Natixis Investment Managers conducted a survey with CoreData Research of more than 11,000 global investors in March and April of this year. It found that individuals invested in portfolios overseen by professional asset managers had less stress, were more trusting of advisors, and more financially confident. 

Overall, the survey revealed that only 11% of model portfolio investors were stressed, while 23% of non-model portfolio investors were stressed. Additionally, 45% of model portfolio investors were confident about their finances while only 24% of non-model portfolio investors were. 

The survey also revealed that 78% of model portfolio investors saw volatility as an opportunity. In contrast, only 47% of non-model portfolio investors felt the same. 70% of model portfolio investors felt that inflation meant it was time to invest more, in contrast to 40% of non-model portfolio investors. 

For advisors, it’s particularly relevant that 97% of model portfolio investors trusted their financial advisors when making decisions in contrast to 73% of non-model investors who said the same. 

However, only 51% of wealth managers and advisory practices in the US plan to offer third-party model portfolios. 

The survey also revealed that model portfolios free up time for advisors by outsourcing portfolio management. This means more time for client services, financial planning, and prospecting. 

Finsum: Natixis conducted a recent survey about model portfolios. Here are some of the major findings.

High rates have severely impacted the real estate market. In terms of commercial real estate (CRE), higher rates mean that financing costs have risen, but more pain will come when they have to roll over debt in the coming years, assuming that rates remain elevated. 

According to Rich Hill, the Head of Real Estate Strategy & Research at Cohen and Steers, Head of Real Estate Strategy & Research, REITs are in a much better position to handle these stresses than the larger CRE market. 

Many REITs have delivered their balance sheets with 86% of debt fixed for around 6 years which means there is much less exposure to interest rates than other CRE operators and investors. Additionally on the aggregate, REITs have a loan to value of 35% which is quite conservative relative to historical standards. 

So far, high rates have had a muted impact on earnings, about 1.4%, making it more of a mild headwind. Thus, valuations for REITs have become quite attractive, while they remain on strong footing fundamentally, especially in relation to the broader CRE market. As a result, Hill notes that valuations for REITs have stabilized, while private valuations continue to move lower. 

Finsum: High rates are leading to significant amounts of stress for parts of the commercial real estate market; however REITs have been less affected so far. 

Succession planning is increasing in importance given the aging of the industry. Succession planning is essentially a plan for the business beyond an advisors’ involvement. It’s also a contingency plan in the event of an unforeseen event. Currently, less than 30% of advisors have a firm succession plan in place. Here are some options when it comes to succession planning.

The first option is an internal transfer of clients and assets to the next generation. It requires both parties to agree upon a value for the practice. The drawback is that often there’s a large gap in this assessment. However, the upside is that the transition for clients has much less friction.

The next option is to sell the practice to an aggregator or integrator. These firms specialize in acquiring RIAs and are often funded by private equity. Typically, this involves giving up control of the business, meaning that the successor has less upside and control due to ownership being diluted. 

Another option is to sell directly to a strategic buyer, which is often another financial institution or financial advisor practice. This entails some sort of transition period to merge operations, employees, and clients. It requires carefully choosing a successor and ensuring that the culture of the two firms can mesh. 

Finsum: Succession planning is increasingly important for clients. Here are some of the most common types of succession plans.

Despite the pain and volatility of higher interest rates, fixed income issuance is continuing to expand at a healthy clip. Skeptics who are calling for the “death of bonds” are incorrect as the market continues to function well despite the bear market. 

In 2022, global bond issuance was down by 20%. However, this is mostly attributed to above-average issuance during the period of extremely easy monetary policy in 2020 and 2021. 

Now, fixed income sales are normalizing and forecasted to exceed $6 trillion by year-end. And issuance is set to increase even more next year. Over the next couple of years, trillions in corporate debt will need to be refinanced which will be the major driver of new issues. 

On the demand side, interest in the asset class has surged due to yields at attractive levels while the economic outlook remains muddled. Many institutions are forced buyers of fixed income securities due to regulatory reasons. Additionally, proceeds from fixed income investments are also often re-invested. 

Currently, the global bond market is worth $140 trillion which means that even with 2% yields, it would generate nearly $3 trillion in payments. Of course, this figure is much higher given that most yields are much higher, but it’s an indication of the bond market’s staying power. 

Finsum: Fixed income deals with considerable volatility and looks set for its second straight losing year. Yet, the bond market continues to operate fine with minimal systemic risk. 

For a financial advisors practice to grow and thrive, there must be a continuous flow of new leads. Many advisors waste significant amounts of time and energy pursuing ineffective lead generation strategies. Instead, advisors need to refine their strategy to ensure that they are getting results on their efforts to create a pipeline of prospects. Here are some tips to increase your chances of success. 

You can establish trust with prospects by offering them something that is free and useful. This can include information in the form of content or directly answering questions around specific topics. This can take the form of blog posts, podcasts, or webinars. 

Social media can also be a powerful tool to connect with prospects and share your message. However, it can often be inefficient so it’s important to ensure that you are spending time on the same platforms as your target client. It can also mean doing research on the right keywords to increase the visibility of your content. 

Another source of leads is through your existing clients. Person to person recommendations remain the best source of warm prospects. You can simply ask them if they know anyone who is looking for help with their finances. 

Finsum: Many advisors aspire to work with high-net-worth clients. Here are some tips to increase your chances of success.