Managed accounts are set for a major transformation as current models often benefit providers more than participants due to high fees. Employers must evaluate how providers personalize portfolios and whether participants actively engage with these features. 

While managed accounts generally offer strong investment management, fee structures can erode some of their value, requiring significant equity exposure increases to match target date fund returns. Personalized portfolio returns tend to fall within a narrow 5% to 7% range, with minor impacts from strategic asset allocation shifts. 

A subscription-based model could better align incentives, offering lower-cost options for less engaged participants while providing premium services for those seeking greater customization. Inconsistencies in provider methodologies, driven by factors like risk tolerance and retirement readiness, highlight the need for greater transparency. 

Finsum: This is an interesting strategy, but if done properly managed accounts are a great vehicle for retirement and defined contribution. 

Target-date funds simplify retirement investing by automatically adjusting risk over time, making them ideal for those who prefer a hands-off approach. These funds, which held $3.5 trillion by the end of 2023, are often the default option in 401(k) plans, ensuring broad diversification and gradual risk reduction. 

However, high fees can significantly erode long-term returns, making it crucial for investors to choose low-cost options. While effective for wealth accumulation, target-date funds may not serve retirees as well since they lack built-in mechanisms for generating steady income. 

Some newer funds address this gap by incorporating annuities to provide predictable post-retirement income. It’s also important to note how they fit with the existing portfolio to create a coherent investment strategy. 

Finsum: As retirement needs vary, understanding fund structures and choosing the right strategy can greatly impact financial security.

Direct indexing has emerged as a compelling investment approach, offering personalized portfolios and tax advantages. According to experts at Goldman Sachs, this strategy is gaining traction as investors seek tailored solutions. 

The industry has expanded rapidly, with direct indexing assets now totaling nearly $800 billion—more than fivefold growth in recent years. Financial advisors are increasingly integrating direct indexing into portfolios to enhance tax efficiency and customization. 

Unlike ETFs, which track broad indices, direct indexing enables investors to own individual stocks, optimizing tax-loss harvesting opportunities. As adoption rises, technology plays a crucial role in managing the complexity of these highly customized accounts.

Finsum: The technology gains have made a huge impact in the world of finance but particularly with new strategies such as direct indexing where it can have a substantial impact on the cost structure. 

Now is an opportune moment to optimize your investments for tax efficiency, as upcoming policy changes could significantly impact financial planning. With tax rates set to rise and transfer tax exemptions shrinking in 2026, proactive strategies can help safeguard wealth. 

One key approach is ensuring that assets are held in tax-advantaged accounts, maximizing the benefits of tax deferral or exemption. Additionally, tax-loss harvesting and careful portfolio rebalancing can mitigate liabilities while maintaining investment goals. 

Charitable giving through donor-advised funds or qualified charitable distributions also presents tax-efficient opportunities. Finally, sophisticated tools like GRATs and strategic liquidity management can help navigate tax burdens while preserving long-term wealth.

Finsum: These are three wonderful tips to improve the efficiency of portfolios, and its good to start educating clients on the benefits of tax alpha.

Managed accounts have evolved beyond simple investment tools to become a key retirement income solution within defined contribution plans. While their availability has increased significantly over the years, participant adoption remains low, with only 7% utilizing these accounts despite widespread access. 

Critics point to ongoing fees as a drawback, though proponents argue that managed accounts provide tailored financial planning, including retirement timing and Social Security optimization. 

Some newer offerings even incorporate annuities or structured withdrawal features, turning managed accounts into a direct retirement paycheck solution. This customization makes them an attractive option for plan sponsors considering alternatives to traditional target-date funds. 

Finsum: As the marketplace continues to adapt, managed accounts are gaining traction as a more personalized and flexible retirement planning tool.

Structured annuity sales soared to a record $62.9 billion in 2024, marking a 39.6% increase from the previous year as investors sought downside protection with upside potential. The fourth quarter alone saw $17.2 billion in structured annuity sales, continuing the product’s rapid ascent. 

Indexed annuities also experienced strong growth, hitting $130 billion for the year despite a quarter-over-quarter dip. Meanwhile, variable annuities rebounded sharply, posting a 25.4% annual increase to $61.3 billion, driven by stock market gains and growing advisor demand. 

Income annuities, a staple for retirees and income-focused investors, reached $14.9 billion in total sales, with New York Life maintaining its dominant market share. While some fixed annuity segments faced headwinds, the broader annuity market remained robust, reflecting investors’ shifting priorities in an evolving economic landscape.

Finsum: With a large boomers currently in the midst of retirement, we could see more demand for annuities from the largest generation. 

Food trends in 2025 continue to evolve, with diners seeking immersive experiences that go beyond just a meal, especially as inflation encourages them to prioritize restaurants offering unique events or entertainment. 

Global flavors have become an expectation rather than a novelty, as Asian and international influences seamlessly integrate into American cuisine, expanding culinary possibilities for chefs and consumers alike. Spice levels are rising on menus, with diners embracing bolder flavors, following the chili crisp craze and the growing popularity of Nashville hot dishes. 

Sandwiches remain a social media favorite, with chefs elevating them through inventive ingredients and international inspirations, proving their staying power in the dining world. Meanwhile, mocktails continue to thrive, with house-made syrups and fresh ingredients transforming them into sophisticated, health-conscious alternatives to traditional cocktails.

Finsum: Also locally sourced ingredients are more valued than ever, with farm-to-table offerings shaping restaurant menus even as they incorporate global flavors as people search for sustainable alternatives. 

Financial advisors are rapidly integrating generative AI into their workflows, with 76% reporting immediate benefits, particularly in efficiency and client engagement. Concerns about AI replacing human advisors have diminished, with only 8% viewing it as a threat, down from 21% a year ago. 

While firms are increasingly formalizing AI policies—jumping to 82% from 47% in 2024—advisors remain selective in their use, favoring AI for analytics and marketing rather than personalized financial planning. 

Many see technology as a competitive advantage, with 57% acquiring clients from competitors with outdated systems. However, despite AI’s rapid adoption, 65% of advisors believe their tech stacks still need improvement. 

Finsum: As AI-driven tools continue to reshape wealth management, firms that strategically implement these advancements stand to gain the most.

RIA custodians play a crucial role in safeguarding the assets of registered investment advisors while maintaining independence to ensure client funds are handled properly. These custodians can be banks, trust companies, or broker-dealers, but all must adhere to regulatory standards that prevent misuse of assets. 

Selecting the right custodian is one of the most significant decisions for an RIA, as it impacts everything from operational efficiency to client trust. 

Key factors to consider include the custodian’s reputation, experience working with firms of similar size and focus, and fee transparency. Additionally, some custodians have minimum asset requirements, which can be a hurdle for smaller firms looking to establish a partnership. 

Finsum: Beyond asset management, a strong custodian should also offer reliable service and support to help RIAs grow and navigate industry challenges.

The defined contribution investment-only (DCIO) industry continues to grow, reaching record asset levels despite increasing pressure on fees and revenue models. Target-date funds (TDFs) remain a dominant force, with more plan sponsors considering active management strategies to enhance participant outcomes. 

At the same time, large passive fund managers are introducing competitively priced active funds, creating new market dynamics. A key decision for advisors is knowing when to pull the trigger on a switch to active plans, and a riskier economic environment can be the right opportunity. 

Meanwhile, personalization is becoming a key focus, though legal challenges surrounding managed accounts may slow adoption. Lastly, collective investment trusts (CITs) are gaining ground on mutual funds, with potential legislation poised to expand their availability in 403(b) plans.

Finsum: DCIO is an ongoing process and shouldn’t be treated like a static one-time decision, consider traditional portfolio strategy and customization as opportunities to shift DC investments.