A recent Goldman Sachs survey reveals that investors are enthusiastic about separately managed accounts (SMAs). Financial advisors appreciate SMAs for their professional management, customization, transparency, tax efficiency, and diversification benefits. 

Chris Mankoff of JTL Wealth Partners finds SMAs advantageous for aligning with clients' preferences and optimizing tax strategies. While there have been challenges in the past with SMAs but the recent technological advancements have made them more accessible and effective. 

Direct indexing, a step beyond SMAs, leverages technology for customized tax management and ESG preferences. Despite their benefits, SMAs may not be suitable for all clients, particularly those with smaller portfolios or predominantly pretax investments.

Finsum: While SMAs might not be for all, with a sizeable portfolio technology makes them easier for advisors to manage. 

The conversation about rate cuts is heating up again as we move into 2024. Signals from the Fed hint at potential rate reductions, spurred by weaker job numbers and rising unemployment. With a lackluster June jobs report and unemployment up to 4.1%, a September rate cut looks increasingly likely. 

For investors, active ETFs offer a strategic response, providing flexibility and potential advantages over passive index funds. These ETFs can adapt to market shifts, benefiting from lower borrowing costs for smaller growth companies. 

As the market concentrates on a few mega-cap firms, active ETFs can diversify risk and capitalize on emerging opportunities. In light of these dynamics, active strategies present a potent option for investors adjusting to the evolving economic landscape.

Finsum: Active management could prove fruitful if interest rates fall and they can capitalize on, say, growth opportunities like tech. 

This summer brings a chance to refresh your wine experience by exploring local wines, visiting new wineries, and shaking up your routine to discover fresh and exciting vintages. Engage with local wine merchants and delve into the wines of different regions or varieties. 

Supporting local wine regions and occasionally splurging on a special bottle can elevate your wine journey. When traveling, seek out regional wines and visit local wineries to expand your palate. Encourage restaurants to feature local wines by asking about them, helping to boost their visibility. 

Embrace the adventure of trying something new, guided by recommendations from wine experts. This year, keep an eye out for trends like wines from minority and female winemakers, sustainable packaging, and alternative wine options.

Finsum: I think the combination of pairing a winery you know and one that is new for a tasting day allows a more intricate tasting experience.

ETFs have been on an ultra-high growth trajectory for over a decade now but at least part of that is being fueled by model portfolios. According to a Cerulli Associates report, ETFs are becoming a fundamental part of models. Asset managers and third-party strategist model providers now allocate about 54% to ETFs. 

Despite only 12% of financial adviser assets being held in practices primarily using model portfolios, Cerulli estimates that 24% are "model portfolio targets," reflecting client-specific customizations. BlackRock leads as the largest model provider with $84.3 billion in model assets, followed by Capital Group with $75.4 billion.

ETFs have surpassed mutual fund assets within models, and the trend is expected to continue as more products reach their three- and five-year track records, according to Matt Apkarian of Cerulli. The report also highlights the trend towards customization within models, combining ETFs with separately managed accounts to meet individual client needs.

Finsum: Technology augments the current financial offerings to ultimately drive innovation. 

The SEC has introduced new disclosure requirements and registration processes for registered index-linked annuities (RILAs) and registered market value adjustment (MVA) annuities in hopes of bringing clarity to the industry. The final rule mandates issuers of non-variable annuities to use Form N-4, updating the framework for these products. 

This change aims to help investors make informed decisions, as the market for these products has grown significantly, with RILA sales reaching $47.4 billion in 2023. The amendments include a summary prospectus framework and extend Rule 156 to non-variable annuity advertisements to prevent misleading materials. 

While SEC Commissioner Hester Peirce supports the general approach, she expressed concerns about potential biases and the need for creative disclosure techniques to enhance investor understanding. The amendments will take effect 60 days after publication in the Federal Register, with full compliance required by May 1, 2026.

Finsum: Annuities seem bogged down by more complexity, and this ruling could help the industry in the long run.