clients invested in model portfolios report higher levels of confidence with their advisor and don’t fear volatility. For advisors, they offer the ability to decrease time spent on investment management and focus more on client service and prospecting.